Large Scale Biology (LSBC) 8-K Entry into a Material Definitive Agreement

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF CALIFORNIA

In re: Large Scale Biology (Vacaville)	Case No.	06-20046-A-11
		_______________
	CHAPTER 11
	MONTHLY OPERATING REPORT
	(GENERAL BUSINESS CASE)

SUMMARY OF FINANCIAL STATUS

MONTH ENDED: Jan-06 PETITION DATE: 01/09/06

1. Debtor in possession (or trustee) hereby submits this Monthly Operating Report on the Accrual Basis of accounting (or if checked here the Office of the U.S. Trustee or the Court has approved the Cash Basis of Accounting for the Debtor). Dollars reported in   $1

2.             Asset and Liability Structure	End of Current Month		End of Prior Month	As of Petition Filing
a.    Current Assets	$	22,221,120
b.    Total Assets	$	25,209,293		$	26,046,595
c.     Current Liabilities	$	889,819
d.     Total Liabilities	$	12,996,589		$	13,019,072

3.             Statement of Cash Receipts & Disbursements for Month	Current Month		Prior Month		Cumulative (Case to Date)
a.     Total Receipts	$	104,768			$	0
b.     Total Disbursements	$	69,263			$	0
c.     Excess (Deficiency) of Receipts Over Disbursements (a - b)	$	35,505	$	0	$	0
d.     Cash Balance Beginning of Month	$	23,236			$	0
e.     Cash Balance End of Month (c + d)	$	58,741	$	0	$	0

	Current Month			Prior Month	Cumulative (Case to Date)
4.             Profit/(Loss) from the Statement of Operations	$	(66,496	)
5.             Account Receivables (Pre and Post Petition)	$	(10,492	)
6.             Post-Petition Liabilities	$	889,819
7.             Past Due Post-Petition Account Payables (over 30 days)	$	0

At the end of this reporting month:	Yes		No
8.             Have any payments been made on pre-petition debt, other than payments in the normal				X
course to secured creditors or lessors? (if yes, attach listing including date of payment, amount of payment and name of payee)
9.             Have any payments been made to professionals? (if yes, attach listing including date of				X
payment, amount of payment and name of payee)
10.           If the answer is yes to 8 or 9, were all such payments approved by the court?
11.           Have any payments been made to officers, insiders, shareholders, relatives? (if yes,				X
attach listing including date of payment, amount and reason for payment, and name of payee)
12.           Is the estate insured for replacement cost of assets and for general liability?		X
13.           Are a plan and disclosure statement on file?		pending
14.           Was there any post-petition borrowing during this reporting period?				X

15.           Check if paid: Post-petition taxes ___;U.S. Trustee Quarterly Fees  x ;    Check if filing is current for: Post-petition tax reporting and tax returns: x

(Attach explanation, if post-petition taxes or U.S. Trustee Quarterly Fees are not paid current or if post-petition tax reporting and tax return filings are not current.)

I declare under penalty of perjury I have reviewed the above summary and attached financial statements, and after making reasonable inquiry believe these documents are correct.

Date:	2/22/06	/s/ Ronald Artale
		Responsible Individual

STATEMENT OF OPERATIONS

(General Business Case)

For the Month Ended      01/31/06     

Current Month
Actual			Forecast			Variance						Cumulative (Case to Date)		Next Month Forecast
										Revenues:
						$	0		1	Gross Sales				$	7,138
						$	0		2	less: Sales Returns & Allowances
$	0		$	0		$	0		3	Net Sales		$	0	$	7,138
$	0					$	0		4	less: Cost of Goods Sold   (Schedule 'B')
$	0		$	0		$	0		5	Gross Profit		$	0	$	7,138
$	398					$	398		6	Interest
						$	0		7	Other Income:	Grants			$	129,435
						$	0		8	Other Receipts
$	25,000		$	25,000		$	0		9	License Fee				$	100,000
$	25,398		$	25,000		$	398		10	Total Revenues		$	0	$	236,573
										Expenses:
						$	0		11	Compensation to Owner(s)/Officer(s)
						$	0		12	Salaries				$	22,100
						$	0		13	Commissions
$	21,000		$	9,500		$	(11,500	)	14	Contract Labor				$	43,250
										Rent/Lease:
						$	0		15	Personal Property
						$	0		16	Real Property				$	1,468
$	14,679		$	0		$	(14,679	)	17	Insurance
						$	0		18	Management Fees
$	45,113		$	45,113		$	0		19	Depreciation				$	34,694
										Taxes:
						$	0		20	Employer Payroll Taxes
						$	0		21	Real Property Taxes
						$	0		22	Other Taxes
						$	0		23	Other Selling
$	827		$	50,500		$	49,673		24	Other Administrative				$	42,182
						$	0		25	Interest
						$	0		26	Other Expenses:
$	1,942		$	1,000		$	(942	)	27	Employee Benefits
						$	0		28	Supplies				$	2,400
			$	10,000		$	10,000		29	Moving & Relocation
						$	0		30	Patent Expenses				$	53,541
$	8,333		$	8,333		$	0		31	License Fee
						$	0		32
						$	0		33
						$	0		34
$	91,894		$	124,446		$	32,552		35	Total Expenses		$	0	$	199,635
$	(66,496	)	$	(99,446	)	$	32,950		36	Subtotal		$	0	$	36,938
										Reorganization Items:
			$	30,000		$	30,000		37	Professional Fees				$	24,883
						$	0		38	Provisions for Rejected Executory Contracts
						$	0		39	Interest Earned on Accumulated Cash from
										Resulting Chp 11 Case
						$	0		40	Gain or (Loss) from Sale of Equipment
						$	0		41	U.S. Trustee Quarterly Fees
						$	0		42
$	0		$	30,000		$	(30,000	)	43	Total Reorganization Items		$	0	$	24,883
$	(66,496	)	$	(69,446	)	$	2,950		44	Net Profit (Loss) Before Federal &State Taxes		$	0	$	61,821
						$	0		45	Federal & State Income Taxes
$	(66,496	)	$	(69,446	)	$	2,950		46	Net Profit (Loss)		$	0	$	61,821

Attach an Explanation or Variance to Statement of Operations (For variances greater than +/-10% only):

In re: Large Scale Biology(Vacaville)

Statement of Operations

(General Business Case)

Explanation of Variance to Statement of Operations

Line 14. Contract Labor. Variance ($11,500). Post suspension of operations start-up. Unable to determine more precise need for professional and clerical assistance.

Line 17. Insurance. Variance ($14,679). Scope and cost of liability, casualty and property insurance was not determinable at the time.

Line 27. Employee Benefits. Variance ($942). COBRA medical reimbursement required there be two employees instead of one for the program to be activated.

BALANCE SHEET

 (General Business Case)

For the Month Ended       January 31,2006      

Assets
				From Schedules		Market Value
	Current Assets
1		Cash and cash equivalents - unrestricted				$	58,740
2		Cash and cash equivalents - restricted
3		Accounts receivable (net)			A	$	(10,492	)
4		Inventory			B	$	0
5		Prepaid expenses				$	223,961
6		Professional retainers
7		Other:	Intercompany			$	21,948,911
8
9		Total Current Assets				$	22,221,120
	Property and Equipment (Market Value)
10		Real property			C	$	0
11		Machinery and equipment			D	$	59,301
12		Furniture and fixtures			D	$	0
13		Office equipment			D	$	6,523
14		Leasehold improvements			D	$	121,257
15		Vehicles			D	$	0
16		Other:			D
17					D
18					D
19					D
20					D
21		Total Property and Equipment				$	187,081
	Other Assets
22		Loans to shareholders
23		Loans to affiliates
24		Other Assets				$	1,205,556
25		Intangible Assets				$	1,595,536
26
27
28		Total Other Assets				$	2,801,092
29		Total Assets				$	25,209,293

NOTE:

Indicate the method used to estimate the market value of assets (e.g., appraisals; familiarity with comparable market prices, etc.) and the date the value was determined.

Liabilities and Equity

(General Business Case)

Liabilities From Schedules
Post-Petition
Current Liabilities
30		Salaries and wages
31		Payroll taxes
32		Real and personal property taxes
33		Income taxes
34		Sales taxes
35		Notes payable (short term)
36		Accounts payable (trade)		A	$	0
37		Real property lease arrearage
38		Personal property lease arrearage
39		Accrued professional fees
40		Current portion of long-term post-petition debt (due within 12 months)
41		Other:	Contract Workers-Ron Artale		$	7,500
42			License Fees		$	8,333
43		Other: Deferred rent, accrued stock comp, accrued expenses			$	873,986
44		Total Current Liabilities			$	889,819
45	Long-Term Post-Petition Debt, Net of Current Portion
46		Total Post-Petition Liabilities			$	889,819
Pre-Petition Liabilities (allowed amount)
47		Secured claims		F	$	7,615,052
48		Priority unsecured claims		F	$	509,597
49		General unsecured claims		F	$	3,982,121
50		Total Pre-Petition Liabilities			$	12,106,770
51		Total Liabilities			$	12,996,589
Equity (Deficit)
52	Retained Earnings/(Deficit) at time of filing				$	(191,626,585	)
53	Capital Stock				$	204,657,972
54	Additional paid-in capital
55	Cumulative profit/(loss) since filing of case				$	(66,496	)
56	Post-petition contributions/(distributions) or (draws)
57	Shareholders notes receivable				$	(3,864	)
58	Market value adjustment				$	(748,323	)
59		Total Equity (Deficit)			$	12,212,704
60     Total Liabilities and Equity (Deficit)					$	25,209,293

SCHEDULES TO THE BALANCE SHEET

(General Business Case)

Schedule A

Accounts Receivable and (Net) Payable

Receivables and Payables Agings	Accounts Receivable [Pre and Post Petition]			Accounts Payable [Post Petition]		Past Due Post Petition Debt
0 -30 Days	$	(10,492	)
31-60 Days
61-90 Days						$	0
91+Days
Total accounts receivable/payable	$	(10,492	)	$	0
Allowance for doubtful accounts
Accounts receivable (net)	$	(10,492	)

Schedule B

Inventory/Cost of Goods Sold

Types and Amount of Inventory(ies)			Cost of Goods Sold
		Inventory(ies) Balance at End of Month		Inventory Beginning of Month
				Add-
Retail/Restaurants -				Net purchase
Product for resale				Direct labor
				Manufacturing overhead
Distribution -				Freight in
Products for resale				Other:
Manufacturer -
Raw Materials
Work-in-progress				Less -
Finished goods				Inventory End of Month
				Shrinkage
Other - Explain				Personal Use
				Cost of Goods Sold	$	0
TOTAL	$	0

Method of Inventory Control	Inventory Valuation Methods
Do you have a functioning perpetual inventory system?	Indicate by a checkmark method of inventory used.

Yes No

How often do you take a complete physical inventory?	Valuation methods -
	FIFO cost
Weekly	LIFO cost
Monthly	Lower of cost or market
Quarterly	Retail method
Semi-annually	Other
Annually	Explain

Date of last physical inventory was

Date of next physical inventory is

Schedule C

Real Property

Description			Cost		Market Value
	Total	$	0	$	0

Schedule D

Other Depreciable Asets

Description			Cost		Market Value
Machinery & Equipment -
	Lab Equipment	$	7,309,277	$	59,301
	Facility Equipment	$	240,063		0
	Total	$	7,549,340	$	59,301
Furniture & Fixtures -
	Total	$	0	$	0
Office Equipment -
	Computers, Printers, Desks	$	722,382	$	6,523
	Total	$	722,382	$	6,523
Leasehold Improvements -
	Vacaville	$	1,508,410	$	913
	Maryland	$	2,311,111	$	120,344
	Total	$	3,819,521	$	121,257
Vehicles -
	Total	$	0	$	0

Schedule E

Aging of Post-Petition Taxes

(As of End of the Current Reporting Period)

Taxes Payable	0-30 Days		31-60 Days		61-90 Days		91+ Days		Total
Federal
Income Tax Withholding									$	0
FICA - Employee									$	0
FICA - Employer									$	0
Unemployment (FUTA)									$	0
Income									$	0
Other (Attach List)									$	0
Total Federal Taxes	$	0	$	0	$	0	$	0	$	0
State and Local
Income Tax Withholding									$	0
Unemployment (UT)									$	0
Disability Insurance (DI)									$	0
Empl. Training Tax (ETT)									$	0
Sales									$	0
Excise									$	0
Real property									$	0
Personal property									$	0
Income									$	0
Other (Attach List)									$	0
Total State & Local Taxes	$	0	$	0	$	0	$	0	$	0
Total Taxes	$	0	$	0	$	0	$	0	$	0

Schedule F

Pre-Petition Liabilities

List Total Claims For Each Classification -	Claimed Amount		Allowed Amount (b)
Secured claims (a)	$	7,615,052	$	7,615,052
Priority claims other than taxes	$	509,597	$	509,597
Priority tax claims	$	0	$	0
General unsecured claims	$	3,982,121	$	3,982,121

(a) List total amount of claims even it under secured.

(b) Estimated amount of claim to be allowed after compromise or litigation. As an example, you are a defendant in a lawsuit alleging damage of $ 10,000,000 and a proof of claim is filed in that amount. You believe that you can settle the case for a claim of $3,000,000. For Schedule F reporting purposes you should list $10,000,000 as the Claimed Amount and $3,000,000 as the Allowed Amount.

Schedule G

Rental Income Information

Not applicable to General Business Cases

Schedule H

Recapitulation of Funds Held at End of Month

	Account 1		Account 2	Account 3	Account 4
Bank
Account Type
Account No.
Account Purpose
Balance, End of Month
Total Funds on Hand for all Accounts	$	0

Attach copies of the month end bank statements(s), reconciliation(s), and the check register(s) to the Monthly Operating Report.

STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

INCREASE/ (Decrease in Cash and Cash Equivalents

For the Month Ended     01/31/06   

				Actual Current Month		Cumulative (Case to Date)
	Cash Receipts
1		Rent/Leases Collected
2		Cash Received from Sales
3		Interest Received		$	398
4		Borrowings
5		Funds from Shareholders, Partners, or Other Insiders
6		Capital Contributions
7		Licenses		$	25,000
8		Government Grants		$	78,380
9		Cobra Payment		$	990
10
11
12			Total Cash Receipts	$	104,768	$	0
	Cash Disbursements
13		Payments for Inventory
14		Selling
15		Administrative		$	14,636
16		Capital Expenditures		$	33,104
17		Principal Payments on Debt
18		Interest Paid
		Rent/Lease:
19			Personal Property
20			Real Property
		Amount Paid to Owner(s)/Officer(s)
21			Salaries
22			Draws
23			Commissions/Royalties
24			Expense Reimbursements
25			Other
26		Salaries/Commissions (less employee withholding)
27		Management Fees
		Taxes:
28			Employee Withholding
29			Employer Payroll Taxes	$	1,402
30			Real Property Taxes
31			Other Taxes
32		Other Cash Outflows:
33			Employee Benefits	$	1,942
34			Insurance	$	14,679
35			Agility Capital seizure of account	$	3,500
36
37
38			Total Cash Disbursements:	$	69,263	$	0
39	Net Increase (Decrease) in Cash			$	35,505	$	0
40	Cash Balance, Beginning of Period			$	23,236
41	Cash Balance, End of Period			$	58,741	$	0

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF CALIFORNIA

In re: Large Scale Bioprocessing Inc.	Case No.	06-20046-A-47
		_________________
	CHAPTER 11
	MONTHLY OPERATING REPORT
	(GENERAL BUSINESS CASE)

SUMMARY OF FINANCIAL STATUS

MONTH ENDED: Jan-06 PETITION DATE: 01/09/06

1. Debtor in possession (or trustee) hereby submits this Monthly Operating Report on the Accrual Basis of accounting (or if checked here the Office of the U.S. Trustee or the Court has approved the Cash Basis of Accounting for the Debtor). Dollars reported in $1

2.             Asset and Liability Structure	End of Current Month			End of Prior Month	As of Petition Filing
a.    Current Assets	$	(18,371,544	)
b.    Total Assets	$	(12,438,544	)		$	(13,609,548	)
c.     Current Liabilities	$	50,884				454,602
d.     Total Liabilities	$	463,201			$	463,202

3.             Statement of Cash Receipts & Disbursements for Month	Current Month		Prior Month		Cumulative (Case to Date)
a.     Total Receipts	$	50,000			$	0
b.     Total Disbursements	$	0			$	0
c.     Excess (Deficiency) of Receipts Over Disbursements (a - b)	$	50,000	$	0	$	0
d.     Cash Balance Beginning of Month	$	0			$	0
e.     Cash Balance End of Month (c+ d)	$	50,000	$	0	$	0

	Current Month			Prior Month	Cumulative (Case to Date)
4.             Profit/(Loss) from the Statement of Operations	$	(52,820	)
5.             Account Receivables (Pre and Post Petition)	$	53,000
6.             Post-Petition Liabilities	$	50,884
7.             Past Due Post-Petition Account Payables (over 30 days)	$	0

At the end of this reporting month:	Yes		No
8.             Have any payments been made on pre-petition debt, other than payments in the normal				X
course to secured creditors or lessors? (if yes, attach listing including date of payment, amount of payment and name of payee)
9.             Have any payments been made to professionals? (if yes, attach listing including date of				X
payment, amount of payment and name of payee)
10.           If the answer is yes to 8 or 9, were all such payments approved by the court?
11.           Have any payments been made to officers, insiders, shareholders, relatives? (if yes,				X
attach listing including date of payment, amount and reason for payment, and name of payee)
12.           Is the estate insured for replacement cost of assets and for general liability?		X
13.           Are a plan and disclosure statement on file?		pending
14.           Was there any post-petition borrowing during this reporting period?				X

15.           Check if paid: Post-petition taxes ___;U.S. Trustee Quarterly Fees  x ;    Check if filing is current for: Post-petition tax reporting and tax returns: x

(Attach explanation, if post-petition taxes or U.S. Trustee Quarterly Fees are not paid current or if post-petition tax reporting and tax return filings are not current.)

I declare under penalty of perjury I have reviewed the above summary and attached financial statements, and after making reasonable inquiry believe these documents are correct.

Date:	2/22/06	/s/ Ronald Artale
		Responsible Individual

STATEMENT OF OPERATIONS

(General Business Case)

For the Month Ended      01/31/06     

Current Month
Actual			Forecast			Variance				Cumulative (Case to Date)		Next Month Forecast
									Revenues:
						$	0	1	Gross Sales
						$	0	2	less: Sales Returns & Allowances
$	0		$	0		$	0	3	Net Sales	$	0	$	0
$	0					$	0	4	less: Cost of Goods Sold      (Schedule 'B')
$	0		$	0		$	0	5	Gross Profit	$	0	$	0
						$	0	6	Interest
						$	0	7	Other Income:
						$	0	8
						$	0	9
$	0		$	0		$	0	10	Total Revenues	$	0	$	0
									Expenses:
						$	0	11	Compensation to Owner(s)/Officer(s)
						$	0	12	Salaries
						$	0	13	Commissions
						$	0	14	Contract Labor			$	5,000
									Rent/Lease:
						$	0	15	Personal Property
						$	0	16	Real Property
						$	0	17	Insurance
						$	0	18	Management Fees
$	52,820		$	52,820		$	0	19	Depreciation
									Taxes:
						$	0	20	Employer Payroll Taxes
						$	0	21	Real Property Taxes
						$	0	22	Other Taxes
						$	0	23	Other Selling
						$	0	24	Other Administrative			$	27,882
						$	0	25	Interest
						$	0	26	Other Expenses:
						$	0	27
						$	0	28
						$	0	29
						$	0	30
						$	0	31
						$	0	32
						$	0	33
						$	0	34
$	52,820		$	52,820		$	0	35	Total Expenses	$	0	$	32,882
$	(52,820	)	$	(52,820	)	$	0	36	Subtotal	$	0	$	(32,882	)
									Reorganization Items:
						$	0	37	Professional Fees
						$	0	38	Provisions for Rejected Executory Contracts
						$	0	39	Interest Earned on Accumulated Cash from
									Resulting Chp 11 Case
						$	0	40	Gain or (Loss) from Sale of Equipment
						$	0	41	U.S. Trustee Quarterly Fees
						$	0	42
$	0		$	0		$	0	43	Total Reorganization Items	$	0	$	0
$	(52,820	)	$	(52,820	)	$	0	44	Net Profit (Loss) Before Federal &State Taxes	$	0	$	(32,882	)
						$	0	45	Federal & State Income Taxes
$	(52,820	)	$	(52,820	)	$	0	46	Net Profit (Loss)	$	0	$	(32,882	)

Attach an Explanation of Variance to Statement of Operations (For variances greater than +/-10% only):

BALANCE SHEET

 (General Business Case)

For the Month Ended       January 31,2006      

Assets
				From Schedules		Market Value
	Current Assets
1		Cash and cash equivalents - unrestricted				$	50,000
2		Cash and cash equivalents - restricted
3		Accounts receivable (net)			A	$	53,000
4		Inventory			B	$	0
5		Prepaid expenses
6		Professional retainers
7		Other:	Intercompany			$	(18,474,544	)
8
9		Total Current Assets				$	(18,371,544	)
	Property and Equipment (Market Value)
10		Real property			C	$	5,266,132
11		Machinery and equipment			D	$	690,776
12		Furniture and fixtures			D	$	0
13		Office equipment			D	$	43,092
14		Leasehold improvements			D	$	0
15		Vehicles			D	$	0
16		Other:			D
17					D
18					D
19					D
20					D
21		Total Property and Equipment				$	6,000,000
	Other Assets
22		Loans to shareholders
23		Loans to affiliates
24		Other Assets				$	8,000
25		Receipts for Sale of Assets				$	(75,000	)
26
27
28		Total Other Assets				$	(67,000	)
29		Total Assets				$	(12,438,544	)

NOTE:

Indicate the method used to estimate the market value of assets (e.g., appraisals; familiarity with comparable market prices, etc.) and the date the value was determined.

Liabilities and Equity

(General Business Case)

Liabilities From Schedules
Post-Petition
Current Liabilities
30		Salaries and wages
31		Payroll taxes
32		Real and personal property taxes
33		Income taxes
34		Sales taxes
35		Notes payable (short term)
36		Accounts payable (trade)	A	$	0
37		Real property lease arrearage
38		Personal property lease arrearage
39		Accrued professional fees
40		Current portion of long-term post-petition debt (due within 12 months)
41		Other:
42		Accured Expenses		$	42,284
43		Arrured Stock Compensation		$	8,600
44		Total Current Liabilities		$	50,884
45	Long-Term Post-Petition Debt, Net of Current Portion
46		Total Post-Petition Liabilities		$	50,884
	Pre-Petition Liabilities (allowed amount)
47		Secured claims	F	$	0
48		Priority unsecured claims	F	$	160,451
49		General unsecured claims	F	$	251,866
50		Total Pre-Petition Liabilities		$	412,317
51		Total Liabilities		$	463,201
Equity (Deficit)
52	Retained Earnings/(Deficit) at time of filing			$	(14,072,750	)
53	Capital Stock
54	Additional paid-in capital
55	Cumulative profit/(loss) since filing of case			$	(52,820	)
56	Post-petition contributions/(distributions) or (draws)
57
58	Market value adjustment			$	1,223,825
59		Total Equity (Deficit)		$	(12,901,745	)
60     Total Liabilities and Equity (Deficit)				$	(12,438,544	)

SCHEDULES TO THE BALANCE SHEET

(General Business Case)

Schedule A

Accounts Receivable and (Net) Payable

Receivables and Payables Agings	Accounts Receivable [Pre and Post Petition]		Accounts Payable [Post Petition]		Past Due Post Petition Debt
0 -30 Days	$	25,000
31-60 Days
61-90 Days	$	28,000			$	0
91+Days
Total accounts receivable/payable	$	53,000	$	0
Allowance for doubtful accounts
Accounts receivable (net)	$	53,000

Schedule B

Inventory/Cost of Goods Sold

Types and Amount of Inventory(ies)			Cost of Goods Sold
		Inventory(ies) Balance at End of Month		Inventory Beginning of Month
				Add-
Retail/Restaurants -				Net purchase
Product for resale				Direct labor
				Manufacturing overhead
Distribution -				Freight in
Products for resale				Other:
Manufacturer -
Raw Materials
Work-in-progress				Less -
Finished goods				Inventory End of Month
				Shrinkage
Other - Explain				Personal Use
				Cost of Goods Sold	$	0
TOTAL	$	0

Method of Inventory Control	Inventory Valuation Methods
Do you have a functioning perpetual inventory system?	Indicate by a checkmark method of inventory used.

Yes No

How often do you take a complete physical inventory?	Valuation methods -
	FIFO cost
Weekly	LIFO cost
Monthly	Lower of cost or market
Quarterly	Retail method
Semi-annually	Other
Annually	Explain

Date of last physical inventory was

Date of next physical inventory is

Schedule C

Real Property

Description			Cost		Market Value
	Land and Building in Owensboro, Ky	$	5,015,737	$	5,266,132
	Total	$	5,015,737	$	5,266,132

Schedule D

Other Depreciable Asets

Description			Cost		Market Value
Machinery & Equipment -
	Manufacturing Equipment	$	5,263,953	$	690,776
	Total	$	5,263,953	$	690,776
Furniture & Fixtures -
	Total	$	0	$	0
Office Equipment -
	Computers, Desks, Office Furniture	$	369,721	$	43,092
	Total	$	369,721	$	43,092
Leasehold Improvements -
	Total	$	0	$	0
Vehicles -
	Total	$	0	$	0

Schedule E

Aging of Post-Petition Taxes

(As of End of the Current Reporting Period)

Taxes Payable	0-30 Days		31-60 Days		61-90 Days		91+ Days		Total
Federal
Income Tax Withholding									$	0
FICA - Employee									$	0
FICA - Employer									$	0
Unemployment (FUTA)									$	0
Income									$	0
Other (Attach List)									$	0
Total Federal Taxes	$	0	$	0	$	0	$	0	$	0
State and Local
Income Tax Withholding									$	0
Unemployment (UT)									$	0
Disability Insurance (DI)									$	0
Empl. Training Tax (ETT)									$	0
Sales									$	0
Excise									$	0
Real property									$	0
Personal property									$	0
Income									$	0
Other (Attach List)									$	0
Total State & Local Taxes	$	0	$	0	$	0	$	0	$	0
Total Taxes	$	0	$	0	$	0	$	0	$	0

Schedule F

Pre-Petition Liabilities

List Total Claims For Each Classification -	Claimed Amount		Allowed Amount (b)
Secured claims (a)
Priority claims other than taxes	$	160,451	$	160,451
Priority tax claims	$	0	$	0
General unsecured claims	$	251,866	$	251,866

(a) List total amount of claims even it under secured.

(b) Estimated amount of claim to be allowed after compromise or litigation. As an example, you are a defendant in a lawsuit alleging damage of  $10,000,000 and a proof of claim is filed in that amount. You believe that you can settle the case for a claim of $3,000,000. For Schedule F reporting purposes you should list $10,000,000 as the Claimed Amount and $3,000,000 as the Allowed Amount.

Schedule G

Rental Income Information

Not applicable to General Business Cases

Schedule H

Recapitulation of Funds Held at End of Month

	Account 1		Account 2	Account 3	Account 4
Bank
Account Type
Account No.
Account Purpose
Balance, End of Month
Total Funds on Hand for all Accounts	$	0

Attach copies of the month end bank statement(s), reconciliation(s), and the check register(s) to the Monthly Operating Report.

STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

INCREASE/ (Decrease in Cash and Cash Equivalents

For the Month Ended        01/31/06    

				Actual Current Month		Cumulative (Case to Date)
	Cash Receipts
1		Rent/Leases Collected
2		Cash Received from Sales
3		Interest Received
4		Borrowings
5		Funds from Shareholders, Partners, or Other Insiders
6		Capital Contributions
7				$	50,000
8		Sale of Assets
9
10
11
12			Total Cash Receipts	$	50,000	$	0
	Cash Disbursements
13		Payments for Inventory
14		Selling
15		Administrative
16		Capital Expenditures
17		Principal Payments on Debt
18		Interest Paid
		Rent/Lease:
19			Personal Property
20			Real Property
		Amount Paid to Owner(s)/Officer(s)
21			Salaries
22			Draws
23			Commissions/Royalties
24			Expense Reimbursements
25			Other
26		Salaries/Commissions (less employee withholding)
27		Management Fees
		Taxes:
28			Employee Withholding
29			Employer Payroll Taxes
30			Real Property Taxes
31			Other Taxes
32		Other Cash Outflows:
33
34
35
36
37
38			Total Cash Disbursements:	$	0	$	0
39	Net Increase (Decrease) in Cash			$	50,000	$	0
40	Cash Balance, Beginning of Period						0
41	Cash Balance, End of Period			$	50,000	$	0

UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF CALIFORNIA

In re: Predictive Diagnostics, Inc.	Case No.	06-20048-A-11
		_______________
	CHAPTER 11
	MONTHLY OPERATING REPORT
	(GENERAL BUSINESS CASE)

SUMMARY OF FINANCIAL STATUS

MONTH ENDED: Jan-06 PETITION DATE: 01/09/06

1. Debtor in possession (or trustee) hereby submits this Monthly Operating Report on the Accrual Basis of accounting (or if checked here the Office of the U.S. Trustee or the Court has approved the Cash Basis of Accounting for the Debtor). Dollars reported in   $1 

2.             Asset and Liability Structure	End of Current Month			End of Prior Month	As of Petition Filing
a.    Current Assets	$	(3,473,467	)
b.    Total Assets	$	(3,160,833	)		$	(3,150,137	)
c.     Current Liabilities	$	62,705				272,821
d.     Total Liabilities	$	308,821			$	308,821

3.             Statement of Cash Receipts & Disbursements for Month	Current Month		Prior Month		Cumulative (Case to Date)
a.     Total Receipts	$	0			$	0
b.     Total Disbursements	$	0			$	0
c.     Excess (Deficiency) of Receipts Over Disbursements (a - b)	$	0	$	0	$	0
d.     Cash Balance Beginning of Month	$	0			$	0
e.     Cash Balance End of Month (c + d)	$	0	$	0	$	0

	Current Month			Prior Month	Cumulative (Case to Date)
4.             Profit/(Loss) from the Statement of Operations	$	(10,696	)
5.             Account Receivables (Pre and Post Petition)	$	0
6.             Post-Petition Liabilities	$	62,705
7.             Past Due Post-Petition Account Payables (over 30 days)	$	0

At the end of this reporting month:	Yes		No
8.             Have any payments been made on pre-petition debt, other than payments in the normal				X
course to secured creditors or lessors? (if yes, attach listing including date of payment, amount of payment and name of payee)
9.             Have any payments been made to professionals? (if yes, attach listing including date of				X
payment, amount of payment and name of payee)
10.           If the answer is yes to 8 or 9, were all such payments approved by the court?
11.           Have any payments been made to officers, insiders, shareholders, relatives? (if yes,				X
attach listing including date of payment, amount and reason for payment, and name of payee)
12.           Is the estate insured for replacement cost of assets and for general liability?		X
13.           Are a plan and disclosure statement on file?		pending
14.           Was there any post-petition borrowing during this reporting period?				X

15.           Check if paid: Post-petition taxes ___;U.S. Trustee Quarterly Fees  x ;     Check if filing is current for: Post-petition tax reporting and tax returns: x

(Attach explanation, if post-petition taxes or U.S. Trustee Quarterly Fees are not paid current or if post-petition tax reporting and tax return filings are not current.)

I declare under penalty of perjury I have reviewed the above summary and attached financial statements, and after making reasonable inquiry believe these documents are correct.

Date:	2/22/06	/s/ Ronald Artale
		Responsible Individual

STATEMENT OF OPERATIONS

(General Business Case)

For the Month Ended      01/31/06     

Current Month
Actual			Forecast			Variance				Cumulative (Case to Date)		Next Month Forecast
									Revenues:
						$	0	1	Gross Sales			$	0
						$	0	2	less: Sales Returns & Allowances
$	0		$	0		$	0	3	Net Sales	$	0	$	0
$	0					$	0	4	less: Cost of Goods Sold         (Schedule 'B')
$	0		$	0		$	0	5	Gross Profit	$	0	$	0
						$	0	6	Interest
						$	0	7	Other Income:			$	0
$	0		$	0		$	0	8				$	0
$	0		$	0		$	0	9
$	0		$	0		$	0	10	Total Revenues	$	0	$	0
									Expenses:
						$	0	11	Compensation to Owner(s)/Officer(s)
						$	0	12	Salaries
						$	0	13	Commissions
$	0		$	0		$	0	14	Contract Labor
									Rent/Lease:
						$	0	15	Personal Property
						$	0	16	Real Property
$	0		$	0		$	0	17	Insurance
						$	0	18	Management Fees
$	10,696		$	10,696		$	0	19	Depreciation			$	10,696
									Taxes:
						$	0	20	Employer Payroll Taxes
						$	0	21	Real Property Taxes
						$	0	22	Other Taxes
						$	0	23	Other Selling
$	0		$	0		$	0	24	Other Administrative
						$	0	25	Interest
						$	0	26	Other Expenses:
$	0		$	0		$	0	27
						$	0	28
			$	0		$	0	29
						$	0	30
						$	0	31
						$	0	32
						$	0	33
						$	0	34
$	10,696		$	10,696		$	0	35	Total Expenses	$	0	$	10,696
$	(10,696	)	$	(10,696	)	$	0	36	Subtotal	$	0	$	(10,696	)
									Reorganization Items:
			$	0		$	0	37	Professional Fees
						$	0	38	Provisions for Rejected Executory Contracts
						$	0	39	Interest Earned on Accumulated Cash from
									Resulting Chp 11 Case
						$	0	40	Gain or (Loss) from Sale of Equipment
						$	0	41	U.S. Trustee Quarterly Fees
						$	0	42
$	0		$	0		$	0	43	Total Reorganization Items	$	0	$	0
$	(10,696	)	$	(10,696	)	$	0	44	Net Profit (Loss) Before Federal & State Taxes	$	0	$	(10,696	)
						$	0	45	Federal & State Income Taxes
$	(10,696	)	$	(10,696	)	$	0	46	Net Profit (Loss)	$	0	$	(10,696	)

Attach an Explanation or Variance to Statement of Operations (For variances greater than +/-10% only):

BALANCE SHEET

 (General Business Case)

For the Month Ended       January 31,2006      

Assets
			From Schedules		Market Value
	Current Assets
1		Cash and cash equivalents - unrestricted			$	0
2		Cash and cash equivalents - restricted			$	0
3		Accounts receivable (net)		A	$	0
4		Inventory		B	$	0
5		Prepaid expenses			$	900
6		Professional retainers
7		Other:
8		Intercompany			$	(3,474,367	)
9		Total Current Assets			$	(3,473,467	)
	Property and Equipment (Market Value)
10		Real property		C	$	0
11		Machinery and equipment		D	$	307,209
12		Furniture and fixtures		D	$	0
13		Office equipment		D	$	5,426
14		Leasehold improvements		D	$	0
15		Vehicles		D	$	0
16		Other:		D
17				D
18				D
19				D
20				D
21		Total Property and Equipment			$	312,634
	Other Assets
22		Loans to shareholders
23		Loans to affiliates
24
25
26
27
28		Total Other Assets			$	0
29		Total Assets			$	3,160,833

NOTE:

Indicate the method used to estimate the market value of assets (e.g., appraisals; familiarity with comparable market prices, etc.) and the date the value was determined.

Liabilities and Equity

(General Business Case)

Liabilities From Schedules
Post-Petition
Current Liabilities
30		Salaries and wages
31		Payroll taxes
32		Real and personal property taxes
33		Income taxes
34		Sales taxes
35		Notes payable (short term)
36		Accounts payable (trade)	A	$	0
37		Real property lease arrearage
38		Personal property lease arrearage
39		Accrued professional fees
40		Current portion of long-term post-petition debt (due within 12 months)
41		Other:
42		Accured Stock Compensation		$	36,000
43		Accured Expenses		$	26,705
44		Total Current Liabilities		$	62,705
45	Long-Term Post-Petition Debt, Net of Current Portion			$	0
46		Total Post-Petition Liabilities		$	62,705
	Pre-Petition Liabilities (allowed amount)
47		Secured claims	F	$	0
48		Priority unsecured claims	F	$	10,000
49		General unsecured claims	F	$	236,116
50		Total Pre-Petition Liabilities		$	246,116
51		Total Liabilities		$	308,821
Equity (Deficit)
52	Retained Earnings/(Deficit) at time of filing			$	(3,458,958	)
53	Capital Stock
54	Additional paid-in capital
55	Cumulative profit/(loss) since filing of case			$	(10,696	)
56	Post-petition contributions/(distributions) or (draws)
57
58	Market value adjustment
59		Total Equity (Deficit)		$	(3,469,654	)
60     Total Liabilities and Equity (Deficit)				$	(3,160,833	)

SCHEDULES TO THE BALANCE SHEET

(General Business Case)

Schedule A

Accounts Receivable and (Net) Payable

Receivables and Payables Agings	Accounts Receivable [Pre and Post Petition]		Accounts Payable [Post Petition]		Past Due Post Petition Debt
0 -30 Days
31-60 Days
61-90 Days					$	0
91+Days
Total accounts receivable/payable	$	0	$	0
Allowance for doubtful accounts
Accounts receivable (net)	$	0

Schedule B

Inventory/Cost of Goods Sold

Types and Amount of Inventory(ies)			Cost of Goods Sold
		Inventory(ies) Balance at End of Month		Inventory Beginning of Month
				Add-
Retail/Restaurants -				Net purchase
Product for resale				Direct labor
				Manufacturing overhead
Distribution -				Freight in
Products for resale				Other:
Manufacturer -
Raw Materials
Work-in-progress				Less -
Finished goods				Inventory End of Month
				Shrinkage
Other - Explain				Personal Use
				Cost of Goods Sold	$	0
TOTAL	$	0

Method of Inventory Control	Inventory Valuation Methods
Do you have a functioning perpetual inventory system?	Indicate by a checkmark method of inventory used.

Yes No

How often do you take a complete physical inventory?	Valuation methods -
	FIFO cost
Weekly	LIFO cost
Monthly	Lower of cost or market
Quarterly	Retail method
Semi-annually	Other
Annually	Explain

Date of last physical inventory was

Date of next physical inventory is

Schedule C

Real Property

Description			Cost		Market Value
	Total	$	0	$	0

Schedule D

Other Depreciable Asets

Description			Cost		Market Value
Machinery & Equipment -
	Lab Equipment - Maldio, Tecan	$	623,322	$	307,209
	Total	$	623,322	$	307,209
Furniture & Fixtures -
	Total	$	0	$	0
Office Equipment -
	Computers, Printers, Servers, Mass Specs, Desks	$	788,620	$	5,426
	Total	$	788,620	$	5,426
Leasehold Improvements -
	Total	$	0	$	0
Vehicles -
	Total	$	0	$	0

Schedule E

Aging of Post-Petition Taxes

(As of End of the Current Reporting Period)

Taxes Payable	0-30 Days		31-60 Days		61-90 Days		91+ Days		Total
Federal
Income Tax Withholding									$	0
FICA - Employee									$	0
FICA - Employer									$	0
Unemployment (FUTA)									$	0
Income									$	0
Other (Attach List)									$	0
Total Federal Taxes	$	0	$	0	$	0	$	0	$	0
State and Local
Income Tax Withholding									$	0
Unemployment (UT)									$	0
Disability Insurance (DI)									$	0
Empl. Training Tax (ETT)									$	0
Sales									$	0
Excise									$	0
Real property									$	0
Personal property									$	0
Income									$	0
Other (Attach List)									$	0
Total State & Local Taxes	$	0	$	0	$	0	$	0	$	0
Total Taxes	$	0	$	0	$	0	$	0	$	0

Schedule F

Pre-Petition Liabilities

List Total Claims For Each Classification -	Claimed Amount		Allowed Amount (b)
Secured claims (a)
Priority claims other than taxes	$	10,000	$	10,000
Priority tax claims	$	0	$	0
General unsecured claims	$	236,116	$	236,116

(a) List total amount of claims even it under secured.

(b) Estimated amount of claim to be allowed after compromise or litigation. As an example, you are a defendant in a lawsuit alleging damage of $ 10,000,000 and a proof of claim is filed in that amount. You believe that you can settle the case for a claim of $3,000,000. For Schedule F reporting purposes you should list $10,000,000 as the Claimed Amount and $3,000,000 as the Allowed Amount.

Schedule G

Rental Income Information

Not applicable to General Business Cases

Schedule H

Recapitulation of Funds Held at End of Month

	Account 1		Account 2	Account 3	Account 4
Bank
Account Type
Account No.
Account Purpose
Balance, End of Month
Total Funds on Hand for all Accounts	$	0

Attach copies of the month end bank statements(s), reconciliation(s), and the check register(s) to the Monthly Operating Report.

STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

INCREASE/ (Decrease in Cash and Cash Equivalents

For the Month Ended 01/31/06

				Actual Current Month		Cumulative (Case to Date)
	Cash Receipts
1		Rent/Leases Collected
2		Cash Received from Sales
3		Interest Received
4		Borrowings
5		Funds from Shareholders, Partners, or Other Insiders
6		Capital Contributions
7
8
9
10
11
12			Total Cash Receipts	$	0	$	0
	Cash Disbursements
13		Payments for Inventory
14		Selling
15		Administrative
16		Capital Expenditures
17		Principal Payments on Debt
18		Interest Paid
		Rent/Lease:
19			Personal Property
20			Real Property
		Amount Paid to Owner(s)/Officer(s)
21			Salaries
22			Draws
23			Commissions/Royalties
24			Expense Reimbursements
25			Other
26		Salaries/Commissions (less employee withholding)
27		Management Fees
		Taxes:
28			Employee Withholding
29			Employer Payroll Taxes
30			Real Property Taxes
31			Other Taxes
32		Other Cash Outflows:
33
34
35
36
37
38			Total Cash Disbursements:	$	0	$	0
39	Net Increase (Decrease) in Cash			$	0	$	0
40	Cash Balance, Beginning of Period			$	0
41	Cash Balance, End of Period			$	0	$	0