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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---

FORM 10-KSB/A

(Amendment No. 1)



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|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------

For the fiscal year ended December 31, 2005



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------

For the transition period from  to

Commission file number: 033-17264-NY



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OPTICAL MOLECULAR IMAGING,
INC.

(Name of small business issuer in its charter)



---



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 11-2856146                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)



|                                                          |  |           
|--------------------------------------------------------- |  | ----------
|8797 Beverly Boulevard, Suite 310 Los Angeles, California |  | 90048     
|(Address of principal executive offices)                  |  | (Zip Code)

Issuers telephone number: (310) 789-1213



---

Securities registered under Section 12(b)
of the Act: None.

Securities registered under Section 12(g) of the Act: None.



---

Check whether the issuer is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act. ̈

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No ̈

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):     Yes ̈No  x

Issuers revenues for its fiscal year
ended December 31, 2005: $0

Aggregate market value of the common stock held by non-affiliates of the Issuer as of March 14, 2006 was
approximately $2,630,824.

There were 9,371,724 shares of the Companys common stock outstanding on March 14, 2006.

Transitional Small Business Disclosure Format:     Yes ̈No  x



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EXPLANATORY NOTE

In response to comments received from the Staff of the Securities and Exchange Commission
(SEC), we are filing this Form 10-KSB/A (Amendment No. 1) to include a revised audit report from our certified public accounting firm that now separately identifies and opines on specified accounting periods for our audited
financial statements and to revise certain of the disclosures in footnotes 2 and 6 to these financial statements relating to our outstanding stock options and the accounting treatment for any stock options that we issue, which financial statements
were included in our Form 10-KSB for the year ended December 31, 2005, which was filed with the SEC on March 31, 2006. In accordance with the rules of the SEC, the complete text of Item 7, Financial Statements of
Part II of our Form 10-KSB and the accompanying financial statements have been set forth in this Form 10-KSB/A, including those portions of that text and the accompanying financial statements that have not been amended from that set forth in
the original Form 10-KSB.

Except for the revised disclosures in Item 7, we have not undertaken in this Form 10-KSB/A to modify or
update any other disclosures in our original report on Form 10-KSB, and this Form 10-KSB does not reflect any events occurring after the date of filing of the original Form 10-KSB.



2



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TABLE OF CONTENTS



|                             |  |   |  | 
|---------------------------- |  | - |  | 
|EXPLANATORY NOTE             |  | 2
|PART II                     
|                             | 
|ITEM 7. FINANCIAL STATEMENTS |  | 4
|PART III                    
|                             | 
|ITEM 13. EXHIBITS            |  | 4



3



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ITEM 7. FINANCIAL STATEMENTS

Our consolidated financial statements and notes thereto and the related
report of Stonefield Josephson, Inc. are attached to this Annual Report beginning at page F-1 and are incorporated herein by reference.

ITEM 13. EXHIBITS



|            |  |                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                      
|            | 
|2.1         |  | Agreement and Plan of Reorganization dated as of May 5, 2005 among the Registrant, Patco Industries Subsidiary, Inc., William C. Patridge, and Spectral Molecular Imaging, Inc., as amended on
June 30, 2005, September 26, 2005 and January 20, 2006. (1)       
|            | 
|3.1         |  | Amended and Restated Certificate of Incorporation of the Registrant. (2)                                                                                                                                                                                         
|            | 
|3.2         |  | Amended and Restated Bylaws of the Registrant. (2)                                                                                                                                                                                                               
|            | 
|4.1         |  | Form of Warrant issued in January 2006 to purchase shares of the common stock of Spectral Molecular Imaging, Inc. and assumed by the Registrant. (2)                                                                                                             
|            | 
|4.2         |  | Form of Subscription Agreement containing registration rights issued by Spectral Molecular Imaging, Inc. in January 2006 and assumed by the Registrant. (2)                                                                                                      
|            | 
|10.1        |  | Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel Farkas and certain other individuals specified in said
agreement.* (2)                                                    
|            | 
|10.2        |  | Amendment No. 1 dated as of November 2, 2004 to the Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel
Farkas and certain other individuals specified in said agreement.* (2)
|            | 
|10.3        |  | Amendment No. 2 dated as of October 20, 2005 to the Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel
Farkas and certain other individuals specified in said agreement.* (2)
|            | 
|10.4        |  | License Agreement dated as of September 29, 2005 between Spectral Molecular Imaging, Inc. and Carnegie Mellon University.* (2)                                                                                                                                   
|            | 
|10.5        |  | Amendment No. 1 dated November 9, 2005 to the License Agreement dated as of September 29, 2005 between Spectral Molecular Imaging, Inc. and Carnegie Mellon University. (2)                                                                                      
|            | 
|10.6        |  | 2006 Equity Incentive Plan of the Registrant. (2)                                                                                                                                                                                                                
|            | 
|10.7        |  | Form of Stock Option Agreement for the Registrants 2006 Equity Incentive Plan. (2)                                                                                                                                                                              



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|            |  |                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                             
|            | 
|10.8        |  | Employment Agreement with Dr. Daniel L. Farkas dated April 22, 2005. (2)                                                                                                
|            | 
|10.9        |  | Employment Agreement with David Wohlberg dated April 22, 2005. (2)                                                                                                      
|            | 
|10.10       |  | Employment Agreement with C. Kirk Peacock dated May 16, 2005. (2)                                                                                                       
|            | 
|21.1        |  | List of the Registrants subsidiaries. (2)                                                                                                                              
|            | 
|31.1        |  | Certification of the Registrants Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
|            | 
|31.2        |  | Certification of the Registrants Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
|            | 
|32.1        |  | Certification of the Registrants Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**     
|            | 
|32.2        |  | Certification of the Registrants Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**     

---

|* | Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the SEC. The omitted portions of the exhibit have been separately
filed by us with the SEC.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Filed with this Annual Report on Form 10-KSB/A.
|-- | -----------------------------------------------

|(1) | Previously filed by us on January 26, 2006 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(2) | Previously filed by us on February 6, 2006 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                     |  |                                 |  |                                      
|-------------------- |  | ------------------------------- |  | -------------------------------------
|Date: August 1, 2006 |  | Optical Molecular Imaging, Inc.
|                     |  |                                
|                     |  | By:                             |  | /s/ David Wohlberg                   
|                     |  |                                 |  | David Wohlberg                       
|                     |  |                                 |  | President and Chief Operating Officer



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OPTICAL MOLECULAR IMAGING, INC.

(a Development Stage Company)

Index to Consolidated Financial Statements

For the Period from Inception of Operations (February 24, 2004) to December 31, 2005



|                                                        |  |          
|------------------------------------------------------- |  | ---------
|                                                        |  | Page     
|                                                        | 
|Report of Independent Registered Public Accounting Firm |  | F-2      
|                                                        | 
|Financial Statements:                                   |  |          
|Balance Sheets                                          |  | F-3      
|Statements of Operations                                |  | F-4      
|Statements of Shareholders Deficit                      |  | F-5      
|Statements of Cash Flows                                |  | F-6      
|Notes to Financial Statements                           |  | F-7 -F-14
|Unaudited Pro Forma Financial Information               |  | F-15     
|Unaudited Pro Forma Balance Sheets                      |  | F-16     
|Unaudited Pro Forma Statement of Operations 2004        |  | F-17     
|Unaudited Pro Forma Statement of Operations 2005        |  | F-18     
|Pro Forma Notes to Financial Statements                 |  | F-19     



F - 1



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Report of Independent Registered Public Accounting Firm

Board of Directors

Spectral Molecular Imaging, Inc.

Los Angeles, CA

We have audited the accompanying balance sheets of Spectral Molecular Imaging, Inc. (a development stage company) as of December 31, 2005 and 2004 and the related
statements of operations, shareholders deficit and cash flows for the year ended December 31, 2005 and period from inception (February 25, 2004) to December 31, 2004 and for the period from inception of operations (February 25, 2004) to
December 31, 2005. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
Spectral Molecular Imaging, Inc. as of December 31, 2005 and 2004 and the results of its operations and its cash flows for the year ended December 31, 2005 and period from inception (February 25, 2004) to December 31, 2004 and for the
period from inception of operations (February 25, 2004) to December 31, 2005 in conformity with U.S. generally accepted accounting principles.

As set
forth in Note 1 to the accompanying financial statements, the company has not yet recognized revenue and has an accumulated operating loss of $257,745. Managements plans are also disclosed in Note 1. These factors raise substantial doubt about
the Companys ability to continue as a going concern. The accompanying financial statements do not include any adjustments to the financial statements that might be necessary should the Company be unable to continue as a going concern.



|                              
|------------------------------
|/s/ Stonefield Josephson, Inc.
|                              
|CERTIFIED PUBLIC ACCOUNTANTS  
|                              
|Santa Monica, California      
|March 23, 2006                



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Spectral Molecular Imaging, Inc.

(A Development Stage Company)

Balance Sheets



|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | - | ----------------- | - | --------- | -
|                                                                                                                                                                           |  | December 31,2004 |         |   | December 31, 2005 |  
|Assets                                                                                                                                                                     | 
|Current assets:                                                                                                                                                            |  |                  |         |   |                   |   |           |  
|Cash                                                                                                                                                                       |  | $                | 101     |   |                   | $ | 30,538    |  
|Restricted Cash                                                                                                                                                            |  |                  |        |   |                   |   | 1,325,000 |  
|Other assets                                                                                                                                                               |  |                  | 247     |   |                   |   | 1,200     |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Total current assets                                                                                                                                                       |  |                  | 348     |   |                   |   | 1,356,738 |  
|                                                                                                                                                                           |  |                 
|Property and equipment, net                                                                                                                                                |  |                  |        |   |                   |   | 40,000    |  
|Other assets                                                                                                                                                               |  |                  |        |   |                   |   | 2,500     |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Total assets                                                                                                                                                               |  | $                | 348     |   |                   | $ | 1,399,239 |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Liability and Shareholders Equity (Deficit)                                                                                                                               |  |                  |         |   |                   |   |           |  
|Current liabilities:                                                                                                                                                       |  |                  |         |   |                   |   |           |  
|Accounts payable                                                                                                                                                           |  | $                |        |   |                   | $ | 15,143    |  
|Accounts payable  shareholders                                                                                                                                            |  |                  | 101     |   |                   |   |          |  
|Subscription payable                                                                                                                                                       |  |                  |        |   |                   |   | 1,325,000 |  
|Accrued liabilities                                                                                                                                                        |  |                  | 11,741  |   |                   |   | 38,834    |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Total current liabilities                                                                                                                                                  |  |                  | 11,842  |   |                   |   | 1,378,977 |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Other liabilities                                                                                                                                                          |  |                  |        |   |                   |   |          |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Commitments and contingencies                                                                                                                                              |  |                  |        |   |                   |   |          |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Shareholders equity (deficit):                                                                                                                                            |  |                  |         |   |                   |   |           |  
|Common stock, $0.001 par value; 129,000,000 shares authorized; 6,450,000 shares and 7,146,600 shares issued and outstanding as of
December 31, 2004 and 2005, respectively |  |                  |        |   |                   |   | 7,147     |  
|Additional paid in capital                                                                                                                                                 |  |                  | 247     |   |                   |   | 270,860   |  
|Deficit accumulated during the development stage                                                                                                                           |  |                  | (11,741 | ) |                   |   | (257,745  | )
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Total shareholders equity (deficit)                                                                                                                                       |  |                  | (11,494 | ) |                   |   | 20,262    |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  
|Total liabilities and shareholders equity (deficit)                                                                                                                       |  | $                | 348     |   |                   | $ | 1,399,239 |  
|                                                                                                                                                                           |  |                  |         |   |                   |   |           |  

The accompanying notes are an integral part of these financial statements.



F - 3



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Spectral Molecular Imaging, Inc.

(A Development Stage Company)

Statements of Operations



|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|----------------------------------- |  | -------------------------------------------------- | --------- | - | ---------------------------------- | - | --------- | -------------------------------------------------- |  | - | --------- | -
|                                    |  | February 25, 2004 (Inception) to December 31, 2004 |           |   | For the
YearEndedDecember 31, 2005 |   |           | February 25, 2004 (Inception) to December 31, 2005 | 
|                                    |  |                                                   
|Revenues                            |  | $                                                  |          |   |                                    | $ |          |                                                    |  | $ |          |  
|                                    |  |                                                    |          
|Expenses:                           |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|In process research and development |  |                                                    | 5,522     |   |                                    |   | 152,760   |                                                    |  |   | 158,282   |  
|Merger costs                        |  |                                                    |          |   |                                    |   | 39,118    |                                                    |  |   | 39,118    |  
|General and administrative          |  |                                                    | 6,219     |   |                                    |   | 54,126    |                                                    |  |   | 60,345    |  
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Total expenses                      |  |                                                    | 11,741    |   |                                    |   | 246,004   |                                                    |  |   | 257,745   |  
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Loss before income taxes            |  |                                                    | (11,741   | ) |                                    |   | (246,004  | )                                                  |  |   | (257,745  | )
|                                    |  |                                                    |          
|Income taxes                        |  |                                                    |          |   |                                    |   |          |                                                    |  |   |          |  
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Net loss                            |  | $                                                  | (11,741   | ) |                                    | $ | (246,004  | )                                                  |  | $ | (257,745  | )
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Weighted average number of shares:  |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Basic and diluted                   |  |                                                    | 6,450,000 |   |                                    |   | 6,867,620 |                                                    |  |   | 6,675,539 |  
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Earnings (loss) per share:          |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  
|Basic and diluted                   |  | $                                                  | (0.00     | ) |                                    | $ | (0.04     | )                                                  |  | $ | (0.04     | )
|                                    |  |                                                    |           |   |                                    |   |           |                                                    |  |   |           |  

The accompanying notes are an integral part of these financial statements.



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##### Table of Contents

Spectral Molecular Imaging, Inc.

(A Development Stage Company)

Statements of Shareholders Equity (Deficit)



|                                                                                           |  |              |  |                              |       |                                               |   |         |       |   |          |   |  |   |          |  
|------------------------------------------------------------------------------------------ |  | ------------ |  | ---------------------------- | ----- | --------------------------------------------- | - | ------- | ----- | - | -------- | - |  | - | -------- | -
|                                                                                           |  | Common Stock |  | Additional Paid - In Capital |       | DeficitAccumulatedDuring
theDevelopment Stage |   |         | Total |  
|                                                                                           |  | Shares       |  | Amount                       |       |                                               |  
|Initial capitalization at $0.00002 per share                                               |  | 6,256,500    |  | $                            | 97    |                                               | $ |        |       | $ |         |   |  | $ | 97       |  
|Common stock issued for cash during 2004 at $0.00078 per share                             |  | 193,500      |  |                              | 150   |                                               |   |        |       |   |         |   |  |   | 150      |  
|Net loss                                                                                   |  |             |  |                              |      |                                               |   |        |       |   | (11,741  | ) |  |   | (11,741  | )
|                                                                                           |  |              |  |                              |       |                                               |   |         |       |   |          |   |  |   |          |  
|Balance at December 31, 2004                                                               |  | 6,450,000    |  |                              | 247   |                                               |   |        |       |   | (11,741  | ) |  |   | (11,494  | )
|Common stock issued for cash during 2005 at $0.19 per share                                |  | 387,000      |  |                              | 6,590 |                                               |   | 68,410  |       |   |         |   |  |   | 75,000   |  
|Common stock issued for cash during 2005 at $0.32 per share                                |  | 154,800      |  |                              | 155   |                                               |   | 49,845  |       |   |         |   |  |   | 50,000   |  
|Common stock issued for in process research and development during 2005 at $0.99 per share |  | 154,800      |  |                              | 155   |                                               |   | 152,605 |       |   |         |   |  |   | 152,760  |  
|Net loss                                                                                   |  |             |  |                              |      |                                               |   |        |       |   | (246,004 | ) |  |   | (246,004 | )
|                                                                                           |  |              |  |                              |       |                                               |   |         |       |   |          |   |  |   |          |  
|Balance at December 31, 2005                                                               |  | 7,146,600    |  | $                            | 7,147 |                                               | $ | 270,860 |       | $ | (257,745 | ) |  | $ | 20,262   |  
|                                                                                           |  |              |  |                              |       |                                               |   |         |       |   |          |   |  |   |          |  

The accompanying notes are an integral part of these financial statements.



F - 5



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##### Table of Contents

Spectral Molecular Imaging, Inc.

(A Development Stage Company)

Statements of Cash Flows



|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|--------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | ----------------------------------- | - | -------- | ---------------------------------------------- |  | - | -------- | -
|                                                                            |  | February 25,2004(Inception) toDecember 31,2004 |         |   | For the Year EndedDecember 31, 2005 |   |          | February 25,2004(Inception) toDecember 31,2005 | 
|Cash flows from operating activities:                                       |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Net loss                                                                    |  | $                                              | (11,741 | ) |                                     | $ | (246,004 | )                                              |  | $ | (257,745 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Depreciation and amortization                                               |  |                                                |        |   |                                     |   |         |                                                |  |   |         |  
|Common stock issued services                                                |  |                                                |        |   |                                     |   | 152,760  |                                                |  |   | 152,760  |  
|Changes in assets and liabilities:                                          |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Other assets                                                                |  |                                                |        |   |                                     |   | (3,700   | )                                              |  |   | (3,700   | )
|Accounts payable                                                            |  |                                                |        |   |                                     |   | 15,142   |                                                |  |   | 15,142   |  
|Accrued liabilities                                                         |  |                                                | 11,741  |   |                                     |   | 27,093   |                                                |  |   | 38,834   |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Net cash used in operating activities                                       |  |                                                |        |   |                                     |   | (54,709  | )                                              |  |   | (54,709  | )
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Cash flows from investing activities                                       |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Purchase of property and equipment                                          |  |                                                |        |   |                                     |   | (40,000  | )                                              |  |   | (40,000  | )
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Cash flows from financing activities:                                       |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Advances from shareholders                                                  |  |                                                | 101     |   |                                     |   | (101     | )                                              |  |   |         |  
|Proceeds from issuance of common stock                                      |  |                                                |        |   |                                     |   | 125,247  |                                                |  |   | 125,247  |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Net cash provided by financing activities                                   |  |                                                | 101     |   |                                     |   | 125,146  |                                                |  |   | 125,247  |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|(Decrease) increase in cash                                                 |  |                                                | 101     |   |                                     |   | 30,437   |                                                |  |   | 30,538   |  
|Cash at beginning of period                                                 |  |                                                |        |   |                                     |   | 101      |                                                |  |   |         |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Cash at end of period                                                       |  | $                                              | 101     |   |                                     | $ | 30,538   |                                                |  | $ | 30,538   |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Supplemental cash flows disclosures:                                        |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Interest expense paid                                                       |  | $                                              |        |   |                                     | $ |         |                                                |  | $ |         |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  
|Income taxes paid                                                           |  | $                                              |        |   |                                     | $ |         |                                                |  | $ |         |  
|                                                                            |  |                                                |         |   |                                     |   |          |                                                |  |   |          |  

The accompanying notes are an integral part of these financial statements.



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##### Table of Contents

Spectral Molecular Imaging, Inc.

(A Development Stage Company)

Notes to Financial Statements

For
the Period From February 25, 2004 (Date of Inception) to December 31, 2005

1. Nature of Organization and Development Stage
Operations

Spectral Molecular Imaging, Inc. (the Company or SMI) is a Nevada corporation that was incorporated and commenced operations on
February 25, 2004. The Company is a development stage company that will seek to develop imaging devices with medical diagnostic applications based upon SMIs technology related to spectral optical imaging.

Going Concern

To date, the Company has relied primarily upon selling
equity securities and borrowings from a prospective shareholder to generate the funds needed to finance its operations. Currently, the Company does not have sufficient cash on hand to sustain operations and is seeking to obtain additional capital
from investors. As of December 31, 2005, current liabilities exceed current assets by $22,259. Unless the Company raises significant amounts of cash in the near future, the Company will not be able to continue as a going concern. Subsequent to
December 31, 2005, the Company raised $1,400,000 (before offering expenses) in a private placement (Note 8).

Stock Split

All common stock share numbers and per share information for the Company have been restated to reflect the 6,450-for-1 stock split which took place in January 2006 in
connection with the Companys private placement (Note 8).

2. Summary of Significant Accounting Policies

Cash and Cash Equivalents  The Company considers all highly liquid debt instruments with an original maturity of 90 days or less to be cash equivalents. The
Company had no cash equivalents at December 31, 2004 and December 31, 2005.

Restricted Cash and Offsetting Liability  The Company
has received cash in connection its private placement (Note 8), which is fully refundable until the private placement closes. Accordingly, the Company has classified the cash received as Restricted Cash and Subscription Payable in the accompanying
balance sheets. The Company had zero and $1,325,000 cash equivalents at December 31, 2004 and December 31, 2005, respectively.

Property and
Equipment - Property and equipment are stated at cost and depreciated using the straight-line methods based on the estimated useful lives (generally three to five years) of the related assets. Management continuously monitors and evaluates the
realizability of recorded long-lived assets to determine whether their carrying values have been impaired. The Company records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be
impaired and the nondiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Any impairment loss is measured by comparing the fair value of the asset to its carrying amount.

Patent Costs - Costs incurred to reimburse Chromo Dynamics, Inc. (CDI) for patent related costs, as provided for in the agreement between CDI and certain
individuals and the Company (Note 4), were expensed as in process research and development expense.



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Research and Development Costs - Research and development expenses consist of costs incurred for direct research
and are expensed as incurred.

Stock-based Compensation  The Company accounts for stock-based compensation using the intrinsic value method in
accordance with APB No. 25, Accounting for Stock Issued to Employees (APB 25). Under APB 25, when stock options are issued with an exercise price equal to the market price of the underlying stock price on the date of grant, no
compensation expense is recognized. The Company continues to follow the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), as amended by SFAS No. 148, which requires the disclosure
of proforma net income and earnings per share as if the Company had applied the fair value recognition provisions of SFAS 123.

The following table
illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation:



|                                                                                               |  |                                                |         |   |                                    |   |          |                                                |  |   |          |  
|---------------------------------------------------------------------------------------------- |  | ---------------------------------------------- | ------- | - | ---------------------------------- | - | -------- | ---------------------------------------------- |  | - | -------- | -
|                                                                                               |  | February 25,2004(Inception) toDecember 31,2004 |         |   | For the Year EndedDecember 31,2005 |   |          | February 25,2004(Inception) toDecember 31,2005 | 
|Net loss as reported                                                                           |  | $                                              | (11,741 | ) |                                    | $ | (246,006 | )                                              |  | $ | (257,745 | )
|Deduct: Total employee stock-based compensation expense determined under the fair value method |  |                                                |        |   |                                    |   | 23,405   |                                                |  |   | 23,405   |  
|                                                                                               |  |                                                |         |   |                                    |   |          |                                                |  |   |          |  
|Pro forma net loss                                                                             |  | $                                              | (11,741 | ) |                                    | $ | (269,411 | )                                              |  | $ | (281,150 | )
|                                                                                               |  |                                                |         |   |                                    |   |          |                                                |  |   |          |  

Fair value was estimated at the date of grant using the Black-Scholes pricing model, with the following weighted
average assumptions:



|                        |  |                            |  
|----------------------- |  | -------------------------- | -
|                        |  | Year EndedDecember 31,2005 |  
|Risk-free interest rate |  | 3.625                      | %
|Expected dividend yield |  | None                       |  
|Expected life           |  | 3.0 years                  |  
|Expected volatility     |  | 100.0                      | %

The risk-free interest rate used in the Black-Scholes valuation method is based on the implied yield currently
available in U.S. Treasury securities at maturity with an equivalent term. We have not declared or paid any dividends and do not currently expect to do so in the future. The expected term of options represents the period that our stock-based awards
are expected to be outstanding and was determined based on projected holding periods for the remaining unexercised shares. Consideration was given to the contractual terms of our stock-based awards, vesting schedules and expectations of future
employee behavior. Expected volatility is based on market prices of traded options for comparable entities within our industry.

The Companys stock
price volatility and option lives involve managements best estimates, both of which impact the fair value of the option calculated under the Black-Scholes methodology and, ultimately, the expense that will be recognized over the life of the
option.



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No tax benefits were attributed to the stock-based compensation expense because a valuation allowance was maintained for
substantially all net deferred tax assets.

Income Taxes - Income taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes, if any. Deferred taxes represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes.

Fair Value of Financial Instruments - The carrying amounts reported in the balance sheets for cash, accounts payable
and accounts payable  shareholder approximate their fair values.

Use of Estimates- The preparation of financial statements in
conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions about the future outcome of current transactions which may affect the reporting and disclosure of these
transactions. Accordingly, actual results could differ from those estimates used in the preparation of these financial statements.

Basic and
Diluted Loss per Common Share  Basic and diluted loss per common share are computed based on the weighted average number of common shares outstanding. Common share equivalents (which consist of options and warrants) are excluded from the
computation of diluted loss per share since the effect would be antidilutive. Common share equivalents which could potentially dilute basic earnings per share in the future, and which were excluded from the computation of diluted loss per share,
totaled zero shares and 330,000 shares at December 31, 2004 and 2005, respectively.

Recently Issued Accounting Standards - In December
2004, the Financial Accounting Standards Board (FASB) revised and issued SFAS 123, Share-Based Payment (SFAS 123(R)). SFAS 123(R) eliminates the alternative of using the APB 25 intrinsic value method of accounting for stock options. This revised
statement will require recognition of the cost of employee services received in exchange for awards of equity instruments based on the fair value of the award at the grant date. This cost is required to be recognized over the vesting period of the
award. The stock-based compensation table in Note 2 illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation. SFAS 123(R) applies to
all awards granted, modified, repurchased, or cancelled after June 30, 2005. The Company will adopt SFAS 123(R) effective January 1, 2006, using the modified prospective method. The adoption of this statement is anticipated to have no
effect on the Companys compensation expense for share-based payments in 2005.

3. Property and Equipment



|                               |  |                  |    |   |                  |   |        |  
|------------------------------ |  | ---------------- | -- | - | ---------------- | - | ------ | -
|                               |  | December 31,2004 |    |   | December 31,2005 |  
|Research equipment             |  | $                |   |   |                  | $ | 40,000 |  
|Computer and office equipment  |  |                  |   |   |                  |   |       |  
|                               |  |                  |    |   |                  |   |        |  
|                               |  |                  |   |   |                  |   | 40,000 |  
|Less: accumulated depreciation |  |                  | ( | ) |                  |   | (     | )
|                               |  |                  |    |   |                  |   |        |  
|Property and equipment, net    |  | $                |   |   |                  | $ | 40,000 |  
|                               |  |                  |    |   |                  |   |        |  

As of December 31, 2005, no equipment had been placed into service. Depreciation expense was zero for the
period from February 25, 2004 (date of inception) to December 31, 2005.



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4. Related-Party Transactions

CDI Agreement

In November 2004, the Company entered into an assignment and license agreement (the CDI Agreement) with
ChromoDynamics, Inc. (CDI), Dr. Daniel Farkas, who is the Chairman, Chief Scientist, and a principal shareholder of SMI, and certain other individuals. Under this agreement Dr. Farkas and the other individuals assigned an
invention in the spectral imaging field to the Company and CDI granted an exclusive worldwide sublicense to SMI of rights under United States Patents Nos. 5,796,512 issued in 1998 to Carnegie Mellon University to use the optical imaging technology
covered by such patents for medical imaging clinical applications. In September 2005, the Company reached an agreement with Carnegie Mellon University to receive a direct license of the technology from that institution in lieu of the sublicense from
CDI. Under the CDI Agreement, the Company will pay Dr. Farkas and the other individuals a royalty based on the Companys sales of products incorporating their technology.

In April 2005, the Company purchased from CDI $40,000 of research equipment.

Patent Costs

At December 31, 2004 and 2005, the Company was
indebted to CDI for patent development costs incurred per the CDI Agreement totaling $8,800 and $0, respectively (Note 4), which are included in accrued expenses on the accompanying balance sheets.

Legal Costs

At December 31, 2004 and 2005, the Company was
indebted to a shareholder for legal services for $2,941 and $38,834, respectively, which are included in accrued expenses on the accompanying balance sheets.

Legal services provided by a shareholder for the period from February 25, 2004 (date of inception) to December 31, 2005 was approximately $70,000.

Other Liabilities

At December 31, 2004 and 2005, the Company was indebted to a shareholder for $101 and $0,
respectively, which is included in accounts payable  shareholder on the accompanying balance sheets.

Rent

From February 25, 2004 (date of inception) to December 31, 2005, the Company used on a rent-free basis office space of a shareholder. Such costs are immaterial
to the financial statements and, accordingly, have not been reflected therein.

5. Commitments and Contingencies:

Operating Lease

The Company currently is utilizing a portion of the
office space of a related party at no cost and without a lease agreement so that either party may terminate this arrangement at any time. Total rent expense was zero for the periods from February 25, 2004 (date of inception) to
December 31, 2005.

Employment Contracts

The
Company has entered into an employment agreement with David Wohlberg, effective as of April 22, 2005, pursuant to which Mr. Wohlberg has agreed to serve as the Companys President and Chief Operating Officer. The term of the agreement
runs until April 30, 2006. Mr. Wohlberg will receive a monthly salary of $2,000, commencing only after the Company has raised at least $1,500,000 of equity capital (if the Company raises a cumulative amount of equity of at least
$4,500,000, Mr. Wohlberg thereafter will receive a salary of $5,000 per month). Mr. Wohlberg has received a grant of options to



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purchase approximately 150,000 shares of the Companys common stock at an exercise price of approximately $0.35 per share. The options vest in four
equal amounts, quarterly over the term of the agreement, in advance. The Company has agreed to indemnify Mr. Wohlberg for all claims arising out of his performance as President and Chief Operating Officer, other than those arising from
Mr. Wohlbergs breach of the agreement or his gross negligence or willful misconduct. Mr. Wohlberg may terminate the agreement if the Company materially breaches the agreement and fails to correct the breach within 15 days following
written notice from Mr. Wohlberg. The Company has the ability to terminate the agreement in the event of Mr. Wohlbergs disability or for cause, as defined in the agreement. Mr. Wohlberg will spend the majority of his
business time on the Companys business.

On May 16, 2005, the Company entered into an employment agreement with Kirk Peacock, pursuant to which
Mr. Peacock agreed to serve as the Companys Chief Financial Officer on a part-time basis. The term of the agreement is one year. The Company has the ability to terminate the agreement in the event of Mr. Peacocks disability or
for cause, as defined in the agreement. Mr. Peacock may terminate the agreement if the Company materially breaches the agreement and fails to correct the breach within 15 days following written notice from Mr. Peacock. For his
services provided pursuant to the agreement, the Company has granted to Mr. Peacock options to purchase approximately 50,000 shares of the Companys Common Stock at an exercise price of approximately $0.35 per share. The options vest and
become exercisable monthly over the one-year term of the agreement. The Company has agreed to indemnify Mr. Peacock for all claims arising out of his performance as Chief Financial Officer, other than those arising from his gross negligence or
willful misconduct.

On April 22, 2005, the Company entered into an agreement with Dr. Daniel L. Farkas, pursuant to which Dr. Farkas
agreed to serve as the Companys Chairman of the Board and Chief Scientist on a part-time basis. The term of the agreement is one year. The Company has the ability to terminate the agreement in the event of Dr. Farkass disability or
for cause, as defined in the agreement. Dr. Farkas may terminate the agreement if the Company materially breaches the agreement and fails to correct the breach within 15 days following written notice from Dr. Farkas. For his
services provided pursuant to the agreement, the Company has granted to Dr. Farkas options to purchase approximately 10,000 shares of the Companys Common Stock at an exercise price of approximately $0.35 per share. The options vest and
become exercisable monthly over the one-year term of the agreement. The Company has agreed to indemnify Dr. Farkas for all claims arising out of his performance as Chairman of the Board and Chief Scientist, other than those arising from his
gross negligence or willful misconduct.

On September 1, 2005, the Company entered into an agreement with Dr. Gregory Bearman, pursuant to which
Dr. Bearman agreed to serve as the Companys Chief Scientist on a part-time basis. The term of the agreement is one year. Dr. Bearman will receive a monthly salary of $1,000, and at such time as the Company has raised a total of at
least $2,000,000 of equity capital, Dr. Bearman thereafter will receive a salary of approximately $2,500 per month. The Company has the ability to terminate the agreement in the event of Dr. Bearmans disability or for
cause, as defined in the agreement. Dr. Bearman may terminate the agreement if the Company materially breaches the agreement and fails to correct the breach within 15 days following written notice from Dr. Bearman. For his
services provided pursuant to the agreement, the Company has granted to Dr. Bearman options to purchase approximately 75,000 shares of the Companys Common Stock at an exercise price of approximately $0.35 per share. The option vests in
four equal amounts, quarterly over the term of the agreement, in advance. The Company has agreed to indemnify Dr. Bearman for all claims arising out of his performance as and Chief Scientist, other than those arising from his gross negligence
or willful misconduct.

6. Shareholders Equity (Deficit)

Equity Investment

In April 2005, three individuals purchased a total of 541,800 shares of the Companys common stock for an aggregate
purchase price of $125,000.



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In September 2005, the Company issued 154,800 shares of the Companys common stock in connection with a licensing
agreement valued at $152,760.

Stock Options

In
February 2005, the Company adopted an Equity Incentive Plan (Plan). Pursuant to the Plan, a committee appointed by the Board of Directors may grant, at its discretion, qualified or nonqualified stock options, stock appreciation rights
and may grant or sell restricted stock to key individuals, including employees, nonemployee directors, consultants and advisors. Option prices for qualified incentive stock options (which may only be granted to employees) issued under the plan may
not be less than 100% of the fair market value of the common stock on the date the option is granted (unless the option is granted to a person who, at the time of grant, owns more than 10% of the total combined voting power of all classes of stock
of the Company; in which case the option price may not be less than 110% of the fair market value of the common stock on the date the option is granted). Option prices for nonqualified stock options issued under the plan are at the discretion of the
committee and may be equal to, greater or less than fair market value of the common stock on the date the option is granted. The options vest over periods determined by the Board of Directors and are exercisable no later than ten years from date of
grant (unless they are qualified incentive stock options granted to a person owning more than 10% of the total combined voting power of all classes of stock of the Company, in which case the options are exercisable no later than five years from date
of grant.) As of December 31, 2005, the Company has reserved 1,000,000 shares of common stock for issuance under the plan and options to purchase approximately 330,000 common shares have been granted under the stock option plan.

The following table summarizes stock option activity for the Company stock option plan during the year ended December 31, 2005:



|                                                |  |         |  |                              |      |                                         |     |                                    |   |  
|----------------------------------------------- |  | ------- |  | ---------------------------- | ---- | --------------------------------------- | --- | ---------------------------------- | - | -
|                                                |  | Options |  | WeightedAverageExercisePrice |      | WeightedAverageRemainingContractualTerm |     | AggregateIntrinsicValue(Thousands)
|Outstanding December 31, 2004                   |  |        |  | $                            |     |                                         |     |                                    |   |  
|Granted                                         |  | 330,000 |  | $                            | 0.32 |                                         |     |                                    |   |  
|Exercised                                       |  |        |  | $                            |     |                                         |     |                                    |   |  
|Forfeited or expired                            |  |        |  | $                            |     |                                         |     |                                    |   |  
|                                                |  |         |  |                              |      |                                         |     |                                    |   |  
|Outstanding December 31, 2005                   |  | 330,000 |  | $                            | 0.32 |                                         | 5.8 |                                    | $ | 
|                                                |  |         |  |                              |      |                                         |     |                                    |   |  
|Vested or expected to vest at December 31, 2005 |  | 199,832 |  | $                            | 0.32 |                                         | 5.8 |                                    | $ | 
|                                                |  |         |  |                              |      |                                         |     |                                    |   |  



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A summary of the status of unvested employee stock options as of December 31, 2005 and changes
during the year then ended, is presented below:



|                              |  |         |  |                                              |     
|----------------------------- |  | ------- |  | -------------------------------------------- | ----
|                              |  | Options |  | WeightedAverageGrant DateFair ValuePer Share
|Unvested at December 31, 2004 |  |        |  | $                                            |    
|Granted                       |  | 330,000 |  | $                                            | 0.32
|Vested                        |  | 199,832 |  | $                                            | 0.32
|Forfeited                     |  |        |  | $                                            |    
|                              |  |         |  |                                              |     
|Unvested at December 31, 2005 |  | 130,168 |  | $                                            | 0.34
|                              |  |         |  |                                              |     

As of December 31, 2005, the total remaining unrecognized compensation cost related to
unvested stock options amounted to $59,854, which will be amortized over the weighted-average remaining requisite service period of less than one year.

Warrants

The Company paid a finders fee in March 2005 to two individuals in the form of warrants to purchase shares of the Companys
common stock at $0.15 per share. The number of shares covered by the finders fee warrants was based upon the number of units purchased in a future private offering by investors introduced to the Company by the finders and will total approximately
150,000 shares to each finder if such investors purchase $1,500,000 of units (Note 8). If the number of units purchased by investors introduced to the Company by the finders is less than $1,500,000 of units, the number of shares covered by the
finders fee warrant shall be reduced pro rata, and an approximately pro rata increase in such fee (payable in warrants or cash) will be paid if such investors purchase more than $1,500,000 of units. The shares of Companys common stock issuable
upon exercise of any of the finders fee warrants will be registered but will be subject to a lock-up provision restricting the quantities and times at which such shares may be sold. The finders will be entitled under certain circumstances to
additional compensation in the event investors who they introduce to the Company purchase units and subsequently make further investments in the Company.

7. Income Taxes

Deferred taxes represent the net tax effects of the temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes. Temporary differences result primarily from the recording of tax benefits of net operating loss carryforwards and start-up costs that will be amortized for tax purposes once the Company begins doing
business as defined by the Internal Revenue Code.

As of December 31, 2005, the Company has an insufficient history to support the likelihood of
ultimate realization of the benefit associated with the deferred tax asset. Accordingly, a valuation allowance has been established for the full amount of the net deferred tax asset.

Deferred taxes consisted of the following:



|                                                  |  |                  |        |   |                  |   |          |  
|------------------------------------------------- |  | ---------------- | ------ | - | ---------------- | - | -------- | -
|                                                  |  | December 31,2004 |        |   | December 31,2005 |  
|Net operating loss carryforwards and other assets |  | $                | 4,700  |   |                  | $ | 103,100  |  
|Less valuation allowance                          |  |                  | (4,700 | ) |                  |   | (103,100 | )
|                                                  |  |                  |        |   |                  |   |          |  
|Net deferred tax asset                            |  | $                |       |   |                  | $ |         |  
|                                                  |  |                  |        |   |                  |   |          |  

At December 31, 2004 and December 31, 2005, the Company had approximately $4,700 and $103,100,
respectively, of net operating loss carryforwards. The utilization of the carryforwards is dependent upon the Companys ability to generate sufficient taxable income during the carryforward period.



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8. Subsequent Events

Reorganization

The Company entered an Agreement and Plan of Reorganization (the Agreement) dated as of May 5, 2005 with
Patco Industries, Ltd., a Delaware corporation (Patco) pursuant to which, on the terms and subject to the conditions of the Agreement, Patco agreed to acquire the Company as a wholly-owned subsidiary. The acquisition will be accomplished
through the merger (the Merger) of a newly formed subsidiary of Patco with and into the Company, with the Company as the surviving corporation and with Patco to issue shares of Patco common stock to the stockholders of the Company.
Pursuant to the Agreement, Patco effected a reverse stock split of approximately .00434 for one of the outstanding shares of Patco common stock so that Patco had approximately 825,000 shares of Patco common stock issued and outstanding immediately
prior to the Merger.

Upon the effectiveness of the Merger, each share of the Companys common stock issued and outstanding immediately prior to the
Merger shall be converted into one share of Patco common stock and each outstanding option or warrant to purchase the Companys common stock, whether or not then exercisable, shall be converted into an option or warrant to purchase one share of
Patco common stock at a price equal to the exercise price in effect immediately prior to the Merger.

The merger was completed on January 31, 2006.

Private Placement

On January 30, 2006, the
Company raised $1,400,000 (before offering expenses) from the sale of 1,400,000 of its units, each unit after the Companys stock split consisting of one share of common stock and one warrant, to accredited investors in a private placement.
Under its prior agreement with two individuals, the Company granted warrants to purchase 300,000 shares of its common stock for services rendered by those individuals who located investors to make investments in the private placement.



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Optical Molecular Imaging, Inc.

(formerly known as Patco Industries, Ltd.)

Selected Unaudited Pro Forma Financial Information

The following unaudited pro forma condensed combined financial information of Spectral Molecular Imaging, Inc. (Spectral) and Optical Molecular Imaging, Inc. (formerly know as Patco Industries, Ltd. and referred to herein as
Optical), which we refer to as Optical Pro Forma has been prepared to demonstrate how these companies or businesses might have looked if (1) the reverse stock split of Opticals common shares, (2) the Spectral
and Optical merger, and (3) the $1,400,000 private placement offering of Spectrals common stock had been completed as of the date or at the beginning of the period presented.

We have prepared the pro forma financial information using the reverse merger purchase method of accounting, resulting in Spectral being deemed the
acquirer for accounting purposes. We expect that we will have no material reorganization and restructuring expenses or potential synergies resulting from the merger and no opportunities to earn more revenue as a result of the transaction.

The pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of
assumptions, does not attempt to predict or suggest future results. The pro forma information also does not attempt to show how the combined company would actually have performed had the companies been combined throughout these periods. If the
companies had actually been combined in prior periods, these companies and businesses might have performed differently. You should not rely on pro forma financial information as an indication of the results that would have been achieved if the
merger had taken place earlier or the future results that the combined company will experience after completion of the transaction.

You
should read these unaudited pro forma condensed combined financial statements in conjunction with the historical financial statements of Spectral and Optical.



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Pro Forma Optical Molecular Imaging

Unaudited Pro Forma Condensed Combined Balance Sheets

As of December 31, 2005



|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|------------------------------------------------ |  | -------------------- | ---- | - | --------------------- | - | --------- | ----------------------- |  | - | ----------------------- | - |  | ----------------- | ---------- | - |  | - | --------- | -
|                                                 |  | OpticalHistorical(1) |      |   | SpectralHistorical(2) |   |           | Pro FormaAdjustments(3) |  |   | FinancingAdjustments(4) |   |  | Optical Pro Forma |           
|                                                 |  | (unaudited)          |      |   |                       |   |           |                         |  |   |                         |   |  |                   |           
|Assets                                           |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Current assets:                                  |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Cash                                             |  | $                    |     |   |                       | $ | 30,538    |                         |  | $ |                        |   |  | $                 | 1,400,000  |   |  | $ | 1,430,538 |  
|Restricted Cash                                  |  |                      |     |   |                       |   | 1,325,000 |                         |  |   |                        |   |  |                   | (1,325,000 | ) |  |   |          |  
|Other assets                                     |  |                      |     |   |                       |   | 1,200     |                         |  |   |                        |   |  |                   |           |   |  |   | 1,250     |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Total current assets                             |  |                      |     |   |                       |   | 1,356,738 |                         |  |   |                        |   |  |                   | 75,000     |   |  |   | 1,431,738 |  
|                                                 |  |                      |      |   |                      
|Property and equipment, net                      |  |                      |     |   |                       |   | 40,000    |                         |  |   |                        |   |  |                   |           |   |  |   | 40,000    |  
|Other assets                                     |  |                      |     |   |                       |   | 2,500     |                         |  |   |                        |   |  |                   |           |   |  |   | 2,500     |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Total assets                                     |  | $                    |     |   |                       | $ | 1,399,238 |                         |  | $ |                        |   |  | $                 | 75,000     |   |  | $ | 1,474,238 |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Liability and Shareholders Equity               |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Current liabilities:                             |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Accounts payable                                 |  | $                    |     |   |                       | $ | 15,142    |                         |  | $ |                        |   |  | $                 |           |   |  | $ | 15,142    |  
|Accounts payable  shareholders                  |  |                      |     |   |                       |   |          |                         |  |   |                        |   |  |                   |           |   |  |   |          |  
|Subscription payable                             |  |                      |     |   |                       |   | 1,325,000 |                         |  |   |                        |   |  |                   | (1,325,000 | ) |  |   |          |  
|Accrued liabilities                              |  |                      |     |   |                       |   | 38,834    |                         |  |   |                        |   |  |                   |           |   |  |   | 38,834    |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Total current liabilities                        |  |                      |     |   |                       |   | 1,378,976 |                         |  |   |                        |   |  |                   | (1,325,000 | ) |  |   | 53,976    |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Other liabilities                                |  |                      |     |   |                       |   |          |                         |  |   |                        |   |  |                   |           |   |  |   |          |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Commitments and contingencies                    |  |                      |     |   |                       |   |          |                         |  |   |                        |   |  |                   |           |   |  |   |          |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Shareholders equity:                            |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Common stock                                     |  |                      | 190  |   |                       |   | 7,147     |                         |  |   | (190                    | ) |  |                   | 1,400      |   |  |   | 8,547     |  
|Additional paid in capital                       |  |                      |     |   |                       |   | 270,860   |                         |  |   |                        |   |  |                   | 1,398,600  |   |  |   | 1,669,460 |  
|Deficit accumulated during the development stage |  |                      | (190 | ) |                       |   | (257,745  | )                       |  |   | 190                     |   |  |                   |           |   |  |   | (257,745  | )
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Total shareholders equity                       |  |                      |     |   |                       |   | 20,262    |                         |  |   |                        |   |  |                   | 1,400,000  |   |  |   | 1,477,950 |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  
|Total liabilities and shareholders equity       |  | $                    |     |   |                       | $ | 1,399,238 |                         |  | $ |                        |   |  | $                 | 75,000     |   |  | $ | 1,474,238 |  
|                                                 |  |                      |      |   |                       |   |           |                         |  |   |                         |   |  |                   |            |   |  |   |           |  



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##### Table of Contents

Pro Forma Optical Molecular Imaging

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2004



|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|----------------------------------- |  | -------------------- | ------- | --- | --------------------- | - | ------- | -------------------- |  | -------------------- | - | ----------------- | - | - |  | - | --------- | ---
|                                    |  | OpticalHistorical(5) |         |     | SpectralHistorical(6) |   |         | Pro FormaAdjustments |  | FinancingAdjustments |   | Optical Pro Forma |  
|Revenues                            |  | $                    |        |     |                       | $ |        |                      |  | $                    |  |                   | $ |  |  | $ |          |    
|Expenses:                           |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|In process research and development |  |                      |        |     |                       |   | 5,522   |                      |  |                      |  |                   |   |  |  |   | 5,522     |    
|General and administrative          |  |                      |        |     |                       |   | 6,219   |                      |  |                      |  |                   |   |  |  |   | 6,219     |    
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Total expenses                      |  |                      |        |     |                       |   | 11,741  |                      |  |                      |  |                   |   |  |  |   | 11,741    |    
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Loss before income taxes            |  |                      |        |     |                       |   | (11,741 | )                    |  |                      |  |                   |   |  |  |   | (11,741   | )  
|Income taxes                        |  |                      |        |     |                       |   |        |                      |  |                      |  |                   |   |  |  |   |          |    
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Net loss                            |  | $                    |        |     |                       | $ | (11,741 | )                    |  | $                    |  |                   | $ |  |  | $ | (11,741   | )  
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Weighted average number of shares:  |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Basic and diluted                   |  |                      | 774,961 | (7) |                       |   |         |                      |  |                      |   |                   |   |   |  |   | 9,321,561 | (8)
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Earnings (loss) per share:          |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    
|Basic and diluted                   |  | $                    |        |     |                       |   |         |                      |  |                      |   |                   |   |   |  | $ |          |    
|                                    |  |                      |         |     |                       |   |         |                      |  |                      |   |                   |   |   |  |   |           |    



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##### Table of Contents

Pro Forma Optical Molecular Imaging

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2005



|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|----------------------------------- |  | -------------------- | ------- | ---- | ---------------------- | - | -------- | -------------------- |  | -------------------- | - | ----------------- | - | - |  | - | --------- | ----
|                                    |  | OpticalHistorical(9) |         |      | SpectralHistorical(10) |   |          | Pro FormaAdjustments |  | FinancingAdjustments |   | Optical Pro Forma |  
|                                    |  | (unaudited)          |         |      |                        |   |          |                      |  |                      |   |                   |  
|Revenues                            |  | $                    |        |      |                        | $ |         |                      |  | $                    |  |                   | $ |  |  | $ |          |     
|Expenses:                           |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|In process research and development |  |                      |        |      |                        |   | 152,760  |                      |  |                      |  |                   |   |  |  |   | 152,760   |     
|Merger costs                        |  |                      |        |      |                        |   | 39,118   |                      |  |                      |  |                   |   |  |  |   | 39,118    |     
|General and administrative          |  |                      |        |      |                        |   | 54,126   |                      |  |                      |  |                   |   |  |  |   | 54,126    |     
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Total expenses                      |  |                      |        |      |                        |   | 246,004  |                      |  |                      |  |                   |   |  |  |   | 246,004   |     
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Loss before income taxes            |  |                      |        |      |                        |   | (246,004 | )                    |  |                      |  |                   |   |  |  |   | (246,004  | )   
|Income taxes                        |  |                      |        |      |                        |   |         |                      |  |                      |  |                   |   |  |  |   |          |     
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Net loss                            |  | $                    |        |      |                        | $ | (246,004 | )                    |  | $                    |  |                   | $ |  |  | $ | (246,004  | )   
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Weighted average number of shares:  |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Basic and diluted                   |  |                      | 791,628 | (11) |                        |   |          |                      |  |                      |   |                   |   |   |  |   | 9,338,228 | (12)
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Earnings (loss) per share:          |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     
|Basic and diluted                   |  | $                    |        |      |                        |   |          |                      |  |                      |   |                   |   |   |  | $ | (0.03     | )   
|                                    |  |                      |         |      |                        |   |          |                      |  |                      |   |                   |   |   |  |   |           |     



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##### Table of Contents

Pro Forma Optical Molecular Imaging

Notes to the Unaudited Condensed Combined Pro Forma Financial
Statements



|1. | This column represents the historical financial position of Optical as of December 31, 2005.
|-- | --------------------------------------------------------------------------------------------



|2. | This column represents the historical financial position of Spectral as of December 31, 2005.
|-- | ---------------------------------------------------------------------------------------------



|3. | These adjustments reflect the elimination of Opticals shareholders equity accounts.
|-- | -------------------------------------------------------------------------------------



|4. | These adjustments represent the issuance of $1,400,000 of Spectral common stock in January 2006.
|-- | ------------------------------------------------------------------------------------------------



|5. | This column represents the results of operations of Optical for the year ended December 31, 2004.
|-- | -------------------------------------------------------------------------------------------------



|6. | This column represents the results of operations of Spectral for the period from February 25, 2004 (date of inception) to December 31, 2004.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------



|7. | Optical effected an approximately 0.00434 for 1 reverse stock split of its common stock, which resulted in its having approximately 774,961 weighted average number of shares
outstanding.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|8. | Pro forma per share data are based on the number of shares of Spectral common stock that would have been outstanding had the merger with Optical and the $1,400,000 private placement
by Spectral taken place. Optical issued 8,546,600 shares in connection with the Spectral.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|9. | This column represents the results of operations of Optical for the year ended December 31, 2005.
|-- | -------------------------------------------------------------------------------------------------



|10. | This column represents the results of operations of Spectral for the year ended December 31, 2005.
|--- | --------------------------------------------------------------------------------------------------



|11. | Optical effected an approximately 0.00434 for 1 reverse stock split of its common stock, which will resulted in its having approximately 791,628 weighted average number of shares
outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|12. | Pro forma per share data are based on the number of shares of Spectral common stock that would have been outstanding had the merger with Optical and the $1,400,000 private placement
by Spectral taken place. Optical issued 8,546,600 shares in connection with the Spectral.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F - 19



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##### Table of Contents

Exhibit Index



|            |  |                                                                                                                                                                                                                                                                  
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                      
|            | 
|2.1         |  | Agreement and Plan of Reorganization dated as of May 5, 2005 among the Registrant, Patco Industries Subsidiary, Inc., William C. Patridge, and Spectral Molecular Imaging, Inc., as amended on
June 30, 2005, September 26, 2005 and January 20, 2006. (1)       
|            | 
|3.1         |  | Amended and Restated Certificate of Incorporation of the Registrant. (2)                                                                                                                                                                                         
|            | 
|3.2         |  | Amended and Restated Bylaws of the Registrant. (2)                                                                                                                                                                                                               
|            | 
|4.1         |  | Form of Warrant issued in January 2006 to purchase shares of the common stock of Spectral Molecular Imaging, Inc. and assumed by the Registrant. (2)                                                                                                             
|            | 
|4.2         |  | Form of Subscription Agreement containing registration rights issued by Spectral Molecular Imaging, Inc. in January 2006 and assumed by the Registrant. (2)                                                                                                      
|            | 
|10.1        |  | Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel Farkas and certain other individuals specified in said
agreement.* (2)                                                    
|            | 
|10.2        |  | Amendment No. 1 dated as of November 2, 2004 to the Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel
Farkas and certain other individuals specified in said agreement.* (2)
|            | 
|10.3        |  | Amendment No. 2 dated as of October 20, 2005 to the Assignment and License Agreement dated as of November 1, 2004 among Spectral Molecular Imaging, Inc., ChromoDynamics, Inc., Dr. Daniel
Farkas and certain other individuals specified in said agreement.* (2)
|            | 
|10.4        |  | License Agreement dated as of September 29, 2005 between Spectral Molecular Imaging, Inc. and Carnegie Mellon University.* (2)                                                                                                                                   
|            | 
|10.5        |  | Amendment No. 1 dated November 9, 2005 to the License Agreement dated as of September 29, 2005 between Spectral Molecular Imaging, Inc. and Carnegie Mellon University. (2)                                                                                      
|            | 
|10.6        |  | 2006 Equity Incentive Plan of the Registrant. (2)                                                                                                                                                                                                                
|            | 
|10.7        |  | Form of Stock Option Agreement for the Registrants 2006 Equity Incentive Plan. (2)                                                                                                                                                                              
|            | 
|10.8        |  | Employment Agreement with Dr. Daniel L. Farkas dated April 22, 2005. (2)                                                                                                                                                                                         



Ex - 1



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##### Table of Contents

|            |  |                                                                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                             
|            | 
|10.9        |  | Employment Agreement with David Wohlberg dated April 22, 2005. (2)                                                                                                      
|            | 
|10.10       |  | Employment Agreement with C. Kirk Peacock dated May 16, 2005. (2)                                                                                                       
|            | 
|21.1        |  | List of the Registrants subsidiaries. (2)                                                                                                                              
|            | 
|31.1        |  | Certification of the Registrants Principal Executive Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
|            | 
|31.2        |  | Certification of the Registrants Principal Financial Officer under Exchange Act Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**
|            | 
|32.1        |  | Certification of the Registrants Principal Executive Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**     
|            | 
|32.2        |  | Certification of the Registrants Principal Financial Officer under 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**     

---

|* | Certain portions of the exhibit have been omitted based upon a request for confidential treatment filed by us with the SEC. The omitted portions of the exhibit have been separately
filed by us with the SEC.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Filed with this Annual Report on Form 10-KSB/A.
|-- | -----------------------------------------------

|(1) | Previously filed by us on January 26, 2006 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------

|(2) | Previously filed by us on February 6, 2006 as an exhibit to our Current Report on Form 8-K and incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------



Ex - 2