SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                       _______

                                      FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the quarterly period ended September 30, 2005
                                    ------------------
                                           OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from                 to
                                       -----            -----
                               Commission file number 0-5485
                                                      ------
                                    VISKASE COMPANIES, INC.
                                    -----------------------
                    (Exact name of registrant as specified in its charter)

Delaware                                                          95-2677354
--------                                                          ----------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification No.)

625 Willowbrook Centre Parkway, Willowbrook, Illinois                  60527
-----------------------------------------------------                  -----
(Address of principal executive offices)                          (Zip Code)

      Registrant's telephone number, including area code:  (630) 789-4900

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes   X       No
                                                    ---         ---
     Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes          No   X
                                                      ---        ----
      Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).  Yes       No    X
                                                  ---       ---
     Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes    X        No
                                 ---           ---
     As of October 27, 2005, there were 9,715,954 shares outstanding of the
registrant's Common Stock, $.01 par value.

                                               1
<PAGE>
                                VISKASE COMPANIES, INC.
                                           INDEX

                                                                         Page

PART I - FINANCIAL INFORMATION
------------------------------
Item 1.  Consolidated Financial Statements

  Consolidated balance sheets at September 30, 2005 (unaudited)
   and December 31, 2004                                                   3

  Unaudited consolidated statements of operations and comprehensive
   loss for the three months ended September 30, 2005 and
   September 30, 2004 and for the nine months ended September 30, 2005
   and September 30, 2004                                                  4

  Unaudited consolidated statements of cash flows for the nine
   months ended September 30, 2005 and September 30, 2004                  5

Notes to consolidated financial statements                                 6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                        25

Item 3.  Quantitative and Qualitative Disclosures About Market Risk       39

Item 4.  Controls and Procedures                                          39

PART II - OTHER INFORMATION
---------------------------
Item 1.  Legal Proceedings                                                40

Item 6.  Exhibits                                                         40

                                          2
<PAGE>
                VISKASE COMPANIES, INC. AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
    (In Thousands, Except for Number of Shares and Per Share Amounts)

<TABLE>
<CAPTION>
                                                      September 30, 2005             December 31, 2004
                                                      ------------------             -----------------
<S>                                               <C>                          <C>
ASSETS
Current assets:
  Cash and cash equivalents                                   $22,767                       $30,255
  Restricted cash                                               3,244                         3,461
  Receivables, net                                             31,563                        30,509
  Inventories                                                  35,129                        32,268
  Other current assets                                         15,745                        10,469
                                                              -------                       -------
    Total current assets                                      108,448                       106,962

Property, plant and equipment                                 112,869                       112,158
Less accumulated depreciation                                  22,729                        19,312
                                                              -------                       -------
  Property, plant and equipment, net                           90,140                        92,846

Deferred financing costs, net                                   3,840                         4,060
Other assets                                                    3,793                         9,564
                                                              -------                       -------
      Total Assets                                           $206,221                      $213,432
                                                             ========                      ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Short-term debt including current portion of
    long-term debt                                               $227                          $384
  Accounts payable                                             15,319                        17,878
  Accrued liabilities                                          36,372                        25,820
  Current deferred income taxes                                 1,481                         1,481
                                                              -------                       -------
    Total current liabilities                                  53,399                        45,563

Long-term debt                                                102,696                       100,962

Accrued employee benefits                                      56,534                        66,715
Deferred and noncurrent income taxes                            7,680                        12,205
Deferred revenue                                                  832

Commitments and contingencies

Stockholders' deficit:
  Preferred stock, $.01 par value; none outstanding
  Common stock, $.01 par value; 10,670,053 shares
    issued and 9,715,954 shares outstanding at
    September 30, 2005; and 10,670,053 shares issued
    and 9,632,022 shares outstanding at
    December 31, 2004                                             107                           107
  Paid in capital                                               1,894                         1,894
  Accumulated (deficit)                                       (21,095)                      (21,310)
  Less 805,270 treasury shares, at cost                          (298)                         (298)
  Accumulated other comprehensive income                        4,481                         7,608
  Unearned restricted stock issued for future service              (9)                          (14)
                                                              -------                       -------
    Total stockholders' (deficit)                             (14,920)                      (12,013)
                                                              -------                       -------
      Total Liabilities and Stockholders' Deficit            $206,221                      $213,432
                                                             ========                      ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
                                           3
<PAGE>
                  VISKASE COMPANIES, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
         (In Thousands, Except for Number of Shares and Per Share Amounts)

<TABLE>
<CAPTION>
                                                  3 Months     3 Months     9 Months     9 Months
                                                    Ended        Ended        Ended        Ended
                                                  September    September    September    September
                                                  30, 2005     30, 2004     30, 2005     30, 2004
                                                  ---------    ---------    ---------    ---------
<S>                                            <C>          <C>          <C>          <C>
NET SALES                                           $52,232      $52,954     $153,856     $154,366

COSTS AND EXPENSES
  Cost of sales                                      41,842       42,048      122,816      121,690
  Selling, general and administrative                 7,287        7,373       21,978       22,779
  Amortization of intangibles                           117          269          504          808
  Restructuring expense                                                         2,174          668
                                                    -------      -------     --------     --------

OPERATING INCOME                                      2,986        3,264        6,384        8,421

  Interest income                                       205          131          517          349
  Interest expense                                    3,199        3,409        9,458        9,747
  Other (income) expense, net                          (763)      (1,860)        (257)       1,436
  Post-retirement benefits curtailment gain            (668)                     (668)
  Loss on early extinguishment of debt,
    net of income tax provision of $0 in 2004                                               13,083
                                                    -------      -------     --------     --------

INCOME (LOSS) BEFORE INCOME TAXES                     1,423        1,846       (1,632)     (15,496)

  Income tax provision (benefit)                     (2,186)        (154)      (1,850)        (393)
                                                    -------      -------     --------     --------

NET INCOME (LOSS)                                     3,609        2,000          218      (15,103)

  Other comprehensive (loss) income:
  Foreign currency translation adjustments             (364)        (659)      (3,127)        (332)
                                                    -------      -------     --------     --------

COMPREHENSIVE INCOME (LOSS)                          $3,245       $1,341      ($2,909)    ($15,435)
                                                    =======      =======     =========    =========

WEIGHTED AVERAGE COMMON SHARES
  - BASIC                                         9,715,954     9,632,022   9,692,212   10,142,026
                                                  =========     =========   =========   ==========

PER SHARE AMOUNTS:
(LOSS) PER SHARE
  - BASIC                                              $.37          $.21        $.02       ($1.49)
                                                    =======      ========    ========     =========

WEIGHTED AVERAGE COMMON SHARES
  - DILUTED                                      10,517,668    10,431,096  10,547,767   10,142,026
                                                 ==========    ==========  ==========   ==========

PER SHARE AMOUNTS:
(LOSS) PER SHARE
  - DILUTED                                            $.34          $.19        $.02       ($1.49)
                                                    =======      ========    ========     =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                          4
<PAGE>
                    VISKASE COMPANIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (In Thousands)

<TABLE>
<CAPTION>
                                                                   9 Months Ended       9 Months Ended
                                                                 September 30, 2005   September 30, 2004
                                                                 ------------------   ------------------
<S>                                                           <C>                  <C>

Cash flows from operating activities:
  Net income (loss)                                                       $218             ($15,103)

  Adjustments to reconcile net income (loss) to net cash
    (used in) provided by operating activities:
      Depreciation and amortization under capital lease                  8,289                8,011
      Amortization of intangibles                                          503                  808
      Amortization of deferred financing fees                              529                  223
      Net (decrease) in deferred income taxes                           (3,711)                (707)
      Postretirement plan curtailment gain                                (668)
      Foreign currency translation loss (gain)                             578                  (17)
      Net (gain) loss on disposition of assets                            (278)                 144
      Bad debt provision                                                    93                  122
      Loss on debt extinguishment                                                            13,083
      Non-cash interest on 8% Notes                                      1,748                5,263
      Payment of interest on 8% Notes                                                        (2,196)

      Changes in operating assets and liabilities:
          Receivables                                                   (2,554)              (2,255)
          Inventories                                                   (4,504)                 770
          Other current assets                                          (6,076)              (1,151)
          Accounts payable and accrued liabilities                      11,979               (4,606)
          Other                                                         (3,472)              11,888
                                                                        -------              -------
      Total adjustments                                                  2,456               29,380
                                                                        -------              -------

          Net cash provided by operating activities                      2,674               14,277

Cash flows (used in) provided by investing activities:
  Capital expenditures                                                  (9,756)              (3,898)
  Reacquisition of leased assets                                          (645)              (9,500)
  Treasury stock purchase                                                                      (298)
  Proceeds from disposition of assets                                    1,114                1,349
  Restricted cash                                                          217               23,535
                                                                        -------              -------
          Net cash (used in) provided by investing activities           (9,070)              11,188

Cash flows (used in) provided by financing activities:
  Deferred financing costs                                                (309)              (4,015)
  Proceeds from issuance of long-term debt                                                   89,348
  Proceeds from issuance of warrants                                                          1,001
  Repayment of long-term borrowings                                       (123)            (104,273)
                                                                        -------            ---------
          Net cash (used in) financing activities                         (432)             (17,939)

Effect of currency exchange rate changes on cash                          (660)                (147)
                                                                        -------              -------
Net (decrease) increase in cash and equivalents                         (7,488)               7,379
Cash and equivalents at beginning of period                             30,255               23,160
                                                                        -------              -------
Cash and equivalents at end of period                                  $22,767              $30,539
                                                                       ========             ========

Supplemental cash flow information:
  Interest paid less capitalized interest                               $4,595               $3,218
  Income taxes paid                                                        $16                  $34
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.

                                          5
<PAGE>

                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

1.   Summary of Significant Accounting Policies

     General

     Viskase Companies, Inc. is a Delaware corporation organized in 1970. As
     used herein, the "Company" means Viskase Companies, Inc. and its
     subsidiaries.

     Nature of Operations

     The Company is a producer of non-edible cellulosic and plastic casings
     used to prepare and package processed meat products, and a provider of
     value-added support services relating to these products, for some of the
     largest global consumer products companies. The Company operates eight
     manufacturing facilities and eight distribution centers in North
     America, Europe and Latin America and, as a result, is able to sell its
     products in most countries throughout the world.

     Principles of Consolidation

     The consolidated financial statements include the accounts of the
     Company. Intercompany accounts and transactions have been eliminated in
     consolidation.

     Reclassification

     Reclassifications have been made to the prior years' financial
     statements to conform to the 2005 presentation.

     Use of Estimates in the Preparation of Financial Statements

     The preparation of financial statements includes the use of estimates
     and assumptions that affect a number of amounts included in the
     Company's financial statements, including, among other things, pensions
     and other post-retirement benefits and related disclosures, inventories
     valued under the last-in, first-out method, reserves for excess and
     obsolete inventory, allowance for doubtful accounts, restructuring
     charges and income taxes. Management bases its estimates on historical
     experience and other assumptions that it believes are reasonable. If
     actual amounts are ultimately different from previous estimates, the
     revisions are included in the Company's results for the period in which
     the actual amounts become known. Historically, the aggregate
     differences, if any, between the Company's estimates and actual amounts
     in any year have not had a significant effect on the Company's
     consolidated financial statements.

     Cash Equivalents

     For purposes of the statement of cash flows, the Company considers cash
     equivalents to consist of all highly liquid debt investments purchased
     with an initial maturity of approximately three months or less. Due to
     the short-term nature of these instruments, the carrying values
     approximate the fair market value. Cash equivalents and restricted cash
     include $21,792 and $28,272 of short-term investments at September 30,
     2005 and December 31, 2004, respectively. Restricted cash is principally
     cash held as collateral for outstanding letters of credit with a
     commercial bank.

                                            6
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Inventories

     Domestic inventories are valued primarily at the lower of last-in,
     first-out ("LIFO") cost or market. Remaining inventories, primarily
     foreign, are valued at the lower of first-in, first-out ("FIFO") cost or
     market.

     Property, Plant and Equipment

     The Company carries property, plant and equipment at cost less
     accumulated depreciation. Property and equipment additions include
     acquisition of property and equipment and costs incurred for computer
     software purchased for internal use including related external direct
     costs of materials and services and payroll costs for employees directly
     associated with the project. Depreciation is computed on the straight-
     line method over the estimated useful lives of the assets ranging from
     (i) building and improvements - 10 to 32 years, (ii) machinery and
     equipment - 4 to 12 years, (iii) furniture and fixtures - 3 to 12 years
     and (iv) auto and trucks - 2 to 5 years. Upon retirement or other
     disposition, cost and related accumulated depreciation are removed from
     the accounts, and any gain or loss is included in results of operations.

     Deferred Financing Costs

     Deferred financing costs are amortized on a straight-line basis over the
     expected term of the related debt agreement. Amortization of deferred
     financing costs is classified as interest expense.

     Patents

     Patents are amortized on the straight-line method over an estimated
     average useful life of 10 years.

     Goodwill and Intangible Assets

     Intangible assets that have an indefinite useful life are not amortized
     and are tested at least annually for impairment. As part of fresh-start
     accounting, the Company recognized intangible assets that are being
     amortized. Non-compete agreements in the amount of $1,236 were amortized
     over the two year period ended March 31, 2005.

     Long-Lived Assets

     The Company continues to evaluate the recoverability of long-lived
     assets including property, plant and equipment, patents and other
     intangible assets. Impairments are recognized when the expected
     undiscounted future operating cash flows derived from long-lived assets
     are less than their carrying value. If impairment is identified,
     valuation techniques deemed appropriate under the particular
     circumstances will be used to determine the asset's fair value. The loss
     will be measured based on the excess of carrying value over the
     determined fair value. The review for impairment is performed at
     least once a year or when circumstances warrant.

     Accounts Payable

     The Company's cash management system provides for the daily
     replenishment of its bank accounts for check-clearing requirements. The
     outstanding check balances of $1,153 and $1,092 at September 30, 2005
     and December 31, 2004, respectively, are not deducted from cash but are
     reflected in Accounts Payable on the consolidated balance sheets.

                                      7
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Deferred Revenue

     License fees paid in advance are deferred and recognized on a straight
     line basis over the life of the applicable patent. As of September 30,
     2005, the remaining balance of unearned revenue was $947.

     Pensions and Other Post-Retirement Benefits

     The North American operations of the Company have defined benefit
     retirement plans covering substantially all salaried and full time
     hourly non-union employees hired on or prior to March 31, 2003
     and employees covered by a collective bargaining agreement hired on or
     prior to September 30, 2004. The Company's operation in Germany also has
     a defined benefit plan covering substantially all of its employees.
     Pension cost is computed using the projected unit credit method. The
     discount rate used approximates the average yield for high-quality
     corporate bonds as of the valuation date. The Company's funding policy
     is consistent with funding requirements of the applicable Federal and
     foreign laws and regulations.

     Salaried and full time hourly non-union United States employees hired
     after March 31, 2003 and United States employees covered by a collective
     bargaining agreement hired after September 30, 2004 are eligible for a
     defined contribution benefit equal to three percent of their base
     earnings, as defined by the plan.

     The United States and Canadian operations of the Company have
     historically provided post-retirement health care and life insurance
     benefits. The Company accrues for the accumulated post-retirement
     benefit obligation that represents the actuarial present value of the
     anticipated benefits. Measurement is based on assumptions regarding such
     items as the expected cost of providing future benefits and any cost
     sharing provisions.

     The Company terminated post-retirement medical benefits as of December
     31, 2004 for all active employees and retirees in the United States who
     were not covered by a collective bargaining agreement.

     On September 30, 2005 employees in the U.S. covered by a collective
     bargaining agreement ratified a new agreement to terminate post-
     retirement medical benefits as of December 31, 2006 for all active
     employees and retirees covered by the collective bargaining agreement.

     Income Taxes

     Deferred tax assets and liabilities are measured using enacted tax laws
     and tax rates expected to apply to taxable income in the years in which
     those temporary differences are expected to be recovered or settled. The
     effect on deferred tax assets and liabilities due to a change in tax
     rates is recognized in income in the period that includes the enactment
     date. In addition, the amounts of any future tax benefits are reduced by
     a valuation allowance to the extent such benefits are not expected
     to be realized on a more likely than not basis.

     Net Income (Loss) Per Share

     Net income (loss) per share of common stock is based upon the weighted-
     average number of shares of common stock outstanding during the year. No
     effect has been given to common stock equivalents, where their effect is
     anti-dilutive on loss per share.

                                            8
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Other Comprehensive Income

     Comprehensive income includes all other non-shareholder changes in
     equity. Changes in other comprehensive income in 2005 and 2004 resulted
     from changes in foreign currency translation adjustments.

     Revenue Recognition

     The Company's revenues are recognized at the time products are shipped
     to the customer, under F.O.B. Shipping Point terms or under F.O.B. Port
     terms. Revenues are net of any discounts, rebates and allowances. The
     Company records all labor, raw materials, in-bound freight, plant
     receiving and purchasing, warehousing, handling and distribution costs
     as a component of cost of goods sold.

     Accounting for Stock-Based Compensation

     The Company uses the intrinsic value method as provided for under APB 25
     to account for options granted to employees for the purchase of common
     stock. No compensation expense is recognized on the grant date, since at
     that date, the option price equals the market price of the underlying
     common stock. The pro forma effect of accounting for stock options under
     a fair value method is as follows:

<TABLE>
<CAPTION>
(Dollars in Thousands, Except Per Share Amounts)             9 Months                       9 Months
                                                         Ended September                Ended September
                                                             30, 2005                       30, 2004
                                                         ---------------                ---------------
<S>                                                   <C>                            <C>
Net income, as reported                                        $218                          ($15,103)
Deduct: Total stock-based compensation expense under a
fair value based method, net of related tax effects            (201)
                                                               -----                         ---------
Net income, pro forma                                           $17                          ($15,103)
                                                               =====                         =========

Basic earnings per share, as reported                          $0.02                           ($1.49)
Diluted earnings per share, as reported                        $0.02                           ($1.49)
Basic earnings per share, pro forma                            $0.00                           ($1.49)
Diluted earnings per share, pro forma                          $0.00                           ($1.49)
</TABLE>

     Accounting Standards

     In November 2004, the FASB issued SFAS No. 151 ("SFAS 151"), "Inventory
     Costs - an Amendment of ARB No. 43 Chapter 4." SFAS 151 requires that
     items such as idle facility expense, excessive spoilage, double freight,
     and rehandling be recognized as current-period charges rather than being
     included in inventory regardless of whether the costs meet the criterion
     of abnormal as defined in ARB 43. SFAS 151 is applicable for inventory
     costs incurred during fiscal years beginning after June 15, 2005. The
     Company plans to adopt this standard beginning the first quarter of
     fiscal year 2006 and does not believe the adoption will have a material
     impact on its financial statements as such costs have historically been
     expensed as incurred.

                                          9
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), "Exchanges
     of Nonmonetary Assets - an Amendment of APB Opinion No. 29" which
     addresses the measurement of exchanges of nonmonetary assets and
     eliminates the exception from fair value accounting for nonmonetary
     exchanges of similar productive assets and replaces it with an exception
     for exchanges that do not have commercial substance. SFAS 153 specifies
     that a nonmonetary exchange has commercial substance if the future cash
     flows of an entity are expected to change significantly as a result of
     the exchange. This statement is effective for nonmonetary asset
     exchanges occurring in fiscal periods beginning after June 15, 2005 and
     is not expected to have a significant impact on the Company's financial
     statements.

     In December 2004, the FASB issued SFAS No. 123 (revised 2004) ("SFAS
     123R"), "Share-Based Payment."  SFAS 123R sets accounting requirements
     for "share-based" compensation to employees, requires companies to
     recognize in the income statement the grant-date fair value of stock
     options and other equity-based compensation issued to employees and
     disallows the use of a fair value method of accounting for stock
     compensation. SFAS 123R is applicable for annual, rather than
     interim, periods beginning after June 15, 2005, as such, the Company
     must adopt in January 2006. The Company is currently evaluating the
     impact this statement will have on the financial statements.

     In March 2005, the FASB issued Interpretation No. 47 ("FIN 47"),
     "Accounting for Conditional Asset Retirement Obligations." FIN 47
     clarifies that the term "conditional asset retirement obligation" as
     used in SFAS No. 143, "Accounting for Asset Retirement Obligations,"
     refers to a legal obligation to perform an asset retirement activity in
     which the timing and (or) method of settlement are conditional on a
     future event that may or may not be within the control of the entity.
     FIN 47 is effective no later than the end of fiscal years ending after
     December 15, 2005 and is not expected to have a significant impact
     on the Company's financial statements.

     In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
     Corrections." SFAS No. 154 replaced Accounting Principles Board Opinion,
     or APB, No. 20, "Accounting Changes" and SFAS No. 3, "Reporting
     Accounting Changes in Interim Financial Statements" and establishes
     retrospective application as the required method for reporting a change
     in accounting principle. SFAS No. 154 provided guidance for determining
     whether retrospective application of a change in accounting principle is
     impracticable and for reporting a change when retrospective application
     is impracticable. SFAS No. 154 also addresses the reporting of a
     correction of an error by restating previously issued financial
     statements. SFAS No. 154 is effective for accounting changes and
     corrections of errors made in fiscal years beginning after December 15,
     2005.

2.   Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                   September 30, 2005     December 31, 2004
                                   ------------------     -----------------
<S>                             <C>                    <C>
     Cash and cash equivalents           $22,767               $30,255
     Restricted cash                       3,244                 3,461
                                         -------               -------

                                         $26,011               $33,716
</TABLE>

     As of September 30, 2005, cash equivalents and restricted cash of
     $21,792 are invested in short-term investments.

                                        10
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

3.   Inventories

     Inventories consisted of:
<TABLE>
<CAPTION>
                                   September 30, 2005     December 31, 2004
                                   ------------------     -----------------
<S>                             <C>                    <C>
     Raw materials                       $5,759                 $4,816
     Work in process                     14,675                 13,558
     Finished products                   14,695                 13,894
                                         -------               -------

                                        $35,129                $32,268
</TABLE>

     Approximately 48% of the Company's inventories at September 30, 2005
     were valued at LIFO. Remaining inventories, primarily foreign, are
     valued at the lower of FIFO cost or market. At September 30, 2005, the
     LIFO values exceeded current manufacturing cost by approximately $251.

4.   Debt Obligations (Dollars in Thousands, Except For Number of Shares and
     Warrants, and Per Share, Per Warrant and Per Bond Amounts)

     On June 29, 2004, the Company issued $90,000 of new 11.5% Senior Secured
     Notes due 2011 ("11.5% Senior Secured Notes") and 90,000 warrants ("New
     Warrants") to purchase an aggregate of 805,230 shares of common stock of
     the Company. The proceeds of the 11.5% Senior Secured Notes and the
     90,000 New Warrants totaled $90,000. The 11.5% Senior Secured Notes have
     a maturity date of, and the New Warrants expire on, June 15, 2011. The
     $90,000 proceeds were used for the (i) repurchase of $55,527 principal
     amount of the Company's 8% Senior Subordinated Notes due December 1,
     2008 (the "8% Notes") at a price of 90% of the aggregate principal
     amount thereof, plus accrued and unpaid interest thereon; (ii) early
     termination of the General Electric Capital Corporation ("GECC") capital
     lease and repurchase of the operating assets subject thereto for a
     purchase price of $33,000; and (iii) payment of fees and expenses
     associated with the refinancing and repurchase of existing debt. In
     addition, the Company entered into a new $20,000 revolving credit
     facility with a financial institution. The revolving credit facility is
     a five-year facility with a June 29, 2009 maturity date.

     Each of the 90,000 New Warrants entitles the holder to purchase 8.947
     shares of the Company's common stock at an exercise price of $.01 per
     share. The New Warrants were valued for accounting purposes using a fair
     value method. Using a fair value method, each of the 90,000 New Warrants
     was valued at $11.117 for an aggregate fair value of the warrant
     issuance of $1,001. The remaining $88,899 of aggregate proceeds were
     allocated to the carrying value of the 11.5% Senior Secured Notes as of
     June 29, 2004.

                                       11
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Outstanding short-term and long-term debt consisted of:
<TABLE>
<CAPTION>
                                                          September 30, 2005             December 31, 2004
                                                          ------------------             -----------------
<S>                                                    <C>                        <C>
Short-term debt, current maturity of long-term debt:
     Other                                                          $227                         $384
                                                                    ----                         ----
          Total short-term debt                                     $227                         $384
                                                                    ----                         ----
Long-term debt:
     11.5% Senior Secured Notes                                  $89,178                      $89,071
     8% Notes                                                     13,397                       11,757
     Other                                                           121                          134
                                                                 -------                      -------
          Total long-term debt                                  $102,696                     $100,962
                                                                ========                     ========
</TABLE>
     Revolving Credit Facility
     -------------------------

     On June 29, 2004, the Company entered into a new $20,000 secured
     revolving credit facility ("Revolving Credit Facility"). The Revolving
     Credit Facility includes a letter of credit subfacility of up to
     $10,000 of the total $20,000 maximum facility amount. The Revolving
     Credit Facility expires on June 29, 2009. Borrowings under the loan and
     security agreement governing this Revolving Credit Facility are subject
     to a borrowing base formula based on percentages of eligible domestic
     receivables and eligible domestic inventory. Under the Revolving Credit
     Facility, we will be able to choose between two per annum interest rate
     options: (i) the lender's prime rate and (ii) LIBOR plus a margin
     currently of 2.25% (which margin will be subject to performance based
     increases up to 2.50% and decreases down to 2.00%); provided that the
     minimum interest rate shall be at least equal to 3.00%. Letter of
     credit fees will be charged a per annum rate equal to the then
     applicable LIBOR rate margin less 50 basis points. The Revolving Credit
     Facility also provides for an unused line fee of 0.375% per annum.

     Indebtedness under the Revolving Credit Facility is secured by liens on
     substantially all of the Company's and the Company's domestic
     subsidiaries' assets, with liens (i) on inventory, account receivables,
     lockboxes, deposit accounts into which payments are deposited and
     proceeds thereof, which will be contractually senior to the liens
     securing the 11.5% Senior Secured Notes and the related guarantees
     pursuant to an intercreditor agreement, (ii) on real property, fixtures
     and improvements thereon, equipment and proceeds thereof, which will be
     contractually subordinate to the liens securing the 11.5% Senior Secured
     Notes and such guarantees pursuant to such intercreditor agreement,
     (iii) on all other assets, which will be contractually pari passu with
     the liens securing the 11.5% Senior Secured Notes and such guarantees
     pursuant to such intercreditor agreement.

     The Revolving Credit Facility contains various covenants which will
     restrict the Company's ability to, among other things, incur
     indebtedness, enter into mergers or consolidation transactions, dispose
     of assets (other than in the ordinary course of business), acquire
     assets, make certain restricted payments, prepay any of the 8% Notes at
     a purchase price in excess of 90% of the aggregate principal amount
     thereof (together with accrued and unpaid interest to the date of such
     prepayment), create liens on our assets, make investments, create
     guarantee obligations and enter into sale and leaseback transactions and
     transactions with affiliates, in each case subject to permitted
     exceptions. The Revolving Credit Facility also requires that we comply
     with various financial covenants, including meeting a minimum EBITDA
     requirement and limitations on capital expenditures in the event our
     usage of the Revolving Credit Facility exceeds 30% of the facility
     amount. The Revolving Credit Facility also requires payment of a
     prepayment premium in the event that it is terminated prior to
     maturity. The prepayment premium, as a percentage of the $20,000
     facility amount, is 2% through June 29, 2006, and 1% through June 29,
     2007.

                                       12
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     There were no short-term borrowings under revolving credit facilities
     during 2004 and 2005.

     11.5% Senior Secured Notes
     --------------------------

     On June 29, 2004, the Company issued $90,000 of 11.5% Senior Secured
     Notes that bear interest at a rate of 11.5% per annum, payable semi-
     annually in cash on June 15 and December 15. The 11.5% Senior Secured
     Notes mature on June 15, 2011.

     The 11.5% Senior Secured Notes will be guaranteed on a senior secured
     basis by all of our future domestic restricted subsidiaries that are not
     immaterial subsidiaries (as defined). The 11.5% Senior Secured Notes and
     the related guarantees (if any) are secured by substantially all of the
     tangible and intangible assets of the Company and guarantor subsidiaries
     (if any); and includes the pledge of the capital stock directly owned by
     the Company or the guarantors; provided that no such pledge will
     include more than 65% of any foreign subsidiary directly owned by the
     Company or the guarantor. The Indenture and the security documents
     related thereto provide that, to the extent that any rule is
     adopted, amended or interpreted that would require the filing with the
     SEC (or any other governmental agency) of separate financial statements
     for any of our subsidiaries due to the fact that such subsidiary's
     capital stock secures the 11.5% Senior Secured Notes, then such capital
     stock will automatically be deemed not to be part of the collateral
     securing the 11.5% Senior Secured Notes to the extent necessary to not
     be subject to such requirement. In such event, the security documents
     may be amended, without the consent of any holder of 11.5% Senior
     Secured Notes, to the extent necessary to release the liens on such
     capital stock.

     With limited exceptions, the 11.5% Senior Secured Notes require that the
     Company maintain a minimum annual level of EBITDA calculated at the end
     of each fiscal quarter as follows:

<TABLE>
<CAPTION>
     Fiscal quarter ending                                      Amount
     ----------------------------------------------             ------
<S>                                                       <C>
     September 30, 2004 through September 30, 2006             $16,000
     December 31, 2006 through September 30, 2008              $18,000
     December 31, 2008 and thereafter                          $20,000
</TABLE>
     unless the sum of (i) unrestricted cash of the Company and its
     restricted subsidiaries as of such day and (ii) the aggregate amount of
     advances that the Company is actually able to borrow under the
     Revolving Credit Facility on such day (after giving effect to any
     borrowings thereunder on such day) is at least $15,000. The minimum
     annual level of EBITDA covenant is not currently in effect as the
     Company's unrestricted cash and the amount of available credit under the
     Revolving Credit Facility exceed $15,000. The Company's EBITDA as of
     September 30, 2005 would have exceeded the required covenant level if
     the covenant had been in effect at that time.

     The 11.5% Senior Secured Notes limit the ability of the Company to (i)
     incur additional indebtedness; (ii) pay dividends, redeem subordinated
     debt, or make other restricted payments, (iii) make certain
     investments or acquisitions; (iv) issue stock of subsidiaries; (v) grant
     or permit to exist certain liens; (vi) enter into certain transactions
     with affiliates; (vii) merge, consolidate, or transfer substantially all
     of our assets; (viii) incur dividend or other payment restrictions
     affecting certain subsidiaries; (ix) transfer, sell or acquire assets,
     including capital stock of subsidiaries; and (x) change the nature of
     our business. At any time prior to June 15, 2008, the Company may
     redeem, at its option, some or all of the 11.5% Senior Secured Notes at
     a make-whole redemption price equal to the greater of (i) 100% of
     the aggregate principal amount of the 11.5% Senior Secured Notes being
     redeemed and (ii) the sum of the present values of 105 3/4% of the
     aggregate principal amount of such 11.5% Senior Secured

                                      13
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Notes and scheduled payments of interest on such 11.5% Senior Secured
     Notes to and including June 15, 2008, discounted to the date of
     redemption on a semi-annual basis (assuming a 360-day year consisting of
     twelve 30-day months) at the Treasury Rate plus 50 basis points,
     together with, in each case, accrued and unpaid interest and additional
     interest, if any, to the date of redemption. The make-whole redemption
     price as of September 30, 2005 is approximately 122%.

     On or after June 15, 2008, the Company may redeem, at its option, some
     or all of the 11.5% Senior Secured Notes at the following redemption
     prices, plus accrued and unpaid interest to the date of redemption:

     For the periods below                            Percentage

     On or after June 15, 2008                         105 3/4%
     On or after June 15, 2009                         102 7/8%
     On or after June 15, 2010                             100%

     Prior to June 15, 2007, the Company may redeem, at its option, up to 35%
     of the aggregate principal amount of the 11.5% Senior Secured Notes with
     the net proceeds of any equity offering at 111 1/2% of their principal
     amount, plus accrued and unpaid interest to the date of redemption,
     provided that at least 65% of the aggregate principal amount of the
     11.5% Senior Secured Notes remains outstanding immediately following the
     redemption.

     Within 90 days after the end of each fiscal year ending in 2006 and
     thereafter, for which the Company's Excess Cash Flow (as defined) was
     greater than or equal to $2,000, the Company must offer to purchase a
     portion of the 11.5% Senior Secured Notes at 101% of principal amount,
     together with accrued and unpaid interest to the date of purchase, with
     50% of our Excess Cash Flow from such fiscal year ("Excess Cash Flow
     Offer Amount"); except that no such offer shall be required if the
     Revolving Credit Facility prohibits such offer from being made because,
     among other things, a default or an event of default is then outstanding
     thereunder. The Excess Cash Flow Offer Amount shall be reduced by the
     aggregate principal amount of 11.5% Senior Secured Notes purchased in
     eligible open market purchases as provided in the indenture.

     If the Company undergoes a change of control (as defined), the holders
     of the 11.5% Senior Secured Notes will have the right to require the
     Company to repurchase their 11.5% Senior Secured Notes at
     101% of their principal amount, plus accrued and unpaid interest to the
     date of purchase.

     If the Company engages in asset sales, it must either invest the net
     cash proceeds from such sales in its business within a certain period of
     time (subject to certain exceptions), prepay indebtedness under
     the Revolving Credit Facility (unless the assets that are the subject of
     such sales are comprised of real property, fixtures or improvements
     thereon or equipment) or make an offer to purchase a principal amount of
     the 11.5% Senior Secured Notes equal to the excess net cash proceeds.
     The purchase price of each 11.5% Senior Secured Note so purchased will
     be 100% of its principal amount, plus accrued and unpaid interest to the
     date of purchase.

     8% Notes
     --------

     The 8% Notes bear interest at a rate of 8% per year, and accrue interest
     from December 1, 2001, payable semi-annually (except annually with
     respect to year four and quarterly with respect to year five), with
     interest payable in the form of 8% Notes (paid-in-kind) for the first
     three years. Interest for years four and five will be payable in cash to
     the extent of available cash flow, as defined, and the balance in the
     form of 8% Notes (paid-in-kind). Thereafter, interest will be payable in
     cash. The 8% Notes mature on December 1, 2008.

                                       14
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     On June 29, 2004, the Company repurchased $55,527 aggregate principal
     amount of its 8% Notes, and the holders (i) released the liens on the
     collateral that secured the 8% Notes, (ii) contractually subordinated
     the Company's obligations under the 8% Notes to obligations under
     certain indebtedness, including the new 11.5% Senior Secured Notes and
     the Revolving Credit Facility; and (iii) eliminated substantially all of
     the restrictive covenants contained in the indenture governing the 8%
     Notes. The carrying value of the remaining 8% Notes outstanding at
     September 30, 2005 is $13,397.

     The 8% Notes were valued at market in fresh-start accounting. The
     discount to face value is being amortized using the effective-interest
     rate methodology through maturity with an effective interest rate
     of 10.46%.

     The following table summarizes the carrying value of the 8% Notes at
     December 31 assuming interest through 2006 is paid in the form of 8%
     Notes (paid-in-kind):

<TABLE>
<CAPTION>
                         2005          2006          2007
                         ----          ----          ----
<S>                 <C>         <C>            <C>
8% Notes
     Principal         $17,261       $18,684       $18,684
     Discount            3,305         2,283         1,148
                       -------       -------       -------
     Carrying value    $13,956       $16,401       $17,536
                       =======       =======       =======
</TABLE>

     Letter of Credit Facility
     -------------------------
     Letters of credit in the amount of $2,419 were outstanding under letter
     of credit facilities with commercial banks, and were cash collateralized
     at September 30, 2005.

     The Company finances its working capital needs through a combination of
     internally generated cash from operations and cash on hand. The
     Revolving Credit Facility provides additional financial flexibility.

     Aggregate maturities of debt for each of the next five years are:

<TABLE>
<CAPTION
                               2005     2006     2007     2008     2009     Thereafter
                               ----     ----     ----     ----     ----     ----------
<S>                         <C>      <C>      <C>      <C>      <C>      <C>

11.5% Senior Secured Notes                                                    $90,000
8% Notes                                                 $18,684
Other                          $227                                               121
                               ----     ----     ----    -------   ----       -------

                               $227                      $18,684              $90,121
                               ====     ====     ====    ========   ====      =======
</TABLE>

                                        15
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

5.   Post-Retirement Plans

     Pension contributions
     ---------------------
     The Company paid $2,834 during the first nine months of 2005, and
     expects to contribute an additional $1,373 during the remainder of the
     year.

<TABLE>
<CAPTION>
                                            9 Months      9 Months
                                              Ended         Ended
                                            September     September
                                            30, 2005      30, 2004
                                            ---------     ---------
<S>                                      <C>           <C>

Component of net period benefit cost
  Service cost                                $1,852        $1,613
  Interest cost                                5,481         5,533
  Expected return on plan assets              (5,099)       (5,264)
  Amortization of prior service cost            (272)           18
                                              ------        -------

    Total net periodic benefit cost           $1,962        $1,900
                                              ======        ======
</TABLE>

     The Company has expensed $1,962 in the first nine months of 2005 and
     expects its pension expense to be $2,576 for the year.

     Post-retirement benefits
     ------------------------
     The Company paid $979 during the first nine months of 2005, and expects
     to contribute an additional $204 during the remainder of the year.

<TABLE>
<CAPTION>
                                                Other Benefits
                                            ----------------------
                                            9 Months      9 Months
                                              Ended         Ended
                                            September     September
                                            30, 2005      30, 2004
                                            ---------     ---------
<S>                                      <C>           <C>

Component of net period benefit cost
  Service cost                                 $180          $682
  Interest cost                                 817         2,596
  Amortization of prior service cost            (78)          264
                                               -----        -----

    Net periodic benefit cost                  $919        $3,542
    Effect of curtailment                      (668)
                                               -----       ------
       Total net periodic benefit cost         $251        $3,542
                                               ====        ======
</TABLE>

     The Company has expensed $251 in the first nine months of 2005 and
     expects its post-retirement benefits income to be $1,341 for the year
     including the effects of the curtailment of post-retirement benefits
     discussed below.

                                   16
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     The Company terminated post-retirement medical benefits as of December
     31, 2004 for all active employees and retirees in the United States who
     were not covered by a collective bargaining agreement.

     On September 30, 2005 employees in the U.S. covered by a collective
     bargaining agreement ratified a new agreement to terminate post-
     retirement medical benefits for all active employees and retirees as
     of December 31, 2006. As a result of the agreement, the Company
     recognized a one time curtailment gain of $668 during the third quarter
     of 2005. The Company will amortize a $12,768 gain due to unrecognized
     prior service cost net of $4,240 of unrecognized actuarial losses over
     the final 15 months of the plan.

6.   Restructuring Charges

     During the second quarter of 2005, our board of directors has approved a
     plan under which we will restructure our finishing operations by
     relocating finishing operations from our facility in Kentland,
     Indiana to a facility in Mexico. We expect to complete the restructuring
     by the end of 2006. The relocation of the finishing operations is
     intended to lower costs and optimize operations. The total cost
     of the restructuring, exclusive of capital expenditures, is expected to
     be approximately $10,000, substantially all of which will result in cash
     expenditures. We also expect to make capital expenditures of
     approximately $9,000 to $10,000 in connection with the restructuring. We
     began incurring a substantial portion of these costs and capital
     expenditures in the second quarter of 2005 and expect to continue to
     incur them through the end of 2006.

     A $1,787 charge for one-time employee costs related to the Kentland
     relocation was recorded during the second quarter of 2005.

     During the first quarter of 2005, the Company committed to a
     restructuring plan to continue to address the Company's competitive
     environment. The plan resulted in a before tax charge of $387.

     During the first quarter of 2004, the Company committed to a
     restructuring plan to continue to address the Company's competitive
     environment. The plan resulted in a before tax charge of $784.
     Approximately 13% of the home office personnel were laid off due to the
     restructuring plan. The 2004 restructuring charge is offset by a
     reversal of an excess reserve of $116 relating to the 2003 restructuring
     reserve.

     During the third and fourth quarters of 2003, the Company committed to a
     restructuring plan to address the industry's competitive environment.
     The plan resulted in a before-tax charge of $2,562. Approximately 2% of
     the Company's worldwide workforce was laid off due to the 2003
     restructuring plan.

     The renegotiated Nucel(r) technology third-party license fee payments
     remaining as of September 30, 2005 are $150 and are included in the 2000
     restructuring reserve.

                                      17
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     Restructuring Reserves
     ----------------------

     The following table provides details of the 2005, 2003 and 2000
     restructuring reserves for the period ended September 30, 2005 (dollars
     in millions):

<TABLE>
<CAPTION>
                                Restructuring                                             Restructuring
                                reserve as of                                             reserve as of
                                 December 31,      2005                      Other        September 30,
                                     2004         Charge     Payments     adjustments          2005
                                -------------     ------     --------     -----------     -------------
<S>                          <C>               <C>        <C>         <C>              <C>
2005 employee costs                                $2.2       ($0.4)                           $1.8
2003 employee costs                  $0.1                      (0.1)
2000 Nucel(r) license fees            0.2                                                       0.2
                                     ----          ----       ------           ----            ----
   Total restructuring charge
   payments                          $0.3          $2.2       ($0.5)                           $2.0
                                     ====          ====       ======           ====            ====
</TABLE>
7.   Capital Stock and Paid in Capital

     Authorized shares of preferred stock $(0.01 par value per share) and
     common stock $(0.01 par value per share) for the Company are 50,000,000
     shares and 50,000,000 shares, respectively. A total of 10,670,053 shares
     of common stock were issued and 9,715,954 were outstanding as of
     September 30, 2005. A total of 10,670,053 shares of common stock were
     issued and 9,632,022 were outstanding as of December 31, 2004.

     In connection with the Company's emergence from bankruptcy in 2003,
     660,000 shares of common stock were reserved for grant to management and
     employees under the Viskase Companies, Inc. Restricted Stock Plan. On
     April 3, 2003, the Company granted 330,070 shares of restricted common
     stock ("Restricted Stock") under the Restricted Stock Plan. Shares
     granted under the Restricted Stock Plan vest 12.5% on grant date; 17.5%
     on the first anniversary of grant date; 20% on the second anniversary of
     grant date; 20% on the third anniversary; and, 30% on the fourth
     anniversary of the grant date, subject to acceleration upon the
     occurrence of certain events. The Restricted Stock expense for the nine-
     month periods ended September 30, 2005 and 2004 is $5 and $5,
     respectively. The value of the Restricted Stock was calculated based on
     the fair market value of approximately $0.10 per share for the new
     common stock upon emergence from bankruptcy using a multiple of cash
     flow calculation to determine enterprise value and the related equity
     value.

8.   Treasury Stock

     In connection with the June 29, 2004 refinancing transaction, the
     Company purchased 805,270 shares of its common stock from the
     underwriter for a purchase price of $298. The common stock has been
     accounted for as treasury stock. The treasury shares are being held for
     use in connection with any exercise of the New Warrants.

9.   Warrants (Dollars in Thousands, Except Per Share and Per Warrant
     Amounts)

     On June 29, 2004, the Company issued $90,000 of 11.5% Senior Secured
     Notes together with the 90,000 New Warrants to purchase an aggregate of
     805,230 shares of common stock of the Company. The aggregate purchase
     price of the 11.5% Senior Secured Notes and the 90,000 of New Warrants
     was $90,000. Each of the New Warrants entitles the holder to purchase
     8.947 shares of the Company's common stock at an exercise price of $.01
     per share through the June 15, 2011 expiration date.

                                  18
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     The New Warrants were valued for accounting purposes using a fair value
     method. Using a fair value method, each of the New Warrants was valued
     at $11.117 for an aggregate fair value of the warrant issuance of
     $1,001.

     Pursuant to the Company's 2003 plan of reorganization, holders of pre-
     petition common stock received warrants to purchase shares of common
     stock ("Old Warrants"). At September 30, 2005, Old Warrants exercisable
     for 304,127 shares of common stock are outstanding. The Old Warrants
     have a seven-year term expiring on April 2, 2010, and have an exercise
     price of $10.00 per share.

10.  Contingencies

     In 1988, Viskase Canada Inc. ("Viskase Canada"), a subsidiary of the
     Company, commenced a lawsuit against Union Carbide Canada Limited and
     Union Carbide Corporation ("Union Carbide") in the Ontario Superior
     Court of Justice, Court File No.: 292270188, seeking damages resulting
     from Union Carbide's breach of environmental representations and
     warranties under the Amended and Restated Purchase and Sale Agreement,
     dated January 31, 1986 ("Agreement"). Pursuant to the Agreement, Viskase
     Corporation and various affiliates (including Viskase Canada) purchased
     from Union Carbide and Union Carbide Films Packaging, Inc., its
     cellulosic casings business and plastic barrier films business
     ("Business"), which purchase included a facility in Lindsay, Ontario,
     Canada ("Site"). Viskase Canada is claiming that Union Carbide breached
     several representations and warranties and deliberately and/or
     negligently failed to disclose to Viskase Canada the existence of
     contamination on the Site.

     In November 2000, the Ontario Ministry of the Environment ("MOE")
     notified Viskase Canada that it had evidence to suggest that the Site
     was a source of polychlorinated biphenyl ("PCB") contamination.
     Viskase Canada and The Dow Chemical Company, corporate successor to
     Union Carbide ("Dow"), have been working with the MOE in investigating
     the PCB contamination.

     The Company and Dow reached an agreement for resolution of all
     outstanding matters between them whereby Dow repurchased the Site for
     $1,375 (Canadian), and is responsible for, and assumed the cost of
     remediation of the Site, and indemnified Viskase Canada and its
     affiliates, including the Company, in relation to all related
     environmental liabilities at the Site and Viskase Canada dismissed
     the action referred to above. The transaction was closed during May
     2005, and resulted in a gain of $279 (US).

     In 1993, the Illinois Department of Revenue ("IDR") submitted a proof of
     claim against Envirodyne Industries, Inc. (now known as Viskase
     Companies, Inc.) and its subsidiaries in the United States Bankruptcy
     Court for the Northern District of Illinois ("Bankruptcy Court"),
     Bankruptcy Case Number 93 B 319, for alleged liability with respect to
     the IDR's denial of the Company's allegedly incorrect utilization of
     certain loss carry-forwards of certain of its subsidiaries. In September
     2001, the Bankruptcy Court denied the IDR's claim and determined the
     debtors were not responsible for 1998 and 1999 tax liabilities, interest
     and penalties. IDR appealed the Bankruptcy Court's decision to the
     United States District Court, Northern District of Illinois, Case Number
     01 C 7861, and in February 2002, the district court affirmed the
     Bankruptcy Court's order. IDR appealed the district court's order to
     United States Court of Appeals for the Seventh Circuit, Case Number 02-
     1632. On January 6, 2004, the appeals court reversed the judgment of the
     district court and remanded the case for further proceedings. The matter
     is now before the Bankruptcy Court for further determination. As of
     September 30, 2005, the tax liabilities, interest and penalties claimed
     totaled approximately $2,600.

                                       19
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

     During 1999 and 2000, the Company and certain of its subsidiaries and
     one other sausage casings manufacturer were named in ten virtually
     identical civil complaints filed in the United States District
     Court for the District of New Jersey. The District Circuit ordered all
     of these cases consolidated in Civil Action No. 99-5195-MLC (D.N.J.).
     Each complaint brought on behalf of a purported class of sausage
     casings customers alleges that the defendants unlawfully conspired to
     fix prices and allocate business in the sausage casings industry. In
     2001, all of the consolidated cases were transferred to the United
     States District Court for the Northern District of Illinois, Eastern
     Division. The Company strongly denies the allegations set forth in these
     complaints.

     In May 2004, the Company entered into a settlement agreement, without
     the admission of any liability ("Settlement Agreement"), with the
     plaintiffs. Under terms of the Settlement Agreement, the plaintiffs
     fully released the Company and its subsidiaries from all liabilities and
     claims arising from the civil action in exchange for the payment of a
     $300 settlement amount, which amount was reserved in the December 31,
     2003 financial statements.

     In August 2001, the Department of Revenue of the Province of Quebec,
     Canada issued an assessment against Viskase Canada in the amount of
     $2,700 (Canadian) plus interest and possible penalties. This assessment
     is based upon Viskase Canada's failure to collect and remit sales tax
     during the period July 1, 1997 to May 31, 2001. During this period,
     Viskase Canada did not collect and remit sales tax in Quebec on reliance
     of the written advice of its outside accounting firm. Viskase Canada
     filed a Notice of Objection in November 2001 with supplementary
     submission in October 2002. The Notice of Objection found in favor of
     the Department of Revenue. The Company has appealed the decision. The
     ultimate liability for the Quebec sales tax lies with the customers of
     Viskase Canada during the relevant period. Viskase Canada could be
     required to pay the amount of the underlying sales tax prior to
     receiving reimbursement for such tax from our customers. The Company
     has, however, provided for a reserve of $300 (U.S.) for interest and
     penalties, if any, but has not provided for a reserve for the underlying
     sales tax. Viskase Canada is negotiating with the Quebec Department of
     Revenue to avoid having to collect the sales tax from customers who will
     then be entitled to credit for such sales tax collected. Those
     negotiations have resulted in Viskase Canada making a settlement offer,
     whereby Viskase Canada would pay $300 (Canadian) and there would be
     no collection of the underlying sales tax from the customers of Viskase
     Canada. The settlement offer was accepted by the Deputy Minister of
     Revenue of Quebec during November 2005. A settlement agreement has been
     executed between Viskase Canada Inc. and the Deputy Minister of Revenue
     of Quebec and the parties will file a Declaration of Settlement out of
     Court to dismiss the action.

     Under the Clean Air Act Amendments of 1990, various industries,
     including casings manufacturers, are or will be required to meet maximum
     achievable control technology ("MACT") air emissions standards for
     certain chemicals. MACT standards applicable to all U.S. cellulosic
     casing manufacturers were promulgated June 11, 2002. The Company
     submitted extensive comments to the EPA during the public comment
     period. Compliance with these new rules was required by June 13,
     2005, although the Company has obtained a one-year extension for both of
     its facilities. To date, the Company has spent approximately $9,555 in
     capital expenditures for MACT, and expects to spend an additional
     $1,050, principally over the next 6 months, to become compliant with
     MACT rules at our two U.S. extrusion facilities.

     In addition, the Company is involved in various other legal proceedings
     arising out of our business and other environmental matters, none of
     which are expected to have a material adverse effect upon results of
     operations, cash flows or financial condition.

                                   20
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

11.  Earnings Per Share

     Following are the reconciliations of the numerators and denominators of
     the basic and diluted EPS (in thousands, except for number of shares and
     per share amounts):

<TABLE>
<CAPTION>
                                                     3 Months      3 Months      9 Months      9 Months
                                                       Ended         Ended         Ended         Ended
                                                    September     September     September     September
                                                     30, 2005      30, 2004      30, 2005      30, 2004
                                                    ---------     ---------     ---------     ---------
<S>                                              <C>           <C>           <C>           <C>

NUMERATOR:

Income (loss) available to common stockholders:

Net income (loss)                                      $3,609        $2,000          $218     ($15,103)
                                                    ---------     ---------     ---------     ---------

Net income (loss) available to common
stockholders
   for basic and diluted EPS                           $3,609        $2,000          $218     ($15,103)
                                                    =========     =========     =========     =========

DENOMINATOR:

Weighted average shares outstanding
   for basic EPS                                    9,715,954     9,632,022     9,692,212    10,142,026

Effect of dilutive securities                         801,714       799,074       855,555
                                                    ---------     ---------     ---------     ---------

Weighted average shares outstanding
   for diluted EPS                                 10,517,668    10,431,096    10,547,767    10,142,026
                                                   ==========    ==========    ==========    ==========
</TABLE>

     Common stock equivalents, consisting of the New Warrants for 805,230
     shares, Old Warrants for 304,127 shares, 990,000 stock options issued to
     management, and 130,877 shares of unvested restricted stock are excluded
     for the nine months ended September 30, 2004 as they are anti-dilutive
     on the loss per share. The vested portion of the Restricted Stock is
     included in the weighted-average shares outstanding for basic earnings
     per share.

                                     21
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

12.  Stock-Based Compensation (Dollars in Thousands, Except Per Share
     Amounts)

     The Company's net income and net income per common share would have been
     reduced to the pro forma amounts indicated below if compensation cost
     for the Company's stock option plan had been determined based on the
     fair value at the grant date for awards in accordance with the
     provisions of SFAS No. 123.

<TABLE>
<CAPTION>
                                 9 Months Ended          9 Months Ended
                                  September 30,           September 30,
                                       2005                    2004
                                 --------------          --------------
<S>                            <C>                   <C>

Net income (loss):
    As reported                        $218                  ($15,103)
    Pro forma                           $17                  ($15,103)
Income (loss) per share:
    As reported, basic                $0.02                    ($1.49)
    As reported, diluted              $0.02                    ($1.49)
    Pro forma, basic                  $0.00                    ($1.49)
    Pro forma, diluted                $0.00                    ($1.49)
</TABLE>

     The fair values of the options granted during 2005 and 2004 were
     estimated on the date of grant using the binomial option pricing model.
     The assumptions used and the estimated fair values are as follows:

<TABLE>
<CAPTION>
                                 2005          2004
                                 ----          ----
<S>                           <C>          <C>

Expected term                  10 years      5 years
Expected stock volatility        14.88%       16.05%
Risk-free interest rate           4.17%        3.44%
Fair value per option            $1.09        $0.54
</TABLE>

     The Company has granted non-qualified stock options to its chief
     executive officer for the purchase of 500,000 shares of its common stock
     under an employment agreement. The Company has granted non-qualified
     stock options to its management for the purchase of 490,000 shares of
     its common stock. Options were granted at, or above, the fair market
     value at date of grant and one-third vests on each of the first, second
     and third anniversaries of the date of grant, subject to acceleration in
     certain events. The options for its chief executive officer and those
     granted to management expire five years and ten years, respectively,
     from the date of grant. The Company's outstanding options were:

<TABLE>
<CAPTION>
                                                         Weighted
                                        Shares            Average
                                         Under           Exercise
                                        Option             Price
                                        ------           --------
<S>                                <C>                <C>
   Outstanding, January 1, 2005        500,000             $2.40
   Granted                             495,000             $2.90
   Exercised                                 0
   Forfeited                             5,000
                                       -------
   Outstanding, September 30, 2005     990,000             $2.65
                                       =======             =====
</TABLE>

     None of the options were exercisable as of September 30, 2005.

                                   22
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

13.  Business Segment Information and Geographic Area Information

     The Company primarily manufactures and sells cellulosic food casings.
     The Company's operations are primarily in North America, South America
     and Europe. Intercompany sales and charges (including royalties) have
     been reflected as appropriate in the following information. Certain
     items are maintained at the Company's corporate headquarters and are not
     allocated geographically. They include most of the Company's debt and
     related interest expense and income tax benefits. Other expense for the
     9 months ended September 30, 2005 and September 30, 2004 includes net
     foreign exchange transaction losses of approximately $143 and $1,040,
     respectively.

     Geographic Area Information
     ---------------------------
<TABLE>
<CAPTION>
                                                     9 Months           9 Months
                                                       Ended              Ended
                                                   September 30,      September 30,
                                                       2005               2004
                                                   -------------      -------------
<S>                                             <C>                <C>
Net sales
United States                                          $88,704            $90,606
South America                                            6,220              5,758
Europe                                                  58,932             58,002
                                                      --------           --------
                                                      $153,856           $154,366
                                                      ========           ========

Operating income (loss)
United States                                           $8,299            $10,366
Canada                                                    (412)              (525)
South America                                             (395)              (712)
Europe                                                  (1,108)              (708)
                                                      --------           --------
                                                        $6,384             $8,421
                                                      ========           ========

Identifiable assets
United States                                         $120,572           $111,595
Canada                                                      28                591
South America                                            8,083              7,479
Europe                                                  78,700             83,880
                                                      --------           --------
                                                      $207,383           $203,545
                                                      ========           ========

United States export sales
  (reported in North America net sales above)
Asia                                                   $14,096            $13,680
South and Central America                                3,687              3,666
Canada                                                   6,102              5,686
Other international                                      3,092              2,930
                                                      --------           --------
                                                       $26,977            $25,962
                                                      ========           ========
</TABLE>

                                             23
<PAGE>
                     VISKASE COMPANIES, INC. AND SUBSIDIARIES
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           (Dollars in Thousands)

14.  Subsequent Event

     During November 2005, Viskase Canada Inc. and the Deputy Minister of
     Revenue of Quebec executed a settlement in the amount of $300 (Canadian)
     to resolve a sales tax assessment for the period July 1, 1997 to May 31,
     2001 (refer to Contingencies, Note 10). The parties will file a
     Declaration of Settlement out of Court to dismiss the assessment action.

                                        24
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS
         ----------------------------------------------------------------

In this filing, unless indicated otherwise, "Viskase" or the "Company" refers
to Viskase Companies, Inc., and "we," "us" and "our" refer to Viskase and its
subsidiaries.

Results of Operations
----------------------
We are a worldwide leader in the manufacture and sale of cellulosic, fibrous
and plastic casings for the processed meat industry. We currently operate
seven manufacturing facilities and eight distribution centers throughout
North America, Europe and South America and we derive approximately 60% of
total net sales from customers located outside the United States. We believe
we are one of the two largest manufacturers of non-edible cellulose casings
for small-diameter processed meats and one of the three largest manufacturers
of non-edible fibrous casings. Our management believes that the factors most
critical to the success of our business are:

  *  maintaining and building upon our reputation for providing a high level
     of customer and technical services;
  *  maintaining and building upon our long-standing customer relationships,
     many of which have continued for decades;
  *  developing additional sources of revenue through new products and
     services;
  *  penetrating new regional markets; and
  *  continuing to streamline our cost structure.

Our net sales are driven by consumer demand for meat products and the level
of demand for casings by processed meat manufacturers, as well as the average
selling prices of our casings. Specifically, demand for our casings is
dependent on population growth, overall consumption of processed meats and
the types of meat products purchased by consumers. Average selling prices are
dependent on overall supply and demand for casings and our product mix.

Our cellulose and fibrous casing extrusion operations are capital-intensive
and are characterized by high fixed costs. Our plastic casing extrusion and
finishing operations are characterized by relatively high labor costs. The
industry's operating results have historically been sensitive to the global
balance of capacity and demand. The industry's extrusion facilities produce
casings under a timed chemical process and operate continuously. We believe
that the industry's current output is in the process of balancing with
global demand and the recent downward trend in casing prices has stabilized.

Recently, the Company announced it was restarting extrusion capacity at our
Thaon-les-Vosges, France facility. This capacity will come on-line during the
fourth quarter of 2005. The cost associated with the restart is estimated to
be approximately $1.0 million.

Our contribution margin varies with changes in selling price, input material
costs, labor costs and manufacturing efficiencies. The total contribution
margin increases as demand for our casings increases. Our financial results
benefit from increased volume because we do not have to increase our fixed
cost structure in proportion to increases in demand. For certain products, we
operate at near capacity in our existing facilities. We regularly evaluate
our capacity and projected market demand. The Company made the decision to
selectively increase our extrusion capacity through a restart of Thaon-les-
Vosges, France extrusion capacity to meet the worldwide demand for small-
diameter casing.

                                      25
<PAGE>

We operate in a competitive environment. During the mid-1990's, we
experienced significant pricing pressure and volume loss with the entrance of
a foreign competitor into the United States market. The market for cellulosic
casings experienced declines in selling price over the last ten years, which
we believe only recently has stabilized. While the overall market volume has
expanded during this period, the industry continued to experience pressure on
pricing. Our financial performance moves in direct relation to our
average selling price.

We have continued to reduce our fixed cost structure in response to market
and economic conditions. Since 1998, we have reduced annual fixed costs by
approximately $40.0 million by:

  *  closing our Chicago, Illinois plant and selling the facility;
  *  reconfiguring our Loudon, Tennessee, Thaon-les-Vosges, France and
     Beauvais, France plants;
  *  discontinuing our Nucel(r) operations;
  *  closing our Lindsay, Ontario, Canada facility; and
  *  reducing the number of employees by approximately 30%.

Comparison of Results of Operations for Fiscal Quarters Ended September 30,
2005 and 2004. The following discussion compares the results of operations
for the fiscal quarter ended September 30, 2005 to the results of operations
for the fiscal quarter ended September 30, 2004. We have provided the table
below in order to facilitate an understanding of this discussion. The table
shows our results of operations for the second quarter of 2005 and 2004. The
table (dollars in millions) is as follows:

<TABLE>
<CAPTION>
                                                 Quarter           Quarter           %
                                                  Ended             Ended         Change
                                              September 30,     September 30,      Over
                                                  2005              2004           2004
                                              -------------     -------------     ------
<S>                                      <C>                 <C>               <C>

NET SALES                                         $52.2             $53.0          -1.4%

COST AND EXPENSES
Cost of sales                                      41.8              42.0          -0.5%
Selling, general and administrative                 7.3               7.4          -1.2%
Amortization of intangibles                          .1                .3         -56.5%
                                                  -----             -----
OPERATING INCOME                                    3.0               3.3          -8.5%

Interest income                                      .2                .1          56.5%
Interest expense                                    3.2               3.4          -6.2%
Other (income) expense, net                         (.7)             (1.9)        -59.0%
Post-retirement benefits curtailment gain           (.7)                              NM
Income tax (benefit)                               (2.2)              (.2)       1319.5%
                                                  -----             -----

NET INCOME                                         $3.6              $2.0          80.5%
                                                  =====             =====
</TABLE>

NM = Not meaningful when comparing positive to negative numbers or to zero.


                                   26
<PAGE>

Quarter Ended September 30, 2005 Versus Quarter Ended September 30, 2004
------------------------------------------------------------------------
Net Sales. Our net sales for the third quarter of 2005 were $52.2 million,
which represents a decrease of $0.8 million or 1.4% from the comparable prior
year quarter. Net sales benefited $0.9 million due to foreign currency
translation gains, offset by a $0.6 million decrease from volume and a $1.1
million decrease due to price and mix.

Cost of Sales. Cost of sales for the third quarter of 2005 decreased 0.5%
from the prior year due to the decreased sales level for the same period, and
increased as a percent of net sales (from 79.2% in 2004 to 80.1% in 2005).
The increase as a percent of sales can be attributed to an increase in
energy, raw material and labor costs.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the third quarter of 2005 were comparable to the
prior year period.

Operating Income. The operating income for the third quarter of 2005 was $3.0
million, representing a decrease of $0.3 million from the prior year quarter.
The decrease in the operating income resulted primarily from higher cost of
sales.

Interest Expense. Interest expense, net of interest income, for the third
quarter of 2005 was $3.0 million, representing a decrease of $0.3 from the
prior year quarter. The decrease in interest expense is due to increased
interest income and an increase in capitalized interest of $0.2 million.

Gain on Curtailment. The Company will terminate post-retirement health care
medical benefits for all active employees and retirees in the United States
who are covered by a collective bargaining agreement as of December 31, 2006.
A ($0.7) million gain on the curtailment of these post-retirement health care
benefits was recognized during the third quarter of 2005.

Other (Income) Expense. Other income of approximately ($0.7) million for the
third quarter of 2005 consists principally of a $0.4 million net gain related
to foreign currency translation. Other income for the comparable quarter of
2004 of ($1.9) million consists principally of a net increase related to
foreign currency translation.

Income Tax (Benefit) Provision. During the third quarter of 2005, an income
tax benefit of ($2.2) million was recognized on the income before income
taxes of $1.4 million resulting principally from a benefit from
the settlement of a Canadian tax issue and a provision for the results of
operations of foreign subsidiaries.

Primarily as a result of the factors discussed above, income for the third
quarter of 2005 was $3.6 million compared to net income of $2.0 million for
the third quarter of 2004.

                                   27
<PAGE>

Comparison of Results of Operations for Nine Months Ended September 30, 2005
and 2004. The following discussion compares the results of operations for the
fiscal nine months ended September 30, 2005 to the results of operations for
the fiscal nine months ended September 30, 2004. We have provided
the table below in order to facilitate an understanding of this discussion.
The table shows our results of operations for the first nine months of 2005
and 2004. The table (dollars in millions) is as follows:

<TABLE>
<CAPTION>

                                                9 Months          9 Months           %
                                                  Ended             Ended         Change
                                              September 30,     September 30,      Over
                                                  2005              2004           2004
                                              -------------     -------------     ------
<S>                                      <C>                 <C>               <C>

NET SALES                                        $153.9            $154.4          -0.3%

COST AND EXPENSES
Cost of sales                                     122.8             121.7           0.9%
Selling, general and administrative                22.0              22.8          -3.5%
Amortization of intangibles                          .5                .8         -37.6%
Restructuring expense                               2.2                .7         225.4%
                                                 ------            ------
OPERATING INCOME                                    6.4               8.4         -24.2%

Interest income                                      .5                .3          48.1%
Interest expense                                    9.5               9.7          -3.0%
Other (income) expense, net                         (.3)              1.4             NM
Post-retirement benefits curtailment gain           (.7)                              NM
Loss on early extinguishment of debt                                 13.1             NM
Income tax provision (benefit)                     (1.9)              (.4)        370.7%
                                                 -------           -------
NET (LOSS)                                          $.2             ($15.1)           NM
                                                 =======           =======
</TABLE>

NM = Not meaningful when comparing positive to negative numbers or to zero.

Nine Months Ended September 30, 2005 Versus Nine Months Ended September 30,
----------------------------------------------------------------------------
2004
----
Net Sales. Our net sales for the first nine months of 2005 were $153.9
million, which represents a decrease of $0.5 million or 0.3% from the
comparable prior year first nine months. Net sales benefited
$2.7 million due to foreign currency translation gains, offset by a $1.7
million decrease due to price and mix and a $1.5 million decrease from
volume.

Cost of Sales. Cost of sales for the first nine months of 2005 increased 0.9%
from the comparable prior year first nine months on a comparable sales level
in both periods, and increased as a percent of net sales (from 78.8% in 2004
to 79.8% in 2005). The increase as a percent of sales can be attributed to an
increase in energy, raw material and labor costs partially offset by
operating efficiencies.

Selling, General and Administrative Expenses. We were able to reduce selling,
general and administrative expenses from 14.8% of sales in the first nine
months of 2004 to 14.3% in the first nine months of 2005. This can be
attributed to reductions from continuous cost saving programs, internal
reorganizations that occurred in both March 2004 and January 2005, and
elimination of certain post-retirement benefits that were effective as of
December 31, 2004. Additionally, in the first nine months of 2004 there was
an unusual income charge of $0.4 million consisting of a reversal of a legal
liability recorded in fresh-start accounting that has been settled.

                                      28
<PAGE>

Operating Income. The operating income for the first nine months of 2005 was
$6.4 million, representing a decrease of $2.0 million from the prior year
first nine months. The decrease in the operating income resulted primarily
from increased restructuring expenses and higher cost of sales, which were
partially offset by improvements in selling, general and administrative
expenses. Operating income for the first nine months of 2005 includes a
restructuring charge of $2.2 million of which $1.7 million was related to
one-time employee costs related to our transfer of Kentland, Indiana
finishing operations to Monterrey, Mexico. Operating income the first nine
months of 2004 includes a restructuring charge of $1.1 million, offset by a
reversal of an unusual income charge of $0.4 million consisting of a reversal
of a legal liability recorded in fresh-start accounting that has been
settled.

Interest Expense. Interest expense, net of interest income, for the first
nine months of 2005 was $9.0 million, representing a decrease of $0.4
million. The decrease is primarily a result of increased capitalized
interest expense.

Other (Income) Expense. Other income of approximately ($0.3) million for the
first nine months of 2005 consists principally of a $0.1 million net loss
related to foreign currency translation and gain of $0.6 on sales of shares
held in Europe. Other expense for the comparable period of 2004 of $1.4
million consists principally of a $1.0 million net loss related to foreign
currency translation.

Gain on Curtailment. The Company will terminate post-retirement health care
medical benefits for all active employees and retirees in the United States
who are covered by a collective bargaining agreement as of December 31, 2006.
A ($0.7) million gain on the curtailment of these post-retirement health care
benefits was recognized during the third quarter of 2005.

Loss on Early Extinguishment of Debt. The loss on debt extinguishment for the
first nine months of 2004 of $13.1 million consists of the losses on the
early retirement of $55.5 million of the 8% Notes at a discount and
of the early termination of the GECC capital lease. The 8% Notes were
purchased at a discount to the principal amount, however, the purchase price
exceeded the carrying value of the 8% Notes as established in Fresh-Start
Accounting. There were no similar early extinguishments of debt during 2005.

Income Tax Provision (Benefit). During 2005, an income tax benefit of ($1.9)
million was recognized on the income before income taxes of $1.6 million
resulting principally from a benefit from the settlement of a Canadian tax
issue and a provision for the results of operations of foreign subsidiaries.

Primarily as a result of the factors discussed above, income for the first
nine months of 2005 was $.2 million compared to net loss of $15.1 million for
the first nine months of 2004.

Effect of Changes in Exchange Rates
-----------------------------------
In general, our results of operations are affected by changes in foreign
exchange rates. Subject to market conditions, we price our products in our
foreign operations in local currencies, with the exception of the
Brazilian export market and the U.S. export markets, which are priced in U.S.
dollars. As a result, a decline in the value of the U.S. dollar relative to
the local currencies of profitable foreign subsidiaries can have a favorable
effect on our profitability, and an increase in the value of the U.S. dollar
relative to the local currencies of profitable foreign subsidiaries can have
a negative effect on our profitability. Exchange rate fluctuations decreased
comprehensive income by $3.1 million for the first nine months of 2005 and
$0.3 million for the comparable period of 2004.

                                       29
<PAGE>

Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents decreased by $7.5 million during the first nine
months of 2005. Cash flows provided by operating activities were $2.7
million, used in investing activities were $9.1 million, and used in
financing activities were $0.4 million. Cash flows used in operating
activities were principally attributable to net loss, and seasonal increase
in working capital offset by depreciation, amortization, and non-cash
interest. Cash flows used in investing activities were principally
attributable to capital expenditures offset by proceeds from the disposition
of assets and the release of restricted cash. Cash flows used in financing
activities principally consisted of the incurrence of financing fees.

As of September 30, 2005, the Company had positive working capital of
approximately $55.0 million including unrestricted cash of $22.8 million,
with additional amounts available under its revolving credit facility. While
the Company could decide to raise additional amounts through the issuance of
new debt or equity, management believes that the existing resources available
to it will be adequate to satisfy current and planned operations for at least
the next twelve months.

On June 29, 2004, the Company issued $90.0 million of 11.5% Senior Secured
Notes that bear interest at a rate of 11.5% per annum, payable semi-annually
in cash on June 15 and December 15. The 11.5% Senior Secured Notes mature on
June 15, 2011.

The 11.5% Senior Secured Notes will be guaranteed on a senior secured basis
by all of our future domestic restricted subsidiaries that are not immaterial
subsidiaries (as defined). The 11.5% Senior Secured Notes and the related
guarantees (if any) are secured by substantially all of the tangible and
intangible assets of the Company and guarantor subsidiaries (if any); and
includes the pledge of the capital stock directly owned by the Company or the
guarantors; provided that no such pledge will include more than 65% of any
foreign subsidiary directly owned by the Company or the guarantor. The
Indenture and the security documents related thereto provide that, to the
extent that any rule is adopted, amended or interpreted that would require
the filing with the SEC (or any other governmental agency) of separate
financial statements for any of our subsidiaries due to the fact that such
subsidiary's capital stock secures the 11.5% Senior Secured Notes, then such
capital stock will automatically be deemed not to be part of
the collateral securing the 11.5% Senior Secured Notes to the extent
necessary to not be subject to such requirement. In such event, the security
documents may be amended, without the consent of any holder of
11.5% Senior Secured Notes, to the extent necessary to release the liens on
such capital stock.

With limited exceptions, the 11.5% Senior Secured Notes require that the
Company maintain a minimum annual level of EBITDA calculated at the end of
each fiscal quarter as follows:

Fiscal quarter ending                             Amount
--------------------------                        ------------

September 30, 2004 through September 30, 2006     $16.0 million
December 31, 2006 through September 30, 2008      $18.0 million
December 31, 2008 and thereafter                  $20.0 million

unless the sum of (i) unrestricted cash of the Company and its restricted
subsidiaries as of such day and (ii) the aggregate amount of advances that
the Company is actually able to borrow under the Revolving Credit Facility on
such day (after giving effect to any borrowings thereunder on such day) is at
least $15.0 million. The minimum annual level of EBITDA covenant is not
currently in effect as the Company's unrestricted cash and the amount of
available credit under the Revolving Credit Facility exceed $15.0
million. The Company's EBITDA as of September 30, 2005 would have exceeded
the required covenant level if the covenant had been in effect at that time.

                                   30
<PAGE>
The 11.5% Senior Secured Notes limit the ability of the Company to (i) incur
additional indebtedness; (ii) pay dividends, redeem subordinated debt, or
make other restricted payments, (iii) make certain investments or
acquisitions; (iv) issue stock of subsidiaries; (v) grant or permit to exist
certain liens; (vi) enter into certain transactions with affiliates; (vii)
merge, consolidate, or transfer substantially all of our assets; (viii) incur
dividend or other payment restrictions affecting certain subsidiaries; (ix)
transfer, sell or acquire assets, including capital stock of subsidiaries;
and (x) change the nature of our business. At any time prior to June 15,
2008, the Company may redeem, at its option, some or all of the 11.5% Senior
Secured Notes at a make-whole redemption price equal to the greater of (i)
100% of the aggregate principal amount of the 11.5% Senior Secured Notes
being redeemed and (ii) the sum of the present values of 105 3/4% of the
aggregate principal amount of such 11.5% Senior Secured Notes and
scheduled payments of interest on such 11.5% Senior Secured Notes to and
including June 15, 2008, discounted to the date of redemption on a semi-
annual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Rate plus 50 basis points, together with, in each case, accrued
and unpaid interest and additional interest, if any, to the date of
redemption. The make-whole redemption price as of September 30, 2005 is
approximately 122%.

On or after June 15, 2008, the Company may redeem, at its option, some or all
of the 11.5% Senior Secured Notes at the following redemption prices, plus
accrued and unpaid interest to the date of redemption:

For the periods below                            Percentage

On or after June 15, 2008                         105 3/4%
On or after June 15, 2009                         102 7/8%
On or after June 15, 2010                             100%

Prior to June 15, 2007, the Company may redeem, at its option, up to 35% of
the aggregate principal amount of the 11.5% Senior Secured Notes with the net
proceeds of any equity offering at 111 1/2% of their principal amount, plus
accrued and unpaid interest to the date of redemption, provided that at least
65% of the aggregate principal amount of the 11.5% Senior Secured Notes
remains outstanding immediately following the redemption.

Within 90 days after the end of each fiscal year ending in 2006 and
thereafter, for which the Company's Excess Cash Flow (as defined) was greater
than or equal to $2.0 million, the Company must offer to purchase a portion
of the 11.5% Senior Secured Notes at 101% of principal amount, together with
accrued and unpaid interest to the date of purchase, with 50% of our Excess
Cash Flow from such fiscal year ("Excess Cash Flow Offer Amount"); except
that no such offer shall be required if the Revolving Credit
Facility prohibits such offer from being made because, among other things, a
default or an event of default is then outstanding thereunder. The Excess
Cash Flow Offer Amount shall be reduced by the aggregate principal amount of
11.5% Senior Secured Notes purchased in eligible open market purchases as
provided in the indenture.

If the Company undergoes a change of control (as defined), the holders of the
11.5% Senior Secured Notes will have the right to require the Company to
repurchase their 11.5% Senior Secured Notes at 101% of their principal
amount, plus accrued and unpaid interest to the date of purchase.

If the Company engages in asset sales, it must either invest the net cash
proceeds from such sales in its business within a certain period of time
(subject to certain exceptions), prepay indebtedness under the Revolving
Credit Facility (unless the assets that are the subject of such sales are
comprised of real property, fixtures or improvements thereon or equipment) or
make an offer to purchase a principal amount of the 11.5% Senior Secured
Notes equal to the excess net cash proceeds. The purchase price of each
11.5% Senior Secured Note so purchased will be 100% of its principal amount,
plus accrued and unpaid interest to the date of purchase.

                                      31
<PAGE>

The Revolving Credit Facility contains various covenants which will restrict
the Company's ability to, among other things, incur indebtedness, enter into
mergers or consolidation transactions, dispose of assets (other than in the
ordinary course of business), acquire assets, make certain restricted
payments, prepay any of the 8% Notes at a purchase price in excess of 90% of
the aggregate principal amount thereof (together with accrued and unpaid
interest to the date of such prepayment), create liens on our assets, make
investments, create guarantee obligations and enter into sale and leaseback
transactions and transactions with affiliates, in each case subject to
permitted exceptions. The Revolving Credit Facility also requires that we
comply with various financial covenants, including meeting a minimum EBITDA
requirement and limitations on capital expenditures in the event our usage of
the Revolving Credit Facility exceeds 30% of the facility amount. The
Revolving Credit Facility also requires payment of a prepayment
premium in the event that it is terminated prior to maturity. The prepayment
premium, as a percentage of the $20.0 million facility amount, is 2% through
June 29, 2006, and 1% through June 29, 2007.

Borrowings under the loan and security agreement governing this Revolving
Credit Facility are subject to a borrowing base formula based on percentages
of eligible domestic receivables and eligible domestic inventory. Under the
Revolving Credit Facility, we will be able to choose between two per annum
interest rate options: (i) the lender's prime rate and (ii) LIBOR plus a
margin currently of 2.25% (which margin will be subject to performance based
increases up to 2.50% and decreases down to 2.00%); provided that the
minimum interest rate shall be at least equal to 3.00%. Letter of credit fees
will be charged a per annum rate equal to the then applicable LIBOR rate
margin less 50 basis points. The Revolving Credit Facility also provides for
an unused line fee of 0.375% per annum.

Indebtedness under the Revolving Credit Facility is secured by liens on
substantially all of the Company's and the Company's domestic subsidiaries'
assets, with liens (i) on inventory, account receivables, lockboxes, deposit
accounts into which payments are deposited and proceeds thereof, which will
be contractually senior to the liens securing the 11.5% Senior Secured Notes
and the related guarantees pursuant to an intercreditor agreement, (ii) on
real property, fixtures and improvements thereon, equipment and proceeds
thereof, which will be contractually subordinate to the liens securing the
11.5% Senior Secured Notes and such guarantees pursuant to such intercreditor
agreement, (iii) on all other assets, which will be contractually pari passu
with the liens securing the 11.5% Senior Secured Notes and such guarantees
pursuant to such intercreditor agreement.

The 8% Notes bear interest at a rate of 8% per year, and accrue interest from
December 1, 2001, payable semi-annually (except annually with respect to year
four and quarterly with respect to year five), with interest payable in the
form of 8% Notes (paid-in-kind) for the first three years. Interest for years
four and five will be payable in cash to the extent of available cash flow,
as defined, and the balance in the form of 8% Notes (paid-in-kind).
Thereafter, interest will be payable in cash. The 8% Notes mature on December
1, 2008.

On June 29, 2004, the Company repurchased $55.5 million aggregate principal
amount of its 8% Notes, and the holders (i) released the liens on the
collateral that secured the 8% Notes, (ii) contractually subordinated the
Company's obligations under the 8% Notes to obligations under certain
indebtedness, including the new 11.5% Senior Secured Notes and the Revolving
Credit Facility; and (iii) eliminated substantially all of the restrictive
covenants contained in the indenture governing the 8% Notes. The carrying
value of the remaining 8% Notes outstanding at September 30, 2005 is $13.4
million.

The 8% Notes were valued at market in fresh-start accounting. The discount to
face value is being amortized using the effective-interest rate methodology
through maturity with an effective interest rate of 10.46%.

                                32
<PAGE>
The following table summarizes the carrying value (in millions) of the 8%
Notes at December 31 assuming interest through 2006 is paid in the form of 8%
Notes (paid-in-kind):

<TABLE>
<CAPTION>
                                 2005          2006          2007
                                 ----          ----          ----
<S>                          <C>         <C>          <C>
8% Notes
     Principal                  $17.3         $18.7         $18.7
     Discount                    (3.3)         (2.3)         (1.2)
                                ------        ------        ------
     Carrying value             $14.0         $16.4         $17.5
                                ======        ======        ======
</TABLE>

Letters of credit in the amount of $2.4 million were outstanding under letter
of credit facilities with commercial banks, and were cash collateralized at
September 30, 2005.

We finance our working capital needs through a combination of internally
generated cash from operations, cash on hand and our revolving credit
facility.

Our board of directors has approved a plan under which we will restructure
our finishing operations by relocating finishing operations from our facility
in Kentland, Indiana to a facility in Mexico. We expect to complete the
restructuring by the end of 2006. The relocation of the finishing operations
is intended to lower costs and optimize operations. The total cost of the
restructuring, exclusive of capital expenditures, is expected to be
approximately $10.0 million, substantially all of which will result in cash
expenditures. We also expect to make capital expenditures of approximately
$9.0 million to $10.0 million in connection with the restructuring. We began
to incur these costs and capital expenditures in the second quarter of
2005 and expect to continue to incur them through the end of 2006. We believe
that the restructuring will yield annual operating cost reductions of between
$7.0 million and $8.0 million when the Mexico relocation is complete.

Capital expenditures for the first nine months of 2005 and the first nine
months of 2004 totaled $9.8 million and $3.9 million, respectively. The 2005
capital expenditures are expected to be $15 million including amounts for the
relocation of finishing operations to Mexico. The 2005 capital expenditures
are principally related to (i) the installation of environmental equipment to
conform to MACT standards for casing manufacturers and (ii) capital
expenditures for the relocation of finishing operations to Mexico.

In 2004, we spent approximately $2.7 million annually on research and
development programs, including product and process development, and on new
technology development. The 2005 research and development and product
introduction expenses are expected to be in the $3.0 million range on an
annual basis. Among the projects included in the current research and
development efforts are Smoke Master(r) small diameter and fibrous casings,
Visflex(r) casings, specialty plastic films and the application of certain
patents and technology for license by Viskase.

Pension and Post-Retirement Benefits
------------------------------------
Our long-term pension and post-retirement benefit liabilities totaled $56.5
million at September 30, 2005.

Expected annual cash contributions for pension and post-retirement benefit
liabilities are expected to be (in millions):

<TABLE>
<CAPTION>
                             2005      2006      2007      2008       2009
                             ----      ----      ----      ----       ----
<S>                       <C>      <C>      <C>       <C>      <C>
Pension                      $3.8      $13.1      $8.7      $7.6      $3.0
Post-retirement benefits      1.2        1.0       0.6       0.5       0.5
                             ----        ----     ----      ----      ----
Total                        $5.0      $14.1      $9.3      $8.1      $3.5
                             ====      =====     ======    =======   ======
</TABLE>

                                           33
<PAGE>

Other
-----
As of September 30, 2005, aggregate maturities of debt for each of the next
five years are (in thousands):

<TABLE>
<CAPTION>
                               2005     2006     2007       2008       2009     Thereafter
                               ----     ----     ----       ----       ----     ----------
<S>                         <C>      <C>      <C>     <C>          <C>      <C>
11.5% Senior Secured Notes                                                       $90,000
8% Notes                                                  $18,684
Other                          $227                                                  121
                               ----     ----     ----     -------      ----      -------
                               $227                       $18,684                $90,121
                               ====     ====     ====     =======      ====      =======
</TABLE>
Critical Accounting Policies
----------------------------
The preparation of financial statements includes the use of estimates and
assumptions that affect a number of amounts included in the Company's
financial statements, including, among other things, pensions and other post-
retirement benefits and related disclosures, inventories valued under the
last-in, first-out method, reserves for excess and obsolete inventory,
allowance for doubtful accounts, restructuring charges and income taxes.
Management bases its estimates on historical experience and other assumptions
that it believes are reasonable. If actual amounts are ultimately different
from previous estimates, the revisions are included in the Company's results
for the period in which the actual amounts become known. Historically, the
aggregate differences, if any, between the Company's estimates and
actual amounts in any year have not had a significant effect on the Company's
consolidated financial statements.

Revenue Recognition
-------------------
The Company's revenues are recognized at the time products are shipped to the
customer, under F.O.B. Shipping Point terms or under F.O.B. Port terms.
Revenues are net of any discounts, rebates and allowances. The Company
records all labor, raw materials, in-bound freight, plant receiving and
purchasing, warehousing, handling and distribution costs as a component of
cost of goods sold.

Allowance for Doubtful Accounts Receivable
------------------------------------------
Accounts receivable have been reduced by an allowance for amounts that may
become uncollectible in the future. This estimated allowance is primarily
based upon our evaluation of the financial condition of each customer, each
customer's ability to pay and historical write-offs.

Allowance for Obsolete and Slow Moving Inventories
--------------------------------------------------
Inventories are valued at the lower of cost or market. The inventories have
been reduced by an allowance for slow moving and obsolete inventories. The
estimated allowance is based upon management's estimate of specifically
identified items, the age of the inventory and historical write-offs of
obsolete and excess inventories.

Deferred Income Taxes
---------------------
Deferred tax assets and liabilities are measured using enacted tax laws and
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities due to a change in tax rates is
recognized in income in the period that includes the enactment date. In
addition, the amounts of any future tax benefits are reduced by
a valuation allowance to the extent such benefits are not expected to be
realized on a more likely than not basis.

                                     34
<PAGE>

Pension Plans and Other Post-Retirement Benefit Plans
-----------------------------------------------------
Our North American operations have a defined benefit retirement plan that
covers substantially all salaried and full-time hourly employees who were
hired prior to April 1, 2003 and a fixed defined contribution plan
and a discretionary profit sharing plan that covers substantially all
salaried and full-time hourly employees who were hired on or after April 1,
2003. Our operations in Germany have a defined benefit retirement
plan that covers substantially all salaried and full-time hourly employees.
Pension cost is computed using the projected unit credit method. The discount
rate used approximates the average yield for high quality corporate bonds as
of the valuation date. Our funding policy is consistent with funding
requirements of the applicable federal and foreign laws and regulations.

Our North American operations have historically provided post-retirement
health care and life insurance benefits. We accrue for the accumulated post-
retirement benefit obligation that represents the actuarial present value of
the anticipated benefits. Measurement is based on assumptions regarding such
items as the expected cost of providing future benefits and any cost sharing
provisions. We terminated post-retirement medical benefits as of December 31,
2004 for all active employees and retirees in the U.S. who were not covered
by a collective bargaining agreement.

On September 30, 2005 employees in the U.S. covered by a collective
bargaining agreement ratified a new agreement to terminate post-retirement
medical benefits as of December 31, 2006 for all active employees and
retirees covered by the collective bargaining agreement.

The weighted average plan asset allocation at December 31, 2004 and 2003, and
target allocation (not weighted) for 2005, are as follows:

<TABLE>
<CAPTION>

                                   Percentage of Plan                     2005
                                         Assets                          Target
     Asset Category                 2004        2003                   Allocation
------------------------           ------      ------                  ----------
<S>                           <C>           <C>               <C>
Equity Securities                   62.5%       58.5%                      60%
Debt Securities                     35.2%       37.1%                      40%
Other                                2.3%        4.4%                       0%
                                   ------      ------                     ----
Total                              100.0%      100.0%                     100%
</TABLE>

Goodwill and Intangible Assets
------------------------------
Intangible assets that have an indefinite useful life are not amortized and
are tested at least annually for impairment. As part of fresh-start
accounting, the Company recognized intangible assets that are being
amortized. Non-compete agreements in the amount of $1.2 million were
amortized over the two year period ended March 31, 2005.

Property, Plant and Equipment
-----------------------------
The Company carries property, plant and equipment at cost less accumulated
depreciation. Property and equipment additions include acquisition of
property and equipment and costs incurred for computer software purchased for
internal use including related external direct costs of materials and
services and payroll costs for employees directly associated with the
project. Depreciation is computed on the straight-line method over the
estimated useful lives of the assets ranging from (i) building and
improvements - 10 to 32 years, (ii) machinery and equipment - 4 to 12 years,
(iii) furniture and fixtures - 3 to 12 years and (iv) auto and trucks - 2 to
5 years. Upon retirement or other disposition, cost and related accumulated
depreciation are removed from the accounts, and any gain or loss is included
in results of operations.

                                35
<PAGE>

Long-Lived Assets
-----------------
The Company continues to evaluate the recoverability of long-lived assets
including property, plant and equipment, patents and other intangible assets.
Impairments are recognized when the expected undiscounted future operating
cash flows derived from long-lived assets are less than their carrying value.
If impairment is identified, valuation techniques deemed appropriate under
the particular circumstances will be used to determine the asset's fair
value. The loss will be measured based on the excess of carrying value over
the determined fair value. The review for impairment is performed at least
once a year or when circumstances warrant.

Other Matters
-------------
We do not have off-balance sheet arrangements (sometimes referred to as
"special purpose entities"), financing or other relations with unconsolidated
entities or other persons. In the ordinary course of business, we lease
certain casing manufacturing and finishing equipment, and certain real
property, consisting of manufacturing and distribution facilities and office
facilities. Substantially all such leases as of September 30, 2005 were
operating leases, with the majority of those leases requiring us to pay
maintenance, insurance and real estate taxes.

Recent Accounting Pronouncements
--------------------------------
In November 2004, the FASB issued SFAS No. 151 ("SFAS 151"), "Inventory Costs
- an Amendment of ARB No. 43 Chapter 4." SFAS 151 requires that items such as
idle facility expense, excessive spoilage, double freight, and rehandling be
recognized as current-period charges rather than being included in inventory
regardless of whether the costs meet the criterion of abnormal as defined in
ARB 43. SFAS 151 is applicable for inventory costs incurred during fiscal
years beginning after June 15, 2005. The Company plans to adopt this standard
beginning the first quarter of fiscal year 2006 and does not believe the
adoption will have a material impact on its financial statements as such
costs have historically been expensed as incurred.

In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), "Exchanges of
Nonmonetary Assets - an Amendment of APB Opinion No. 29" which addresses the
measurement of exchanges of nonmonetary assets and eliminates the exception
from fair value accounting for nonmonetary exchanges of similar productive
assets and replaces it with an exception for exchanges that do not have
commercial substance. SFAS 153 specifies that a nonmonetary exchange has
commercial substance if the future cash flows of an entity are expected to
change significantly as a result of the exchange. This statement is effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after
June 15, 2005 and is not expected to have a significant impact on the
Company's financial statements.

In December 2004, the FASB issued SFAS No. 123 (revised 2004) ("SFAS 123R"),
"Share-Based Payment."  SFAS 123R sets accounting requirements for "share-
based" compensation to employees, requires companies to recognize in the
income statement the grant-date fair value of stock options and other equity-
based compensation issued to employees and disallows the use of a fair value
method of accounting for stock compensation. SFAS 123R is applicable for
annual, rather than interim, periods beginning after June 15, 2005, as such,
the Company must adopt in January 2006. The Company is currently evaluating
the impact this statement will have on the financial statements.

In March 2005, the FASB issued Interpretation No. 47 ("FIN 47"), "Accounting
for Conditional Asset Retirement Obligations." FIN 47 clarifies that the term
"conditional asset retirement obligation" as used in SFAS No. 143,
"Accounting for Asset Retirement Obligations," refers to a legal obligation
to perform an asset retirement activity in which the timing and (or) method
of settlement are conditional on a future event that may or may not be within
the control of the entity. FIN 47 is effective no later than the end of
fiscal years ending after December 15, 2005 and is not expected to have a
significant impact on the Company's financial statements.

                                    36
<PAGE>

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections." SFAS No. 154 replaced Accounting Principles Board Opinion, or
APB, No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements" and establishes retrospective
application as the required method for reporting a change in accounting
principle. SFAS No. 154 provided guidance for determining whether
retrospective application of a change in accounting principle is
impracticable and for reporting a change when retrospective application is
impracticable. SFAS No. 154 also addresses the reporting of a correction of
an error by restating previously issued financial statements. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005.

Forward-looking Statements
--------------------------
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are not guarantees of future performance and
are subject to risks and uncertainties that could cause actual results and
our plans and objectives to differ materially from those projected. Such
risks and uncertainties include, but are not limited to, general business and
economic conditions; competitive pricing pressures for our products; changes
in other costs; opportunities that may be presented to and pursued by us;
determinations by regulatory and governmental authorities; the timing and
cost of our finishing operations restructuring; and the ability to achieve
other cost reductions and efficiencies.

Related Party Transactions

During the nine months ended September 30, 2005, we purchased $.096 million
in telecommunication services from XO Communications, Inc., an affiliate of
Carl C. Icahn, who may be deemed to be the beneficial owner of approximately
29.1% of the common stock. We believe that the purchase of the
telecommunication services was on terms at least as favorable as we would
expect to negotiate with an unaffiliated party.

Arnos Corp., an affiliate of Carl C. Icahn, was the lender under a secured
revolving credit facility that we terminated in 2004. We paid Arnos Corp.
origination fees, interest and unused commitment fees of $0.144 million
during 2004. We believe the terms of this facility were at least as favorable
as those that we would have expected to negotiate with an unaffiliated party.

On June 29, 2004 we repurchased 805,270 shares of common stock (representing
approximately 7.34% of the issued and outstanding common stock on a fully
diluted basis as of June 17, 2004) held by Jefferies & Company, Inc., the
initial purchaser of the 11.5% Senior Secured Notes, or its affiliates for
total consideration of $0.298 million.

Contingencies

In 1988, Viskase Canada Inc. ("Viskase Canada"), a subsidiary of the Company,
commenced a lawsuit against Union Carbide Canada Limited and Union Carbide
Corporation ("Union Carbide") in the Ontario Superior Court of Justice, Court
File No.: 292270188, seeking damages resulting from Union Carbide's breach of
environmental representations and warranties under the Amended and Restated
Purchase and Sale Agreement, dated January 31, 1986 ("Agreement"). Pursuant
to the Agreement, Viskase Corporation and various affiliates (including
Viskase Canada) purchased from Union Carbide and Union Carbide Films
Packaging, Inc., its cellulosic casings business and plastic barrier films
business ("Business"), which purchase included a facility in Lindsay,
Ontario, Canada ("Site"). Viskase Canada is claiming that Union Carbide
breached several representations and warranties and deliberately and/or
negligently failed to disclose to Viskase Canada the existence of
contamination on the Site.

                                       37
<PAGE>

In November 2000, the Ontario Ministry of the Environment ("MOE") notified
Viskase Canada that it had evidence to suggest that the Site was a source of
polychlorinated biphenyl ("PCB") contamination. Viskase Canada and The Dow
Chemical Company, corporate successor to Union Carbide ("Dow"), have been
working with the MOE in investigating the PCB contamination.

The Company and Dow reached an agreement for resolution of all outstanding
matters between them whereby Dow repurchased the Site for $1.375 million
(Canadian), and is responsible for, and assumed the cost of remediation of
the Site, and indemnified Viskase Canada and its affiliates, including the
Company, in relation to all related environmental liabilities at the Site and
Viskase Canada dismissed the action referred to above. The transaction was
closed during May 2005, and resulted in a gain of $279,000 (US).

In 1993, the Illinois Department of Revenue ("IDR") submitted a proof of
claim against Envirodyne Industries, Inc. (now known as Viskase Companies,
Inc.) and its subsidiaries in the United States Bankruptcy Court for the
Northern District of Illinois ("Bankruptcy Court"), Bankruptcy Case Number 93
B 319, for alleged liability with respect to the IDR's denial of the
Company's allegedly incorrect utilization of certain loss carry-forwards of
certain of its subsidiaries. In September 2001, the Bankruptcy Court denied
the IDR's claim and determined the debtors were not responsible for 1998 and
1999 tax liabilities, interest and penalties. IDR appealed the Bankruptcy
Court's decision to the United States District Court, Northern District of
Illinois, Case Number 01 C 7861; and in February 2002 the district court
affirmed the Bankruptcy Court's order. IDR appealed the district court's
order to United States Court of Appeals for the Seventh Circuit, Case Number
02-1632. On January 6, 2004, the appeals court reversed the judgment of the
district court and remanded the case for further proceedings. The matter is
now before the Bankruptcy Court for further determination. As of June 30,
2005, the tax liabilities, interest and penalties claimed totaled
approximately $2.6 million.

During 1999 and 2000, the Company and certain of its subsidiaries and one
other sausage casings manufacturer were named in ten virtually identical
civil complaints filed in the United States District Court for the District
of New Jersey. The District Circuit ordered all of these cases consolidated
in Civil Action No. 99-5195-MLC (D.N.J.). Each complaint brought on behalf of
a purported class of sausage casings customers alleges that the defendants
unlawfully conspired to fix prices and allocate business in the sausage
casings industry. In 2001, all of the consolidated cases were transferred to
the United States District Court for the Northern District of Illinois,
Eastern Division. The Company strongly denies the allegations set forth in
these complaints.

In May 2004, the Company entered into a settlement agreement, without the
admission of any liability ("Settlement Agreement") with the plaintiffs.
Under terms of the Settlement Agreement, the plaintiffs fully released the
Company and its subsidiaries from all liabilities and claims arising from the
civil action in exchange for the payment of a $0.3 million settlement amount,
which amount was reserved in the December 31, 2003 financial statements.

In August 2001, the Department of Revenue of the Province of Quebec, Canada
issued an assessment against Viskase Canada in the amount of $2.7 million
(Canadian) plus interest and possible penalties. This assessment is based
upon Viskase Canada's failure to collect and remit sales tax during the
period July 1, 1997 to May 31, 2001. During this period, Viskase Canada did
not collect and remit sales tax in Quebec on reliance of the written advice
of its outside accounting firm. Viskase Canada filed a Notice of Objection in
November 2001 with supplementary submission in October 2002. The Notice of
Objection found in favor of the Department of Revenue. The Company has
appealed the decision. The ultimate liability for the Quebec sales tax lies
with the customers of Viskase Canada during the relevant period. Viskase
Canada could be required to pay the amount of the underlying sales tax prior
to receiving reimbursement for such tax from our customers. The Company has,
however, provided for a reserve of $0.3 million (US) for interest and
penalties, if any, but has not provided for a reserve for the underlying
sales tax. Viskase Canada is negotiating with the Quebec Department of
Ministry to avoid having to collect the sales tax from customers who will
then be entitled to credit for such sales tax collected. Those negotiations
have resulted in Viskase Canada making a settlement offer, whereby Viskase
Canada would pay $0.3 million (Canadian) and there would be no collection of
the underlying sales tax from the customers of Viskase Canada. The settlement
offer was accepted by the Deputy Minister of Revenue of

                                      38
<PAGE>

Quebec during November 2005. A settlement agreement has been executed between
Viskase Canada Inc. and the Deputy Minister of Revenue of Quebec and the
parties will file a Declaration of Settlement out of Court to dismiss the
action.

Under the Clean Air Act Amendments of 1990, various industries, including
casings manufacturers, are or will be required to meet maximum achievable
control technology ("MACT") air emissions standards for certain chemicals.
MACT standards applicable to all U.S. cellulosic casing manufacturers were
promulgated June 11, 2002. The Company submitted extensive comments to the
EPA during the public comment period. Compliance with these new rules was
required by June 13, 2005, although the Company has obtained a one-year
extension for both of its facilities. To date, the Company has spent
approximately $9.6 million in capital expenditures for MACT, and expects to
spend an additional $1.05 million, principally over the next 6 months, to
become compliant with MACT rules at our two U.S. extrusion facilities.

In addition, the Company is involved in various other legal proceedings
arising out of our business and other environmental matters, none of which
are expected to have a material adverse effect upon results of operations,
cash flows or financial condition.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------
The Company is exposed to certain market risks related to foreign currency
exchange rates. In order to manage the risk associated with this exposure to
such fluctuations, the Company occasionally uses derivative financial
instruments. The Company does not enter into derivatives for trading
purposes.

The Company has prepared sensitivity analyses to determine the impact of a
hypothetical 10% devaluation of the U.S. dollar relative to the European
receivables, payables, sales and purchases denominated in U.S. dollars. Based
on its sensitivity analyses at September 30, 2005, a 10% devaluation of the
U.S. dollar would reduce the Company's consolidated balance sheet by
approximately $246,000.

From time to time the Company purchases gas futures contracts to lock in set
rates on gas purchases. The Company uses this strategy to minimize its
exposure to volatility in natural gas. These products are not linked to
specific assets and liabilities that appear on the balance sheet or to a
forecasted transaction and, therefore, do not qualify for hedge accounting.
As such, the loss on the change in fair value of the futures contracts was
recorded in other income, net and is immaterial. There were no gas future
contracts as of September 30, 2005.

ITEM 4.  CONTROLS AND PROCEDURES
         -----------------------
We maintain a system of disclosure controls and procedures designed to
provide reasonable assurance that information we are required to disclose in
the reports that we file or submit under the Securities Exchange Act of 1934,
as amended, is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms. Our
management, with the participation of our chief executive officer and our
chief financial officer, evaluated the effectiveness of our disclosure
controls and procedures as of September 30, 2005. Based on that evaluation,
our chief executive officer and chief financial officer have concluded that,
as of such date, our disclosure controls and procedures were effective at the
reasonable assurance level.

There have been no significant changes in our internal control over financial
reporting that occurred during the quarter ended September 30, 2005 that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

                                   39
<PAGE>

PART II. OTHER INFORMATION

Item 1 - Legal Proceedings
         -----------------
For a description of pending litigation and other contingencies, see Part 1,
Note 10, Contingencies in Notes to Consolidated Financial Statements for
Viskase Companies, Inc. and Subsidiaries.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------
None.

Item 3 - Defaults Upon Senior Securities
         -------------------------------
None.

Item 4 - Submission of Matters to a Vote of Security Holders
         ---------------------------------------------------
None.

Item 5 - Other Information
         -----------------
None.

Item 6 - Exhibits
         --------
31.1     Certification of Principal Executive Officer Pursuant to Section 302
         of the Sarbanes-Oxley Act of 2002.

31.2     Certification of Principal Financial Officer Pursuant to Section 302
         of the Sarbanes-Oxley Act of 2002.

32.1     Certification of Principal Executive Officer Pursuant to 18 U.S.C.
         Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
         Oxley Act of 2002.

32.2     Certification of Principal Financial Officer Pursuant to 18 U.S.C.
         Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
         Oxley Act of 2002.

                                     40
<PAGE>

                                 SIGNATURES
                                 ----------


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                     VISKASE COMPANIES, INC.
                     -----------------------
                     Registrant



                     By:  /s/  Gordon S. Donovan
                          ----------------------
                          Gordon S. Donovan
                          Vice President and Chief Financial Officer
                            (Duly authorized officer and principal financial
                            officer of the registrant)







Date:  November 14, 2005

                                    41
<PAGE>

                                                           Exhibit 31.1

             CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
      PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Robert L. Weisman, certify that:

1)  I have reviewed this quarterly report on Form 10-Q of Viskase Companies,
    Inc.;

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

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

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

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

    b)  Evaluated the effectiveness of the registrant's disclosure controls
        and procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the
        end of the period covered by this report based on such evaluation;
        and

    c)  Disclosed in this report any change in the registrant's internal
        control over financial reporting that occurred during the
        registrant's most recent fiscal quarter (the registrant's fourth
        fiscal quarter in the case of an annual report) that has materially
        affected, or is reasonably likely to materially affect, the
        registrant's internal control over financial reporting; and

5)  The registrant's other certifying officer(s) and I have disclosed, based
    on our most recent evaluation of internal control over financial
    reporting, to the registrant's auditors and the audit committee of the
    registrant's board of directors (or persons performing the equivalent
    functions):

    a)  All significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.

Date:  November 14, 2005

                                 /s/ Robert L. Weisman
                                 -------------------------------------------
                                       Robert L. Weisman
                                       President and Chief Executive Officer

                                  42
<PAGE>

                                                            Exhibit 31.2

              CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
        PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gordon S. Donovan, certify that:

1)  I have reviewed this quarterly report on Form 10-Q of Viskase Companies,
    Inc.;

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

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

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

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

    b)  Evaluated the effectiveness of the registrant's disclosure controls
        and procedures and presented in this report our conclusions about the
        effectiveness of the disclosure controls and procedures, as of the
        end of the period covered by this report based on such evaluation;
        and

    c)  Disclosed in this report any change in the registrant's internal
        control over financial reporting that occurred during the
        registrant's most recent fiscal quarter (the registrant's fourth
        fiscal quarter in the case of an annual report) that has materially
        affected, or is reasonably likely to materially affect, the
        registrant's internal control over financial reporting; and

5)  The registrant's other certifying officer(s) and I have disclosed, based
    on our most recent evaluation of internal control over financial
    reporting, to the registrant's auditors and the audit committee of the
    registrant's board of directors (or persons performing the equivalent
    functions):

    a)  All significant deficiencies and material weaknesses in the design or
        operation of internal control over financial reporting which are
        reasonably likely to adversely affect the registrant's ability to
        record, process, summarize and report financial information; and

    b)  Any fraud, whether or not material, that involves management or other
        employees who have a significant role in the registrant's internal
        control over financial reporting.

Date:  November 14, 2005

                        /s/ Gordon S. Donovan
                        ------------------------------------------------
                              Gordon S. Donovan
                              Vice President and Chief Financial Officer

                                    43
<PAGE>

                                                            Exhibit 32.1

                 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                   AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002

In connection with the accompanying quarterly report on Form 10-Q of Viskase
Companies, Inc. (the "Company") for the quarter ended September 30, 2005, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Robert L. Weisman, President and Chief Executive Officer of the
Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to my
knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly represents, in all
material respects, the financial condition and results of operations of the
Company.

Date:  November 14, 2005

                                      /s/ Robert L. Weisman
                                      -------------------------------------
                                      Robert L. Weisman
                                      President and Chief Executive Officer

A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.


                                        44
<PAGE>

                                                              Exhibit 32.2

                 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
                       PURSUANT TO 18 U.S.C. SECTION 1350,
                    AS ADOPTED PURSUANT TO SECTION 906 OF THE
                           SARBANES-OXLEY ACT OF 2002

In connection with the accompanying quarterly report on Form 10-Q of Viskase
Companies, Inc. (the "Company") for the quarter ended September 30, 2005, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Gordon S. Donovan, Vice President and Chief Financial Officer
of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to my
knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly represents, in all
material respects, the financial condition and results of operations of the
Company.

Date:  November 14, 2005

                              /s/ Gordon S. Donovan
                              ------------------------------------------
                              Gordon S. Donovan
                              Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange
Commission or its staff upon request.



                                45
<PAGE>