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


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   ----------

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                        COMMISSION FILE NUMBER 000-21930
                                   ----------

                          BIOSOURCE INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                 DELAWARE                                   77-0340829
(State or other jurisdiction of incorporation            (I.R.S. Employer
             or organization)                           Identification No.)


                   542 FLYNN ROAD, CAMARILLO, CALIFORNIA 93012
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (805) 987-0086


      Securities registered pursuant to Section 12(b) of the Exchange Act:

                                      None

      Securities registered pursuant to Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value
                         Preferred Stock purchase rights
                                   ----------

       Indicate by check mark whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during the  preceding  12 months  (or for such  shorter  periods  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

       Indicate by check mark if no disclosure of delinquent  filers in response
to Item 405 of regulation S-K is contained herein, and will not be contained, to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part  III of the  Form  10-K or any
amendment to this Form 10-K . [_]

     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 stock (based on the last sale
price of such  stock as  reported  by the  National  Association  of  Securities
Dealers  Automated  Quotation  National Market System) held by non-affiliates of
the registrant as of June 28, 2002 was $57,046,775

       The number of shares of the Registrant's  common stock  outstanding as of
March 18, 2003 was 9,608,005.

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


<PAGE>


                                     PART I

ITEM 1.    DESCRIPTION OF BUSINESS

The following  discussion  should be read in conjunction  with our  consolidated
financial  statements  provided  under Part II, Item 8 of this annual  report on
Form 10-K.  Certain statements  contained herein may constitute  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  These  statements  involve  a number of  risks,  uncertainties  and other
factors that could cause actual results to differ materially,  as discussed more
fully herein.

The forward-looking  information set forth in this annual report on Form 10-K is
as of March 24,  2003,  and we  undertake  no duty to update  this  information.
Should  events  occur  subsequent  to March 24, 2003 that make it  necessary  to
update the forward-looking  information contained in this Form 10-K, the updated
forward-looking  information  will be filed  with the  Securities  and  Exchange
Commission in a quarterly report on Form 10-Q or as an earnings release included
as an exhibit to a Form 8-K,  each of which will be available at the  Securities
and  Exchange  Commission's  website  at  www.sec.gov.  More  information  about
potential  factors  that could  affect our  business  and  financial  results is
included in the section  entitled  "Risk  Factors"  beginning on page 26 of this
Form 10-K.


OVERVIEW

The Company  manufactures,  markets and  distributes  products used worldwide in
biomedical  research  that  are  instrumental  in the  development  of new  drug
therapies and medical  diagnostic  methods.  Our products enable  scientists and
biomedical  researchers to better  understand the  biochemistry,  immunology and
cell biology of the human body, as well as disease processes. The Company offers
over 3,650 products that are grouped into the following  product lines:  Assays;
Antibodies;  Bioactive  Proteins  and  Peptides;  Oligonucleotides;  and  Serum,
Buffers and Media.  We believe we offer a unique  combination of  technological,
production,  and research and development skills resulting in a full spectrum of
products  and  services  for  the  worldwide  pharmaceutical  and  biotechnology
industries.

The Company believes it has a strong scientific  research staff, a broad product
line and an established trade name, giving us a solid presence in the biomedical
research market. We intend to continue our focus on new product development, and
to seek to acquire  businesses,  products and technologies  complementary to our
current business through acquisitions, licensing or joint ventures.

INDUSTRY OVERVIEW

The  biomedical   research  industry  has  seen  significant   advances  in  the
understanding of physiological processes at the cellular and molecular level. In
particular,  the biotechnology  industry has seen a substantial amount of growth
over the last year as the sequencing of the human genetic structure,  or genome,
has been completed.  Researchers have identified thousands of previously unknown
genes  that  potentially  play key roles in  physiological  systems in the human
body. These genes are of significant  interest to the  pharmaceutical  industry,
since  they  can  be  used  as  the  basis  of  new  therapeutic  discovery  and
development.  The increase in biomedical  research resulting from the sequencing
of the human  genome  has  resulted  in the need for  methods  and  products  to
accelerate and assist this research.  The core competencies we have developed in
molecular and cellular  biology,  immunology  and custom  services  address this
need.  Biomedical  researchers  around  the  world are  constantly  in search of
specialty  research  products and services,  which are necessary to conduct both
basic and clinical  research.  This research is conducted in settings that range
from  university  and  medical  school   laboratories  to   pharmaceutical   and
biotechnology  research  and  development  groups.  The  success of this type of
research depends upon the availability of high quality  biological  reagents and
custom  services,  including the types of assay kits,  antibodies,  biologically
active proteins,  molecular  probes and serums that we develop,  manufacture and
sell.

STRATEGY

Our strategy is to increase our organic growth rate through focused research and
development  and sales and  marketing  investments  in  cellular  communications
markets with high growth potential. Cellular communications markets include both
extracellular signaling products (such as cytokines) and intracellular signaling
products (such as signal transduction).  BioSource will exploit unique corporate
and product  capabilities to drive product


                                       2


<PAGE>


growth in these select  markets.  As a complement to this  strategy,  we may, as
appropriate,  acquire  companies  which  enhance our ability to compete in these
markets. In order to facilitate this strategy, the Company is:

o    Investing more resources in research and development than in prior history.
     In 2000  and 2001  the  Company  spent  approximately  11% of net  sales on
     research and development.  In 2002, the Company spent  approximately 15% of
     net  sales  on  research  and  development.   In  2003,  our  research  and
     development  spending is projected to be approximately 15% - 17% of sales -
     a dollar increase of approximately $1.5 million.  We expect this investment
     to result in a substantially higher rate of product introduction, increased
     levels of novel  products  and  transfer  of existing  products  into novel
     platforms.

o    Continuing  to invest in sales and marketing  infrastructure  by increasing
     our geographic  coverage and marketing  support.  This effort began in 2000
     and will continue in 2003.  Although the incremental  increases in spending
     in sales and marketing  expenses have been decreasing from 2000 to 2002 and
     will continue to decrease in 2003, the increased spending levels from prior
     periods has  assisted  the Company in its  organic  sales  growth over this
     period. We expect this sales and marketing investment, along with increased
     product depth through our increased  research and  development  spending in
     2002 and 2003, to produce  higher annual sales growth than levels  achieved
     in 2000, 2001, and 2002.

o    We expect this  investment to result in new market  penetration,  increased
     brand recognition and ultimately greater organic sales growth.

o    Increasing  business  development efforts to support the Company's cellular
     communications strategy. We anticipate this focus will result in additional
     relationships  in the areas of licensing and strategic  partnerships.  This
     will enable our reagent development and manufacturing  expertise to be more
     easily exploited in novel platforms and technologies.

o    Evaluating potential  acquisition targets that will complement our existing
     core  competencies  and further  strengthen our position in core proteomics
     markets.

PRODUCTS

We offer over 3,650 products, which we group into the following product lines:

o    assays

o    antibodies

o    bioactive proteins and peptides

o    oligonucleotides

o    serum, buffers and media

ASSAYS

ENZYME-LINKED  IMMUNOSORBENT  ASSAY  ("ELISA")  TEST  KITS.  We  have  developed
reagents and  methodologies  for the  measurement of cytokines and chemokines in
blood or  other  biological  samples.  ELISA  test  kits  are a  combination  of
cytokines, their antibodies and other chemical reagents, and are used to measure
the presence or quantity of a particular  bioactive protein in serum,  plasma or
other biological  sample. The quantitation of these cytokines and chemokines has
been shown to be an excellent way for  scientists  to determine  the  functional
status of the immune system. Since many of the current targets of pharmaceutical
intervention   are  designed  to  modulate  the  immune   system,   using  these
quantitation  markers as a means for gauging the  effectiveness  of treatment is
becoming a key monitor.


                                       3


<PAGE>


In a typical  ELISA  test kit,  an  antibody  is  immobilized  or  "bound"  on a
microtiter well of the kit's test plate. A sample containing the antigen that is
to be  measured is added by the  researcher  and allowed to react with the bound
antibody.  After the well is washed, a second antibody with a specific enzymatic
tag is added and allowed to react with the bound antigen. After washing away any
remaining free antibody, the researcher adds a substrate that produces a colored
reaction.  The amount of color is proportional and thereby  indicates the amount
of antigen present, which can be measured even in minute  concentrations,  using
common laboratory instruments. This method of quantitation of these antigens has
become an  integral  tool both in research  and  diagnostic  applications  as it
provides a relatively inexpensive,  accurate and rapid method for the evaluation
of immune status.

Our ELISA tests produce  results in a few hours,  compared to days or even weeks
with bioassays.  We offer kits for human, mouse, rat, monkey and swine proteins.
The  diversity  of species is  important  to allow  investigators  to  establish
numerous  measurements in pre-clinical  animal model systems.  We offer over 390
types of ELISA kits and we believe we are the leader in sales of rat, monkey and
swine cytokine ELISA kits. Detection of fluctuations in cytokine levels by ELISA
tests,  whether in an in-vitro  cell  culture  experiment  of a new drug or in a
patient's serum, provide researchers and scientists with valuable information in
understanding disease progression, therapy and diagnosis.

An alternative  method to our ELISA test kits are our Muliplex Antibody kits for
use in products manufactured by Luminex Corporation,  a third party, which allow
measurement of several proteins  simultaneously in a single sample,  saving time
and effort as well as the  precious  sample.  Our menu has  rapidly  expanded to
include kits for the measurement of human, mouse and rat cytokines,  chemokines,
growth  factors  and  cell  biology  markers.   The  multiplex  kits  allow  for
investigators  to  establish  screens for drug  targets and  inhibitors  in cell
culture  samples or to determine the diagnostic  value of a panel of proteins in
human patient serum or plasma samples.

Of the more than 390 kits we offer, the following table illustrates a few of the
more common applications of our ELISA test kits:

  Test Kit                        Characteristics/Application
  --------     -----------------------------------------------------------------

     Tau       This kit detects and quantitates the presence and phosphorylation
               state of an important brain protein thought to be involved in the
               development of Alzheimer's disease. When this protein is modified
               in the cell by the addition of phosphate groups at specific amino
               acid sites, the biological  activity of the protein  changes.  In
               certain disease states, abnormally high levels of phosphorylation
               occur,   which  cause  the  protein  structures  to  destabilize,
               ultimately  leading  to  neuronal  degeneration.   Deposition  of
               filamentous tau is implicated in other neurodegenerative diseases
               including   cortical  basal   degeneration   (CBD),   progressive
               supranuclear  palsy (PSP),  Pick's disease,  and certain forms of
               Parkinson's   disease.   Pharmaceutical   companies   are  keenly
               interested in developing drugs that can halt specific patterns of
               phosphorylation  without  hampering  normal  cell  activity.  The
               ability to quantitate the phosphorylation state at specific sites
               will assist this effort.

     Rb        This kit detects and quantitates the presence and phosphorylation
               state of an important cellular regulation protein associated with
               cell division.  This protein,  known as Retinoblastoma protein or
               Rb, is one focus of  efforts to develop  anti-cancer  drugs.  The
               activity of Rb is controlled by phosphorylation of the protein at
               specific amino acids by a select group of protein  kinases called
               cdks. If too much  phosphorylation  of Rb occurs,  its ability to
               halt  cell  division  is  hampered,  as is the case in  malignant
               cells.  The  ability  to  specifically  quantitate  the  level of
               phosphorylation  of this  protein  by  kinases  and the impact of
               kinase inhibitors on normal and abnormal phosphorylation is a key
               development in the drug development process.

      IL-6     This kit detects and  quantitates  a cytokine  that is  extremely
               important  in the study of  inflammation.  IL-6 is  produced by a
               number of cells in the body and its actions  regulate  the growth
               and  differentiation of various cells of the immune system.  IL-6
               induces a variety of  important  proteins in the body in response
               to   inflammation   or  tissue  injury.   Although  most  healthy
               individuals have undetectable levels of IL-6 in their serum, huge
               quantities of IL-6 are


                                       4


<PAGE>


               detected in severe  inflammatory  situations  such as septicemia.
               The  elevation  of  serum  IL-6  precedes  that  of  acute  phase
               proteins, e.g., in a postoperative phenomenon,  and may thus be a
               sensitive early parameter to investigate inflammatory conditions.
               Serum levels of IL-6 are used in studies of surgical or traumatic
               tissue  injuries,   infectious  diseases,   auto-immune  diseases
               including arthritis, graft rejection,  alcoholic liver cirrhosis,
               malignancies, etc.

RADIOIMMUNO-ASSAYS   ("RIA").  We  produce  and  market  RIAs,  which  are  used
internationally  in clinical  laboratories  for the  measurement of hormones and
proteins  important in growth,  reproductive and thyroid  disease.  These assays
utilize  radioisotopically  labeled  molecules to compete with  non-isotopically
labeled  molecules for sites on known antibody  concentrations.  RIA is a mature
technology  used  primarily in European and other  foreign  countries and is not
widely used in the United States.

OTHER ASSAYS.  We have combined our  oligonucleotide  and ELISA  technologies to
develop a portfolio  of other assay kits that  measure the quantity of messenger
RNA, the type of RNA that serves as a template for protein synthesis, of various
cytokines  in blood,  cultured  cells or tissues.  Our  molecular  analysis  kit
product line permits  detection of the individual  genes,  and  quantitates  the
amount of the gene that encodes for a specific  protein.  We also have developed
kits that allow  researchers  to measure  multiple genes at the same time from a
single sample.

ANTIBODIES

Antibodies  are used as detector  systems in the research of normal and abnormal
proteins.  Antibodies  are  proteins  generated  by immune  cells in response to
foreign  substances,  which are called antigens.  Antibodies have specific amino
acid sequences,  which cause them to interact only with the antigen that induced
their creation.  Antibodies  circulate in the blood and assist the body's immune
system by searching out and neutralizing or eliminating antigens. Antibodies are
used by  researchers  in a variety  of  applications,  including  neutralization
studies in bioassay  systems,  as capture and  detection  molecules  for protein
quantitation and for cellular  differentiation.  Antibodies used in research are
generally  produced  by  injecting  an antigen  into  animals,  which  cause the
animals' immune system to produce an antibody specific to that antigen.

Our secondary  antibody  product line  provides  researchers  and  biotechnology
companies with a broad array of high quality reagents used to develop analytical
signals in various  assays.  In  addition,  other  companies  use our  secondary
antibodies as a component of their test kits.

We also have developed a significant  catalog of innovative signal  transduction
tools that enable  customers to more  readily  understand  the complex  signals,
which  control  cellular  processes.  Many of these  tools are  antibodies  that
recognize specific, activated or inactivated forms of proteins containing one or
more  molecules of phosphate  at specific  sites.  Such an addition of phosphate
molecules,  which is referred  to as  phosphorylation,  or removal of  phosphate
molecules,  which  is  referred  to as  dephosphorylation,  control  most of the
signaling within and between cells.  Diseases such as cancer,  heart disease and
Alzheimer's have been shown to be at least in part due to the  malfunctioning of
key molecules  within cells,  in many cases due to alterations in their activity
through altered phosphorylation.

We offer over 1,650 antibody  products.  The following table illustrates some of
the uses for the antibodies we offer:

      Uses                                  Description
--------------      ------------------------------------------------------------
Flow Cytometry      In order to  identify  specific  cell types by the nature of
                    the antigens  expressed  on their  surface,  antibodies  are
                    bound to cells  and  visualized  by  labeling  the  antibody
                    molecules  with a  fluorescent  dye or  "fluorochrome."  The
                    result  is  examined  with  an  instrument  known  as a flow
                    cytometer.

ELISA Test Kits     Antibodies  are used in our ELISA  test  kits to detect  and
                    measure  proteins  in  biological  fluids.  An  antibody  is
                    coupled  with  an  enzyme  which  reacts  with  a  colorless
                    substrate in the presence of a sample containing the antigen
                    of  interest  to


                                       5


<PAGE>


                    generate a colored reaction  product.  The color produced is
                    proportional  to,  and  thereby  indicates  the  amount  of,
                    antigen present in the sample.

High Throughput     High throughput  screening  permits the researcher to screen
                    test thousands of drug  candidates in a short period of time
                    for their effect on target molecules. In order to be used in
                    this manner,  we conjugate our  antibodies to different dyes
                    or enzymes.

Immunoblotting      Immunoblotting   uses  antibodies  to  identify  a  specific
                    protein in a complex mixture.  In this process, a protein of
                    interest  is  separated   by  molecular   weight  using  gel
                    electrophoresis. A specific antibody is then passed over the
                    mixture,  and any  protein  that  binds to the  antibody  is
                    visibly detected.

The research  conducted by our  customers  often  requires  that we  manufacture
unique, specific peptides or antibodies for custom research projects. Previously
unidentified  genes and proteins  are being  identified  at a rapid rate,  which
often precedes the  introduction  of catalog  offerings by many months to years.
Through our Massachusetts  facility we engage in the manufacture of these custom
peptides and antibodies  thus allowing  customers to perform timely  research on
these new or proprietary  targets.  The  capabilities to provide custom peptides
and antibodies as well as innovative  catalog products  further  strengthens our
strategic relationships with our customers and has led to the development of new
catalog products and expanded sales opportunities.

BIOACTIVE PROTEINS AND PEPTIDES

Proteins,  which are chains of amino acids in  particular  sequences,  and their
interactions are responsible for all of the biochemical and physical  properties
of a cell, as well as variations  among different types of cells.  Proteins take
various forms, including enzymes, hormones, antibodies, receptors, cytokines and
chemokines.  Proteins  are  ideal  for use in basic  research,  drug  discovery,
enzymology, high throughput screening, in vivo studies, x-ray crystallography or
as antigens for antibody production.  Our primary protein products are cytokines
and  chemokines,   which  are  regulatory  molecules  that  control  growth  and
differentiation of cells.

CYTOKINES.  The  development of an effective  immune response  involves  complex
cell-to-cell communications, which are mediated by a group of small hormone-like
soluble secreted proteins collectively called cytokines.  Cytokines, like growth
factors,  interact with specialized target receptors on the surface of the cells
and stimulate a chain of secondary  messengers leading to a biological response.
These  responses  result from  changes in both the  molecular  capabilities  and
behaviors of cells.  For example,  cytokines can activate cells to recognize and
eliminate  harmful bacteria and viruses.  They carry vital signals to the cell's
genetic  machinery  that can trigger it to grow or stop  growing.  Cytokines can
also signal a cell to differentiate,  that is, to acquire the features necessary
for it to take on more specialized tasks.  Specific cytokines play a key role in
stimulating  cells surrounding a wound to grow and divide and also in attracting
migratory  cells to the site.  Some  cytokines have a regulatory  function,  and
other cytokines exert direct effects of their own.

Cytokines  are  extracted  from  natural  sources,  such  as  human  and  animal
platelets,  white blood  cells and  lymphatic  cells,  or are  produced  through
genetic  engineering,  also  known  as  recombinant  DNA  technology.  Cytokines
coordinate and  orchestrate  the proper  functioning  of the immune  system.  In
addition to  producing  the human  cytokines,  we also  produce  the  equivalent
proteins  from  mice,  rats,  swine  and  monkeys.   Many  cytokines  are  being
investigated for their ability to activate or suppress host immunity.  Cytokines
and other similar growth factors and adhesion  molecules are instrumental in the
body's defense against cancer, AIDS and other life- threatening disorders.

CHEMOKINES.  Chemokines are specific  proteins that regulate the recruitment and
activation  of white  blood cells and other  sites of  inflammation.  Chemokines
function by binding to  receptors on the surface of affected  cells.  Tremendous
interest in chemokines exists due to recent studies linking chemokines and their
receptors to the development of HIV.

OTHER  PROTEINS.  To date we have focused on  cytokines,  chemokines  and growth
factors;  however,  with the  progress  of the  human  genome  project,  protein
discoveries will expand beyond these proteins.  Signal transduction proteins, of
which it is  hypothesized  that only a fraction  have been  discovered,  will be
important in


                                       6


<PAGE>


high throughput  screens of drug candidates  since the irregular  functioning of
these  proteins  is  involved  in  substantially  all  diseases.   Additionally,
researchers will want reagents to the nuclear  proteins,  cytoskeletal  proteins
and others  that will be  discovered  to study  their role in various  diseases.
Reagents to these markers can be created using our core competencies.

We offer over 360  protein  products.  The  following  table  shows  examples of
different cytokines we produce and
use:
Cytokine                                  Research Uses
--------          --------------------------------------------------------------

   IL-4           Interleukin  4 is a  protein  that has been  observed  to have
                  direct   growth-suppressive   activity   on   a   variety   of
                  malignancies. IL-4 is used in cancer research.

   VEGF           Vascular Endothelial Growth Factor regulates angiogenesis, the
                  process  of new  blood  vessel  growth.  VEGF  is used in drug
                  development,  cancer  research  and  as a  growth  factor  for
                  endothelial cells.

   TNF            Tumor Necrosis  Factor is a protein that plays a vital role in
                  the  regulation  of the  immune  system.  TNF is used to study
                  immunological  processes,   cancer,  inflammation  and  septic
                  shock.

PEPTIDES.  Bioactive peptides are subsections of proteins or small proteins that
are  synthetically  created.  These peptides  represent the active or inhibitory
site of a  particular  protein,  and are used to study the  activity  of various
proteins.  Some bioactive  peptides,  such as beta amyloid  peptides,  have been
shown to play a major role in the development of Alzheimer's Disease.

OLIGONUCLEOTIDES

The  production  of   oligonucleotides  is  a  custom  service  we  provide  for
researchers  engaged in molecular  biology.  An oligonucleotide is a synthesized
polymer  made  up  of  the  same  building  blocks  that  form  DNA.   Synthetic
oligonucleotides  have been used in  molecular  biology for over  twenty  years,
essentially  as  templates  for  nucleic  acid and protein  synthesis,  and more
recently,  as the therapeutic agents for the inhibition of gene expression or as
a diagnostic agent to identify  disease.  DNA is used by almost every discipline
in  biomedical  research  in  both  academic  and  commercial  areas,  including
molecular  biology  and  cell  biology  departments  of major  universities  and
biomedical  companies  developing gene therapy  products.  These researchers use
synthetic  oligonucleotides  to determine  the exact  sequence of a gene,  or to
perform  experiments  leading to the  potential  development  of  pharmaceutical
drugs.  The primary use of the  oligonucleotides  we develop and sell is for DNA
sequencing and polymerase chain reaction, or PCR, priming.

In  DNA  sequencing,   we  synthesize   oligonucleotides  pursuant  to  customer
specifications, which they use to initiate a process of sequencing a DNA strand.
DNA sequencing is used in a wide range of biomedical  research  applications  to
identify the makeup of particular strands of DNA.

In PCR priming,  our synthesized  oligonucleotides  are used by our customers in
combination with other reagents to amplify a specific genetic sequence  isolated
from a cell sample.  After PCR  amplification,  gel  electrophoresis  is used to
identify and even to quantitate a specific DNA or RNA sequence from that sample.
PCR is an extremely  powerful tool in molecular  biology research because it can
amplify  genetic  information  from a  single  copy  of DNA or  RNA.  Using  PCR
technology,  the presence of the genetic message used to code for the production
of protein can be identified,  thereby  offering  numerous  possibilities in the
detection  of  genetic  disorders,   monitoring  disease  progression,   and  in
understanding cellular functions.

Genomics research requires large quantities of oligonucleotides.  DNA arrays for
expression  profiling and single nucleotide  polymorphism,  or SNP, analysis all
require the use of synthetic DNA oligonucleotides.  In addition, high throughput
screening  techniques,  used  in drug  discovery  are  incorporating  the use of
fluorescent  modified DNA  oligonucleotide  probes to detect and quantify target
gene  expression.   We  have  developed  technologies  to  rapidly  produce  and
manufacture  large  number of high  quality DNA  oligonucleotides  for DNA array
construction and developed proprietary processes to produce fluorescent probes.


                                       7


<PAGE>


The following  table  illustrates  some of the uses for the DNA  oligonucleotide
services we offer:

  Uses                                  Applications
-------       ------------------------------------------------------------------

Primers       Oligonucleotides are used in the initiation of the PCR process.

Probes        DNA oligonucleotides  are used in hybridization  reactions for the
              Real Time PCR  quantitation.  Probes are duel labeled  fluorescent
              probes used in real time PCR quantitation and molecular diagnostic
              analysis.  We offer three different  styles of FRET probes for our
              customers,  including the highly sensitive  BioSource Grove Binder
              ("BGB") probe for SNP analysis..

Arrays        Oligonucleotides  are  used  on a solid  matrix  to  profile  gene
              expression or single nucleotide polymorphisms, or SNP's.

SERUM, BUFFERS AND MEDIA

We manufacture over 245 serum, media and buffer products in our catalog. We also
offer custom formulation  services for unique  applications.  These products are
vital in growing  specialized cell cultures.  In most cases, cell cultures are a
primary testing method for the effectiveness of vaccines and drugs for a variety
of diseases.

CUSTOMERS

We have over 6,000 customers worldwide.  No single customer accounted for 10% or
more of our total  revenue  during any of the last three  years.  Our  customers
include:

    PHARMACEUTICAL            BIOTECHNOLOGY                UNIVERSITIES

     Astra Zeneca                 Amgen            Brigham and Women's Hospital
Aventis Pharmaceuticals           Biogen            Baylor College of Medicine
 Bristol Myers Squibb            Exelexis               Columbia University
       Eli Lilly                Genentech             John Hopkins University
   Glaxo Smithkline       Human Genome Sciences                UCLA
    Merck & Company               Hyseq                  UC San Francisco
        Pfizer                  Millennium          University of Pennsylvania
      Pharmacia              Pharmaceuticals     University of Texas MD Anderson
   Schering-Plough        Rigel Pharmaceuticals      Cancer Research Center
     Wyeth-Ayerst                Tularik            University of Washington
                               Zymogenetics                at St. Louis


         GOVERNMENT

 Centers for Disease Control
Food and Drug Administration
  National Cancer Institute
National Institutes of Health
     VA Medical Centers
U.S. Army Research Institute


RESEARCH AND DEVELOPMENT

As a reagent company with significant internal R&D and manufacturing capability,
BioSource  strives to produce  uniquely  capable reagents to markers of interest
for the academic and pharmaceutical  community.  Reflecting our strategy, we are
pursuing development in high-growth markets.  Traditionally, we have focused our
research  and  development  in the area of  extracellular  signaling  molecules.
BioSource  has  been  predominantly  known,  in this  respect,  for our  work in
cytokines,  chemokines  and  growth  factors.  These  proteins  act as  chemical
communicators especially in the immune system and are critical to the maturation
and function of normal cells.  These proteins continue to play an important role
as indicators of the health of the immune system and are thus indicators of some
disease processes.  We will continue to leverage this immunological expertise to
appropriately  expand our product  offerings in this area. We have also achieved
success in  extending  our  product  lines into  intracellular  signaling,  more
commonly known as signal  transduction.  Signal transduction is a market that is
growing in importance  as  researchers  begin to understand  its central role in
disease  and its  significance  as  targets  for drug  therapy.  We also plan to
exploit the increasing demand for new high-content and high-throughput platforms
that enable  pharmaceutical  and  biotechnology  companies to fully  realize the
opportunities represented by the sequencing of the human genome.


                                       8


<PAGE>


Therefore,  our current  research and development  activities are focused in the
following areas:

o    Development of reagents for new detection  technologies and assay platforms
     for the growing high-content and high-throughput screening markets.
o    Selective  addition of new cytokine,  chemokine  and growth  factors to our
     existing product offerings.
o    Development of new signal transduction reagents.

As of March 1,  2003,  we  employed  53  research  scientists,  18 of whom  hold
Ph.D.'s.  Among these professionals are experts in peptide chemistry,  molecular
biology, immunology and signal transduction.  In particular,  their knowledge is
fundamental  to  the  development  of  peptides,   oligonucleotides,   proteins,
antibodies and assay kits. Our research  laboratories  are located in Camarillo,
California;  Hopkinton,  Massachusetts; and Nivelles, Belgium. In the year ended
December 31, 2002, we introduced over 500 new products,  of which  approximately
70% were developed by our scientists.  In addition,  as of March 7, 2003, we had
approximately 200 products under development. We spent approximately $6,187,000,
$3,986,000,  and $3,575,000 on research and development in 2002,  2001, and 2000
respectively. Research and development spending represented approximately 15% of
net sales in 2002 and 11% of net sales in 2001 and 2000.  In 2003,  our research
and development spending is projected to be approximately 15% - 17% of sales - a
dollar  increase  from  2002 of  approximately  $1.5  million.  We  expect  this
investment to result in a higher rate of product introduction,  increased levels
of novel products and transfer of existing products into novel platforms.

MANUFACTURING

Our  reagent  products  and  ELISA  test  kits are  manufactured  in  Camarillo,
California.  We manufacture  oligonucleotides at our laboratories located at our
facilities in Foster City,  California.  Our custom  peptides and antibodies and
other  antibodies are  manufactured  at the laboratory  facilities in Hopkinton,
Massachusetts.  Our serum,  buffers and media are manufactured at our facilities
in Rockville,  Maryland.  We also  manufacture  antibodies and assay kits at our
European facility in Nivelles,  Belgium. We currently  manufacture  products for
inventory and ship products  shortly after receipt of orders and anticipate that
we will  continue to do so in the future.  Accordingly,  we have not developed a
significant backlog of products and do not anticipate we will develop a material
backlog of products in the future.

Labeling,  packaging,  and  shipping  are  carried  out  independently  at  each
facility. We purchase our packaging components from outside suppliers who follow
our own custom  packaging  designs.  We have an internal graphic arts department
located at our  Camarillo,  California  facility  that designs our packaging and
marketing  materials.  We believe there are numerous available suppliers for our
packaging components.

We believe that we have  adequate  supplies of raw materials on hand to continue
to  manufacture  almost all of our products and meet customer  demand,  and that
those  materials that we do not produce  internally  are readily  available from
multiple sources.

SALES AND MARKETING

We have 32  sales  representatives  worldwide.  The  principal  markets  for our
products are in the United States,  Japan and Western  Europe.  We have a direct
sales  force  strategically  located in major  metropolitan  areas in the United
States.  The use of a direct  sales  force  provides us with an  opportunity  to
discuss  directly with researchers and scientists new developments and trends in
the industry.  We advertise in various  scientific trade journals and distribute
our own product catalog to all current and selected potential customers. We sell
to our international  markets directly through our European  subsidiary,  and we
use international  distributors  that specifically  target selected foreign life
science markets.

Our sales people hold a minimum of a biological  sciences  undergraduate  degree
and undergo  training in the nature and  application  of our products and proven
selling  techniques.  We believe that by investing in the scientific training of
our  sales  force,  we are  able to  determine  the  needs  of  researchers  and
scientists  in the  biomedical  community.  Our sales  force is used to  provide
valuable feedback for product  development.  Each  representative is responsible
for the  maintenance  of  existing  accounts  as well as the  generation  of new
business.


                                       9


<PAGE>


Representatives  are paid a base salary and  commissions.  The  commissions  are
based upon sales growth over previous years' sales levels.

Besides the United  States,  we sell directly into  Germany,  Belgium,  Holland,
Denmark,  Sweden,  Norway, Finland and the United Kingdom. We also use a network
of international  distributors  covering over 40 other  countries.  We utilize a
network of both exclusive and non-exclusive international  distributors,  but we
generally  grant  exclusive  distribution  rights  only  where  the  distributor
maintains direct field representatives  proportionate to the potential for sales
of our  products  in a  defined  geographical  area.  In  order  to serve as our
distributor,  the  distributor  must agree to and meet  acceptable  annual sales
goals.  We offer  all of our  distributors  annual  training  to  enhance  their
knowledge  of our  products as well as their  respective  applications,  solicit
requests for new products and ultimately to increase sales.

SEGMENT INFORMATION

The  Company  operates  primarily  in  one  industry  segment,   the  licensing,
development,  manufacture, marketing and distribution of biological reagents and
test kits used in biomedical  research.  For information  regarding the revenues
and assets associated with the Company's geographic segments, see Note 11 of the
Notes to the Company's  Consolidated  Financial Statements included elsewhere in
this filing.

COMPETITION

We are engaged in a segment of the health care products  industry that is highly
competitive.  Our primary  competitors include  biotechnology  companies such as
Techne Corporation, BD BioSciences, New England Biolabs, and Invitrogen. Many of
our  competitors  have been involved in the health care  industry  significantly
longer than we have and benefit from greater name recognition. In addition, many
of our competitors have greater resources to devote to research and development,
sales and marketing and occasionally engage in price cutting measures to achieve
leadership in their field. However, we believe that by offering a very broad and
complete product line that enables the end user to obtain many products from one
source we gain a competitive advantage. In addition,  competition in our markets
generally focus on the following factors:

o    quality

o    speed of delivery

o    application/customer support

o    breadth of product offerings and

o    price

PATENTS AND TRADEMARKS

We are  currently  seeking  and  intend to seek  patent  protection  on  certain
proprietory  technologies.  Although  our intent is to protect our  interests in
select  technologies,  there is no guarantee that these patents will be granted,
or if granted,  be effective in fully protecting the use of these  technologies.
We also seek to protect our  interests  by  treating  certain  technologies  and
know-how as trade  secrets and by requiring all  employees  and  contractors  to
execute   invention   and   assignment   agreements   with  us,  which   include
confidentiality provisions.

"PhosphoELISA,"  "BGB,"  "Messagescreen,"   "TAGOImmunologicals,"  "Cytoscreen,"
"Primescreen,"  "Cytosets" and "Flexia" are unregistered product trademarks used
for some of our  products,  but are only of limited  importance to our business.
"Biofluids"  is  also  a  registered  trademark  we  acquired  as  part  of  our
acquisition of Biofluids in December 1998.


                                       10


<PAGE>


GOVERNMENT AND ENVIRONMENTAL REGULATION

Except as we indicate in the following paragraph,  approval by the Food and Drug
Administration is not required for the sale of any of our products in the United
States  because  our  products  are  marketed  and sold for  research  use only.
Research  products  are not  currently  required  to comply with the lengthy FDA
approval  process  associated  with diagnostic or therapeutic  products.  In the
event we  develop  products  directly  for the  diagnostic  market in the United
States,  we will be required to obtain FDA approval prior to selling them.  This
approval, if required, could be time consuming and costly.

Some of our  products,  however,  are used by our  customers as raw materials or
intermediates  in the  production of diagnostic  products.  As such, we received
clearance  by  the  State  of  California  and  the  FDA  to   manufacture   our
TAGOImmunologics  product line as Analyte Specific Reagents.  These reagents are
classified as Class I biologics  that are  manufactured  in compliance  with the
FDA's Quality System Regulation, also known as cGMP. This registration allows us
to market these products to clinical  laboratories and manufacturers of in vitro
diagnostic products.

We believe that we are materially in compliance with the Occupational Safety and
Health Act, the Environmental  Protection Act, the Toxic Substances Control Act,
and other similar laws of general application.

Our European subsidiary's clinical products are produced in facilities that have
achieved  ISO 9001  certification,  and are  eligible  to be used in Europe  for
clinical  diagnostics.   In  all  of  our  markets  in  which  we  sell  through
distributors,   our   distributors  are  responsible  for  compliance  with  the
applicable governmental regulations.

Except  as we  indicated  above,  we are  not  subject  to  direct  governmental
regulation  other  than  the  laws  and  regulations   generally  applicable  to
businesses in the  jurisdictions in which we operate,  including those governing
the handling and disposal of hazardous wastes and other  environmental  matters.
Our research and  development  activities  involve the  controlled  use of small
amounts of hazardous materials,  chemical and radioactive compounds. Although we
believe that our safety  procedures for handling and disposing of such materials
comply with  applicable  regulations,  the risk of accidental  contamination  or
injury from these  materials  cannot be completely  eliminated.  In the event of
such an accident,  we could be held liable for resulting damages. This liability
could have a material adverse effect on us.

EMPLOYEES

As of March 1, 2003,  we employed 296  individuals,  291 of whom were  full-time
employees. Twenty one of our employees at that date had doctoral degrees.

None of our employees in the United States is represented  by a labor union.  As
of March 1, 2003, 60 of our 296 employees worked for our Europeon  subsidiary in
Belgium.  As is  customary  under  Belgian  labor law,  employees of our Belgian
subsidiary,  BioSource  Europe S.A., are  represented by two national unions who
represent  employee  interests  to  the  national  chemistry  industry  employer
organization.  We  believe  we  are  in  compliance  with  these  Belgium  legal
restrictions.  We consider  our current  Belgium  subsidiary  employee and labor
relations to be good.

Pursuant  to  Belgian  law,  we have in the  past  been  subject  to  heightened
restrictions  related  to union  representation  for works  councils  and safety
councils  applicable  to  companies  with more  than 50  employees.  Because  we
employed less than 50 employees at our Nivelles, Belgian facility in 2000, these
heightened  restrictions  terminated  in April  2000.  If we employ more than 50
employees  as  determined  under  Belgium  law,  then at the  time  of the  next
elections for works  councils and safety  councils that will occur in 2004,  the
heightened restrictions for certain employees will again be applicable to us.

ITEM 2.    PROPERTIES

In June 1996, the Company secured financing from Heller Financial Corp. in order
to partially finance the purchase of its previous  corporate  headquarters.  The
original  loan  principal  was $745,000 and was secured by a first trust deed on
the  property.  The loan bore interest at a rate of 9.4% and had a 20-year term.
In addition,  in


                                       11


<PAGE>


June 1996, the Company obtained a loan from the Small Business Administration in
order to partially finance the purchase of the previous  corporate  headquarters
building.  The original loan  principal was $616,000 and was secured by a second
trust deed on the  property.  The loan bore interest at a rate of 7.6% and had a
20-year term.  Payments to both Heller  Financial  Corp.  and the Small Business
Administration  were  guaranteed  by the  previous  chairman of the board of our
Company.

In November  2000,  the Company  completed  the sale of its  previous  corporate
headquarters.  In  conjunction  with this sale,  the Company paid the  remaining
$672,100  balance  due on the  Heller  Financial  Corp.  loan and the  remaining
$543,600 due on the Small Business  Administration loan. As a result of the sale
of the  building,  the Company  recognized  a loss of $99,300 in 2000,  which is
shown in other income  (expense) in the accompanying  consolidated  statement of
operations.

In March 2000, the Company  entered into a lease for a new facility at 542 Flynn
Road  in  Camarillo,   California,   and  relocated  its  previous  offices  and
laboratories  to this new  location  in July  2000.  The new  building  contains
approximately  51,821  square  feet  and  is  situated  in  an  industrial  park
approximately  two blocks from the previous  corporate  headquarters.  The lease
commenced  on May 1, 2000 and runs  through  June 30,  2005,  with the option to
continue the lease for two additional five-year terms. Monthly lease payments in
2003 are approximately  $31,000.  The new facility has several laboratory areas,
including  molecular biology facilities,  a protein  purification  facility,  an
oligonucleotide  facility, and an assay development and manufacturing  facility,
as well as ELISA  development  and  manufacturing  space and cold storage  rooms
sufficient to accommodate our current and anticipated future needs.

We lease a facility in Foster City, California,  approximately 20 miles south of
San  Francisco,  which  consists of  approximately  6,600 square feet,  of which
approximately 6,000 square feet is our oligonucleotide laboratory, under a lease
that  expires in May 2006.  Monthly  lease  payments  in 2003 are  approximately
$13,700.

We also lease a facility in  Hopkinton,  Massachusetts,  approximately  25 miles
west of Boston,  which  consists of  approximately  11,500 square feet, of which
approximately  7,000 square feet is laboratory  space,  under a lease originally
expired in April 2001. In February 2001,  the Company  amended its current lease
in Hopkinton, Massachusetts. The amended lease extends the term of the lease for
five  additional  years,  through May 2006.  Monthly lease  payments in 2003 are
approximately $11,000.

In January  2002,  the  Company  leased an  additional  facility  in  Hopkinton,
Massachusetts,  which  consists of  approximately  10,500  square feet, of which
approximately  7,000 is laboratory space, under a lease that expires in January,
2007. Monthly lease payments in 2003 are approximately $16,000.

We lease a facility in  Rockville,  Maryland,  which  consists of  approximately
11,500 square feet of warehouse,  manufacturing, and office space, under a lease
that  expires in May 2004.  Monthly  lease  payments  in 2003 are  approximately
$14,000.

Our European subsidiary leases facilities in Nivelles,  Belgium,  which consists
of  approximately  30,000 square feet of  manufacturing,  laboratory  and office
space,  under a lease that expires in March 2007. Monthly lease payments in 2003
are approximately $19,000.

Additional small sales offices are located in Germany and Holland.

We believe that all of our  facilities  are in good  condition,  are  adequately
covered  by  insurance  and will be  adequate  for our  occupancy  needs for the
foreseeable future.

The Company's  lease  commitments  for the above  referenced  properties make up
substantially  all of the  Company's  total lease  commitments.  At December 31,
2002,  total future minimum  payments  under all of the Company's  leases are as
follows (in thousands):


                                       12


<PAGE>


     2003........................................  $   1,440
     2004........................................      1,340
     2005........................................      1,048
     2006........................................        579
     2007........................................         53
     Thereafter..................................         --
                                                   ---------

                                                   $   4,460
                                                   =========

ITEM 3.    LEGAL PROCEEDINGS

The  Company is  involved  in  various  claims and  lawsuits  incidental  to its
business. In the opinion of management,  these claims and suits in the aggregate
will not  materially  affect the  financial  position,  results of operations or
liquidity of the Company.

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

No matter was  submitted  to a vote of our  security  holders  during the fourth
quarter of our last fiscal year.

                                     PART II

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

Our  common  stock is traded on the  Nasdaq  National  Market  under the  symbol
"BIOI." The following table sets forth, for the periods indicated,  the high and
low closing  sales price per share of our common stock as reported on the Nasdaq
National Market.

                                                         High           Low
                                                        ------        ------
     2001 Fiscal Year
         First Quarter                                  $13.69        $ 6.00
         Second Quarter                                  10.45          6.00
         Third Quarter                                    7.25          5.10
         Fourth Quarter                                   8.30          5.00
     2002 Fiscal Year
         First Quarter                                  $ 8.20        $ 5.19
         Second Quarter                                   6.16          5.86
         Third Quarter                                    6.08          4.89
         Fourth Quarter                                   6.31          5.50
     2003 Fiscal Year
         First Quarter, through March 18, 2003          $ 6.95        $ 5.83


On March 18,  2003,  the  closing  sale price of our common  stock on the Nasdaq
National Market was $6.20. As of March 18, 2003,  there were 9,608,005 shares of
our common stock outstanding held by approximately 484 holders of record.

On January 10, 2000, the company  entered into a securities  purchase  agreement
with Genstar  Capital  Partners  II, L.P. and Stargen II LLC,  both of which are
accredited  investors as such term is defined in Rule 501 of Regulation D of the
Securities Act of 1933. Pursuant to this agreement, the Company sold Genstar and
Stargen a total of 371,300  shares,  including  364,244 to Genstar  and 7,056 to
Stargen, of our $.001 Series B Redeemable  Preferred Stock for $9,000,312 in the
aggregate.  These  shares were  convertible  into  1,485,200  shares,  including
1,456,976 for Genstar and 28,244 to Stargen,  of the Company's  common stock. In
addition, the Company issued Genstar and Stargen warrants to purchase a total of
1,287,000 shares of common stock,  including  1,262,542 to Genstar and 24,458 to
Stargen,  exercisable at $7.77 per share.  Under the investor  rights  agreement
among


                                       13


<PAGE>


Genstar,  Stargen and the Company,  executed in connection  with the  securities
purchase  agreement,  Genstar and Stargen also have the right to appoint two out
of our seven  directors to our board of  directors as long as they  beneficially
own, in the aggregate,  at least 750,000 shares of common stock, or one director
if they  beneficially  own at least  495,000  shares.  Pursuant to the  investor
rights  agreement,  Jean-Pierre L. Conte, a Managing Director of Genstar Capital
LLC,  and  Robert J.  Weltman,  a Vice  President  of Genstar  Capital  LLC were
appointed to our board of directors.  Genstar and Stargen also have the right of
first  refusal  to  purchase  additional  shares  and the right to require us to
register the shares of our common stock  underlying the preferred  stock and the
warrants.  The consummation of the securities purchase agreement,  including the
issuance of the shares of Series B Preferred Stock and the warrants, occurred on
February 15, 2000.

The Series B Redeemable  Preferred  Stock had an initial  aggregate  liquidation
value of  $9,000,312.  The  Series B  Redeemable  Preferred  Stock  shares  were
entitled  to receive  dividends  at an annual rate of 8% of the  original  issue
price.  Unless all dividends on the  outstanding  Series B Redeemable  Preferred
Stock shares were paid, no dividends or other  distributions  were to be paid to
Common Stock shareholders.  The Series B Redeemable Preferred Stock shareholders
had liquidation  preference to the Common Stock  shareholders.  On September 20,
2000,  pursuant to the terms of the  Certificate  of  Designation of Preferences
Rights and  Limitations of our Series B Redeemable  Preferred Stock and $432,400
of redeemable preferred dividends were converted into 1,556,574 common shares at
$6.06 per common share or $9,432,700.  Total non-cash  preferred stock dividends
and effects of  beneficial  conversion  related to the  preferred  stock totaled
$3,853,300.

In  connection  with the  issuance of Series B  Redeemable  Preferred  Stock the
holders received  detachable stock purchase warrants.  In addition,  the holders
received a beneficial  conversion with an estimated fair value of $995,100.  The
warrants are  exchangeable  for 1,287,000  shares of Common Stock at an exercise
price of $7.77 per share.  The Company  allocated the net proceeds of $8,415,200
based on the  relative  fair value of the  warrants  ($1,840,700),  the Series B
Redeemable   Preferred  Stock   ($5,579,400)   and  the  beneficial   conversion
($995,100).  The  book  value  of the  Series B  Redeemable  Preferred  Stock of
$5,579,400  accreted  to  its  liquidation  value  by  $995,100  related  to the
beneficial conversion feature and $1,840,700 upon conversion.

The Company entered into a Securities Purchase Agreement, effective as of August
9, 2000 with Genstar Capital  partners II L.P,  pursuant to which Genstar agreed
to purchase from the Company 300,000 shares of common stock at $15.00 per share.
Genstar  subsequently  assigned its rights to purchase 30,000 of these shares to
Jean-Pierre L. Conte and 3,333 of the shares to Robert  Weltman.  Both Mr. Conte
and Mr. Weltman  currently  serve on the Company's  Board of directors.  Genstar
assigned its right to purchase  another  33,334 of these shares to certain other
individuals  affiliated with Genstar. The Company also entered into a Securities
Purchase Agreement, effective as of August 9, 2000, with Russell D. Hays, former
President and Chief Executive Officer of the Company, pursuant to which Mr. Hays
agreed to purchase  40,000  shares of the  Company's  common stock at $15.00 per
share. The Company also entered into a Securities Purchase agreement,  effective
as of August 9, 2000,  pursuant to which George Uveges,  former Chief  Operating
Officer of the Company agreed to purchase 11,428 shares of the company's  common
stock at $21.875 per share. The closing of each of these  transactions  occurred
on September 28, 2000. These  transactions were exempt from  registration  under
Rule  506  of  Regulation  D of  the  Securities  Act of  1933,  and  all of the
purchasers  in these  transactions  are  accredited  investors  as that  term is
defined in Rule 501 of Regulation D.

In January 2000,  the Company's  Board of Directors  approved the 2000 BioSource
International, Inc. non-qualified stock option plan (the "2000 Plan"). Under the
2000 Plan,  non-qualified  stock options may be granted to full-time  employees,
part-time  employees,  directors  and  consultants  of the Company to purchase a
maximum of 2,000,000 shares of the company's common stock. Options granted under
the 2000 Plan are generally  exercisable  at the rate of 25% each year beginning
one year from the date of grant.  The stock options  generally  expire ten years
from the date of  grant.  See note 8 of the  accompanying  audited  consolidated
financial statements.


                                       14


<PAGE>


EQUITY  COMPENSATION  PLAN  INFORMATION - The following table sets forth certain
information regarding the Company's equity compensation plans as of December 31,
2002.

<TABLE>
<CAPTION>

                           NUMBER OF SECURITIES      WEIGHTED-AVERAGE     NUMBER OF SECURITIES
                             TO BE ISSUED UPON      EXERCISE PRICE OF    REMAINING AVAILABLE OR
                                EXERCISE OF            OUTSTANDING        FUTURE ISSUANCE UNDER
                           OUTSTANDING OPTIONS,     OPTIONS, WARRANTS      EQUITY COMPENSATION
                            WARRANTS AND RIGHTS         AND RIGHTS                PLANS
                           --------------------     -----------------    ----------------------
<S>                             <C>                       <C>                    <C>
Equity compensation
plans approved by
security holders........         677,484                  $4.58                  117,009

Equity compensation
plans not approved by
security holders........        2,929,991 (1)             $7.59                  834,409
                                ---------                 -----                  -------

Total...................        3,607,475                 $7.03                  951,418
                                =========                 =====                  =======
----------
<FN>
(1)  Includes  1,287,000  warrants pursuant to a securities  purchase  agreement
     dated January 10, 2000 with Genstar Capital Partners II L.P. and Stargen II
     LLC.
</FN>
</TABLE>

In January 2000, the compensation  committee of the Company's Board of Directors
approved the 2000 BioSource International,  Inc. Non-Qualified Stock option Plan
(the  "2000  Plan").  The 2000  Plan was not  approved  by  shareholders  of the
Company.  Under the 2000 Plan,  non-qualified  stock  options  may be granted to
full-time  employees,  part-time  employees,  directors and  consultants  of the
Company to purchase a maximum of 2,000,000 shares of the company's common stock.
Options  granted under the 2000 Plan vest and are generally  exercisable  at the
rate of 25% each  year  beginning  one year  from the date of  grant.  The stock
options  generally  expire  ten  years  from the date of  grant.  Stock  options
outstanding under the 2000 Plan as of December 31, 2002 were 1,642,991.

The Company also has stock option  agreements that are outside the 2002 Plan and
the Company's 1993 Stock Option Plan. Those agreements are only for the purchase
of non-qualified stock options.

The Compensation  Committee of our Board of Directors currently  administers our
stock option plans.

                                 DIVIDEND POLICY

BioSource  has  never  paid  cash  dividends  on its  common  stock and does not
currently  anticipate that it will do so in the foreseeable  future. The Company
plans to retain earnings to finance our operations.











ITEM 6.       SELECTED FINANCIAL DATA

The selected data presented below under the captions "Consolidated  Statement of
Operations Data" and "Consolidated Balance Sheet Data" for, and as of the end of
each of the years in the five-year  period ended  December 31, 2002, are derived
from the audited consolidated financial statements of the Company. The following
selected  data should be read in  conjunction  with the  Company's  consolidated
financial  statements and notes thereto,  as well as the section included herein
entitled  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations."


                                       15


<PAGE>


<TABLE>
<CAPTION>
                                                                    YEARS ENDED DECEMBER 31,
                                                 ------------------------------------------------------------
                                                    2002          2001         2000         1999         1998
                                                 -------     ---------    ---------    ---------    ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)

<S>                                              <C>         <C>          <C>          <C>          <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales                                        $40,055     $  35,175    $  32,210    $  29,257    $  21,859
Cost of sales                                     17,689        15,540       13,600       11,071       13,189
                                                 -------     ---------    ---------    ---------    ---------

Gross profit                                      22,366        19,635       18,610       18,186        8,670
Operating expenses:
  Research and development                         6,187         3,986        3,575        3,315        2,648
  Sales and marketing                              8,339         7,395        5,682        4,737        4,338
  General and administrative                       5,916         6,945        9,071        4,460        4,469
  Purchased in-process technology                     --            --           --           --        4,222
  Amortization of intangibles                        641         1,098        1,093        1,061           95
                                                 -------     ---------    ---------    ---------    ---------

Operating income (loss)                            1,283           211         (811)       4,613       (7,102)
Interest and other income (expense), net             123           460           72       (1,016)         432
                                                 -------     ---------    ---------    ---------    ---------

Income (loss) before income tax expense
  (benefit)                                        1,406           671         (739)       3,597       (6,670)
Income tax expense (benefit)                          11           (70)        (573)          20       (1,534)
                                                 -------     ---------    ---------    ---------    ---------

Income (loss) before redeemable preferred
  stock dividend and beneficial conversion         1,395           741         (166)       3,577       (5,136)
Redeemable preferred stock dividend and
  accretion of beneficial conversion feature          --            --       (3,853)          --           --
                                                 -------     ---------    ---------    ---------    ---------

Income (loss) before cumulative effect of
  accounting change                                1,395           741       (4,019)       3,577       (5,136)

Cumulative effect of accounting change (net
  of applicable income taxes of $1,500)           (2,447)           --           --           --           --
                                                 -------     ---------    ---------    ---------    ---------

Net income (loss) available to common
  shareholders                                   $(1,052)    $     741    $  (4,019)   $   3,577    $  (5,136)
                                                 =======     =========    =========    =========    =========


Net income (loss) per share:
  Basic                                          $ (0.10)    $    0.07    $   (0.47)   $    0.49    $   (0.68)
                                                 =======     =========    =========    =========    =========

  Diluted                                        $ (0.11)    $    0.07    $   (0.47)   $    0.46    $   (0.68)
                                                 =======     =========    =========    =========    =========

Shares used to compute per share amounts:
  Basic                                            9,787        10,398        8,584        7,235        7,509
                                                 =======     =========    =========    =========    =========

  Diluted                                         10,189        10,965        8,584        7,833        7,509
                                                 =======     =========    =========    =========    =========
</TABLE>

                                                AS OF DECEMBER 31,
                               -------------------------------------------------
                                  2002      2001       2000       1999      1998
                               -------   -------    -------    -------   -------
                                                 (IN THOUSANDS)

CONSOLIDATED BALANCE SHEET
DATA:
Current assets                 $23,389   $24,963    $26,420    $18,325   $18,278
Total assets                    46,506    49,841     50,364     40,222    41,400
Current liabilities              6,793     5,963      6,318      7,340    10,039
Long term debt, less
  current portion                   --        --         --     11,459    13,666

Total stockholders' equity      39,713    43,878     44,046     21,422    17,696


                                       16


<PAGE>


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

Our  company  develops,  manufactures,  markets  and  distributes  products  and
services that are widely used in biomedical research.  Our products and services
enable  scientists to better  understand the  biochemistry,  immunology and cell
biology of the human body, aging and certain diseases such as cancer,  arthritis
and other inflammatory diseases, AIDS and certain other infectious diseases. The
Company has a wide variety of  products,  including  immunoassay  and ELISA test
kits,  immunological reagents,  including bioactive proteins (cytokines,  growth
factors and adhesion molecules), oligonucleotides, and monoclonal and polyclonal
antibodies.  The Company also  manufactures and market custom  oligonucleotides,
peptides  and  antibodies  to  the  specifications  of  our  customers.  We  use
recombinant  DNA  technology to produce  cytokines and other  proteins.  We have
registered  our  analyte  specific  reagents  with the FDA and have  received  a
license to sell  these  products  as Class I Medical  Devices.  We market  these
products  to  in  vitro   diagnostic   manufacturers   and  clinical   reference
laboratories  as  "active  ingredients"  in the tests they  produce to  identify
various  specific  diseases or conditions.  In order to market these products as
medical devices, we are required to be in compliance with the FDA's Current Good
Manufacturing   Practices  and  Regulations.   We  believe  we  offer  a  unique
combination of technological,  production,  and research and development  skills
resulting  in a full  spectrum  of  products  and  services  for  the  worldwide
pharmaceutical and biotechnology industries.

BioSource was  originally  incorporated  as a California  corporation in October
1989, and was reincorporated as a Delaware corporation in May 1993 in connection
with  the   acquisition  of  TAGO   Immunologicals,   Inc.,  a  manufacturer  of
immunological  reagents  derived  from  antibodies  produced  in goats and other
animals.  In  November  1995,  we  acquired  Keystone   Laboratories,   Inc.,  a
manufacturer of  oligonucleotides.  In June 1996, we acquired assets and assumed
selected liabilities of Medgenix Diagnostics,  S.A. located in Fleurus, Belgium.
The  Medgenix  assets  consisted of  diagnostic  and  research  assay kits,  and
included  manufacturing  and distribution  facilities,  research and development
laboratories, customer accounts and an existing employee base. In December 1998,
BioSource  acquired  Quality  Controlled  Biochemicals,  Inc., a manufacturer of
peptides and antibodies.  In December 1998, we also acquired  substantially  all
the assets and selected liabilities of Biofluids, Inc., a manufacturer of serum,
buffers and media.

The Company  currently  manufactures  products for inventory and ships  products
shortly after receipt of orders and  anticipates  that it will continue to do so
in the future. Accordingly,  the Company has not developed a significant backlog
of  products  and does not  anticipate  it will  develop a  material  backlog of
products in the future.

The following  discussion  should be read in conjunction  with our  consolidated
financial  statements  provided  under Part II, Item 8 of this annual  report on
Form 10-K.  Certain statements  contained herein may constitute  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995.  These  statements  involve  a number of  risks,  uncertainties  and other
factors that could cause actual results to differ materially,  as discussed more
fully herein.

The forward-looking  information set forth in this annual report on Form 10-K is
as of  March  24,  2003,  and the  Company  undertakes  no duty to  update  this
information.  Should  events  occur  subsequent  to March 24,  2003 that make it
necessary to update the forward-looking information contained in this Form 10-K,
the updated  forward-looking  information  will be filed with the Securities and
Exchange Commission in a quarterly report on Form 10-Q or as an earnings release
included  as an exhibit to a Form 8-K,  each of which will be  available  at the
Securities and Exchange  Commission's  website at www.sec.gov.  More information
about potential  factors that could affect our business and financial results is
included in the section  entitled  "Risk  Factors"  beginning on page 26 of this
Form 10-K.


                                       17


<PAGE>


CRITICAL ACCOUNTING POLICIES

General

Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated  financial statements,  which have been prepared
in  accordance  with  accounting  principles  generally  accepted  in the United
States.  The  preparation  of these  financial  statements  requires  us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues  and  expenses,   and  related  disclosure  of  contingent  assets  and
liabilities.  On an on-going  basis,  the Company  evaluates its estimates.  The
Company  bases its  estimates  on  historical  experience  and on various  other
assumptions  that are believed to be  reasonable  under the  circumstances,  the
results of which form the basis for making  judgments  about the carrying values
of assets and  liabilities  that are not readily  apparent  from other  sources.
Actual results may differ from these estimates  under  different  assumptions or
conditions. Specifically, management must make estimates in the following areas:


         ALLOWANCE FOR DOUBTFUL  ACCOUNTS.  The Company has  $6,418,000 in gross
         trade  accounts  receivable  and  $261,000 in  allowance  for  doubtful
         accounts on the  consolidated  balance sheet at December 31, 2002.  The
         Company  has  procedures  in  place to  adequately  review  the  credit
         worthiness  of new  customers  and also to properly  review orders from
         existing  customers  to  determine  if a  change  in  credit  terms  is
         warranted.  A review of our  allowance  for  doubtful  accounts is done
         timely and  consistently  throughout the year. As of December 31, 2002,
         the Company  believes its  allowance  for  doubtful  accounts is fairly
         stated. The Company does have accounts  receivable amounts from certain
         customers  as of December  31, 2002 that if their  financial  condition
         changed and a significant allowance needed to be created,  could have a
         material adverse effect on the Company's financial results for 2003.


         INVENTORY  ADJUSTMENTS.  The  Company  reviews  the  components  of our
         inventory  on  a  regular  basis  for  excess,  obsolete  and  impaired
         inventory based on estimated future usage and sales. The  manufacturing
         process  for  antibodies  has and may  continue  to produce  quantities
         substantially  in excess of forecasted  usage,  if any, and anticipated
         antibody  sales  volumes  are  highly   uncertain  and  realization  of
         individual  product  cost  may not  occur.  As a  result,  the  Company
         reserves  its entire  manufactured  antibody  inventory  at 100% of its
         value.  As  of  December  31,  2002,  the  Company  had  $4,633,000  of
         manufactured  antibodies  in its  inventory  and a  reserve  for  these
         antibodies  totaling  $4,633,000.  The Company will continue to monitor
         its  antibody  inventory  and the  continued  need for a 100%  reserve.
         Additionally, material inventory write-downs in our inventory can occur
         if competitive conditions or new product introductions by our customers
         or us vary from our current expectations.


         DEFERRED  TAX  ASSETS  AND  DEFERRED  INCOME  TAXES.  The  Company  has
         $10,683,000 in deferred income tax assets on its  consolidated  balance
         sheet  as of  December  31,  2002.  See  note  10 to  the  consolidated
         financial  statements  included  in this Form 10-K for a listing of the
         specific  components.  As of December 31, 2002, no valuation  allowance
         has been set up to offset any of the deferred  tax assets.  The ability
         to realize these  deferred tax assets  depends  entirely on the Company
         generating   taxable  income  in  the  future.  The  Company  has  used
         historical  information  as well as a  projected  financial  outlook to
         project taxable income amounts.  The Company believes it is more likely
         than  not that  they  will be able to  realize  these  benefits  in the
         future.  A material change in our expected  realization of these assets
         would  occur if the  ability to deduct tax loss  carryforwards  against
         future  taxable  income is altered.  If our  projections  involving tax
         planning and operating  strategies do not materialize or if significant
         changes in tax laws occur within the various tax jurisdictions in which
         we operate,  we would have to set up a valuation  allowance against our
         deferred  tax assets that could  materially  effect our tax expense and
         our financial results.


The Company believes the following critical  accounting policies affect our more
significant  judgments and estimates  used in  preparation  of our  consolidated
financial statements.

         REVENUE  RECOGNITION.  The Company's revenue is generated from the sale
         of products primarily manufactured internally.  The Company does have a
         small amount of products that are sold on an outside  equipment ("OEM")
         basis.  The Company sells standard and custom products  directly to end


                                       18


<PAGE>


         users and distributors and recognizes revenue upon transfer of title to
         the  customer,  which occurs upon  shipment.  General sales and payment
         terms  to  distributors  are  similar  to  those  granted  to end  user
         customers.  Certain end user  customers  prepay for product and request
         shipment  of the  product  at  future  dates,  primarily  sera or media
         products.  The Company  records  deferred  revenue until such time as a
         product is shipped to a customer.  Approximately  22% of the  Company's
         2002  net  sales  were  to  distributors.  The  Company's  distribution
         agreements do not provide a general right of return.  The amount of the
         Company's  inventory  held  by  distributors  is  not  believed  to  be
         substantial.

         The Securities and Exchange  Commission's Staff Accounting Bulletin No.
         101,  "Revenue  Recognition,"  ("SAB  101")  provides  guidance  on the
         application  of generally  accepted  accounting  principles to selected
         revenue  recognition  issues.  The  Company  believes  that its revenue
         recognition  policy is consistent  with this guidance and in accordance
         with generally accepted accounting principles. We do not anticipate any
         changes to our revenue recognition and shipping policies in the future.

         LONG-LIVED ASSETS. In October,  2001 the Financial Accounting Standards
         Board  ("FASB")  issued  Statement  on Financial  Accounting  Standards
         ("SFAS")  No.  144,  "Accounting  for the  Impairment  or  Disposal  of
         Long-Lived Assets," which addresses financial  accounting and reporting
         for the impairment or disposal of long-lived assets. While SFAS No. 144
         supersedes  SFAS No.121,  "Accounting  for the Impairment of Long-Lived
         Assets and for Long-Lived Assets to be Disposed Of," it retains many of
         the fundamental provisions of that statement. The standard is effective
         for fiscal years  beginning  after December 15, 2001. It is our policy,
         and in accordance with SFAS No. 144, to account for long-lived  assets,
         including intangibles,  at amortized cost. As part of an ongoing review
         of the valuation and  amortization  of  long-lived  assets,  management
         assesses the carrying  value of such assets if facts and  circumstances
         suggest  that  they may be  impaired.  If this  review  indicates  that
         long-lived  assets  will  not  be  recoverable,   as  determined  by  a
         non-discounted  cash  flow  analysis  over the  remaining  amortization
         period, the carrying value of the Company's  long-lived assets would be
         reduced to its estimated fair value based on discounted  cash flows. As
         a result, the Company has determined that its long-lived assets are not
         impaired as of December 31, 2002 and 2001.

         GOODWILL.  In July  2001,  the  Financial  Accounting  Standards  Board
         ("FASB") issued  Statement of Financial  Accounting  Standards  ("FAS")
         No.141,  "Accounting  For  Business  Combinations,"  and FAS  No.  142,
         "Accounting  For  Goodwill  and Other  Intangible  Assets." FAS No. 141
         requires  that  the  purchase  method  of  accounting  be used  for all
         business  combinations  initiated  after  June 30,  2001.  FAS No.  142
         requires that goodwill and  intangible  assets with  indefinite  useful
         lives no longer be amortized  to earnings,  but instead be reviewed for
         impairment in accordance with FAS No. 142. The amortization of goodwill
         and  intangible  assets was  approximately  $641,000,  $1,098,000,  and
         $1,093,000,  for fiscal years ended December 31, 2002,  2001, and 2000,
         respectively.  Effective  January 1, 2002,  the Company's  goodwill and
         other  intangible  assets are accounted for under FAS No. 141 "Business
         Combinations"  and FAS No. 142 "Goodwill and Other Intangible  Assets."
         The Company  used the present  value  method for  determining  the fair
         value of its reporting units. In the first quarter of 2002, the Company
         recognized  a non-cash  charge,  net of  applicable  income  taxes,  of
         $2,870,000 representing the cumulative effect of a change in accounting
         principle  resulting  from the  implementation  of FAS 142.  The charge
         included  the  write  off  of  all  of  the  goodwill  related  to  the
         acquisition of Quality Controlled Biochemicals ("QCB") and Biofluids in
         December 1998. In the third quarter of 2002, the Company  received cash
         proceeds of $800,000 in an arbitration  settlement  related to its 1998
         acquisition  of  QCB.  This  recovery,  shown  net of  legal  fees  and
         applicable  income taxes,  totals $423,000 and is shown as a cumulative
         effect of a change in  accounting  principle for the three months ended
         September 30, 2002.  The net impairment  charge for goodwill  resulting
         from the  adoption of FAS 142 for the year ended  December  31, 2002 is
         $2,447,000  and is shown  in the  accompanying  condensed  consolidated
         statement of operations as a cumulative effect of an accounting change.

         The Company reviewed its remaining goodwill for impairment in the third
         quarter  of  2002  and  determined  that  the  carrying  value  was not
         impaired.  Accordingly,  the Company  continues  to carry the  goodwill
         related  to  its  1996   acquisition  of  certain  assets  and  assumed
         liabilities of Medgenix Diagnostics,  SA, now BioSource Europe, S.A., a
         wholly-owned  subsidiary of the Company,  on its  Consolidated  Balance
         Sheets.


                                       19


<PAGE>


CONSOLIDATED RESULTS OF OPERATIONS

The selected data presented below under the caption  "Consolidated  Statement of
Operations  Data Presented as a Percentage of Sales" for each of the years ended
December  31,  2002,  2001 and 2000 are  derived  from  the audited consolidated
financial  statements of the Company. The following selected data should be read
in conjunction with the Company's  consolidated  financial  statements and notes
thereto,  as  well  as  the  data  and  information   included  herein  entitled
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

CONSOLIDATED STATEMENT OF OPERATIONS DATA             YEARS ENDED DECEMBER 31,
PRESENTED AS A PERCENTAGE OF SALES                2002         2001         2000
                                                 -----        -----        -----

Net sales                                         100%         100%         100%
Cost of sales                                      44%          44%          42%
                                                 -----        -----        -----
    Gross profit                                   56%          56%          58%

Operating expenses:
    Research and development                       15%          11%          11%
    Sales and marketing                            21%          21%          18%
    General and administrative                     15%          20%          28%
    Amortization of intangibles                     2%           3%           3%
                                                 -----        -----        -----
         Total operating expenses                  53%          55%          61%
                                                 -----        -----        -----
Operating income (loss)                             3%           1%          -3%

Interest income                                     0%           1%           1%
Interest expense                                    0%           0%          -1%
Other income, net                                   0%           0%           0%
                                                 -----        -----        -----
Income (loss) before income tax (benefit)           4%           2%          -3%
Income tax expense (benefit)                        0%           0%          -2%
                                                 -----        -----        -----
       Income (loss) before redeemable
          preferred stock dividend and
          beneficial conversion                     3%           2%          -1%
Redeemable preferred stock dividend and
  accretion of beneficial conversion                0%           0%         -12%
                                                 -----        -----         ----
      Income (loss) before cumulative
          effect of accounting change               3%           0%         -13%
Cumulative effect of accounting change             -6%           0%           0%
                                                 -----        -----        -----
Net income (loss) available to common
  stockholders                                     -3%           2%         -13%
                                                 =====        =====        =====


YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

NET  SALES.  Net  sales for the  twelve  months  ended  December  31,  2002 were
$40,055,000,  an increase of  $4,880,000,  or 14%,  (13% after  eliminating  the
$476,000  positive  impact of foreign  exchange)  compared  to net sales for the
twelve months ended December 31, 2001.  North America sales,  which  represented
61% of consolidated net sales in 2002, grew $2,243,000 or 10% as compared to the
twelve months ended December 31, 2001.  European  sales,  which represent 27% of
consolidated  net sales in 2002, grew $2,090,000 or 24% (18% in local currency),
as compared to the comparable prior year period.  Sales in Japan and the rest of
the world, representing 12% of consolidated net sales, increased 13% compared to
2001.  North  American  sales grew 10%  primarily due to an increase in sales of
assays, proteins,  serum and media and signal transduction antibodies.  European
sales grew 18% in local currency primarily due to assays,  proteins,  antibodies
and  diagnostic  products.  Sales in Japan  and the rest of the  world  grew 13%
primarily  due to a full year  distributor  agreement in place with our Japanese
distributor  and continued  penetration  of products into  countries  outside of
Europe and North America.


                                       20


<PAGE>


GROSS PROFIT. Gross profit for the year ended December 31, 2002 was $22,366,000,
resulting in a gross margin of 56%,  compared to a gross profit of  $19,635,000,
and a gross margin of 56% for the year ended  December 31, 2001.  The  Company's
margins remained constant in part due to the continued  investment in production
and planning related areas within the Company.  The Company's 2002  consolidated
margin of 56% was impacted by lower  oligonucleotides  sales in 2002 compared to
2001. These lower sales resulted in excess fixed costs being charged directly to
cost of sales. The Company expects its consolidated  margins to begin increasing
slightly in 2003.

RESEARCH AND DEVELOPMENT. Research and development expense for the twelve months
ended December 31, 2002 and 2001 were  $6,187,000 and $3,986,000 and represented
15% and 11% of sales  respectively.  The  increase in research  and  development
expenses  for the twelve  months ended  December  31, 2002 when  compared to the
comparable  prior year period  reflects the  Company's  investment in additional
personnel and materials in the cytokine and signal  transduction  research areas
with the goal of  producing  additional  novel  and  proprietary  products.  The
Company  incrementally  hired 18 additional  research and development  personnel
during 2002 and more than doubled its core product  introduction  rate from 2001
to  2002.  The  company  expects  its  R &  D  spending  in  2003  to  represent
approximately 16% of sales.

SALES AND MARKETING. Sales and marketing expenses were $8,339,000 for the twelve
months  ended  December  31, 2002 and  $7,395,000  for the twelve  months  ended
December  31,  2001,  representing  21% of sales for each of the years  2002 and
2001. In the twelve  months ended  December 31, 2002,  the  Company's  sales and
marketing  expenses in personnel and marketing  programs increased $806,000 from
the comparable prior year period. During 2002, the Company incrementally hired 8
additional  employees in sales and marketing,  including people in our technical
service and sales departments.

GENERAL AND ADMINISTRATIVE.  General and administrative expenses were $5,916,000
and $6,945,000 for the years ended December 31, 2002 and 2001,  representing 15%
and 20% of  sales  for  each of the  years  2002 and  2001,  respectively.  This
represents a decrease of $1,029,000,  or 15% in 2002 compared to 2001. Excluding
$1,406,000 of net general and  administrative  charges in 2001 that were related
to non-recurring  employee and legal matters,  the Company decreased its general
and  administrative  expenses,  as a percentage of sales,  from 16% for the year
ended  December 31, 2001 to 15% for the year ended  December 31, 2002. For 2003,
we project our general and administrative  expenses, as a percentage of sales to
be approximately 14%.

AMORTIZATION OF INTANGIBLES.  In July 2001, the Financial  Accounting  Standards
Board ("FASB") issued Statement of Financial  Accounting  Standards  ("FAS") No.
142,  "Accounting For Goodwill and Other Intangible Assets." The amortization of
goodwill and intangible assets was approximately $641,000 and $1,098,000 for the
years ended December 31, 2002 and 2001, respectively. Effective January 1, 2002,
the Company's  goodwill and other intangible  assets are accounted for under FAS
No. 142 "Goodwill and Other Intangible Assets." See discussion in the cumulative
effect of accounting change section below.

INTEREST  INCOME.  Interest  income was $113,000 in 2002 compared to $376,000 in
2001. This interest income was derived from the interest income on cash invested
in  short-term  securities.  The  decrease in interest  income was the result of
lower cash amounts  invested in  short-term  interest  bearing  accounts in 2002
compared to 2001 and lower average short-term interest rates in 2002 compared to
2001.

OTHER INCOME,  NET. Other income, net was $10,000 in 2002 compared to $86,000 in
2001.  The net other  income in 2002 and 2001  consisted  primarily  from  gains
realized on foreign currency transactions.

INCOME TAX  EXPENSE  (BENEFIT).  The  effective  tax rate for the twelve  months
ending December 31, 2002 and 2001 was 1% and (10%) respectively.  The Company is
benefiting  from R & D and other tax credits which when applied to income levels
for the periods  presented is  resulting  in effective  tax rates lower than the
current  applicable  federal and state statutory rates. In the fourth quarter of
2002,  the Company  elected to utilize  the  Extraterritorial  Income  Exclusion
("EIE")  federal tax credit,  which,  along with other tax credits,  reduced its
effective tax rate for 2002 to 1%. The Company expects its effective tax rate to
increase to approximately 22% to 26% in 2003.


                                       21


<PAGE>


CUMULATIVE EFFECT OF ACCOUNTING  CHANGE. In July 2001, the Financial  Accounting
Standards  Board ("FASB")  issued  Statement of Financial  Accounting  Standards
("FAS")  No.141,  "Accounting  For  Business  Combinations,"  and FAS  No.  142,
"Accounting For Goodwill and Other Intangible Assets." FAS No. 141 requires that
the  purchase  method  of  accounting  be  used  for all  business  combinations
initiated after June 30, 2001. FAS No. 142 requires that goodwill and intangible
assets with  indefinite  useful lives no longer be  amortized  to earnings,  but
instead  be  reviewed  for  impairment  in  accordance  with  FAS No.  142.  The
amortization  of goodwill  and  intangible  assets was  approximately  $641,000,
$1,098,000,  and $1,093,000, for fiscal years ended December 31, 2002, 2001, and
2000, respectively.  Effective January 1, 2002, the Company's goodwill and other
intangible  assets are accounted  for under FAS No. 141 "Business  Combinations"
and FAS No. 142 "Goodwill and Other Intangible  Assets." In the first quarter of
2002, the Company  recognized a non-cash charge, net of applicable income taxes,
of  $2,870,000  representing  the  cumulative  effect of a change in  accounting
principle  resulting from the implementation of FAS 142. The charge included the
write  off of all  of  the  goodwill  related  to  the  acquisition  of  Quality
Controlled  Biochemicals  ("QCB") and  Biofluids in December  1998. In the third
quarter  of  2002,  the  Company  received  cash  proceeds  of  $800,000  in  an
arbitration  settlement  related to its 1998  acquisition of QCB. This recovery,
shown net of legal fees and  applicable  income  taxes,  totals  $423,000 and is
shown as a cumulative  effect of a change in accounting  principle for the three
months  ended  September  30,  2002.  The net  impairment  charge  for  goodwill
resulting  from the adoption of FAS 142 for the year ended  December 31, 2002 is
$2,447,000 and is shown in the accompanying  condensed consolidated statement of
operations as a cumulative effect of an accounting change. The Company continues
to amortize the goodwill  related to its 1996  acquisition of certain assets and
assumed liabilities of Medgenix  Diagnostics,  SA, now BioSource Europe, S.A., a
wholly-owned subsidiary of the Company.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 2000

NET SALES.  Net sales were  $35,175,000 in 2001 compared to $32,210,000 in 2000,
an increase of $2,965,000 or 9%. North American sales,  which represented 63% of
consolidated  net sales in 2001,  grew  $2,734,000  or 14% for the  year,  while
European sales, which represent 25% of consolidated net sales in 2001, increased
$662,000  or 8%.  Sales  from the rest of the world,  representing  12% of total
consolidated  net sales in 2001  decreased  $431,000  or 9% over the prior year.
North  American  sales grew due to an increased  number of sales  personnel  and
increased spending on marketing programs in 2001 compared to 2000 which resulted
in increased sales of oligonucleotides,  proteins, peptides and products related
to signal transduction.  In local currency, European sales in 2001 grew $933,000
or 11%  compared  to the  prior  year.  European  sales  grew  primarily  due to
increased sales in assays and signal transduction products. Sales in the rest of
the  world  decreased  from  2000 to 2001 due to the  transition  to a new major
distributor  in the first  quarter of 2001 and to a delayed  renegotiation  of a
distributor agreement in Japan.

GROSS PROFIT. Gross profit for the year ended December 31, 2001 was $19,635,000,
resulting in a gross margin of 56%,  compared to a gross profit of  $18,610,000,
and a gross margin of 58% for the year ended  December 31, 2000. The decrease in
gross  margin  for the  year  ended  December  31,  2001  was due in part to the
Company's relocation of its primary manufacturing and corporate  headquarters in
May of 2000,  moving from a previously  owned 29,000  square foot  building to a
leased 52,000 square foot building  causing the 2001 gross margin to be affected
by a full year of higher  on-going  costs in the new facility  compared to seven
months of higher on-going costs in 2000. Also, our serum and media gross margin,
which  represented  approximately  5% of our 2001 gross margin,  was  negatively
impacted  by  increased  raw  material  costs due to a lower  supply of  certain
material in 2001 compared to 2000 which  contributed  to the lower gross margins
in 2001 compared to 2000. In addition, the product mix of sales in 2001 compared
to 2000  contributed  to our  gross  margin  reduction.  Oligonucleotides,  as a
percentage of total sales increased slightly from 2000 to 2001 and traditionally
had lower  margins than assays,  which  represented  the largest  portion of our
sales and generated a higher margin. New  oligonuceotide  products are now being
discovered,  manufactured  and accepted by customers that produce higher margins
than traditional oligonuceotides.

RESEARCH AND  DEVELOPMENT.  Research and development  expense for the year ended
December  31,  2001 was  $3,986,000  compared to  $3,575,000  for the year ended
December 31, 2000, an increase of $411,000 or 11%. As a percentage of net sales,
research and  development  expense was 11% for each of the years ended  December
31, 2001 and 2000. The Company introduced over 300 new products in 2001 compared
to over 400 new products in 2000 and had 39 research  scientists  as of December
31, 2001 and 2000.


                                       22


<PAGE>


SALES AND  MARKETING.  Sales and marketing  expense was  $7,395,000 for the year
ended  December 31, 2001 and $5,682,000 for the year ended December 31, 2000, an
increase of $1,713,000 or 30%. As a percentage of net sales, this represents 21%
and 18% of net sales for each of the years  ended  December  31,  2001 and 2000,
respectively.   This  increase  was  primarily  attributable  to  $1,169,000  in
increased  salary and related sales expenses,  including  commissions and travel
expenses, due to an increased number of salesmen and two new sales and marketing
executives  hired in November  2000 and  $330,000 of increased  advertising  and
promotional expenses.

GENERAL AND  ADMINISTRATIVE.  General and administrative  expense was $6,945,000
and  $9,071,000  for the years ended  December 31, 2001 and 2000,  respectively.
This  represented  a decrease of  $2,126,000,  or 23% in 2001  compared to 2000.
There were $4,256,000 of charges incurred in 2000 that were not incurred in 2001
including (i) a non-cash stock  compensation  charge of $946,000  related to the
hiring of a former  Chief  Executive  Officer  and Chief  Operating  Officer  in
September 2000; (ii) $1.3 million of severance costs including the retirement of
the Company's  previous  Chief  Executive and Chief  Operating  Officers;  (iii)
$745,000 of professional  fees related to abandoned  acquisitions work and legal
cost  related to an employee  termination  suit;  (iv)  $534,000  related to the
transition  to a new  senior  management  team;  (v)  $523,000  related  to  the
withdrawal of the Company's follow on stock offering;  (vi) $120,000 increase in
the  reserve  for bad debt and  allowances  and (vii) a reserve of $88,000 for a
customer  dispute.  These  charges  were offset by charges  totaling  $2,006,000
incurred in 2001 that were not incurred in 2000  including  $1,406,000  in legal
expenses  related to an  employee  termination,  $600,000  of charges  primarily
related to an employee  termination  and  relocation  and  recruiting  fees. The
$1,406,000 of legal  expenses  described  above  includes a $275,000  charge for
payment  related to the  settlement  of the  litigation  in January  2002.  SG&A
expenses before the $4,256,000 in charges  described above occurring in 2000 and
the  $2,006,000  of charges  described  above  occurring  in 2001 were  $124,000
higher, or 3% for the twelve months ended December 31, 2001 as compared to 2000.

AMORTIZATION OF INTANGIBLES. Amortization of intangible assets was $1,098,000 in
2001  and  $1,093,000  in  2000.  These  amounts  represented   amortization  of
intangible assets acquired  primarily in connection with the acquisitions of QCB
and Biofluids in December 1998. On January 1, 2002, the company adopted SFAS No.
141  "Accounting  for Business  Combinations"  and SFAS No. 142  "Accounting for
Goodwill and Other  Intangible  Assets." The  impairment  charge for goodwill or
intangible  assets deemed to have an indefinite  useful life  resulting from the
adoption  of SFAS 142 would be  non-operational  in nature  and  reflected  as a
cumulative  effect of an accounting  change net of the related tax impact in the
period in which SFAS is  adopted.  The  adoption of SFAS 142 will also result in
amortization  of  intangible  assets no longer being  amortized  over a specific
period  of  time,  but  evaluated  on a  periodic  basis  and  adjusted  for any
impairment, when appropriate.

INTEREST  INCOME.  Interest  income was $376,000 in 2001 compared to $266,000 in
2000. This interest income was derived from the interest income on cash invested
in short-term securities.

INTEREST  EXPENSE.  Interest  expense  was $2,000 in 2001 and  $302,000 in 2000.
Interest  expense in 2000 was related to the interest  expense on the notes used
to finance the  acquisition of QCB and Biofluids in December  1998.  These notes
were paid in full in May 2000.

OTHER INCOME AND (EXPENSE) NET.  Other income,  net was $86,000 in 2001 compared
to $108,000 in 2000. The net other income in 2001 and 2000  consisted  primarily
from gains realized on foreign currency transactions.

INCOME TAX BENEFIT. Income tax benefit was $70,000 in 2001 and $573,000 in 2000.
The income tax  benefits in 2001 and 2000 were the result of tax  benefits  from
research and experimentation and other permanent tax credits..

REDEEMABLE PREFERRED STOCK DIVIDEND AND ACCRETION OF BENEFICIAL CONVERSION. With
the  conversion of preferred  stock into common stock in September of 2000,  the
Company incurred a $3,853,000 charge for non-cash  preferred stock dividends and
accretion related to a beneficial conversion feature for the year ended December
31,  2000.  The Company  did not incur any  similar  charge in 2001 and does not
expect any similar charges in 2002 or subsequent years.


                                       23


<PAGE>


                                QUARTERLY RESULTS

The following  table sets forth various  unaudited  statement of operations data
for the last eight  quarters,  which has been  prepared on the same basis as the
annual  information  and, in  management's  opinion,  includes  all  adjustments
necessary to present fairly the information for each of the quarters below.

<TABLE>
<CAPTION>
                                   Dec. 31,   Sept. 30,    June 30,   March 31,    Dec. 31,   Sept. 30,    June 30,  March 31,
                                      2002        2002        2002        2002        2001        2001        2001       2001
                                  --------    --------    --------    --------    --------    --------    --------   --------
                                                                         (in thousands)

<S>                               <C>         <C>         <C>         <C>         <C>         <C>         <C>        <C>
Net Sales .....................   $  9,881    $ 10,101    $ 10,292    $  9,781    $  9,171    $  8,587    $  8,760   $  8,657
Cost of goods sold ............      4,580       4,365       4,548       4,196       4,143       3,761       3,678      3,958
                                  --------    --------    --------    --------    --------    --------    --------   --------

Gross profit ..................      5,301       5,736       5,744       5,585       5,028       4,826       5,082      4,699
Research and development ......      1,825       1,557       1,512       1,293       1,056       1,051         925        954
Sales and marketing ...........      2,100       1,961       2,013       2,266       1,843       1,806       1,824      1,922
General and administrative ....      1,590       1,394       1,471       1,460       2,028       1,751       1,360      1,807
Amortization of intangibles ...        160         160         160         160         274         275         275        275
                                  --------    --------    --------    --------    --------    --------    --------   --------

Income (loss) from operations .       (374)        664         588         406        (173)        (57)        699       (258)
Interest income,  net .........         31          21          20          40          45          85         107        137
Other income (expense), net ...         19          (8)        (31)         30          39         (28)         26         49
                                  --------    --------    --------    --------    --------    --------    --------   --------

Income (loss) before income
   taxes (benefit) ............       (324)        677         577         476         (89)       --           832        (72)
Income tax expense (benefit) ..       (370)        149         127         105         (40)       (266)        258        (22)
                                  --------    --------    --------    --------    --------    --------    --------   --------

Income (loss) before cumulative
   effect of accounting change          46         528         450         371         (49)        266         574        (50)

Cumulative effect of change in
   accounting change ..........       --           423        --        (2,870)       --          --          --         --
                                  --------    --------    --------    --------    --------    --------    --------   --------


Net income (loss) available to
   common shareholders ........   $     46    $    951    $    450    $ (2,499)   $    (49)   $    266    $    574   $    (50)
                                  ========    ========    ========    ========    ========    ========    ========   ========


Net income (loss) per diluted
   share ......................   $  (0.00)   $  0.090    $   0.04    $  (0.23)   $  (0.00)   $   0.02    $   0.05   $  (0.00)
                                  ========    ========    ========    ========    ========    ========    ========   ========


Diluted shares used to compute
   per share amounts ..........     10,052      10,029      10,101      10,727      10,931      10,868      10,964     11,374
                                  ========    ========    ========    ========    ========    ========    ========   ========
</TABLE>


LIQUIDITY AND CAPITAL RESOURCES

Cash and cash  equivalents  as of December 31, 2002 of  $5,941,000  decreased by
$3,530,000,  or 37%, from  $9,471,000 at December 31, 2001. The decrease in cash
was due  primarily  to  $3,749,000  provided by operating  activities  offset by
$3,481,000   and  $4,320,000   used  in  investing  and  financing   activities,
respectively.

Net cash of $3,749,000  was provided by operating  activities  in 2002.  Working
capital,  which is the excess of current  assets over  current  liabilities  was
$16,596,000 at December 31, 2002 as compared to $19,000,000 at December 31, 2001
representing  a decrease of $2,404,000  or 13%. The  $3,749,000 of cash provided
from  operations  was  derived   primarily  from  $1,395,000  of  income  before
redeemable  preferred  stock dividend and  beneficial  conversion and $2,404,000
from the change in working capital from December 31, 2002 and December 31, 2001.

Net cash used in investing  activities in 2002 was  $3,481,000  and was entirely
related to  capital  expenditures,  which were  primarily  for the  purchase  of
laboratory and manufacturing equipment. The Company anticipates capital spending
in 2003 to be at lower levels then incurred in 2002.


                                       24


<PAGE>


Net cash used in financing  activities in 2002 was  $4,320,000 of which $291,000
was provided from the exercise of employee stock options and $4,611,000 was used
in the repurchase of the Company's  common stock pursuant to a stock  repurchase
program effective  October 30, 2001. The repurchase  program allows for spending
up to $5,000,000 on the  repurchase  of the Company's  common stock.  In July of
2002, the Board approved an additional $5,000,000 in spending for the repurchase
program,  bringing the total  spending  limit to  $10,000,000.  Through March 7,
2003,  the Company had spent a total  $5,800,000  and may continue to repurchase
its common stock until the $10,000,000 limit is used.

On February  15, 2000,  the Company  issued  371,300  shares of $0.001 par value
Series B Redeemable  Preferred  Stock and  received net proceeds of  $8,415,200.
These  funds  were used to reduce the  Company's  notes  payable  related to the
acquisitions of QCB and Biofluids in December 1998.

On September 18, 2000, two former  executives of the Company invested a total of
$850,000 in the Company,  acquiring 51,400 shares of common stock. Additionally,
on September 18, 2000, a major  shareholder  invested an additional  $4,468,700,
net of expenses, into the Company acquiring 300,000 shares of common stock.

In the year ended  December 31, 2002,  the Company  received  $291,000  from the
issuance of common stock related to the exercise of stock options.

The Company has never paid  dividends  on common stock and has no plans to do so
in fiscal 2003. Our earnings will be retained for reinvestment in the business.

The Company has entered  into  various  leases  involving  facility  properties,
copiers  and   automobiles.   Lease  expense  for  2003  will  be  approximately
$1,340,000.

At December 31, 2002,  total future minimum  payments under all of the Company's
leases are as follows (in thousands):

     2002........................................  $   1,340
     2003........................................      1,260
     2004........................................      1,064
     2005........................................        810
     2006........................................        484
     Thereafter..................................         36
                                                   ---------

                                                   $   4,994
                                                   =========

The  Company  expects to be able to meet its  future  cash and  working  capital
requirements for operations and capital additions  through  currently  available
funds and cash generated from operations.  As of March 1, 2003, the Company does
not have a line of credit.  However, the Company may raise additional capital or
secure  debt  financing  from  time  to  time to  take  advantage  of  favorable
conditions  in the  market  or in  connection  with  our  corporate  development
activities.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  SFAS No. 143  addresses  financial  accounting  and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement  costs. The adoption of SFAS No. 143 does not have a
material impact on the financial position or results of operations.

In  January  2003,  the  FASB  issued  FASB   Interpretation   ("FIN")  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees and  Indebtedness of Others." FIN No. 45 requires a company
to  recognize a  liability  for the  obligations  it has  undertaken  to issue a
guarantee.  This  liability  would be recorded at the inception of the guarantee
and  would  be  measured  at fair  value.  The  measurement  provisions  of this
statement apply  prospectively  to guarantees  issued or modified after December
31,  2002.  The  disclosure


                                       25


<PAGE>


provisions of the statement  apply to financial  statements  for periods  ending
after  December  15,  2002.  The adoption of FIN No. 45 does not have a material
impact on the financial position or results of operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN 46 requires a company to consolidate  variable interest entity if
it is designated as the primary  beneficiary  of that entity even if the company
does  not have a  majority  voting  interest.  A  variable  interest  entity  is
generally  defined  as an entity  where its  equity  is  unable to  finance  its
activities  or when the  owners  of the  entity  lack the  risk and  rewards  of
ownership.  The provisions of this  statement  apply at inception for any entity
created after January 31, 2003. For an entity  created before  February 1, 2003,
the  provisions of this  interpretation  must be applied at the beginning of the
first  interim or annual  period  beginning  after June 15,  2003.  The  Company
believes that the adoption of FIN No. 46 will not have a material  impact on the
financial position or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure - an amendment of FASB Statement No.
123."  SFAS  No.  148  amends  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation,"  to provide  alternative  methods of  transition  for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No.  123 to  require  prominent  disclosures  in both  annual  and  interim
financial  statements  about the method of accounting for  stock-based  employee
compensation  and the  effect  of the  method  used  on  reported  results.  The
disclosure  requirements  apply to all  companies  for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports  containing  financial  statements for interim  periods  beginning after
December 15, 2002.  The adoption of SFAS No. 148 did not have a material  impact
on the Company's consolidated financial statements.

                                  RISK FACTORS

You  should  carefully  consider  the  following  risk  factors  and  all  other
information  contained  in this report  before  purchasing  shares of our common
stock.  Investing in our common stock  involves a high degree of risk. If any of
the following events or outcomes actually occur, our business, operating results
and financial  condition would likely suffer. As a result,  the trading price of
our common  stock could  decline,  and you may lose all or part of the money you
paid to purchase our common stock.Risks Related to Our Business

FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD IMPAIR OUR BUSINESS.

The Company  historically has sought, and will continue to seek, to increase our
sales  and   profitability   primarily   through  the  acquisition  or  internal
development of new product lines,  additional customers and new businesses.  Our
historical revenue growth is primarily  attributable to our acquisitions and new
product  development  and, to a lesser  extent,  to increased  revenues from our
existing  products.   We  expect  that  future  acquisitions,   if  successfully
consummated,  will create  increased  working capital  requirements,  which will
likely precede by several months any material  contribution of an acquisition to
our net income.  Our ability to achieve our expansion  objectives  and to manage
our  growth  effectively  and  profitably  depends  upon a variety  of  factors,
including:

o    our ability to internally develop new products;

o    our ability to make profitable acquisitions;

o    integration of new facilities into existing operations;

o    hiring, training and retention of qualified personnel;

o    establishment of new  relationships or expansion of existing  relationships
     with customers and suppliers; and

o    availability of capital.

In addition,  the  implementation  of our growth strategy will place significant
strain on our administrative,  operational and financial resources and increased
demands on our financial systems and controls.  Our ability to


                                       26


<PAGE>


manage our growth successfully will require us to continue to improve and expand
these  resources,  systems and controls.  If our  management is unable to manage
growth effectively, our operating results could be adversely affected. Moreover,
there can be no assurance that our historic rate of growth will  continue,  that
we will continue to successfully  expand or that growth or expansion will result
in profitability.

WE CANNOT GUARANTEE THAT OUR FUTURE ACQUISITIONS WILL BE SUCCESSFUL.

The Company competes for acquisition and expansion  opportunities with companies
which have  significantly  greater  financial and management  resources than us.
There can be no assurance that suitable acquisition or investment  opportunities
will be identified,  that any of these transactions can be consummated, or that,
if acquired,  these new businesses can be integrated successfully and profitably
into our  operations.  These  acquisitions  and  investments  may also require a
significant  allocation of resources,  which will reduce our ability to focus on
the other portions of our business,  including many of the factors listed in the
prior risk factor.

REDUCTION  OR DELAYS IN  RESEARCH  AND  DEVELOPMENT  BUDGETS  AND IN  GOVERNMENT
FUNDING MAY NEGATIVELY IMPACT OUR SALES.

Our customers include researchers at pharmaceutical and biotechnology companies,
academic institutions and government and private  laboratories.  Fluctuations in
the  research  and   development   budgets  of  these   researchers   and  their
organizations  could have a  significant  effect on the demand for our products.
Research and  development  budgets  fluctuate  due to numerous  factors that are
outside our control and are difficult to predict, including changes in available
resources,   spending  priorities  and  institutional  budgetary  policies.  Our
business could be seriously damaged by any significant decrease in life sciences
research  and  development  expenditures  by  pharmaceutical  and  biotechnology
companies, academic institutions or government and private laboratories.

A  significant  portion  of our  sales  has been to  researchers,  universities,
government  laboratories and private foundations whose funding is dependent upon
grants from government  agencies such as the U.S. National  Institutes of Health
and similar domestic and international agencies.  Although the level of research
funding has increased  during the past several years, we cannot assure that this
trend will continue.  Government  funding of research and development is subject
to the political  process,  which is  inherently  fluid and  unpredictable.  Our
revenues may be adversely  affected if our customers delay purchases as a result
of uncertainties surrounding the approval of government budget proposals.  Also,
government  proposals to reduce or eliminate  budgetary  deficits have sometimes
included reduced  allocations to the NIH and other government agencies that fund
research and development  activities.  A reduction in government funding for the
NIH or other government research agencies could seriously damage our business.

Many of our customers  receive funds from approved grants at particular times of
the year,  as determined  by the federal  government.  Grants have, in the past,
been frozen for extended periods or have otherwise become unavailable to various
institutions  without advance  notice.  The timing of the receipt of grant funds
affects the timing of purchase  decisions by our customers and, as a result, can
cause fluctuations in our sales and operating results.

WE RELY ON RAW MATERIALS AND SPECIALIZED EQUIPMENT FOR OUR MANUFACTURING,  WHICH
WE MAY NOT ALWAYS BE ABLE TO OBTAIN ON FAVORABLE TERMS.

Our manufacturing  process relies on the continued  availability of high-quality
raw  materials  and  specialized  equipment.  It is  possible  that a change  in
vendors,  or in the quality of the raw  materials  supplied to us, could have an
adverse impact on our manufacturing process and, ultimately,  on the sale of our
finished  products.  We have from time to time  experienced  a disruption in the
quality or availability of key raw materials,  which has created minor delays in
our ability to fill orders for specific test kits. This could occur again in the
future,  resulting in significant delays, and could have a detrimental impact on
the sale of our products and our results of operations.  In addition, we rely on
highly  specialized  manufacturing  equipment  that if damaged or disabled could
adversely   affect  our  ability  to  manufacture  our  products  and  therefore
negatively  impact  our  business.  We  rely  on  the  timely  transport  of raw
materials. Any disruption in transportation systems could have an adverse impact
on our ability to manufacture and supply products.


                                       27


<PAGE>


OUR ABILITY TO RAISE THE CAPITAL NECESSARY TO EXPAND OUR BUSINESS IS UNCERTAIN.

In the future,  in order to expand our business through internal  development or
acquisitions,  we may need to raise substantial  additional funds through equity
or  debt  financings,  research  and  development  financings  or  collaborative
relationships.  However,  this  additional  funding may not be available  or, if
available,  it  may  not be  available  on  economically  reasonable  terms.  In
addition,  any additional funding may result in significant dilution to existing
stockholders. If adequate funds are not available, we may be required to curtail
our operations or obtain funds through  collaborative  partners that may require
us to release material rights to our products.

OUR RESEARCH AND DEVELOPMENT EFFORTS FOR NEW PRODUCTS MAY BE UNSUCCESSFUL.

We incur significant  research and development  expenses to develop new products
and  technologies.  There  can be no  assurance  that any of these  products  or
technologies  will be  successfully  developed  or that  if  developed,  will be
commercially   successful.   In  the  event   that  we  are  unable  to  develop
commercialized  products  from our  research and  development  efforts or we are
unable or  unwilling  to  allocate  amounts  beyond  our  currently  anticipated
research and  development  investment,  we could lose our entire  investment  in
these new  products  and  technologies.  Any failure to  translate  research and
development expenditures into successful new product introductions could have an
adverse effect on our business.

FAILURE TO LICENSE NEW TECHNOLOGIES COULD IMPAIR OUR NEW PRODUCT DEVELOPMENT.

Our business model of providing products to researchers  working on a variety of
genetic projects requires us to develop a wide spectrum of products. To generate
broad product lines it is advantageous to sometimes  license  technologies  from
others rather than depending  exclusively on our own employees.  As a result, we
believe our ability to license new  technologies  from third parties is and will
continue to be important to our ability to offer new products.

In  addition,  from time to time we are notified or become aware of patents held
by third parties that are related to  technologies we are selling or may sell in
the future.  After a review of these patents,  we may decide to obtain a license
for these  technologies  from these third parties or  discontinue  the products.
There  can be no  assurance  that we will be able to  continue  to  successfully
identify new technologies  developed by others.  Even if we are able to identify
new  technologies  of  interest,  we may not be able to  negotiate  a license on
favorable terms, or at all. If we lose the rights to patented technology, we may
need to discontinue  selling certain  products or redesign our products,  and we
may  lose  a  competitive  advantage.  Potential  competitors  could  in-license
technologies  that we fail to license and potentially erode our market share for
certain   products.    Our   licenses    typically   subject   us   to   various
commercialization,  sublicensing,  minimum payment, and other obligations. If we
fail to comply with these  requirements,  we could lose important rights under a
license. In addition, certain rights granted under the license could be lost for
reasons  out of our  control.  For  example,  the  licensor  could  lose  patent
protection for a number of reasons, including invalidity of the licensed patent.
We do not always receive  significant  indemnification  from a licensor  against
third party claims of intellectual property infringement.

We are  currently in the process of  negotiating  several of these  licenses and
expect that we will also negotiate these types of licenses in the future.  There
can be no  assurances  that  we will be able  to  negotiate  these  licenses  on
favorable terms, or at all.

OUR FUTURE SUCCESS  DEPENDS ON THE TIMELY  INTRODUCTION  OF NEW PRODUCTS AND THE
ACCEPTANCE OF THESE NEW PRODUCTS IN THE MARKETPLACE.

Our ability to gain access to technologies  needed for new products and services
also  depends  in  part  on  our  ability  to  convince  licensors  that  we can
successfully  commercialize  their inventions.  We cannot assure that we will be
able to continue to identify new  technologies  developed by others.  Even if we
are  able  to  identify  new  technologies  of  interest,  we may not be able to
negotiate a license on favorable terms, or at all.

IF WE FAIL TO INTRODUCE  NEW  PRODUCTS,  OR OUR NEW PRODUCTS ARE NOT ACCEPTED BY
POTENTIAL CUSTOMERS, WE MAY LOSE MARKET SHARE.


                                       28


<PAGE>


Rapid  technological  change and frequent new product  introductions are typical
for the markets we serve.  Our future success will depend in part on continuous,
timely development and introduction of new products that address evolving market
requirements.   We  believe  successful  new  product  introductions  provide  a
significant  competitive  advantage because customers make an investment of time
in  selecting  and  learning to use a new  product,  and then are  reluctant  to
switch. To the extent we fail to introduce new and innovative  products,  we may
lose market share to our  competitors,  which will be difficult or impossible to
regain.  Any inability,  for  technological  or other reasons,  to  successfully
develop and  introduce  new products  could reduce our growth rate or damage our
business.

In the past we have  experienced,  and are likely to  experience  in the future,
delays in the development and introduction of products. We cannot assure that we
will keep pace with the rapid rate of change in life sciences research,  or that
our new products will  adequately  meet the  requirements  of the marketplace or
achieve market  acceptance.  Some of the factors  affecting market acceptance of
new products include:

o    availability, quality and price relative to competitive products;

o    the timing of introduction of the product relative to competitive products;

o    customers' opinion of the products utility;

o    ease of use;

o    consistency with prior practices;

o    scientists' opinion of the product's usefulness;

o    citation of the product in published research; and

o    general trends in life sciences research.

The  expenses  or  losses  associated  with  unsuccessful   product  development
activities  or lack of market  acceptance of our new products  could  materially
adversely affect our business, operating results and financial condition.

The  development,  introduction  and  marketing  of  innovative  products in our
rapidly  evolving  markets will require  significant  sustained  investment.  We
cannot assure their cash from  operations or other sources will be sufficient to
meet these ongoing requirements.

FAILURE TO ATTRACT AND RETAIN  QUALIFIED  SCIENTIFIC OR PRODUCTION  PERSONNEL OR
LOSS OF KEY MANAGEMENT OR KEY PERSONNEL COULD HURT OUR BUSINESS.

Recruiting  and  retaining  qualified  scientific  and  production  personnel to
perform research and development  work and product  manufacturing is critical to
our success.  Because the industry in which we compete is very  competitive,  we
face significant  challenges  attracting and retaining this qualified  personnel
base.  Although  we believe we have been and will be able to attract  and retain
these  personnel,  there can be no assurance that we will be able to continue to
successfully  attract qualified personnel.  In addition,  our anticipated growth
and expansion into areas and activities requiring additional expertise,  such as
clinical testing,  government approvals,  production and marketing, will require
the addition of new  management  personnel  and the  development  of  additional
expertise by existing  management  personnel.  The failure to attract and retain
these personnel or,  alternatively,  to develop this expertise  internally would
adversely  affect  our  business.  We  generally  do not enter  into  employment
agreements  requiring  these  employees  to continue in our  employment  for any
period of time.

Our success also will continue to depend to a significant  extent on the members
of our management team and, in particular,  on our Chief  Executive  Officer and
President,  Leonard M.  Hendrickson.  We do not maintain any "key man" insurance
policies  regarding any of these  individuals.  We may not be able to retain the
services of our  executive  officers  and key  personnel  or attract  additional
qualified  members to  management  in the  future.


                                       29


<PAGE>


The loss of services of Mr.  Hendrickson,  or of any of our other key management
or employees, could have a material adverse effect upon our business.

MANY OF OUR  CUSTOMERS  ARE  OBTAINING  OUR  PRODUCTS  THROUGH NEW  DISTRIBUTION
CHANNELS AND METHODS THAT MAY  ADVERSELY  IMPACT OUR RESULTS OF  OPERATIONS  AND
FINANCIAL CONDITION.

A number of our customers  have developed  purchasing  initiatives to reduce the
number of vendors they purchase  from in order to lower their supply  costs.  In
some cases, these customers have established  agreements with large distributors
which  include  discounts  and the  distributors'  direct  involvement  with the
purchasing process.  For similar reasons,  many larger customers,  including the
federal  government,  have  special  pricing  arrangements,   including  blanket
purchase  agreements.  These  agreements may limit our pricing  flexibility with
respect to our products,  which could adversely  impact our business,  financial
condition and results of operations. In addition, although we accept and process
some orders  through our Internet  website,  we also  implement  sales through a
third  party  Internet  vendor.   Internet  sales  through  third  parties  will
negatively  impact our gross margins because we pay commission on these Internet
sales. On the other hand, if we do not enter into  arrangements with third-party
e-commerce  providers,  we may lose  customers  who prefer to purchase  products
using these Web sites. Our business may be harmed as a result of these Web sites
or other sales methods which may be developed in the future.

WE RELY ON AIR TRANSPORT TO SHIP PRODUCTS TO OUR CUSTOMERS

Any disruption in standard air transport systems could have an adverse effect on
our business.

WE RELY ON INTERNATIONAL SALES, WHICH ARE SUBJECT TO ADDITIONAL RISKS.

International sales accounted for approximately 41% of our revenues in 2002, 40%
of our revenues in 2001,  and 42% of our revenues in 2000.  International  sales
can be subject to many inherent risks that are difficult or impossible for us to
predict or control, including:

o    unexpected changes in regulatory requirements and tariffs;

o    difficulties  and costs  associated  with in staffing and managing  foreign
     operations, including foreign distributor relationships;

o    longer   accounts   receivable   collection   cycles  in  certain   foreign
     countries;adverse economic or political changes;

o    unexpected changes in regulatory requirements;

o    more limited protection for intellectual property in some countries;

o    changes in our international distribution network and direct sales force;

o    potential  trade  restrictions,  exchange  controls  and  import and export
     licensing requirements;

o    problems in collecting accounts receivable; and

o    potentially adverse tax consequences of overlapping tax structure.

o    Impairment of the ability to transport goods internationally.

We intend to continue to generate  revenues  from sales outside North America in
the future.  Future  distribution of our products outside North America also may
be subject to greater governmental regulation. These regulations,  which include
requirements for approvals or clearance to market,  additional time required for
regulatory  review and sanctions  imposed for  violations,  as well as the other
risks indicated in the bullets listed


                                       30


<PAGE>


above, vary by country. We may not be able to obtain regulatory approvals in the
countries in which we currently  sell our products or in countries  where we may
sell our  products  in the  future.  In  addition,  we may be  required to incur
significant costs in obtaining necessary regulatory approvals. Failure to obtain
necessary  regulatory  approvals or any other failure to comply with  regulatory
requirements could result in a material reduction in our revenues and earnings.

We also  depend  on  third-party  distributors  for a  material  portion  of our
international sales. If we lose or suffer any significant  reduction in sales to
any material distributor, our business could be materially adversely affected.

In  addition,  approximately  27% of our sales are made in  foreign  currencies,
primarily  Euros and  British  pounds.  A  significant  portion  of the  foreign
currencies in which we conduct our business is currently  denominated  in Euros.
The  Company  is not  certain  about  the  effect  of the Euro on our  business,
financial  condition or results of operations.  In the past, gains and losses on
the collection of our accounts receivable arising from international  operations
have  contributed  to negative  fluctuations  in our results of  operations.  In
general,  increases in the exchange  rate of the United States dollar to foreign
currencies  cause our products to become  relatively more expensive to customers
in those  countries,  leading to a reduction in sales or  profitability  in some
cases.  We  historically   have  not,  and  currently  are  not,  using  hedging
transactions  or other means to reduce our exposure to fluctuations in the value
of the United States dollar as compared to the foreign  currencies in which many
of our sales are made.

OUR OPERATING RESULTS MAY FLUCTUATE.

Our operating results may vary significantly quarter to quarter and from year to
year as a result of a variety of factors. These factors include:

o    level of demand for our products;

o    changes in our customer and product mix;

o    timing of acquisitions and investments in infrastructure;

o    competitive conditions;

o    timing and extent of intellectual property litigation;

o    exchange rate fluctuations; and

o    general economic and political conditions.

We  believe  that  quarterly  comparisons  of  our  financial  results  may  not
necessarily  be  meaningful  and should not be relied upon as an  indication  of
future  performance.  Additionally,  if our  operating  results  in one or  more
quarters do not meet the expectations of security analysts or others,  the price
of our common stock could be materially adversely affected.

Our  continued  investment  in product  development  and sales and marketing are
significantly ongoing expenses. If revenue in a particular period falls short of
expectations,  we may not be able to reduce  significantly  our expenditures for
that period,  which would materially  adversely affect the operating results for
that period.

WE MAY BE UNABLE TO PROTECT OUR TRADEMARKS, TRADE SECRETS AND OTHER INTELLECTUAL
PROPERTY RIGHTS THAT ARE IMPORTANT TO OUR BUSINESS.

We regard our  trademarks,  trade secrets and other  intellectual  property as a
component of our success.  We rely on trademark law and trade secret  protection
and  confidentiality  and/or  license  agreements  with  employees,   customers,
partners and others to protect our intellectual  property.  Effective  trademark
and trade secret  protection  may not be available in every country in which our
products are  available.  We cannot be certain that


                                       31


<PAGE>


we have taken adequate steps to protect our intellectual property, especially in
countries  where the laws may not  protect  our rights as fully as in the United
States. In addition, our third-party  confidentiality agreements can be breached
and, if they are,  there may not be an adequate  remedy  available to us. If our
trade secrets become known, we may lose our competitive position.

INTELLECTUAL PROPERTY OR OTHER LITIGATION COULD HARM OUR BUSINESS.

Litigation regarding patents and other intellectual property rights is extensive
in the biotechnology  industry. We are aware that patents have been applied for,
and in some  cases  issued to others,  claiming  technologies  that are  closely
related to ours. As a result,  and in part due to the  ambiguities  and evolving
nature  of  intellectual  property  law,  we  periodically  receive  notices  of
potential  infringement  of  patents  held by others.  Although  to date we have
successfully  resolved these types of claims, we may not be able to do so in the
future.

In the event of an intellectual  property dispute, we may be forced to litigate.
This  litigation  could  involve  proceedings  declared  by the U.S.  Patent and
Trademark Office or the International  Trade Commission,  as well as proceedings
brought directly by affected third parties. Intellectual property litigation can
be extremely expensive,  and these expenses,  as well as the consequences should
we not prevail, could seriously harm our business.

If a third party claimed an intellectual property right to technology we use, we
might need to  discontinue  an  important  product or  product  line,  alter our
products  and  processes,  pay  license  fees or  cease  our  affected  business
activities.  Although  we might under  these  circumstances  attempt to obtain a
license to this intellectual  property, we may not be able to do so on favorable
terms, or at all.

In addition to intellectual property litigation,  other substantial,  complex or
extended  litigation could result in large expenditures by us and distraction of
our management. For example, lawsuits by employees, stockholders,  collaborators
or  distributors  could be very costly and  substantially  disrupt our business.
Disputes from time to time with companies or individuals are not uncommon in our
industry,  and we cannot  assure you that we will always be able to resolve them
out of court.

ACCIDENTS RELATED TO HAZARDOUS MATERIALS COULD ADVERSELY AFFECT OUR BUSINESS.

Portions  of  our  operations  require  the  controlled  use  of  hazardous  and
radioactive materials. Although we believe our safety procedures comply with the
standards prescribed by federal, state, local and foreign regulations,  the risk
of  accidental  contamination  of property or injury to  individuals  from these
materials cannot be completely eliminated. In the event of an accident, we could
be liable for any damages that result, which could seriously damage our business
and results of operations.

OUR SALES ARE SUBJECT TO  SEASONALITY,  WHICH MEANS THAT WE HAVE LESS REVENUE IN
SOME MONTHS.

We  experience  a slowing  of sales in  Europe  during  the  summer  months  and
worldwide during the Christmas holidays.  Generally, our fourth quarter revenues
are lower than our revenues in each of the first three  quarters of the year. We
believe  that  period to period  comparisons  of our  operating  results may not
necessarily be reliable indicators of our future performance.  It is likely that
in some future period our operating  results will not meet expectations or those
of public market analysts,  which could result in reductions in the market price
of our common stock.

POTENTIAL  PRODUCT  LIABILITY  CLAIMS COULD  AFFECT OUR  EARNINGS AND  FINANCIAL
CONDITION.

We face a potential risk of liability claims based on our products and services,
and we have faced such claims in the past. We carry product liability  insurance
coverage  which is  limited  in scope  and  amount  but which we  believe  to be
adequate.  We cannot assure you, however,  that we will be able to maintain this
insurance at reasonable cost and on reasonable terms. We also cannot assure that
this insurance will be adequate to protect us against a product liability claim,
should one arise.

THE  LABOR  LAWS  APPLICABLE  TO  OUR  EMPLOYEES  IN  EUROPE  MAY  RESTRICT  THE
FLEXIBILITY OF OUR MANAGEMENT.


                                       32


<PAGE>


As of March 1, 2003,  60 of our 296 employees  worked for our  BioSource  Europe
subsidiary,  which is located in Nivelles, Belgium. As a result of Belgian labor
laws,  we are  required  to make  specified  severance  payments in the event we
terminate a European employee. Accordingly, our management may be limited by the
application of the Belgian labor laws in the  determination  of staffing levels,
and may have less flexibility in making such determinations than our competitors
whose employees are not subject to similar labor laws.

                       RISKS ASSOCIATED WITH OUR INDUSTRY

THE BIOMEDICAL  RESEARCH PRODUCTS  INDUSTRY IS VERY  COMPETITIVE,  AND WE MAY BE
UNABLE TO CONTINUE TO COMPETE EFFECTIVELY IN THIS INDUSTRY IN THE FUTURE.

We are engaged in a segment of the biomedical research products industry that is
highly  competitive.  We compete with many other  suppliers and new  competitors
continue  to enter the  markets.  Many of our  competitors,  both in the  United
States and  elsewhere,  are major  pharmaceutical,  chemical  and  biotechnology
companies,  and  many of them  have  substantially  greater  capital  resources,
marketing  experience,  research and development  staffs, and facilities than we
do. Any of these  companies  could succeed in developing  products that are more
effective  than the  products  that we have or may  develop and may also be more
successful  than us in producing and marketing  their  products.  We expect this
competition to continue and intensify in the future.  Competition in our markets
is primarily driven by:

o    product performance, features and liability;

o    price;

o    timing of product introductions;

o    ability  to  develop,   maintain  and  protect  proprietary   products  and
     technologies;

o    sales and distribution capabilities;

o    technical support and service;

o    brand royalty;

o    applications support; and

o    breadth of product line.

If a competitor develops superior  technology or cost-effective  alternatives to
our products, our business,  financial condition and results of operations could
be materially adversely affected.

Our  competitors  have in the past and may in the  future  compete  by  lowering
prices.  Our failure to anticipate and respond to price competition could reduce
our revenues and profits, and may damage our market share.

Our industry has also seen substantial  consolidation in recent years, which has
led to the creation of  competitors  with  greater  financial  and  intellectual
property resources than us. In addition, we believe that the success that others
have had in our industry will attract new  competitors.  Some of our current and
future  competitors  also may cooperate to better compete against us. We may not
be able to compete  effectively  against  these  current or future  competitors.
Increased competition could result in price reductions for our products, reduced
margins  and loss of market  share,  any of which  could  adversely  impact  our
business, financial condition and results of operations.

AS A  RESULT  OF  CONSOLIDATION  IN THE  PHARMACEUTICAL  INDUSTRY,  WE MAY  LOSE
EXISTING CUSTOMERS OR HAVE GREATER DIFFICULTY OBTAINING NEW CUSTOMERS.


                                       33


<PAGE>


In recent  years,  the  United  States  pharmaceutical  industry  has  undergone
substantial  consolidation.  As part of many  business  combinations,  companies
frequently  reduce the number of suppliers  used and we may not be selected as a
supplier  after  any  business  combination.   Further,   mergers  or  corporate
consolidations  in the  pharmaceutical  industry could cause us to lose existing
customers and potential  future  customers,  which could have a material adverse
effect on our business, financial condition and results of operations.

WE ARE CURRENTLY SUBJECT TO GOVERNMENT REGULATION.

Our business is currently  subject to regulation,  supervision  and licensing by
federal,  state and local governmental  authorities.  Also, from time to time we
must expend  resources  to comply  with newly  adopted  regulations,  as well as
changes in existing regulations. If we fail to comply with these regulations, we
could be subject to disciplinary actions or administrative  enforcement actions.
These actions could result in penalties, including fines.

                     RISKS ASSOCIATED WITH OUR COMMON STOCK

OUR STOCK PRICE HAS BEEN VOLATILE.
Our common  stock is quoted on the NASDAQ  National  Market,  and there has been
substantial  volatility  in the market  price of our common  stock.  The trading
price of our common stock has been,  and is likely to continue to be, subject to
significant fluctuations due to a variety of factors, including:

o    fluctuations in our quarterly operating and earnings per share results;

o    the gain or loss of significant contracts;

o    loss of key personnel;

o    announcements  of  technological  innovations  or new products by us or our
     competitors;

o    delays in the development and introduction of new products;

o    legislative or regulatory changes;

o    general trends in the industry;

o    recommendations  and/or changes in estimates by equity and market  research
     analysts;

o    biological or medical discoveries;

o    disputes and/or developments  concerning  intellectual property,  including
     patents and litigation matters;

o    public concern as to the safety of new technologies;

o    sales of common stock of existing holders;

o    securities class action or other litigation;

o    developments  in our  relationships  with current or future  customers  and
     suppliers; and

o    general economic conditions, both in the United States and abroad.

As a result of these factors,  and  potentially  others,  the sales price of our
common  stock has ranged  from  $2.41 to $32.00  per share from  January


                                       34


<PAGE>


1, 1998 through March 18, 2003 and from $5.83 to $6.95 per share from January 1,
2003 through  March 18, 2003.  For  additional  information  regarding the price
range of our common stock,  see "Item 5. Market for  Registrant's  Common Equity
and Related Stockholder Matters."

In  addition,  the stock  market in general has  experienced  extreme  price and
volume  fluctuations that have affected the market price of our common stock, as
well as the stock of many biotechnology companies. Often, price fluctuations are
unrelated to operating  performance  of the  specific  companies  whose stock is
affected.

In the past,  following periods of volatility in the market price of a company's
stock,  securities  class action  litigation  has  occurred  against the issuing
company.  If we were subject to this type of litigation in the future,  we could
incur  substantial  costs and a  diversion  of our  management's  attention  and
resources, each of which could have a material adverse effect on our revenue and
earnings.  Any  adverse  determination  in this type of  litigation  could  also
subject us to significant liabilities.

ANTI-TAKEOVER  PROVISIONS IN OUR GOVERNING  DOCUMENTS AND UNDER  APPLICABLE  LAW
COULD IMPAIR THE ABILITY OF A THIRD PARTY TO TAKE OVER OUR COMPANY.

We are subject to various  legal and  contractual  provisions  that may impede a
change in our control, including the following:

o    our  adoption of a  stockholders'  rights  plan,  which could result in the
     significant  dilution  of the  proportionate  ownership  of any person that
     engages in an unsolicited attempt to take over our company; and

o    the ability of our board of  directors  to issue  additional  shares of our
     preferred stock,  which shares may be given superior  voting,  liquidation,
     distribution and other rights as compared to our common stock.

These   provisions,   as  well  as  other   provisions  in  our  certificate  of
incorporation  and bylaws and under the Delaware General  Corporations  Law, may
make it more  difficult  for a third party to acquire our  company,  even if the
acquisition  attempt was at a premium  over the market value of our common stock
at that time.

Our principal  stockholders  and management own a significant  percentage of our
capital  stock  and  will be able to  exercise  significant  influence  over our
affairs.  Our executive  officers,  directors and  principal  stockholders  will
continue to beneficially own 34.0% of our outstanding  common stock,  based upon
the beneficial  ownership of our common stock as of March 10, 2003. In addition,
these same persons also hold options to acquire  additional shares of our common
stock, which may increase their percentage ownership of the common stock further
in the future. Accordingly, these stockholders:

o    will be able to  significantly  influence the  composition  of our board of
     directors;

o    will significantly  influence all matters requiring  stockholder  approval,
     including change of control transactions; and

o    will continue to have significant influence over our business.

This  concentration  of  ownership  of our common stock could have the effect of
delaying or  preventing  a change of control of us or otherwise  discouraging  a
potential  acquirer from  attempting to obtain control of us. This in turn could
have a negative  effect on the market price of our common  stock.  It could also
prevent our  stockholders  from  realizing a premium over the market  prices for
their shares of common stock.

OUR PRINCIPAL  STOCKHOLDERS  AND MANAGEMENT OWN A SIGNIFICANT  PERCENTAGE OF OUR
CAPITAL  STOCK  AND  WILL BE ABLE TO  EXERCISE  SIGNIFICANT  INFLUENCE  OVER OUR
AFFAIRS.

Our executive officers,  directors and principal  stockholders  beneficially own
approximately  34.0% of our outstanding  common stock, based upon the beneficial
ownership  of our  common  stock  as of  March  10,  2003.  As a  result,  these
stockholders,  if they act  together,  could exert  substantial  influence  over
matters requiring stockholder approval,  including the election of directors and
approval of mergers and other  significant  corporate


                                       35


<PAGE>


transactions.  The voting power of such persons may have the effect of delaying,
preventing  or deterring a change in control,  and could affect the market price
of our common stock.

ABSENCE OF DIVIDENDS COULD REDUCE OUR ATTRACTIVENESS TO YOU.

Some  investors  favor  companies that pay  dividends,  particularly  in general
downturns in the stock market. We have never declared or paid any cash dividends
on our common  stock.  We  currently  intend to retain any future  earnings  for
funding growth and we do not currently  anticipate  paying cash dividends on our
common stock in the foreseeable  future.  Because we may not pay dividends,  the
return on this investment likely depends on selling this stock at a profit.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We conduct business in various foreign  currencies,  including Euros and British
pounds,  and are therefore subject to the transaction  exposures that arise from
foreign  exchange  rate  movements  between  the  dates  that  foreign  currency
transactions  are initiated and the dates that they are  converted.  We are also
subject  to  exchange  rate   exposures   arising  from  the   translation   and
consolidation of the financial results of our foreign  subsidiaries.  Although a
significant  portion of the foreign  currencies in which we conduct our business
is currently,  or is anticipated in the future to be,  denominated in Euros as a
result of the European  Monetary  Union,  we are not certain about the effect of
the Euro on our business,  financial  condition or results of operations.  We do
not currently hedge either our translation  risk or our economic risk associated
with the  exchange  of foreign  currencies  into U.S.  dollars.  There can be no
assurances  that  future  changes  in  currency  exchange  rates will not have a
material impact on our future cash collections and operating results.

Our exposure to market risks for changes in interest rates relates  primarily to
outstanding  commercial  debt. Due to the recent paydown of our commercial debt,
we  anticipate no material  market risk exposure for changes in interest  rates.
Accordingly, we have not included quantitative tabular disclosures.


ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                                            Page
                                                                            ----

Independent Auditors' Report..............................................  F-2

Consolidated Balance Sheets at December 31, 2002
and December 31, 2001.....................................................  F-3

Consolidated Statements of Operations for the years
ended December 31, 2002, 2001 and 2000....................................  F-4

Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the years ended
December 31, 2002, 2001 and 2000..........................................  F-5

Consolidated Statements of Cash Flows for the years
ended December 31, 2002, 2001 and 2000....................................  F-6

Notes to Consolidated Financial Statements as of
December 31, 2002 and 2001 and for the years ended
December 31, 2002, 2001 and 2000 .........................................  F-7

Financial Statement Schedule--Valuation and
Qualifying Account .......................................................  F-24



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

None


                                       36


<PAGE>


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

INFORMATION WITH RESPECT TO DIRECTORS AND EXECUTIVE OFFICERS

The  following  table  sets forth  information  with  respect to our  directors,
executive officers and key employees as of March 18, 2003:

NAME                             AGE           POSITION
----                             ---           --------

Leonard M. Hendrickson            55           President and Chief Executive
                                               Officer, Director

Charles C. Best                   43           Chief Financial Officer,
                                               Executive Vice President, Finance

Kevin J. Reagan, Ph.D.            51           Vice President, Immunology

Jozef Vangenechten, Ph.D.         48           General Manager, BioSource
                                               Europe, S.A

Rocco R. Raduazo                  43           Vice President of Sales

Valerie Bressler-Hill             38           Vice President of Marketing

Jean-Pierre L. Conte*             39           Director

David J. Moffa, Ph.D.* **         60           Director

John R. Overturf, Jr.**           42           Director

Robert D. Weist**                 63           Director

Robert J. Weltman                 37           Director

John L. Zabriskie, Ph.D.*         63           Director
----------

*   Member of the Compensation Committee.
**  Member of the Audit Committee.

Leonard M. Hendrickson  became president and Chief Executive  Officer on October
15, 2001. He has been a director of BioSource  since October 1993.  Prior to his
position with the Company,  Mr.  Hendrickson  was President of Isotope  Products
Laboratories  from February 1992 to October 2001.  From February 1990 to January
1992, Mr.  Hendrickson  served as the principal  consultant for Microchemics,  a
marketing  and  business  development  consulting  firm  that  he  founded.  Mr.
Hendrickson   holds  a  Bachelor  of  Science  degree  from  the  University  of
Pennsylvania and a Masters in Business  Administration  from American University
in Washington, D.C.

Charles C. Best joined  BioSource in December 1999 as Chief  Financial  Officer.
Prior to his  employment at BioSource,  Mr. Best served four and a half years as
Vice President and Chief Financial Officer of Cogent Light Technologies, Inc., a
company engaged in the manufacture of surgical lighting  instruments.  From 1989
to 1995, Mr. Best worked in various positions including Corporate Controller for
3D Systems,  Inc., a company  engaged


                                       37


<PAGE>


in the manufacture and sale of high tech rapid prototyping  equipment.  Mr. Best
is a CPA and holds a Bachelor of Science degree in Business  Administration  and
Accounting from San Diego State University.

Kevin J. Reagan, Ph.D. became Vice President,  Immunology in December 1996. From
1991 to December  1996,  Dr. Reagan served as the first  Director of Development
Laboratories  and  then  Vice  President,  Laboratory  Operations  at  Specialty
Laboratories,  Inc., a clinical reference lab. From 1990 to 1991, Dr. Reagan was
the  Associate  Director of  AIDS/Hepatitis  R&D at Ortho  Diagnostics,  Inc., a
Johnson  &  Johnson  Company.  Dr.  Reagan  received  his  Bachelor  of  Arts in
Biological  Sciences from the University of Delaware.  Dr. Reagan  received both
his Masters and Ph.D.  degrees in  Microbiology  and  Immunology  from Hahnemann
Medical College.

Jozef Vangenechten,  Ph.D. became Managing Director of BioSource Europe, S.A. in
February 1998. From 1988 to February 1998, Dr.  Vangenechten  worked for Societe
Generale de  Surveillance,  n.v.,  an  international  provider of  environmental
compliance  services,  most  recently  as  Managing  Director  of SGS's  EcoCare
Environmental Services division.

Rocco R. Raduazo  joined  BioSource in December 2002 as Vice President of Sales.
From 1996 up to his  employment at BioSource,  Mr. Raduazo served in a number of
positions at BD  Biosciences  Clontech  including  Vice  President of Sales.  BD
Biosciences  Clontech is a company  engaged in the  manufacture of genomic based
products.  From 1990 to 1995, Mr.  Raduazo  worked in various  positions at Life
Technologies,  Inc., a company engaged in the manufacture and sale of biological
reagents.  Mr. Raduazo holds a Bachelor of Science degree in  Biochemsitry  from
the University of New Hampshire,  performed  various graduate work at Ohio State
University and holds an MBA in Finance from the American University.

Valerie Bressler-Hill,  Ph.D. became Vice President,  Marketing in January 2000,
having  served as  Director of  Marketing  since  1999.  From 1994 to 1998,  Dr.
Bressler-Hill  served in the Research and Development  group of the Company as a
scientist and Associate Director. Dr. Bressler-Hill received her Ph.D. degree in
Physical Chemistry from University of California at Santa Barbara.

Jean-Pierre L. Conte has served as a director of BioSource  since February 2000.
Mr.  Conte is a Managing  Director  of Genstar  Capital  LLC,  which is the sole
general partner of Genstar  Capital  Partners II, L.P., a private equity limited
partnership and a Managing  Director of Genstar Capital,  L.P. which is the sole
general partner of Genstar Capital Partners III L.P. Prior to joining Genstar in
1995, he was a principal for six years at the NTC Group,  Inc., a private equity
investment firm. He is a director of several private companies. Mr. Conte earned
a Masters of Business  Administration from Harvard University Graduate School of
Business  and a Bachelor of Arts from  Colgate  University.  Mr.  Conte has been
appointed to the Board of  Directors  pursuant to an investor  rights  agreement
among  Genstar,  Stargen and the  Company,  which is  described  under "Item 13.
Certain Relationships and Related Transactions."

David J. Moffa,  Ph.D.  has been a director of BioSource  since April 1995.  Dr.
Moffa serves as the Regional  Director and as special projects  director for Lab
Corporation of America,  Inc. located in Fairmont,  West Virginia,  positions he
has held  since  1982 and 1984,  respectively,  and as  director  of  LabCorp in
Pittsburgh Pennsylvania, a position held since 1985. Dr. Moffa also serves as an
advisor  and  consultant  to various  diagnostic,  scientific  and  health  care
facilities, and is an owner and developer of GM Realty and Moffa Properties. Dr.
Moffa also serves on a number of  committees  and boards of directors of various
privately held companies and  governmental  offices,  including  BB&T,  Inc. Dr.
Moffa has completed a post doctoral  fellowship in Clinical  Biochemistry at the
West Virginia University National Institutes of Health, holds a Ph.D. in Medical
Biochemistry  from the West  Virginia  School of Medicine,  a Masters of Science
degree in  Biochemistry  from West  Virginia  University  and a Bachelor of Arts
degree in Pre-Medicine from West Virginia University.

John R. Overturf, Jr. has been a director of BioSource since September 1993. Mr.
Overturf serves as the President of R.O.I.,  Inc., a private investment company,
a  position  he has held since July 1993.  He also  serves as  President  of the
Combined Penny Stock Fund,  Inc., a closed-end  stock market fund, a position he
has held since  August 1996.  From  September  1993 until  September  1996,  Mr.
Overturf served as Vice President of the Rockies Fund,  Inc., a closed-end stock
market fund. Mr. Overturf holds a Bachelor of Science degree in Finance from the
University of Northern Colorado.


                                       38


<PAGE>


Robert D. Weist has been a director of BioSource since April 1996. Mr. Weist has
been President of Weist  Associates,  a management  consulting firm, since April
1992.  From January 1986 through  April 1992,  Mr. Weist was a consultant to and
Senior Vice President,  Administration,  General Counsel and Secretary of Amgen,
Inc., having served as Vice President,  General Counsel and Secretary from March
1982 through  January 1986.  Mr. Weist holds a Juris Doctor degree from New York
University  and a Masters in  Business  Administration  from the  University  of
Chicago.

Robert J. Weltman has served as a director of BioSource  since February 2000. He
is  currently  a Managing  Director  of Genstar  Capital,  LP, the sole  general
partner  of  Genstar  Capital  Partners  II,  L.P.,  a  private  equity  limited
partnership.  Mr.  Weltman  joined  Genstar  in August  1995.  Prior to  joining
Genstar,  from  July  1993 to July  1995,  Mr.  Weltman  was an  Associate  with
Robertson,  Stephens & Company, an investment banking firm. Mr. Weltman holds an
AB degree in chemistry from Princeton University. Mr. Weltman has been appointed
to the  Board of  Directors  pursuant  to an  investor  rights  agreement  among
Genstar,  Stargen and the Company,  which is described  under "Item 13.  Certain
Relationships and Related Transactions."

John L.  Zabriskie,  Ph.D., is Co-founder and has served as Director of Puretech
Ventures, a venture creation company since 2001. From 1997 to 2000 Dr. Zabriskie
was Chairman and Chief Executive Officer of NEN Life Science  Products,  Inc., a
leading  supplier of kits for labeling and  detection of DNA. From 1995 to 1997,
Dr. Zabriskie was President and Chief Executive Officer of Pharmacia and Upjohn,
Inc., a Fortune 500 pharmaceutical  company formed by the merger of Pharmacia AB
of Sweden and the Upjohn Company of Kalamazoo, Michigan. From 1965 until joining
Upjohn in 1994,  Dr.  Zabriskie was employed by Merck and Co., Inc. He began his
career  at Merck as a  chemist  in 1965 and  held  various  positions  including
President of Merck Sharp & Dohme and Executive  Vice President of Merck and Co.,
Inc.  He has  served  on a  number  of  boards  for  health  care  and  academic
institutions  and  currently  serves on the Board of  Directors  of Kellogg Co.,
Cubist Pharmaceutical, Inc., Biomira, Inc., Array BioPharma, and MacroChem Corp.
Dr.  Zabriskie  received his A.B.  degree in chemistry  from  Dartmouth  College
(N.H.)  in 1961 and his  Ph.D.  in  organic  chemistry  from the  University  of
Rochester (N.Y.) in 1965.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange Act of 1934,  requires our executive
officers,  directors,  and persons who own more than ten percent of a registered
class of our equity  securities  to file  reports of  ownership  and  changes in
ownership  with the Securities and Exchange  Commission  (the "SEC").  Executive
officers,  directors and  greater-than-ten  percent stockholders are required by
SEC  regulations  to furnish us with all Section  16(a)  forms they file.  Based
solely on our  review of the  copies of the  forms  received  by us and  written
representations  from certain reporting persons that they have complied with the
relevant filing  requirements,  we believe that,  during the year ended December
31, 2002, all our executive  officers,  directors and  greater-than-ten  percent
stockholders complied with all Section 16(a) filing requirements, except for the
following;  Robert D.  Weist  filed two late Form 4s,  each  reporting  late one
transaction that occurred in November 2002 and December 2002, respectively;  and
each of John R. Overturf, Jr., David J. Moffa,  Jean-Pierre L. Conte, and Robert
J.  Weltman  filed one late Form 4, each  reporting  late one  transaction  that
occurred for each in December 2002.


                                       39


<PAGE>


ITEM 11.   EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth, as to the Chief Executive Officer and as to each
of the other four most highly compensated  officers whose compensation  exceeded
$100,000  during  the  last  fiscal  year  (the  "Named  Executive   Officers"),
information  concerning  all  compensation  paid  for  services  to  us  in  all
capacities for each of the three years ended December 31 indicated below.

<TABLE>
                           SUMMARY COMPENSATION TABLE
<CAPTION>
                                             -------------------------------------    -----------------------
                                                      ANNUAL COMPENSATION             LONG TERM COMPENSATION
                                             -------------------------------------    -----------------------
                                                                          OTHER       NUMBER OF
                                 YEAR ENDED                               ANNUAL      SECURITIES   ALL OTHER
NAME AND                          DECEMBER                                COMPEN-     UNDERLYING    COMPEN-
PRINCIPAL POSITION (1)               31,        SALARY       BONUS        SATION        OPTIONS     SATION
--------------------------------    ----     ----------    ---------     ---------      -------    ---------
<S>                                 <C>      <C>           <C>           <C>            <C>        <C>

Leonard M. Hendrickson..........    2002     $250,000      $99,650       $ 1,548(4)           0
   Chief Executive Officer and      2001       49,000(2)    90,000(3)        173(4)     280,000
   President

David Thrower...................    2002     $124,506(5)   $     0       $14,053(6)           0
   Senior Vice President,           2001      200,000       23,000           324(4)     110,000
   Sales and Marketing              2000       28,750(5)     8,750            27(4)     235,000    $13,224(7)

Charles C. Best.................    2002     $166,400      $59,023           324(4)           0
   Chief Financial Officer          2001      160,000       23,500           325(4)      87,500
   and Executive Vice President     2000      142,200       22,500           489(4)      20,000

----------
<FN>
(1)    For a description  of employment  agreements  between  certain  executive
       officers and the  Company,  see  "Employment  Agreements  with  Executive
       Officers" below.
(2)    Mr.  Hendrickson  joined  the  Company  on  October  15,  2001.  (3)  Mr.
       Hendrickson  received a signing bonus on October 15, 2001 (4) Consists of
       group life insurance premiums paid by the Company.
(5)    Mr.  Thrower joined the Company on November 1, 2000 and resigned from the
       Company on July 26,  2002.  (6)  Consists of $13,685 of accrued  vacation
       paid by the Company upon termination and $188 for a group life insurance
       premium paid by the Company.
(7)    Relocation expenses.
</FN>
</TABLE>


                                       40


<PAGE>


OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth certain information  regarding the grant of stock
options  made  during  the  fiscal  year ended  December  31,  2002 to the Named
Executive Officers.

<TABLE>
                        OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>

                            NUMBER OF       PERCENT OF       AVG.
                            SECURITIES    TOTAL OPTIONS    EXERCISE                POTENTIAL REALIZABLE VALUE
                            UNDERLYING      GRANTED TO     OF BASE                 OF ASSUMED ANNUAL RATES OF
                             OPTIONS       EMPLOYEES IN     PRICE     EXPIRATION   STOCK PRICE APPRECIATION
NAME                        GRANTED(1)    FISCAL YEAR(2)  ($/SH.)(3)     DATE        FOR OPTION TERM (1)
------------------------    ----------    --------------  ----------  ----------   -------------------------
                                                                                      5%($)         10%($)
                                                                                      -----         ------
<S>                             <C>             <C>           <C>         <C>         <C>           <C>

Leonard M. Hendrickson...       0               0%            --          --          $  0          $  0
David Thrower............       0               0%            --          --          $  0          $  0
Charles C. Best..........       0               0%            --          --          $  0          $  0
----------
<FN>
(1)  Options granted in 2002 vest over various periods. The options were granted
     for a term of 10 years.
(2)  Options  covering an aggregate of 388,300  shares were granted to employees
     of the Company and its subsidiary during the year ended December 31, 2002.
(3)  The exercise price and the tax withholding  obligations related to exercise
     may be paid by  delivery  of  already  owned  shares  held a minimum of six
     months, subject to certain conditions.
</FN>
</TABLE>

OPTION EXERCISES AND STOCK OPTIONS HELD AT FISCAL YEAR END

The  following  table sets forth,  for those Named  Executive  Officers who held
stock  options  at  fiscal  year  end,  certain  information  regarding  options
exercised in fiscal year 2002,  the number of shares of common stock  underlying
stock  options  held and the value of options held at fiscal year end based upon
the last  reported  sales  price of the  common  stock on the  NASDAQ  market on
December 31, 2002 ($5.99 per share).

<TABLE>
          AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<CAPTION>

                           SHARES                 NUMBER OF SECURITIES
                          ACQUIRED               UNDERLYING UNEXERCISED       VALUE OF UNEXERCISED
                             ON      VALUE             OPTIONS AT            IN-THE-MONEY OPTIONS AT
NAME                      EXERCISE  REALIZED       DECEMBER 31, 2001           DECEMBER 31, 2001
------------------------  --------  --------       -----------------           -----------------
                            (#)       ($)       EXERCISABLE  UNEXERCISABLE   EXERCISABLE  UNEXERCISABLE
                            ---       ---       -----------  -------------   -----------  -------------
<S>                                              <C>           <C>            <C>           <C>
Leonard M. Hendrickson..    --        --         140,666       198,334        $191,163      $198,334
Charles C. Best.........    --        --          62,124        71,786          48,450         7,500
----------
</TABLE>

COMPENSATION OF DIRECTORS

Our non-employee  corporate  directors  currently are paid $2,000 for each board
meeting attended, and $1,000 per year for service on a board committee.  We also
pay out of pocket  expenses  incurred by our directors in connection  with their
attendance. In addition,  non-employee directors,  excluding Dr. Zabriskie, have
received an annual grant of 4,000  non-statutory  stock options,  exercisable at
the fair market value of our common stock on the date of grant,  and which fully
vest on the date of grant. Dr. Zabriskie, who was appointed as a board member in
July 2002,  received a grant of 55,000  stock  options on July 17, 2002 of which
20,000 vested  immediately and 50% of the remaining  35,000 shares vest annually
over the next two year period.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

We have entered into an  employment  agreement  with Leonard M.  Hendrickson  to
serve as our President and Chief Executive Officer,  effective as of October 15,
2001. Pursuant to this agreement Mr. Hendrickson  receives an annual base salary
of $250,000,  which we may increase, at the Board's sole discretion,  at the end
of each year of his employment. In addition to the base salary to be paid to Mr.
Hendrickson, the Company paid Mr.


                                       41


<PAGE>


Hendrickson a one time signing bonus in the amount of $90,000, upon commencement
of his employment. In addition, Mr. Hendrickson is eligible to receive an annual
bonus under the Company's management incentive plan. The agreement terminates on
December 31, 2004. In the event that Mr. Hendrickson's  employment is terminated
without cause or due to a "change of control"  during the term of the agreement,
the Company is obligated to continue to pay Mr. Hendrickson's  then-current base
salary  for a  period  of  12  months  following  the  effective  date  of  such
termination.  Also,  in certain  instances  involving a "change of control," all
stock  options which have been granted to Mr.  Hendrickson  that are unvested at
the time of such change of control become  immediately  vested and  exercisable.
According to our agreement with Mr. Hendrickson,  a "change of control" includes
any event  pursuant  to which (i) any  person  or  entity  (or group of  related
persons or entities  acting in concert) shall acquire shares of capital stock of
the  Company  entitled  to  exercise  35% or  more  of the  total  voting  power
represented by all shares of capital stock of the Company then  outstanding;  or
(ii) the Company sells or otherwise  transfers all or  substantially  all of its
assets or merges,  consolidates  or  reorganizes  with any other  corporation or
entity,  resulting in less than 75% of the total voting power represented by the
capital stock or other equity  interests of the  corporation  or entity to which
the  Company's  assets  are  sold  or  transferred  or  surviving  such  merger,
consolidation or reorganization  being held by the persons and entities who were
holders of common stock of the Company immediately prior to such event; or (iii)
the Company  issues,  otherwise than on a pro rata basis,  additional  shares of
capital stock representing  (after giving effect to such issuance) more than 35%
of the total  voting  power of the  Company;  or (iv) the  persons  who were the
directors  of the Company as of October 15, 2001 cease to comprise a majority of
the Board of Directors of the Company.

Effective as of December 17, 1999, Charles C. Best, our Chief Financial Officer,
entered  into a  separation  agreement  with us.  In the event we  experience  a
"change of control," and the  employment  of Mr. Best is  terminated  within one
year of the "change of  control,"  we are  obligated to continue to pay Mr. Best
his  then-current  base salary for a period of 12 months following the effective
date of such  termination.  For purposes of Mr. Best's separation  agreement,  a
"change of  control"  includes  (i) the  acquisition  by any person or entity of
shares of our capital stock entitled to exercise 35% or more of the total voting
power  of  our  stockholders,  (ii)  the  sale  or  transfer  by  us of  all  or
substantially  all of our assets or a merger,  consolidation  or  reorganization
with any other  corporation  or  entity,  which  results in less than 75% of the
total voting power represented by the capital stock or other equity interests of
the  corporation  or entity  to which  our  assets  are sold or  transferred  or
surviving such merger, consolidation or reorganization being held by the persons
and  entities who were  holders of our common  stock  immediately  prior to such
agreement,  (iii) the  issuance by us,  otherwise  than on a pro rata basis,  of
additional  shares of capital  stock  representing  (after giving effect to such
issuance) more than 35% of the total voting power of our  stockholders,  or (iv)
the persons who were our  directors as of the date of the  separation  agreement
ceasing to comprise a majority of our Board of Directors.

Effective May 18, 2001,  David  Thrower,  our Senior Vice President of Sales and
Marketing, entered into a separation agreement with us. In the event the Company
terminates Mr. Thrower's employment with the Company other than for cause at any
time (i)  during  the  later of (A) 12  months  from the date of his  separation
agreement,  and (B) Nine months from the  appointment  of a new Chief  Executive
Officer by the Board, or (ii) within six months following a "change of control",
we are required to pay Mr. Thrower his then-current  base salary for a period of
12 months following the effective date of such termination.  In addition, if the
employment  of Mr.  Thrower  is  terminated  within  six  months of a "change of
control"  all stock  options  which have been  granted to Mr.  Thrower  that are
unvested at the time of such change of control shall become  immediately  vested
and exercisable. According our agreement with Mr. Thrower, a "change of control"
is defined as the acquisition by any person or entity  unaffiliated with Genstar
Capital  LLC of  capital  stock  representing  at least 40% of the  total  fully
diluted  shares of the Company.  Mr.  Thrower  resigned from the company in July
2002 and was not  eligible  to receive  any  additional  compensation  under his
employment agreement.

STOCK OPTION PLANS

We adopted a Stock  Option  Plan (the "1993  Plan") in 1993.  The purpose of the
1993 Plan is to attract,  retain and  motivate  certain of our key  employees by
giving them  incentives  which are linked  directly to increases in the value of
our common  stock.  Each of our  officers,  directors  and  employees  and under
certain  circumstances,  our  consultants  are eligible to be considered for the
grant of awards  under the 1993  Plan.  The  maximum  number of shares of common
stock  that may be  issued  pursuant  to awards  granted  under the 1993 Plan is
2,000,000, subject


                                       42


<PAGE>


to certain  adjustments to prevent dilution.  Any shares of common stock subject
to an award,  which for any reason expires or terminates  unexercised  are again
available for issuance under the 1993 Plan.

The 1993 Plan  authorizes the  Compensation  Committee to enter into any type of
arrangement  with an eligible  employee  that,  by its terms,  involves or might
involve the issuance of (1) shares of our common stock, (2) an option,  warrant,
convertible security, stock appreciation right or similar right with an exercise
or conversion privilege at a price related to our common stock, or (3) any other
security or benefit with a value derived from the value of our common stock. Any
stock  option  granted may be an incentive  stock  option  within the meaning of
Section 422 of the Internal  Revenue Code of 1986,  as amended (the "Code") or a
nonqualified stock option.

As of March 5, 2003, the Board had granted  options under the 1993 Plan covering
an aggregate of  2,000,000  shares of common stock to certain of our  directors,
officers  and  employees,  of which  options to  purchase  677,484  shares  were
outstanding.

In  January  2000,   our  Board  of  Directors   approved  the  2000   BioSource
International, Inc. non-qualified stock option plan (the "2000 Plan"). Under the
2000 Plan,  non-qualified  stock options may be granted to full-time  employees,
part-time  employees,  directors  and  consultants  of the Company to purchase a
maximum of 2,000,000 shares of the company's common stock. Options granted under
the 2000 Plan are generally  exercisable  at the rate of 25% each year beginning
one year from the date of grant.  The stock options  generally  expire ten years
from the date of grant. As of March 5, 2003, the Board had granted options under
the 2000 Plan  covering an  aggregate  of  2,000,000  shares of common  stock to
certain of our directors,  officers and employees, of which 1,165,591 options to
purchase shares were outstanding.

The Compensation  Committee of our Board of Directors currently  administers our
stock option plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER TRADING PARTICIPATION

Compensation Committee currently consists of Messrs. Zabriskie, Moffa and Conte.
The   Compensation   Committee  is  responsible   for   considering  and  making
recommendations to the Board of Directors regarding  executive  compensation and
is  responsible  for  administrating  our stock option and  executive  incentive
compensation  plans.  None of the  members of the  compensation  committee  is a
current  officer or employee of the Company.  None of our executive  officers or
Directors  served as a member of the board of  directors  of any other entity of
which an executive officer or Director served on our Board of Directors.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL STOCKHOLDERS

The following table sets forth as of March 18, 2003 certain information relating
to the  ownership  of our common  stock by (i) each person known by us to be the
beneficial  owner of more than five  percent  of the  outstanding  shares of our
common stock, (ii) each of our directors,  (iii) each of our executive officers,
and (iv) all of our executive  officers and directors as a group.  Except as may
be indicated in the footnotes to the table and subject to  applicable  community
property laws,  each such person has the sole voting and  investment  power with
respect to the shares owned.  Unless  otherwise  indicated,  the address of each
person  listed is in care of  BioSource  International,  Inc.,  542 Flynn  Road,
Camarillo,  California  93012,  and the  address of Messrs.  Conte,  Weltman and
Genstar  Capital LLC is Four  Embarcadero  Center,  Suite 1900,  San  Francisco,
California 94111.


                                       43


<PAGE>


                                              Number of Shares
                                              of Common Stock
                                                Beneficially
             Name and Address                      Owned (1)       Percent (1,2)
             ----------------                 ----------------     -------------

Genstar Capital LLC (3)...................        3,444,856            31.5%
Jean-Pierre L. Conte (3)..................        3,396,189            31.1%
Kennedy Capital Management, Inc. (4)......          759,428             7.9%
Dimensional Funds Advisors Inc. (5).......          595,300             6.2%
Royce & Associates LLC (6)................          580,000             6.0%
Bricoleur Capital Management LLC (7)......          493,510             5.1%
Leonard M. Hendrickson (8)................          221,832             2.3%
John L. Zabriskie, Ph.D. (9)..............           70,000              *
David J. Moffa, Ph.D. (10)................           43,900              *
John R. Overturf, Jr. (11)................           29,600              *
Robert D. Weist (12)......................           44,000              *
Robert J. Weltman (13)....................           15,333              *
Charles C. Best (14)......................           76,446              *
All of the directors  and  executive
   officers as a group (nine persons) (15)        3,825,700            34.4%
----------
* Less than one percent.

(1)    Under Rule 13d-3,  certain shares may be deemed to be beneficially  owned
       by more than one person (if, for example, persons share the power to vote
       or the power to dispose of the shares). In addition, shares are deemed to
       be beneficially  owned by a person if the person has the right to acquire
       the shares (for example,  upon  exercise of an option)  within 60 days of
       the date as of which  the  information  is  provided.  In  computing  the
       percentage  ownership of any person,  the amount of shares outstanding is
       deemed to include the amount of shares  beneficially owned by such person
       (and  only such  person)  by reason  of these  acquisition  rights.  As a
       result,  the percentage of  outstanding  shares of any person as shown in
       this table does not necessarily  reflect the person's actual ownership or
       voting  power  with  respect  to the  number of  shares  of common  stock
       actually outstanding at March 21, 2000.
(2)    Percentage  ownership  is based  on  9,608,005  shares  of  common  stock
       outstanding as of March 18, 2003. (3) Genstar  Capital  Partners II, L.P.
       holds 2,032,809 shares of common stock and 1,262,542 shares of
       common stock  issuable upon exercise of warrants and Stargen II LLC holds
       34,380 shares of common stock and 24,458 shares of common stock  issuable
       upon  exercise of warrants,  all of which are  currently  convertible  or
       exercisable.  Includes  12,000 stock options held by Mr. Conte and 12,000
       stock options held by Mr.  Weltman.  In addition,  Mr. Conte holds 30,000
       shares of common stock,  Richard F. Hoskins holds 16,667 shares of common
       stock,  Mr.  Weltman holds 3,333 shares of common  stock,  and Richard D.
       Paterson holds 16,667 shares of common stock.  Genstar Capital LLC is the
       general  partner of Genstar  Capital  Partners  II, L.P. Mr.  Conte,  Mr.
       Hoskins and Mr.  Paterson  are the  managers  and  managing  directors of
       Genstar  Capital LLC and are members of Stargen,  and Mr. Paterson is the
       Administrative  Member of  Stargen.  In such  capacities  Messrs.  Conte,
       Hoskins and Paterson may be deemed to  beneficially  own shares of common
       stock  beneficially  held by Genstar  Capital  Partners and Stargen,  but
       disclaim  such  beneficial  ownership,  except  to the  extent  of  their
       economic  interest in these shares.  Messrs.  Conte,  Hoskins,  Paterson,
       Genstar Capital LLC, Genstar Capital Partners II, L.P. and Stargen II LLC
       may be deemed to be acting  as a group in  relation  to their  respective
       holdings in BioSource but do not affirm the existence of any such group.
(4)    As disclosed in the Schedule 13G filed with the  Securities  and Exchange
       Commission on February 14, 2003 by Kennedy Capital Management, Inc.
(5)    As disclosed in the Schedule 13G filed with the  Securities  and Exchange
       Commission on February 3, 2003 by Dimensional Fund Advisors, Inc.
(6)    As disclosed in the Schedule 13G filed with the  Securities  and Exchange
       Commission on February 3, 2003 by Royce & Associates LLC.
(7)    As disclosed in the Schedule 13G filed with the  Securities  and Exchange
       Commission on February12, 2003 by Bricoleur Capital Management LLC.


                                       44


<PAGE>


(8)    Includes (i) 169,832  shares of common stock  reserved for issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable  within  60 days of March 18,  2003;  (ii)  40,000  shares of
       common stock owned;  (iii) 4,000 shares of common stock held of record by
       two of Mr. Hendrickson's minor children;  and (iv) 8,000 shares of common
       stock held in the Microchemics Simplified Employee Pension Plan.
(9)    Includes  (i)55,000  shares of common stock  reserved  for issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable  within 60 days of March 18, 2003;  and (ii) 15,000 shares of
       common stock owned.
(10)   Includes  (i) 36,500  shares of common stock  reserved for issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable  within 60 days of March 18, 2003;  (ii) 550 shares of common
       stock held solely by Dr.  Moffa's  spouse;  (iii) 4,000  shares of common
       stock held  jointly  with Dr.  Moffa's  spouse;  and (iv) 2,850 shares of
       common stock held directly.
(11)   Includes  (i) 24,000  shares of common stock  reserved for issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable  within 60 days of March 18,  2003;  and (ii) 5,600 shares of
       common stock owned.
(12)   Includes  44,000  shares of  common  stock  reserved  for  issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable within 60 days of March 18, 2003.
(13)   Includes  (i) 3,333  shares of common  stock held  directly;  (ii) 12,000
       shares of common  stock  reserved  for  issuance  upon  exercise of stock
       options that are currently  exercisable or are exercisable within 60 days
       of March 18, 2003. Mr. Weltman is also a Principal of Genstar  Capital LP
       and a member,  but not a managing member,  of Stargen II LLC. Mr. Weltman
       does not have  power to vote or  dispose  of, or to direct  the voting or
       disposition of, any securities  beneficially owned by Genstar Capital LLC
       or Stargen II LLC. Mr. Weltman  disclaims that he  beneficially  owns any
       shares of common  stock  beneficially  owned by  Genstar  Capital  LLC or
       Stargen II LLC,  except to the extent of his economic  interest in shares
       owned by Genstar Capital LLC or Stargen II LLC.
(14)   Includes  76,446  shares of  common  stock  reserved  for  issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable within 60 days of March 18, 2003.
(15)   Includes (i) 386,778  shares of common stock  reserved for issuance  upon
       exercise  of  stock  options  that  are  currently   exercisable  or  are
       exercisable  within 60 days of March 18, 2003;  (ii) 1,287,000  shares of
       common  stock  reserved  for  issuance  upon the exercise of warrants and
       (iii) includes 2,151,922 shares of common stock owned.

EQUITY PLAN COMPENSATION INFORMATION

The Equity Plan Compensation  Information identified in Part II, Item 5 above is
incorporated into this Part III, Item 12 by this reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On January 10,  2000,  we entered  into a  securities  purchase  agreement  with
Genstar  Capital  Partners  II,  L.P.  and  Stargen  II  LLC.  Pursuant  to this
agreement,  we sold  Genstar  and Stargen a total of 371,300  shares,  including
364,244 to Genstar  and 7,056 to Stargen,  of our Series B  Preferred  Stock for
$9,000,312  in the  aggregate.  These  shares were  initially  convertible  into
1,485,200 shares, including 1,456,976 for Genstar and 28,224 for Stargen, of our
common stock. In addition, we issued to Genstar and Stargen warrants to purchase
a total of 1,287,000 shares of our common stock,  including 1,262,542 to Genstar
and 24,458 to Stargen, exercisable at $7.77 per share. Under the investor rights
agreement  among  Genstar,  Stargen  and us,  executed  in  connection  with the
securities  purchase  agreement,  Genstar  and  Stargen  also  have the right to
appoint two out of our seven directors to our Board of Directors as long as they
beneficially own, in the aggregate,  at least 750,000 shares of common stock, or
one director if they  beneficially own at least 495,000 shares.  Pursuant to the
investor  rights  agreement,  we  appointed  Jean-Pierre  L.  Conte,  a Managing
Director of Genstar  Capital LLC,  and Robert J.  Weltman,  a Vice  President of
Genstar  Capital LLC, to our Board of  Directors.  Genstar and Stargen also have
the  right of first  refusal  to  purchase  additional  shares  and the right to
require us to register their shares of our common stock underlying the preferred
stock and the warrants.  The consummation of the securities  purchase agreement,
including  the  issuance  of the  shares  of  Series B  Preferred  Stock and the
warrants,  occurred on February 15, 2000.  Pursuant to the  securities  purchase
agreement,  we  paid a  $270,009  transaction  fee to  Genstar  Capital  LLC and


                                       45


<PAGE>


reimbursed all of the fees and expenses of approximately  $195,426,  incurred by
Genstar  Capital  Partners and its affiliates in connection  with the securities
purchase agreement.

On September 20, 2000,  pursuant to the terms of the  Certificate of Designation
of Preferences, Rights and Limitations of our Series B Preferred, all issued and
outstanding shares of Series B Preferred Stock were automatically converted into
an aggregate of 1,556,574 shares of common stock,  including 1,526,922 shares of
common  stock  issued to Genstar  and 29,652  shares of common  stock  issued to
Stargen.

We entered into a Securities Purchase Agreement, effective as of August 9, 2000,
with  Genstar  Capital  Partners  II, L.P.  Genstar  agreed to purchase  from us
300,000  shares of our common  stock at $15.00 per share.  Genstar  subsequently
assigned its right to purchase  30,000 of these shares to  Jean-Pierre  L. Conte
and 3,333 of the  shares  to  Robert  Weltman.  Both Mr.  Conte and Mr.  Weltman
currently  serve on our  Board  of  Directors.  Genstar  assigned  its  right to
purchase  an  additional  33,334 of these  shares to certain  other  individuals
affiliated with Genstar.  We also entered into a Securities  Purchase Agreement,
effective as of August 9, 2000,  with  Russell D. Hays,  former  President,  and
Chief  Executive  Officer of the  Company  pursuant  to which Mr. Hays agreed to
purchase  40,000  shares of the our common  stock at $15.00  per share.  We also
entered into a Securities Purchase Agreement, effective as of September 5, 2000,
with George Uveges,  former Chief Operating  Officer of the Company  pursuant to
which Mr.  Uveges  agreed to purchase  11,428  shares of the our common stock at
$21.875  per  share.  The  closing  of each of these  transactions  occurred  on
September 28, 2000.

ITEM 14.   CONTROLS AND PROCEDURES

Within 90 days prior to the  filing of this  report,  members  of the  Company's
management,  including the Company's President and Chief Executive Officer,  Len
Hendrickson,   and  Chief  Financial  Officer,   Charles  Best,   evaluated  the
effectiveness of the design and operation of the Company's  disclosure  controls
and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
Mr. Hendrickson and Mr. Best believe that, as of the date of the evaluation, the
Company's  disclosure  controls and  procedures are effective in making known to
them material  information  relating to the Company  (including its consolidated
subsidiaries) required to be included in this report.

Disclosure controls and procedures, no matter how well designed and implemented,
can provide  only  reasonable  assurance  of  achieving  an entity's  disclosure
objectives.   The  likelihood  of  achieving  such  objectives  is  affected  by
limitations  inherent in disclosure  controls and procedures.  These include the
fact that human judgment in decision-making can be faulty and that breakdowns in
internal  control can occur  because of human  failures such as simple errors or
mistakes or intentional circumvention of the established process.

There were no significant changes in the Company's internal controls or in other
factors that could  significantly  affect these internal controls,  known to Mr.
Hendrickson or Mr. Best, after the date of the most recent evaluation.

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

   (a)(1) The  financial  statements  listed  below are included as part of this
report:

    Independent Auditors' Report

    Consolidated Balance Sheets at December 31, 2002 and 2001

    Consolidated Statements of Operations for the Years ended December 31, 2002,
    2001, and 2000

    Consolidated  Statements of Stockholders'  Equity and  Comprehensive  Income
    (Loss) for the Years ended December 31, 2002, 2001 and 2000

    Consolidated Statements of Cash Flows for the Years ended December 31, 2002,
    2001, and 2000

    Notes to Consolidated Financial Statements


                                       46


<PAGE>


   (a)(2) The following  schedule  supporting  the  financial  statements of the
Company is included herein:

   Financial Statement Schedule--Valuation and Qualifying Accounts
   All other schedules are omitted because they are not applicable, not required
   or because the required information is included in the consolidated financial
   statements or notes thereto.

   (a)(3) Exhibits

   See Exhibit Index immediately following signature page.

   (b) Reports on Form 8-K:

         Current Report on Form 8-K dated October 21, 2002, reporting Item 5 and
         filed with the Securities and Exchange Commission on October 22, 2002.


                                       47


<PAGE>


                                   SIGNATURES

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

                                       BioSource International, Inc

         Date:  March 27, 2003         By:      /s/  Charles C. Best
                                                --------------------------------
                                                Charles C. Best
                                                Chief Financial Officer

         Date:  March 27, 2003         By:      /s/  Leonard M. Hendrickson
                                                --------------------------------
                                                Leonard M. Hendrickson
                                                President and Chief Executive
                                                Officer


                                POWER OF ATTORNEY
Each person whose  signature  appears  below  constitutes  and appoints  Leonard
Hendrickson  and  Charles  Best,  and  each of  them,  as his  true  and  lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any or
all amendments to this Annual Report on Form 10-K and to file the same, with all
exhibits  thereto,  and  other  documents  in  connection  therewith,  with  the
Securities and Exchange  Commission,  granting unto said  attorneys-in-fact  and
agents,  and each of them,  full power and  authority to do and perform each and
every  act and  thing  requisite  and  necessary  to be done  in and  about  the
foregoing,  as  fully to all  intents  and  purposes  as he might or could do in
person,  hereby  ratifying and  confirming all that said  attorneys-in-fact  and
agents, or either of them, or their substitutes,  may lawfully do or cause to be
done by virtue hereof.


In  accordance  with the Exchange  Act, this report has been signed below by the
following  person on behalf of the  registrant  and in the capacities and on the
date indicated:

           SIGNATURE                         TITLE                     DATE
           ---------                         -----                     ----

/S/  LEONARD M. HENDRICKSON       President, Chief Executive      March 27, 2002
------------------------------    Officer and Director
     Leonard M. Hendrickson

/S/  DAVID J. MOFFA, PH.D.        Director                        March 27, 2003
------------------------------
     David J. Moffa, Ph.D.

/S/  JOHN R. OVERTURF, JR.        Director                        March 27, 2003
------------------------------
     John R. Overturf, Jr.

/S/  ROBERT D. WEIST              Director                        March 27, 2003
------------------------------
     Robert D. Weist

/S/  JEAN-PIERRE L. CONTE         Director                        March 27, 2003
------------------------------
     Jean-Pierre L. Conte

/S/  ROBERT J. WELTMAN            Director                        March 27, 2003
------------------------------
     Robert J. Weltman

/S/  JOHN L. ZABRISKIE PH. D.     Director                        March 27, 2003
------------------------------
     John L. Zabriskie Ph.D


                                       48


<PAGE>


                        Certification of CEO Pursuant to
                 Securities Exchange Act Rules 13a-14 and 15d-14
                             as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

I, Leonard M. Hendrickson certify that:

         1. I have  reviewed  this annual report on Form 10-K for the year ended
December 31, 2002;

         2. Based on my  knowledge,  this  annual  report  does not  contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
annual report;

         3. Based on my knowledge, the financial statements, and other financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

                  a) designed such disclosure  controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

                  b) evaluated the effectiveness of the registrant's  disclosure
controls and  procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

                  c) presented in this annual report our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The  registrant's  other  certifying  officers and I have disclosed,
based on our most recent evaluation,  to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

                  a) all significant  deficiencies in the design or operation of
internal  controls  which could  adversely  affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

                  b)  any  fraud,   whether  or  not  material,   that  involves
management or other  employees who have a significant  role in the  registrant's
internal controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this annual  report  whether or not there were  significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003                            /s/ Leonard M. Hendrickson
                                                --------------------------
                                                   Leonard M. Hendrickson
                                                   President and
                                                   Chief Executive Officer


                                       49


<PAGE>


                        Certification of CFO Pursuant to
                 Securities Exchange Act Rules 13a-14 and 15d-14
                             as Adopted Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002

I, Charles C. Best certify that:

         1. I have  reviewed  this annual report on Form 10-K for the year ended
December 31, 2002;

         2. Based on my  knowledge,  this  annual  report  does not  contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
annual report;

         3. Based on my knowledge, the financial statements, and other financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

                  a) designed such disclosure  controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,  particularly
during the period in which this annual report is being prepared;

                  b) evaluated the effectiveness of the registrant's  disclosure
controls and  procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and

                  c) presented in this annual report our  conclusions  about the
effectiveness of the disclosure  controls and procedures based on our evaluation
as of the Evaluation Date;

         5. The  registrant's  other  certifying  officers and I have disclosed,
based on our most recent evaluation,  to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function):

                  a) all significant  deficiencies in the design or operation of
internal  controls  which could  adversely  affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

                  b)  any  fraud,   whether  or  not  material,   that  involves
management or other  employees who have a significant  role in the  registrant's
internal controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this annual  report  whether or not there were  significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 27, 2003                            /s/ CHARLES C. BEST
                                                --------------------------------
                                                   Charles C. Best
                                                   Executive Vice President and
                                                   Chief Financial Officer


                                       50


<PAGE>


                                 EXHIBIT INDEX
               FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

    3.1           Certificate of Incorporation of Registrant (1)

    3.2           Bylaws of Registrant (1)

    4.1           Specimen Stock Certificate of Common Stock of Registrant (1)

    4.2           Certificate of Designation of Series A Preferred Stock (9)

    4.3           Certificate of Designation of Series B Preferred Stock (11)

    4.4           Rights  Agreement,  dated as of  February  25,  1999,  between
                  Registrant and U.S. Stock Transfer and Trust  Corporation,  as
                  Rights Agent (9)

    4.5           Amendment to Rights  Agreement,  dated as of January 10, 2000,
                  between   Registrant   and  U.S.   Stock  Transfer  and  Trust
                  Corporation (13)

    4.6           Second  Amendment to Rights  Agreement,  dated  September  28,
                  2000,  between  Registrant  and U.S.  Stock Transfer and Trust
                  Corporation (13)

    4.7           Form of Right Certificate (9)

    4.8           Summary of Share Purchase Rights (9)

    4.9           Investor  Rights  Agreement  dated  February 15, 2000,  by and
                  among Registrant, Genstar Partners II, L.P. and Stargen II LLC
                  (12)

    4.10          Amendment to Investor  Rights  Agreement  dated  September 18,
                  2000,  among  Registrant,  Genstar Capital  Partners II, L.P.,
                  Stargen II LLC, Russell D. Hays and George Uveges (13)

    4.11          Second Amendment to Investor Rights Agreement, dated September
                  28, 2000, among Registrant, Genstar Capital Partners II, L.P.,
                  Stargen II LLC,  Russell D. Hays,  George Uveges,  Jean-Pierre
                  Conte,  Richard  Hoskins,  Richard Paterson and Robert Weltman
                  (13)

    4.12          Warrant  to  Purchase  Common  Stock of  Registrant  issued to
                  Genstar Capital Partners II, L.P. on February 15, 2000 (12)

    4.13          Warrant  to  Purchase  Common  Stock of  Registrant  issued to
                  Stargen II LLC on February 15, 2000 (12)

   10.1           Registrant's 1993 Stock Incentive Plan (4)

   10.2           Licensing  Agreement  dated May 1, 1990,  by and between TAGO,
                  Inc., as licensee,  and St.  Jude's  Children's  Hospital,  as
                  licenser (1)

   10.3           License  Agreement  dated  February 14,  1991,  by and between
                  Registrant and Schering Corporation (1)

   10.4           License  Agreement  dated  October  1,  1993,  by and  between
                  Registrant, as licensee, and Schering Corporation, as licensor
                  (2)


                                       51


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, CONTINUED

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

   10.5           Separation and  Consulting  Agreement  between  Registrant and
                  James H. Chamberlain dated September 19, 2000 (15)

   10.6           License  Agreement  dated  February  7, 1994,  by and  between
                  Registrant, as licensee and Fundacio Clinic (4)

   10.7           Form of Indemnification  Agreement for Directors and Executive
                  Officers (6)

   10.8           List  of  Indemnities  relating  to  Form  of  Indemnification
                  Agreement previously filed as Exhibit 10 (16)

   10.9           Registrant's Employee Stock Purchase Plan (7)

   10.10          Securities  Purchase  Agreement dated January 10, 2000, by and
                  among  Registrant,  Genstar  Capital  Partners  II,  L. P. and
                  Stargen II LLC (15)

   10.11          Securities Purchase Agreement, effective as of August 9, 2000,
                  between the Registrant and Genstar  Capital  Partners II, L.P.
                  (13)

   10.12          Amendment  to  Securities  Purchase  Agreement,  dated  as  of
                  September  28, 2000,  among the  Registrant,  Genstar  Capital
                  Partners II, L.P., Jean-Pierre Conte, Richard Hoskins, Richard
                  Paterson and Robert Weltman (13)

   10.13          Securities Purchase Agreement, effective as of August 9, 2000,
                  between the Registrant and Russell D. Hays (13)

   10.14          Securities  Purchase  Agreement,  effective as of September 5,
                  2000, between the Registrant and George Uveges (13)

   10.15          Letter agreement regarding  employment,  dated August 2, 2000,
                  between Registrant and Russell D. Hays (15)

   10.16          Amendment  to letter  agreement  regarding  employment,  dated
                  September  18, 2000,  between  Registrant  and Russell D. Hays
                  (15)

   10.17          Letter agreement regarding  employment,  dated August 18, 2000
                  between Registrant and George Uveges (15)

   10.18          Amendment  to letter  agreement  regarding  employment,  dated
                  September 18, 2000, between Registrant and George Uveges (15)

   10.19          Registrant's 2000 Non-Qualified Stock Option Plan (14)

   10.20          Lease  Agreement  for 542 Flynn  Road,  dated  March 7,  2000,
                  between Registrant and Lincoln Ventura Technology Center (15)

   10.21          Executive  Employment Agreement between Registrant and Leonard
                  M. Hendrickson, dated September 24, 2001 (16)


                                       52


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, CONTINUED

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

   21             Subsidiaries of the Company:
                                                             STATE/COUNTRY OF
                  NAME                                        INCORPORATION
                  ----                                        -------------

                  Keystone Laboratories, Inc.................California
                  BioSource V.I. FSC., LTD...................U.S. Virgin Islands
                  BioSource Europe S.A.......................Belgium
                  BioSource B.V..............................Holland
                  BioSource GmbH.............................Germany
                  BioSource U.K., Ltd........................U.K.
                  Quality Controlled Biochemicals, Inc.......Massachusetts
                  Javelle, Inc...............................Massachusetts

   23.1           Consent of KPMG LLP, Independent Public Accountants

   99.1           Certificate of our Chief Executive Officer and Chief Financial
                  Officer pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002.
----------

 (1) Incorporated by reference to the Company's  Registration  Statement on Form
     S-4 as filed with the  Securities  and Exchange  Commission  on October 22,
     1992, as amended.
 (2) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1992.
 (3) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1993.
 (4) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December  31,  1994.
 (5) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1995.
 (6) Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2  (SEC  No.  333-3336)  as  filed  with  the  Securities  and  Exchange
     Commission on May 31, 1996, as amended.
 (7) Incorporated by reference to the Company's  Registration  Statement on Form
     S-8 (SEC No. 33-91838) as filed with the Securities and Exchange Commission
     on May 4, 1995.
 (8) Incorporated  by reference to the  Company's  Current  Report on Form 8-K/A
     filed with the Securities and Exchange Commission on February 19, 1999.
 (9) Incorporated by reference to the Company's Current Report on Form 8-A filed
     with the Securities and Exchange Commission on March 1, 1999.
(10) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 1998.
(11) Incorporated by reference to the Company's  Registration  Statement on Form
     S-3 as filed with the Securities and Exchange Commission on March 16, 2000.
(12) Incorporated by reference to Amendment No. 1 to the Company's  Registration
     Statement on Form S-3 as filed with the Securities and Exchange  Commission
     on March 22, 2000.
(13) Incorporated  by reference to the Company's  Current  Report on Form 8-K as
     filed with the Securities and Exchange  Commission on October 26, 2000, and
     as amended on October 31, 2000.
(14) Incorporated  by reference to the Company's  definitive  proxy statement as
     filed with the Securities and Exchange Commission on May 16, 2000.
(15) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 2000.
(16) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 2001.


                                       53


<PAGE>


                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULE



                                                                           PAGE
                                                                           ----

Independent Auditors' Report.............................................   F-2

Consolidated Balance Sheets at December 31, 2002 and
December 31, 2001........................................................   F-3

Consolidated Statements of Operations for the years
ended December 31, 2002, 2001 and 2000...................................   F-4

Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the years ended
December 31, 2002, 2001 and 2000.........................................   F-5

Consolidated Statements of Cash Flows for the years
ended December 31, 2002, 2001 and 2000...................................   F-6

Notes to Consolidated Financial Statements as of
December 31, 2002 and 2001 and for the years
ended December 31, 2002, 2001 and 2000 ..................................   F-7

Financial Statement Schedule--Valuation and Qualifying Accounts..........   F-24


                                      F-1



<PAGE>


                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
BioSource International, Inc.:

We  have   audited  the   consolidated   financial   statements   of   BioSource
International,  Inc. and  subsidiaries as listed in the  accompanying  index. In
connection with our audits of the  consolidated  financial  statements,  we also
have  audited the  financial  statement  schedule as listed in the  accompanying
index. These consolidated  financial statements and financial statement schedule
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these  consolidated  financial  statements  and  financial
statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the 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  BioSource
International,  Inc. and  subsidiaries  as of December 31, 2002 and 2001 and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period  ended  December  31,  2002  in  conformity  with  accounting
principles  generally  accepted in the United  States of America.  Also,  in our
opinion,  the related financial statement schedule,  when considered in relation
to the  basic  consolidated  financial  statements  taken as a  whole,  presents
fairly, in all material respects, the information set forth therein.

As explained in Note 1 to the financial  statements,  effective January 1, 2002,
the Company  changed its method of accounting for the impairment of goodwill and
other intangibles.


                                                 /S/ KPMG LLP

Los Angeles, California
February 14, 2003


                                      F-2


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                (Amounts in thousands, except for per share data)

                                                              DECEMBER 31,
                                                           2002          2001
                                                         --------      --------

         ASSETS
Current assets:
   Cash and cash equivalents .......................     $  5,941      $  9,471
   Accounts receivable, less allowance for
     doubtful accounts of $261 at December
     31, 2002 and 2001 .............................        6,157         6,184
   Inventories, net (note 2) .......................        8,880         7,184
   Prepaid expenses and other current assets .......          538           540
   Deferred income taxes (note 9) ..................        1,873         1,584
                                                         --------      --------
         Total current assets ......................       23,389        24,963

Property and equipment, net (note 3) ...............        7,398         5,408
Intangible assets net of accumulated
   amortization of $2,502 at December 31,
   2002 and $1,861 at December 31, 2001
   (notes 1 and 4)..................................        6,076         6,717
Goodwill, net of accumulated amortization of
   $1,517 at December 31, 2001 (notes 1 and 4) .....          307         4,936
Other assets .......................................          526           491
Deferred tax assets  (note 9) ......................        8,810         7,326
                                                         --------      --------
                                                         $ 46,506      $ 49,841
                                                         ========      ========

         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ................................     $  3,115      $  2,416
   Accrued expenses ................................        2,910         2,707
   Deferred revenue ................................          427           404
   Income tax payable ..............................          341           436
                                                         --------      --------
         Total current liabilities .................        6,793         5,963
Commitments and contingencies (note 12)

Stockholders' equity:
Common stock, $.001 par value. Authorized
   20,000,000 shares: issued and outstanding
   9,676,931 shares at December 30, 2002;
   issued 10,449,817 shares and outstanding
   10,353,817 shares at December 31, 2001 ..........           10            10
Additional paid-in capital .........................       44,500        48,761
Accumulated deficit ................................       (3,382)       (2,330)
Accumulated other comprehensive loss ...............       (1,415)       (2,563)
                                                         --------      --------
         Net stockholders' equity ..................       39,713        43,878
                                                         --------      --------
                                                         $ 46,506      $ 49,841
                                                         ========      ========


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


                                      F-3


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                  (Amounts in thousands, except per share data)


                                               2002         2001         2000
                                             --------     --------     --------

Net sales ...............................    $ 40,055     $ 35,175     $ 32,210
Cost of sales ...........................      17,689       15,540       13,600
                                             --------     --------     --------
   Gross profit .........................      22,366       19,635       18,610

Operating expenses:
   Research and development .............       6,187        3,986        3,575
   Sales and marketing ..................       8,339        7,395        5,682
   General and administrative ...........       5,916        6,945        9,071
   Amortization of intangibles ..........         641        1,098        1,093
                                             --------     --------     --------
     Total operating expenses ...........      21,083       19,424       19,421
                                             --------     --------     --------
Operating income (loss) .................       1,283          211         (811)

Interest income .........................         113          376          266
Interest expense ........................           0           (2)        (302)
Other income, net .......................          10           86          108
                                             --------     --------     --------
Income (loss) before income tax
   expense (benefit) ....................       1,406          671         (739)
Income tax expense (benefit) ............          11          (70)        (573)
                                             --------     --------     --------
     Income (loss) before redeemable
       preferred stock dividend and
       beneficial conversion ............       1,395          741         (166)
Redeemable preferred stock dividend
   and accretion of beneficial
   conversion ...........................        --           --         (3,853)
                                             --------     --------     --------
     Income (loss) before cumulative
       effect of accounting change ......       1,395          741       (4,019)
Cumulative effect of accounting
   change (net of applicable income
   taxes of $1,500) .....................      (2,447)        --           --
                                             --------     --------     --------
Net income (loss) available to
   common stockholders ..................    $ (1,052)         741       (4,019)
                                             ========     ========     ========

Income (loss) per share before
   accounting change:
   Basic ................................    $   0.14         0.07        (0.47)
                                             ========     ========     ========
   Diluted ..............................    $   0.14         0.07        (0.47)
                                             ========     ========     ========

Net income (loss) per share:
   Basic ................................    $  (0.11)        0.07        (0.47)
                                             ========     ========     ========
   Diluted ..............................    $  (0.10)        0.07        (0.47)
                                             ========     ========     ========

Shares used to compute per share
   amounts:
   Basic ................................       9,787       10,398        8,584
                                             ========     ========     ========
   Diluted ..............................      10,189       10,965        8,584
                                             ========     ========     ========


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


                                      F-4


<PAGE>

<TABLE>
                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                         AND COMPREHENSIVE INCOME (LOSS)
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                             (Amounts in thousands)

<CAPTION>
                                                                                   Retained                               Compre-
                                                 Common stock       Additional     earnings    Accumulated     Net        hensive
                                           Number of                  paid-in    (accumulated  comprehen-  stockholders'  income
                                             Shares       Amount      capital      deficit)     sive loss     equity      (loss)
                                           --------------------------------------------------------------------------------------
<S>                                          <C>          <C>        <C>          <C>          <C>          <C>           <C>

Balance at December 31, 1999                 7,426        $   7      $22,026      $   948      $ (1,559)    $21,422

Stock compensation                                                       946                                    946
Issuance of common stock                       351           --        5,318           --            --       5,318
Exercise of stock options                      827            1        2,952           --            --       2,953
Exercise of Warrants                           165            0          750           --            --         750
Sale of treasury stock                           1           --            8           --            --           8
Conversion of preferred stock                1,557            2        9,431           --            --       9,433
Issuance of warrants and beneficial
   conversion feature of redeemable
   preferred stock                                                     2,836           --            --       2,836
Accretion of the redeemable preferred
   stock to its redemption value                                                   (3,853)           --      (3,853)
Income tax benefit from exercise of
   stock options                                --           --        5,037           --            --       5,037
Net loss                                        --           --           --         (166)                     (166)      $  (166)
Foreign currency translation adjustments        --           --           --           --          (638)       (638)         (638)
                                                                                                                          -------
Total comprehensive loss                                                                                         --       $  (804)
                                          -------------------------------------------------------------------------       =======
Balance at December 31, 2000                10,327        $  10      $49,304      $(3,071)     $ (2,197)    $44,046
                                          -------------------------------------------------------------------------

Exercise of stock options                      123            0          308           --            --         308
Purchase of treasury stock                     (96)                     (668)          --            --        (668)
Stock option compensation charge                             --         (388)          --            --        (388)
Income tax benefit from exercise of stock
   options                                                   --          205           --            --         205
Net income                                                                            741                       741       $   741
Foreign currency translation adjustments                     --           --           --          (366)       (366)         (366)
                                                                                                                          -------
Total comprehensive income                                                                                       --       $   375
                                          -------------------------------------------------------------------------       =======
Balance at December 31, 2001                10,354        $  10      $48,761      $(2,330)     $ (2,563)    $43,878
                                            -----------------------------------------------------------------------

Exercise of stock options                      105           --          291           --            --         291
Purchase of treasury stock                    (782)          --       (4,608)          --            --      (4,608)
Income tax benefit from exercise of stock                                                                        --
   options                                                   --           56           --            --          56
Net loss                                                                           (1,052)                   (1,052)      $(1,052)
Foreign currency translation adjustments                     --           --           --         1,148       1,148         1,148
                                                                                                                          -------
Total comprehensive income                                                                                       --       $    96
                                          -------------------------------------------------------------------------       =======
Balance at December 31, 2002                 9,677        $  10      $44,500      $(3,382)     $ (1,415)    $39,713
                                          -------------------------------------------------------------------------
</TABLE>


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


                                      F-5


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
                             (Amounts in thousands)

                                                    2002       2001       2000
                                                  -------    -------    -------
Cash flows from operating activities:
      Net income (loss) .......................   $(1,052)       741       (166)
      Adjustments to reconcile net income
        (loss) to net cash provided by
        operating activities:
           Depreciation and amortization ......     2,324      2,431      2,156
           Loss on sale of property and
              equipment .......................      --         --           99
           Stock compensation .................      --         (388)       946
           Write-down of inventory ............      --         --          424
           Income tax benefit from the
              exercise of stock options .......        56        205      5,037
           Cumulative effect of accounting
              change ..........................     4,629       --         --
      Changes in assets and liabilities
           Accounts receivable ................       505       (753)      (610)
           Inventories ........................    (1,011)      (654)    (1,145)
           Prepaid expenses and other
              current assets ..................         9        716       (684)
           Deferred income taxes ..............    (1,774)       (31)    (4,813)
           Other assets .......................       (35)       245        340
           Accounts payable ...................       522       (748)     1,229
           Accrued expenses ...................       (63)        12        872
           Deferred income ....................        23         90        (55)
           Income taxes payable ...............      (384)       199       (207)
                                                  -------    -------    -------
             Net cash provided by operating
                activities ....................     3,749      2,065      3,423
                                                  -------    -------    -------
Cash flows from investing activities:
      Purchase of property and equipment ......    (3,481)    (2,559)    (2,152)
      Proceeds from sales of property and
         equipment ............................      --         --        1,926
                                                  -------    -------    -------
           Net cash used in investing
              activities ......................    (3,481)    (2,559)      (226)
                                                  -------    -------    -------
Cash flows from financing activities:
      Proceeds from the exercise of options ...       291        308      2,953
      Proceeds from the exercise of warrants ..      --         --          750
      Proceeds from the issuance of common
         stock ................................      --         --        5,319
      Proceeds from the issuance of redeemable
         preferred stock and warrants .........      --         --        8,415
      Repayments to bank ......................      --         --      (14,364)
      Payments to acquire treasury stock ......    (4,608)      (668)      --
                                                  -------    -------    -------
           Net cash provided from (used in)
              financing activities ............    (4,317)      (360)     3,073
                                                  -------    -------    -------

           Net increase (decrease) in cash
              and cash equivalents ............    (4,049)      (854)     6,270
Effect of exchange rates on cash and cash
   equivalents ................................       519       (308)      (282)

Cash and cash equivalents at beginning of
   year .......................................     9,471     10,633      4,645
                                                  -------    -------    -------

Cash and cash equivalents at end of year ......   $ 5,941      9,471     10,633
                                                  =======    =======    =======

Supplemental disclosure of cash flow
   information: Cash paid during the
   year for:
           Interest ...........................   $    44          2        345
                                                  =======    =======    =======
           Income taxes .......................   $  --         --          439
                                                  =======    =======    =======

Supplemental disclosure of non-cash
   information:
           Preferred stock accretion ..........   $  --         --        3,853
                                                  =======    =======    =======


In 2000,  the conversion of redeemable  preferred  stock to common stock totaled
$9,433.

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


                                      F-6


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001, AND 2000

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

BioSource  International,  Inc. and  subsidiaries  (BioSource  or the  Company),
develops,  manufactures,  markets and  distributes  products  used  worldwide in
disease related biomedical research and clinical diagnostics, principally in the
fields of immunology  and molecular  biology.  Our products  include ELISA assay
test kits, clinical diagnostic kits, bioactive proteins,  antibodies,  bioactive
peptides,   oligonucleotides   and  related  products.   These  products  enable
scientists to better understand the biochemistry, immunology and cell biology of
the human body.  Some examples  would include  certain  diseases such as cancer,
aging,  arthritis  and  other  inflammatory  diseases,  AIDS and  certain  other
infectious diseases.

PRINCIPLES OF CONSOLIDATION

The  consolidated   financial  statements  include  the  accounts  of  BioSource
International,   Inc.  and  its  wholly  owned  subsidiaries.   All  significant
intercompany accounts and transactions have been eliminated.

CASH AND CASH EQUIVALENTS

Cash  and  cash  equivalents   include  all  cash  balances  and  highly  liquid
investments with original maturities of three months or less.

FINANCIAL INSTRUMENTS

The carrying value of financial  instruments such as cash and cash  equivalents,
trade  receivables,  and payables  approximates their fair value at December 31,
2002 and 2001 due to the short-term nature of these instruments.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out) or market (net
realizable  value) for raw  materials  and work in process and the  average-cost
method for finished goods.

DEPRECIATION AND AMORTIZATION

Property and  equipment are stated at cost.  Depreciation  and  amortization  of
property and equipment and goodwill is provided using the  straight-line  method
over the estimated useful lives of the related assets which generally range from
three  to  fifteen  years.   Leasehold  improvements  are  amortized  using  the
straight-line  method  over  their  estimated  useful  lives or the lease  term,
whichever is shorter.

GOODWILL AND INTANGIBLE ASSETS

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  ("FAS")  No.141,  "Accounting  For Business
Combinations,"  and FAS No. 142,  "Accounting For Goodwill and Other  Intangible
Assets." FAS No. 141 requires that the purchase method of accounting be used for
all business  combinations  initiated  after June 30, 2001. FAS No. 142 requires
that goodwill and intangible  assets with  indefinite  useful lives no longer be
amortized to earnings, but instead be reviewed for impairment in accordance with
FAS  No.  142.  The   amortization   of  goodwill  and  intangible   assets  was
approximately  $641,000,  $1,098,000,  and  $1,093,000,  for fiscal  years ended
December 31, 2002, 2001, and 2000, respectively.  Effective January 1, 2002, the
Company's  goodwill and other intangible  assets are accounted for under FAS No.
141  "Business  Combinations"  and FAS No. 142  "Goodwill  and Other  Intangible
Assets." The Company  used the present  value  method for  determining  the fair
value  of its  reporting  units.  In the  first  quarter  of 2002,  the  Company
recognized a non-cash charge, net of applicable income taxes, of $2,870,000


                                      F-7


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001, AND 2000


representing the cumulative effect of a change in accounting principle resulting
from the  implementation of FAS 142. The charge included the write off of all of
the  goodwill  related to the  acquisition  of Quality  Controlled  Biochemicals
("QCB")  and  Biofluids  in December  1998.  In the third  quarter of 2002,  the
Company received cash proceeds of $800,000 in an arbitration  settlement related
to its 1998  acquisition  of QCB.  This  recovery,  shown net of legal  fees and
applicable income taxes,  totals $423,000 and is shown as a cumulative effect of
a change in accounting  principle for the three months ended September 30, 2002.
The net  impairment  charge for goodwill  resulting from the adoption of FAS 142
for  the  year  ended  December  31,  2002 is  $2,447,000  and is  shown  in the
accompanying  condensed  consolidated  statement of  operations  as a cumulative
effect of an accounting change.

Prior to 2002,  the Company  accounted for its  intangible  assets under FAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be  Disposed  Of." Under FAS 121,  Long-Lived  assets  and  intangible
assets are required to be reviewed for impairment  whenever events or changes in
circumstances  indicate  that  the  carrying  amount  of an  asset  may  not  be
recoverable.  The Company  reviewed for  impairment  by  comparing  the carrying
amount of the asset to future cash flows expected to be generated by the asset.

The Company reviewed its remaining  goodwill for impairment in the third quarter
of 2002  using  FAS No.  142 and  determined  that the  carrying  value  was not
impaired.  Accordingly,  the Company  continues to carry the goodwill related to
its 1996  acquisition  of certain  assets and  assumed  liabilities  of Medgenix
Diagnostics,  SA, now BioSource Europe,  S.A., a wholly-owned  subsidiary of the
Company on its Consolidated Balance Sheets.

ADVERTISING, MARKETING AND PROMOTION COSTS

Advertising, marketing and promotion costs are expensed as incurred. These costs
charged to operations for the years ended 2002,  2001 and 2000 were  $2,922,000,
$2,489,000, and $2,261,000, respectively.

LICENSE AGREEMENTS

License agreements  primarily for the use of antibodies are recorded at cost and
are amortized using the  straight-line  method over the shorter of the estimated
useful lives of the license or the license term  (generally  five to ten years).
These costs are  included  with other  assets in the  accompanying  consolidated
balance  sheets.  Accumulated  amortization  at  December  31, 2002 and 2001 was
approximately $396,000 and $325,000, respectively.

REVENUE RECOGNITION

The  Company's  revenue  is  generated  from  the  sale  of  products  primarily
manufactured  internally.  The Company does have a small amount of products that
are sold on an outside  equipment  ("OEM") basis. The Company sells standard and
custom products  directly to end users and distributors  and recognizes  revenue
upon  transfer of title to the  customer,  which occurs upon  shipment.  General
sales and payment terms to distributors are similar to those granted to end user
customers. Certain end user customers prepay for product and request shipment of
the  product at future  dates,  primarily  sera or media  products.  The Company
records  deferred revenue until such time as a product is shipped to a customer.
Approximately  22% of the  Company's  2002 net sales were to  distributors.  The
Company's distribution  agreements do not provide a general right of return. The
amount of the Company's  inventory  held by  distributors  is not believed to be
substantial.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are charged to expense as incurred.


                                      F-8


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000
INCOME TAXES

Income taxes are accounted for under the asset and  liability  method.  Deferred
tax assets  and  liabilities  are  recognized  for the  future tax  consequences
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  carryforwards.  Deferred  tax assets  and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

The  Company  has not  provided  U.S.  federal or foreign  withholding  taxes on
foreign subsidiary  undistributed earnings as of December 31, 2002, because such
earnings are  intended to be  permanently  invested.  It is not  practicable  to
determine the U.S.  Federal income tax liability,  if any, that would be payable
if such earnings were not reinvested indefinitely.

LONG-LIVED ASSETS

It is our policy to account for long-lived  assets (property,  plant,  equipment
and  intangible  assets) at amortized  cost. As part of an ongoing review of the
valuation  and  amortization  of  long-lived  assets,  management  assesses  the
carrying value of such assets if facts and  circumstances  suggest that they may
be  impaired.  If this  review  indicates  that  long-lived  assets  will not be
recoverable,  as  determined  by a  non-discounted  cash flow  analysis over the
remaining  amortization  period, the carrying value of the Company's  long-lived
assets would be reduced to its  estimated  fair value based on  discounted  cash
flows. As a result,  the Company has determined  that its long-lived  assets are
not impaired as of December 31, 2002 and 2001.  Effective January 1, 2002, other
long-lived  assets are  accounted  for under SFAS No. 144,  "Accounting  for the
Impairment  or  Disposal  of  Long-Lived  Assets," , which  addresses  financial
accounting  and reporting for the  impairment or disposal of long-lived  assets.
While SFAS No. 144  supersedes  SFAS No.121,  "Accounting  for the Impairment of
Long-Lived  Assets and for Long-Lived Assets to be Disposed Of," it retains many
of the fundamental  provisions of that  statement.  The adoption of SFAS No. 144
did not have a  material  impact  on the  financial  position  or  results  from
operations.

STOCK COMPENSATION

The Company  accounts for  stock-based  compensation  to employees and directors
using the intrinsic value method.

COMPREHENSIVE INCOME (LOSS)

Comprehensive  income  (loss) is the total of net  income  (loss)  and all other
non-owner  changes in equity.  Except for net income (loss) and foreign currency
translation  adjustments,  the Company does not have any  transactions  or other
economic  events that qualify as  comprehensive  income  (loss) as defined under
SFAS No. 130.

BUSINESS SEGMENT REPORTING

Management of the Company has determined  its reportable  segments are strategic
business  units  that offer both sales to  external  customers  from  geographic
company  facilities  and  sales to  external  customers  in  certain  geographic
regions.  Significant  reportable  business  segments are the United  States and
European  facilities,  and sales to external  customers are  summarized as those
located in the United States,  Europe,  Japan and other.  Information related to
these segments is summarized in Note 12.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  SFAS No. 143  addresses  financial  accounting  and reporting for
obligations associated with the retirement of tangible long-lived



                                      F-9


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


assets and the associated asset  retirement  costs. The adoption of SFAS No. 143
does  not have a  material  impact  on the  financial  position  or  results  of
operations.

In  January  2003,  the  FASB  issued  FASB   Interpretation   ("FIN")  No.  45,
"Guarantor's  Accounting and Disclosure  Requirements for Guarantees,  Including
Indirect  Guarantees and  Indebtedness of Others." FIN No. 45 requires a company
to  recognize a  liability  for the  obligations  it has  undertaken  to issue a
guarantee.  This  liability  would be recorded at the inception of the guarantee
and  would  be  measured  at fair  value.  The  measurement  provisions  of this
statement apply  prospectively  to guarantees  issued or modified after December
31,  2002.  The  disclosure  provisions  of the  statement  apply  to  financial
statements  for periods  ending after December 15, 2002. The adoption of FIN No.
45 does not have a  material  impact on the  financial  position  or  results of
operations.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN 46 requires a company to consolidate  variable interest entity if
it is designated as the primary  beneficiary  of that entity even if the company
does  not have a  majority  voting  interest.  A  variable  interest  entity  is
generally  defined  as an entity  where its  equity  is  unable to  finance  its
activities  or when the  owners  of the  entity  lack the  risk and  rewards  of
ownership.  The provisions of this  statement  apply at inception for any entity
created after January 31, 2003. For an entity  created before  February 1, 2003,
the  provisions of this  interpretation  must be applied at the beginning of the
first  interim or annual  period  beginning  after June 15,  2003.  The  Company
believes that the adoption of FIN No. 46 will not have a material  impact on the
financial position or results of operations.

In December  2002,  the FASB issued SFAS No. 148,  "Accounting  for  Stock-Based
Compensation  - Transition  and  Disclosure - an amendment of FASB Statement No.
123."  SFAS  No.  148  amends  SFAS  No.  123,   "Accounting   for   Stock-Based
Compensation,"  to provide  alternative  methods of  transition  for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No.  123 to  require  prominent  disclosures  in both  annual  and  interim
financial  statements  about the method of accounting for  stock-based  employee
compensation  and the  effect  of the  method  used  on  reported  results.  The
disclosure  requirements  apply to all  companies  for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports  containing  financial  statements for interim  periods  beginning after
December 15, 2002.  The adoption of SFAS No. 148 did not have a material  impact
on the Company's consolidated financial statements.

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 affects the reported amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.  Significant
areas  requiring  the use of  management  estimates  relate to the  valuation of
inventories,  accounts  receivable  allowances,  the useful  lives of assets for
depreciation and amortization,  evaluation of impairment,  restructuring expense
and accrual, litigation accruals and recoverability of deferred taxes.

CONCENTRATIONS OF CREDIT RISK

Financial  instruments,  which potentially subject the Company to concentrations
of credit  risk,  consist  primarily  of cash  equivalents  and  trade  accounts
receivable.  The credit risk  associated  with trade  accounts is mitigated by a
credit   evaluation   process,   reasonably   short  collection  terms  and  the
geographical dispersion of sales transactions.


                                      F-10


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


FOREIGN CURRENCY TRANSLATION

The assets and liabilities of the Company's foreign subsidiary, whose functional
currency is Euros,  are  translated at the rate of exchange at the balance sheet
date, and related  revenues and expenses are translated at the average  exchange
rate in effect during the period. Resulting translation adjustments are recorded
as a component of stockholders'  equity.  Gains and losses from foreign currency
transactions are included in net income.  Foreign currency transaction gains and
losses were  insignificant to the operating results for each of the years in the
three-year period ended December 31, 2002.


2.   INVENTORIES

     Inventories  at  December  31,  2002  and 2001 are  summarized  as  follows
(000's):


                                                     2002             2001
                                                    ------           ------
     Raw materials ......................           $2,703           $2,367
     Work in process ....................              493              304
     Finished goods .....................            5,684            4,513
                                                    ------           ------

                                                    $8,880           $7,184
                                                    ======           ======


3.   PROPERTY AND EQUIPMENT

     Property  and  equipment at December  31, 2002 and 2001 are  summarized  as
follows (000's):


                                                      2002          2001
                                                    --------      --------
     Machinery and equipment ..................     $  9,241      $  6,919
     Office furniture and equipment ...........        3,708         2,604
     Leasehold improvements ...................        1,530           907
                                                    --------      --------
                                                      14,479        10,430
     Less accumulated depreciation and
           amortization .......................       (7,081)       (5,022)
                                                    --------      --------

                                                    $  7,398      $  5,408
                                                    ========      ========


4.   GOODWILL AND INTANGIBLE ASSETS - ADOPTION OF FINANCIAL ACCOUNTING STATEMENT
     142

In  July  2001,  the  FASB  issued  FAS  No.  141,   "Accounting   For  Business
Combinations,"  and FAS.  142,  "Accounting  for Goodwill  and Other  Intangible
Assets."

The pro forma effects of  implementation of FAS 142 to prior periods would be as
follows: (amounts in thousands, except per share data):


                                      F-11


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


                                                  For Years Ended December 31,
                                             -----------------------------------
                                                2002         2001        2000
                                             ---------     --------    --------
Reported income (loss) ..................    $  (1,052)         741      (4,019)
Add:
Impairment charge, net of tax ...........        2,477
Goodwill Amortization, net of tax .......         --            283         280
                                             ---------     --------    --------
Adjusted net income (loss) ..............        1,425        1,024      (3,739)
                                             =========     ========    ========

Basic net income (loss) per share:
   Reported income (loss) ...............    $   (0.11)        0.07       (0.47)
   Impairment charge, net of tax ........         0.25         --          --
   Goodwill Amortization, net of tax ....         --           0.03        0.03
                                             ---------     --------    --------
   Adjusted net income (loss) ...........    $    0.15         0.10       (0.44)
                                             =========     ========    ========

Diluted net income (loss) per share:
   Reported income (loss) ...............    $   (0.10)        0.07       (0.47)
   Impairment charge, net of tax ........         0.24          --          --
   Goodwill Amortization, net of tax ....         --           0.03        0.03
                                             ---------     --------    --------
   Adjusted net income (loss) ...........    $    0.14         0.09       (0.44)
                                             =========     ========    ========


Acquired Intangible assets are as follows (in thousands):

As of December 31,                         2002                     2001
------------------                  ------------------      --------------------
                                                Accumu-                  Accumu-
                                    Gross       lated        Gross       lated
                                   Carrying     Amorti-     Carrying     Amorti-
                                    Amount      zation       Amount      zation
                                    ------      ------       ------      ------
Amortized intangible assets
  Developed Technology .......      $7,656      (2,115)      $7,656      (1,574)
  Core technology ............         665        (181)         665        (137)
  Tradename ..................         257        (206)         257        (150)
                                    ------      ------       ------      ------
     Total ...................      $8,578      (2,502)      $8,578      (1,861)
                                    ======      ======       ======      ======


At  December  31,  2002,  estimated  amortization  expense  was as  follows  (in
thousands):

                            2003 .............. $606
                            2004 .............. $555
                            2005 .............. $555
                            2006 .............. $555
                            2007 .............. $555


                                      F-12


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


The changes in the carrying  amount of goodwill for the year ended  December 31,
2002, is as follows (in thousands):

                                                   United States    European
                                                      Segment       Segment
                                                      -------       -------
     Balance as of December 31, 2001 ...........      $ 4,629           307
     Goodwill acquired during the year .........         --            --
     Impairment losses .........................       (4,629)         --
                                                      -------       -------
     Balance as of December 31, 2002 ...........      $  --             307
                                                      =======       =======


5.   REDEEMABLE PREFERRED STOCK

On February  15, 2000,  the Company  issued  371,300  shares of $0.001 par value
Series B Redeemable Preferred Stock with an initial aggregate  liquidation value
of $9,000,300. The Series B Redeemable Preferred Stock was initially convertible
into  1,485,200  shares of the Company's  Common Stock at an effective  price of
$6.06 per share of Common  Stock and entitled to dividends at an 8% annual rate.
The holders received  detachable  warrants  exchangeable for 1,287,000 shares of
Common Stock at an exercise price of $7.77 per share. The Company  allocated the
net  proceeds of  $8,415,200  based on the  relative  fair value of the warrants
($1,840,700),  the Series B  Redeemable  Preferred  Stock  ($5,579,400)  and the
beneficial conversion ($995,100).

On September 20, 2000,  the Series B Redeemable  Preferred  Stock  automatically
converted  to common  stock as the last  reported  sales price of the  Company's
common stock had been above $20 for 20 consecutive days. Upon conversion, all of
the  originally  issued  redeemable  preferred  stock and $432,400 of redeemable
preferred  dividends were  converted  into 1,556,574  common shares at $6.06 per
common share or $9,432,700. Total non-cash preferred stock dividends and effects
of beneficial conversion related to the preferred stock totaling $3,853,000 were
charged to net loss available to common shareholders.

6. COMMON STOCK AND TREASURY STOCK

In October 2001, the Company  announced that its Board of Directors had approved
a stock repurchase  program.  The Board has authorized the Company to repurchase
up to  $5,000,000  of its common stock.  The  repurchases  are to be made at the
discretion  of  management  and can be made at any time,  as  market  conditions
warrant.  The stock repurchase program will end June 30, 2003. On July 19, 2002,
the Company  amended the stock  repurchase  program and increased its repurchase
commitment by $5 million to a total of $10 million. As of December 31, 2002, the
Company  had  repurchased  878,000  shares of common  stock and  incurred a cash
outlay totaling $5,276,000.

On September  18,  2000, a total of 351,400  shares of common stock were issued,
for cash proceeds of $5,318,700. Two former executives of the Company invested a
total of $850,000 in the Company, representing 51,400 shares of common stock and
a major stockholder invested an additional $4,468,700, net of expenses, into the
Company  for  300,000  shares  of  common  stock.  The  Company  recorded  stock
compensation  expense  of  $557,900  as the 51,400  shares of common  stock were
issued  for  less  than  market   value,   which  is  included  in  general  and
administrative expense on the accompanying Consolidated Statement of Operations.


                                      F-13


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


7.   STOCK OPTIONS, PURCHASE PLANS AND WARRANTS

The  Company  currently  has two stock  option  plans in place - the 1993  Stock
Incentive  Plan (the "1993  Plan") and the 2000 BSI  non-qualified  stock option
Plan (the "2000  Plan").  The Company also has several  stock option  agreements
with certain officers in effect.

Under the 2000 Plan,  non-qualified  stock  options may be granted to  full-time
employees,  part-time  employees,  directors and  consultants  of the Company to
purchase a maximum of 2,000,000  shares of the company's  common stock.  Options
granted  under the 2000 Plan vest and are generally  exercisable  at the rate of
25% each  year  beginning  one year from the date of  grant.  The stock  options
generally expire ten years from the date of grant.

Under the 1993 Plan, incentive and non-qualified stock options may be granted to
full-time  employees,  part-time  employees,  directors and  consultants  of the
Company to  purchase  a maximum of  2,000,000  shares of common  stock.  Options
granted  under the 1993 Plan vest and are generally  exercisable  at the rate of
25% each  year  beginning  one year from the date of  grant.  The stock  options
generally expire ten years from the date of grant.

The per share  weighted  average  market value of stock options  granted  during
2002, 2001 and 2000 was $6.20, $6.00, and $20.51,  respectively,  on the date of
grant using the Black-Scholes  option-pricing  model with the following weighted
average assumptions:

                                                    2002       2001       2000
                                                    ----       ----       ----

     Expected dividend yield.................        0.00%      0.00%      0.00%
     Risk-free interest rate.................        3.82%      4.50%      4.76%
     Expected volatility.....................      106.42%     89.87%    100.00%
     Expected option life (years)............        5.18       4.81       8.10


The Company applies APB Opinion No. 25 in accounting for its stock option grants
to employees and directors,  and accordingly,  no compensation  cost, except for
the  expenses  for two former  officers of the Company (see detail below in this
note), has been recognized for its stock options in the  consolidated  financial
statements  as the market  value of the  Company's  common  stock at the date of
grant was equal to its exercise price on such date.  Had the Company  determined
compensation  cost  based  upon the fair  value at the grant  date for its stock
options  under SFAS No. 123, the  Company's net income (loss) would have changed
to the pro forma amounts indicated below:


                                      F-14


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


                                             2002          2001         2000
                                         ----------    ---------    ---------
                                                     (in thousands,
                                                except per share data)

Net income (loss) available to common
stockholders:
    As reported ......................   $   (1,052)   $     741    $  (4,019)

        Add/deduct: Total stock-based
        employee compensation expense
        determined under intrinsic
        value based method for all
        awards, net of tax effects ...         --           (233)         233

        Deduct: Total stock-based
        employee compensation expense
        determined under fair value
        based method for all awards,
        net of tax effects ...........       (2,458)      (2,764)      (3,434)
                                         ----------    ---------    ---------

    Pro forma net loss available
        to common stockholders .......   $   (3,510)   $  (2,256)   $  (7,220)
                                         ==========    =========    =========


Net income (loss) per share available
    to common stockholders:
        Basic - as reported ..........   $    (0.11)   $    0.07    $   (0.47)
                                         ==========    =========    =========

        Basic - pro forma ............   $    (0.36)   $   (0.22)   $   (0.84)
                                         ==========    =========    =========

        Diluted - as reported ........   $    (0.10)   $    0.07    $   (0.47)
                                         ==========    =========    =========

        Diluted - pro forma ..........   $    (0.36)   $   (0.22)   $   (0.84)
                                         ==========    =========    =========


Pro  forma  net  income  (loss)  available  to  common   stockholders   reflects
compensation expense related to the vested portion of options granted during the
periods October 1997 through December 2002.

To the extent that  BioSource  derives a tax benefit from  options  exercised by
employees,  such benefit is credited to additional paid-in capital. Tax benefits
recognized  totaling  $56,000,   $205,000,   and  $5,037,000  were  credited  to
additional paid-in capital in fiscal 2002, 2001 and 2000, respectively.


                                      F-15


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


The following  summarizes the stock option  transactions under the 1993 Plan and
the 2000 Plan during the periods presented:
                                                                     WEIGHTED
                                                                     AVERAGE
                                                   SHARES         EXERCISE PRICE
                                                   ------         --------------

Options outstanding at December 31, 1999.....     1,516,425          $   3.54
Options granted..............................     1,338,198             16.19
Options exercised............................      (702,100)             3.55
Options canceled.............................       (87,700)             5.89
                                                -----------          --------

Options outstanding at December 31, 2000.....     2,064,823             12.67
Options granted..............................       904,647              7.84
Options exercised............................       (36,952)             2.50
Options canceled.............................      (885,166)            17.55
                                                -----------          --------

Options outstanding at December 31, 2001.....     2,047,352              8.74

Options granted..............................       388,300              6.20
Options exercised............................       (76,514)             3.10
Options canceled.............................      (516,063)            13.18
                                                -----------          --------

Options outstanding at December 31, 2002.....     1,843,075          $   7.20
                                                ===========          ========


At  December  31,  2002,  the range of  exercise  prices  and  weighted  average
remaining  contractual life of outstanding  options were as follows:


                 Weighted         Weighted       Number of     Number of
                 Average          Average         Options       Options
                 Exercise         Life of       Outstanding    Currently
                  Price           Option                       Exercisable
             -------------------------------------------------------------

              $1.37 - $3.10         4.90           290,246        289,221
              $3.11 - $6.20         7.70           570,841        288,412
              $6.21 - $9.30         8.10           524,144        197,816
              $9.31 - $15.50        8.00           279,958        128,527
             $15.51 - $31.00        7.70           177,886        103,625
                                 ---------      -----------    -----------
Total                               7.50         1,843,075      1,007,601
                                 =========      ===========    ===========

At December  31,  2002,  2001 and 2000,  the number of options  exercisable  was
1,007,601, 777,836, and 621,015, respectively, and the weighted average exercise
price of those options was $6.47, $6.41, and $4.06, respectively.

In 2000,  under the 2000 Plan, two former officers of the Company received stock
options at an exercise price less than fair value.  The Company incurred a total
stock option compensation expense of $388,000 in 2000. Additionally, in 2000 the
Company  recorded  stock  compensation  expense of $558,000 for 51,400 shares of
common stock issued to two former executives of the Company,  for less than fair
market value.  Upon  termination of the former officers in May 2001, the Company
recognized  a related  expense  reduction  of $388,000 in the second  quarter of
2001,  as the former  officers  were  terminated  prior to their  stock  options
vesting.

The Company has several stock option  agreements with certain  officers that are
outside the 1993 and the 2000 Plan. The outstanding  agreements  expire from May
2003 through October 2011.


                                      F-16


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


The following summarizes transactions outside the option plan during the periods
presented:

                                                                     WEIGHTED
                                                                     AVERAGE
                                                   SHARES         EXERCISE PRICE
                                                   ------         --------------

Options outstanding at December 31, 1999.....      502,500          $   3.13
Options granted..............................           --                --
Options exercised............................     (145,834)             3.91
Options canceled.............................      (66,666)             2.81
                                               -----------          --------

Options outstanding at December 31, 2000.....      290,000              2.89
Options granted..............................      280,000              5.19
Options exercised............................      (64,000)             2.61
Options canceled.............................           --                --
                                               -----------          --------

Options outstanding at December 31, 2001.....      506,000          $   4.19

Options granted..............................           --                --
Options exercised............................       28,600              2.00
Options canceled.............................           --               --
                                               -----------          -------

Options outstanding at December 31, 2002.....      477,400          $   4.33
                                               ===========          ========


At  December  31,  2002,  the range of  exercise  prices  and  weighted  average
remaining  contractual life of outstanding options under certain agreements were
as follows:

                Weighted          Weighted       Number of     Number of
                 Average          Average         Options       Options
                Exercise          Life of       Outstanding    Currently
                 Price            Option                       Exercisable
             -------------------------------------------------------------

             $0.00 - $1.50          2.10            62,800         62,800
             $1.51 - $3.00          0.40            71,600         71,600
             $3.01 - $6.44          7.70           343,000        144,666
                                  --------       ----------    -----------
Total                               5.90           477,400        279,066
                                  ========       ==========    ===========


At December  31,  2002,  2001 and 2000,  the number of  exercisable  options was
279,066, 226,000, and 290,000,  respectively,  and the weighted average exercise
price of those options was $3.72, $2.97, and $2.89, respectively.

During  2002,  2001 and 2000,  105,114,  100,952,  and  847,934  stock  options,
respectively  were  exercised  for proceeds  totaling  $291,000,  $308,000,  and
$2,952,000 of cash received by the company.

During  2000,  a total of 218,100  warrants  were  exercised  for  $750,000  and
converted into 165,400 common shares.

Effective  April 7, 1995, the Company adopted an Employee Stock Purchase Plan to
provide   substantially  all  full-time   employees,   excluding  officers,   an
opportunity to purchase shares of its common stock through  payroll  deductions.
In addition,  the Company provides a matching  contribution  equal to 50% of the
participant's  contribution.  All  contributions  are invested in the  Company's
common stock, which is purchased on the open


                                      F-17


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


market at prevailing market prices. Participants have a fully vested interest in
the shares  purchased  with  payroll  deductions  and become fully vested in the
shares  purchased  with  Company  matching  contributions  after two years.  The
Company's  matching expense for the years ended December 31, 2002, 2001 and 2000
was approximately $24,000, $19,000, and $20,000, respectively.

In connection with the issuance of Series B Redeemable Preferred Stock (see Note
6), 1,287,000 detachable stock purchase warrants were granted. The warrants have
a term of up to five  years  from  date of  issuance  and are  exchangeable  for
1,287,000 shares of Common Stock at an exercise price of $7.77 per share.

8.   STOCKHOLDER RIGHTS PLAN

On February 16, 1999, the Company adopted a stockholders' rights plan to protect
the Company and its stockholders from unsolicited attempts or inequitable offers
to acquire the Company's stock. The rights plan has no immediate dilutive effect
and does not diminish the  Company's  ability to accept an offer to purchase the
Company that is approved by the board of directors.  The stockholder rights plan
was implemented through a dividend of one preferred share purchase right on each
outstanding  share of the Company's  common stock  outstanding on March 2, 1999.
Each right will entitle  stockholders  to buy one  one-thousandth  of a share of
Series A preferred stock at an exercise price of $24.50.  The rights will become
exercisable (with certain limited  exceptions  provided in the rights agreement)
following the 10th day after:  (a) a person or group announces an acquisition of
15% or more of the Company's  common stock,  (b) a person or group announces the
commencement  of a tender  offer  the  consummation  of which  would  result  in
ownership by the person or group of 15% or more of the  Company's  common stock,
(c) the filing of a registration statement for any such exchange offer under the
Securities Act of 1933, or (d) the Company's board of directors determining that
a person is an "adverse person," as defined in the rights plan. The buyer or any
"adverse person" would not be entitled to exercise rights under the rights plan.
The effect of the rights plan is to discourage  acquisitions of more than 15% of
the Company's  common stock  without  negotiations  with the Company's  board of
directors.  The  Company  can  redeem  the rights for $.001 per right at certain
times as  provided  in the rights  agreement.  The rights  expire on January 31,
2009.

9.   INCOME TAXES

Income (loss) before  income taxes  (benefit) for 2002,  2001 and 2000 were from
the following sources (000's):

                                2002                  2001                 2000
                         -----------           -----------           ----------

     Domestic            $       723           $    (1,203)          $   (1,994)
     Foreign                     683                 1,874                1,255
                         -----------           -----------           ----------
                         $     1,406           $       671           $     (739)
                         ===========           ===========           ==========

Income tax expense (benefit) is summarized as follows (000's):

                                2002                  2001                 2000
                         -----------           -----------           ----------
Current:
     Federal             $      (440)          $        95            $   3,524
     State and local             401                    42                  780
     Foreign                     552                    71                   55
                         -----------           -----------           ----------
                         $       513                   208                4,359
                         -----------           -----------           ----------
Deferred:
     Federal                     307                   (70)              (3,866)
     State and local            (549)                 (350)              (1,114)
     Foreign                    (260)                  142                   48
                         -----------           -----------           ----------
                                (502)                 (278)              (4,932)
                         -----------           -----------           ----------
                         $        11           $       (70)          $     (573)
                         ===========           ===========           ==========


                                      F-18


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


The primary  components  of  temporary  differences  which give rise to deferred
taxes at December 31, 2002 and 2001 are (000's):

                                                          2002             2001
                                                      ---------        ---------

   Deferred tax assets:
     Reserves for inventory.........................  $   1,517        $   1,208
     Purchased in-process technology/goodwill.......      3,046            1,472
     Net operating loss carryforwards...............      4,290            4,746
     Allowance for doubtful accounts................         89               68
     Accrual for severance..........................          0               99
     R & D and AMT credit carryforwards.............      1,570            1,188
     Other..........................................        336              211
                                                      ---------        ---------

   Total deferred tax assets........................     10,848            8,992
   Deferred tax liability
     Depreciation...................................        165               82
                                                      ---------        ---------

         Net deferred tax assets....................  $  10,683        $   8,910
                                                      =========        =========


Management has reviewed the recoverability of deferred income tax assets and has
determined  that it is more likely than not that the deferred tax assets will be
fully realized through future taxable earnings.

Actual income tax expense  (benefit)  differs from that obtained by applying the
Federal  income tax rate of 34% to income (loss) before income taxes  (benefits)
as follows (000's):

                                                     2002       2001       2000
                                                    -----      -----      -----

Computed "expected" tax expense (benefit) .....     $ 478      $ 228      $(251)
Nondeductible items ...........................        24       --         --
State taxes (net of Federal benefit) ..........       (98)        21        (34)
Tax credits ...................................      (213)      (338)      (437)
Extraterritorial Income Exclusion .............      (244)      --         --
Effect of foreign operations ..................        50        (18)        66
Other .........................................        14         37         83
                                                    -----      -----      -----

       Total ..................................     $  11      $ (70)     $(573)
                                                    =====      =====      =====


The Company does not provide for U.S. federal income taxes on the  undistributed
earnings  of its  foreign  subsidiaries  since the  Company  intends to reinvest
indefinitely its earnings in such subsidiaries. It is not practical to determine
the U.S.  federal  income tax  liability,  if any, that would be payable if such
earnings were not reinvested indefinitely.

As of December 31, 2002, the Company has a net operating loss (NOL) carryforward
of  approximately  $8,932,000 and  $11,714,400  for Federal and State income tax
purposes, respectively. The federal NOL's are available to offset future taxable
income,  if any,  through 2020 to 2021.  The state NOL's are available to offset
future taxable income, if any, through 2006 to 2021.


                                      F-19


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


10.  401(K) BENEFIT PLAN

The Company has a 401(k) profit  sharing plan,  which covers  substantially  all
domestic  employees  of  the  Company.  Plan  participants  may  make  voluntary
contributions  up to 20% of their earnings up to the statutory  limitation.  The
Company's  contribution  is $0.25 for each $1.00  contributed by employees up to
the first $2,000.  Company  contributions  have no vesting period. The Company's
contributions   were  $67,000,   $57,000,   $55,000  in  2002,  2001  and  2000,
respectively.

11.  BUSINESS SEGMENTS

BioSource   primarily   operates  in  one  industry   segment;   the  licensing,
development,  manufacture, marketing and distribution of biological reagents and
test  kits  used  in  biomedical  research..  The  Company's  customers  are not
concentrated in any specific  geographic  region and no single customer accounts
for a significant amount of our sales.

Our accounting  policies for the segments below are the same as those  described
in the summary of significant accounting policies,  except that we are only able
to track net sales for the geographic "Sales-to" segments. The Company evaluates
performance  for the  "Sales-from"  segments on net  revenues and profit or loss
from operations.  The Company's reportable segments are strategic business units
that offer geographic product availability.  They are managed separately because
each business requires different marketing and distribution strategies. Business
segment information is summarized as follows (000's):


                                               2002         2001         2000
                                             --------     --------     --------
SALES - FROM SEGMENTS:
Net sales to external customers from:
     United States:
         Domestic .......................    $ 23,574     $ 21,027     $ 18,843
         Export .........................       4,082        4,623        4,303
                                             --------     --------     --------
                Total United States .....      27,656       25,650       23,146
     Europe .............................      12,399        9,525        9,064
                                             --------     --------     --------
                Consolidated ............    $ 40,055     $ 35,175     $ 32,210
                                             ========     ========     ========

Operating income (loss):
     United States ......................    $ (1,250)    $ (1,970)    $ (2,204)
     Europe .............................       2,533        2,181        1,393
                                             --------     --------     --------
                Consolidated ............    $  1,283     $    211     $   (811)
                                             ========     ========     ========


                                      F-20


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


                                              2002         2001         2000
                                             --------     --------     --------
SALES - TO SEGMENTS:
Net sales to external customers in:
     United States ......................    $ 23,574     $ 21,027     $ 18,843
     Europe .............................      10,940        8,846        8,180
     Japan ..............................       3,319        3,085        3,203
     Other ..............................       2,222        2,217        1,984
                                             --------     --------     --------
                Consolidated ............    $ 40,055     $ 35,175     $ 32,210
                                             ========     ========     ========

SALES - BY PRODUCT GROUP
Net sales by product group:
     Biological reagents ................    $ 20,944     $ 19,360     $ 17,169
     Test kits ..........................      19,111       15,815       15,041
                                             --------     --------     --------
                                             $ 40,055     $ 35,175     $ 32,210
                                             ========     ========     ========

IDENTIFIABLE ASSETS AT END OF YEAR:
     United States ......................    $ 36,263     $ 42,420
     Europe .............................      10,243        7,421
                                             --------     --------
                Consolidated ............    $ 46,506     $ 49,841
                                             ========     ========

NET INTEREST EXPENSE (INCOME):
     United States ......................    $    (92)    $   (363)    $     58
     Europe .............................         (21)         (11)         (22)
                                             --------     --------     --------
                Consolidated ............    $   (113)    $   (374)    $     36
                                             ========     ========     ========

DEPRECIATION AND AMORTIZATION:
     United States ......................    $  2,028     $  2,145     $  1,785
     Europe .............................         296          286          371
                                             --------     --------     --------
                Consolidated ............    $  2,324     $  2,431     $  2,156
                                             ========     ========     ========

CAPITAL EXPENDITURES:
     United States ......................    $  3,132     $  2,106     $  1,913
     Europe .............................         349          453          239
                                             --------     --------     --------
                Consolidated ............    $  3,481     $  2,559     $  2,152
                                             ========     ========     ========


12.  COMMITMENTS AND CONTINGENCIES

At December 31, 2002, future minimum payments under the Company's non-cancelable
leases are as follows (in thousands):

     2003........................................  $   1,440
     2004........................................      1,340
     2005........................................      1,048
     2006........................................        579
     2007........................................         53
     Thereafter..................................         --
                                                   ---------

                                                   $   4,460
                                                   =========

Rent expense for 2002 totaled $1,412,000.


                                      F-21


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


On June 14, 2000, one of our former employees,  Jordan Fishman,  Ph.D.,  filed a
legal  action  against  us in  the  United  States  Central  District  Court  of
California alleging breach of Dr. Fishman's Employment Agreement and a number of
other causes of action. BioSource filed a counter claim against Dr. Fishman, and
a number of pre-trial  motions,  the result of which was that only the breach of
contract claim and BioSource's  counter claim remained for trial. On January 14,
2002,  shortly before the scheduled trial date,  plaintiff  agreed to settle the
case and the DiSorbo Lawsuit discussed below for $275,000, which was expensed in
2001.

Dr.  Fishman  also sued  Dennis  DiSorbo,  Ph.D.,  a Vice  President  of our QCB
division,  in the Superior  Court of  Worcester,  Massachusetts  for  wrongfully
interfering with his employment contract with BioSource (the "DiSorbo Lawsuit").
The DiSorbo  Lawsuit  was stayed  pending the  determination  of the  California
Lawsuit.  The  parties  agreed  to settle  the  DiSorbo  Lawsuit  as part of the
settlement of the California Lawsuit without additional consideration.

In June  2000,  the  former  shareholders  of QCB  commenced  a AAA  arbitration
proceeding  against the Company  seeking the recovery of escrowed funds from the
purchase of QCB that were withheld  from the purchase  price paid by the Company
as security for claims that might be discovered after closing. The Company filed
a counterclaim against the former shareholders of QCB, including Dr. Fishman, in
the  arbitration  to  recover  damages.   Management  believes  we  suffered  in
connection  with  inaccuracies  in, and/or breaches of the  representations  and
warranties  contained in, the original Stock Purchase Agreement for QCB executed
on December 9, 1998.  In our  counterclaim,  we sought to recover  $1,347,000 of
escrowed  funds.  On July 2, 2002,  we settled the  arbitration  and all related
claims against the former  shareholders of QCB and Dr. Fishman in  consideration
of the payment to us of $800,000 from the escrowed  funds.  The remaining  funds
held in escrow were released to the former  shareholders of QCB. This settlement
is  considered  to be a reduction  of the  goodwill  originally  recorded in the
acquisition  of QCB.  That  goodwill was written off as a  cumulative  effect of
accounting  change in the  adoption of FASB  Statement  No. 142 during the first
quarter of 2002.  The  settlement  was  accounted  for as an  adjustment  to the
cumulative effect of accounting change during the third quarter of 2002.

The Company is involved in various  other claims and lawsuits  incidental to its
business. In the opinion of management,  these claims and suits in the aggregate
will not  materially  affect the  financial  position,  results of operations or
liquidity of the Company.

13.  EARNINGS PER SHARE

The Company presents basic and diluted earnings (loss) per share ("EPS").  Basic
EPS is computed by dividing net income (loss)  available to common  stockholders
by the weighted  average  number of common  shares  outstanding  for the period.
Diluted EPS reflects the potential  dilution from securities that could share in
the earnings of the Company.

The reconciliation of basic to diluted weighted average shares is as follows:

                                                     Year ended December 31,
                                                  2002        2001       2000
                                                --------    --------   --------

Net income (loss) available to common
     stockholders used for basic and
     diluted income (loss) per share ........   $ (1,052)   $    741   $ (4,019)
                                                ========    ========   ========

Weighted average shares used in basic
     computation ............................      9,787      10,398      8,584
Dilutive stock options and warrants .........        402         567       --
                                                --------    --------   --------

Weighted average shares used for diluted
     computation ............................     10,189      10,965      8,584
                                                ========    ========   ========


                                      F-22


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2002, 2001 AND 2000


Options to purchase  1,040,125,  793,332,  and 90,003  shares of common stock at
prices ranging from $6.08 to $31.00,  $8.00 to $31.00, and $17.13 to $27.38 were
outstanding during 2002, 2001 and 2000,  respectively,  but were not included in
the  computation  of diluted  earnings  (loss) per share  because  the  options'
exercise  price was greater than the average  market price of the common shares.
Options to purchase  1,190,469  shares of common stock at prices ranging from of
$1.37 to $12.18 per share were outstanding  during 2000 but were not included in
the computation of diluted loss per share because the options were antidilutive,
as the Company incurred a net loss for that year.

Warrants to purchase  1,287,000  shares at an exercise  price of $7.77 per share
were  outstanding  as of December 31, 2002 and 2000 but were not included in the
computation  of diluted  net  income per share  because  their  effect  would be
anti-dilutive.


                                      F-23


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNT
                  YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000




                            Balance at     Provision    Deductions    Balance at
                             Beginning      Charged      Accounts       End of
                              of Year      to Income   Written Off       Year
                              -------      ---------   -----------       ----
                                                   (000's)
2000-allowance for
   doubtful accounts........  $  328          139          324            143

2001-allowance for
   doubtful accounts........  $  143          125            7            261

2002-allowance for
   doubtful accounts........  $  261          140          140            261




See accompanying independent auditors' report.


                                      F-24


<PAGE>


                                 EXHIBIT INDEX
               FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

    3.1           Certificate of Incorporation of Registrant (1)

    3.2           Bylaws of Registrant (1)

    4.1           Specimen Stock Certificate of Common Stock of Registrant (1)

    4.2           Certificate of Designation of Series A Preferred Stock (9)

    4.3           Certificate of Designation of Series B Preferred Stock (11)

    4.4           Rights  Agreement,  dated as of  February  25,  1999,  between
                  Registrant and U.S. Stock Transfer and Trust  Corporation,  as
                  Rights Agent (9)

    4.5           Amendment to Rights  Agreement,  dated as of January 10, 2000,
                  between   Registrant   and  U.S.   Stock  Transfer  and  Trust
                  Corporation (13)

    4.6           Second  Amendment to Rights  Agreement,  dated  September  28,
                  2000,  between  Registrant  and U.S.  Stock Transfer and Trust
                  Corporation (13)

    4.7           Form of Right Certificate (9)

    4.8           Summary of Share Purchase Rights (9)

    4.9           Investor  Rights  Agreement  dated  February 15, 2000,  by and
                  among Registrant, Genstar Partners II, L.P. and Stargen II LLC
                  (12)

    4.10          Amendment to Investor  Rights  Agreement  dated  September 18,
                  2000,  among  Registrant,  Genstar Capital  Partners II, L.P.,
                  Stargen II LLC, Russell D. Hays and George Uveges (13)

    4.11          Second Amendment to Investor Rights Agreement, dated September
                  28, 2000, among Registrant, Genstar Capital Partners II, L.P.,
                  Stargen II LLC,  Russell D. Hays,  George Uveges,  Jean-Pierre
                  Conte,  Richard  Hoskins,  Richard Paterson and Robert Weltman
                  (13)

    4.12          Warrant  to  Purchase  Common  Stock of  Registrant  issued to
                  Genstar Capital Partners II, L.P. on February 15, 2000 (12)

    4.13          Warrant  to  Purchase  Common  Stock of  Registrant  issued to
                  Stargen II LLC on February 15, 2000 (12)

   10.1           Registrant's 1993 Stock Incentive Plan (4)

   10.2           Licensing  Agreement  dated May 1, 1990,  by and between TAGO,
                  Inc., as licensee,  and St.  Jude's  Children's  Hospital,  as
                  licenser (1)

   10.3           License  Agreement  dated  February 14,  1991,  by and between
                  Registrant and Schering Corporation (1)

   10.4           License  Agreement  dated  October  1,  1993,  by and  between
                  Registrant, as licensee, and Schering Corporation, as licensor
                  (2)


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, CONTINUED

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

   10.5           Separation and  Consulting  Agreement  between  Registrant and
                  James H. Chamberlain dated September 19, 2000 (15)

   10.6           License  Agreement  dated  February  7, 1994,  by and  between
                  Registrant, as licensee and Fundacio Clinic (4)

   10.7           Form of Indemnification  Agreement for Directors and Executive
                  Officers (6)

   10.8           List  of  Indemnities  relating  to  Form  of  Indemnification
                  Agreement previously filed as Exhibit 10 (16)

   10.9           Registrant's Employee Stock Purchase Plan (7)

   10.10          Securities  Purchase  Agreement dated January 10, 2000, by and
                  among  Registrant,  Genstar  Capital  Partners  II,  L. P. and
                  Stargen II LLC (15)

   10.11          Securities Purchase Agreement, effective as of August 9, 2000,
                  between the Registrant and Genstar  Capital  Partners II, L.P.
                  (13)

   10.12          Amendment  to  Securities  Purchase  Agreement,  dated  as  of
                  September  28, 2000,  among the  Registrant,  Genstar  Capital
                  Partners II, L.P., Jean-Pierre Conte, Richard Hoskins, Richard
                  Paterson and Robert Weltman (13)

   10.13          Securities Purchase Agreement, effective as of August 9, 2000,
                  between the Registrant and Russell D. Hays (13)

   10.14          Securities  Purchase  Agreement,  effective as of September 5,
                  2000, between the Registrant and George Uveges (13)

   10.15          Letter agreement regarding  employment,  dated August 2, 2000,
                  between Registrant and Russell D. Hays (15)

   10.16          Amendment  to letter  agreement  regarding  employment,  dated
                  September  18, 2000,  between  Registrant  and Russell D. Hays
                  (15)

   10.17          Letter agreement regarding  employment,  dated August 18, 2000
                  between Registrant and George Uveges (15)

   10.18          Amendment  to letter  agreement  regarding  employment,  dated
                  September 18, 2000, between Registrant and George Uveges (15)

   10.19          Registrant's 2000 Non-Qualified Stock Option Plan (14)

   10.20          Lease  Agreement  for 542 Flynn  Road,  dated  March 7,  2000,
                  between Registrant and Lincoln Ventura Technology Center (15)

   10.21          Executive  Employment Agreement between Registrant and Leonard
                  M. Hendrickson, dated September 24, 2001 (16)


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002, CONTINUED

  EXHIBIT
  NUMBER                                   DESCRIPTION
  -------         --------------------------------------------------------------

   21             Subsidiaries of the Company:
                                                             STATE/COUNTRY OF
                  NAME                                        INCORPORATION
                  ----                                        -------------

                  Keystone Laboratories, Inc.................California
                  BioSource V.I. FSC., LTD...................U.S. Virgin Islands
                  BioSource Europe S.A.......................Belgium
                  BioSource B.V..............................Holland
                  BioSource GmbH.............................Germany
                  BioSource U.K., Ltd........................U.K.
                  Quality Controlled Biochemicals, Inc.......Massachusetts
                  Javelle, Inc...............................Massachusetts

   23.1           Consent of KPMG LLP, Independent Public Accountants

   99.1           Certificate of our Chief Executive Officer and Chief Financial
                  Officer pursuant to Section 906 of the  Sarbanes-Oxley  Act of
                  2002.
----------

 (1) Incorporated by reference to the Company's  Registration  Statement on Form
     S-4 as filed with the  Securities  and Exchange  Commission  on October 22,
     1992, as amended.
 (2) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1992.
 (3) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1993.
 (4) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December  31,  1994.
 (5) Incorporated  by reference to the  Company's  Form 10KSB for the year ended
     December 31, 1995.
 (6) Incorporated by reference to the Company's  Registration  Statement on Form
     SB-2  (SEC  No.  333-3336)  as  filed  with  the  Securities  and  Exchange
     Commission on May 31, 1996, as amended.
 (7) Incorporated by reference to the Company's  Registration  Statement on Form
     S-8 (SEC No. 33-91838) as filed with the Securities and Exchange Commission
     on May 4, 1995.
 (8) Incorporated  by reference to the  Company's  Current  Report on Form 8-K/A
     filed with the Securities and Exchange Commission on February 19, 1999.
 (9) Incorporated by reference to the Company's Current Report on Form 8-A filed
     with the Securities and Exchange Commission on March 1, 1999.
(10) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 1998.
(11) Incorporated by reference to the Company's  Registration  Statement on Form
     S-3 as filed with the Securities and Exchange Commission on March 16, 2000.
(12) Incorporated by reference to Amendment No. 1 to the Company's  Registration
     Statement on Form S-3 as filed with the Securities and Exchange  Commission
     on March 22, 2000.
(13) Incorporated  by reference to the Company's  Current  Report on Form 8-K as
     filed with the Securities and Exchange  Commission on October 26, 2000, and
     as amended on October 31, 2000.
(14) Incorporated  by reference to the Company's  definitive  proxy statement as
     filed with the Securities and Exchange Commission on May 16, 2000.
(15) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 2000.
(16) Incorporated  by  reference to the  Company's  Form 10-K for the year ended
     December 31, 2001.