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XL TechGroup, Inc. (XLT)


Thursday 28 September, 2006

XL TechGroup, Inc.

2006 Interim Results

XL TechGroup, Inc.
28 September 2006

Press Release                                                  28 September 2006

                               XL TechGroup, Inc.

                       ('XL TechGroup' or 'the Company')

             Interim Results for the six months ended 30 June 2006

XL TechGroup Inc. (AIM: XLT), the systematic architect and builder of an ongoing
stream of high value new companies, today announces its interim results for the
six months ended 30 June 2006.


•    Significant commercialisation progress at TyraTech including signed 
     agreements with Scotts Miracle-Gro and Arysta LifeScience, as well as 
     initial revenues

•    GenXL launched as a new value creation entity over and above XL TechGroup's 
     core business model, which should result in more frequent transaction 

•    Technology option agreement signed for a unique protected algae and a 
     scalable process to cost-effectively produce renewable biofuel and other 
     products, which has quickly led to the launch of PetroAlgae LLC

•    Strong progress at AgCert International with site roll-out rate 
     accelerating and added potential from new joint venture with AES

•    Strong total cash and quoted securities at market (net of debt) of 
     approximately US$151.8million as at 30 June 2006 
     (1H 2005: US$165.9 million)

Post period end

•    TyraTech signed a licensing agreement with Syngenta for specific 
     insecticide applications

•    Successful placing of 4 million existing shares to satisfy demand from 
     institutional investors and increase the free float

•    Depository interest facility established to enable holding and electronic 
     settlement in CREST

•    DxTech has completed four milestone development and manufacturing 
     partnerships deals as part of its on-going growth strategy

•    Launch of XL TechGroup's fourth company, PetroAlgae, which has developed an 
     environmentally-friendly algae that generates an estimated two hundred 
     times more energy per acre than traditional biofuel crops (e.g. soybean 
     oils), together with a process by which the technology can cost-
     effectively produce renewable biofuel and other renewable products in large 
     volumes, without any government subsidies.

John Scott, Chief Executive of XL TechGroup, said:  'This has been an immensely
productive period for XL TechGroup, during which the progress being made by all
of our portfolio companies has been impressive.  In particular, TyraTech is
significantly ahead of schedule on the path to achieve a targeted liquid asset
value of at least US$400 million by mid 2008, and the search for a permanent CEO
has started.

'DxTech has now moved into the first part of its commercialisation phase, while
the formation of GenXL will also provide our shareholders with a pathway to even
greater value by taking advantage of the rich pipeline of opportunities, over
and above the Company's core business model, that both XL TechGroup and our
partners in this venture, GEN3, can provide.  The potential of our latest
company, PetroAlgae, to transform the global markets which are currently reliant
on petroleum based feedstock is very exciting.'

'We look forward to demonstrating the underlying value of our assets over the
coming months.'

                                    - Ends -

For further information:
XL TechGroup Inc.
John Scott / Harold Gubnitsky                               Tel: +1 321 409 7403
[email protected]                                

XL TechGroup media enquiries:
Abchurch Communications
Heather Salmond / Gareth Mead                          Tel: +44 (0) 20 7398 7700
[email protected]                  

Chairman and CEO's Statement

Operational Review

AgCert International plc ('AgCert')

AgCert, the leader in the production of greenhouse gas emission reductions, has
made considerable progress so far this year and its commercially proven business
model is producing an escalating roll-out rate of new sites.  AgCert had
increased its total Certified Emission Reduction ('CER') credits reserve to 2.6
million by the end of August, up 37 per cent since 20 June 2006, and more than
100,000 CERs have been submitted for certification with expected delivery for
revenue in October 2006, subject to final UN approval.  AgCert has also
delivered its first CERs to a customer from projects located in Brazil and

A joint venture initiative with AES Corporation, one of the world's leading
power companies, is also progressing well with AES planning a US$300 million
investment into AES AgriVerde over the next five years.

XL TechGroup's holdings in AgCert have fallen slightly during the period, to the
current level of 24.14%, not through any share sales, but through the dilution
effect from the exercise of warrants by third parties on 973,056 AgCert shares
held by XL TechGroup.  These warrants were granted in 2003 to holders of XL
TechGroup loan notes, and were exercised in July 2006.

We are pleased with the significant progress being made by AgCert and we remain
supportive shareholders.

TyraTech LLC ('TyraTech')

TyraTech's unique biotechnology platform is successfully being applied to the
creation of an entirely new class of powerful insecticides and parasiticides,
based on natural essential oils, that are designed to be highly effective, safe
for both humans and animals, environmentally-friendly and to reduce resistance
development.  The core technology uses the successful reproduction of chemo
receptors in a stable cell line to identify highly effective synergistic
compounds that out perform many synthetic chemical alternatives.

During the past six months, TyraTech has achieved commercial traction, as
evidenced by initial orders and shipments in Mexico and India, and signed
commercial agreements with larger multi-national partners.  Specifically, an
exclusive supply and distribution agreement with Terra Quest SA de CV of Mexico,
signed in March, has made quick progress, having already placed their first
order and executed a successful test at one of the leading hospitals in Mexico,
the Universitario De Nuevo Leon part of the Medicine Faculty of the 'Autonomous
University of Nuevo Leon' in Monterrey.  Additionally we have obtained an
initial order to meet Indian government mosquito and insect vector control
needs.  These are two examples of the expansion of the geographic footprint for

TyraTech has made impressive advances, with major blue chip partners
anticipating significant market penetration.  In March, TyraTech signed an
option agreement with The Scotts Company LLC, a subsidiary of The Scotts
Miracle-Gro Company.  Under the terms of this agreement, Scotts and TyraTech are
working together to conduct product development and technical evaluation of
TyraTech's natural pesticide technologies relating to a number of specific
insects in certain consumer applications.  The Scotts-Tyratech partnership is
making good progress toward commercialization, with progress to date on both
active ingredient efficacy and regulatory path timing.

In June, TyraTech signed a global licensing and co-development agreement with
the North American subsidiary of Japan based Arysta LifeScience Corporation.
Headquartered in Tokyo, Japan, Arysta LifeScience Corporation is the world's
largest privately held crop protection and life science company.  Under this
agreement, Arysta LifeScience has an exclusive license to manufacture and market
a number of specific horticultural insecticide products.  TyraTech will receive
payments from Arysta LifeScience covering development milestones, followed by a
revenue based royalty structure following product launch as well as associated
active ingredient sales.

In July, TyraTech signed a licensing agreement with Syngenta Professional
Products which grants Syngenta rights to license TyraTech's natural and highly
effective technologies relating to a range of insecticide applications.  Under
the terms of the agreement, TyraTech will receive upfront and milestone
payments, followed by royalties based on product sale revenues and associated
sales of active ingredients.

In addition to commercial validation from multi-national corporations,
TyraTech's technology has continued to undergo stringent independent analysis,
with extensive success.  Globally respected research laboratories, such as the
Entomology Research and Education Center of Florida the Institute of Public
Health at Georgia State University and the Indian National Institute for Malaria
Research in New Delhi, have tested a broad range of TyraTech products with
exceptional, market-beating, results.

In addition to the already announced development partnerships which are all
progressing well, significant progress has also been made in a number of other
areas, with particular promise seen in anti-parasitic prototypes for the food
industry.  Intestinal parasites affect 2 billion people around the world and the
expected market for a prophylactic functional food is potentially a
multi-billion dollar opportunity.

TyraTech's first products are now in production, initial revenues have been
received, the first significant order has been shipped, and the company is
moving rapidly towards full commercialisation.  As such, a number of senior
managerial appointments have been made to ensure the success of this process
and, as part of XL TechGroup's business strategy, TyraTech has now initiated the
search for a permanent CEO to lead the company's continued expansion.

DxTech LLC ('DxTech')

DxTech has made substantial progress towards the production of its
fully-automated, point-of-need device that will replace all common blood tests
currently performed at laboratories.  As announced today, all of the company's
key technology partners have now signed milestone development deals, which
signal DxTech's transition from development to the first phases of

A market research project for the US Physician's Office Laboratory has been
successfully completed with the participation of 600 physicians across the US.
Likewise, a patient study to evaluate the co-occurring use of assays, with a
sample of 2 million individuals, has also been concluded.  This research has
provided strong validation of the DxTech business model and confirmed
substantial market appetite for its technology.

DxTech is now aggressively scaling up its infrastructure and it is anticipated
that key product demonstrations will occur with target customers before the end
of 2006.

GenXL LLC ('GenXL')

The launch of GenXL through a collaboration with GEN3 Partners, Inc., the highly
regarded US-headquartered product innovation and technology development firm,
provides an exciting pathway to deliver even greater value for XL TechGroup
shareholders.  The joint venture is taking advantage of the rich pipeline of
opportunities discovered by XL TechGroup over and above the Company's core
business model.  Some of these will be opportunities that flow from XL
TechGroup's own business development processes but which don't meet the US$400
million minimum target value criteria - in other words, there is expected to be
a more frequent flow of smaller sized deals.  GEN3 is also contributing its own
stream of opportunities and the combination of these will produce a steady flow
of new companies, standalone product lines or technology licensing

GenXL has access to committed funding of US$4 million from its founding
shareholders, XL TechGroup and GEN3, of which an initial US$1 million has been
received.  GenXL is already working on an initial pipeline of opportunities,
with the expectation of a steady stream of announcements from 2007 onwards.
Each GenXL business, unlike the XL TechGroup model, is free to attract external
private equity or Venture Capital funding.  In this regard, the first
opportunities are being evaluated and a number of established US based VC funds
have already expressed a very strong interest in investing in GenXL businesses.
We are very excited about the potential of this new value-creation entity.

PetroAlgae LLC ('PetroAlgae')

The formation of XL TechGroup's latest company PetroAlgae, which has been
announced today, is an exciting development within the Company's portfolio.
PetroAlgae has developed a proprietary, environmentally-friendly algae to
efficiently produce oils which replace petroleum to address an ever-increasing
global market need for sustainable, affordable sources of petroleum derived

This ground-breaking environmentally-friendly technology platform addresses a
number of multiple billion dollar markets such as transportation fuels (e.g.
biodiesel), heating oil, and plastics.  The algae has an estimated yield that is
two hundred times greater per acre than traditional biofuel crops such as
soybean plants so that, if just 2% of the currently cultivated land in the US
was used to grow this alga, it would produce 60 billion gallons of oil - enough
for the entire annual US demand of diesel.  The disruptive technology is rapidly
scalable which could enable PetroAlgae to satisfy the enormous global market
demand for petroleum at a level that is competitive to fossil fuels.

PetroAlgae's commercial viability has already been established with global
multinational strategic partners and potential end users, as a result of which
management believes that it offers significant valuation potential for XL

Corporate & Technology Partners

XL TechGroup's ever strengthening relationships with corporate discovery
partners, such as Procter & Gamble and AES, continue to offer the Company an
exciting pipeline of possible opportunities.  Additionally, these partners can
ultimately become very significant end-users to the solutions we create.  It is
core to XL TechGroup's business methodology to focus on an unmet market need in
the first instance, so we are continuing to source further appropriate

In addition, XL TechGroup has strong working relationships with numerous
technology focused institutions, including some of the leading academic
institutions around the world.  Our business model however, allows us to go to
any potential partner with a technological specification to identify the optimal
solution.  Again, we continue to scour the globe for the best collaborations.

Pipeline of Possible Opportunities

XL TechGroup's pipeline includes technologies that have been matched with unmet
needs to create potential opportunities, from which our next new companies might
be selected.  However, it is very important to note that, while XL TechGroup has
exclusive rights to most of the technologies described, the nature of our
rigorous selection process means that only a few of these opportunities will
ever be chosen for development and scaling as new companies by XL TechGroup.
However, some of these opportunities may be transferred to GenXL for
commercialisation.  The pipeline is continuously evolving as new opportunities
are added, and as existing opportunities are eliminated.  The following list
represents a snapshot of the current possibilities.

•  a technology that inhibits the formation of bacterial films without
   killing individual organisms, providing an effective new anti-bacterial 
   approach that does not promote resistance to drugs

•  a proprietary formulation of several rhizobacteria which together
   effectively fix nitrogen in growing plants, thereby significantly reducing or
   eliminating the need for synthetic nitrogen fertilizer, with consequent cost
   savings and large environmental benefits

•  a novel technology for non-invasively imaging, for the first time, of
   unstable vulnerable plaque in the coronary arteries

•  a moisture barrier technology which provides controlled separation of
   wet and dry food products

•  an economical catalytic process to split low-cost methane into
   high-value, high-purity graphitized carbon and pure hydrogen

•  a new approach to causing existing cancer therapeutics to 'stick'
   highly preferentially to certain tumour types, thereby enhancing the 
   specificity of the relevant drugs

•  an offshoot of a novel cancer vaccine technology which is adapted as a
   peripheral blood diagnostic to screen for early cancer detection.


We are delighted with the progress being achieved at all of our companies.

•  AgCert continues to roll out new sites and the US$300 million
   investment by AES is a clear further validation of AgCert's business model 
   and technology

•  DxTech has now moved into the first part of its commercialisation
   phase after receiving very significant interest in its product from potential
   end users

•  TyraTech's development process has accelerated and it is now ahead of
   schedule on the path to achieve a target liquid asset value of at least 
   US$400 million within four years of establishment.  We anticipate a number of 
   important TyraTech announcements during the coming months

•  GenXL is expected to start revealing the first of its new companies
   during 2007, creating a new income stream for XL TechGroup shareholders over 
   and above the core business

•  We are very excited about the potential from PetroAlgae, not just in
   terms of scale but also the likelihood of achieving our minimum valuation
   criteria well ahead of our targeted four year schedule.

The financial progress of XL TechGroup is gauged by measuring the growth in
cash, tradable securities of our affiliates (currently AgCert) and the future
value of our other companies.  As at 26 September 2006, XL TechGroup had a
market capitalisation of £129.7 million and, on the same date, our 24.18% stake
in AgCert had a market value of £61.5 million.  Combined with the cash and
quoted securities at market (net of debt) as at 30 June 2006 of approximately
£82.1 million, this means that all of XL TechGroup's other investments are
currently being valued at just £61 million.

Geoffrey Vernon                                       John Scott
Chairman                                              Chief Executive

Financial Review


XL TechGroup's financial results are on track as planned.  During the period,
the Company has continued to expand its resources to address the increasing
throughput of opportunities and new portfolio companies.  For the period under
review, ending cash was US$37.9 million, which includes proceeds from the US$35
million debt financing obtained in late 2005.  The debt financing provided a way
to leverage our AgCert shares and finance future operational needs of the
Company, whilst preserving the upside value potential in the AgCert shares that
we remain confident about.  At period end 30 June 2006, our holdings in AgCert
were valued at US$149 million (whilst as at 26 September 2006 it was US$116.6

By design, the Company does not directly produce and sell products, but rather
creates companies that do.  Therefore, except for the sale of affiliate shares,
it is likely that the only turnover that will be reported by XL TechGroup will
be the result of consolidation of our early stage new companies and their
resulting turnover, which may not be material, consistent or a meaningful
measurement of success for the Company.

Results of operations

For the reported period, XL TechGroup reported a loss of US$17.4 million.  This
loss includes a charge of US$1.4 million for the Company's portion of net losses
in its non-consolidated AgCert related affiliates; and net consolidated losses
for TyraTech and DxTech of US$4.9 million, including minority interest.


For the six months ended 30 June, TyraTech recorded its first revenues of US$0.1
million, which were consolidated into the Company's financial results.  The
revenues were the result of exclusivity fees received from its license partners.

Operating expenses

For the six months ended 30 June 2006, operating expenses were US$15.0 million:
US$5.2 million for general and administration; US$9.8 million for business and
technical, development, including a US$2.4 million recorded reserve related to
the receivable from Mercury, a third party research and development entity.

Funding of XL TechGroup companies

Funding the operations of our pipeline opportunities and new companies is a
planned aspect of our business and is expected to increase in the future as
their number and size grows.  These fundings will take the form of either equity
contributions or debt, with the latter expected to be repaid upon certain
events, including in relation to exits.  In the current period, XL TechGroup
advanced US$4.5 million to its affiliates.  Affiliate funding for H12005
included net repayments to XL TechGroup of prior advances to AgCert of $1.4
million and advances to TyraTech of $2 million.  Affiliate funding for H12004
was US$1 million.

Debt Financing

In December 2005, XL TechGroup completed a US$35 million debt financing with
Laurus Master Fund Ltd ('Laurus').  Under the terms of the arrangement, XL
TechGroup has unrestricted access to US$25 million to fund its working capital
requirements, with a further US$10 million available when XL TechGroup portfolio
companies, TyraTech LLC and DxTech LLC, achieve certain financial milestones.
The facility is due for repayment in three years and has a variable interest
rate, which is currently 10.75 per cent per annum, being 2.5 per cent over the
US Prime Rate.

Laurus has been granted a seven year option to invest up to a total of US$7
million (being 20 per cent of the borrowing facility) in buying shares held by
XL TechGroup in any of its portfolio companies.  In this regard, Laurus has the
option to acquire AgCert shares held by XL TechGroup at a premium to the AgCert
share price as at 30 December 2005, or the option to acquire shares in any XL
TechGroup portfolio company that seeks a stock market listing, at a discount to
the then IPO price.  From 30 June 2006, Laurus is also entitled on an annual
basis to receive either cash or additional AgCert shares from XL TechGroup with
a value equivalent to six per cent of the outstanding principal under this
facility, calculated in relation to the AgCert share price at that time.

There are no conditions that would require XL TechGroup to provide additional
security in the event of a fall in the AgCert share price, or to surrender any
AgCert shares, save for a loan default.

Liquidity and cash

As at 30 June 2006, XL TechGroup had cash balances (including short and long
term investments) of US$37.9 million (H12005: US$23.8 million and H12004: US$.3
million).  The net outflow of cash from operating activities is principally due
to the Company's operating loss generated from its continuing development
activities and providing funding to our affiliates.  The Company has multiple
additional sources of cash available to fund its businesses that include
repayment of receivables, sale of assets, strategic partners in our affiliates,
initial offerings of new and existing shares in our affiliates, and additional
debt financing.  The Company expects its current cash and the available
additional sources of funds to satisfy both operating expenses and the funding
of affiliate companies into the foreseeable future.

Treasury Policies

XL TechGroup continually reviews its cash management and control over treasury
management which is reported to the Board.  The Company does not engage in
speculative transactions or derivative trading with respect to cash balances
held and the policy is to optimise interest return while maintaining flexibility
to undertake ongoing activities and safeguarding of assets.

David Szostak
Chief Financial Officer

Consolidated Balance Sheets (Unaudited)
June 30, 2006 and 2005

US Dollars                                                                          June 30,
                             Assets                                         2006                  2005
Current assets:
    Cash                                                                27,677,182            23,792,621
    Cash - restricted                                                   10,240,322                     -
    Notes and other receivables, net of reserve                            437,608               984,519
    Prepaid expenses                                                       295,250                57,542
    Prepaid interest                                                     1,038,333                     -
    Due from affiliates                                                     20,952                66,552
                 Total current assets                                   39,709,647            24,901,234
Investment in AgCert International, Plc.
    (fair market value of $148,860,242 as of June 30, 2006)              4,901,260            20,081,993
Property and equipment, net of accumulated depreciation                    625,504               141,082
Deferred loan cost, net                                                  5,496,522                     -
Other assets                                                               202,706               103,129
                 Total assets                                           50,935,639            45,227,438
         Liabilities and Stockholder's Equity (Deficit)
Current liabilities:
    Accounts payable                                                       363,016               131,215
    Accrued liabilities                                                  3,763,116             1,351,983
    Liability for warrants and options to purchase                       8,166,617             3,014,908

    AgCert International, Plc. Shares
                 Total current liabilities:                             12,292,749             4,498,106
Investment in ANX, LLC.                                                  5,656,241            21,493,749
Note payable                                                            34,880,000                     -
Deferred revenue                                                            95,833                     -
                 Total liabilities                                      52,924,823            25,991,855
Minority interest                                                          520,453               291,611
Stockholder's equity (deficit)
    Common stock, par value $0.001. Authorized 100,000,000
        issued and outstanding 49,351,025 shares in 2006 and
        49,311,482 in 2005                                                  49,351                49,311
    Additional paid in capital                                          45,451,234            45,010,106
    Accumulated deficit                                               (48,010,222)          (24,682,644)
    Unearned compensation                                                        -           (1,432,801)
                 Stockholder's equity (deficit)                        (2,509,637)            18,943,972
                 Total liabilities and stockholder's equity             50,935,639            45,227,438

Consolidated Statements of Operations (Unaudited)
Six months ended June 30, 2006 and 2005

US Dollars                                                                    Six months ended June 30,
                                                                              2006                  2005

Revenues                                                                   104,167                     -

Operating expenses:
    General and administrative                                           5,232,001             2,743,709
    Business and technical development                                   9,749,908             5,458,076
                 Total operating expenses                               14,981,909             8,201,785
Other income (expense):
    Interest income                                                      1,009,951               434,121
    Interest expense                                                   (2,841,402)                   542
    Gain on initial public offering of AgCert International,                     -            25,549,121
    Equity in losses of affiliates                                     (1,359,130)          (22,898,644)
    Change in fair value of warrants to purchase
        AgCert International, Plc. Shares                                  193,441           (2,812,528)
    Support and service fees from affiliate                                169,599               128,722
                 Total other income (expense)                          (2,827,541)               401,334
                 Loss before income taxes and minority interest       (17,705,283)           (7,800,451)

Income taxes                                                                     -                     -
                 Loss before minority interest                        (17,705,283)           (7,800,451)
Minority interest                                                          304,023               708,389
                 Net loss                                             (17,401,260)           (7,092,062)
(Loss) per share                                                            (0.35)                (0.14)
Weighted average number of common shares                                49,351,025            49,311,482

Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30, 2006 and 2005

US Dollars                                                                  Six months ended June 30,
                                                                           2006                  2005
Cash flows from operating activities:
    Net loss                                                          (17,401,260)           (7,092,062)
    Adjustments to reconcile net loss to net cash used for
        operating activities:
            Depreciation and amortization                                1,144,437                15,915
            Reserve on note receivable                                   2,359,261                     -
            Equity in losses of affiliate                                1,359,130            22,898,644
            Change in fair value of warrants to purchase
                AgCert International, Plc. Shares                          106,559             2,812,528
            Gain on initial public offering of AgCert                            -          (25,549,121)
            International, Plc.
            In-process research and development                                  -             1,000,000
            Amortization of stock awards                                   988,508               257,094
            Minority interest                                            (304,023)             (708,389)
        Changes in operating assets and liabilities
            Other receivables                                            (268,209)                56,640
            Prepaid expenses and other assets                              792,678              (45,164)
            Accounts payable and accrued liabilities                       937,862               643,984
            Due to (from) affiliate                                        153,768              (52,368)
                  Net cash used for operating activities              (10,131,289)           (5,762,299)
Cash flows from investing activities:
    Change in restricted cash                                            (240,322)                     -
    Notes receivable                                                     (838,274)             (617,000)
    Purchases of property and equipment                                  (404,323)               (5,720)
    Repayment of advances by (investment in and advances to)                     -             1,403,435
                  Net cash provided by (used for) investing            (1,482,919)               780,715

Cash flows from financing activities:
    Payment of loan costs                                                    (268)                     -
    Repayment on note payable                                            (120,000)                     -
                  Net cash provided by financing activities              (120,268)                     -
                  Net decrease in cash                                (11,734,476)           (4,981,584)
Cash, beginning of period                                               39,411,658            28,774,205
Cash, end of period                                                     27,677,182            23,792,621

Notes to the Accounts

1)       Basis of Presentation

The consolidated financial statements of XL TechGroup, Inc. (the Company) have
been prepared in accordance with accounting principles generally accepted in the
United States of America (US GAAP).  The consolidated financial statements for
the six months ended 30 June 2006 and 30 June 2005 include the accounts of XL
TechGroup, Inc., and its subsidiaries TyraTech, LLC (TyraTech) and DxTech, LLC
(DxTech), each a Delaware limited liability company. All intercompany balances
and transactions have been eliminated.

The financial information for the six months ended 30 June 2006 and 30 June 2005
is unaudited.  In the opinion of the Company directors, the financial
information for these periods present fairly the financial position, results of
operations and cash flows for the periods in conformity with generally accepted
accounting principles under US GAAP.

2)       Debt Financing

On 30 December 2005, the Company entered into a $35 million fully secured note
agreement with Laurus Master Fund Ltd. (Laurus) due 30 December 2008.  The note
is primarily secured with Company owned common shares of AgCert, Plc.  The $35
million in proceeds were reduced by $1.6 million of loan costs and $2.1 million
of prepaid interest, and included $10 million of restricted cash deposited in an
escrow account accessible to the Company upon completion of third party
commercialization contracts by its subsidiaries.  Interest is determined and
payable under terms including a 'cash' interest portion and an 'advanced'
interest portion.   The cash interest portion is payable monthly at prime plus
2.5% (10.75% as of 30 June 2006).  The advanced interest portion is payable at
6% annually in advance of 29 December 2006 and 2007, and can be paid in cash or
AgCert, Plc. common shares, at the option of the Company.

In connection with $35 million note payable to Laurus, the Company entered into
a purchase option agreement by which Laurus was granted an option to purchase
equity in any subsidiary of the Company in an amount not to exceed $7 million
for a period of seven years.  In this purchase option, the Company granted to
Laurus the right to purchase stock, shares or other equity interests of any
affiliate owned by the Company.  Laurus may choose to exercise the purchase
option in common shares of AgCert, Plc. at an exercise price equal to 208.21 GBp
per share subject to the terms of the lock-in agreement for the AgCert, Plc.
shares.  The purchase option is considered a derivative instrument, which
requires the purchase option liability to be recorded at fair value at each
balance sheet date, and resulting changes in fair value to be included in
income.  On the note agreement date, the recorded fair value of the purchase
option was $5,015,081, which was initially included in deferred loan costs as a
cost to obtain financing and is amortized over the term of the note.  As of 30
June 2006 and 2005, the purchase option liability was fair valued at $4.7
million and $5.0 million, respectively, which resulted in a change in fair value
of $0.3 for the six months ended 30 June 2006.

3)       Investment in AgCert International, Plc.

The Company owns 41,712,000 shares of AgCert Plc as of 30 June 2006 and 2005
(24.72% and 27.17% ownership, respectively), and accounts for its investment in
AgCert Plc under the equity method.  The Company's portion of AgCert Plc's
equity in losses totaled $16.3 million and $3.6 million for the six months ended
30 June 2006 and 2005, respectively.

As of 30 June 2006, the fair market value of the Company's investment in AgCert
Plc totaled $148.9 million.

4)       Investment in ANX, LLC

As of 30 June 2006 and 2005, the balance sheet of ANX consisted primarily of
cash, shares of AgCert Plc common stock (3.2% and 10.8% ownership at 30 June
2006 and 2005, respectively), investment in a wholly owned subsidiary and a put
option liability.  The put option liability relates to the ability of certain
ANX unit holders to put ANX units in exchange for AgCert Plc shares.  ANX owns
sufficient shares of AgCert Plc to cover the maximum exposure related to the put
option liability.  The put option liability is considered a derivative
instrument, which requires the put option liability to be recorded at fair value
at each balance sheet date, and resulting changes in fair value to be included
as income or expense in the statement of operations.  As of 30 June 2005, the
put option liability was fair valued at $54.8 million, all of which was included
in ANX net losses for the six months ended 30 June 2005.  During the six months
ended 30 June 2006, put options were exercised for AgCert Plc shares, resulting
in an ANX realized net gain on the transfer of AgCert shares of $40.8 million
and partial satisfaction of the put liability of $38 million.  Separate from the
impact of exercised put options,  changes in the fair value of the put option
liability for the six months ended 30 June 2006 resulted in $10.1 of losses in
the ANX statement of operations.

As of 30 June 2006 and 2005, the Company owned 47.31% and 41.85% of ANX,
respectively.  The Company accounts for its investment in ANX under the equity
method.  The Company's portion of ANX's equity in income (losses) totaled $14.9
million and ($19.3 million) for the six months ended 30 June 2006 and 2005,

5)       Liability for Warrants to Purchase AgCert International, Plc Shares

In connection with financing the Company arranged with private investors in
2003, the Company granted warrants to purchase an equivalent of 973,056 shares
of AgCert Plc, at $0.3083 per share.  As a result of the AgCert Plc IPO, the
warrant liability qualified as a derivative instrument, which requires the
warrant liability to be recorded at fair value at each balance sheet date.
Changes in the fair value of the warrant liability are included in other income
(expense) in the statement of operations. As of 30 June 2006 and 2005, the
warrant liability was fair valued at $3.5 million and $3.0 million,
respectively, which resulted in a change in fair value of $0.5 million and $2.8
million for the six months ended 30 June 2006 and 2005, respectively.
Subsequent to 30 June 2006, all of the warrants were exercised.

6)       Revenue and Deferred Revenue

During the six months ended 30 June 2006, the Company's subsidiary TyraTech
completed agreements with corporate partners Scotts and Arysta LifeScience,
resulting in revenue for the period of $0.1 million and deferred revenues of
$0.1 million at 30 June 2006.

7)       Non-cash Items

The Company recorded a reserve for the entire outstanding balance on a note
receivable from a third party research and development entity for $2.4 million
during the six months ended 30 June 2006.

8)       Loss per Share

The loss per share was calculated based on a weighted average number of shares
outstanding during the six months ended 30 June 2006, namely 49,351,025 (2005:
49,311,482) and a loss of $17,401,260 (2005:  $7,092,062).

                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                      

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