SEC Info - Bioanalytical Systems Inc - IPO: ‘424B1’ on 11/25/97

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Bioanalytical Systems Inc – IPO: ‘424B1’ on 11/25/97

As of: Tuesday, 11/25/97 · Accession #: 950124-97-6219 · File #: 333-36429

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/25/97  Bioanalytical Systems Inc         424B1                  1:239K                                   Bowne - Bde

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                            68    405K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Additional Information Business Capitalization Certain Transactions Changing Nature of Pharmaceutical Industry Client Contracts Terminable Upon Notice Clients Common Shares Competition Contractual Arrangements Dependence on and Possible Adverse Effect of Government Regulation Dependence on Certain Industries and Clients Description of Capital Stock Dilution Dividend Policy Employees Experts Glossary Government Regulation Growth Strategy Income taxes Ind Index to Financial Statements Legal Matters Liability Risks Related to Products and the Provision of Services Liquidity and Capital Resources Management Management's Discussion and Analysis of Financial Condition and Results of Operations Nda Need to Attract, Develop, Manage and Retain Professional Staff Net income per Common Share Notes to Consolidated Financial Statements Offering, The Option Plans Overview Peter T. Kissinger, Ph.D Pla Preferred Shares Principal Shareholders Product Liability and Insurance Prospectus Summary Registration Rights Report of Independent Auditors Risk Factors Safety Sales and Marketing Scientific Advisory Board Selected Consolidated Financial Data Services Shares Eligible For Future Sale Shares Eligible for Future Sale; Registration Rights The Offering Underwriting Use of proceeds Volatility of Quarterly Operating Results
1	1st Page - Filing Submission
3	Prospectus Summary
4	The Offering
5	Risk Factors
"	Dependence on Certain Industries and Clients
"	Need to Attract, Develop, Manage and Retain Professional Staff
"	Dependence on and Possible Adverse Effect of Government Regulation
6	Competition
"	Client Contracts Terminable Upon Notice
7	Volatility of Quarterly Operating Results
8	Liability Risks Related to Products and the Provision of Services
"	Shares Eligible for Future Sale; Registration Rights
10	Use of proceeds
"	Dividend Policy
11	Dilution
12	Capitalization
13	Selected Consolidated Financial Data
14	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Overview
17	Liquidity and Capital Resources
19	Business
20	Changing Nature of Pharmaceutical Industry
21	Growth Strategy
28	Services
29	Clients
"	Sales and Marketing
30	Contractual Arrangements
31	Government Regulation
"	Product Liability and Insurance
32	Employees
33	Management
"	Peter T. Kissinger, Ph.D
35	Scientific Advisory Board
37	Option Plans
40	Certain Transactions
41	Principal Shareholders
42	Description of Capital Stock
"	Common Shares
"	Preferred Shares
43	Registration Rights
44	Shares Eligible For Future Sale
46	Underwriting
48	Legal Matters
"	Experts
"	Additional Information
49	Glossary
50	Ind
"	Nda
51	Pla
"	Safety
52	Index to Financial Statements
53	Report of Independent Auditors
58	Notes to Consolidated Financial Statements
59	Income taxes
"	Net income per Common Share

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FILED PURSUANT TO RULE 424(b)(1)
REGISTRATION NO. 333-36429

PROSPECTUS

1,250,000 COMMON SHARES

BIOANALYTICAL SYSTEMS LOGO

BIOANALYTICAL SYSTEMS, INC.

All of the 1,250,000 Common Shares offered hereby (the "Shares") are being
sold by Bioanalytical Systems, Inc. (the "Company"). Prior to this offering
there has been no public market for the Common Shares of the Company (the
"Common Shares"). See "Underwriting" for a discussion of information relating to
the factors considered in determining the initial public offering price. The
Common Shares have been approved for quotation on the Nasdaq National Market
under the symbol "BASI." The Underwriters have reserved for sale, at the initial
public offering price, up to 30,000 of the Shares offered hereby for employees
of the Company and certain other individuals who have expressed an interest in
purchasing Shares in the offering.

SEE "RISK FACTORS" AT PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.

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

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

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=============================================================================================================
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)

-------------------------------------------------------------------------------------------------------------
Per Share......................... $8.00 $.56 $7.44
-------------------------------------------------------------------------------------------------------------
Total(3).......................... $10,000,000 $700,000 $9,300,000
=============================================================================================================

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses of the offering payable by the Company, estimated
at $500,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
187,500 additional Shares, on the same terms and conditions set forth above,
solely for the purpose of covering over-allotments, if any. If this option
is exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, and Proceeds to Company will be $11,500,000, $805,000, and
$10,695,000, respectively. See "Underwriting."

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

The Shares are offered by the several Underwriters named herein, subject to
prior sale, when, as and if accepted by them, subject to their right to reject
any orders in whole or in part and subject to certain conditions. It is expected
that delivery of certificates representing the Shares will be made at the
offices of Roney & Co., L.L.C., One Griswold, Detroit, Michigan, 48226 on or
about November 26, 1997.

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

RONEY & CO. THE OHIO COMPANY

NOVEMBER 24, 1997

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The Company intends to distribute to its shareholders annual reports
containing audited financial statements and will make available copies of
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year.
-------------------------

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES, INCLUDING
STABILIZING BIDS, SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF PENALTY
BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN
PASSIVE MARKET MAKING TRANSACTIONS IN THE SHARES ON NASDAQ IN ACCORDANCE WITH
RULE 103 OF REGULATION M. SEE "UNDERWRITING."
-------------------------

BAS(R) is a registered trademark of the Company. This Prospectus also includes
trade names and trademarks of other companies.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Company's Consolidated Financial
Statements and related notes thereto, appearing elsewhere in this Prospectus.
Except as otherwise noted, all information in this Prospectus, including
financial information, share and per share data: (i) reflects the conversion of
all of the Company's outstanding Convertible Preferred Shares (the "Convertible
Preferred Shares") into Common Shares prior to the completion of this offering;
(ii) assumes no exercise of the Underwriters' over-allotment option; and (iii)
reflects a 4.514 for 1 share split to be effected prior to the completion of
this offering. Terms used but not otherwise defined herein are defined in the
Glossary included herein.

THE COMPANY

The Company is a contract research organization providing research and
development resources through both its services and products to many of the
leading pharmaceutical, medical device and biotechnology companies in the world.
Founded in 1974, the Company has over 23 years of experience in developing
products and methodologies to support the analytical chemistry requirements of
the drug discovery process. At its inception, the Company focused on providing
new products and procedures which facilitated research progress at client sites.
Recently, pharmaceutical companies have experienced increasing pressures to
bring products to market on a cost-effective and accelerated basis. Accordingly,
many clients have requested the Company to carry out proprietary projects at the
Company's facilities. As a result, the Company now derives its revenues from (i)
research services provided to clients and (ii) the sale of its analytical
instruments and other products. The Company believes that among contract
research organizations that provide in house statistical, clinical, and medical
services, it is the only one that designs and sells analytical instrumentation
products and, on the analytical instrument side, it is one of very few firms
that maintains a separate business for contract analytical services. The Company
intends to continue to take advantage of this unique industry niche.

The Company's services are marketed to pharmaceutical and other
biotechnical companies involved in later stages of drug testing and the
Company's products are marketed to both public and private research
organizations engaged in the early stages of drug development. On the services
side, according to the Pharmaceutical Research and Manufacturing Association, in
1997 pharmaceutical and biotechnology companies will spend approximately $18.9
billion worldwide on research and development, of which approximately 18% or
$3.4 billion will be outsourced to independent contract service providers such
as the Company. On the products side, the Company competes in the $11 billion
analytical instrument industry.

Over the past five years, the Company regularly has provided its services
and/or products to all of the top 25 pharmaceutical companies in the world, as
ranked by 1996 research and development spending. In fiscal 1997, the Company
estimates that more than one-third of its total revenue was derived from these
companies. As a result of its client focus; reputation for high-quality services
and products; capital investment in state-of-the-art instrumentation and
facilities; skilled and experienced professional staff; and expertise in
performing critical development and support services, the Company believes that
it is a value-added partner in solving its clients' complex product development
problems.

The Company's operating strategies are derived from a strong base of
expertise in analytical chemistry. The Company will continue to (i) enhance the
synergy between the Company's services and products; (ii) emphasize high-end
testing services; (iii) invest in state-of-the-art instrumentation; (iv) enhance
client relationships; and (v) work with large innovator pharmaceutical companies
in the development of analytical methods for new drug candidates as early as
possible in the drug development process. A portion of the net proceeds from
this offering will be used to further implement the Company's operating
strategies.

The Company's objective is to continue to grow as a leading provider of
high-quality analytical chemistry support services to the worldwide
pharmaceutical, medical device and biotechnology industries. In order to
continue its growth, the Company intends to leverage its facilities,
technological expertise and information systems. The Company believes that it
will continue to differentiate itself from its competitors by increasing the
array of services and products offered to its clients, further enhancing the
Company's reputation of offering
3

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a turnkey approach to accurately and quickly meet product development challenges
faced by clients. The Company has developed and implemented a business strategy
intended to accelerate growth and profitability, consisting of the following
five principal elements:

- Increase technical staff to expand the volume of services provided
- Implement a comprehensive marketing and sales program
- Broaden the range of complementary services provided
- Expand geographically in strategic locations
- Identify and effect key acquisitions

The Company was incorporated under the laws of Indiana in 1975. The
Company's principal executive offices are located at 2701 Kent Avenue, West
Lafayette, Indiana, 47906, and its telephone number is (765) 463-4527.

THE OFFERING

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Shares offered by the Company................... 1,250,000 Shares
Common Shares to be outstanding after the
offering...................................... 4,250,000 Common Shares(1)
Use of proceeds................................. Repayment of indebtedness, purchase of laboratory
equipment, hiring of additional personnel, upgrade
of information systems, expansion of current
facilities, working capital and other general
corporate purposes, including potential
acquisitions. See "Use of Proceeds."
Nasdaq National Market symbol................... BASI

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

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YEAR ENDED SEPTEMBER 30,
---------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----

STATEMENT OF INCOME DATA:
Product revenue $ 9,124 $ 8,903 $ 9,627 $ 9,113 $ 9,932
Services revenue............................... 1,663 1,800 2,725 3,681 4,991
------- ------- ------- ------- -------
Total revenue................................ 10,787 10,703 12,352 12,794 14,923
Operating income............................... 1,128 609 784 701 1,172
Net income available to common shareholders.... $ 886 $ 495 $ 497 $ 347 $ 657
Net income per Common Share.................... $ .30 $ .16 $ .16 $ .11 $ .21
Weighted average Common Shares outstanding..... 2,993 3,048 3,066 3,089 3,101

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SEPTEMBER 30, 1997
------------------------------
ACTUAL AS ADJUSTED(2)
------ --------------

BALANCE SHEET DATA:
Working capital............................................. $ 2,493 $ 6,223
Total assets................................................ 15,931 18,858
Long-term debt, less current portion........................ 5,045 --
Convertible Preferred Shares................................ 1,231 --
Shareholders' equity........................................ 5,651 15,658

-------------------------
(1) Based on Common Shares outstanding at September 30, 1997, excluding 272,671
Common Shares issuable upon exercise of options outstanding as of September
30, 1997, of which 236,555 were exercisable as of that date. See
"Capitalization," "Management -- Option Plans" and Note 6 of Notes to
Consolidated Financial Statements. Also reflects the conversion of all
outstanding Convertible Preferred Shares into 752,399 Common Shares effected
immediately prior to the issuance of the Shares offered hereby.

(2) Adjusted to reflect (i) the conversion of all outstanding Convertible
Preferred Shares into Common Shares effected immediately prior to the
issuance of the Shares offered hereby, and (ii) the sale of 1,250,000 Shares
offered hereby (after deducting the estimated underwriting discounts and
commissions and offering expenses payable by the Company), at the initial
public offering price of $8.00 per share.
4

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RISK FACTORS

An investment in the Shares offered hereby involves a high degree of risk.
Prospective investors should consider carefully the following risk factors, in
addition to the other information contained in this Prospectus, prior to making
an investment in the Shares.

DEPENDENCE ON CERTAIN INDUSTRIES AND CLIENTS

The Company's revenues are highly dependent on research and development
expenditures and compliance testing expenditures by the pharmaceutical,
biotechnology and medical device industries and by universities and government
research institutions worldwide. Decreases in such expenditures, including those
resulting from a general economic decline in these industries, could have a
material adverse effect on the Company. The Company has benefited from the
growing tendency of companies to engage independent organizations to conduct
development and testing projects. Any reduction in the outsourcing of research,
development or testing activities, or any reduction in public funding of science
and technology could have a material adverse effect on the Company's business,
operations and financial condition. There has been substantial consolidation in
recent years in the pharmaceutical industry, both in the United States and
Europe. It is not possible to assess the impact upon the Company of future
pharmaceutical industry consolidation since the effect may depend on an
acquiror's inclination to outsource or its existing relationship with the
Company or a competitor. See "Business -- Changing Nature of Pharmaceutical
Industry."

During 1997, a major United States-based pharmaceutical company and the
Company's Japanese distributor accounted for approximately 21% and 12%,
respectively, of the Company's total revenues. There can be no assurance that
the Company's business will not continue to be dependent on continued
relationships with certain clients or distributors or that annual results will
not be dependent upon performance of a few large projects. In addition, there
can be no assurance that significant clients or distributors in any one period
will continue to be significant clients or distributors in other periods. See
"Business -- Clients" and "-- Sales and Marketing."

NEED TO ATTRACT, DEVELOP, MANAGE AND RETAIN PROFESSIONAL STAFF

The Company's business is labor intensive and involves the delivery of
highly specialized professional services. The Company's future growth and
success depends in large part upon its ability to attract, develop, manage and
retain highly skilled professional, scientific and technical operating staff.
There is significant competition from the Company's competitors as well as from
the in-house research departments of pharmaceutical and biotechnology companies
and other enterprises for employees with the skills required to perform the
services offered by the Company. Although the Company has confidentiality
agreements with its scientific and technical operating personnel, the Company
does not have in place covenants not to compete that would directly preclude the
employees from being employed by a competitor. There can be no assurance that
the Company will be able to attract, develop, manage and retain a sufficient
number of highly skilled employees in the future or that it will continue to be
successful in training, retaining and managing its current employees. The loss
of a significant number of employees or the Company's inability to hire
sufficient numbers of qualified employees could have a material adverse effect
on the Company's business, operations and financial condition. See "Business --
Employees."

DEPENDENCE ON KEY EXECUTIVES

The Company relies to a significant extent on a number of key executives,
including Peter T. Kissinger, Ph.D., its President and Chairman of the Board.
The Company maintains key man life insurance on Dr. Kissinger in the amount of
$1.0 million. The loss of the services of any of the Company's key executives
could have a material adverse effect on the Company's business, operations and
financial condition.

DEPENDENCE ON AND POSSIBLE ADVERSE EFFECT OF GOVERNMENT REGULATION

The Company's business depends in part on government regulation of the drug
development process by the United States and foreign governments. More stringent
governmental regulation of the drug development

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process increases the need for services and products provided or produced by the
Company. Recently, legislation has been proposed that would substantially modify
the current requirements for FDA administration of the drug and device approval
process. Under the proposed legislation, applications for approval of new drugs
could be made to private accredited facilities in lieu of the FDA. As a result,
the number of clinical trials of new drugs would be reduced and other rules
administered by the FDA would be simplified. Any change in the scope of
regulatory requirements or the introduction of simplified drug or device
approval procedures could adversely affect the Company's business, operations
and financial condition.

The Company's revenues are also dependent, in part, upon continued
compliance with governmental requirements applicable to facilities and
techniques used in the manufacture of products for clinical use and the
provision of services. The Company's facilities are subject to scheduled
periodic regulatory inspections to ensure compliance with FDA requirements.
Failure on the part of the Company to comply with applicable requirements could
result in the termination of ongoing research, the discontinuance of selected
Company operations, the disqualification of data for submission to regulatory
authorities and fines and penalties being assessed against the Company, any of
which could have a material adverse effect on the Company's business, operations
and financial condition.

The Company's activities are also subject to foreign, federal, state and
local laws and regulations governing the use, storage, handling and disposal of
hazardous materials and chemicals. If the Company were held liable for an
accidental contamination or injury from these materials and chemicals, the
Company's business, operations and financial condition could be materially
adversely affected. See "Business -- Changing Nature of Pharmaceutical Industry"
and "Business -- Government Regulation."

COMPETITION

With respect to its products, the Company primarily competes with several
large equipment manufacturers and, with respect to its services, the Company
primarily competes against in-house research departments of pharmaceutical and
biotechnology companies, universities and teaching hospitals and other
full-service CROs. Many of the Company's competitors possess substantially
greater capital, technical and other resources than the Company. Competitive
factors with respect to the Company's products include quality, reliability and
price. CROs generally compete on the basis of previous experience, medical and
scientific expertise in specific therapeutic areas, the quality of contract
research, the ability to organize and manage large-scale trials on a global
basis, medical database management capabilities, the ability to provide
statistical and regulatory services, the ability to recruit investigators, the
ability to integrate information technology with systems to improve the
efficiency of contract research, an international presence with strategically
located facilities, financial viability and price. The Company's failure to
compete effectively in any one or more of these areas could have a material
adverse effect on the Company's business, operations and financial condition.
See "Business -- Changing Nature of Pharmaceutical Industry" and "Business --
Competition."

CLIENT CONTRACTS TERMINABLE UPON NOTICE

Generally, the Company's service contracts are terminable by the client
upon notice at any time. Contracts may be terminated for a variety of reasons,
including the client's decision to forego a particular study, failure of
products to satisfy safety requirements and unexpected or undesired product
testing results. The loss of business from a significant client or the
cancellation of a major contract or series of commitments could have a material
adverse effect on the Company's business, operations and financial condition.
See "Business -- Contractual Arrangements."

UNCERTAINTY OF INTERNATIONAL MARKETS

In fiscal 1997, approximately 34% of the Company's total revenue was
derived from customers located outside the United States. The Company expects to
increase its geographical diversification outside the United States, including
entering new markets in Asia and South America. These markets tend to be much
more volatile than the United States market. Significant governmental,
regulatory, political, economic and cultural issues or changes could adversely
affect the growth or profitability of the Company's business activities in any

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such market. In addition, although currently all of the Company's contracts are
required to be paid in United States dollars, in the event future contracts were
denominated in a foreign currency the Company could be faced with currency
fluctuations in the conversion to United States dollars.

DEPENDANCE ON PROPRIETARY TECHNOLOGY; UNPREDICTABILITY OF PATENT PROTECTION

The Company's business is dependent, in part, on its ability to obtain
patents in various jurisdictions on its current and future technologies and
products, to defend its patents and protect its trade secrets and to operate
without infringing on the proprietary rights of others. There can be no
assurance that the Company's patents will not be challenged by third parties or
that, if challenged, those patents will be held valid. In addition, there can be
no assurance that any technologies or products developed by the Company will not
be challenged by third parties owning patent rights and, if challenged, will be
held to not infringe those patent rights. The expense involved in any patent
litigation can be significant. The Company also relies on unpatented,
proprietary technology, and there can be no assurance that others will not
independently develop or obtain similar products or technologies.

FUTURE CAPITAL REQUIREMENTS MAY BE SIGNIFICANT; UNCERTAINTY OF ADDITIONAL
FUNDING

The Company expects capital and operating expenditures to increase over the
next several years. Although the Company believes that the net proceeds from
this offering, existing cash and cash equivalents and anticipated cash flow from
operations will be sufficient to support the Company's operations for the
foreseeable future, the Company's actual future capital requirements will depend
on many factors, including its future profitability, the rate of its internal
growth and the timing, size and terms of acquisitions made by the Company, if
any. The Company may require significant additional financing in the future,
which it may seek to raise through public or private equity offerings or debt
financings. There can be no assurance that additional financing will be
available when needed or that, if available, such financing can be obtained on
terms favorable to the Company. To the extent the Company raises additional
capital by issuing equity securities, ownership dilution to existing
shareholders will result and may be substantial. See "Use of Proceeds,"
"Business -- Growth Strategy" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

RISK RELATED TO GROWTH THROUGH ACQUISITIONS

The Company's growth strategy includes identifying and effecting selected
acquisitions. The Company has limited acquisition experience, and growth through
acquisition involves numerous risks, including the potential inability of the
Company to effectively assimilate the operations of acquired companies, the
expenses incurred in connection with failed acquisition attempts, the diversion
of management's attention from other business concerns and, in the case of
acquisitions of foreign companies, the risks presented by language and cultural
barriers and currency exchange rate fluctuations. There can be no assurance that
the Company will complete any future acquisitions or that acquisitions, if any,
will contribute favorably to the Company's business, operations and financial
condition. See "Business -- Growth Strategy."

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of the Shares will experience immediate and substantial
dilution of the net tangible book value per share from the initial offering
price. See "Dilution."

VOLATILITY OF QUARTERLY OPERATING RESULTS

The Company's results of operations have been and will continue to be
subject to quarterly fluctuations, principally as a result of the commencement,
completion, cancellation or duration of large contracts, the progress of ongoing
contracts, changes in the mix of products and services, the incurrence of
significant expenses upon commencement of product or service contracts before
any significant revenues are recognized from such activities, and seasonality in
the business. For this reason, there is a risk that comparisons of quarterly
operating results on a year-to-year basis, or on a quarter-to-quarter basis,
will not provide a

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meaningful indication of future performance. In addition, fluctuations in
quarterly results could affect the market price of the Common Shares in a manner
unrelated to the longer-term operating performance of the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

LIABILITY RISKS RELATED TO PRODUCTS AND THE PROVISION OF SERVICES

Although the Company does not provide products or services directly to the
public, its business involves the sale of instruments for use by others and the
provision of contract analytical services. It is possible that claims could be
made against the Company by either its clients or the customers of its clients
for damages suffered as a result of the use of the Company's products or for
errors made in the performance of the Company's analytical services. The Company
maintains product liability and errors and omissions insurance with respect to
these risks, but there can be no assurance that the insurance would cover all
risks. The Company also seeks to reduce its exposure through indemnification
agreements with its clients. The scope of those agreements may vary from client
to client, and the performance of the clients' obligations thereunder are not
secured. There can be no assurance that these measures will be adequate to
protect the Company from damages resulting from defects in its products or
services. See "Business -- Product Liability and Insurance."

MANAGEMENT DISCRETION REGARDING NET PROCEEDS OF THE OFFERING

The Company has not yet allocated a substantial portion of the net proceeds
of the offering to specific uses. Accordingly, management will have broad
discretion as to the application of the offering proceeds. Pending the Company's
use of such proceeds, the net proceeds of the offering will be invested in
high-quality, short-term, interest-bearing investment-grade debt securities,
certificates of deposit or direct or guaranteed obligations of the United
States. It is possible that the return on such investments will be less than
that which would be realized were the Company immediately to use such funds for
other purposes. See "Use of Proceeds."

CONCENTRATION OF OWNERSHIP

Upon the completion of this offering, certain of the Company's executive
officers will beneficially own approximately 36% of the outstanding Common
Shares, and certain of the Company's non-employee directors will beneficially
own approximately 21% of the outstanding Common Shares. Accordingly, those
persons will be in a position to significantly influence the election of the
Company's directors and the outcome of corporate actions requiring shareholder
approval. This concentration of ownership may have the effect of delaying or
preventing a change in control of the Company. See "Management" and "Principal
Shareholders."

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

The sale of substantial amounts of the Common Shares in the public market
following the offering could have an adverse effect on prevailing market prices
of the Common Shares. Immediately after the offering, the 1,250,000 Shares
(1,437,500 Shares if the Underwriters' over-allotment option is exercised in
full) offered hereby will be freely tradeable without restriction, and
approximately 600,000 additional Common Shares will be eligible for sale in the
public market pursuant to Rule 144(k) under the Securities Act. All of the
Company's directors and executive officers and certain of the Company's
shareholders have agreed with the Underwriters not to sell an aggregate of
2,515,178 Common Shares held by them for a period of 180 days from the date of
this Prospectus without the prior consent of the Underwriters. After such time,
or earlier with the written consent of the Underwriters, those Common Shares
will be eligible for sale, subject to the volume and other restrictions under
Rule 144 promulgated under the Securities Act. See "Shares Eligible For Future
Sale."

The Company also intends to file a registration statement covering the sale
of Common Shares reserved for issuance under the Company's stock option plans
approximately 30 days following the date of this Prospectus. As of September 30,
1997, there were aggregate options outstanding under the Bioanalytical Systems,
Inc. 1990 Employee Incentive Stock Option Plan (the "1990 Employee Option Plan")
and the 1990 Bioanalytical Systems, Inc. Outside Director Stock Option Plan (the
"1990 Director Option Plan") to

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purchase 272,671 Common Shares at a weighted average price of $1.27 per share,
of which 236,555 Common Shares were then vested and exercisable. The holders of
171,757 of the options exercisable as of September 30, 1997 have signed Lock-Up
Agreements. The Company also may issue and sell up to 95,000 Common Shares under
the 1997 Employee Incentive Stock Option Plan (the "1997 Employee Option Plan")
and 5,000 Common Shares under the 1997 Outside Director Stock Option Plan (the
"1997 Director Option Plan", and together with the 1997 Employee Option Plan,
the 1990 Employee Option Plan and the 1990 Director Option Plan, the "Option
Plans"). See "Management -- Option Plans," and "Underwriting."

Certain shareholders have the right to require the registration of their
Common Shares under the Securities Act at any time subject to certain
limitations but those shareholders have agreed not to exercise those rights for
a period of 180 days from the date of this Prospectus. See "Description of
Capital Stock -- Registration Rights." If those shareholders were to cause a
large number of Common Shares to be registered and sold in the public market
thereafter, the market price for the Common Shares could be materially adversely
affected. Additionally, those shareholders have the right to require the Company
to include their Common Shares in any Company-related registration under the
Securities Act, and the exercise of these "piggyback" registration rights could
have a material adverse effect on the Company's ability to raise capital in the
future. See "Certain Transactions."

NO PRIOR MARKET; POTENTIAL STOCK PRICE VOLATILITY

Prior to this offering, there has been no public market for the Common
Shares and there can be no assurance that an active trading market will develop
or be sustained after this offering. The initial public offering price has been
determined through negotiations between the Company and the Underwriters and may
not represent prices that will prevail in the trading market. See
"Underwriting."

The market price of the Common Shares could be subject to wide fluctuations
in response to variations in operating results from quarter to quarter, changes
in earnings estimates by analysts, market conditions in the industry and general
economic conditions. See "Risk Factors -- Volatility of Quarterly Operating
Results." Furthermore, the stock market has experienced significant price and
volume fluctuations unrelated to the operating performance of particular
companies. These market fluctuations may have an adverse effect on the market
price of the Common Shares. Following the offering, the Company will have
approximately 4.2 million Common Shares outstanding, of which approximately 1.8
million Common Shares could be considered to be part of the "float." Based on
the initial public offering price of $8.00 per share, the market capitalization
of the Company is approximately $34.0 million. As a result of the small "float"
and market capitalization, the Company's Common Shares will be subject to
volatility. The price volatility of the Common Shares could be accentuated by
quarterly fluctuations in earnings. See "Risk Factors -- Volatility of Quarterly
Operating Results."

POSSIBLE ISSUANCE OF PREFERRED SHARES

The Board of Directors of the Company has the authority to issue preferred
shares in the future without further shareholder approval and upon such terms
and conditions, and having such rights, privileges and preferences, as the Board
of Directors may determine. The issuance of preferred shares, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could adversely affect the market price of the Common Shares
and could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a majority of the
outstanding voting securities of the Company. The Company has no present plans
to issue any preferred shares. See "Description of Capital Stock."

NO CASH DIVIDENDS

The Company has never paid any cash dividends to holders of its Common
Shares and does not anticipate paying any cash dividends in the foreseeable
future, but intends instead to retain any future earnings for reinvestment in
its business. Any future determination as to the payment of dividends will be
made at the discretion of the Board of Directors of the Company and will depend
upon the Company's operating results, financial condition, capital requirements,
general business conditions and such other factors as the Board of Directors
deems relevant. See "Dividend Policy."

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USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,250,000 Shares
offered hereby are estimated to be $8.8 million ($10.2 million if the
Underwriter's over-allotment option is exercised in full), based on the initial
public offering price of $8.00 per share and after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company. The Company intends to utilize approximately $5.8 million to repay bank
indebtedness. The Company also intends to utilize a portion of the net proceeds
to purchase laboratory equipment, hire additional technical staff and upgrade
its information systems. These expenditures will primarily supplement and expand
capabilities for existing services offered to clients. In addition, the Company
intends to use a portion of the proceeds from the offering to expand its present
facilities as well as to fund future geographic expansion. Pending such uses,
the Company intends to invest the remaining proceeds of the offering in
high-quality, short-term, interest-bearing, investment-grade debt securities,
certificates of deposit or direct or guaranteed obligations of the United
States.

As part of its business strategy, the Company reviews many acquisition
candidates in the ordinary course of business, although the Company currently
has no agreements or arrangements in place with respect to any future
acquisition. There can be no assurance that the Company will complete any
acquisitions.

DIVIDEND POLICY

The Company has never paid cash dividends on its Common Shares and does not
anticipate paying any cash dividends in the foreseeable future. The Company
currently intends to retain any future earnings to develop and expand its
business. The Company is currently restricted from paying cash dividends under
the terms of its lines of credit without the prior written consent of the bank.

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DILUTION

The net tangible book value of the Company as of September 30, 1997 was
approximately $6.7 million or $2.22 per share after giving effect to the
conversion of the outstanding Convertible Preferred Shares into Common Shares
and the 4.514 for 1 share split to be effected prior to the issuance of the
Shares offered hereby. The net tangible book value per share is equal to the
book value of the Company's total tangible assets less its total liabilities,
divided by the total number of Common Shares outstanding. After giving effect to
the sale by the Company of 1,250,000 Shares offered hereby at the initial public
offering price of $8.00 per share (resulting in estimated net proceeds of $8.8
million after deducting the estimated underwriting discounts and commissions and
estimated offering expenses), the net tangible book value of the Company as of
September 30, 1997 would be approximately $15.5 million, or $3.64 per share.
This represents an immediate increase of $1.42 per share to existing
shareholders and an immediate dilution of $4.36 per share to new investors. The
following table illustrates this per share dilution:

[Download Table]

Initial public offering price per share..................... $8.00
Net tangible book value per share before the offering..... $2.22
Increase in net tangible book value per share attributable
to new investors....................................... 1.42
-----
Net tangible book value per share after offering............ 3.64
-----
Dilution per share to new investors......................... $4.36
=====

To the extent that the Underwriters' over-allotment option is exercised in
full, the net tangible book value of the Company at September 30, 1997 would
have been approximately $16.8 million, or $3.78 per share, representing an
immediate increase in net tangible book value per share of $1.56 to existing
shareholders and an immediate dilution of $4.22 per share to new investors.

The following table summarizes, as of September 30, 1997, the differences
in the number of Common Shares purchased from the Company, the total
consideration paid to the Company and the average price per share paid by the
existing shareholders and by the new investors with respect to the Shares
offered hereby, based upon the initial public offering price of $8.00 per share
and before deduction of estimated underwriting discounts and commissions and
estimated offering expenses:

[Enlarge/Download Table]

SHARES PURCHASED TOTAL CONSIDERATION(1) AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------

Existing shareholders(1).................. 3,000,000 70.6% $ 1,907,350 16.0% $ 0.64
New investors............................. 1,250,000 29.4 10,000,000 84.0 8.00
--------- ----- ----------- -----
Total..................................... 4,250,000 100.0% $11,907,350 100.0%
========= ===== =========== =====

-------------------------
(1) The above computations exclude options outstanding at September 30, 1997 to
purchase a total of 272,671 Common Shares at a weighted average exercise
price of $1.27 per share. To the extent these options are exercised, there
will be further dilution to new investors. See "Capitalization," "Management
-- Option Plans" and Note 6 of Notes to Consolidated Financial Statements.

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CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company as of September 30, 1997, on an actual basis and as adjusted (i) to give
effect to the conversion of all outstanding Convertible Preferred Shares into
Common Shares which occurred immediately prior to the issuance of the Shares
offered hereby and (ii) to reflect the sale of the 1,250,000 Shares offered
hereby at the initial public offering price of $8.00 per share and the receipt
of the estimated net proceeds therefrom. See "Use of Proceeds."

[Download Table]

SEPTEMBER 30, 1997
----------------------
AS
ACTUAL ADJUSTED
------ --------
(IN THOUSANDS, EXCEPT
SHARES DATA)

Short-term debt............................................. $ 803 $ --
======= =======
Long-term debt, less current portion........................ $ 5,045 $ --
Preferred Shares:
1,000,000 Preferred Shares authorized and
166,667 Convertible Preferred Shares outstanding
(actual), none outstanding (as adjusted)............... 1,231 --
Shareholders' equity:
Common Shares, 19,000,000 shares authorized and 2,247,601
shares outstanding (actual); 4,250,000 shares
outstanding (as adjusted)(1)........................... 498 941
Additional paid-in capital................................ 178 9,742
Retained earnings......................................... 4,978 4,978
Currency translation adjustment........................... (3) (3)
------- -------
Total shareholders' equity........................... 5,651 15,658
------- -------
Total capitalization................................. $11,927 $15,658
======= =======

-------------------------
(1) Does not include 272,671 Common Shares issuable upon exercise of options
outstanding as of September 30, 1997, of which 236,555 were exercisable as
of that date. See "Management -- Option Plans" and Note 6 of Notes to
Consolidated Financial Statements.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated statement of income data for the years
ended September 30, 1995, 1996 and 1997 and the balance sheet data as of
September 30, 1996 and 1997 are derived from and should be read in conjunction
with the financial statements and notes thereto included elsewhere herein,
audited by Ernst & Young LLP. The selected statement of income data for the
years ended September 30, 1993 and 1994 and selected balance sheet data as of
September 30, 1993, 1994 and 1995 also are derived from audited financial
statements, which are not included herein. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

[Enlarge/Download Table]

YEAR ENDED SEPTEMBER 30,
-----------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF INCOME DATA:
Product revenue.................................. $ 9,124 $ 8,903 $ 9,627 $ 9,113 $ 9,932
Services revenue................................. 1,663 1,800 2,725 3,681 4,991
------- ------- ------- ------- -------
Total revenue............................... 10,787 10,703 12,352 12,794 14,923
Cost of product revenue.......................... 3,479 3,418 3,448 3,227 3,334
Cost of services revenue......................... 833 1,039 1,834 2,141 2,986
------- ------- ------- ------- -------
Total cost of revenue....................... 4,312 4,457 5,282 5,368 6,320
------- ------- ------- ------- -------
Gross profit..................................... 6,475 6,246 7,070 7,426 8,603
------- ------- ------- ------- -------
Operating expenses:
Selling........................................ 3,366 3,531 3,940 3,937 4,225
Research and development....................... 1,099 1,122 1,124 1,424 1,568
General and administrative..................... 882 984 1,222 1,364 1,638
------- ------- ------- ------- -------
Total operating expenses.................... 5,347 5,637 6,286 6,725 7,431
------- ------- ------- ------- -------
Operating income................................. 1,128 609 784 701 1,172
Other income (expense), net...................... 28 192 111 (18) (75)
------- ------- ------- ------- -------
Income before income taxes....................... 1,156 801 895 683 1,097
Income taxes..................................... 216 253 344 283 413
------- ------- ------- ------- -------
Net income....................................... $ 940 $ 548 $ 551 $ 400 $ 684
======= ======= ======= ======= =======
Net income available to common shareholders...... $ 886 $ 495 $ 497 $ 347 $ 657
Net income per Common Share...................... $ .30 $ .16 $ .16 $ .11 $ .21
Weighted average Common Shares outstanding....... 2,993 3,048 3,066 3,089 3,101

[Enlarge/Download Table]

SEPTEMBER 30,
--------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital................................... $3,897 $4,392 $4,080 $ 3,059 $ 2,493
Property and equipment, net....................... 2,494 2,736 3,707 6,526 10,035
Total assets...................................... 7,800 8,163 9,428 11,374 15,931
Long-term debt, less current portion.............. 239 187 416 2,512 5,045
Convertible Preferred Shares...................... 1,994 2,047 2,100 1,530 1,231
Shareholders' equity.............................. 3,547 4,056 4,609 4,956 5,651

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

The following discussion and analysis should be read in conjunction with
Selected Consolidated Financial Data and the Company's Consolidated Financial
Statements and notes thereto included elsewhere in this Prospectus. In addition
to the historical information contained herein, the discussions in this
Prospectus may contain forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below and in the section
entitled "Risk Factors," as well as those discussed elsewhere in this
Prospectus.

OVERVIEW

The Company provides a broad range of value-added products and services
focused on chemical analysis to the worldwide pharmaceutical, medical device and
biotechnology industries. The Company's customer-focused approach and its high
quality products and services enable it to serve as a value-added partner in
solving complex scientific problems by providing cost-effective results to its
customers on an accelerated basis. Founded in 1974 in Lansing, Michigan and
relocated to West Lafayette, Indiana in 1975, the Company has experienced growth
primarily through internal expansion, supplemented by strategic acquisitions. As
part of its internal growth strategy, the Company has developed technical
specialties in such areas as chromatography, electrochemistry, in vivo sampling
and mass spectrometry. The Company's growth has strategically positioned it to
take advantage of globalization in the marketplace and to provide new services
and areas of technical expertise to its customers. During this phase, the
Company has been continuously profitable since 1987.

Throughout its history, the Company has taken steps to position itself as a
global leader in the analytical chemistry field. Development of the Company's
infrastructure began in 1975 when it established relationships with several
customers and multiple international distributors. In 1981, the Company
increased its sphere of influence to include Japan with the creation of BAS
Japan, an independent distributor. In 1988, the Company enhanced its computer
software expertise by acquiring Interactive Microware Inc. in State College,
Pennsylvania. In 1990, the Company began offering contract services to customers
that lacked the time or expertise to perform certain analyses using the
Company's analytical products. In 1991, the Company further expanded its global
presence by establishing an office in Brussels, Belgium, and in 1995, the
Company acquired a distributor, BAS Technicol Ltd., to further solidify its
presence in the United Kingdom. While the Company derives a significant portion
of its revenues from customers in Asia, the Company does not expect that the
recent economic downturn in certain Asian markets will have a material adverse
impact on its financial condition in the short or long term, because the Company
does not derive a significant amount of its total revenue from these markets.

Revenues are derived principally from (i) the sale of the Company's
analytical instruments and other products, and (ii) analytical services provided
to customers. Both methods of generating revenue utilize the Company's ability
to identify, isolate and resolve client problems relating to the separation and
quantification of individual substances in complex mixtures. The Company's
analytical products are sold primarily to pharmaceutical firms and research
organizations. The Company supports the pharmaceutical industry by focusing on
analytical chemistry for biomedical research, diagnostics, electrochemistry and
separations science. Principal customers include scientists engaged in drug
metabolism studies, as well as those engaged in basic neuroscience research. The
Company was the first to commercialize the liquid chromatography and
electrochemistry technology which is now the worldwide standard for the
determination of neurotransmitter substances. Research products include in vivo
sampling devices, reagent chemicals, electrochemical apparatus and sensors.

Revenue from the sale of the Company's products and the related costs are
recognized upon shipment of the products to customers. The Company's
pharmaceutical service contracts generally have terms ranging from several
months to several years. A portion of the contract fee is generally payable upon
receipt of the initial samples with the balance payable in installments over the
life of the contract. The contracts are broken down into discrete units of
deliverable services for which a fixed fee for each unit is established, and
revenue

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and related direct costs are recognized as specific contract terms are fulfilled
under the percentage of completion method utilizing units of delivery. The
termination of a contract results in no material adjustments to revenue or
direct costs previously recognized, and the Company is entitled to payment for
all work performed through the date of notice of termination and all costs
associated with termination of a contract.

The Company's management believes that fluctuations in the Company's
quarterly results are caused by a number of factors, including the Company's
success in attracting new business, the size and duration of service contracts,
the timing of its client's decisions to enter into new contracts, the
cancellation or delays of on-going contracts, the timing of acquisitions and
other factors, many of which are beyond the Company's control. See "Risk Factors
-- Volatility of Quarterly Operating Results."

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
statement of income data as a percentage of total revenue.

[Enlarge/Download Table]

PERCENTAGE OF REVENUE
---------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1996 1997
---- ---- ----

Product revenue............................................. 77.9% 71.2% 66.6%
Services revenue............................................ 22.1 28.8 33.4
----- ----- -----
Total revenue.......................................... 100.0 100.0 100.0
Cost of product revenue..................................... 27.9 25.2 22.3
Cost of services revenue.................................... 14.9 16.8 20.0
----- ----- -----
Total cost of revenue.................................. 42.8 42.0 42.3
Gross profit................................................ 57.2 58.0 57.7
Operating expenses:
Selling................................................... 31.9 30.8 28.3
Research and development.................................. 9.1 11.1 10.5
General and administrative................................ 9.9 10.7 11.0
----- ----- -----
Total operating expenses............................... 50.9 52.6 49.8
----- ----- -----
Operating income............................................ 6.3 5.4 7.9
Other income (expense), net................................. 0.9 (0.1) (0.5)
----- ----- -----
Income before income taxes.................................. 7.2 5.3 7.4
Income taxes................................................ 2.8 2.2 2.8
----- ----- -----
Net income.................................................. 4.4% 3.1% 4.6%
===== ===== =====

Year ended September 30, 1997 Compared with Year ended September 30, 1996

Total revenue for the year ended September 30, 1997 increased 16.6% to
approximately $14.9 million from approximately $12.8 million in the year ended
September 30, 1996. The net increase of approximately $2.1 million related
primarily to increased revenue from services, which increased to approximately
$5.0 million in the year ended September 30, 1997 from approximately $3.7
million in the year ended September 30, 1996 as a result of the expansion of
types and volume of services provided by the Company. During this same period,
product revenue increased to approximately $9.9 million for the year ended
September 30, 1997 from approximately $9.1 million for the year ended September
30, 1996 primarily as a result of increased penetration in the electrochemistry
and the liquid chromatography market.

Costs of revenue increased 17.7% to approximately $6.3 million for the year
ended September 30, 1997 from approximately $5.4 million for the year ended
September 30, 1996. This increase of approximately $952,000 was largely due to
the hiring of additional support staff in the services unit. Costs of revenue
for the Company's products decreased to 33.6% as a percentage of product revenue
for the year ended September 30, 1997 from 35.4% of product revenue for the year
ended September 30, 1996, due to a change in product mix.

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Costs of revenue for the Company's services increased to approximately 59.8% as
a percentage of services revenue for the year ended September 30, 1997 from
approximately 58.2% of services revenue for the year ended September 30, 1996
due to an increase in services support staff.

Selling expenses for the year ended September 30, 1997 increased 7.3% to
approximately $4.2 million from approximately $3.9 million during the year ended
September 30, 1996 due to increased commissions on foreign sales. Research and
development expenses for the year ended September 30, 1997 increased 10.1% to
$1.6 million from approximately $1.4 million for the year ended September 30,
1996 due to the development of the in vitro product line. General and
administrative expenses for the year ended September 30, 1997 increased 20.1% to
approximately $1.6 million from approximately $1.4 million for the year ended
September 30, 1996, primarily as a result of increased property taxes incurred
in connection with the Company's purchase and construction of additional
facilities.

Other income (expense), net, was approximately $(75,000) in the year ended
September 30, 1997 as compared to approximately $(18,000) in the year ended
September 30, 1996 as a result of a reduction of interest income due to a
reduction in cash and cash equivalents resulting from the redemption of
Redeemable Preferred Shares owned by the Venture Funds in accordance with their
terms.

The Company's effective tax rate for 1997 was 37.7% as compared to 41.4%
for fiscal 1996. This decrease was primarily due to utilization of the research
and development tax credit.

Year ended September 30, 1996 Compared with Year ended September 30, 1995

Total revenue for the year ended September 30, 1996 increased 3.6% to
approximately $12.8 million from approximately $12.4 million in the year ended
September 30, 1995. The net increase of approximately $400,000 related to
increased revenue from services, which increased to approximately $3.7 million
in the year ended September 30, 1996 from approximately $2.7 million in the year
ended September 30, 1995 as a result of the expansion of types and volume of
services provided by the Company. During this same period, product revenue
decreased to approximately $9.1 million for the year ended September 30, 1996
from approximately $9.6 million for the year ended September 30, 1995 primarily
as a result of increased industry competition in the liquid chromatography
market.

Costs of revenue increased 1.6% to approximately $5.4 million for the year
ended September 30, 1996 from approximately $5.3 million for the year ended
September 30, 1995. This increase of approximately $100,000 was due to the
hiring of additional support staff in the services unit. Costs of revenue for
the Company's products decreased to 35.4% as a percentage of product revenue for
the year ended September 30, 1996 from 35.8% of product revenue for the year
ended September 30, 1995, due to a change in product mix. Costs of revenue for
the Company's services decreased to approximately 58.2% as a percentage of
service revenue for the year ended September 30, 1996 from approximately 67.3%
of services revenue for the year ended September 30, 1995 due to an increase in
the level of services revenue.

Research and development expenses for the year ended September 30, 1996
increased 26.7% to $1.4 million from approximately $1.1 million for the year
ended September 30, 1995 due to the development of the in vitro product line.
General and administrative expenses for the year ended September 30, 1996
increased 11.6% to approximately $1.4 million from approximately $1.2 million
for the year ended September 30, 1995, primarily as a result of increased
property taxes incurred in connection with the Company's purchase and
construction of additional facilities.

Other income (expense), net, was approximately $(18,000) in the year ended
September 30, 1996 as compared to approximately $111,000 in the year ended
September 30, 1995 as a result of a reduction in interest income due to a
reduction in cash and cash equivalents resulting from the redemption of
Redeemable Preferred Shares owned by the Venture Funds in accordance with their
terms.

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The Company's effective tax rate for 1996 was 41.4% as compared to 38.5%
for fiscal 1995. This increase was due, in part, to operating losses from
operations in the United Kingdom for which there is no corresponding income tax
deduction and to increased state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company's principal sources of cash have been cash
flow generated from operations and funds received from venture capital
investments, the most recent of which was a $2.0 million financing completed in
March 1991. At September 30, 1997, the Company had cash and cash equivalents of
approximately $160,000, compared to cash and cash equivalents of approximately
$600,000 at September 30, 1996. The decrease in cash resulted primarily from
increased capital expenditures made to expand the Company's facilities and
operations. The expansion was partially financed by cash provided by operating
activities, and a $5.0 million credit facility.

The Company's net cash provided by operating activities was approximately
$842,000 for the year ended September 30, 1997. Cash provided by operations
during the year ended September 30, 1997 consisted of net income of
approximately $684,000 plus non-cash charges of approximately $584,000 partially
offset by a net increase of approximately $426,000 in operating assets and
liabilities. The most significant increase in operating assets related to trade
accounts receivable, which increased to approximately $3.0 million at September
30, 1997 from approximately $1.6 million at September 30, 1996, due primarily to
sales growth.

Cash used by investing activities increased to approximately $4.0 million
for the year ended September 30, 1997 from approximately $3.2 million for the
year ended September 30, 1996, primarily as a result of the Company's purchase
and construction of additional facilities. Cash provided by financing activities
for the fiscal 1997 was approximately $2.7 million due to an increase in the
Company's long and short term debt and offset by the redemption of Redeemable
Preferred Shares in accordance with their terms.

The Company's net cash provided by operating activities was approximately
$301,000 for the year ended September 30, 1996, resulting from approximately
$400,000 of net income and reduced by a net increase in operating assets and
liabilities which was partially offset by non-cash charges. Trade accounts
receivable remained relatively constant at approximately $1.6 million at
September 30, 1996 as compared to September 30, 1995.

Cash used by investing activities increased to approximately $3.2 million
for fiscal 1996 from approximately $1.3 million for fiscal 1995, primarily as a
result of the Company's purchase and construction of additional facilities. Cash
provided by financing activities for fiscal 1996 was approximately $1.7 million
due to an increase in the Company's long term debt incurred for the facilities
expansion and offset by the redemption of Redeemable Preferred Shares in
accordance with their terms.

Total expenditures by the Company for property and equipment were
approximately $1.3 million $3.2 million and $4.1 million in fiscal 1995, 1996
and 1997, respectively. Expenditures made in connection with the expansion of
the Company's operating facilities and purchases of laboratory equipment account
for the largest portions of these expenditures. The Company anticipates
increased levels of capital expenditures in fiscal 1998 and fiscal 1999. The
increased capital investments relate to the completion of the renovation and
construction of the additional facilities and the purchase of additional
laboratory equipment corresponding to anticipated increases in research services
to be provided by the Company. The Company also expects to make other
investments to expand its operations, through internal growth and strategic
acquisitions, alliances and joint ventures. However, the Company currently has
no firm commitments for capital expenditures other than in connection with the
expansion of the Company's facilities.

Based on its current business activities, the Company believes that cash
generated from its operations, amounts available under its existing bank lines
of credit and credit facility and the net proceeds from this offering will be
sufficient to fund the Company's working capital and capital expenditure
requirements for the next few years.

The Company has a bank line of credit agreement which expires March 1, 1998
and allows borrowings of the lesser of 50.0% of inventories plus 80.0% of
qualified accounts receivable or $2.2 million. Interest is

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charged at the prime rate plus .25% (8.75% at September 30, 1997). At September
30, 1997, the collateral base for this line of credit resulted in borrowing
availability of approximately $2.2 million of which $200,000 was outstanding at
September 30, 1997. The line is collateralized by inventories and accounts
receivable. The Company has a second line of credit agreement with the same bank
for capital expenditures which expires March 1, 1998 and allows borrowings of
the lesser 80% of capital expenditures or $1,000,000. Interest is charged at the
prime rate plus .25% (8.75% at September 30, 1997). At September 30, 1997,
$315,377 was outstanding on this line. The line is collateralized by fixed
assets, inventories and accounts receivable. The Company has entered into
negotiations with the bank to increase the amounts available under these lines
of credit and extend the expiration dates upon completion of the sale of the
Shares offered hereby, although there can be no assurance that such negotiations
will be successful.

During 1996, the Company entered into a credit facility for up to $5.0
million for the purchase and renovation of an adjacent building. At maturity of
this facility on January 31, 1998, the loan may be converted to a five year term
loan based upon a 20 year amortization funding on a conventional commercial
mortgage basis or with fixed principal payments plus interest. Interest is
charged at the prime rate plus .25% (8.75% at September 30, 1997). This credit
facility is collateralized by substantially all of the Company's property and
equipment. The agreement contains certain covenants which, among other things,
require the Company to maintain minimum levels of tangible net worth and debt
service coverage.

RECENT DEVELOPMENT

On October 31, 1997, the Company acquired all of the outstanding capital
stock of Vetronics, Inc. ("Vetronics"), which manufactures, markets and sells,
electrocardiograph and vital sign monitors for small to midsize animals. The
total purchase price consisted of $200,000 in cash, $150,000 in notes payable on
July 1, 1998 and a contingent amount to be based upon the profitability of sales
from products manufactured by Vetronics during the next two years. The Company
believes that the addition of these products will enhance its position as a
producer of physiology instrumentation.

INFLATION

To date, the Company believes that the effects of inflation have not had a
material adverse effect on its business, operations or financial condition.

NEW ACCOUNTING PRONOUNCEMENTS

In July 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and
Related Information." Under SFAS 131, the Company will report financial and
descriptive information about its operating segments. SFAS 131 is effective for
fiscal years beginning after December 15, 1997. The Company plans to adopt SFAS
131 on October 1, 1998. The Company has not yet evaluated the impact of adoption
of SFAS 131.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 establishes
standards for reporting and display of comprehensive income in the financial
statements. SFAS 130 is effective for fiscal years beginning after December 15,
1997. The Company plans to adopt SFAS 130 on October 1, 1998. The Company has
not yet evaluated the impact of SFAS 130.

In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128, "Earnings per Share," which replaces the presentation of
primary earnings per share ("EPS") with basic EPS and replaces fully diluted EPS
with diluted EPS. It also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the components of the basic EPS
computation to the components of the diluted EPS computation. SFAS No. 128 is
effective for both interim and annual periods ending after December 15, 1997.
Earlier adoption is not permitted. Upon adoption, all prior-period EPS data
presented will be restated. The Company does not anticipate the adoption of SFAS
No. 128 to have a significant effect on EPS.

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BUSINESS

COMPANY OVERVIEW

The Company is a contract research organization providing research and
development resources to many of the leading pharmaceutical, medical device and
biotechnology companies in the world. The Company offers an efficient,
variable-cost alternative to its clients' internal product development,
compliance and quality control programs. Founded in 1974, the Company initially
focused primarily on providing new products and procedures which facilitated
research progress at client sites. Recently, as a result of increasing pressures
to bring products to market on a cost-effective and accelerated basis, many
clients have requested the Company to carry out proprietary projects at the
Company's facilities. As a result, the Company now derives its revenues from
both the sale of its analytical instruments and other products as well as
research services provided to customers. The Company provides a broad array of
both value-added products and services focused on chemical analysis, allowing
its clients to perform their R&D functions either "in-house" or at the Company.
The Company believes that among CROs that provide statistical, clinical, and
medical services, the Company is the only one that designs and sells analytical
instrumentation. Within the analytical instruments business, the Company
believes that it is one of very few firms to maintain a separate business unit
devoted to contract analytical services under the regulatory framework of GLPs
and GMPs.

The Company's products and services combine basic research with diagnostic
and therapeutic experience. One consequence of the restructuring of the
healthcare industry is the greater reliance on outsourcing research services for
both clinical trials and formulation development. The Company is capable of
supporting the analytical needs of researchers and clinicians, from small
molecule drugs and hormones through large biomolecules such as proteins. The
Company's scientists have the skills necessary in instrumentation, chemical
reagents and computer software to make the products and services it provides
increasingly valuable to the worldwide pharmaceutical, medical device and
biotechnological industries.

Over the past five years, the Company regularly has provided its products
and/or services to all of the top 25 pharmaceutical companies in the world, as
ranked by 1996 research and development spending. In fiscal 1997, the Company
estimates that more than one-third of its total revenue was derived from these
companies. As a result of its (i) client focus, (ii) reputation for high-quality
services and products, (iii) capital investment in state-of-the art
instrumentation and facilities, (iv) skilled and experienced professional staff,
and (v) expertise in performing critical development and support services, the
Company believes that it is a value-added partner in solving its clients'
complex product development problems.

The Company designs, manufactures and markets a broad range of products and
related scientific procedures that detect and quantify the presence of chemicals
in certain substances. On the products side, the Company competes in the $11
billion analytical instrument industry. The Company's focus, however, is not on
marketing hardware and software, but rather on solutions to challenging
analytical problems where the Company can utilize its talented personnel to
provide a total solution not generally available from hardware-focused
competitors. The Company's products utilize state-of-the-art scientific
technology, including liquid chromatography, electrochemistry and in vivo
sampling instrumentation. The Company's analytical instruments are sold
primarily to pharmaceutical firms and research organizations. Principal clients
include scientists engaged in drug metabolism studies, as well as scientists
engaged in basic neuroscience research.

The Company provides a wide variety of services to pharmaceutical
companies, medical device manufacturers, medical research centers, academic
institutions and others. These analytical services support screening and
pharmacological testing, toxicology/safety testing, formulation development,
laboratory testing, regulatory and compliance consulting and quality control
testing. The Company began providing services primarily in response to requests
from customers who had used or were using the Company's products. To reduce
overhead and speed drug approval requests through the FDA, pharmaceutical
companies are contracting increasing amounts of their analytical work to outside
firms like the Company. The Pharmaceutical Research and Manufacturing
Association estimates that in 1997, pharmaceutical and biotechnology companies
will spend approximately $18.9 billion worldwide on research and development, of
which approximately 18%, or $3.4 billion, will be outsourced to independent
contract service providers. The Company believes that the trend of outsourcing
will continue as a result of drug development pressures, the

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emphasis on cost containment, patent expirations, consolidation in the
pharmaceutical industry, virtual drug company and biotechnology industry growth,
the need for technical expertise, the need for data management expertise and the
globalization of the pharmaceutical marketplace.

CHANGING NATURE OF PHARMACEUTICAL INDUSTRY

The Company provides products and services on a world wide basis to
pharmaceutical, medical device and biotechnology companies, academic
institutions and the United States government to facilitate the research and
development of drugs and medical devices. The Company's products are marketed
generally to both public and private research organizations engaged in the early
stages of drug development, while the Company's services are marketed generally
to pharmaceutical and other biotechnical companies engaged in later stages of
drug testing. The Company competes against several large equipment manufacturers
with respect to its products, while the research services industry is highly
fragmented consisting of several hundred service providers operating in various
segments of the market and a few larger companies focusing primarily on managing
clinical trials. While the markets for the Company's products and services have
distinct customers (often simply separate divisions in a large pharmaceutical
company) and requirements, the Company believes that both markets are facing
increased pressure to outsource certain facets of their research and development
activities. The Company believes that the factors identified below will
contribute to a continuing increase in outsourcing activities by its customers.

Drug Development Pressure

The pharmaceutical industry is under pressure to rapidly develop new drugs
to treat chronic illnesses and life threatening conditions such as AIDS and
Alzheimer's disease as consumers, doctors, health care providers and
pharmaceutical company shareholders continue to demand quicker and more
efficient drug development. Responding to this pressure, pharmaceutical
companies are attempting to accelerate the drug development process, including
reliance to an increasing extent on external providers of research and
development services to perform testing and analysis in all phases of the
process.

Emphasis on Cost Containment

Pharmaceutical companies are facing increasing pressure to develop more
efficient operating strategies as a result of margin pressure from market
forces, including (i) a shift toward managed care, (ii) patent expirations,
(iii) generic substitution, (iv) increased purchasing power of large buyer
groups and (v) governmental initiatives designed to reduce drug prices. The
Company believes that the pharmaceutical and medical device industries are
responding to these pressures by downsizing internal research and development
programs, favoring outsourcing as a variable-cost alternative. Further, the need
for additional capacity to increase the speed of new product development, to
maximize the period of marketing exclusivity and to increase economic returns,
has driven the need for outsourced services.

Patent Expirations

Patents on all major pharmaceuticals continue to age and expire. According
to the Pharmaceutical Research and Marketing Association, since 1984
prescriptions for generic drugs have risen from 20% to 43% of all prescriptions
written. Moving generic drugs onto the market faster can result in an estimated
2 to 5 year reduction in effective patent protection for brand name drugs.
Patent expirations are forcing drug companies to develop new products or modify
existing products to maintain market share against generic product competition.
The Company believes that the pressure to develop new products and modify
(reformulate) existing products, combined with internal capacity constraints, is
leading companies to outsource these activities.

Consolidation in the Pharmaceutical Industry

The pharmaceutical industry is increasingly consolidating as drug
development companies continue to pursue new avenues of growth and more
efficient ways of conducting business. As companies seek to combine

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varied personnel, resources and activities, the Company believes that they will
increasingly focus on ways to reduce costs and streamline operations, leading to
the greater use of companies providing contract research services.

Biotechnology Industry and "Virtual" Drug Company Growth

The biotechnology industry has grown rapidly over the last 10 years and has
introduced a significant number of new compounds for development. As a result,
many biotechnology companies do not have the necessary in-house resources to
conduct required development and testing. Furthermore, the number of
pharmaceutical and medical device companies whose business strategy is to bring
a product far enough along to attract a strategic partner that will manufacture
and market a drug has increased. Many of these "virtual" drug development
companies, having little or no internal development or support resources, must
outsource a substantial portion of drug development and testing.

Need for Technical Expertise

The increasing complexity of new drugs requires high quality, innovative,
solution-driven contract work through all phases of the development process from
preclinical toxicology and pharmacokinetics through reformulation
pharmacokinetic studies and post-market clinical drug monitoring. The Company
believes that this need for specialized technical expertise will increasingly
lead to outsourcing of research activities.

Need for Data Management Expertise

Regulatory agencies are increasing the volume of data required for
regulatory filings, as well as requesting increased access to these data.
Furthermore, the FDA is encouraging the use of computer-assisted filings in an
effort to expedite the approval process; consequently, drug companies are
increasingly outsourcing to firms with automated data management capabilities.
Clients also are demanding access to data as it is acquired in the laboratory;
and the Company has the ability to provide clients with remote access to Company
computer systems while at the same time protecting client data from unauthorized
access.

Globalization of the Marketplace

Foreign pharmaceutical companies, particularly in Japan and Europe, are
increasingly seeking to obtain approval to market their products in the United
States. Due to a lack of familiarity with the complex United States regulatory
system and the difficulty in bringing their operating facilities into
FDA-required GMP compliance, foreign firms are relying on independent
development companies with experience in the United States to provide integrated
services through all phases of product development and to assist in preparing
regulatory submissions. The Company believes that domestic firms with
established regulatory expertise and a broad range of integrated development
services will benefit from this trend.

GROWTH STRATEGY

The Company's objective is to be the leading provider of high-quality
analytical chemistry and support services to the worldwide pharmaceutical,
medical device and biotechnology industries. The Company intends to leverage its
facilities, technological expertise and information systems to facilitate growth
and differentiate itself from its competitors. The Company has adopted a
business strategy intended to accelerate growth and profitability, which
consists of the following elements:

Increase Technical Staff to Expand Sales

The Company believes its investment in infrastructure and technical
expertise has positioned it to significantly expand the level of services it
provides to current and future clients. The Company is currently turning away
opportunities to provide services because of technical personnel and capacity
constraints. The Company intends to hire additional scientific personnel,
allowing it to take advantage of the recent expansion of the Company's
facilities and substantially increased laboratory space. The additional
personnel will allow the Company to further provide services to current and
future clients.

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Implement Comprehensive Marketing and Sales Program

Due to the recent growth of the CRO industry and the highly fragmented
nature of the competition, the Company believes it has been difficult for many
CROs to achieve a high profile corporate identity within the marketplace. The
Company's marketing strategy is to continue to build upon its reputation as a
provider of high quality products and services. The Company has developed a
marketing plan designed to substantially increase awareness of the products
offered and services provided by the Company. The plan includes: (i) increasing
the number of sales and marketing personnel, (ii) expanding the level of
advertising and promotion, (iii) expanding strategic development relationships
with key clients, (iv) expanding global market presence through distributors and
locally focused promotion, and (v) surveying existing and potential clients to
further assess needs and buying practices. The Company also intends to expand
its technical services staff given that in the normal course of business of
responding to client inquiries regarding the Company's products and services
they have identified additional business opportunities in the services sector.

Broaden Range of Services Provided

The Company intends to expand its development capabilities by adding
services that are complementary to its product development and support services.
In addition to offering a broad range of integrated, value-added services that
span the product life cycle from new compound characterizations to market
product compliance and quality control testing, the Company plans to: (i)
provide integrated formulations development services, (ii) refine current in
vitro sampling methodologies, and (iii) broaden the range of services provided
in connection with clinical trials. Increasing the array of services offered to
clients is intended to enhance the Company's reputation for providing a turnkey
approach to accurately and quickly meet product development challenges.

Expand Geographically

The Company intends to supplement its internal growth through the opening
of offices in strategic locations. The Company believes that these offices will
be valuable in developing and maintaining important client relationships. The
Company believes that establishing a presence in certain domestic and
international markets will enable it to more effectively compete for services
from worldwide pharmaceutical, medical device and biotechnology customers that
require a rapid turnaround. The Company intends to add facilities on the West
Coast, as well as in targeted international markets. Adding facilities outside
the United States will allow the Company to provide analytical services nearer
to clinical sites and major pharmaceutical research centers located in
international markets, without certain regulatory restrictions applicable to
delivery and testing of substances in the United States. Geographic expansion
may be accomplished by internal growth, acquisitions or joint ventures.

Identify and Effect Key Acquisitions

The Company believes that significant acquisition opportunities exist in
the CRO industry due to its highly fragmented nature. The Company intends to
focus on acquisitions of businesses that would expand its geographic presence,
add to its clinical expertise in sectors in which it has significant experience
and broaden its range of services. As part of its business strategy and in a
continuing effort to enhance its capabilities to serve the global needs of its
clients, the Company is looking at strategic acquisitions on an ongoing basis.
In addition to considering the business of the candidate, the Company evaluates
the ease with which an acquisition candidate may be integrated into the
Company's organizational structure.

OPERATING STRATEGIES

The Company's operating strategies are derived from a strong base of
expertise in analytical chemistry, obtained from not only its role as a
manufacturer of state of the art instrumentation but also as a provider of
contract laboratory services. This dual role strongly differentiates the Company
from its competitors. The Company believes that among CROs that provide
statistical, clinical, and medical services, the Company is the only one that
designs and sells analytical instrumentation. Within the analytical instruments
business, the

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Company believes it is one of very few firms to maintain a separate business
unit devoted to contract analytical services under the regulatory framework of
GLP's and GMP's. The Company's operating strategies consist of the following
elements:

Continue to Focus on Analytical Chemistry

The Company will remain focused on selling products and services related to
analytical chemistry. The Company believes that this area has not been
emphasized by many of the larger CROs and that they presently do not have the
personnel or the scientific expertise to be successful in this field. The
Company has developed and will continue to develop methodologies capable of
measuring new drug substances. The Company believes that its capabilities to
make highly technical measurements in blood plasma, tissue or dosage forms, for
example, represents a significant competitive advantage.

Enhance the Synergy between Products and Services

The Company will continue to provide analytical chemistry solutions by
selling innovative products and services. Each of these business units
complements and enhances the other. For example, the Company has received
certain contract service work due to the Company's expertise in selling and
supporting liquid chromatography products. Conversely, the timely completion of
a contracted study in the services unit has subsequently led to purchase orders
from the same clients for the Company's products.

Further Emphasize High-End Assays

The Company will continue to focus on performing sophisticated analytical
techniques, distinguishing the Company from entities performing commodity-like
services. Clients with a need for specialized, sophisticated, instrumental
techniques with extremely high sensitivity seek out highly qualified CROs such
as the Company in order to maximize their likelihood of success. Many of the
newer compounds being developed are pharmacologically active at much lower
concentrations than before and require more sophisticated analytical techniques.
Due to the expertise of the Company's staff, and the sophisticated
instrumentation which it employs in its services contracts, the Company will
continue to take advantage of these high-end opportunities.

Continue to Invest in State of the Art Instrumentation

The Company has historically and will continue to invest in technologies
and products that are needed to support its customers' analytical chemistry
needs. The Company's stature in the contract services business and its ability
to distinguish itself from its competitors will be enhanced by (i) providing
more capacity through purchasing automated sample analysis systems (robotics),
(ii) increasing the number of LC/MS and GC/MS systems, (iii) increasing the
on-site storage space for stability samples, and (iv) adding other
instrument-based techniques.

Enhance Client Relationships

The Company prides itself on its strong relationships with its clients. The
Company believes that its continuous communication with clients both on the
product support side and throughout the testing process has been critical to its
success. The Company believes many clients view the Company's staff as a virtual
extension of their own department.

Emphasize the "Annuity Effect"

The Company will continue its close working relationships with large
innovator pharmaceutical companies by developing analytical methods for new drug
candidates as early as possible in the drug development process. Upon acceptance
of the new method by the client, the Company becomes the preferred provider of
the testing services and can leverage its development expenses over the analyses
of thousands of specimens generated from dozens of clinical trials and stability
testing protocols. The Company thereby generates a continuing revenue stream
extending over not only the drug development process but also over the

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post-approval phase, where demand for testing services can actually increase as
reformulations occur and as other clients use the Company's method for drug
interaction studies.

THE COMPANY'S ROLE IN THE DRUG DEVELOPMENT PROCESS

Overview of Process

The Company has 23 years of experience in developing methodology to support
the analytical chemistry requirements of the drug discovery process. Under the
United States regulatory system, the development process for new pharmaceutical
products can be divided into three distinct phases. The preclinical phase
involves the discovery, characterization, product formulation and animal testing
necessary to prepare an Investigational New Drug ("IND") exemption for
submission to the FDA. The IND must be accepted by the FDA before the drug can
be tested in humans. The second, or clinical phase of development follows a
successful IND submission and involves the activities necessary to demonstrate
the safety, tolerability, efficacy and dosage of the substance in humans, as
well as the ability to produce the substance in accordance with the FDA's GMP
regulations. Data from these activities are compiled in a New Drug Application
("NDA"), or for biotechnology products, a Product License Application ("PLA"),
for submission to the FDA requesting approval to market the drug. The third
phase follows FDA approval of the NDA, or PLA, and involves the production and
continued analytical and clinical monitoring of the drug. The post-approval
phase also involves the development and regulatory approval of product
modifications and line extensions, including improved dosage forms.

The drug development process may be illustrated schematically as set forth
below. Although the schematic is organized in a linear fashion, many of the
stages of the process frequently overlap.

FLOW CHART

[Enlarge/Download Table]

------------- -------------- ------------------ --------------
| | | UNDERLYING | | DRUG | | IN VITRO |
| GENETIC | | BIOCHEMISTRY | | DISCOVERY | | AND IN VIVO |
| INFORMATION |--->| OF DISEASE |--->|(LEAD GENERATION) |--->| PRECLINICAL |-----------
| | | | | | | RESEARCH | |
------------- -------------- ------------------ -------------- |
---------------------------------------------------------------------------------------------
| ------------- -------------- ------------------- -------------
| | |IND | | | REFINED | | |NDA
| | PRELIMINARY | | PHASE I | | FORMULATION | | PHASE II |
| |FORMULATIONS | | TRIALS | | AND | | AND III |
-->| DEVELOPMENT |--->|(FIRST IN MAN)|--->| MANUFACTURING |--->| TRIALS |-----------
| | | | |(STABILITY TESTING)| | | |
------------- -------------- ------------------- ------------- |
---------------------------------------------------------------------------------------------
| -------- ------------------- ------------------- ------------------
| | | | | | LINE | | GENERIC |
| | FDA | | MARKETING | | EXTENSIONS | | COMPETITION |
-->|APPROVAL|--->| (QUALITY CONTROL) |--->| (NEW INDICATIONS) |--->| (BIO-EQUIVALENCE)|
-------- ------------------- ------------------- ------------------

--------
| |
| | Areas where the Company's products and services currently apply
--------

--------
| |
| | Areas where the Company's technology is being explored
--------

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Process Specifics and the Company's Role

The Preclinical Phase. The development of a new pharmaceutical agent begins
with the discovery or synthesis of an array of new molecules which may influence
a specific target such as a membrane bound receptor or an enzyme involved in the
disease under study. These libraries of molecules are screened for
pharmacological activity using various in vitro and in vivo models, with the
goal of selecting relatively few "leads" for further development. Once the
pharmacologically active molecule is fully characterized, the agent is analyzed
to confirm the integrity and quality of material produced. Development of the
initial dosage forms to be used in clinical trials is completed, together with
analytical chemistry protocols to determine their stability. Upon successful
completion of preclinical safety and efficacy studies in animals, an IND
submission is prepared and provided to the FDA for review prior to human
clinical trials.

Most of the Company's products are designed for use in the preclinical
phase of drug development, and the Company also provides its bioanalytical
services in this phase. A good example of the role of the Company's products in
the preclinical phase is the utilization of Company technology in the
development of drug substances impacting the central nervous system
neurotransmitters, including serotonin, dopamine, norepinephrine, and
acetylcholine. These drugs are used in the treatment of such conditions as
depression, Parkinson's disease, schizophrenia and Alzheimer's disease. The
Company's chromatography products have been used extensively, for example, to
study the influence of reuptake inhibitors on serotonin uptake and release in
CNS programs at universities and a major pharmaceutical company well before
1985. The Company believes that the synergy between the Company's
instrumentation products and services has been a factor in the Company being
selected by major pharmaceutical companies to determine new drug candidates in
thousands of Phase I-III clinical specimens.

The Clinical Phase. Following successful submission of an IND application,
the sponsor is permitted to conduct Phase I human clinical trials in a limited
number of healthy individuals to determine the drug's safety and tolerability.
This work requires bioanalytical assays to determine the availability and
metabolism of the active ingredient following administration. Expertise in
method development and validation is essential for this phase, particularly with
new chemical entities. Phase II clinical trials involve administering the drug
to individuals who suffer from the target disease or condition to determine the
drug's potential effectiveness and ideal dose. When further safety (toxicology),
tolerability and an ideal dosing regimen have been established, Phase III
clinical trials involving large numbers of patients are conducted to verify
efficacy and safety. After the successful completion of Phase III clinical
trials, the sponsor of the new drug submits an NDA, or PLA, to the FDA
requesting that the product be approved for marketing.

The Company's bioanalytical work is most intensive per individual in Phase
I studies where relatively few individuals are dosed. In Phase II and III the
number of individuals treated accelerates rapidly, but the number of blood
samples drawn per patient declines. Phase II and III studies are carried out
over several years with what has become a well established analytical protocol.
To maintain consistency in the analytical data, it is unusual for a sponsor to
change laboratories unless there are problems in the quality or timely delivery
of results. This tendency provides the "annuity effect" described previously.

One area of special interest to the Company is drug interaction studies.
With increasing numbers of patients receiving multiple drug therapy, it is
critical that the impact of each drug be assessed with respect to its influence
on the effectiveness and toxicology of other drugs dosed simultaneously. This
complicates and often extends clinical trials. Frequently, drugs from different
manufacturers will be used together. A CRO such as the Company can provide
services to several firms simultaneously when a potential synergy exists between
their respective products. Such firms are often competitors in one therapeutic
area and complementors in another area (e.g. the "cocktail" approach to HIV
therapy). In such a case, a given assay technology might well be of interest to
a number of clients, spreading the assay development cost. More importantly,
drug interaction studies lead to new clients in a much more cost effective
manner than advertising or an outside sales force.

The Post-approval Phase. Following approval, the drug manufacturer must
comply with quality assurance and quality control requirements throughout
production and must continue chemical analytical and stability studies of the
drug in commercial production to continue to validate production processes and
confirm

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product shelf life. The drug manufacturer's raw materials must be analyzed prior
to use in production, and samples from each manufactured batch must be tested
prior to release of the batch for distribution to the public. The Company also
provides its bioanalytical services in all areas during the post-approval phase,
concentrating on bioequivalence studies of new formulations, line extensions,
new disease indications and drug interaction studies.

COMPANY PRODUCTS AND SERVICES

Overview

The Company's products and services may be illustrated schematically as set
forth below.

[A FLOW CHART SCHEMATIC OF THE COMPANY'S SERVICES AND PRODUCTS, INDICATING THE
TECHNOLOGY INVOLVED IN THE SERVICES AND PRODUCTS WILL BE INSERTED HERE.]

The Company provides products and procedures for the $11 billion analytical
instrument industry, and also provides a broad array of bioanalytical services
in all phases of the drug development process. Over its 23 year history, the
Company has developed expertise in a number of core scientific technologies
which it has utilized in developing state-of-the-art procedures designed to
determine amounts of chemical substances in complex materials. These
technologies include: liquid chromatography, electrochemistry, solid phase
extraction, mass spectrometry, enzymology and fluorescence. The Company also
uses its expertise in analytical chemistry to provide a wide range of
bioanalytical services to pharmaceutical companies, academic institutions and
others involved in pharmaceutical research and development.

Products

The Company designs, manufactures and markets a broad range of products and
related scientific procedures that detect and quantify the presence of chemicals
in certain substances. The Company's products utilize state-of-the-art
scientific technology including liquid chromatography, electrochemistry and in
vivo sampling instrumentation. Presently, the Company's products and procedures
include:

- Bioanalytical separation instrumentation that utilizes liquid
chromatography and Windows(R) software to detect low concentrations of
substances in biological fluids and tissues.

- A wide-range of chemical analyzers that utilize scientific technologies
including electrochemistry, liquid chromatography and enzymology to
analyze levels of chemicals such as acetylcholine, choline, serotonin and
dopamine in biological materials. These instruments assist scientists in
the study of, among other things, Alzheimer's disease, cocaine addiction
and the effects of chemical warfare agents and strokes.

- Diagnostic kits and procedures, designed to utilize the Company's
instrumentation, that, among other things, enable clinical laboratories
and pharmaceutical researchers to determine the presence of

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multiple drugs in blood plasma and to measure neurotransmitters and their
metabolites in plasma and urine. These kits and procedures assist
researchers in developing new drugs for diseases such as AIDS and
cardiovascular disease.

- A line of miniaturized in vivo sampling devices, marketed to veterinary
and animal research centers, pharmaceutical companies and medical
research centers, which assist in the study of a number of medical
conditions, including stroke, depression, Parkinson's disease, diabetes
and osteoporosis.

The chart below sets forth the Company's product categories, the technology
supporting each category and the applications of each category.

[Enlarge/Download Table]

--------------------------------------------------------------------------------------------------------
PRODUCT/PROCEDURE ENABLING TECHNOLOGY APPLICATION(S)
--------------------------------------------------------------------------------------------------------
Bioanalytical Separation - Liquid chromatography Determining low concentrations
Instrumentation - High pressure digitally of substances in biological
controlled fluids and tissues
metering pumps
- Electrochemical and optical
detectors
- Customized Windows(R) software
- Customized Internet
applications
--------------------------------------------------------------------------------------------------------
Electrochemical Analyzers and - Electrochemistry Development of biosensors for
Accessories - Real time control and data substances, such as glucose,
acquisition software lactate, glutamate; development
- Customized Windows(R) software of batteries for electronics
- Customized Internet such as pacemakers; study of
applications corrosion of implants
--------------------------------------------------------------------------------------------------------
Acetylcholine/Choline Analyzer - Liquid chromatography Studies of Alzheimer's disease;
- Enzymology chemical warfare agents; and
- Electrochemistry infant formula
--------------------------------------------------------------------------------------------------------
Serotonin and Dopamine Analyzer - Liquid chromatography Developing serotonin reuptake
- Electrochemistry inhibitors; studies of the
mechanism of cocaine addiction
--------------------------------------------------------------------------------------------------------
Amino Acid Analyzer - Derivatization chemistry Studies of aspartame, glutamate,
- Liquid chromatography and GABA in the brain; research
- Electrochemistry and/or to minimize the impact of stroke
- Fluorescence and other ischemic events in the
brain
--------------------------------------------------------------------------------------------------------
In vivo sampling devices - Hydrophilic membrane fibers Following pharmacokinetics in
("artificial blood vessels") - Digitally controlled pumping vivo; monitoring glucose;
and auxiliary instrumentation systems, miniature fraction neurotransmitters, peptides, and
collectors, and valves amino acids; studies of stroke,
depression, Parkinson's Disease,
diabetes and calcium loss
related to osteoporosis and
weightlessness; reducing the use
of animals in research
--------------------------------------------------------------------------------------------------------
Kits for clinical measurement of - Robotics Evaluating cardiovascular
neurotransmitters and - Liquid chromatography disease, inborn errors of
homocysteine in human blood - Electrochemistry metabolism, and cancers of
and urine - Customized Windows(R) software neurological origin
--------------------------------------------------------------------------------------------------------
Simultaneous determination of - Robotics Cocktail therapy for AIDS; drug
multiple drugs in blood plasma - Solid phase extraction interaction studies during
- Liquid chromatography clinical trials
- Mass spectrometry
--------------------------------------------------------------------------------------------------------
Vital signs monitoring - Electrocardiology (ECG) ECG, respiration, blood
- Temperature transducers pressure, and temperature
- Real time software monitoring in veterinary clinics
and toxicology departments in
pharmaceutical companies
--------------------------------------------------------------------------------------------------------

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Services

The Company provides a wide variety of services to pharmaceutical
companies, medical device manufacturers, medical and research centers, academic
institutions, and others. The Company's services unit has grown rapidly over the
last several years. The Company began providing services primarily in response
to requests from customers who had used or were using the Company's products. As
the Company's reputation has grown, the Company's customers increasingly have
drawn on the Company's expertise in analytical chemistry to solve complex
problems which arise in the course of drug research and development. The
Company's range of services now include: method development and validation;
product characterization; stability testing; bioanalytical testing; diagnostic
testing and in vivo sampling. The Company is poised to utilize its expertise to
provide a greater volume and broader array of services. These services involve
the application of the Company's expertise in analytical chemistry to a broad
range of challenging and complex issues, and include the services described
below.

- Method Development and Validation. The Company develops and validates
methods used in a broad range of laboratory testing necessary to
determine physical or chemical characteristics of compounds and finished
dosage forms. Analytical methods are developed to demonstrate potency,
purity, stability or physical attributes. These methods are validated to
ensure that the data generated are accurate, precise, reproducible and
reliable and are used throughout the drug development process and in
product support testing. Of the Company's 160 employees as of September
30, 1997, more than 30 of the Company's scientists (including nine who
hold Ph.D. degrees) are experienced with method development and
validation.

- Product Characterization. The Company has the expertise and instruments
required to identify and characterize a broad range of chemical entities.
Characterization analysis identifies the chemical composition, structure
and physical properties of a compound, and characterization data forms a
significant portion of a regulatory application. The Company uses
numerous techniques to characterize the compound, including
chromatography, spectroscopy, electrochemistry and other physical
chemistry techniques. Once appropriate test methods are developed and
validated, and appropriate reference standards (highly pure samples) are
characterized and certified, the Company can assist clients by routinely
testing compounds for clinical and commercial use.

- Stability Testing. The Company provides stability testing and secure
storage facilities necessary to establish and confirm product purity,
potency and other shelf-life characteristics. Stability testing is
required at all phases of product development, from dosage form
development through commercial production, to confirm shelf life of each
manufactured batch. The Company maintains a four-chamber, ICH validated
controlled climate GMP facility. FDA regulations require that samples of
clinical and commercial products placed in stability chambers be analyzed
in a timely fashion after scheduled "pull points" occur, based on the
date of manufacture.

- Bioanalytical Testing. The Company offers bioanalytical testing services
to support clinical trials, analyzing plasma samples to characterize the
drug's concentration and determine the rate of absorption and
elimination. Bioanalytical studies of new drugs often present challenging
and complex issues, with products being metabolized into multiple active
and inactive forms. The Company works with its clients to develop and
validate analytical methods to permit detection and measurement of the
various components to trace levels. In some cases clients expect the
Company to take responsibility to develop methodology and in other cases
methodology is transferred from the client and refined and validated by
the Company personnel. The most common technology used in such studies is
liquid chromatography coupled with various detectors, including mass
spectrometry as well as optical and electrochemical devices.

- Diagnostic Testing. The Company has manufactured bioanalytical chemistry
products since its start in 1974. The Company produces fully automated,
networkable state-of-the-art liquid chromatographs and electrochemical
analyzers based on Windows(R)software. The Company has recently developed
and now produces a line of diagnostic kits designed to fit its
instrumentation. These kits help measure neurotransmitters and their
metabolites and homocysteine, an experimental cardiovascular disease

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indicator in plasma and urine. These measurement processes are often
performed by Company personnel utilizing Company products.

- In Vivo Sampling. The Company pioneered and has commercialized
miniaturized in vivo sampling methodology, which involves the continuous
monitoring of chemical changes in live animals. This technology is sold
as both a service and a line of products. The Company is aggressively
adding new components to this line, with the goal of selling complete,
automated sampling systems. Target markets include veterinary and animal
research centers, pharmaceutical companies and medical research centers.
The Company has received two significant Phase II SBIR grants that
involve subcontracts with Purdue University and the University of Kansas
for the purpose of exploiting this emerging technology.

- Formulation Development Services. In the future, the Company plans to
provide integrated formulation development services, enabling the Company
to take a client's compound and develop a safe and stable product with
desired characteristics. The Company believes its strong academic
connections to Purdue and other universities, formulation expertise and
extensive analytical capabilities position the Company to provide a
significant contribution to this area.

CLIENTS

Over the past five years, the Company regularly has provided services and
products to all of the top 25 pharmaceutical companies in the world, as ranked
by 1996 research and development spending. In fiscal 1997, the Company estimates
that more than one-third of its total revenue was derived from these companies.
In addition, the Company products are purchased by the vast majority of medical
schools in North America, Europe and Asia. In fiscal 1997, the Company provided
products and services to approximately 300 institutions, including some of the
largest United States, European and Japanese drug companies. Approximately 34%
of the Company's revenues are generated from customers located outside the
United States.

The Company believes that a concentration of business among certain large
clients is not uncommon in the CRO industry. The Company has experienced such
concentration in the past and may do so again in the future. During 1996, four
operating groups (Quality Control, Analytical Research and Development, Clinical
Pharmacokinetics, and Drug Metabolism) of Pfizer, Inc., a major United States
pharmaceutical company, in the aggregate accounted for approximately 18% of the
Company's total revenues. These sales were derived from both the products and
the services units of the Company. During 1997, Pfizer, Inc. accounted for
approximately 21% of the Company's total revenues. Most of these sales fell
under approximately 80 contracts the Company has or had with Pfizer, Inc., the
largest of which totaled approximately $400,000. Although the Company strives to
reduce its reliance on a limited number of major clients, there can be no
assurance that the Company's business will not be dependent upon certain major
clients, the loss of which could have a material adverse effect on the Company.
In addition, due to the project-oriented nature of the Company's business, there
can be no assurance that significant clients in any one period will continue to
be significant clients in other periods. See "Risk Factors -- Dependence on
Certain Industries and Clients."

SALES AND MARKETING

Marketing and sales initiatives have been created to address both market
needs and economic reality. Services have grown primarily through direct,
internal recommendations among major pharmaceutical manufacturers. Frequently,
these customers have had prior relationships with the Company's staff and
positive experiences with the Company's products and services. The Company
recognizes that its growth and continued customer satisfaction are dependent
upon its ability to continually improve its sales and marketing functions.

In North America, products are sold directly to the end user. The Company
has approximately 20 personnel selling a range of products and an equal number
providing technical and development support. All staff members are technically
trained and all function in both capacities. The Company has also established a
highly professional collection of catalogs, training and technical support
literature, workshops, and academic publications. The Company's peer-reviewed
journal, Current Separations, describes independent research in

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technologies of interest to the Company's customers, and is distributed to
18,500 readers worldwide, many of whom are current or potential customers.

Product sales, marketing and technical support is led from the Company's
main office in West Lafayette, Indiana. The Company maintains an office in New
Jersey with a small sales and technical staff, enabling the Company to
demonstrate its products and present technical workshops near the largest
concentration of key customers. The Company also maintains sales and technical
support capabilities in Massachusetts, North Carolina, Texas, Pennsylvania and
Kansas.

The Company's marketing plan provides for new sales representation in
California and the Midwest, stronger promotion of all product lines, enhanced
workshops, training, and demonstration capabilities in the Company's new
facilities. The Company's marketing and sales strategy is to be more aggressive,
focus on customer needs and further strengthen communications with its markets.
The Company will build on its long history of innovation and technical
excellence.

BAS Technicol, Ltd., a wholly-owned subsidiary of the Company, manages most
sales in Europe, and the Company maintains sales and technical support
capabilities in Belgium. The Company has a network of more than 20 established
distributors covering Japan, the Pacific Basin, South America, the Middle East,
India, South Africa and Eastern Europe. Revenue generated from the Company's
Japanese distributor, BAS Japan, accounted for approximately 12% of the
Company's total revenue for fiscal 1997. Although the Company believes that it
could identify a suitable replacement in the event that BAS Japan discontinues
as the Company's distributor, such an event could have a material adverse effect
on the Company's business, operations and financial condition. See Note 9 of
Notes to Consolidated Financial Statements. All of these distributor
relationships are managed from the Company's headquarters. International growth
is planned through acquisitions, stronger local promotion and significantly
broadening the Company's distributor network.

CONTRACTUAL ARRANGEMENTS

The Company's service contracts typically establish an estimated fee for
identified services. While the Company is performing a contract, clients often
adjust the scope of services to be provided by the Company in light of interim
project results, at which time the amount of fees is adjusted accordingly.
Generally, the Company's fee-for-service contracts are terminable by the client
upon written notice of 30 days or less. The loss of a large contract or the loss
of multiple contracts could adversely affect the Company's future revenue and
profitability. Contracts may be terminated for a variety of reasons, including
the client's decision to forego a particular study, the failure of product
prototypes to satisfy safety requirements and unexpected or undesired results of
product testing. See "Risk Factors -- Client Contracts Terminable Upon Notice"
and "--Dependence on Certain Industries and Clients."

BACKLOG

Backlog for the Company's products consists of booked purchase orders for
products which have not been shipped. The Company rarely has a backlog for its
products of more than one month of sales. Many products are shipped within 24
hours of order receipt. Because the arrangements pursuant to which the Company
provides its services are terminable upon written notice of 30 days or less, the
Company does not calculate backlog for the services it provides and does not
believe that determining such amount would provide a meaningful indicator of the
future performance of its services unit.

COMPETITION

With respect to its products, the Company competes with several large
equipment manufacturers, including Hewlett Packard, Waters Corporation and
Perkin Elmer Corporation. Competitive factors include quality, reliability and
price. The Company believes it competes favorably in its targeted markets
because of its ability to combine quality products with technical assistance and
services to meet customer needs.

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With respect to its services, the Company competes primarily with in-house
research, development, quality control and other support service departments of
pharmaceutical and biotechnology companies, as well as university research
laboratories and teaching hospitals. In addition, there are numerous
full-service CRO's that compete in this industry. The largest CRO competitors
offering similar research services include Covance, Inc., Pharmaceutical Product
Development, Inc., Applied Analytical Industries, Inc., Phoenix International
Life Sciences Inc. and MDS Health Group Ltd. CROs generally compete on the basis
of previous experience, medical and scientific expertise in specific therapeutic
areas, the quality of contract research, the ability to organize and manage
large-scale trials on a global basis, medical database management capabilities,
the ability to provide statistical and regulatory services, the ability to
recruit investigators, the ability to integrate information technology with
systems to improve the efficiency of contract research, an international
presence with strategically located facilities, financial viability and price.

Many of the Company's competitors are much larger and have significantly
greater financial resources than the Company. See "Risk Factors -- Competition."

GOVERNMENT REGULATION

The services performed by the Company are subject to various regulatory
requirements designed to ensure the quality and integrity of pharmaceutical and
diagnostic products, primarily under the Federal Food, Drug and Cosmetic Act and
associated GLP and GMP regulations which are administered by the FDA in
accordance with current industry standards. These regulations apply to all
phases of manufacturing, testing and record keeping, including personnel,
facilities, equipment, control of materials, processes and laboratories,
packaging, labeling and distribution. Noncompliance with GLPs and GMPs by the
Company in a project could result in disqualification of data collected by the
Company in the project. Material violation of GLP or GMP requirements could
result in additional regulatory sanctions, and in severe cases could result in a
discontinuance of selected Company operations, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.

To help assure compliance with applicable regulations, the Company has
established quality assurance controls at its facilities that monitor ongoing
compliance by auditing test data and regularly inspecting facilities, procedures
and other GMP compliance parameters. In addition, FDA regulations and guidelines
serve as a basis for the Company's standard operating procedures, where
applicable. Certain of the Company's development and testing activities are
subject to the Controlled Substances Act, administered by the Drug Enforcement
Agency ("DEA"), which regulates strictly all narcotic and habit-forming
substances. The Company maintains restricted-access facilities and heightened
control procedures for projects involving such substances due to the level of
security and other controls required by the DEA. In addition to FDA regulations,
the Company is subject to other federal and state regulations concerning such
matters as occupational safety and health and protection of the environment.

The Company's activities involve the controlled use of hazardous materials
and chemicals. The Company is subject to foreign, federal, state and local laws
and regulations governing the use, storage, handling and disposal of such
materials and certain waste products. The risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
which could have a material adverse effect on the Company's business and results
of operations. See "Risk Factors -- Dependence on and Possible Adverse Effect of
Government Regulation."

PRODUCT LIABILITY AND INSURANCE

The Company maintains product liability and professional errors and
omissions liability insurance, providing approximately $6.0 million in coverage
on a claims-made basis. In addition, in certain circumstances the Company seeks
to manage its liability risk through contractual provisions with clients
requiring the Company to be indemnified by the client or covered by clients'
product liability insurance policies. In addition, in certain types of
engagements, the Company seeks to limit contractual liability to its clients to
the amount of fees received by the Company. The contractual arrangements are
subject to negotiation with clients and the

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terms and scope of such indemnification, liability limitation and insurance
coverage vary from client to client and from project to project. Although most
of the Company's clients are large, well-capitalized companies, the financial
performance of these indemnities is not secured. Therefore,the Company bears the
risk that the indemnifying party may not have the financial ability to fulfill
its indemnification obligations or that liability would exceed the amount of
applicable insurance. In addition, the Company could be held liable for errors
and omissions in connection with the services it performs. There can be no
assurance that the Company's insurance coverage will be adequate or that
insurance coverage will continue to be available on terms acceptable to the
Company, or that the Company can obtain indemnification arrangements or
otherwise be able to limit its liability risk. See "Risk Factors -- Liability
Risks Related to Products and the Provision of Services."

EMPLOYEES

At September 30, 1997, the Company had 160 full-time employees, 110 of
which hold degrees, including 30 Ph.D.s. The Company believes that its relations
with its employees are good. None of the Company's employees are represented by
a union. The Company's performance depends on its ability to attract and retain
qualified professional, scientific and technical staff. The level of competition
among employers for skilled personnel is high. The Company believes that its
employee benefit plans enhance employee morale, professional commitment and work
productivity and provide an incentive for employees to remain with the Company.
While the Company has not experienced any significant problems in attracting or
retaining qualified staff, there can be no assurance that the Company will be
able to avoid these problems in the future. All employees enter into
confidentiality agreements intended to protect the Company's proprietary
information. See "Risk Factors -- Need to Attract, Develop, Manage and Retain
Professional Staff."

FACILITIES

The Company's principal executive offices are located at 2701 Kent Avenue,
West Lafayette, IN 47906 constituting approximately 100,000 square feet of
operational and administrative space. Purdue University, located in West
Lafayette, Indiana, is exceptionally strong in pharmacy, chemistry, veterinary
medicine, computer science and engineering. Its program in Analytical Chemistry
is ranked among the best in the nation. The Purdue campus provides access to
educational opportunities, high quality consultants, graduates and information
resources. The technically trained staff that the Company requires prefers a
community with the amenities of a first rate university. The Company's record
for obtaining Federal and other grants has enhanced collaborative efforts with
Purdue. The Company maintains offices which provide sales and technical support
services in New Jersey, Pennsylvania and the United Kingdom, and employs sales
and technical support service representatives in North Carolina, Texas and
Belgium. The Company believes that its facilities are adequate for the Company's
operations and that suitable additional space will be available when needed.

INFORMATION SYSTEMS

Although the Company's focus is on providing value-added products and
services, information systems are an important component of the Company's
technological leadership. The Company believes that superior information systems
are essential to expanding its operations and to providing innovative services
to clients. The Company's customized Windows(R)-based software is integral to
many of its products.

The FDA has become increasingly sophisticated with respect to information
systems and the integrity of all forms of data incorporated into regulatory
submissions. Correspondingly, the Company strives to be at the forefront of
nonclinical testing laboratories in validation of hardware and software systems.
The Company's continuing commitment to technological innovations and meeting
changing client and regulatory requirements will drive continuous improvement of
its information systems technology, maintaining a competitive advantage.

LEGAL PROCEEDINGS

The Company from time to time may be involved in various claims and legal
proceedings arising in the ordinary course of business. The Company does not
believe that any pending claims or proceedings, individually or in the
aggregate, would have a material adverse effect on the Company's financial
condition or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company and their ages as of
September 30, 1997 are as follows:

[Enlarge/Download Table]

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

Peter T. Kissinger, Ph.D.(1)(2)........ 52 Chairman of the Board; President; Chief Executive
Officer
Ronald E. Shoup, Ph.D.(2).............. 45 President, Research Services Unit; Vice President,
Research and Development; Director
Craig S. Bruntlett, Ph.D............... 48 Vice President, Electrochemical Products
Donnie A. Evans........................ 51 Vice President, Engineering
Stephen Geary, Ph.D.................... 56 Vice President, United States Sales and Marketing
Candice B. Kissinger................... 45 Vice President, International Marketing; Secretary
and Director
Lina L. Reeves-Kerner.................. 47 Vice President, Human Resources
Michael P. Silvon, Ph.D................ 50 Vice President, Business Development
Denise M. Wallworth, Ph.D.............. 44 Managing Director, BAS Technicol, Ltd.
Douglas P. Wieten...................... 36 Chief Financial Officer, Controller and Treasurer
William E. Baitinger(2)(3)............. 64 Director
Michael K. Campbell(3)................. 46 Director
Thomas A. Hiatt(1)..................... 49 Director
John A. Kraeutler(1)(2)................ 49 Director
William C. Mulligan(1)(3).............. 43 Director
W. Leigh Thompson, Ph.D.(2)............ 59 Director

-------------------------
(1) Member of the Compensation and Incentive Stock Option Committee.

(2) Member of the Executive Committee.

(3) Member of the Audit Committee.

PETER T. KISSINGER, PH.D. founded the Company in 1974 and has served as its
Chairman, President and Chief Executive Officer since 1974. He is also a
part-time Professor of Chemistry at Purdue University where he has been teaching
since 1975. Dr. Kissinger has a Bachelor of Science degree in Analytical
Chemistry from Union College and a Doctorate in Analytical Chemistry from the
University of North Carolina.

RONALD E. SHOUP, PH.D. has been Vice President, Research and Development
since 1983 and President of the Company's research services unit, BAS Analytics,
since 1990. Dr. Shoup has been instrumental in developing many of the Company's
chromatographic applications. Dr. Shoup has a Bachelor of Science degree in
Chemistry and Mathematics, and a Ph.D. in Analytical Chemistry from Purdue
University.

CRAIG S. BRUNTLETT, PH.D. has been Vice President, Electrochemical Products
since 1992 and is responsible for sales, marketing and development of the
Company's electrochemical products. From 1980 to 1990, Dr. Bruntlett was
Director of New Product Development for the Company. Dr. Bruntlett has a
Bachelor of Arts degree in Chemistry and Mathematics from St. Cloud State
University in Minnesota and a Ph.D. in Chemistry from Purdue University.

DONNIE A. EVANS was the Company's first full-time employee beginning as an
electronics engineer in 1978. Since January of 1988, he has been Vice President,
Engineering Services.

STEPHEN GEARY, PH.D. has been Vice President, United States Sales and
Marketing since January 1992. Dr. Geary is responsible for the sales efforts of
the Company's clinical products. Dr. Geary has a Bachelor of Science degree in
Biology and Chemistry from Tufts University, a Masters of Science degree in
Biology from the University of New Hampshire and a Ph.D. in Biochemistry from
Syracuse University.

CANDICE B. KISSINGER has been Vice President, International Sales and
Marketing since July 1981. Mrs. Kissinger developed the Company's international
distribution network and is responsible for managing

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the Company's advertising activities. Mrs. Kissinger has a Bachelor of Science
degree in Microbiology from Ohio Wesleyan University and a Masters of Science
degree in Food Science from the University of Massachusetts. Mrs. Kissinger is
the wife of Dr. Peter T. Kissinger.

LINA L. REEVES-KERNER has been Vice President, Human Resources since 1995
and is responsible for the administrative support functions of the Company,
including shareholder relations, human resources and community relations. From
1980 to 1990 Ms. Reeves-Kerner served as an Administrative Assistant at the
Company. Ms. Reeves-Kerner has a Bachelor of Science degree in Business
Administration from Indiana Wesleyan University.

MICHAEL P. SILVON, PH.D. has been Vice President, Business Development
since March 1997. From August 1996 until January 1997, Dr. Silvon was Manager,
Technical Services for Great Lakes Chemical responsible for commercial technical
support. From December 1994 until August 1996, Dr. Silvon was a self-employed
consultant advising various companies on technical business management. From
October 1993 until December 1994, Dr. Silvon was Vice President Sales and
Marketing at Hi-Port, Inc., a custom formulations and packaging firm in Houston,
Texas. Prior to that period, Dr. Silvon was a Regional Business Manager-Americas
for the Fine Chemicals Business of Imperial Chemical Industries, PLC/Zeneca,
responsible for outsourcing the needs of many major pharmaceutical companies
with key raw materials. Dr. Silvon has his Bachelor in Science degree in
Chemistry from Loyola University of Chicago, a Ph.D. in Chemistry from the
University of Vermont and a Masters in Business Administration from Sacred Heart
University.

DENISE M. WALLWORTH, PH.D. has been Managing Director, BAS Technicol, Ltd.
since March 1995 and is responsible for the Company's operations in the United
Kingdom. Prior to that time she was Managing Director of Technicol Ltd., which
was acquired by the Company in March 1995. Dr. Wallworth has a Bachelor of
Science degree in Chemistry and a Doctorate in Organic Chemistry from the
University of Manchester Institute of Science Technology.

DOUGLAS P. WIETEN has been Chief Financial Officer since September 1997,
corporate Controller since February 1992 and Treasurer since March 1997 and is a
certified public accountant. Prior to that time, Mr. Wieten worked at Ernst &
Whinney (now Ernst & Young LLP), where he had been employed since 1984. Mr.
Wieten has a Bachelor of Science degree in Accounting from Butler University.

WILLIAM E. BAITINGER has served as a director of the Company since 1979.
Mr. Baitinger has been Director of Technology Transfer at Purdue University
since 1988, responsible for all aspects of the program. Mr. Baitinger has a
Bachelor of Science degree in Chemistry and Physics from Marietta College and a
Masters of Science degree in Chemistry from Purdue University.

MICHAEL K. CAMPBELL has served as a director of the Company since 1991. Mr.
Campbell has been the President and Chief Executive Officer of Powerway, Inc., a
software company, since January 1993. From January 1992 until January 1993, Mr.
Campbell was Chief Financial Officer of Hurco Companies, Inc. and was president
of Hurco Manufacturing, its largest division. Mr. Campbell has a Bachelor of
Science degree in accounting from the University of Southern Indiana.

THOMAS A. HIATT has served as a director of the Company since 1991. Mr.
Hiatt has been general partner of Middlewest Ventures, a venture capital firm,
since 1986. Mr. Hiatt has a Bachelor of Arts degree in Political Science from
Wabash College and a Master of Science degree in Management from the
Massachusetts Institute of Technology. Mr. Hiatt is also a director of Fifth
Third Bank of Central Indiana, Isolab, Inc., PackageNet, Inc. and Powerway, Inc.

JOHN A. KRAEUTLER has served as a director of the Company since January
1997. Mr. Kraeutler has been President and Chief Operating Officer of Meridian
Diagnostics, Inc. since August 1992 and is also a director. Prior to that time,
Mr. Kraeutler was Executive Vice President and Chief Operating Officer of
Meridian Diagnostics, Inc. Mr. Kraeutler has a Bachelor of Science degree in
Biology from Fairleigh Dickinson University and a Masters of Science degree in
Biology and a Masters in Business Administration from Seton Hall University.

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WILLIAM C. MULLIGAN has served as a director of the Company since 1991. Mr.
Mulligan has been the managing director of Primus Venture Partners, a venture
capital firm, since January 1992. Mr. Mulligan has a Bachelor of Arts degree in
Economics from Denison University and a Masters in Business Administration from
the University of Chicago. Mr. Mulligan is also a director of Universal
Electronics.

W. LEIGH THOMPSON, PH.D., M.D., has served as a director of the Company
since January 1997. Since 1995, Dr. Thompson has been the chief executive
officer of Profound Quality Resources, Inc., a world-wide scientific consulting
firm. Prior to 1995, Dr. Thompson held various positions at Lilly Research
Laboratories. Dr. Thompson has a Bachelor of Science degree in Biology from the
College of Charleston, a Masters of Science and a Doctorate in Pharmacology from
the Medical University of South Carolina and a Medical Doctor degree from The
Johns Hopkins University. Dr. Thompson is also a director of Chrysalis
International Corporation, Corvas International, Inc., GeneMedicine, Inc., La
Jolla Pharmaceutical Company, Medarex, Inc., Ophidian Pharmaceuticals, Inc. and
Orphan Medical, Inc.

All directors are elected at the annual meeting of shareholders for a term
of one year and hold office until the election and qualification of their
successors at the next annual meeting of shareholders or until their earlier
resignation or removal. Officers of the Company serve at the discretion of the
Board of Directors.

DIRECTOR COMMITTEES

The Board of Directors has established an Audit Committee, a Compensation
and Incentive Stock Option Committee (the "Compensation Committee") and an
Executive Committee. The Audit Committee is responsible for recommending to the
Board of Directors the engagement of the independent auditors of the Company and
reviewing with the independent auditors the scope and results of the audits, the
internal accounting controls of the Company, and audit practices. Messrs.
Baitinger, Campbell and Mulligan serve on the Audit Committee. The Compensation
Committee is responsible for reviewing and approving all compensation
arrangements for the officers of the Company and for administering the Company's
Option Plans. See "Management -- Option Plans." Messrs. Kissinger, Hiatt,
Kraeutler and Mulligan serve on the Compensation and Incentive Stock Option
Committee. The Executive Committee may exercise all of the authority of the
Board of Directors, subject to certain limitations with respect to payment of
dividends, filling of vacancies on the Board, amendment of the Articles of
Incorporation or Bylaws, and issuance of shares. Messrs. Kissinger, Shoup,
Baitinger, Kraeutler and Thompson serve on the Executive Committee.

DIRECTOR COMPENSATION

Directors who are not employees of the Company, other than Messrs. Hiatt
and Mulligan, receive $500 for each Board meeting attended, plus out-of-pocket
expenses incurred in connection with attendance at such meetings. Dr. Thompson
receives an additional $6,000 annually as compensation for the services he
renders as a consultant to the Company. See "Management -- Scientific Advisory
Board." Directors who are employees of the Company do not receive any additional
compensation for their services as directors.

SCIENTIFIC ADVISORY BOARD

In 1985, the Company established a Scientific Advisory Board to assist the
Company in its research and development activities. The Scientific Advisory
Board is comprised of distinguished scientists from outside the Company who have
significant accomplishments in areas of science and technology that are
important to the Company's future. The Scientific Advisory Board interacts with
the Company's scientific and management staff. The following individuals are the
current members of the Scientific Advisory Board:

DANIEL W. ARMSTRONG, PH.D. is the Curators' Distinguished Professor of
Chemistry at the University of Missouri-Rolla. He is the Editor for Chirality;
Section Editor for Amino Acids; on the Advisory Board for Analytical Chemistry;
and is on the Editorial Board of several other journals. He is the founder and
first director of the Center for Environmental Science and Technology. He is on
the Board of Directors of Advanced Separation Technologies, has six patents and
approximately 250 publications. He received his Ph.D. in Chemistry from Texas
A&M University in 1977.

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R. GRAHAM COOKS, PH.D., is Henry Bohn Hass Distinguished Professor of
Chemistry at Purdue University. He received his Bachelor of Science degree at
the University of Natal, South Africa, in 1959; his Masters of Science and his
Doctorate from the above in 1963 and 1966, respectively, and his Doctorate from
Cambridge University in Great Britain in 1976. Prof. Cooks currently serves on
the editorial boards of ten scientific journals. He has been honored with Purdue
Cancer Research Award (1983), ACS Analytical Divisions 1984 Chemical
Instrumentation Award, Thomson Medal for International Service to Mass
Spectrometry (1985), Herbert McCoy Award (1990), NSF Special Creativity Award
(1990 & 1995), ACS award for Mass Spectrometry (1991), and ACS Award for
Analytical Chemistry (1997). He has published more than 500 scientific papers
since 1967.

WILLIAM R. HEINEMAN, PH.D., is Distinguished Research Professor in the
Department of Chemistry at the University of Cincinnati where he has served on
the faculty since 1972. He received his Doctorate in Chemistry from the
University of North Carolina in 1968. Dr. Heineman has served on the
editorial/advisory boards of Analytical Chemistry, The Analyst, Selective
Electrode Reviews, Encyclopedia of Analytical Science, Fresenius Journal of
Analytical Chemistry, Quimica Analitica, Biosensors and Bioelectronics,
Analytica Chimica Acta, and Applied Biochemistry and Biotechnology. He has
received numerous awards including the Alexander von Humboldt Senior Research
Award for U.S. Scientists, the Charles N. Reilley Award in Electroanalytical
Chemistry, and the Division of Analytical Chemistry Award for Excellence in
Teaching from the American Chemical Society. He is the Chair of the Division of
Analytical Chemistry of the American Chemical Society and a cofounder and
President of the Society for Electroanalytical Chemistry.

JEAN-MICHEL KAUFFMAN, PH.D., is Professor of Analytical Chemistry at the
Pharmaceutical Institute, University of Brussels (ULB). He received his
undergraduate degree in Pharmacy and his Doctorate in Pharmaceutical Sciences
from ULB in 1977 and 1983, respectively. Dr. Kauffman is Vice President of the
Belgian Society of Pharmaceutical Sciences and Treasurer of the International
Bioelectrochemical Society. He is Editor in Chief of the journal Talanta and
serves on five other editorial boards. Dr. Kauffman's research focuses on
pharmaceutical analysis, biosensors, and electrochemical measurement techniques.
He has published 19 review chapters and 105 scientific journal articles.

SUSAN M. LUNTE, PH.D., is Associate Professor of Pharmaceutical Chemistry
and Courtesy Associate Professor of Chemistry at the University of Kansas. She
received her Doctorate in Analytical Chemistry in 1984 from Purdue University.
She was a research scientist at Procter & Gamble, Cincinnati, OH from 1984 until
1987 when she went to the University of Kansas. Dr. Lunte has been associated
with the Center for Bioanalytical Research (CBAR) at the University of Kansas
since 1987 and served as Associate Director and Director of that center from
1994 to early 1997. Dr. Lunte serves on the editorial advisory boards of
Analytical Proceedings and Pharmaceutical Research and in 1997 was the recipient
of the Agnes Fay Morgan Research Award for Women in Chemistry from Iota Sigma
Pi, an NSF CAREER Award, and the University of Kansas Graduate Student Mentoring
Award. She is currently chair-elect of the Analytical and Pharmaceutical Quality
section of the American Association of Pharmaceutical Scientists and will serve
as chair next year.

MARK E. MEYERHOFF, PH.D. is Professor of Chemistry and Associate Chair for
Graduate Affairs in the Department of Chemistry at the University of Michigan.
He has active research programs in the areas of electrochemical sensor design,
novel immunoassay systems, and new stationary phases for liquid chromatography.
He received his Doctorate from the State University of New York at Buffalo in
1979. Since joining the faculty at Michigan, he and his collaborators have
authored more than 170 original research papers. Professor Meyerhoff serves on
the editorial/advisory boards of Biosensors & Bioelectronics; Electroanalysis;
Analytica Chimica Acta, and Applied Biochemistry and Biotechnology. He also
serves on Scientific Advisory Boards for Medtronics Blood Management,
Instrumentation Laboratory Sensor Systems, GDS Technologies, and Selective
Technologies.

W. LEIGH THOMPSON, PH.D., M.D., is retired from Eli Lilly and Company where
he served as Director of Clinical Investigation, Executive Vice President of
Lilly Research Laboratories and Chief Scientific Officer. Prior to joining Eli
Lilly in 1982, Dr. Thompson served as a Professor of Medicine at Case Western
University from 1974 until 1982, where he founded programs in clinical
pharmacology and critical care medicine. He directed live telecasts for
continuing education, developed the Northeast Ohio Poison Control Center,

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Cleveland Drug Analysis Laboratory, and University Hospitals Drug Information
Center. As an Assistant Professor of Medicine and of Pharmaceutical and
Experimental Therapeutics at Johns Hopkins, Dr. Thompson started the advanced
nurse practitioner program and initiated computer-assisted instruction in
pharmacokinetics. He is an honorary Life Member and Past President of the
Society of Critical Care Medicine and is co-editor of the Textbook of Critical
Care and Critical Care: State of the Art.

Each of the Scientific Advisory Board members is employed by an employer
other than the Company and may have commitments to, or consulting or advisory
contracts with, other entities that may conflict or compete with his or her
obligations with the Company. Generally, members of the Scientific Advisory
Board are not expected to devote a substantial portion of their time to Company
matters.

The members of the Scientific Advisory Board do not receive any
compensation in connection with attending meetings of the Scientific Advisory
Board. They do, however, from time to time, receive compensation in connection
with consulting services they render to the Company. In fiscal 1997 Dr. Thompson
received $6,000 for consulting service rendered to the Company, and no other
member of the Scientific Advisory Board received in excess of $1,500 for
consulting services.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation provided by the Company to,
or for the account of, the Chief Executive Officer of the Company and the only
other executive officer of the Company who had annual compensation in excess of
$100,000 (the "Named Executive Officers") for the years ended September 30,
1995, 1996 and 1997.

[Enlarge/Download Table]

ANNUAL COMPENSATION
------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION(S) FISCAL YEAR SALARY BONUS COMPENSATION
------------------------------ ----------- ------ ----- ------------

Peter T. Kissinger, Ph.D............................ 1997 $85,000 $21,250 $25,380(1)
Chairman of the Board; President 1996 $85,000 $ 4,250 $26,788(1)
and Chief Executive Officer 1995 $85,000 $21,250 $26,134(1)
Ronald E. Shoup, Ph.D. ............................. 1997 $84,254 $22,500 $ 4,850(2)
President, Research Services Unit; Vice President, 1996 $78,431 $ 3,932 $ 5,113(2)
Research and Development; Director 1995 $73,500 $18,375 $ 4,410(2)

-------------------------
(1) Includes $20,865 of premiums paid on a life insurance policy on the lives of
Dr. Kissinger and Mrs. Kissinger, the beneficiary of which is a trust
established for their benefit, and contributions to the Company's 401(k)
plan on Dr. Kissinger's behalf.

(2) Represents contributions to the Company's 401(k) plan on Dr. Shoup's behalf.

INCENTIVE PLAN

The Company has an incentive plan for its executive officers, the purpose
of which is to strengthen the financial condition of the Company by providing an
incentive bonus to its executive officers based upon the Company's pre-tax net
income. If the Company's pre-tax net income, calculated before the payment of
any bonuses, exceeds $500,000, each executive officer receives a bonus equal to
5% of his or her annual salary. If the Company's pre-tax net income, calculated
before the payment of any bonuses, exceeds $750,000, $1 million or $1.25
million, each executive officer will receive a bonus equal to 15%, 20% or 25%,
respectively, of his or her annual salary. In fiscal 1997, each executive
officer received a bonus equal to 25% of his or her annual salary.

OPTION PLANS

A total of 95,000 Common Shares have been reserved for issuance under the
Company's 1997 Employee Option Plan adopted October 23, 1997 and a total of
5,000 Common Shares have been reserved for issuance under the Company's 1997
Director Option Plan, of which options to purchase an aggregate of 35,000 and

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4,000 Common Shares, respectively, have been granted at an exercise price equal
to the public offering price set forth on the cover page of this Prospectus. In
addition, at the date of this Prospectus options to purchase a total of 245,585
Common Shares were outstanding under the 1990 Employee Option Plan at a weighted
average exercise price of $1.34 per share, and 27,086 Common Shares were
outstanding under a Director Option Plan, at an exercise price of $0.66 per
share. No further options may be granted under the 1990 Employee Option Plan or
the 1990 Director Option Plan.

The 1990 and 1997 Employee Option Plans (the "Employee Plans") are
administered by the Compensation Committee. Members of the Compensation
Committee are not eligible to participate in the Employee Plans while serving on
the Compensation Committee. Participants in the Employee Plans are key employees
of the Company and its subsidiaries as may be selected from time to time by the
Compensation Committee. Subject to the terms of the Employee Plans, the
Compensation Committee is authorized to determine the number of Common Shares
subject to each option granted thereunder, the time and conditions of exercise
of such option and all other terms and conditions of such option.

The 1990 and 1997 Director Option Plans (the "Director Plans") are
administered by a committee consisting of three or more members of the Board of
Directors (the "Option Committee"). Participants in the Director Plans are
directors of the Company or an affiliate of the Company who are not employed by
the Company or any affiliate, as may be selected from time to time by the Option
Committee.

Options granted under the Employee Plans are incentive stock options, as
defined by Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code"). The per share exercise price of an option will be not less than 100% of
the fair market value of the Common Shares on the date of the grant, except that
the per share exercise price of options granted to employees who are holders of
10.0% or more of the total combined voting power of all outstanding classes of
shares of the Company ("10% Shareholders") will be not less than 110% of such
fair market value. In addition, for each participant who is an employee, the
maximum aggregate fair market value on the date of grant of all Common Shares
subject to options first exercisable in any one year may not exceed $100,000.

Options will expire on a date determined by the Compensation or Option
Committee, as the case may be, provided that the options will expire not more
than ten years from the date of grant (five years in the case of options issued
to 10% Shareholders). Generally, all options will terminate on the date the
holder ceases to be employed by, or to serve as a director of, the Company. If,
however, an option holder retires with the consent of the Company or becomes
permanently and totally disabled, options granted under the Option Plans will
expire three months and 12 months, respectively, after the termination of
employment. If an option holder's service with the Company is terminated as a
result of death, the options will expire 12 months after such event. Options are
not transferable other than by will or the laws of descent and distribution.

Options vest in four equal installments on the second, third, fourth and
fifth anniversary of the date of grant. If the Company is a party to any merger
or consolidation, the Company has the right to terminate any outstanding option
upon 30 days written notice to the option holder; however, if the merger or
consolidation is not consummated within 180 days from the date of such notice,
all options terminated shall be deemed to have been continuously in effect. If
the Company is dissolved or liquidated, the Company shall give each option
holder 30 days written notice and all unexercised options shall be deemed to be
terminated upon such dissolution or liquidation.

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The following table sets forth certain information concerning exercisable
and unexercisable options held by the Named Executive Officers at September 30,
1997.

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

[Enlarge/Download Table]

NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------

Peter T. Kissinger, Ph.D....................... 40,630 13,543 $253,125 $ 84,373
Ronald E. Shoup, Ph.D. ........................ 20,315 4,514 $136,246 $ 28,845

-------------------------
(1) Calculated on the basis of the initial public offering price of $8.00 per
share.

401(K) SAVINGS PLAN

The Company has a defined contribution retirement plan (the "401(k) Plan"),
qualified under Sections 401(a) and 401(k) of the Code. All employees of the
Company are eligible to enroll in the 401(k) Plan on the first April 1 or
October 1 after completing one year of employment with the Company. The 401(k)
Plan provides that the Company will contribute 2% of each eligible employee's
compensation to the 401(k) Plan. In addition, each participant may contribute
from 1% to 10% or none of their annual compensation. The Company may also make
discretionary contributions based on a certain percentage of a participant's
contributions under the 401(k) Plan, as determined by the Board of Directors.
The Board of Directors approved a matching contribution of 38% beginning October
1, 1997. The Company made contributions under the 401(k) Plan totaling
approximately $179,151 for the year ended September 30, 1997.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

As permitted by the Indiana Business Corporation Law (the "BCL"), the
Second Restated Articles of Incorporation of the Company (the "Articles")
require the Company to indemnify its officers and directors from liabilities to
the extent allowed by the BCL. The BCL provides that a corporation may indemnify
its officers and directors, if the officer or director acted in good faith and
in a manner he reasonably believed, in the case of conduct in his official
capacity, was in the best interests of the Company and, in all other cases, was
not opposed to the best interests of the Company, and, with respect to any
criminal proceeding, the officer or director had reasonable cause to believe his
conduct was lawful or no reasonable cause to believe his conduct was unlawful.
The BCL further provides that the Company may advance to its officers and
directors expenses incurred in connection with proceedings against them for
which they may be indemnified, if the Company receives a written affirmation
from such officer or director that in his good faith belief he met the standard
of conduct described above and that he will repay all advanced expenses if it is
ultimately determined that he did not meet that standard of conduct. Pursuant to
the BCL, the Company may obtain directors' and officers' insurance. At present,
the Company is not aware of any pending or threatened litigation or proceeding
involving an officer, director, employee or agent of the Company in which
indemnification would be required or permitted.

The Company maintains directors' and officers' liability insurance with
respect to certain risks to which the Company and its directors and officers are
exposed.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Peter T. Kissinger, Thomas Hiatt, John Kraeutler and William Mulligan
served on the Compensation Committee during fiscal 1997. Dr. Kissinger, the
President and Chief Executive Officer of the Company, currently is a member of
the Compensation Committee; however, he does not participate in decisions
regarding his compensation. None of the Company's executive officers serves as a
director of, or in any compensation related capacity for, companies with which
members of the Compensation Committee are affiliated.

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CERTAIN TRANSACTIONS

In 1991 Primus Capital Fund II, LP ("Primus") and Middlewest Ventures II,
LP ("Middlewest") purchased Redeemable Preferred Shares and Convertible
Preferred Shares of the Company. The Redeemable Preferred Shares carried an 8%
cumulative dividend, and were redeemed in accordance with their terms for an
amount equal to their purchase price in equal installments on December 31, 1995,
June 30, 1996 and December 31, 1996. See Note 6 of Notes to Consolidated
Financial Statements. The Convertible Preferred Shares were purchased for an
aggregate of $1,231,000 and were converted into an aggregate of 752,399 Common
Shares immediately prior to the issuance of the Shares offered hereby, of which
470,250 shares and 282,149 shares are owned by Primus and Middlewest,
respectively. The Venture Funds continue to have certain rights to cause the
Company to register the Common Shares owned by the Venture Funds under the
Securities Act for sale to the public. See "Description of Capital Stock --
Registration Rights." Additionally, the Company has agreed to use its best
efforts to cause one representative from each Venture Fund to be elected to the
Company's Board of Directors as long as the respective Venture Fund owns more
than 5% of the Company's outstanding Common Shares. All other covenants between
the Company and the Venture Funds were terminated in connection with the
conversion of the Convertible Preferred Shares to Common Shares.

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PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Shares as of September 30, 1997 by (i) each person who
is known by the Company to own beneficially more than 5% of the outstanding
Common Shares, (ii) each director of the Company, (iii) the Named Executive
Officers, and (iv) all directors and executive officers of the Company as a
group.

[Enlarge/Download Table]

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1)(2) OFFERING(1)(2)
-------------------- --------------------
NAME NUMBER PERCENT NUMBER PERCENT
---- ------ ------- ------ -------

Primus Capital Fund II, L.P. ........................... 470,250 15.7% 470,250 11.1%
Middlewest Ventures II, L.P. ........................... 282,149 9.4% 282,149 6.6%
Peter T. Kissinger(3)................................... 1,261,099 42.0% 1,261,099 29.3%
Ronald E. Shoup(4)...................................... 89,453 3.0% 89,453 2.1%
Candice B. Kissinger(5)................................. 1,261,099 42.0% 1,261,099 29.3%
William E. Baitinger(6)................................. 137,734 4.6% 137,734 3.2%
Michael K. Campbell(7).................................. 27,086 * 27,086 *
Thomas A. Hiatt(8)...................................... 282,149 9.4% 282,149 6.6%
John A. Kraeutler....................................... -- -- -- --
William C. Mulligan(9).................................. 470,250 15.7% 470,250 11.1%
W. Leigh Thompson....................................... -- -- -- --
Nicholas Winograd(10)................................... 174,030 5.8% 174,030 4.1%
All executive officers and directors as a group......... 2,513,138 83.8% 2,513,138 56.8%

-------------------------
* Less than 1% of outstanding Common Shares.

(1) Unless otherwise noted, all addresses are in care of Company at 2701 Kent
Avenue, West Lafayette, Indiana 47906.

(2) Except as indicated in the footnotes to this table and pursuant to
applicable community property laws, the Company believes that the persons
named in the table have sole voting and investment power with respect to
all Common Shares.

(3) Includes (i) 247,795 Common Shares beneficially owned by Candice B.
Kissinger, the wife of Dr. Kissinger, including 13,543 Common Shares
issuable upon the exercise of options granted to Mrs. Kissinger under the
1990 Employee Option Plan which are exercisable within 60 days of September
30, 1997; (ii) 595,904 Common Shares owned jointly by Dr. and Mrs.
Kissinger; and (iii) 40,630 Common Shares issuable upon the exercise of
outstanding options granted to Dr. Kissinger under the 1990 Employee Option
Plan which are exercisable within 60 days of September 30, 1997.

(4) Includes (i) 68,686 Common Shares owned jointly by Dr. Shoup and his wife
and (ii) 20,315 Common Shares beneficially owned by Dr. Shoup issuable upon
the exercise of options under the 1990 Employee Option Plan exercisable
within 60 days of September 30, 1997.

(5) Includes 417,400 Common Shares beneficially owned by Peter T. Kissinger,
including 40,630 Common Shares issuable upon the exercise of options
granted to Dr. Kissinger under the 1990 Employee Option Plan exercisable
within 60 days of September 30, 1997; (ii) 595,904 Common Shares owned
jointly by Dr. and Mrs. Kissinger; and (iii) 13,543 Common Shares
beneficially owned by Mrs. Kissinger issuable upon the exercise of options
under the 1990 Employee Option Plan exercisable within 60 days of September
30, 1997.

(6) Includes 53,089 Common Shares owned jointly by Mr. Baitinger and his wife.

(7) Includes 27,086 Common Shares issuable upon the exercise of outstanding
options granted to Mr. Campbell under the 1990 Director Option Plan which
are exercisable within 60 days of September 30, 1997.

(8) Mr. Hiatt is a general partner of Middlewest Management Company, L.P.,
which is the general partner of Middlewest Ventures II, L.P., and
accordingly may be attributed beneficial ownership of the

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Common Shares owned by Middlewest Ventures II, L.P. The other general
partner of Middlewest Management Company, L.P. is Marcey Shockey. Mr. Hiatt
disclaims beneficial ownership of the Common Shares beyond his ownership
interest in Middlewest Management Company, L.P. Mr. Hiatt serves as a
Director of the Company as a nominee of Middlewest Ventures II, L.P. The
address of Middlewest Ventures II, L.P. is 201 N. Illinois, Suite 300,
Indianapolis, Indiana 46204.

(9) Mr. Mulligan is a general partner of Primus Venture Partners Limited
Partnership, which, together with Primus Advisors, Inc., is the general
partner of Primus Management II. Primus Management II is the general
partner of Primus Capital Fund II, L.P. Accordingly, Mr. Mulligan may be
attributed beneficial ownership of the Common Shares owned by Primus
Capital Fund II, L.P. The other general partners of Primus Venture Partners
Limited Partnership are James T. Bartlett, Jonathan E. Dick, Kevin J.
McGinly and Loyal W. Wilson. Mr. Mulligan disclaims beneficial ownership of
the Common Shares beyond his ownership interest in Primus Venture Partners
Limited Partnership. Mr. Mulligan serves as a Director of the Company as a
nominee of Primus Capital Fund II, L.P. The address of Primus Capital Fund
II, L.P. is 1375 E. Ninth Street, Suite 2700, Cleveland, Ohio 44114.

(10) Includes 172,270 Common Shares owned jointly by Mr. Winograd and his wife.
The address of Mr. Winograd is RR1 Box 49F, Spring Mills, Pennsylvania
16875.

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 19 million Common
Shares, and one million preferred shares (the "Preferred Shares") none of which
are outstanding. As of September 30, 1997, there were 2,247,601 Common Shares
issued and outstanding held of record by 63 shareholders and the Company had
outstanding options to purchase a total of 272,671 Common Shares.

The following summary of certain provisions of the Common Shares and
Preferred Shares does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Articles of Incorporation,
which are included as an exhibit to the Registration Statement on Form S-1
(including all schedules, exhibits and amendments thereto, the "Registration
Statement"), and by the provisions of applicable law.

COMMON SHARES

The Company's Articles of Incorporation authorize the issuance of up to 19
million Common Shares. Holders of Common Shares are entitled to one vote for
each Common Share held on all matters submitted to a vote of shareholders and do
not have cumulative voting rights. Accordingly, holders of a majority of the
Common Shares entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of Common Shares are entitled to
receive ratably such dividends, if any, as may be declared by the Company's
Board of Directors out of funds legally available therefor and subject to any
preferential dividend rights of any then outstanding Preferred Shares. Upon the
liquidation, dissolution or winding up of the Company, the holders of Common
Shares are entitled to receive ratably the net assets of the Company available
after the payment of all debts and other liabilities and subject to any
preferential dividend rights of any then outstanding Preferred Shares. Holders
of Common Shares have no preemptive, subscription, redemption or conversion
rights. The outstanding Common Shares are, and the Shares offered by the Company
in this offering will be, when issued and paid for, fully paid and
nonassessable.

PREFERRED SHARES

The Board of Directors is authorized, subject to any limitations prescribed
by Indiana law, to provide for the issuance of Preferred Shares in one or more
series, to establish from time to time the number of shares to be included in
each such series, to fix the powers, designations, preferences and rights of the
shares of each wholly unissued series and any qualifications, limitations or
restrictions thereon and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then outstanding)
without any further vote or action by the shareholders. The Board of Directors
may authorize the issuance of

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Preferred Shares with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of Common Shares. The issuance
of Preferred Shares could have the effect of decreasing the market price of the
Shares. The issuance of Preferred Shares may have the effect of delaying,
deferring or preventing a change in control of the Company. The Company has no
current plan to issue any Preferred Shares.

REGISTRATION RIGHTS

The Venture Funds have certain rights with respect to the registration
under the Securities Act of an aggregate of 752,399 Common Shares held by them.
If requested by the Venture Funds, the Company must file a registration
statement under the Securities Act covering all Common Shares requested to be
included by the Venture Funds within 60 days. The Venture Funds may make an
unlimited number of requests for registration; provided, however, that the
Company is only required to bear the expense of one registration. The Company
has the right to delay any registration for up to 90 days under certain
circumstances.

In addition, if the Company proposes to register any of its Common Shares
under the Securities Act other than in connection with a Company employee
benefit plan or a corporate reorganization, the Venture Funds may require the
Company to include all or a portion of their shares in that registration,
subject to certain priorities among them, although the managing underwriter of
any such offering may limit the number of Common Shares to be offered by the
Venture Funds.

CERTAIN PROVISIONS OF INDIANA LAW

As an Indiana corporation, the Company is governed by the provisions of the
BCL.

Voting Requirements for Certain Business Combinations. Chapter 43 of the
BCL establishes a five-year period beginning with the acquisition of 10% of the
voting power of the outstanding voting shares of a "resident domestic
corporation" (which definition includes the Company) during which certain
business transactions involving the acquiring shareholder are prohibited unless,
prior to the acquisition of such interest, the board of directors approves the
acquisition of such interest or the proposed business combination. After the
five-year period expires, a business combination involving the acquiring
shareholder may take place only upon approval by a majority of the disinterested
shares, or if the other shareholders receive a formula price based on the higher
of the highest price paid by the acquiring shareholder or the market value at
the time of the announcement of the proposed transaction, whichever is higher.
The minimum price for shares other than common shares is to be determined under
criteria similar to that for common shares, except the minimum price as defined
cannot be less than the highest preferential amount to which the shares are
entitled in the event of any liquidation, dissolution or winding up of the
corporation.

Changes of Control. Under Chapter 42 of the BCL, with certain exceptions, a
person proposing to acquire or acquiring voting shares of an "issuing public
corporation" (which definition includes only corporations having at least 100
shareholders, principal place of business, office or substantial assets within
Indiana, and in which more than 10% of its shareholders are Indiana residents,
10% of its shares are owned by Indiana residents, or which have 10,000 or more
shareholders who are Indiana residents) sufficient to entitle that person to
exercise voting power within any of the ranges of one-fifth to one-third of all
voting power, more than one-third but less than one-half of all voting power, or
a majority or more of all voting power (a "control share acquisition") may give
a notice of such fact to the corporation containing certain specified data. The
acquiring person may request that the directors call a special meeting of
shareholders for the purpose of considering the voting rights to be accorded the
shares so acquired ("control shares"), and the control shares have voting rights
only to the extent granted by a resolution approved by the shareholders. The
resolution must be approved by a majority of the votes entitled to be cast by
each voting group entitled to vote separately on the proposal, excluding shares
held by the acquiring person and shares held by management. Control shares as to
which the required notice has not been filed and any control shares not accorded
full voting rights by the shareholders may be redeemed at fair market value by
the corporation if it is authorized to do so by its articles of incorporation or
bylaws before a control share acquisition has occurred. The Company has not
adopted such a provision in its Articles or Bylaws. Shareholders are entitled to
dissenters rights with respect to the control

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share acquisition in the event that the control shares are accorded full voting
rights and the acquiring person has acquired control shares with a majority of
all voting power.

Other Provisions of the BCL. The BCL specifically authorizes directors, in
considering the best interest of a corporation, to consider both the long- and
short-term interests of the corporation, as well as the effects of any action on
shareholders, employees, suppliers and customers of the corporation, and
communities in which offices or other facilities of the corporation are located
and any other factors the directors consider pertinent. Under the BCL, directors
are not required to approve a proposed business combination or other corporate
action if they determine in good faith that the action is not in the best
interest of the corporation. In addition, the BCL states that directors are not
required to redeem any rights under or render inapplicable a shareholder rights
plan or to take or decline to take any other action solely because of the effect
such action or inaction might have on a proposed change of control of the
corporation or the amounts to be paid to shareholders upon such a change of
control. The Delaware Supreme Court has held that defensive measures in response
to a potential takeover must be "reasonable in relation to the threat posed."
The BCL explicitly provides that the different or higher degree of scrutiny
imposed in Delaware and certain other jurisdictions upon director actions taken
in response to potential changes in control will not apply.

The BCL requires directors to discharge their duties, based on the facts
then known to them, in good faith, with the care an ordinary, prudent person in
a like position would exercise under similar circumstances and in a manner the
director reasonably believes to be in the best interest of the corporation. A
director is not liable for any action taken as a director or for failure to take
any action unless the director has breached or failed to perform the duties of
the director's office in compliance with the foregoing standard and the breach
or failure to perform constitutes willful misconduct or recklessness.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Shares is National City Bank. Its
telephone number is (216) 575-2494.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the closing of this offering, the Company will have outstanding an
aggregate of 4,250,000 Common Shares. Of these Common Shares, all the Shares
sold in this offering will be freely tradeable without restrictions or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), and approximately 600,000 Common Shares owned by existing shareholders
will be eligible for sale pursuant to Rule 144(k) under the Securities Act. All
of the Company's officers and directors and certain of the Company's
shareholders have agreed with the Underwriters that, for a period of 180 days
after the date of this Prospectus, subject to certain exceptions, they will not
directly or indirectly offer, sell, contract to sell, pledge, grant any option
to purchase, establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise dispose of or grant any rights with respect to any
Common Shares (or any securities convertible into, exchangeable for or
exercisable for Common Shares), without the prior written consent of the
Underwriters (the "Lock-Up Agreements"). In its sole discretion and at any time
without notice, the Underwriters may release all or any portion of the Common
Shares subject to the Lock-Up Agreements.

Following the expiration of the 180-day lock-up period, or earlier with the
written consent of the Underwriters, 2,939,061 Common Shares will be eligible
for sale by existing shareholders of the Company subject to the volume and other
limitations of Rule 144, as discussed below.

In general, under Rule 144 any holder of restricted securities, as defined
under Rule 144, including an affiliate of the Company, as to which at least one
year has elapsed since the later of the date of acquisition of the Common Shares
from the Company or an affiliate, would be entitled beginning 90 days after the
date of this Prospectus, to sell within any three-month period a number of
Common Shares that does not exceed the greater of 1% of the then outstanding
Common Shares (approximately 42,500 shares upon the completion of this offering)
or the average weekly trading volume of the Common Shares on the Nasdaq National
Market

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during the four calendar weeks preceding the date on which notice of the sale is
filed with the Commission. Sales under Rule 144 are subject to certain
requirements relating to manner of sale, notice and availability of current
public information about the Company. However, a person (or persons whose Common
Shares are aggregated) who is not deemed to have been an affiliate of the
Company at any time during the 90 days immediately preceding the sale and who
beneficially owned the Common Shares for at least two years since the later of
the date the Common Shares were acquired from the Company or an affiliate of the
Company may sell those shares under Rule 144(k) without regard to the
limitations described above. The foregoing is a summary of Rule 144 and is not
intended to be a complete description of it.

As of September 30, 1997, there were 272,671 Common Shares subject to
outstanding options issued pursuant to the Company's Option Plans, of which
approximately 236,555 Common Shares were vested as of that date. The Company
intends to file a registration statement under the Securities Act to register
Common Shares reserved for issuance under the Option Plans, thereby permitting
the sale of those Common Shares by non-affiliates in the public market without
restriction under the Securities Act. That registration statement will become
effective immediately upon filing. The holders of 171,757 of the options
exercisable as of September 30, 1997 have signed Lock-Up Agreements.

Subject to certain limitations on the aggregate offering price of a
transaction and other conditions, Rule 701 may be relied upon with respect to
the resale of securities originally purchased from the Company by its employees,
directors, officers, consultants or advisers prior to the closing of this
offering pursuant to written compensatory benefit plans or written contracts
relating to the compensation of such persons. In addition, the Commission has
indicated that Rule 701 will apply to options granted by the Company before this
offering, along with the Common Shares acquired upon exercise of such options.
Securities issued in reliance on Rule 701 are deemed to be Restricted Shares
and, subject to the contractual limitations described above, beginning 90 days
after the date of this Prospectus, may be sold by persons other than affiliates
subject only to the manner of sale provisions of Rule 144 and by affiliates
under Rule 144 without compliance with its one-year minimum holding period
requirements. See "Risk Factors -- Shares Eligible for Future Sale; Registration
Rights."

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UNDERWRITING

Subject to the terms and conditions contained in the Underwriting
Agreement, each of the underwriters named below (the "Underwriters") has
severally agreed to purchase, and the Company has agreed to sell to such
Underwriter, the respective number of Shares set forth opposite the name of such
Underwriter:

[Download Table]

NUMBER OF
NAME SHARES
---- ---------

Roney & Co., L.L.C. ........................................ 545,000
The Ohio Company............................................ 545,000
EVEREN Securities, Inc. .................................... 20,000
David A. Noyes & Co. ....................................... 20,000
First of Michigan Corporation............................... 20,000
Hanifen, Imhoff Inc. ....................................... 20,000
Janney Montgomery Scott Inc. ............................... 20,000
NatCity Investments, Inc. .................................. 20,000
Pennsylvania Merchant Group, Ltd. .......................... 20,000
Stifel, Nicolaus & Co., Inc. ............................... 20,000
---------
Total.................................................. 1,250,000
=========

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Shares offered hereby are
subject to approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all Shares
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are purchased.

The Underwriters, for whom Roney & Co., L.L.C. and The Ohio Company are
acting as representatives (the "Representatives"), propose to offer part of the
Shares directly to the public at the public offering price set forth in the
cover page of this Prospectus and part of the shares to certain dealers at a
price which represents a concession not in excess of $.30 per share under the
public offering price. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $.10 per share to certain other dealers. After the
offering, the offering price and other selling terms may be changed. The
Representatives have advised the Company that the Underwriters do not intend to
confirm sales to any accounts over which they exercise discretionary authority.

The Company has granted to the Underwriters an option, exercisable for 30
days from the date of this Prospectus, to purchase up to an aggregate of 187,500
additional Shares, respectively, at the public offering price set forth on the
cover page of this Prospectus minus the underwriting discounts and commissions.
The Underwriters may exercise such option solely for the purpose of covering
over-allotments, if any, in connection with the sale of the shares offered
hereby. To the extent such option is exercised, each Underwriter will be
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number of shares set forth opposite
such Underwriter's name in the preceding table bears to the total number of
shares in such table.

The Company, all of its directors and executive officers and certain of the
Company's shareholders, who beneficially hold an aggregate of 2,515,178 Shares,
have agreed that, for a period of 180 days following the date of this
Prospectus, they will not, without the prior written consent of the
Representatives, offer, sell, contract to sell, or otherwise dispose of any
Shares of the Company; provided, however, that the Company may issue and sell up
to 372,671 Common Shares pursuant to the Option Plans in effect on the date of
this Prospectus or to non-employee Directors.

Prior to the offering, there has not been any public market for the Common
Shares of the Company. Consequently, the initial public offering price for the
Shares included in the offering has been determined by negotiations between the
Company and the Representatives. Among the factors considered in determining
such price was the history of and prospects for the Company's business and the
industry in which it competes, an assessment of the Company's management and the
present state of the Company's development, the past

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and present revenues and earnings of the Company, the prospects for the growth
of the Company's revenues and earnings, the current state of the economy in the
United States and the current level of economic activity in the industry in
which the Company competes and in related or comparable industries, and
currently prevailing conditions in the securities markets, including current
market valuations of publicly traded companies that are comparable to the
Company.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act or to
contribute to payments that the Underwriters may be required to make in respect
thereof.

The Underwriters have reserved for sale, at the initial public offering
price, up to 30,000 of the Shares offered hereby for employees of the Company
and certain other individuals who have expressed an interest in purchasing such
Shares in the offering. The number of shares available for sale to the general
public will be reduced to the extent such persons purchase such reserved shares.
Any reserved shares not so purchased will be offered by the Underwriters to the
general public on the same basis as the other shares offered hereby.

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LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Ice Miller Donadio & Ryan, Indianapolis, Indiana. Certain legal
matters in connection with this offering will be passed upon for the
Underwriters by Honigman Miller Schwartz & Cohn.

EXPERTS

The consolidated financial statements of Bioanalytical Systems, Inc. at
September 30, 1997 and 1996, and for each of the three years in the period ended
September 30, 1997, appearing in this Prospectus and Registration Statement,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549 (the "Commission"), a Registration Statement on Form S-1
under the Securities Act with respect to the Shares offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. Statements contained in this
Prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, if such contract or
document is filed as an exhibit, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement. Each statement is
qualified in all respects by such reference to such exhibit. The Registration
Statement, including exhibits and schedules thereto, is publicly available
through the Commission's World Wide Web site (http:/www.sec.gov) or may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may be obtained at prescribed
rates by writing the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549.

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GLOSSARY

AIDS: A fatal disease that destroys the host's immune system resulting from
infection with human immunodeficiency virus (HIV).

ASSAY: Quantitative measurement of a substance.

BIOANALYTICAL TESTING: Measurement of a drug substance, its metabolites,
and/or naturally occurring compounds in samples that are produced by or are part
of living systems. These samples could include a new drug substance in human
plasma or a neurotransmitter in rat brain tissue. Often the method is custom
built for a particular problem and requires specialized staff and
instrumentation for the procedure's development and validation for use.

CHROMATOGRAPHY: An analytical technique in which a mixture of chemicals is
separated into its discrete components, according to their differing
interactions between moving and stationary chemical phases. The stationary phase
is usually a powder contained in a tube and the moving phase is a gas or a
liquid. Several different detectors have been created to quantify each component
in the mixture after separation.

CLINICAL STUDIES: Human studies designed to distinguish a drug's effect
from other influences. Such studies conducted in the U.S. must be under an
approved IND under the guidance of an institutional review board and in accord
with FDA rules on human studies and informed consent of participants.

CNS: Central Nervous System is that portion of the nervous system having to
do with the brain and spinal cord.

COCKTAIL THERAPY: A combination of drugs generally operating with different
therapeutic mechanisms designed to attack disease hard and early. See drug
interaction studies.

COMPLIANCE: The extent to which a product developer conforms to regulatory
direction or a patient agrees to and follows a prescribed treatment.

CRO: Contract Research Organizations, which help drug companies design and
administer clinical trials.

DISSOLUTION: Release of a given amount of a drug into solution from a solid
dosage form. Dissolution is measured in vitro, under conditions which generally
simulate those which occur in vivo.

DRUG: A chemical used in the diagnosis, treatment or prevention of disease.

DRUG INTERACTION STUDIES: Patients treated with more than one drug may
experience unexpected therapeutic and/or toxic effects. Bioanalytical testing
helps understand and resolve these effects.

EFFECTIVENESS, EFFICACY: The desired measure of a drug's influence on a
disease condition designated as such by the FDA on the basis of "substantial
evidence."

ELECTROCARDIOGRAPHY: A measurement technique that detects and records the
electrical activity of the heart. The EKG detects and records the electrical
potential of the heart during the heartbeat.

ELECTROCHEMISTRY: The study of chemical reactions in which one or more
electrons are added or removed from an atom or molecule. Electrochemistry is
used in two ways for practical purposes. Electricity can alter chemicals (as in
corrosion and analysis) and chemicals can generate electricity (as in batteries
and fuel cells).

ENZYMOLOGY: The study of enzymes, which are complex proteins that catalyze
specific biochemical reactions in the body.

FDA: The Food and Drug Administration, an agency of the Department of
Health and Human Services which is responsible for ensuring compliance with the
federal Food, Drug and Cosmetic Act, as amended.

FLUORESCENCE: Light emitted by a chemical after energy is added to it. The
kind and amount of light is unique to the kind and amount of each chemical. It
can be used as an indirect method of detecting and measuring the concentration
of a chemical.

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GC/MS: Gas Chromatography/Mass Spectrometry. An analytical technique in
which the chemical mix is separated by heating, converting to a gas, passing the
gas over a stationary phase and detecting, identifying, and quantifying the
separated components by Mass Spectrometry.

GENERIC DRUGS: Drug formulations of identical composition with respect to
the active ingredient. Drugs may be generically equivalent but not
therapeutically equivalent.

GLP: Good Laboratory Practices. Regulations that set requirements for
facilities management, maintenance and calibration of equipment, analytical
protocol, quality assurance, data reporting, storage, retrieval and retention
and other controls.

GMP: Current Good Manufacturing Practices. Regulations that set
requirements for sanitation, inspection of raw materials and finished products
and other quality controls.

HIV: A type of retrovirus (human immunodeficiency virus) that is
responsible for the fatal illness, acquired immunodeficiency syndrome (AIDS).

ICH GUIDELINES: International Conference on Harmonization attempting to
normalize drug regulations among several countries.

IND: Investigational New Drug Application. An application that a drug
sponsor must submit to the FDA before beginning tests of a new drug on humans.
The IND contains a plan for the study and is supposed to give a complete picture
of the drug, including its structural formula, animal test results and
manufacturing information.

INDICATION: A sign or circumstance which points to or shows the cause,
pathology, treatment or issue of an attack of disease; that which serves as a
guide or warning.

IN VITRO: Literally, "in glass"; a biologic or biochemical process
occurring outside a living organism.

IN VIVO: Literally, "in life"; a biologic or biochemical process occurring
within a living organism.

KIT: A carefully designed and validated method and collection of tools and
reagents used to determine the presence of an illness or disorder.

LCEC: Liquid Chromatography/Electrochemistry. A technique in which liquid
chromatography is used to separate the components of a mixture. The chemicals
are detected and quantified in an electrochemical cell.

LC/MS: Liquid Chromatography/Mass Spectrometry. A technique in which liquid
chromatography is used to separate the components of a mixture. The separated
chemicals are detected, identified and quantified by Mass Spectrometry.

LIQUID CHROMATOGRAPHY: A chromatographic method in which the stationary
phase is packed in a tubular column and the moving phase is a liquid driven
through the column by a force such as hydraulic pressure or gravity. Components
may be separated on the basis of size, polarity, charge and/or shape.

MASS SPECTROMETRY: A gas phase analytical technique used to identify a
chemical by molecular weight and breakdown products unique to that chemical.

NDA: New Drug Application. An application requesting FDA approval to
market a new drug for human use in interstate commerce. The application must
contain, among other things, data from specific technical viewpoints for FDA
review -- including chemistry, pharmacology, medical, biopharmaceutics,
statistics and, for anti-infectives, microbiology.

NEUROTRANSMITTER: A chemical, such as acetylcholine, which is released
from the axon of one neuron and binds to a specific site in the dendrite of an
adjacent neuron, thus triggering a nerve impulse.

PHARMACOKINETICS: The science which describes, quantitatively, the uptake
of drugs by the body, their biotransformation, their distribution, metabolism,
and elimination from the body.

PHARMACOLOGY: The science that deals with the effect of drugs on living
organisms.

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PHYSIOLOGY: The study of how living organisms function.

PLA: Product License Application. An application that a drug sponsor must
submit to the FDA before beginning tests of a new biologic drug on humans.
Equivalent to an IND for biologically derived drugs (genetically altered
organisms etc.).

POTENCY: The power of a medicinal agent to product the desired effects.

PRECLINICAL STUDIES: Studies that test a drug on animals and other
nonhuman test systems. They must comply with FDA's Good Laboratory Practices
Regulations.

PRODUCT CHARACTERIZATIONS: Thorough analysis of a product, which may
contain a mixture of chemicals, decomposition products and other components, in
a pharmaceutical formulation.

ROBOTIC SAMPLE PREPARATION AND DISSOLUTION TESTING: Rapid, cost effective,
fully automated sample preparation and dissolution tests which are typically
quantified by liquid chromatography.

SAFETY: No drug is completely safe or without the potential for side
effects. Before a drug may be approved for marketing, the law requires the
submission of results of tests adequate to show the drug is safe under the
conditions of use in the proposed labeling. Thus, "safety" is determined case by
case and reflects the drug's risk v. benefit relationship.

SBIR GRANTS: Federal Small Business Innovation Research and Small Business
Technology Transfer Grants. These support research in topics of interest to
NASA, NIH, etc. Awards, term and degree of industry involvement vary.

SOLID PHASE EXTRACTION: An analytical separation technique in which a
mixture of chemicals is stirred with a solid, usually a powder. The solid is
chosen for its ability to bind specifically to one or more of the chemicals in
the mixture. After mixing, the solid with the bound chemicals attached is
separated from the extracted sample and washed. The chemicals are subsequently
removed with a solvent and analyzed.

SPECTROSCOPY/SPECTROMETRY: An analytical technique used to identify a
chemical by observing how it interacts with visible, infrared, or ultraviolet
light, magnetism, radio waves or other parts of the electromagnetic energy
spectrum. Each part of each chemical absorbs and/or emits this energy
differently. A spectroscope/spectrometer measures the kind and amount of energy
and in some cases the chemical breakdown products. Each chemical has a unique
energy fingerprint that enables identification.

STABILITY: The quality of maintaining a constant character in the presence
of forces which threaten to disturb it; resistance to change. In drugs,
maintaining therapeutic efficacy and chemical composition with changing time,
temperature, humidity, etc.

THERAPEUTICS: The science and techniques of restoring patients to health.

VALIDITY: The degree to which output reflects what it purports to reflect.
The degree to which output is a function of known input and it alone.

"VIRTUAL" DRUG COMPANY: A venture management technique. A "virtual"
company creates, acquires or licenses a new pharmaceutical or device. Most
development, registration, manufacture and commercialization are then carried
out through contracted parties or strategic partners. A small staff and
negligible assets are key characteristics.

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BIOANALYTICAL SYSTEMS, INC.

INDEX TO FINANCIAL STATEMENTS

[Download Table]

PAGE
----

Report of Independent Auditors.............................. F-2
Consolidated Balance Sheets as of September 30, 1996 and
1997...................................................... F-3
Consolidated Statements of Income for the years ended
September 30, 1995, 1996 and 1997 ........................ F-4
Consolidated Statements of Preferred Shares and
Shareholders' Equity for the years ended September 30,
1995, 1996 and 1997....................................... F-5
Consolidated Statements of Cash Flows for the years ended
September 30, 1995, 1996 and 1997......................... F-6
Notes to Consolidated Financial Statements.................. F-7

F-1

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REPORT OF INDEPENDENT AUDITORS

Board of Directors and Shareholders
Bioanalytical Systems, Inc.

We have audited the accompanying consolidated balance sheets of
Bioanalytical Systems, Inc. as of September 30, 1997 and 1996, and the related
consolidated statements of income, preferred shares and shareholders' equity and
cash flows for each of the three years in the period ended September 30, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Bioanalytical
Systems, Inc. at September 30, 1997 and 1996, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended September 30, 1997 in conformity with generally accepted accounting
principles.

/s/ ERNST & YOUNG LLP

Indianapolis, Indiana
October 31, 1997, except for Note 10,
as to which the date is November 21, 1997

F-2

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BIOANALYTICAL SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

[Enlarge/Download Table]

SEPTEMBER 30
--------------------------
1996 1997
---- ----

ASSETS
Current assets:
Cash and cash equivalents................................. $ 595,339 $ 161,338
Accounts receivable (Note 4):
Trade................................................... 1,545,843 2,361,591
Grants.................................................. 99,921 370,198
Other................................................... 6,045 281,579
Inventories (Notes 3 and 4)............................... 1,931,850 1,911,231
Deferred income taxes (Note 5)............................ 164,753 209,695
Prepaid expenses.......................................... 38,710 46,787
----------- -----------
Total current assets........................................ 4,382,461 5,342,419
Goodwill, less accumulated amortization of $18,002 in 1996
and $30,002 in 1997 (Note 2).............................. 222,030 210,030
Other assets................................................ 243,541 343,120
Property and equipment (Note 4):
Land and improvements..................................... 166,621 171,014
Buildings and improvements................................ 4,282,317 4,294,183
Machinery and equipment................................... 3,616,693 4,067,319
Office furniture and fixtures............................. 620,319 680,395
Construction in process................................... 173,241 3,625,062
----------- -----------
8,859,191 12,837,973
Less accumulated depreciation and amortization............ (2,333,356) (2,802,823)
----------- -----------
6,525,835 10,035,150
----------- -----------
Total assets................................................ $11,373,867 $15,930,719
=========== ===========
LIABILITIES, PREFERRED SHARES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 730,110 $ 1,341,181
Income taxes payable...................................... 33,562 250,153
Accrued expenses.......................................... 239,826 352,593
Customer advances......................................... 19,871 101,986
Current portion of long-term debt......................... 300,115 287,833
Lines of credit........................................... -- 515,377
----------- -----------
Total current liabilities................................... 1,323,484 2,849,123
Long-term debt, less current portion (Note 4)............... 2,512,027 5,044,875
Deferred income taxes (Note 5).............................. 1,053,144 1,154,166
Preferred shares (Note 6):
Authorized shares -- 1,000,000
Issued and outstanding shares:
Redeemable -- 22,223 in 1996............................ 298,302 --
Convertible -- 166,667.................................. 1,231,242 1,231,242
Shareholders' equity (Note 6):
Common Shares, no par value:
Authorized shares -- 19,000,000
Issued and outstanding shares -- 2,186,663 in 1996 and
2,247,601 in 1997..................................... 484,375 497,875
Additional paid-in capital................................ 151,233 178,233
Retained earnings......................................... 4,321,103 4,978,149
Currency translation adjustment........................... (1,043) (2,944)
----------- -----------
4,955,668 5,651,313
----------- -----------
Total liabilities, preferred shares and shareholders'
equity.................................................... $11,373,867 $15,930,719
=========== ===========

See accompanying notes.

F-3

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BIOANALYTICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF INCOME

[Enlarge/Download Table]

YEAR ENDED SEPTEMBER 30
---------------------------------------
1995 1996 1997
---- ---- ----

Product revenue....................................... $ 9,627,393 $ 9,113,297 $ 9,932,022
Services revenue...................................... 2,724,469 3,680,838 4,991,348
----------- ----------- -----------
Total Revenue.................................... 12,351,862 12,794,135 14,923,370
Cost of product revenue............................... 3,447,566 3,226,736 3,334,413
Cost of services revenue.............................. 1,834,349 2,141,715 2,985,858
----------- ----------- -----------
Total Cost of Revenue............................ 5,281,915 5,368,451 6,320,271
----------- ----------- -----------
Gross profit.......................................... 7,069,947 7,425,684 8,603,099
Operating expenses:
Selling............................................. 3,940,096 3,937,224 4,224,523
Research and development............................ 1,123,641 1,423,901 1,568,417
General and administrative.......................... 1,222,136 1,363,921 1,638,465
----------- ----------- -----------
Total Operating Expenses 6,285,873 6,725,046 7,431,405
----------- ----------- -----------
Operating income...................................... 784,074 700,638 1,171,694
Interest income....................................... 67,492 38,843 4,835
Interest expense...................................... (78,882) (81,396) (100,177)
Other income.......................................... 86,645 28,180 12,306
Gain (loss) on sale of property and equipment......... 35,532 (3,218) 8,831
----------- ----------- -----------
Income before income taxes............................ 894,861 683,047 1,097,489
Income taxes (Note 5)................................. 344,254 282,648 413,395
----------- ----------- -----------
Net income............................................ $ 550,607 $ 400,399 $ 684,094
=========== =========== ===========
Net income available to common shareholders........... $ 497,271 $ 347,063 $ 657,046
Net income per common share........................... 0.16 0.11 0.21
Weighted average Common Shares outstanding............ 3,065,567 3,089,308 3,101,429

See accompanying notes.

F-4

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BIOANALYTICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF PREFERRED SHARES AND SHAREHOLDERS' EQUITY

[Enlarge/Download Table]

REDEEMABLE CONVERTIBLE ADDITIONAL CURRENCY
PREFERRED PREFERRED COMMON PAIN-IN RETAINED TRANSLATION
SHARES SHARES SHARES CAPITAL EARNINGS ADJUSTMENT
---------- ----------- ------ ---------- -------- -----------

Balance at September 30, 1994....... $ 815,661 $1,231,242 $468,237 $111,060 $3,476,769 $ --
Net income.......................... -- -- -- -- 550,607 --
Accrual of cumulative dividends on
preferred shares.................. 53,336 -- -- -- (53,336) --
Retirement of 21,949 common
shares............................ -- -- (4,862) (41,327) -- --
Issuance of 67,716 common shares for
the exercise of stock options..... -- -- 15,000 34,500 -- --
Issuance of 22,572 common shares for
the acquisition of business (Note
2)................................ -- -- 5,000 45,000 -- --
Currency translation adjustment..... -- -- -- -- -- 2,309
--------- ---------- -------- -------- ---------- -------
Balance at September 30, 1995....... 868,997 1,231,242 483,375 149,233 3,974,040 2,309
Net income.......................... -- -- -- -- 400,399 --
Accrual of cumulative dividends on
preferred shares.................. 53,336 -- -- -- (53,336) --
Issuance of 4,514 common shares for
the exercise of stock options..... -- -- 1,000 2,000 -- --
Redemption of Preferred Shares...... (624,031) -- -- -- -- --
Currency translation adjustment..... -- -- -- -- -- (3,352)
--------- ---------- -------- -------- ---------- -------
Balance at September 30, 1996....... 298,302 1,231,242 484,375 151,233 4,321,103 (1,043)
Net income.......................... -- -- -- -- 684,094 --
Accrual of cumulative dividends on
preferred shares.................. 27,048 -- -- -- (27,048) --
Issuance of 60,944 common shares for
the exercise of stock options..... -- -- 13,500 27,000 -- --
Redemption of Preferred Shares...... (325,350) -- -- -- -- --
Currency translation adjustment..... -- -- -- -- -- (1,901)
--------- ---------- -------- -------- ---------- -------
Balance at September 30, 1997....... $ -- $1,231,242 $497,875 $178,233 $4,978,149 $(2,944)
========= ========== ======== ======== ========== =======

See accompanying notes.

F-5

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BIOANALYTICAL SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

YEAR ENDED SEPTEMBER 30
---------------------------------------
1995 1996 1997
---- ---- ----

OPERATING ACTIVITIES
Net income............................................ $ 550,607 $ 400,399 $ 684,094
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 397,619 399,797 536,389
Loss (gain) on sale of property and equipment.... (35,532) 3,218 (8,831)
Deferred income taxes............................ 107,324 100,437 56,080
Changes in operating assets and liabilities:
Accounts receivable......................... (118,978) (251) (1,361,559)
Inventories................................. 25,365 (148,617) 20,619
Prepaid expenses and other assets........... (19,367) (248,569) (107,656)
Accounts payable............................ (46,054) (75,773) 611,071
Income taxes payable........................ 106,760 (82,012) 216,591
Accrued expenses............................ (312,079) (41,509) 112,767
Customer advances........................... (36,000) (6,129) 82,115
----------- ----------- -----------
Net cash provided by operating activities............. 619,665 300,991 841,680
INVESTING ACTIVITIES
Capital expenditures.................................. (1,299,910) (3,178,499) (4,095,651)
Proceeds from sale of property and equipment.......... 61,370 21,412 70,778
Payments for purchase of net assets from Technicol
Limited, net of cash acquired....................... (92,731) -- --
----------- ----------- -----------
Net cash used by investing activities................. (1,331,271) (3,157,087) (4,024,873)
FINANCING ACTIVITIES
Borrowings of long-term debt.......................... 422,250 2,401,035 2,722,995
Payments of long-term debt............................ (128,255) (124,732) (202,429)
Borrowings on lines of credit......................... -- -- 615,377
Payments on lines of credit........................... -- -- (100,000)
Net proceeds from the exercise of stock options....... 3,311 3,000 40,500
Redemption of preferred shares........................ -- (624,031) (325,350)
Other................................................. 2,309 (3,352) (1,901)
----------- ----------- -----------
Net cash provided by financing activities............. 299,615 1,651,920 2,749,192
----------- ----------- -----------
Net decrease in cash and cash equivalents............. (411,991) (1,204,176) (434,001)
Cash and cash equivalents at beginning of year........ 2,211,506 1,799,515 595,339
----------- ----------- -----------
Cash and cash equivalents at end of year.............. $ 1,799,515 $ 595,339 $ 161,338
=========== =========== ===========

See accompanying notes.

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Bioanalytical Systems, Inc. and its subsidiaries (the "Company")
manufacture scientific instruments for use in the determination of trace amounts
of organic compounds in biological, environmental and industrial materials. The
Company sells its equipment and software for use in industrial, governmental and
academic laboratories. The Company also engages in laboratory services,
consulting and research related to analytical chemistry and chemical
instrumentation. The Company's customers are located in the United States and
throughout the world.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated.

CASH EQUIVALENTS

The Company considers all short-term, highly liquid investments to be cash
equivalents.

FINANCIAL INSTRUMENTS

Management has estimated that the fair value of financial instruments,
including cash and cash equivalents, accounts receivable, accounts payable and
debt approximates the carrying values.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method.

GOODWILL

Goodwill represents the excess of cost of acquisitions over the fair value
of net assets acquired and is amortized by the straight-line method over a
twenty year period.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of 10 through 40 years.
Expenditures for maintenance and repairs are charged to expense as incurred.

The Financial Accounting Standards Board (FASB) issued Statement of
Accounting Standards No. 121 (SFAS 121), "Accounting for Impairment of
Long-Lived Assets and for Assets to be Disposed of," which the Company adopted
effective October 1, 1995. SFAS 121 requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for possible
impairment whenever events or changes in circumstances indicate the carrying
amount of an asset may not be recoverable. Adoption of the Statement and its
application during 1996 and 1997 did not have an impact on the Company's
financial position or results of operations.

REVENUE RECOGNITION

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

1. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
renewal option. A portion of the contract fee is generally payable upon receipt
of the initial samples with the balance payable in installments over the life of
the contract. A majority of the Company's contracts are broken down into
discrete units of deliverable services for which a fixed fee for each unit is
established and revenue and related direct costs are recognized as units of
deliverable services are fulfilled. For all other service contracts, the Company
allocates a ratable portion of the total contract fee to the units of
deliverable services and recognizes revenue and the related direct costs as the
units of deliverable services are fulfilled.

INCOME TAXES

The Company computes its income tax provision in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
109). SFAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities. These deferred taxes are
measured by applying the provisions of tax laws in effect at the balance sheet
date.

ADVERTISING EXPENSE

The Company expenses advertising costs as incurred. Advertising expense was
$238,612, $267,184 and $275,850 for 1995, 1996, and 1997, respectively.

NET INCOME PER COMMON SHARE

Net income per common share is computed on the basis of the weighted
average number of common and common equivalent shares outstanding during each
year. Common equivalent shares include options to purchase Common Shares and
convertible preferred shares, which are assumed to be converted. In this
computation, net income is reduced by dividends accrued on the Redeemable
Preferred Shares.

Supplemental net income per share is computed by dividing supplemental net
income (which includes net income plus interest expense, net of the related
income tax benefit) by the weighted average number of shares that would have
been outstanding after giving effect to the number of shares that were required
to be sold in this public offering to repay borrowings under the Company's lines
of credit and long-term debt facilities at October 1, 1996. Supplemental net
income per share for 1997 was $0.20.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

RECENTLY ISSUED ACCOUNTING STANDARDS

In July 1997, the FASB issued Statement No. 131 (SFAS 131), "Disclosures
about Segments of an Enterprise and Related Information". Under SFAS 131, the
Company will report financial and descriptive information about its operating
segments. SFAS 131 is effective for fiscal years beginning after December 15,
1997. The Company plans to adopt SFAS 131 on October 1, 1998. The Company has
not yet evaluated the impact of adoption of SFAS 131.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS 130 establishes
standards for reporting and display of comprehensive income in the financial
statements. SFAS 130 is effective for fiscal years beginning after December 15,

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

1. SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
1997. The Company plans to adopt SFAS 130 on October 1, 1998. The Company has
not yet evaluated the impact of SFAS 130.

In February 1997, the FASB issued Statement of Financial Accounting
Standards No. 128 (SFAS 128), "Earnings per Share", which replaces the
presentation of primary earnings per share (EPS) with basic EPS and replaces
fully diluted EPS with diluted EPS. It also requires dual presentation of basic
and diluted EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the components of
the basic EPS computation to the components of the diluted EPS computation. SFAS
128 is effective for both interim and annual periods ending after December 15,
1997. Earlier adoption is not permitted. Upon adoption, all prior-period EPS
data presented will be restated. The Company does not anticipate the adoption of
SFAS 128 to have a significant effect on EPS.

2. ACQUISITION

Effective April 3, 1995 the Company acquired all of the capital stock of
Technicol, Limited for cash approximating $97,000 and 22,572 common shares. The
acquired business was involved in the distribution of chromatography equipment
and supplies to pharmaceutical firms in the United Kingdom.

The acquisition was accounted for using the purchase method of accounting
and the results of operations have been included in the consolidated financial
statements since the date of acquisition. The purchase price was allocated to
the net assets acquired, including $240,032 to goodwill, based upon the fair
market value at the date of acquisition.

On an unaudited pro forma basis, revenue, net income and net income per
share for the year ended September 30, 1995, was $12,892,000, $510,000 and
$0.15, respectively. This pro forma data presents the consolidated results of
operations as if the acquisition had occurred on October 1, 1994, after giving
effect to certain adjustments, including amortization of goodwill, increased
interest expense and related income tax effects. The pro forma results have been
prepared for comparative purposes only and do not purport to indicate the
results of operations which would actually have occurred had the acquisition
been in effect on the date indicated, or which may occur in the future.

Pro forma amounts for the year ended September 30, 1995 include the
acquired entity's financial data for the year ended April 30, 1995 as it was not
practicable to determine the September 30, 1995 year end results.

3. INVENTORIES

Inventories at September 30 consisted of:

[Enlarge/Download Table]

1996 1997
---- ----

Raw materials............................................... $ 803,396 $ 909,258
Work in progress............................................ 292,076 278,386
Finished goods.............................................. 868,153 800,880
---------- ----------
1,963,625 1,988,524
LIFO reserve................................................ (31,775) (77,293)
---------- ----------
Total LIFO cost............................................. $1,931,850 $1,911,231
========== ==========

4. DEBT ARRANGEMENTS

The Company has a bank line of credit agreement which expires March 1, 1998
and allows borrowings of the lesser of 50% of inventories plus 80% of qualified
accounts receivable or $2,200,000. Interest is charged at

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

4. DEBT ARRANGEMENTS -- CONTINUED
the prime rate plus .25% (8.75% at September 30, 1997). At September 30, 1997,
the collateral base for this line of credit resulted in borrowing availability
of approximately $2,200,000, of which $200,000 was outstanding at September 30,
1997. The line is collateralized by inventories and accounts receivable.

The Company has a bank line of credit agreement for capital expenditures
which expires March 1, 1998 and allows borrowings of the lesser of 80% of
capital expenditures or $1,000,000. Interest is charged at the prime rate plus
.25% (8.75% at September 30, 1997). At September 30, 1997, $315,377 was
outstanding on this line. This line is collateralized by property and equipment,
inventories and accounts receivable.

During 1996, the Company entered into a credit facility for up to
$5,000,000 for the purchase and renovation of an adjacent building (the
"Construction loan"). At maturity (January 31, 1998), the loan may be converted
to a five year term loan based upon a 20 year amortization funding on a
conventional commercial mortgage basis or with fixed principal payments plus
interest. Interest is charged at the prime rate plus .25% (8.75% at September
30, 1997). This credit facility is collateralized by property and equipment. The
agreement contains certain covenants, which among other things require the
Company to maintain minimum levels of tangible net worth and debt service
coverage.

Long-term debt at September 30 consisted of the following:

[Enlarge/Download Table]

1996 1997
---- ----

Construction loan........................................... $1,972,003 $4,695,000
Equipment loan, monthly payments of $8,803 including
interest at 8.50% per annum............................... 423,900 351,592
Mortgage note collateralized by certain real estate, monthly
payments of $4,827 including interest at 8.75% per
annum..................................................... 144,412 97,610
Capital lease obligations (Note 7).......................... 271,827 188,506
---------- ----------
2,812,142 5,332,708
Less current portion........................................ (300,115) (287,833)
---------- ----------
$2,512,027 $5,044,875
========== ==========

The maturities of long-term debt for the five succeeding years are as
follows:

[Download Table]

YEARS ENDED SEPTEMBER 30
------------------------

1998............................................. $ 287,833
1999............................................. 326,813
2000............................................. 198,903
2001............................................. 208,980
2002............................................. 125,703
Thereafter....................................... 4,184,476
----------
$5,332,708
==========

Cash interest payments of $69,602, $99,057, and $345,018 were made in 1995,
1996 and 1997, respectively. Cash interest payments for 1996 and 1997 include
interest of $28,868 and $266,200, respectively, on the Construction loan which
was capitalized. These amounts include interest required to be paid on a portion
of the undistributed earnings of a subsidiary which qualifies as a domestic
international sales corporation (see Note 5).

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

5. INCOME TAXES

Significant components of the Company's deferred tax liabilities and assets
as of September 30 are as follows:

[Download Table]

1996 1997
---- ----

Deferred tax liabilities:
Tax over book depreciation................................ $ 712,032 $ 818,420
Deferred DISC income...................................... 398,280 340,642
---------- ----------
Total deferred liabilities.................................. 1,110,312 1,159,062
Deferred tax assets:
Tax credit carryforwards.................................. 91,493 --
Net operating loss carryforwards.......................... 14,876 4,526
Inventory pricing......................................... 72,669 71,199
Accrued vacation.......................................... 57,916 63,470
Other-net................................................. 34,184 75,396
---------- ----------
Total deferred tax assets................................... 271,138 214,591
Valuation allowance for deferred tax assets................. (49,217) --
---------- ----------
Net deferred tax assets..................................... 221,921 214,591
---------- ----------
Net deferred tax liabilities................................ $ 888,391 $ 944,471
========== ==========

Significant components of the provision for income taxes are as follows:

[Download Table]

1995 1996 1997
---- ---- ----

Current:
Federal............................................. $170,721 $123,625 $265,776
State............................................... 66,209 58,586 91,539
-------- -------- --------
Total current......................................... 236,930 182,211 357,315
Deferred:
Federal............................................. 100,181 81,928 54,849
State............................................... 7,143 18,509 1,231
-------- -------- --------
Total deferred........................................ 107,324 100,437 56,080
-------- -------- --------
$344,254 $282,648 $413,395
======== ======== ========

The effective income tax rate varied from the statutory federal income tax
rate as follows:

[Download Table]

1995 1996 1997
---- ---- ----

Statutory federal income tax rate........................... 34.0% 34.0% 34.0%
Increases (decreases):
Amortization of goodwill and other nondeductible
expenses............................................... 1.0 2.1 1.2
Benefit of foreign sales corporation, net................. (6.8) (8.6) (5.8)
State income taxes, net of federal tax benefit............ 5.4 7.5 5.6
Research and development credit........................... -- -- (5.0)
Nondeductible foreign losses.............................. 6.3 10.0 7.6
Other..................................................... (1.4) (3.6) 0.1
---- ---- ----
38.5% 41.4% 37.7%
==== ==== ====

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

5. INCOME TAXES -- CONTINUED
]Net operating loss carryforwards were generated by a subsidiary of the Company
prior to its acquisition by the Company and the carryforwards are restricted to
use by that subsidiary. These carryforwards expire through the year 2004.

In fiscal 1996 and 1997, the Company's foreign operations generated losses
before income taxes of $200,145 and $245,800, respectively.

Payments made in 1995, 1996 and 1997 for federal and state income taxes
amounted to $163,950, $160,000 and $140,000, respectively.

6. PREFERRED SHARES AND SHAREHOLDERS' EQUITY

PREFERRED SHARES

On February 27, 1991 the Board of Directors approved the issuance of up to
1,000,000 shares of Preferred Shares. The Board of Directors designated 105,000
shares as Redeemable Preferred Shares ($10.00 stated value) and designated
250,000 shares as Convertible Preferred Shares ($8.00 stated value).

The Redeemable Preferred Shares have preference over all other outstanding
classes of capital shares of the Company with respect to payment of dividends.
Holders of Redeemable Preferred Shares are entitled to receive, when and as
declared by the Board of Directors, cumulative preferential cash dividends at
the rate of $.80 per share per annum payable quarterly in arrears, however, they
do not participate with respect to other dividends declared by the Company.
Although such dividends have not been declared, the Company has recorded the
dividends as a charge to Retained Earnings and an increase to Redeemable
Preferred Shares. The Redeemable Preferred Shares were redeemed by the Company
in three equal installments on December 31, 1995, June 30, 1996 and December 1,
1996 at $10.00 per share plus accrued unpaid dividends.

The holders of the Convertible Preferred Shares have the right at any time
to convert those shares, in whole or in part and without additional
consideration, into fully paid Common Shares. The conversion rate is one Common
Shares for each Convertible Preferred Share at September 30, 1997 (4.514 Common
Shares for each Convertible Preferred Share after the share split described in
Note 10). Holders of Convertible Preferred Shares are entitled to one vote per
share on any matter submitted to a vote of the holders of Common Shares. No cash
dividends may be declared and paid with respect to the Common Shares unless
equivalent dividends are also declared and paid with respect to the Convertible
Preferred Shares. These shares are redeemable, at the option of the holders, in
three equal installments on December 31, 1995, June 30, 1996 and December 31,
1996, at a redemption price of $8.00 per share plus any accrued unpaid
dividends. No redemption requests were made by the holders during 1997.

Alternatively, the holders of the Convertible Preferred Shares may require
the Company to purchase all or any portion of the Convertible Preferred Shares
and any Common Shares obtained through the conversion of the Convertible
Preferred Shares at a price equal to the greater of the amount such shares are
entitled to receive upon liquidation of the Company or fair market value. The
fair market value could exceed the $8 optional redemption price. As of September
30, 1997, the holders of the Convertible Preferred Shares have executed
agreements to convert these shares into Common Shares concurrent with the
Company's initial public offering.

The Company must maintain certain restrictive covenants in accordance with
the preferred stock agreement, including net worth and indebtedness
requirements, restrictions on the declaration of dividends, redemption of Common
Shares, issuance of Preferred and Common Shares and capital expenditure levels.

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

6. PREFERRED SHARES AND SHAREHOLDERS' EQUITY -- CONTINUED
STOCK OPTION PLANS

During 1990, the Company established an Employee Incentive Stock Option
Plan whereby options to purchase shares of the Company's Common Shares at fair
market value can be granted to employees of the Company. Options granted become
exercisable in four equal installments beginning two years after the date of the
grant. The plan terminates in the year 2000.

During fiscal 1989, the Company established an Outside Director Stock
Option Plan whereby options to purchase shares of the Company's Common Shares at
fair market value can be granted to outside directors. Options granted become
exercisable in four equal installments beginning two years after the date of
grant. The plan terminates in 1999.

The Company has adopted new stock option plans in connection with its
initial public offering and accordingly does not plan to grant any more options
pursuant to the plans discussed above.

The Company applies the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because the
alternative fair value accounting provided for under SFAS 123, "Accounting for
Stock-Based Compensation," requires use of opinion valuation models that were
not developed for use in valuing employee stock options. Under APB 25, because
the exercise price of the Company's employee stock options equals the estimated
market price of the underlying shares on the date of grant, no compensation
expense is recognized.

A summary of the Company's stock option activity, and related information
for the years ended September 30 follows:

[Enlarge/Download Table]

1995 1996 1997
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- -------- ------- -------- ------- --------

Outstanding -- beginning of year...... 410,359 $1.08 342,643 $1.15 338,129 $1.16
Exercised............................. 67,716 0.73 4,514 0.66 60,944 0.66
Terminated............................ -- -- -- -- 4,514 1.32
------- ------- -------
Outstanding -- end of year............ 342,643 $1.15 338,129 $1.16 272,671 $1.27
======= ======= =======
Exercisable at end of year............ 224,140 $0.87 262,512 $1.00 236,555 $1.19
======= ======= =======

[Enlarge/Download Table]

RANGE OF NUMBER WEIGHTED NUMBER
EXERCISE OUTSTANDING AT AVERAGE REMAINING WEIGHTED AVERAGE EXERCISABLE AT WEIGHTED AVERAGE
PRICES SEPTEMBER 30, 1997 CONTRACTUAL LIFE EXERCISE PRICE SEPTEMBER 30, 1997 EXERCISE PRICE
-------- ------------------ ----------------- ---------------- ------------------ ----------------

$0.66-$1.00 105,637 2.01 $0.66 105,637 $0.66
$1.01-$1.50 36,116 4.14 $1.31 36,116 $1.31
$1.51-$2.10 130,918 5.38 $1.75 94,802 $1.73
------- -------
272,671 236,555
======= =======

No options were granted in fiscal 1995, 1996 or 1997.

A special non-qualified option was granted for 4,514 Common Shares at $1.27
per share to a consultant to the Company in August 1991. This options remains
outstanding at September 30, 1997.

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

7. CAPITAL LEASE

The Company has a capital lease arrangement to finance the acquisition of
equipment. Future minimum lease payments, based upon scheduled payments under
the lease arrangement, as of September 30, 1997 are as follows:

[Download Table]

1998........................................................ $102,504
1999........................................................ 102,504
--------
Total minimum lease payments................................ 205,008
Amounts representing interest............................... (16,502)
--------
Present value of minimum lease payments..................... $188,506
========

The total amount of property and equipment capitalized under capital lease
obligations as of both September 30, 1996 and 1997 was $486,043. Accumulated
amortization at September 30, 1996 and 1997 was $121,191 and $169,795,
respectively. The amortization is included in depreciation expense.

At September 30, 1997, the Company has a commitment to purchase $546,400 of
equipment which it currently intends to finance using an operating lease with
monthly payments approximating $9,000.

8. RETIREMENT PLAN

Effective July 1, 1984, the Company established an Internal Revenue Code
Section 401(k) Retirement Plan covering all employees over twenty-one years of
age with at least one year of service. Under the terms of the Plan, the Company
contributes 2% of each participant's total wages to the Plan. The Plan also
includes provisions for various contributions which may be instituted at the
discretion of the Board of Directors. The contribution made by the participant
may not exceed 10% of the participant's annual wages. Contribution expense was
$110,489, $138,142 and $158,924 in 1995, 1996 and 1997, respectively.

9. SEGMENT INFORMATION

The Company operates in two principal segments -- analytical services and
analytical products. The Company's analytical services unit provides analytical
chemistry support on a contract basis directly to pharmaceutical companies. The
Company's analytical products unit provides liquid chromatography,
electrochemical, and physiological monitoring products to pharmaceutical
companies, universities, government research centers and medical research
institutions.

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

9. SEGMENT INFORMATION -- CONTINUED
INDUSTRY SEGMENT DATA:

[Enlarge/Download Table]

YEAR ENDED SEPTEMBER 30,
---------------------------
1995 1996 1997
---- ---- ----
(IN THOUSANDS)

REVENUE
Products.................................................... $ 9,627 $ 9,113 $ 9,932
Services.................................................... 2,725 3,681 4,991
------- ------- -------
Total Revenue............................................... $12,352 $12,794 $14,923
======= ======= =======
OPERATING INCOME (LOSS)
Products.................................................... $ 320 $ (366) $ (107)
Services.................................................... 464 1,067 1,279
------- ------- -------
Total Operating Income...................................... 784 701 1,172
Corporate income (expenses)................................. 111 (18) (75)
------- ------- -------
Income before income taxes.................................. $ 895 $ 683 $ 1,097
======= ======= =======
IDENTIFIABLE ASSETS
Products.................................................... $ 6,993 $ 6,116 $ 6,221
Services.................................................... 2,435 5,258 9,710
------- ------- -------
Total Assets................................................ $ 9,428 $11,374 $15,931
======= ======= =======
DEPRECIATION AND AMORTIZATION
Products.................................................... $ 266 $ 224 $ 244
Services.................................................... 132 176 292
------- ------- -------
$ 398 $ 400 $ 536
======= ======= =======
CAPITAL EXPENDITURES
Products.................................................... $ 468 $ 324 $ 153
Services.................................................... 832 2,854 3,943
------- ------- -------
$ 1,300 $ 3,178 $ 4,096
======= ======= =======

EXPORT SALES:

Export sales to unaffiliated customers by destination of sales are
summarized as follows (in thousands):

[Enlarge/Download Table]

YEAR ENDED SEPTEMBER 30,
------------------------
1995 1996 1997
---- ---- ----

Pacific Rim:
Japan..................................................... $1,739 $1,769 $1,740
Other..................................................... 1,159 1,134 1,215
------ ------ ------
2,898 2,903 2,955
Europe...................................................... 933 1,144 1,105
Other....................................................... 836 556 1,037
------ ------ ------
$4,667 $4,603 $5,097
====== ====== ======

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BIOANALYTICAL SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

9. SEGMENT INFORMATION -- CONTINUED
MAJOR CUSTOMERS:

During 1996 and 1997, a major United States-based pharmaceutical company
accounted for approximately 18.3% and 20.9%, respectively, of the Company's
total revenues.

The Company sells its products through international distributors, one of
which represents 18%, 19% and 17% of 1995, 1996 and 1997 product sales,
respectively. Accounts receivable from this foreign distributor are $196,416 and
$124,104 at September 30, 1996 and 1997, respectively.

10. SUBSEQUENT EVENT (UNAUDITED)

On September 24, 1997, the Company's Board of Directors approved a 4.514
for 1 share split of common shares effective November 21, 1997. All common share
and per share amounts and information concerning stock option plans have been
adjusted retroactively to give effect to this share split. Immediately prior to
the share split, the Convertible Preferred Shares were converted to Common
Shares on a one-for-one basis in accordance with the terms of the Convertible
Preferred Shares.

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

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

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

TABLE OF CONTENTS

[Download Table]

PAGE
----

Prospectus Summary.................... 3
Risk Factors.......................... 5
Use of Proceeds....................... 10
Dividend Policy....................... 10
Dilution.............................. 11
Capitalization........................ 12
Selected Consolidated Financial
Data................................ 13
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 14
Business.............................. 19
Management............................ 33
Certain Transactions.................. 40
Principal Shareholders................ 41
Description of Capital Stock.......... 42
Shares Eligible for Future Sale....... 44
Underwriting.......................... 46
Legal Matters......................... 48
Experts............................... 48
Additional Information................ 48
Glossary.............................. 49
Index to Financial Statements......... F-1

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

UNTIL DECEMBER 19, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN COMMON SHARES, WHETHER OR NOT PARTICIPATING IN
THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENTS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITER WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

1,250,000 COMMON SHARES

[BIOANALYTICAL SYSTEMS LOGO]

BIOANALYTICAL SYSTEMS, INC.

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

PROSPECTUS
-----------------------------

RONEY & CO.

THE OHIO COMPANY

NOVEMBER 24, 1997

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

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B1’ Filing	Date	First	Last	Other Filings

	10/1/98	18	60
	7/1/98	18
	3/1/98	17	61
	1/31/98	18	61
	12/19/97	68
	12/15/97	18	60
	11/26/97	1
Filed on:	11/25/97
	11/24/97	1	68	S-1/A
	11/21/97	53	67
	10/31/97	18	53
	10/23/97	37
	10/1/97	39
	9/30/97	4	67
	9/24/97	67
	12/31/96	40	63
	12/1/96	63
	10/1/96	59
	9/30/96	13	67
	6/30/96	40	63
	12/31/95	40	63
	10/1/95	58
	9/30/95	13	60
	4/30/95	60
	4/3/95	60
	10/1/94	60
	9/30/94	13	56
	9/30/93	13
				List all Filings

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Filing Submission 0000950124-97-006219 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Bioanalytical Systems Inc – IPO: ‘424B1’ on 11/25/97

As of: Tuesday, 11/25/97 · Accession #: 950124-97-6219 · File #: 333-36429

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Initial Public Offering (IPO): Prospectus — Rule 424(b)(1)
Filing Table of Contents