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


                       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, 2001

                        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             (I.R.S. Employer Identification No.)
 incorporation or organization)


                   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 . [_]

       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 March 21, 2002 was $58,625,000.

       The number of shares of the Registrant's  common stock  outstanding as of
March 21, 2002 was 9,852,863.


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

OVERVIEW

We develop,  manufacture,  market and  distribute  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.  We offer over
3,200  products  that  we  group  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.

We have a  strong  scientific  research  staff,  a  broad  product  line  and an
established trade name,  giving us a strong 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 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.
     The past  three  years  have seen  research  and  development  spending  at
     approximately  11% of net sales.  In 2002,  our  research  and  development
     spending is  projected  to be  approximately  16% - 18% of sales - a dollar
     increase of approximately $2.5 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 2002.  We expect  this  investment  to result in new
     market  penetration,  increased brand  recognition  and ultimately  greater
     organic sales growth.


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<PAGE>


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  3,200  different  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 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.

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 328
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.


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<PAGE>


Of the more than 325 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 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.  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


                                       4


<PAGE>


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 1,500 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 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


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<PAGE>


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 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 350  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.


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<PAGE>


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.

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  to
               search and Energy Transfer, probes are fluorescent probes used in
               real time PCR quantitation and diagnostic molecular analysis.  We
               offer both custom and standard FRET probes for our customers.

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

SERUM, BUFFERS AND MEDIA

We manufacture over 240 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 4,900 customers worldwide.  No single customer accounted for 10% or
more of our total  revenue  during any of the last three  years.  Our  customers
include:


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<PAGE>


    PHARMACEUTICAL           BIOTECHNOLOGY                UNIVERSITIES

     Astra Zeneca                Amgen            Brigham and Women's Hospital
Aventis Pharmaceuticals        Genentech             Georgetown University
 Bristol Myers Squibb            Biogen             Johns Hopkins University
       Eli Lilly         Human Genome Sciences                UCLA
   Glaxo Smithkline              Hyseq                  UC San Francisco
   Johnson & Johnson              Icos               University of Michigan
    Merck & Company       IDEC Pharmaceuticals     University of Pennsylvania
        Pfizer           Rigel Pharmaceuticals   University of Texas MD Anderson
       Pharmacia                                      Cancer Research Center
    Schering-Plough

                                   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 pharmaceutical and research 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.  Cytokines are soluble  proteins  that act as chemical  communicators
between cells and continue to play an important  role in 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.  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.

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.

Currently we employ 39 research scientists, 21 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, 2001, we
introduced over 300 new products,  of which  approximately 80% were developed by
our scientists.  In addition,  as of February 22, 2002, we had approximately 243
products under development.  We spent approximately $3,986,000,  $3,575,000, and
$3,315,000 on research and  development in 2001,  2000,  and 1999  respectively.
These amounts  represent  approximately  11% of net sales in each year. In 2002,
our research and development spending is projected to be approximately 16% - 18%
of sales - a dollar  increase  of  approximately  $2.5  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.

MANUFACTURING

Our  reagent  products  and  ELISA  test  kits are  manufactured  in  Camarillo,
California.  We manufacture  oligonucleotides at our laboratories located at our
facilities in Camarillo and Foster City,  California.  Our custom 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.


                                       8


<PAGE>


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 29  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.   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 to Germany, Belgium, Holland and the
United Kingdom, and 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.

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


                                       9


<PAGE>


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.

"TAGOImmunologicals," "Cytoscreen," "Primescreen," "ICScreen" and "Cytosets" 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.

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, 2002,  we  employed  257  individuals,  247 of who 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 21, 2001, 53 of our 257 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.


                                       10


<PAGE>


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 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  their  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
2002 are  approximately $29,000.  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  6,500 square feet,  of which
approximately 6,000 square feet is our oligonucleotide laboratory, under a lease
that  expires in May 2003.  Monthly  lease  payments  in 2002 are  approximately
$13,000.

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. Monthly lease payments in 2002 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 2002 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 2002 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 2002
are approximately $18,000.


                                       11


<PAGE>


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,
2001,  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
                                           ======

ITEM 3.  LEGAL PROCEEDINGS

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.

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 of 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  being  held  by the  Company  to  recover  damages
management  believes it has 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.  The  Company has
counterclaimed against the former shareholders of QCB, including Dr. Fishman, in
the  arbitration  to  recover  those  damages.  The  Company  seeks  to  recover
$1,347,000  of escrowed  funds for this claim.  In  addition,  the Company  also
brought a fraud claim against Dr. Fishman for the intentional misrepresentations
and/or omissions he made in connection with the Stock Purchase Agreement. In its
fraud claim,  the Company seeks to recover the amount of its overpayment for the
purchase of QCB, the amount of lost profits that BioSource would reasonably have
anticipated  and  earned  had QCB  possessed  the  characteristics  fraudulently
attributed to it, punitive  damages,  and attorneys' fees and costs. The parties
have  selected  a panel of three  arbitrators  who will  hear the  dispute.  The
parties  are in the  process of  conducting  discovery  in  connection  with the
arbitration.  The  arbitration is scheduled to begin on May 1, 2002. The Company
has not recorded an accrual for any  potential  gain  realized upon a successful
recovery of any or all of the escrowed funds or recoverable damages. The Company
is expensing all legal fees as they are incurred.

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.


                                       12


<PAGE>


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 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
                                                    ------        ------
     2000 Fiscal Year
         First Quarter                              $28.50        $ 6.50
         Second Quarter                              22.63          4.56
         Third Quarter                               31.00         15.13
         Fourth Quarter                              29.88         13.63

     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, through March 21, 2002      $ 8.20        $ 5.19


On March 21,  2002,  the last  reported  sale price of our  common  stock on the
Nasdaq  National  Market was $5.95.  As of March 21, 2002,  there were 9,852,863
shares of our common  stock  outstanding  held by  approximately  491 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,  we  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  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.


                                       13


<PAGE>


The Series B Redeemable  Preferred  Stock had an initial  aggregate  liquidation
value of  $9,000,300.  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.

We 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 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.

                                 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.  We plan to
retain earnings to finance our operations.

On  February  16,  1999,  our Board of  Directors  declared  a  dividend  of one
preferred  share  purchase  right for each share of common stock  outstanding on
March 2, 1999.  The purchase  rights are subject to the terms and  conditions of
the Rights  Agreement  dated  February 25, 1999,  filed with the  Securities and
Exchange  Commission on March 1, 1999, on Form 8-A. The purchase  rights are not
represented by separate certificates,  but, instead, initially will be evidenced
by the certificates representing our outstanding common stock.

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


                                       14


<PAGE>


December  31,  2001,  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."

<TABLE>
<CAPTION>

                                                        YEARS ENDED DECEMBER 31,
                                        --------------------------------------------------------
                                           2001       2000        1999        1998        1997
                                        --------    --------    --------    --------    --------
                                                 (in thousands, except per share data)

<S>                                     <C>         <C>         <C>         <C>         <C>
CONSOLIDATED STATEMENT OF OPERATIONS
 DATA:
Net sales ...........................   $ 35,175    $ 32,210    $ 29,257    $ 21,859    $ 20,572
Cost of sales .......................     15,540      13,600      11,071      13,189       6,930
                                        --------    --------    --------    --------    --------
Gross profit ........................     19,635      18,610      18,186       8,670      13,642
Operating expenses:
  Research and development ..........      3,986       3,575       3,315       2,648       2,078
  Sales and marketing ...............      7,395       5,683       4,737       4,338       4,043
  General and administrative ........      6,945       9,071       4,460       4,469       3,552
  Purchased in-process technology ...       --          --          --         4,222        --
  Amortization of intangibles .......      1,098       1,093       1,061          95          31
                                        --------    --------    --------    --------    --------
Operating income (loss)  ............        211        (812)      4,613      (7,102)      3,938
Interest and other income
 (expense), net .....................        460          73      (1,016)        432         708
                                        --------    --------    --------    --------    --------
Income (loss) before income taxes
 (benefit)  .........................        671        (739)      3,597      (6,670)      4,646
Income tax expense (benefit)  .......        (70)       (573)         20      (1,534)      1,460
                                        --------    --------    --------    --------    --------
Net income (loss)  ..................        741        (166)      3,577      (5,136)      3,186
Redeemable preferred stock dividend
 and accretion of beneficial
 conversion feature .................       --        (3,853)       --          --          --
                                        --------    --------    --------    --------    --------
Net Income (loss) available to
 common stockholders ................   $    741    $ (4,019)   $  3,577    $ (5,136)   $  3,186
                                        ========    ========    ========    ========    ========

Net income (loss) per share available
 to common stockholders:
  Basic .............................   $   0.07    $  (0.47)   $   0.49    $  (0.68)   $   0.38
  Diluted ...........................   $   0.07    $  (0.47)   $   0.46    $  (0.68)   $   0.36

Shares used to compute net income
 (loss) per share available to common
 stockholders:
  Basic .............................     10,398       8,584       7,235       7,509       8,318
  Diluted ...........................     10,965       8,584       7,833       7,509       8,965


<CAPTION>
                                                           AS OF DECEMBER 31,
                                        --------------------------------------------------------
                                           2001       2000        1999        1998        1997
                                        --------    --------    --------    --------    --------
                                                            (in thousands)

<S>                                     <C>         <C>         <C>         <C>         <C>
CONSOLIDATED BALANCE SHEET DATA:
Current assets ......................   $ 24,963    $ 26,420    $ 18,325    $ 18,278    $ 27,636
Total assets ........................     49,841      50,364      40,222      41,400      33,157
Current liabilities .................      5,963       6,318       7,340      10,039       3,206
Long term debt, less current
 portion ............................       --          --        11,459      13,666       1,292

Total stockholders' equity ..........     43,878      44,046      21,422      17,696      28,658
</TABLE>


                                       15


<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. We
have 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. We also manufacture 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.

In 2000, we incurred a net loss available to common  stockholders of $4,019,000.
The loss was partially the result of a $3,853,000 charge for non-cash  preferred
stock dividends and accretion  related to a beneficial  conversion  feature (see
note 6 to the consolidated  financial statements included in this Form 10-K) and
to $4,256,000 of general and administrative  charges that were not indicative of
normal general and administrative  operating expenses (see detailed  explanation
below in the  management  discussion  and  analysis  comparing  the  year  ended
December 31, 2001 to the year ended December 31, 2000).

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.

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 21,  2002,  and we  undertake  no duty to update  this  information.
Should  events  occur  subsequent  to March 21, 2002 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 25 of this
Form 10-K.


                                       16


<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,  we  evaluate  our  estimates.  We base our
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  $6,445,000 in gross
         trade  accounts  receivable  and  $261,000 in  allowance  for  doubtful
         accounts on the  consolidated  balance sheet at December 31, 2001.  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, 2001,
         we believe our allowance for doubtful  accounts is fairly stated. We do
         have accounts  receivable amounts from certain customers as of December
         31, 2001 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 2002.


         Inventory  adjustments.  We review the components of our inventory on a
         regular  basis for excess,  obsolete  and impaired  inventory  based on
         estimated  future  usage and sales.  The  Company  reserves  its entire
         antibody inventory at 100% of its value because the ability to sell its
         antibody  inventory  is  questionable.  As of December  31,  2001,  the
         Company had $3,752,000 of antibodies in its inventory and a reserve for
         these  antibodies  totaling  $3,752,000.  The Company will  continue to
         monitor its antibody reserve policy.  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
         $8,910,000  in deferred  income  taxes and  deferred  tax assets on its
         consolidated  balance sheet as of December 31, 2001. 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,  2001,  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.


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

         REVENUE RECOGNITION. Our revenue is generated from the sale of products
         primarily  manufactured by us. We do have a small amount of products we
         sell on an outside equipment  manufactured  ("OEM") basis. We recognize
         revenue  from all of our  product  sales upon  transfer of title to the
         customer,  which  occurs  upon  shipment.  We  typically  ship  to  our
         customers FOB shipping  point.  We do have  customers who order and pay
         for certain cell  culture  products and request that we store a portion
         of the batch for them.  In these  instances,  we record all payments as
         deferred  revenue in the  consolidated  balance  sheets


                                       17


<PAGE>


         and  recognize  revenue upon  shipment of the  product to the customer.
         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. We believe that our  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,  we have  determined  that  our  long-lived  assets  are not
         impaired as of December 31, 2001 and 2000.

         GOODWILL.  In July 2001, the FASB  issued SFAS No.141,  "Accounting For
         Business Combinations", and SFAS No. 142, "Accounting For  Goodwill and
         Other  Intangible  Assets".  SFAS No. 141  requires  that the  purchase
         method of accounting be  used for all business  combinations  initiated
         after  June  30,  2001.  SFAS  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
         SFAS No. 142.  The amortization of goodwill and intangible  assets with
         indefinite  lives  was   approximately   $1,098,000,   1,093,000,   and
         1,061,000 for fiscal  years ended  December 31, 2001,  2000,  and 1999,
         respectively.  Effective  January 1, 2002, the  Company's  goodwill and
         other  intangible  assets  will be  accounted  for  under  SFAS No. 141
         "Business   Combinations"   and  SFAS   No.  142  "Goodwill  and  Other
         Intangible  Assets." The Company is in the process of  quantifying  the
         anticipated  impact of adopting the  provisions of SFAS No. 142,  which
         is expected to be significant.  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.

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,  2001,  2000 and 1999" 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."


                                       18


<PAGE>


CONSOLIDATED STATEMENT OF OPERATIONS DATA              YEARS ENDED DECEMBER 31,
PRESENTED AS A PERCENTAGE OF SALES                    2001       2000       1999
                                                      ----       ----       ----

Net sales .....................................       100%       100%       100%
Cost of sales .................................        44%        42%        38%
                                                      ----       ----       ----
    Gross profit ..............................        56%        58%        62%

Operating expenses:
    Research and development ..................        11%        11%        11%
    Sales and marketing .......................        21%        17%        16%
    General and administrative ................        20%        28%        15%
    Amortization of intangibles ...............         3%         4%         4%
                                                      ----       ----       ----
         Total operating expenses .............        55%        60%        46%
                                                      ----       ----       ----
Operating income  (loss) ......................         1%        -2%        16%

Interest income ...............................         1%         1%         1%
Interest expense ..............................         0%        -1%        -5%
Other income (expense), net ...................         0%         0%         0%
                                                      ----       ----       ----
Income (loss) before income taxes (benefit) ...         2%        -2%        12%
Income tax expense (benefit) ..................         0%         0%         0%
                                                      ----       ----       ----
        Net income (loss) .....................         2%        -2%        12%
Redeemable preferred stock dividend and
  accretion of beneficial conversion ..........        --        -12%         0%
                                                      ----       ----       ----
Net income (loss) available to
  common stockholders .........................         2%       -14%        12%
                                                      ====       ====       ====

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  increase  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 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 to 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  represents  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. This trend may continue in 2002, which could result in
lower gross margins on our serum and media products in 2002 compared to 2001. 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 have  traditionally  had lower margins
than assays,  which  represent  the largest  portion of our sales and generate a
higher  margin.   New   oligonuceotide   products  are  now  being   discovered,
manufactured  and  accepted  by  customers  that  produce  higher  margins  than
traditional oligonuceotides. Our oligonucleotide sales may fluctuate


                                       19


<PAGE>


materially  from  quarter to quarter in 2002 and beyond,  and,  depending on the
product mix, could have an effect on our gross margins.

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. In 2002, the Company anticipates spending between 16% and 18%
of revenues on research and development  activities.  This upward spending trend
in research and development will continue into 2003 and is representative of the
Company's  desire to increase the number of new, novel and proprietary  products
it brings to market.  This effort is  focusing  on the  quality of new  products
being developed not the quantity of new products developed.

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
represents 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
new 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 represent  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 Company is in the process of quantifying the
anticipated impact of adopting the provisions of SFAS No. 142, which is expected
to be  significant.  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.


                                       20


<PAGE>


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.  In 2000,  we
realized a large tax benefit of $5,037,000 from the exercise of stock options by
employees.

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.  We did not incur any  similar  charge in 2001 and do not  expect any
similar charges in 2002 or subsequent years.

Year Ended December 31, 2000 Compared to Year Ended December 1999

Net Sales.  Net sales were  $32,210,000 in 2000 compared to $29,257,000 in 1999,
an increase of $2,953,000 or 10%. North American sales, which represented 60% of
consolidated  net sales in 2000,  grew  $3,308,000  or 21% for the  year,  while
European sales, which represent 25% of consolidated net sales in 2000,  declined
$930,000  or 10%.  Sales from the rest of the world,  representing  15% of total
consolidated  net sales in 2000 grew $575,000 or 14% over the prior year.  North
American  sales grew due to increased  sales of  oligonucleotides,  proteins and
products related to signal transduction.  In local currency, European sales grew
$55,000 or 1% compared  to the prior  year.  European  research  product  sales,
excluding the impact of foreign  exchange,  decreased 6% while sales of European
clinical products, excluding the impact of foreign exchange, increased 3%. Sales
in the rest of the world  increased  due to the  increase  in sales of  clinical
products.

Gross Profit. Gross profit for the year ended December 31, 2000 was $18,610,000,
resulting in a gross margin of 58%,  compared to a gross profit of  $18,186,000,
and a gross margin of 62% for the year ended December 31, 1999. The gross margin
of 58% for the year ended December 31, 2000 was negatively  impacted by $663,000
or  approximately 2% as a result of $571,00 of inventory write downs and $92,000
related to a sales allowance for a potential credit to a terminated distributor.
In  addition,  gross  margin  was  impacted  $70,000  or .2% for the year  ended
December  31,  2000 due to the  impact of foreign  exchange.  The  Company  also
relocated it's primary manufacturing and corporate  headquarters in 2000, moving
from a previously  owned 29,000  square foot  building to a leased 52,000 square
foot  building  causing the 2000 gross margin to be effected by higher  on-going
costs of the new  facility.  Our  serum  and media  business,  which  represents
approximately  7% of our 2000 net sales was impacted by  increased  raw material
costs.

Research and  development.  Research and development  expense for the year ended
December  31,  2000 was  $3,575,000  compared to  $3,315,000  for the year ended
December 31, 1999,  an increase of $260,000 or 8%. As a percentage of net sales,
research and  development  expense was 11% for each of the years ended  December
31, 2000 and 1999.

Sales and  marketing.  Sales and marketing  expense was  $5,682,000 for the year
ended  December 31, 2000 and $4,737,000 for the year ended December 31, 1999, an
increase of $945,000 or 20%. As a percentage of net sales,  this  represents 18%
and 16% of net sales  for each of the years  ended  December  31,  2000 and 1999
respectively.  This increase was attributable primarily to $120,000 of increased
advertising  and promotional  expenses,  $450,000 of increased sales expenses in
the United  States,  $322,000  increased  expenses  related to the addition of a
direct sales force in the United Kingdom which began operations in January 2000,
and $80,000 due to the hiring of two new senior sales and  marketing  executives
to the Company in November 2000.

General and  administrative.  General and administrative  expense was $9,071,000
and $4,460,000 for the years ended December 31, 2000 and 1999 respectively. This
represents an increase of $4,610,000,  or 103%.  $4,256,000 of this increase was
related to various charges including:  (i) a non-cash stock compensation  charge
of  $946,000  related to the hiring of a new 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 merger and
acquisition  work and legal cost related to an employee  termination  suit; (iv)
$534,000 related to the transition to a new senior management


                                       21


<PAGE>


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.  SG&A  expenses  before the
$4,256,000  charges  described  above were $354,000 higher for the twelve months
ended December 31, 2000 as compared to 1999,  reflecting the Company's continued
investment in its infrastructure.

Amortization of intangibles. Amortization of intangible assets was $1,093,000 in
2000 and $1,061,000 in 1999. These amounts represent  amortization of intangible
assets  acquired  primarily  in  connection  with  the  acquisitions  of QCB and
Biofluids in December 1998.

Interest  income.  Interest  income was $266,000 in 2000 compared to $397,000 in
1999. This interest income was derived from the interest income on cash invested
in short-term securities.

Interest expense.  Interest expense was $302,000 in 2000 and $1,367,000 in 1999.
Interest  expense  was  related  to the  interest  expense  on the notes used to
finance the  acquisition  of QCB and Biofluids in December 1998. The decrease in
interest expense from 1999 to 2000 is the result of the pay off of notes payable
in March 2000.

Other income and (expense) net. Other income and (expense),  net was $108,000 of
net other  income in 2000  compared to  ($46,000)  of net  expense in 1999.  The
$108,000 of net income in 2000 consisted primarily of a gain of $82,000 from the
liquidation  of two  European  subsidiaries  and  $104,000 of gains  realized on
foreign  currency  transactions  offset  by a  $99,000  loss on the  sale of the
Company's previous  headquarters in November 2000. The $46,000 net other expense
in 1999 was primarily losses realized on foreign currency transactions.

Income tax expense (benefit). Income tax benefit was $573,000 in 2000 and income
tax expense  was $20,000 in 1999.  The income tax benefit in 2000 was the result
of tax  benefits  from  research and  experimentation  and other  permanent  tax
credits  while the  minimal  income  tax  expense  in 1999 was the result of the
utilization of prior year operating losses in the European  subsidiaries in 1999
and R & E and other permanent tax credits.


                                       22


<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,    Sep. 30,    Jun. 30,   Mar. 31,    Dec. 31,    Sep. 30,    Jun. 30,    Mar. 31,
                              2001        2001        2001       2001        2000        2000        2000        2000
                            --------    --------    --------   --------    --------    --------    --------    --------
                                                                  (in thousands)

<S>                         <C>         <C>         <C>        <C>         <C>         <C>         <C>         <C>
Net Sales ...............   $  9,171    $  8,587    $  8,760   $  8,657    $  7,719    $  8,150    $  8,449    $  7,891
Cost of goods sold ......      4,143       3,761       3,678      3,958       3,889       3,395       3.257       3,058
                            --------    --------    --------   --------    --------    --------    --------    --------
   Gross profit .........      5,028       4,826       5,082      4,699       3,830       4,755       5,191       4,833
Research and development
    .....................      1,056       1,051         925        954         982         872         899         822
Sales and marketing .....      1,843       1,806       1,824      1,922       1,617       1,325       1,393       1,346
General and
  administrative ........      2,028       1,751       1,360      1,807       2,888       3,420       1,670       1,092
Amortization of
  intangibles ...........        274         275         275        275         275         275         274         270
                            --------    --------    --------   --------    --------    --------    --------    --------
   Income (loss) from
    operations ..........       (173)        (57)        699       (258)     (1,932)     (1,137)        954       1,303
Interest income
  (expense), net ........         45          85         107        137         146          13         (11)       (182)
Other income (expense),
  net ...................         39         (28)         26         49          60         (47)         79          16
                            --------    --------    --------   --------    --------    --------    --------    --------
   Income (loss) before
    income taxes
    (benefit)  ..........        (89)       --           832        (72)     (1,726)     (1,171)      1,022       1,136
Income tax expense
  (benefit)  ............        (40)       (266)        258        (22)       (633)       (609)        317         352
                            --------    --------    --------   --------    --------    --------    --------    --------
   Net income (loss)  ...        (49)        266         574        (50)     (1,093)       (562)        705         784

Redeemable preferred
  stock dividend and
  accretion of beneficial
  conversion feature ....       --          --          --         --          --        (2,384)       (323)     (1,147)
                            --------    --------    --------   --------    --------    --------    --------    --------

Net income (loss)
  available to common
  stockholders ..........   $    (49)   $    266    $    574   $    (50)   $ (1,093)   $ (2,946)   $    383    $   (363)
                            ========    ========    ========   ========    ========    ========    ========    ========

Net income (loss) per
  basic share available
  to common stockholders    $  (0.00)   $   0.03    $   0.06   $  (0.00)   $  (0.11)   $  (0.35)   $   0.05    $  (0.05)
                            ========    ========    ========   ========    ========    ========    ========    ========

Shares used to compute
  basic net income (loss)
  per share available to
  common stockholders ...     10,391      10,443      10,428     10,352      10,324       8,362       7,930       7,717
                            ========    ========    ========   ========    ========    ========    ========    ========
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash  equivalents  as of December 31, 2001 of  $9,471,000  decreased by
$1,162,000,  or 11%, from $10,633,000 at December 31, 2000. The decrease in cash
was due  primarily  to  $2,065,000  provided by operating  activities  offset by
$2,559,000 and $360,000 used in investing and financing activities.


Net cash of $2,065,000  was provided by operating  activities  in 2001.  Working
capital,  which is the excess of current  assets over  current  liabilities  was
$19,000,000 at December 31, 2001 as compared to $20,102,000 at December 31, 2000
representing an decrease of $1,102,000 or 5%.

Net cash used in investing activities in 2001 was $2,559,000 which was primarily
for  the  purchase  of  laboratory  and  manufacturing  equipment.  The  Company
anticipates capital spending in 2002 to be a least at levels incurred in 2001.


                                       23


<PAGE>


Net cash used in financing activities in 2001 was $360,000 of which $308,000 was
provided  from the exercise of employee  stock  options and $668,000 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.  Through March
18, 2002,  the Company had spent  $2,900,000  and may continue to repurchase its
common stock until the $5,000,000 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, 2001,  the Company  received  $308,000  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 2002. 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  2002  will  be  approximately
$1,340,000.

At December 31, 2001,  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 21, 2002, the Company does
not have a line of credit.  However,  we 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  July  2001,   the  FASB  issued  SFAS  No.141,   "Accounting   For  Business
Combinations",  and SFAS No. 142,  "Accounting For Goodwill and Other Intangible
Assets".  SFAS No. 141 requires  that the purchase  method of accounting be used
for all  business  combinations  initiated  after  June 30,  2001.  SFAS 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 SFAS No. 142. The amortization of goodwill and intangible assets
with indefinite lives was approximately  $1,098,000,  $1,093,000, and $1,061,000
for fiscal years ended  December 31, 2001,  2000,  and 1999,  respectively.  The
Company is in the process of quantifying  the  anticipated  financial  statement
impact of  adopting  the  provisions  of SFAS No.  142,  which is expected to be
material. 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.  The  Company  will  adopt of SFAS 142
effective January 1, 2002.


                                       24


<PAGE>


In October 2001, the FASB issued 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. The Company expects that the adoption of SFAS
No. 144 will not have a material  impact on the  financial  position  or results
from operations.


                                  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.

We  historically  have 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 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.

We compete 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.


                                       25


<PAGE>


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.

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


                                       26


<PAGE>


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.

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;


                                       27


<PAGE>


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.  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.


                                       28


<PAGE>


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 INTERNATIONAL SALES, WHICH ARE SUBJECT TO ADDITIONAL RISKS.

International  sales  accounted for  approximately  40% of our revenues in 2001,
42.0% of our revenues in 2000, and 47.0% of our revenues in 1999.  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;

o    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.

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 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  18% of our sales are made in  foreign  currencies,
primarily  Belgian  francs,   British  pounds,  and  German  marks.  Although  a
significant  portion of the foreign  currencies in which we conduct our business
is currently,  or may in the future 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.  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.


                                       29



<PAGE>


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 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 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


                                       30


<PAGE>


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.

As of March 21, 2002,  53 of our 257 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:


                                       31


<PAGE>


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.  We may respond by lowering our prices,  which could reduce revenues and
profits. Conversely,  failure to anticipate and respond to price competition 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.

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.


                                       32


<PAGE>


                     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 1, 1998
through  March 21,  2002 and from $5.19 to $8.20 per share from  January 1, 2002
through March 20, 2002. 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.


                                       33


<PAGE>


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 32.3% of our outstanding  common stock,  based upon
the beneficial  ownership of our common stock as of March 21, 2002. 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  32.3% of our outstanding  common stock, based upon the beneficial
ownership  of our  common  stock  as of  March  21,  2002.  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  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.


                                       34


<PAGE>


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We conduct  business in various foreign  currencies,  including  Belgian francs,
British pounds and German marks,  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,
  2001 and December 31, 2000................................................ F-3

Consolidated Statements of Operations for
  the years ended December 31, 2001, 2000
  and 1999.................................................................. F-4

Consolidated Statements of Stockholders'
  Equity and Comprehensive Income (Loss)
  for the years ended December 31, 2001,
  2000 and 1999............................................................. F-5

Consolidated Statements of Cash Flows for
  the years ended December 31, 2001, 2000
  and 1999.................................................................. F-6

Notes to Consolidated Financial Statements
  as of December 31, 2001 and 2000 and for
  the years ended December 31, 2001, 2000
  and 1999 ................................................................. F-7

Financial Statement Schedule--Valuation and
  Qualifying Account ...................................................... F-22

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

None


                                       35


<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 21, 2002:

 Name                             Age     Position
 -----------------------------   -----    --------------------------------------
 Leonard M. Hendrickson           54      President and Chief Executive Officer

 Charles C. Best                  42      Chief Financial Officer, Executive
                                          Vice President, Finance

 David S. Thrower                 38      Vice President, Global Sales and
                                          Marketing

 Cirilo Cabradilla, Jr., Ph.D.    54      Vice President, Molecular Biology

 Kevin J. Reagan, Ph.D            50      Vice President, Immunology

 Jozef Vangenechten, Ph.D         47      General Manager, BioSource Europe, S.A

 Jean-Pierre L. Conte*            38      Director

 David J. Moffa, Ph.D.*           59      Director

 John R. Overturf, Jr.**          41      Director

 Robert D. Weist**                62      Director

 Robert J. Weltman**              36      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 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.


                                       36


<PAGE>


David Thrower became Senior Vice President of Global Marketing in November 2000.
Mr. Thrower served as Senior Vice President of Global  Marketing for GN Resound,
Inc.  from  1998 to 1999.  From  1993 to 1998 Mr.  Thrower  worked  for  Quattro
Consulting,  Inc.  and served as their  Vice  President  from 1996 to 1998.  Mr.
Thrower holds a Master degree in Business  Administration  from Harvard Graduate
School of Business  Administration,  and a Bachelor's  degree in Mathematics and
Computational Sciences from Stanford University.

Cirilo D. Cabradilla,  Jr., Ph.D. became Vice President of Molecular Biology and
President  of our Keystone  division in November  1995.  From 1991 to 1995,  Dr.
Cabradilla served as President of Keystone Laboratories, Inc. From 1988 to 1991,
Dr.  Cabradilla  was  Vice  President,   Product   Development,   of  Vascor,  a
pharmaceutical  company.  Dr.  Cabradilla  was an  Assistant  Professor of Viral
Oncology from 1996-1997 at the University of Pennsylvania,  School of Veterinary
Medicine. He did his postdoctoral training at the National Cancer Institute from
1974-1977.  Dr. Cabradilla  received a Bachelor of Science and a Ph.D. degree in
Biochemistry from the University of California at Davis.

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.

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 us,  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.


                                       37


<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 Principal  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 us, which is
described under "Item 13. Certain Relationships and Related Transactions."


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, 2000, all our executive  officers,  directors and  greater-than-ten  percent
stockholders complied with all Section 16(a) filing requirements, except for the
following;  Jean-Pierre  L.  Conte and  Robert J.  Weltman  each filed an Annual
Report of Beneficial  Ownership on Form 5 for the calendar  year ended  December
31, 2001 which  included a report  relating to options that were granted  during
the calendar year ended December 31, 2000,  which  transaction  should have been
reported on an Annual Report of Bendficial  Ownership on Form 5 for the calendar
year ended December 31, 2000.


                                       38


<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..........    2001     $ 49,000(2)   $90,000(10)      173(3)      280,000
   Chief Executive Officer and
   President

David Thrower...................    2001     $200,000      $23,000          324(3)      110,000
   Senior Vice President,           2000       28,750(7)     8,750           27(3)      235,000    $13,224(4)
   Sales and Marketing

Charles C. Best.................    2001     $160,000      $23,500          325(3)       87,500
   Chief Financial Officer          2000      142,200       22,500          489(3)       20,000
   and Executive Vice President     1999       11,250(8)         0                       30,000

Russell D. Hays.................    2001     $160,300(6)   $     0       21,173(5)            0    $90,460(4)
   Chairman of the Board,           2000      107,000(9)    56,164          129(3)      395,000     57,428(4)
   President and Chief
   Executive Officer

Cy D. Cabradilla, Jr............    2001     $140,000      $22,000          635(3)       52,500
   Vice President, Molecular        2000      123,375       21,000          364(3)       12,000
   Biology                          1999      120,000       10,600          826(3)        5,000

----------
<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)  Consists of group life insurance premiums paid by the Company.
(4)  Relocation expenses.
(5)  Consists  of  $20,527  for  accrued  vacation  paid  by  the  Company  upon
     termination  and  $645  for a  group  life  insurance  premium  paid by the
     Company.
(6)  Mr. Hays joined the Company on September 18, 2000.
(7)  Mr. Thrower joined the Company on November 1, 2000.
(8)  Mr. Best joined the Company on December 1, 1999.
(9)  Mr. Hays resigned as of May 18, 2001.
(10) Mr. Hendrickson received a signing bonus on October 15, 2001.
</FN>
</TABLE>


                                       39


<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,  2001 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..       280,000         24%            5.19     10/15/11    $2,367,977    $5,113,080
David Thrower...........       110,000          9%            5.74      9/17/11    $  396,895    $  857,001
Charles C. Best.........        87,500          8%            8.78     12/19/11    $  483,054    $1,043,040
Cy D. Cabradilla Jr.....        52,500          5%            8.17     12/19/11    $  269,607    $  582,152

----------
<FN>
(1)  Options granted in 2001 vest over various periods. The options were granted
     for a term of 10 years.
(2)  Options covering an aggregate of 1,165,750 shares were granted to employees
     of the Company and its subsidiary during the year ended December 31, 2001.
(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 2001,  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, 2001 ($8.30 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..    --        --         71,000        280,000        $310,900      $870,800
David Thrower...........    --        --         58,750        286,250            --         293,000
Charles C. Best.........    --        --         16,500        117,500          55,890        97,650
Cy D. Cabradilla........    --        --         31,228         62,772         133,002        36,250
</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 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.

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


                                       40


<PAGE>


of his employment. In addition to the base salary to be paid to Mr. Hendrickson,
the  Company  paid Mr.  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  pursuant  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 (iv) 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 (v) 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.

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


                                       41


<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 21, 2002, 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  767,238  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 21,  2002,  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,  as of March 20,
2002, options to purchase 1,355,250 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.  Hendrickson,  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.  Of the  members of the  compensation  committee,  only Mr.
Hendrickson  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 21, 2002 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 555  California  Street,  Suite  4850,  San  Francisco,
California 94104.


                                       42


<PAGE>


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

Genstar Capital LLC (3)..................        3,436,856              30.2%
Jean-Pierre L. Conte (3).................        3,392,189              29.9%
Armetis Investment Management LLC(14)....        1,011,685              10.1%
Kennedy Capital Management, Inc(4).......          868,625               8.6%
Dimensional Funds Advisors Inc. (5)......          535,100               5.3%
Leonard M. Hendrickson (6)...............          109,400               1.1%
David J. Moffa, Ph.D. (7)................           39,900                *
John R. Overturf, Jr. (8)................           22,000                *
Robert D. Weist (9)......................           65,000                *
Robert J. Weltman (10)...................           11,333                *
David Thrower (11).......................           58,750                *
Charles C. Best (12).....................           31,500                *
Cy D. Cabradilla (13)....................           31,228                *
All of the directors  and  executive
  officers as a group (nine persons) (15)         3,765,722             32.3%
----------
* 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  10,065,731  shares  of  common  stock
     outstanding as of March 21, 2002.
(3)  Genstar Capital  Partners II, L.P. holds  2,008,025  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 8,000 stock options heldby Mr. Conte.
     In  addition,  Mr. Conte holds 30,000  shares of common  stock,  Richard F.
     Hoskins holds 16,667  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 15, 2002 by Kennedy Capital Management, Inc.
(5)  As disclosed in the  Schedule  13G filed with the  Securities  and Exchange
     Commission on January 30, 2002 by Dimensional Fund Advisors, Inc.


                                       43


<PAGE>


(6)  Includes  (i) 71,000  shares of common stock  reserved  for  issuance  upon
     exercise of stock options that are currently exercisable or are exercisable
     within 60 days of March 21, 2002; (ii) 26,400 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.
(7)  Includes  (i) 32,500  shares of common stock  reserved  for  issuance  upon
     exercise of stock options that are currently exercisable or are exercisable
     within 60 days of March 21,  2002;  (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.
(8)  Includes  (i) 20,000  shares of common stock  reserved  for  issuance  upon
     exercise of stock options that are currently exercisable or are exercisable
     within 60 days of March 21,  2002;  and (ii) 2,000  shares of common  stock
     owned.
(9)  Includes  65,000 shares of common stock reserved for issuance upon exercise
     of stock options that are currently  exercisable or are exercisable  within
     60 days of March 21, 2002.
(10) Includes (i) 3,333 shares of common stock held directly;  (ii) 8,000 shares
     of common stock  reserved for issuance  upon exercise of stock options that
     are currently  exercisable or are  exercisable  within 60 days of March 21,
     2002. 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.
(11) Includes  58,750 shares of common stock reserved for issuance upon exercise
     of stock options that are currently  exercisable or are exercisable  within
     60 days of March 21, 2002.
(12) Includes  16,500 shares of common stock reserved for issuance upon exercise
     of stock options that are currently  exercisable or are exercisable  within
     60 days of March 21, 2002.
(13) Includes  31,228 shares of common stock reserved for issuance upon exercise
     of stock options that are currently  exercisable or are exercisable  within
     60 days of March 21, 2002.
(14) As disclosed in the  Schedule  13G filed with the  Securities  and Exchange
     Commission on February 4, 2002 by Armetis Investment Management LLC.
(15) Includes  (I) 292,000  shares of common stock  reserved  for issuance  upon
     exercise of stock options that are currently exercisable or are exercisable
     within 60 days of March 21,  2002;  (ii)  1,287,000  shares of common stock
     reserved  for issuance  upon the  exercise of warrants  and (iii)  includes
     2,186,722 shares of common stock owned.

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
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.


                                       44


<PAGE>


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 the 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.  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, 2001 and 2000

    Consolidated Statements of Operations for the Years ended December 31, 2001,
    2000, and 1999

    Consolidated  Statements of Stockholders'  Equity and  Comprehensive  Income
    (Loss) for the Years ended December 31, 2001, 2000 and 1999

    Consolidated Statements of Cash Flows for the Years ended December 31, 2001,
    2000, and 1999

    Notes to Consolidated Financial Statements

   (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  September 26, 2001,  reporting Item 5
         and filed with the  Securities  and Exchange  Commission  on October 4,
         2001.

         Current Report on Form 8-K dated October 25, 2001, reporting Item 5 and
         filed with the Securities and Exchange Commission on November 2, 2001.


                                       45


<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.



   Date:  March 25, 2002                   /s/  Charles C. Best
                                     By: _________________________________
                                           Charles C. Best
                                           Chief Financial Officer




   Date:  March 25, 2002                   /s/  Leonard M. Hendrickson
                                     By: _________________________________
                                           Leonard M. Hendrickson
                                           President and Chief Executive Officer

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 25, 2002
                                    Officer and Director
------------------------------
        Leonard M. Hendrickson

/s/    David J. Moffa, Ph.D.        Director                      March 25, 2002

------------------------------
        David J. Moffa, Ph.D.

/s/     John R. Overturf, Jr.       Director                      March 25, 2002

------------------------------
        John R. Overturf, Jr.

/s/    Robert D. Weist              Director                      March 25, 2002

------------------------------
        Robert D. Weist

/s/    Jean-Pierre L. Conte         Director                      March 25, 2002

------------------------------
        Jean-Pierre L. Conte

/s/    Robert J. Weltman            Director                      March 25, 2002

------------------------------
        Robert J. Weltman


                                      46


<PAGE>


                                  EXHIBIT INDEX
               FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001

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

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


                                       47

<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001, CONTINUED

Exhibit
Number                                   Description
-------        -----------------------------------------------------------------

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

  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

  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

  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 540 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


                                       48


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001, 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
----------

(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.


                                       49


<PAGE>


                 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULE



                                                                            Page
                                                                            ----

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

Consolidated Balance Sheets at December 31,
  2001 and December 31, 2000...............................................  F-3

Consolidated Statements of Operations for
  the years ended December 31, 2001, 2000
  and 1999.................................................................  F-4

Consolidated Statements of Stockholders'
  Equity and Comprehensive Income (Loss)
  for the years ended December 31, 2001,
  2000 and 1999............................................................  F-5

Consolidated Statements of Cash Flows for
  the years ended December 31, 2001, 2000 and 1999.........................  F-6

Notes to Consolidated Financial Statements
  as of December 31, 2001 and 2000 and for
  the years ended December 31, 2001, 2000
  and 1999 ................................................................  F-7

Financial Statement Schedule--Valuation and
  Qualifying Accounts.....................................................  F-22


                                      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, 2001 and 2000 and the
results  of their  operations  and their cash flows for each of the years in the
three-year  period  ended  December  31,  2001  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.

                                          KPMG LLP

Los Angeles, California
February 18, 2002


                                      F-2


<PAGE>


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


                                                                DECEMBER 31,
                                                            2001          2000
                                                         --------      --------

       ASSETS
Current assets:
   Cash and cash equivalents .......................     $  9,471      $ 10,633
   Accounts receivable, less allowance for
     doubtful accounts of $261 at December
     31, 2001 and $143 at December 31, 2000 ........        6,184         5,611
   Inventories, net (note 3) .......................        7,184         6,693
   Prepaid expenses and other current assets .......          540         1,261
   Deferred income taxes  (note 10) ................        1,584         2,222
                                                         --------      --------
       Total current assets ........................       24,963        26,420


Property and equipment, net (note 4) ...............        5,408         4,353
Intangible assets net of accumulated
   amortization of $3,377 at December 31,
   2001 and $2,279 at December 31, 2000
   (note 2) ........................................       11,653        12,752
Other assets .......................................          491           382
Deferred tax assets  (note 10) .....................        7,326         6,457
                                                         --------      --------
                                                         $ 49,841      $ 50,364
                                                         ========      ========

       LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
   Accounts payable ................................     $  2,416      $  3,275
   Accrued expenses ................................        2,707         2,688
   Deferred revenue ................................          404           314
   Income tax payable ..............................          436            41
                                                         --------      --------
       Total current liabilities ...................        5,963         6,318
Commitments and contingencies (note 13)

Stockholders' equity:
Common stock, $.001 par value. Authorized
   20,000,000 shares: issued 10,449,817
   and outstanding 10,353,817 shares at
   December 30, 2001; issued 10,616,889
   shares and outstanding 10,326,458
   shares at December 31, 2000 .....................           10            10
Additional paid-in capital .........................       48,761        49,304
Accumulated deficit ................................       (2,330)       (3,071)
Accumulated other comprehensive loss ...............       (2,563)       (2,197)
                                                         --------      --------
       Net stockholders' equity ....................       43,878        44,046
                                                         --------      --------
                                                         $ 49,841      $ 50,364
                                                         ========      ========


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, 2001, 2000 AND 1999
                  (Amounts in thousands, except per share data)


                                               2001         2000         1999
                                             --------     --------     --------

Net sales ...............................    $ 35,175     $ 32,210     $ 29,257
Cost of sales ...........................      15,540       13,600       11,071
                                             --------     --------     --------
    Gross profit ........................      19,635       18,610       18,186

Operating expenses:
    Research and development ............       3,986        3,575        3,315
    Sales and marketing .................       7,395        5,682        4,737
    General and administrative ..........       6,945        9,071        4,460
    Amortization of intangibles .........       1,098        1,093        1,061
                                             --------     --------     --------
       Total operating expenses .........      19,424       19,421       13,573
                                             --------     --------     --------
Operating income (loss) .................         211         (811)       4,613

Interest income .........................         376          266          397
Interest expense ........................          (2)        (302)      (1,367)
Other income (expense), net .............          86          108          (46)
                                             --------     --------     --------
Income (loss) before income tax
  expense (benefit) .....................         671         (739)       3,597
Income tax expense (benefit) ............         (70)        (573)          20
                                             --------     --------     --------
       Net income (loss) ................         741         (166)       3,577
Redeemable preferred stock
  dividend and accretion of
  beneficial conversion .................        --         (3,853)        --
                                             --------     --------     --------
Net income (loss) available to
  common stockholders ...................    $    741     $ (4,019)    $  3,577
                                             ========     ========     ========

Net income (loss) per share
  available to common stockholders
    Basic ...............................    $   0.07     $  (0.47)    $   0.49
                                             ========     ========     ========
    Diluted .............................    $   0.07     $  (0.47)    $   0.46
                                             ========     ========     ========
Shares used to compute net income
  (loss) available to common
  stockholders
    Basic ...............................      10,398        8,584        7,235
                                             ========     ========     ========
    Diluted .............................      10,965        8,584        7,833
                                             ========     ========     ========


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, 2001, 2000 AND 1999
                             (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, 1998                 7,179            7       21,187       (2,629)         (869)      17,696
Issuance of stock options to non employees      --           --           14           --            --           14
Exercise of stock options                      247            0          608           --                        608
Income tax benefit from exercise of stock
  options                                       --           --          217           --            --          217
Net income                                      --           --           --        3,577            --        3,577      $ 3,577
Foreign currency translation adjustments        --           --           --                       (690)        (690)        (690)
                                                                                                                          -------
Total comprehensive income                                                                                                $ 2,887
                                           -------------------------------------------------------------------------      =======
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
                                           -------------------------------------------------------------------------
</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, 2001, 2000 AND 1999
                             (Amounts in thousands)

                                                 2001        2000        1999
                                               --------    --------    --------
Cash flows from operating activities:
      Net income (loss) ....................   $    741    $   (166)   $  3,577
      Adjustments to reconcile net
         income (loss) to net cash
         provided by operating
         activities:
           Depreciation and amortization ...      2,431       2,156       1,991
           Loss on sale of property
             and equipment .................       --            99        --
           Stock compensation ..............       (388)        946          14
           Write-down of inventory .........       --           424       1,455
      Changes in assets and liabilities
           Accounts receivable .............       (753)       (610)     (1,175)
           Inventories .....................       (654)     (1,145)     (2,812)
           Prepaid expenses and other
             current assets ................        716        (684)        (91)
           Deferred income taxes ...........        (31)     (4,813)       (904)
           Other assets ....................        245         340         314
           Accounts payable ................       (748)      1,229         328
           Accrued expenses ................         12         872      (2,255)
           Deferred income .................         90         (55)       (257)
           Income taxes payable ............        404       4,830         216
                                               --------    --------    --------
           Net cash provided by operating
             activities ....................      2,065       3,423         401
                                               --------    --------    --------
Cash flows from investing activities:
      Purchase of property and equipment ...     (2,559)     (2,152)     (1,077)
      Proceeds from sales of property
        and equipment ......................       --         1,926          26
                                               --------    --------    --------
           Net cash used in investing
             activities ....................     (2,559)       (226)     (1,051)
                                               --------    --------    --------
Cash flows from financing activities:
      Proceeds from the exercise
        of options .........................        308       2,953         609
      Proceeds from the exercise
        of warrants ........................       --           750        --
      Proceeds from the exercise
        of common stock ....................       --         5,319        --
      Proceeds from the issuance
        of redeemable preferred
        stock and warrants .................       --         8,415        --
      Repayments to bank ...................       --       (14,364)     (2,476)
      Payments to acquire treasury
        stock ..............................       (668)       --          --
                                               --------    --------    --------
           Net cash provided from (used
             in) financing activities ......       (360)      3,073      (1,867)
                                               --------    --------    --------
           Net increase (decrease) in
             cash and cash equivalents .....       (854)      6,270      (2,517)

Effect of exchange rates on cash and
  cash equivalents .........................       (308)       (282)         85

Cash and cash equivalents at beginning
  of year ..................................     10,633       4,645       7,077
                                               --------    --------    --------

Cash and cash equivalents at end of year ...   $  9,471    $ 10,633    $  4,645
                                               ========    ========    ========

Supplemental disclosure of cash flow
  information: Cash paid during the year
  for:
           Interest ........................   $      2    $    345    $  1,171
                                               ========    ========    ========
           Income taxes ....................   $   --      $    439    $    286
                                               ========    ========    ========

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

           Income tax benefit from
             exercise of stock options .....   $    205    $  5,037    $    217
                                               ========    ========    ========

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, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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,
2001 and 2000 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.

Effective  January 1,  2002,  the  Company  will adopt  Statement  of  Financial
Accounting  Standards ("SFAS") No. 141, "Goodwill and Other Intangible  Assets,"
which will result in no further  amortization  of goodwill.  See Recently Issued
Accounting Standards.

Advertising, Marketing and Promotion Costs

Advertising, marketing and promotion costs are expensed as incurred. These costs
charged to operations for the years ended 2001,  2000 and 1999 were  $2,489,000,
$2,261,000, and $1,718,000, respectively.


                                      F-7


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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, 2001 and 2000 was
approximately $325,000 and $252,000, respectively.

Revenue Recognition

Sales and related cost of goods sold are  recognized  upon shipment of products.
Certain  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.

Research and Development Costs

Research and development costs are charged to expense as incurred.

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.

Long-Lived Assets

It is our policy 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,  we have
determined  that our long-lived  assets are not impaired as of December 31, 2001
and 2000.  Effective January 1, 2002,  goodwill and other intangible assets will
be accounted  for under SFAS No. 141  "Business  Combinations"  and SFAS No. 142
"Goodwill  and  Other  Intangible  Assets."  Other  long-lived  assets  will  be
accounted for under SFAS No. 144,  "Accounting for the Impairment or Disposal of
Long-Lived Assets." See Recently Issued Accounting Standards.

Stock Compensation

We account for  stock-based  compensation  under the  provisions of Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation"  (SFAS 123). Under the provisions of SFAS No. 123, the Company has
elected to continue to measure  compensation  cost under  Accounting  Principles
Board Opinion No. 25 and comply with the pro forma disclosure  requirements (see
note 8).


                                      F-8


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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 July 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued SFAS
No.141,  "Business  Combinations",   and  SFAS  No.  142,  "Goodwill  and  Other
Intangible Assets". SFAS No. 141 requires that the purchase method of accounting
be used for all business  combinations  initiated  after June 30, 2001. SFAS 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 SFAS No. 142. The amortization of goodwill and intangible assets
with indefinite lives was approximately $1,098,000 $1,093,000 and $1,061,000 for
fiscal years ended December 31, 2001, 2000, and 1999, respectively.  The Company
is in  the  process  of  qualifying  the  anticipated  impact  of  adopting  the
provisions of SFAS No. 142, which is expected to be significant.  The impairment
charge for goodwill or intangible  assets  deemed to have an  indefinite  useful
life as of the adoption of SFAS No. 142 would be  non-operational  in nature and
reflected as a cumulative  effect of an accounting change net of the related tax
impact. The Company will adopt SFAS No. 142 effective January 1, 2002.

In October, 2001 the FASB issued 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. The Company expects that the adoption of SFAS
No. 144 will not have a material  impact on the  financial  position  or results
from operations.

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.


                                      F-9


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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 mitigate credit risk.

Foreign Currency Translation

The assets and liabilities of the Company's foreign subsidiary, whose functional
currency  is Belgian  francs,  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, 2001.


2. Business Combinations

On December 10, 1998, BioSource acquired Quality Controlled  Biochemicals,  Inc.
("QCB").  QCB is a  leading  manufacturer  of  phosphopeptides,  phosphorylation
state-specific   antibodies,   custom  peptides  and  custom   antibodies.   The
transaction  was accounted  for as a purchase.  The results of operations of QCB
are included in the accompanying consolidated financial statements from the date
of  acquisition.   The  purchase  price  was  $15,193,900,   including   related
acquisition  costs.  The  purchase  price  exceeded the fair value of net assets
acquired by  approximately  $16,034,500  of which  $4,222,000  was  allocated to
in-process technology. The remaining $11,812,500,  which is being amortized on a
straight-line  basis,  was  allocated  to  identifiable  intangible  assets  and
goodwill with useful lives ranging from 5 to 15 years.

On December 15, 1998, the Company  purchased  certain assets and  liabilities of
Biofluids,   Inc.   (Biofluids)  for  $2,822,500  in  cash,   including  related
acquisition  costs.  Biofluids is involved in the  manufacture and sale of sera,
media and buffers utilized in biomedical research. The acquisition was accounted
for as a purchase.  The  results of  Biofluids  operations  from the date of the
acquisition to December 31, 1998 were not  significant.  Intangible  assets were
acquired  in the amount of  $2,348,700  and are being  amortized  over a 15-year
period and included in intangible  assets in the  consolidated  balance sheet at
December 31, 2000 and 1999.

3. Inventories

   Inventories at December 31, 2001 and 2000 are summarized as follows (000's):

                                                         2001             2000
                                                      --------        ---------

   Raw materials....................................  $  2,367        $   1,922
   Work in process..................................       304              553
   Finished goods...................................     4,513            4,218
                                                      --------        ---------
                                                      $  7,184        $   6,693
                                                      ========        =========


                                      F-10


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


4. Property and Equipment

   Property  and  equipment  at  December  31, 2001 and 2000 are  summarized  as
follows (000's):

                                                         2001             2000
                                                      --------        ---------
   Machinery and equipment..........................  $  6,919        $   5,356
   Office furniture and equipment...................     2,604            2,155
   Leasehold improvements...........................       907              779
                                                      --------        ---------
                                                        10,430            8,290
   Less accumulated depreciation and amortization...    (5,022)          (3,937)
                                                      --------        ---------
                                                      $  5,408        $   4,353
                                                      ========        =========
5. Lines of Credit

In April 2000, the Company  established a revolving line of credit that provides
for  borrowings up to $3,400,000  and bore interest at a rate of 2% per annum in
excess of either the bank's adjusted  treasury rate, for a variable term, or the
bank's LIBOR rate,  also for a variable term. No borrowings  were made under the
line of credit. The line of credit expired on February 26, 2001.

6. 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. 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  Stockholders.   The  Series  B  Redeemable  Preferred  Stockholders  had
liquidation  preference to the Common  Stockholders.  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 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 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.


                                      F-11


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


7. Common Stock and Treasury Stock

In 1998,  the Board of Directors  authorized  the  repurchase of up to 1,500,000
shares of the Company's then outstanding common stock. Through 1998, the Company
had repurchased  1,279,500  common shares for  $8,054,000.  In October 2000, the
Company's  Board of  Directors  approved  a  resolution  terminating  its  stock
repurchase  program. As of December 31, 2000, the Company held 290,431 shares of
treasury  stock at a cost of  $1,576,000.  The 290,431  shares of treasury stock
were retired in 2001.

In October 2001, the Board of Directors  authorized a stock  repurchase  program
for  spending  up to $5 million for the  repurchase  the  Company's  outstanding
common stock.  Through  December 31, 2001,  the Company had  repurchased  96,000
common  shares for  $668,000.  As of December  31,  2001 the Company  held these
96,000 shares as treasury stock.  The stock  repurchase  program expires on June
30, 2003.

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 statement of operations.

In 1999 the Company  recognized a non-cash charge of $13,500 for the issuance of
stock options to non-employees.

8. 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.

In January 2000, the Company's Board of Directors  approved 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 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.


                                      F-12


<PAGE>



                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


The per share  weighted  average  market value of stock options  granted  during
2001, 2000 and 1999 was $6.00,  $20.51 and $3.64,  respectively,  on the date of
grant using the Black-Scholes  option-pricing  model with the following weighted
average assumptions:

                                                         2001     2000     1999
                                                       -------  -------  -------

     Expected dividend yield...........................  0.00%    0.00%    0.00%
     Risk-free interest rate...........................  4.50%    4.76%    6.40%
     Expected volatility............................... 89.87%  100.00%   60.00%
     Expected option life (years)......................  4.81     8.10     7.10



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:

                                                  2001        2000        1999
                                                --------    ---------   --------
                                                         (in thousands,
                                                     except per share data)

Net income (loss) available to common
  stockholders:
       As reported............................. $    741    $ (4,019)   $ 3,577
       Pro forma............................... $ (2,023)   $ (7,453)   $ 2,194
                                                =========   =========   ========

Net income (loss) per share available to
  common stockholders:
       As reported
         Basic................................. $   0.07    $  (0.47)   $  0.49
         Diluted............................... $   0.07    $  (0.47)   $  0.46
       Pro forma
         Basic................................. $  (0.19)   $  (0.87)   $  0.30
         Diluted............................... $  (0.18)   $  (0.87)   $  0.28
                                                =========   =========   ========

Pro  forma  net  income  (loss)  available  to  common   stockholders   reflects
compensation expense related to the vested portion of options granted during the
periods 1996 through 2001.

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  $201,000,   $5,037,000  and  $217,000  were  credited  to
additional paid-in capital in fiscal 2001, 2000 and 1999, respectively.


                                      F-13


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


The following  summarizes the stock option  transactions under the 1993 Plan and
the 2000 Plan during the periods presented:

                                                                        Weighted
                                                                         average
                                                                        exercise
                                                        Shares            price
                                                       ---------         -------

     Options outstanding at December 31, 1998......... 1,717,146         $ 3.30
     Options granted..................................   191,000           4.56
     Options exercised................................  (221,791)          2.58
     Options canceled.................................  (169,930)          4.69
                                                       ---------         ------
     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
                                                       =========         ======


At  December  31,  2001,  the range of  exercise  prices  and  weighted  average
remaining  contractual  life of  outstanding  options was  $1.37-$31.00  and 8.2
years, respectively.

At December  31,  2001,  2000 and 1999,  the number of options  exercisable  was
777,836, 621,015 and 1,108,445,  respectively, and the weighted average exercise
price of those options was $6.41, $4.06 and $3.50, 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  compensation  expense of $388,100 in 2000. Upon termination of the former
officers in May 2001,  the Company  recognized  a related  expense  reduction of
$388,100 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-14


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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

                                                                        Weighted
                                                                         average
                                                                        exercise
                                                         Shares           price
                                                         -------         -------

     Options outstanding at December 31, 1998........... 527,500          $3.13
     Options granted....................................      --             --
     Options exercised.................................. (25,000)          1.50
     Options canceled...................................      --             --
                                                         -------          -----
     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
                                                         =======          =====

At  December  31,  2001,  the range of  exercise  prices  and  weighted  average
remaining  contractual life of outstanding  options under certain agreements was
$1.50-$6.44 and 6.6 years, respectively.

At December  31,  2001,  2000 and 1999,  the number of  exercisable  options was
226,000,  290,000 and 420,467,  respectively,  and the weighted average exercise
price of those options was $2.97, $2.89 and $3.18, respectively.

During  2001,  2000 and  1999,  120,235,  828,651  and  246,791  stock  options,
respectively  were  exercised for proceeds  totaling  $308,000,  $2,953,000  and
$609,000 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 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, 2001, 2000 and 1999 was  approximately  $19,000,  $20,000 and
$18,000 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.


                                      F-15


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


9. 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.

10. Income Taxes

Income (loss) before  income taxes  (benefit) for 2001,  2000 and 1999 were from
the following sources (000's):

                                        2001             2000             1999
                                     ------------------------------------------

     Domestic .............          $(1,203)          $(1,994)         $ 2,107
     Foreign ..............            1,874             1,255            1,490
                                     -------           -------          -------
                                     $   671           $  (739)         $ 3,597
                                     =======           =======          =======

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

                                        2001             2000             1999
                                     -------------------------------------------
Current:
     Federal ..............          $    95           $ 3,524          $   720
     State and local ......               42               780              203
     Foreign ..............               71                55
                                     -------           -------          -------
                                     $   208             4,359              923
                                     -------           -------          -------
Deferred:
     Federal ..............              (70)           (3,866)              76
     State and local ......             (350)           (1,114)              (7)
     Foreign ..............              142                48             (972)
                                     -------           -------          -------
                                        (278)           (4,932)            (903)
                                     -------           -------          -------
                                     $   (70)          $  (573)         $    20
                                     =======           =======          =======


                                      F-16


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


The primary  components  of  temporary  differences  which give rise to deferred
taxes at December 31, 2001 and 2000 are (000's):

                                                              2001         2000
                                                             ------       ------
Deferred tax assets:
  Reserves for inventory .............................       $1,208       $1,089
  Purchased in-process technology/goodwill ...........        1,472        1,561
  Net operating loss carryforwards ...................        4,746        4,664
  Allowance for doubtful accounts ....................           68           18
  Stock option compensation ..........................            0          154
  Accrual for severance ..............................           99          255
  R & D and AMT credit carryforwards .................        1,188        1,050
  Other ..............................................          211           93
                                                             ------       ------
Total deferred tax assets ............................        8,992        8,885
Deferred tax liability
  Depreciation .......................................           82          206
                                                             ------       ------
      Net deferred tax assets ........................       $8,910       $8,679
                                                             ======       ======

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):


                                                2001         2000         1999
                                              -------      -------      -------

Computed "expected" tax expense
  (benefit) .............................     $   228      $  (251)     $ 1,223
Nondeductible items .....................        --           --             16
State taxes (net of Federal
  benefit) ..............................          21          (34)         139
Reduction of valuation allowance ........        --           --         (1,160)
Tax credits .............................        (338)        (437)        (100)
Tax effect resulting from
  foreign sales corporation
  activities ............................        --           --            (76)
Effect of foreign operations ............         (18)          66          188
Other ...................................          37           83         (210)
                                              -------      -------      -------
       Total ............................     $   (70)     $  (573)     $    20
                                              =======      =======      =======


                                      F-17


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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, 2001, the Company has a net operating loss (NOL) carryforward
of  approximately  $10,482,500  and $12,036,400 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.

11. 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  $57,000,  $55,000  and  $38,000  in 2001,  2000  and  1999,
respectively.

12. Business Segments

BioSource  is  engaged  in  a  single  industry,  the  licensing,   development,
manufacture, marketing and distribution of immunological reagents, test kits and
oligonucleotides  used  in  biomedical  research  and  human  diagnostics.   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.  We  evaluate
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):

                                               2001         2000          1999
                                            ------------------------------------
SALES - FROM SEGMENTS: Net sales
  to external customers from:
     United States:
         Domestic .....................     $ 21,027      $ 18,843      $ 15,518
         Export .......................        4,623         4,303         4,678
                                            --------      --------      --------
           Total United States ........       25,650        23,146        20,196
     Europe ...........................        9,525         9,064         9,061
                                            --------      --------      --------
           Consolidated ...............     $ 35,175      $ 32,210      $ 29,257
                                            ========      ========      ========

Operating income (loss):
     United States ....................     $ (1,970)     $ (2,204)     $  2,711
     Europe ...........................        2,181         1,393         1,902
                                            --------      --------      --------
           Consolidated ...............     $    211      $   (811)     $  4,613
                                            ========      ========      ========


                                      F-18


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


                                               2001          2000         1999
                                            ------------------------------------
SALES - TO SEGMENTS:
Net sales to external customers in:
     United States ....................     $ 21,027      $ 18,843      $ 15,518
     Europe ...........................        8,846         8,180        10,139
     Japan ............................        3,085         3,203         2,790
     Other ............................        2,217         1,984           810
                                            --------      --------      --------
           Consolidated ...............     $ 35,175      $ 32,210      $ 29,257
                                            ========      ========      ========

IDENTIFIABLE ASSETS AT END OF YEAR:
     United States ....................     $ 42,420      $ 42,544
     Europe ...........................        7,421         7,820
                                            --------      --------
           Consolidated ...............       49,841      $ 50,364
                                            ========      ========

NET INTEREST EXPENSE (INCOME):
     United States ....................     $   (363)     $     58      $    816
     Europe ...........................          (11)          (22)          154
                                            --------      --------      --------
           Consolidated ...............     $   (374)     $     36      $    970
                                            ========      ========      ========

DEPRECIATION AND AMORTIZATION:
     United States ....................     $  2,145      $  1,785      $  1,560
     Europe ...........................          286           371           431
                                            --------      --------      --------
           Consolidated ...............     $  2,431      $  2,156      $  1,991
                                            ========      ========      ========

CAPITAL EXPENDITURES:
     United States ....................     $  2,106      $  1,913      $    899
     Europe ...........................          453           239           178
                                            --------      --------      --------
           Consolidated ...............     $  2,559      $  2,152      $  1,077
                                            ========      ========      ========


13. Commitments and Contingencies

At December  31, 2001 the Company had leases for certain of its  facilities  and
equipment under various  noncancelable  operating  leases expiring through March
2007. Total rental expense was approximately $977,000, $872,000 and $723,000 for
the years ended December 31, 2001, 2000 and 1999, respectively.

On  March  8,  2000 the  Company  entered  into a lease  for a new  facility  in
Camarillo,  California.  The lease  commenced on May 1, 2000 and expires on June
30,  2005,  with the  option to extend  the lease for two  additional  five-year
terms.  Annual lease payments in the initial five-year period ended December 31,
2005 range from $342,000 at inception to $411,000 at termination.

In  February   2001  the  Company   amended  its  current  lease  in  Hopkinton,
Massachusetts.  The original  lease  expires on May 31, 2001.  The amended lease
extends the term of the lease for five  additional  years and expires on May 31,
2006.  Annual  lease  payments in the  five-year  period  ended May 31, 2006 are
approximately $131,000.

In January  2002,  the  Company  leased an  additional  facility  in  Hopkinton,
Massachusetts.  The original  lease expires on January 17, 2007. The term of the
lease is for 5 years.  Annual  lease  payments  in the  five-year  period  ended
January 2007 are approximately $195,000.


                                      F-19


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


At December 31, 2001,  future minimum payments under 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
                                                   =======

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.

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 of 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  being  held  by the  Company  to  recover  damages
management  believes it has 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.  The  Company has
counterclaimed  against  the  former  shareholders  of the  QCB,  including  Dr.
Fishman,  in the  arbitration  to recover  those  damages.  The Company seeks to
recover  $1,347,000 of Escrowed Funds for this claim.  In addition,  the Company
alsobrought   a  fraud   claim   against  Dr.   Fishman   for  the   intentional
misrepresentations  and/or  omissions  he  made in  connection  with  the  Stock
Purchase Agreement.  In its fraud claim, the Company seeks to recover the amount
of its  overpayment  for the  purchase of QCB,  the amount of lost  profits that
BioSource  would  reasonably  have  anticipated and earned had QCB possessed the
characteristics  fraudulently attributed to it, punitive damages, and attorneys'
fees and costs. The parties have selected a panel of three  arbitrators who will
hear the  dispute.  The parties are in the process of  conducting  discovery  in
connection with the arbitration. The arbitration is scheduled to begin on May 1,
2002.  The company has not recorded an accrual for any  potential  gain realized
upon a successful  recovery of any or all of the escrowed  funds or  recoverable
damages. The Company is expensing all legal fees as they are incurred.

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.

14. 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.


                                      F-20


<PAGE>


                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
               AS OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS
                     ENDED DECEMBER 31, 2001, 2000 AND 1999


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

                                                    Year ended December 31,
                                                 -----------------------------
                                                   2001       2000       1999
                                                 -------    -------    -------
     Net income (loss) available to common
      stockholders used for basic and diluted
      income (loss) per share.................   $   741    $(4,019)   $ 3,577
                                                 =======    =======    =======
     Weighted average shares used in basic
      computation.............................    10,398      8,584      7,235
     Dilutive stock options and warrants......       567         --        598
                                                 -------    -------    -------
     Weighted average shares used for diluted
      computation.............................    10,965      8,584      7,833
                                                 =======    =======    =======

Options to purchase 793,332, 90,003 and 404,849 shares of common stock at prices
ranging  from  $8.00 to  $31.00,  $17.13  to  $27.38  and  $4.13  to $8.94  were
outstanding during 2001, 2000 and 1999,  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  118,100  shares at a weighted  average  exercise  price of
$11.10 per share were  outstanding as of December 31, 1999 but were not included
in the  computation  of diluted net income per share for the year ended December
31, 1999 because the effect would be anti-dilutive.

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


                                      F-21


<PAGE>



                 BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNT
                  YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999




                            Balance at     Provision    Deductions    Balance at
                             Beginning      Charged      Accounts       End of
                              of Year      to Income   Written Off       Year
                              -------      ---------   -----------       ----
                                                   (000's)

1999-allowance for
  doubtful accounts ....       $301            86            59           328

2000-allowance for
  doubtful accounts ....       $328           139           324           143

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



See accompanying independent auditors' report.


                                      F-22


<PAGE>


                                  EXHIBIT INDEX
               FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001

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

  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, 2001, CONTINUED

Exhibit
Number                                   Description
-------        -----------------------------------------------------------------

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

  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

  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

  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 540 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


<PAGE>


                                  EXHIBIT INDEX
          FOR FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2001, 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
----------

(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.