UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM 10-K
                (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscal year ended: December 31, 2005

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

                         COMMISSION FILE NUMBER 0-33505


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

                           LIFE SCIENCES RESEARCH INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                                    MARYLAND
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)
                                   52-2340150
                         IRS Employer Identification No.
            PO BOX 2360, METTLERS ROAD, EAST MILLSTONE, NJ 08875-2360
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 732 649-9961
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:


                                                NAME OF EACH EXCHANGE
     TITLE OF EACH CLASS                         ON WHICH REGISTERED
Voting Common Stock $0.01 par value               Other OTC Market


Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                Yes __                    No  X

Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.

                 Yes __                    No  X

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or Section  15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such report),  and (2) has been subject to such
filing requirements for the past 90 days.

                 Yes X                     No __

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not 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-K or any
amendment of this Form 10-K. [ x ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)

                   Yes X                     No __

Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                    Yes __                   No X

The aggregate market value of the Voting Common Stock held by non-affiliates of
the Registrant was $120,038,400 on June 30, 2005, the last business day of
Registrant's most recently completed second fiscal quarter.

Indicate the number of outstanding shares of each of the Registrant's classes of
common stock as of the latest practicable date.

As of March 13, 2006 the Registrant had outstanding  12,561,351 shares of Voting
Common Stock

<PAGE>
<TABLE>

TABLE OF CONTENTS
<CAPTION>

ITEM                                                                                     PAGE
                                     PART I

<S>     <C>                                                                                <C>
1.       Business...........................................................................4

1A.      Risk Factors......................................................................15

2.       Properties .......................................................................19

3.       Legal Proceedings ................................................................19

4.       Submission of Matters to a Vote of Security Holders ..............................19


                                     PART II

5.       Market For Registrant's Common Equity, Related Stockholder Matters and Issuer
         Purchases of Equity Securities.....................................................20

6.       Selected Consolidated Financial Data ..............................................26

7.       Management's Discussion and Analysis of Financial Condition and Results
         of Operation ......................................................................28

7A.      Quantitative and Qualitative Disclosures About Market Risk ........................42

8.       Financial Statements and Supplementary Data  ......................................43

9.       Changes in and Disagreements with Accountants on Accounting and Financial
         Disclosure ........................................................................77

9A.      Controls and Procedures ...........................................................77


                                    PART III


10.      Directors and Executive Officers of the Registrant .................................78

11.      Executive Compensation  ............................................................80

12.      Security Ownership of Certain Beneficial Owners and Management and Related
         Stockholder Matters ................................................................87

13.      Certain Relationships and Related Transactions .....................................88

14.      Principal Accountant Fees and Services  ............................................89


                                     PART IV


15.      Exhibits and Financial Statements Schedules ........................................90

</TABLE>

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

INTRODUCTION

Life Sciences Research, Inc. ("LSR") and subsidiaries (collectively, the
"Company") is a global contract research organization, offering worldwide
pre-clinical and non-clinical testing for biological safety evaluation research
services to pharmaceutical, biotechnology, agrochemical and industrial chemical
companies. The Company serves the rapidly evolving regulatory and commercial
requirements to perform safety evaluations on new pharmaceutical compounds and
chemical compounds contained within the products that humans use, eat and are
otherwise exposed to. In addition, the Company tests the effect of such
compounds on the environment and also performs work on assessing the safety and
efficacy of veterinary products.

As the Company continues to build on improving fundamentals, we have the
following strategy and goals:

o    To grow to significant  profitability and improved return on investment for
     our shareholders.

o    To be appreciated as the listening,  understanding  and reliable partner in
     creative  compound  development  and safety  assessment and to be the first
     choice for the industries we serve.

o    To provide our employees with the opportunity for individual development in
     a caring, rewarding and safe working environment.

o    To be recognized positively in the local communities in which we operate.

LSR was incorporated on July 19, 2001 as a Maryland corporation. It was formed
specifically for the purpose of making a recommended all share offer (the
"Offer") for Life Sciences Research Ltd (LSR Ltd) formerly Huntingdon Life
Sciences Group plc ("Huntingdon"). The Offer was made on October 16, 2001 and
was declared unconditional on January 10, 2002, at which time LSR acquired
approximately 89% of the outstanding ordinary shares of Huntingdon in exchange
for approximately 5.3 million shares of LSR Voting Common Stock. The subsequent
offer period expired on February 7, 2002, by which time approximately 92% of the
outstanding ordinary shares had been offered for exchange. LSR completed its
compulsory purchase under UK law of the remaining outstanding ordinary shares of
Huntingdon on March 26, 2002 at which time Huntingdon became a wholly owned
subsidiary of LSR, in exchange for a total of approximately 5.9 million shares
of LSR Voting Common Stock (the "Exchange Offer").

Under accounting principles generally accepted in the United States ("US GAAP"),
the Company whose stockholders retain the majority interest in a combined
business must be treated as the acquirer for accounting purposes. Accordingly,
the Exchange Offer is accounted for as a reverse acquisition for financial
reporting purposes. The reverse acquisition is deemed a capital transaction and
the net assets of Huntingdon (the accounting acquirer) are carried forward to
LSR (the legal acquirer and the reporting entity) at their carrying value before
the combination. Although Huntingdon was deemed to be the acquiring corporation
for financial accounting and reporting purposes, the legal status of LSR as the
surviving corporation does not change. The relevant acquisition process utilizes
the capital structure of LSR and the assets and liabilities of Huntingdon are
recorded at historical cost. The equity of LSR is the historical equity of
Huntingdon, retroactively restated to reflect the number of shares issued in the
Exchange Offer.

On June 14, 2005, the Company entered into and consummated purchase and sale
agreements with Alconbury Estates Inc. and subsidiaries (collectively
"Alconbury") for the sale and leaseback of the Company's three operating
facilities in Huntingdon and Eye, England and East Millstone, New Jersey (the
"Sale/Leaseback Transaction"). Alconbury is a newly formed company controlled by
LSR's Chairman and CEO, Andrew Baker. The total consideration paid by Alconbury
for the three properties was $40 million, consisting of $30 million in cash and
a five year, $10 million variable rate subordinated promissory note, which
Alconbury agreed to make a best effort to repay within twelve months.

The proceeds from the Sale/Leaseback Transaction (plus additional cash on hand)
were used by the Company to pay in full its (pound)22.6 million non-bank debt
(approximately $41.1 million).

In accordance with the provisions of FASB Interpretation No. 46R (FIN 46R), the
Company will reflect the consolidation of Alconbury as long as it is considered
the "primary beneficiary" of Alconbury's variable interests. The Company will
not record the gain and loss associated with the sale of the properties, nor
recognize the associated changes in depreciation, interest, and rent expenses,
until FIN 46R consolidation accounting no longer applies. At that time, the
Company will record a non-cash loss of approximately $44 million for the sale of
the UK properties, and a gain of approximately $6 million, amortized over the
term of the lease, for the US property. In addition, the Company anticipates a
net reduction in its annual depreciation charge of approximately $2.7 million,
offset by a net increase of $0.5 million in interest and rent expenses. The
Company anticipates that it will no longer be the primary beneficiary of
Alconbury when the $10 million subordinated promissory note has been repaid.

LSR's executive office is based at the Princeton Research Center in East
Millstone, New Jersey.

HISTORY

Huntingdon was originally incorporated in the UK in 1951 as a limited liability
company to provide contract research services to the UK pharmaceutical,
agrochemical and food industries. In 1964 it was acquired by the US company,
Becton Dickinson. Over the next 20 years it successfully established itself as a
leading Contract Research Organization (CRO) with business across a number of
sectors and with a number of leading pharmaceutical and agrochemical companies.
In April 1983, Huntingdon was re-registered as a public limited company and in
1988 it was floated on the London Stock Exchange. In early 1989 Huntingdon
obtained a listing for its ADR's on the New York Stock Exchange.

In 1995, it acquired the toxicology business of APBI, which included
laboratories near Princeton, New Jersey and Newcastle and Eye, Suffolk in the UK
for a total consideration of $43 million. Immediately upon acquisition, the
toxicology business of APBI in the UK was merged with that of Huntingdon
Research Center Limited and the name of that company changed to Huntingdon Life
Sciences Limited. The US business acquired operates as Huntingdon Life Sciences
Inc.

In the first half of 1997, allegations were made relating to animal care and
Good Laboratory Practice (GLP) against Huntingdon's operating subsidiaries in
the UK and US. Those allegations and the UK Government's subsequent statement in
the House of Commons in July 1997 about its investigation into those allegations
caused the cancellation of booked orders and a decline in new orders.
Significant trading losses and cash outflows resulted during the period from mid
1997 through 1998. Given the medium to long term element of many of Huntingdon's
activities and the reluctance of clients to place new work until its finances
were stabilized, Huntingdon required a substantial injection of finance to both
initially restore confidence and then to fund operations during the period until
it returned to profitability.

On September 2, 1998 a group of new investors, led by Andrew Baker, subscribed
(pound)15 million ($25 million) for 120 million ordinary shares while existing
shareholders and institutional investors took up a further 57 million shares,
contributing (pound)7.1 million ($11.8 million). After expenses of (pound)1.7
million ($2.9 million), the issue of shares raised (pound)20.4 million ($33.9
million). On the same date Huntingdon's bankers agreed to continue Huntingdon's
credit facilities at (pound)24.5 million ($40.8 million) until August 31, 2000
and this amount remained fully drawn down. This debt was refinanced on January
20, 2001 by means of a loan from HLSF LLC, a subsidiary company of the Stephens
Group Inc., a related party at the time, which subsequently transferred the debt
to an unrelated third party. That debt was paid in full on June 14, 2005 from
the proceeds of the Sale/Leaseback Transaction plus cash on hand.

Since the involvement of the new investor group in 1998, the management team,
led by Brian Cass, believes that LSR has successfully addressed many of the
Company's past difficulties. Relationships with customers have been restored and
sales are growing at an encouraging rate.

In November 1999, a new so called "animal rights" group known as "Stop
Huntingdon Animal Cruelty" (SHAC) was formed in the UK with Huntingdon as its
target. Since then, activists in both the UK and the US have continued focusing
on Huntingdon (now LSR), its staff and directors, but also many other
stakeholders in the business, including shareholders, financial institutions,
suppliers and customers. For further details see Other Information Pertaining to
the Company - Animal Rights Activism, below.

In October 2001, LSR commenced the Offer for Huntingdon, which was completed in
March 2002 with Huntingdon becoming a wholly owned subsidiary of LSR. The effect
of the Offer was to re-domicile Huntingdon's corporate and legal existence to
the US. As a US company incorporated in Maryland, LSR benefits from a more
hospitable corporate environment, including corporate governance and privacy
rules and regulations that benefit LSR security holders. Moreover, the
investment community in the US is more familiar with the CRO industry, since
most publicly traded CRO's are domiciled in the US.

In March 2002, LSR completed a private placement of approximately 5.1 million
shares of Voting Common Stock at a per share subscription price of $1.50 per
share.

In April 2002, LSR began trading its common stock on the US Over the Counter
Bulletin Board (OTCBB). Since February 6, 2006 it has traded on the Other OTC
Market (Pink Sheets).

DESCRIPTION OF BUSINESS

The Company provides pre-clinical and non-clinical biological safety evaluation
research services to most of the world's leading pharmaceutical, biotechnology,
agrochemical and industrial chemical companies. The purpose of this safety
evaluation is to identify risks to humans, animals or the environment resulting
from the use or manufacture of a wide range of chemicals, which are essential
components of our clients' products. The Company's services are designed to meet
the regulatory requirements of governments around the world.

The Company's aim is to develop its business within these markets, principally
in the pharmaceutical sector, and through organic growth. In doing so, the
Company expects to benefit from strong drug pipelines in the pharmaceutical
industry and a growing trend towards greater outsourcing as clients focus more
internal resources on research and increasingly look to variabilize their
development costs.

The Company's sales and marketing functions are specifically focused on two main
groups, pharmaceutical and non-pharmaceutical customers. As much of the research
activity conducted for these two customer groups is similar, the Company
believes it is appropriate, operationally, to view this as one business.

Pharmaceuticals and Biopharmaceuticals

The pharmaceutical research and development pathway is shown below:

[GRAPHIC OMITTED]

The Company performs non-clinical testing in support of the drug development
process, primarily work outsourced from the bio-pharmaceutical industry. Over
80% of the Company's orders are derived from this pharmaceutical sector.
Essentially all of this work is performed as a result of regulatory requirements
that seek to minimize the risks associated with the ultimate testing and use of
these compounds in humans.

Pre-clinical testing helps to evaluate both how the drug affects the body as
well as how the body affects the drug. Utilizing advanced laboratory and
toxicological evaluations, this work helps assess safe and appropriate dose
regimens. Other non-clinical testing can focus on identifying and avoiding the
longer-term cancer implications of exposure to the compound, or relating to the
potential of possible reproductive implications, as well as assessing the
stability of pharmaceuticals under a variety of storage conditions.

The Company views its non-clinical market as extending all the way beyond
marketing authorization, although the core market extends to "proof of concept"
in man (Phase 2A). Since 1999, the Company has had collaborative relationships
with a number of Phase I clinical trial units and offers centralized clinical
laboratory services in support of clinical trials. The Company's market is
further extended beyond pre-clinical with analytical chemistry support for
clinical trials, establishing the stability of pharmaceuticals under varied
storage conditions and the batch testing of marketed pharmaceuticals for product
release.

The Company has also actively pursued opportunities to extend its range of
capabilities supporting late stage drug discovery, focused around in vitro and
in vivo models for lead candidate drug characterization and optimization. This
growing range of biological services is intended to position the Company to take
advantage of the increasing demand for a greater understanding of the physical,
chemical and biological properties of intended therapeutics prior to the
commencement of pre-clinical and clinical testing.

The outsourced market for the late stage clinical trials (Phase 3 and beyond) is
also relevant to the Company. While the Company does not preclude entering this
market in the future, it has no plan to do so in the foreseeable future, as it
is a very different business and one in which a number of major companies are
already firmly established.

Market Growth

It is estimated that the pharmaceutical industry annual research and development
(R & D) spending is over $50 billion per year and is growing at around 10% per
annum. Approximately 20% of this is devoted solely to pre-clinical testing and a
further 10% to central laboratory services. The Company believes that
approximately 20-25% of the pre-clinical is outsourced and almost all the
central laboratory which means that the Company is today competing in a market
which exceeds $3 billion. It is widely believed that this market will continue
to grow for the foreseeable future, both in absolute dollar amount and in the
percentage of pre-clinical work that is outsourced.

The market for these services is growing, among other things, due to the
following:

o    New drug  discovery  is  growing  fueled  by new  technologies  and  strong
     profits.  The information obtained from the Human Genome Project has led to
     the greater  understanding  of the  pathways  underlying  the  mechanism of
     disease. This has, in turn, led to a growth in the use and understanding of
     the  `omics  (genomics,  proteomics,  etc.) and  increased  focus on target
     receptor based discovery.

o    Preclinical development services should experience the higher growth first,
     as they are at the front end to receive  the  anticipated  wave of new drug
     candidates generated by advances in drug discovery technologies.

o    The need to replace earnings from drugs coming off patent,  and anticipated
     decreasing price flexibility in key markets,  is driving an increase in the
     number of drugs being put into development.

o    It is estimated there has been a 30% increase in the numbers of projects in
     pre-clinical development since 2000.

o    There is also a growing trend towards the  outsourcing of development  work
     as clients focus more internal resource on discovery research in the search
     for new lead compounds.

o    The biotechnology  industry has become a significant source of business for
     the Company.  The number of drugs produced by the  biotechnology  industry,
     which  require US Food and Drug  Administration  (FDA)  approval  has grown
     substantially  over the past  decade.  Many  biotechnology  companies  have
     strategically  chosen  not to invest  in asset  intensive  development  and
     regulatory safety evaluation,  but rather to outsource major areas of R & D
     and  utilize  CROs to  perform  these  services.  This  frees them from the
     capital-intensive  requirement  to  establish  and staff their own in-house
     facilities and then the inefficient  utilization of those  capabilities due
     to their sporadic and varied demand.

o    The process of  consolidation  within the  pharmaceutical  industry is also
     accelerating the move towards  outsourcing.  While there is some short-term
     negative impact from mergers, with development pipelines being rationalized
     and a focus on integration rather than development,  longer-term  resources
     are  increasingly  invested in in-house  facilities  for discovery and lead
     optimization rather than development and regulatory safety evaluation.  The
     Company's own research, supported by comments from the major competitors in
     this space, suggest that none of the major global pharmaceutical  companies
     are currently  investing in significant new safety  evaluation  facilities.
     Undertaking  development  work and safety  evaluation is the Company's core
     business.

As a result of these, amongst other factors, it is believed that the overall
market for outsourced services is estimated to be growing at a rate at least
equal to the growth of research and development expenditure by the
pharmaceutical industry.

Non-Pharmaceuticals

The Company currently generates approximately 20% of its orders from safety and
efficacy testing of compounds for the agrochemical, industrial chemical, and
veterinary and food industries. During 2005 non-pharmaceutical revenues were
approximately the same as the prior year and a declining percent of total
revenues, which is predicted to continue. The work involved has many
similarities and often uses many of the same facilities, equipment, and
scientific disciplines to those employed in pre-clinical testing of
pharmaceutical compounds.

The Company's business in these areas is again driven by governmental regulatory
requirements. The Company's services address safety concerns surrounding a
diverse range of products, spanning such areas as agricultural herbicides and
other pesticides, medical devices, veterinary medicines, and specialty chemicals
used in the manufacture of pharmaceutical intermediates, and manufactured
foodstuffs and products. The Company believes it is a clear market leader in
programs designed to assess the safety, environmental impact and efficacy of
agricultural chemicals as well as in programs to take new specialty chemicals to
market.

Market Growth

It is estimated that the worldwide market for outsourced contract research from
non-pharmaceutical industries is approximately $300 million. The growth in the
non-pharmaceutical business is driven both by the introduction of novel
compounds, and by legislation concerning the safety and environmental impact of
existing products.

The Company believes that this segment is likely to experience relatively low
growth in the next few years, although a number of market segments included in
this broad area of business have the potential for some growth in the future due
to the following:

o    Continued  implementation  of  testing  requirements  for `high  production
     volume' (HPV) chemical products in Europe and the US.

o    Introduction of new  legislation  for the  notification of new and existing
     chemicals that are in use within the European Union (REACH).

o    Safety testing of specific  formulations of crop  protection  products on a
     country-by-country basis within the European Union (91/414).

o    More stringent regulations affecting compounds, which have the potential to
     adversely affect the environment, (e.g. biocides and endocrine disrupters).

o    Growth in  concerns  over food  safety,  (e.g.  additives  and  genetically
     modified foods, and the introduction of `nutraceuticals').

o    Developments of new markets such as China and the EU accession countries.

Safety testing in these industries is also more likely to be outsourced as,
unlike the pharmaceutical industry, fewer companies have comprehensive internal
laboratory facilities. While overall R & D is not growing, we believe that
increased outsourcing could provide business opportunities in this market.

Customers

The Company offers worldwide pre-clinical and non-clinical testing for
biological safety evaluation research services to human and veterinary
pharmaceutical, biotechnology, agrochemical, industrial chemical and food
companies. In 2005 the Company received orders from companies ranging from the
largest in their industries to small and start-up organizations. 37 clients
placed over $1 million of orders with the Company and the ten largest clients
accounted for approximately 44% of orders. No single client accounted for more
than 10% of net revenues for 2005.

For net revenues from clients, assets attributable to each of the Company's
business segments, other segment information and a geographical analysis of
revenues from clients (based on the location of the client) for each of the last
three fiscal years, see note 13 to the audited consolidated financial statements
included elsewhere in this Annual Report.

Backlog

The majority of the Company's net revenues are earned under contracts, which
generally range in duration from a few months to three years. Revenue from these
contracts is generally recognized over the term of the contract as services are
rendered. The Company maintains an order backlog to track anticipated net
revenues for work that has yet to be earned. Aggregate backlog at December 31,
2005 was $122 million compared to $119 million at December 31, 2004, which
represents an increase of 7% exclusive of the impact of foreign exchange.

Segment Information

For a discussion of geographic segment information please see "Segment Analysis"
beginning on page 32 and "Geographical Analysis" beginning on page 73.

COMPETITION

Competition in both the pharmaceutical and non-pharmaceutical market segments
ranges from:

o    in-house R&D divisions of large pharmaceutical, agrochemical and industrial
     chemical companies who perform their own safety assessments; to

o    "full  service"  providers  - CROs like LSR,  who  provide a full  range of
     non-clinical  safety services to the industries  (such as Covance Inc., and
     Charles River Laboratories International, Inc.); and

o    "niche"  suppliers  focusing on specific  services,  geographic  areas,  or
     industries (such as MDS, WIL Research, or SafePharm Labs).

GOVERNMENT REGULATION OF OPERATIONS

Regulatory agencies

Since the services provided by the Company are used to support pharmaceutical,
biotechnological, chemical or agrochemical product approval applications, its
laboratories are subject to both formal and informal inspections by appropriate
regulatory and supervisory authorities, as well as by representatives from
client companies. The Company is regularly inspected by US, Japan and UK
governmental agencies because of the number and complexities of the studies it
undertakes. In 1979, the US Food and Drug Administration (FDA) promulgated the
Good Laboratory Practice (GLP) regulations, defining the standards under which
biological safety evaluations are to be conducted. Other governmental agencies
such as the Environmental Protection Agency (EPA), the Japanese Ministry Of
Health and Welfare, the Japanese Ministry of Agriculture, Forestry and
Fisheries, and the UK Department of Health, have introduced
compliance-monitoring programs with similar GLP standards. During 2005 the
Company in the UK had 2 GLP inspections; and in the US an FDA inspection. The
Company has had numerous such inspections since 1995.

The Company's laboratory in the US is subject to the United States Department of
Agriculture (USDA) Animal Welfare Regulations (Title 9, Code of Federal
Regulations, Subchapter A). The laboratory is regularly inspected by USDA
officials for compliance with these regulations. Compliance is assured through
an Institutional Animal Care and Use Committee, comprising staff from a broad
range of disciplines within the Company and including external representation.
Furthermore, in the US there is a voluntary certification program run by an
independent and internationally recognized organization, the Association for
Assessment and Accreditation of Laboratory Animal Care (AAALAC). The Company's
laboratories in both the US and UK are accredited under this program. The
Company's pre-clinical services are subject to industry standards for the
conduct of research and development studies that are embodied in the regulations
for GLP. The FDA and other regulatory authorities require the test results
submitted to such authorities be based on studies conducted in accordance with
GLP. The Company must also maintain reports for each study for specified periods
for auditing by the study sponsor and by FDA or other regulatory authorities.

The Company's operations in the UK are regulated by the Animals (Scientific
Procedures) Act 1986. This legislation, administered by the UK Home Office,
provides for the control of scientific procedures carried out on animals and
regulation of their environment. Personal licenses (the Company has
approximately 225 licensees) are issued by the UK Home Office to personnel who
are competent to perform regulated procedures and each program of work must be
authorized in advance by a Project Licensee. Premises where procedures are
carried out must also be formally designated by the UK Home Office.
Consultations and inspections are regularly undertaken in order to ensure
continued compliance with regulatory and legislative requirements, the Company
had 20 such visits in 2005.

At each of its research centers, the Company ensures the availability of
suitably experienced and qualified veterinary staff backed by a 24-hour call out
system.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

While the Company conducts its business to comply with certain environmental
regulations, compliance with such regulations does not impact significantly on
its earnings or competitive position. Management believes that its operations
are currently in material compliance with all applicable environmental
regulations.

OTHER INFORMATION PERTAINING TO THE COMPANY

Human Resources

The Company's most important resource is its people. They have created the
Company's knowledge base, its expertise and its excellent scientific reputation.
Scientists from the Company are represented at the highest levels on several US,
UK and international committees on safety and toxicity testing. Several staff
members are considered leaders in their respective fields. They frequently
lecture at scientific seminars and regularly publish articles in scientific
journals. This recognition has resulted in frequent assignments from clients for
consultation services. Some of the Company's staff serve by invitation or
election on a number of scientific and industrial advisory panels and groups of
certain organizations and agencies such as the FDA, the EPA, the UK Department
of Health, and the World Health Organization.

To ensure that this experience and expertise is transmitted throughout the
organization, the Company conducts training programs. For example, the Company's
study director training programs train graduate staff in all phases of
toxicology. Also, in conjunction with the Institute of Animal Technology, the
Company maintains what it believes to be one of the largest animal technician
training programs in the world. The Company employs approximately 240 licensed
personnel.

The number of employees in the Company at December 31, 2005 and 2004 were as
follows:

                                  2005                      2004
US ........................        268                       247
UK ........................      1,128                     1,129
Japan .....................         11                        11
                            -----------               -----------
                                 1,407                     1,387
                            -----------               -----------

Management and Labor Relations

The Company's labor force is non-union and there has never been any disruption
of the business through strikes or other employee action. The Company regularly
reviews its pay and benefits packages and believes that its labor relations,
policies and practices and management structure are appropriate to support its
competitive position.

Acquisition of Huntingdon Life Sciences KK (HLS KK)

HLSKK has acted as the Company's marketing representative in Japan since 1996.
This Company was a joint venture, 50% of which was owned by Huntingdon. On July
1, 2003, the remaining 50% of the shares in HLS KK, not previously owned by
Huntingdon, was purchased, resulting in HLS KK becoming a wholly owned
subsidiary of Huntingdon. The purchase price is payable over a three year
period, and is equal to the greater of (a) $1 million or (b) the commission
which would have been paid if the purchase had not happened at rates of between
2.5% and 4.5% of billings generated. Payments during that three year period
shall be made at the rate which had been in effect for commissions prior to the
acquisition, and is payable semi-annually. The amount paid in 2005 was $666,000,
2004 $577,000.

Prior to July 1, 2003, the shares owned by Huntingdon in HLS KK were held as an
investment, as the day to day control of HLS KK was not exercised by the
Company.

Research and Development

In addition to experience gained through research activities performed for
clients, the Company engages in research in order to respond to the changing
needs of clients and to maintain competitiveness within the industries in which
it operates. Most of the research undertaken, however, is an inherent part of
the research carried out on behalf of clients in completing studies and as such
it is not identified separately.

Know-how and Patents

The Company believes that its proprietary know-how plays an important role in
the success of its business. Where the Company considers it appropriate, steps
are taken to protect its know-how through confidentiality agreements and
protection through registration of title or use. However the Company has no
patents, trademarks, licenses, franchises or concessions which are material and
upon which any of the services offered are dependent.

Quality Assurance

The Company maintains extensive quality assurance programs, designed to ensure
that all testing programs meet client requirements, as well as all relevant
codes, standards and regulations. Based on a Master Schedule, periodic
inspections are conducted as testing programs are performed to assure adherence
to project specifications or protocols and final reports are extensively
inspected to ensure consistency with data collected.

Animal Rights Activism

During the last decade there was an escalation in animal rights activity that
targeted biomedical research internationally including academic, government and
commercial organizations. As part of this increase a new campaign group (Stop
Huntingdon Animal Cruelty, SHAC) was formed in the UK in November 1999. SHAC's
broad aim is to end all animal research, while its immediate and publicly stated
goal at that time was to "shut HLS down within three years". During 2000 this
campaign broadened and intensified with a range of Huntingdon's stakeholders
becoming potential targets; including staff, directors, institutional and
personal shareholders, customers, financial institutions and other suppliers.
The protest activities took many forms, both legal and illegal, such as
demonstrations outside the Company's facilities and in local towns; distribution
of propaganda; abuse, intimidation and threats directed at many of the
stakeholders listed above; and, in occasional cases, acts of violence.

During 2001 and 2002 the incidents of violent protest in the UK appeared to
diminish. However, activists focused their protest activities on the Company's
financial institutions in unsuccessful attempts to deprive Huntingdon of its
bank financing and to stop the US re-domiciling transaction. During this period,
due in large part to the successful US re-domiciling, the activities of SHAC and
other animal rights groups expanded to and intensified in the US, focusing on a
similar range of stakeholders as had been targeted in the UK.

To counter this animal rights campaign the Company adopted a strategy of
openness and direct co-operation with all its stakeholders, the media and the
local communities. The Company has taken every opportunity to promote the value
of the work it does in helping its customers bring to market safe and effective
new medicines and other products. Members of the media, national bodies, schools
and local groups have visited the Company, toured the laboratories and animal
facilities, and talked with staff. These visitors have been consistently
impressed with the Company's ethics, its standards of animal welfare and the
professionalism of its staff. As a consequence of the Company's constructive,
high profile, public relations activities and the irrationality of the animal
rights messages, media coverage has become increasingly positive. Additionally,
both in the US and the UK, the media has consistently condemned the illegal
protest actions of the SHAC campaign.

Initiated by, and in conjunction with, the Company's leadership on this issue,
there has been a marked increase in communication campaigns designed to inform
the general public. These have focused on the essential nature of animal based
research, the high standards of animal welfare demanded, the commitment to
developing non-animal alternatives and the benefits of such research to society.
Our clients' recognition of our scientific and professional integrity and
leadership was evident in the granting of the prestigious UK Pharma Industry
Individual Achievement Award to Brian Cass, the Company's President and Managing
Director, in October 2001. In further recognition of his contribution to science
and professional achievements, Mr. Cass was appointed as a Commander in the Most
Excellent Order of the British Empire (CBE) in June 2002. The highly prestigious
CBE is awarded on merit, for exceptional achievement or service; it is
recommended by the Prime Minister of England, but is approved by the Queen.

In the UK the Company has successfully lobbied politicians and the British
parliament, with great support from industry trade bodies such as the
Association of the British Pharmaceutical Industry, Bioindustry Association, and
Research Defence Society. As a result, the British Government has made very
positive statements in support of the Company specifically and of biomedical
research using animals in general. It has also been extremely critical of the
illegal activities of some animal rights supporters. The Government has
introduced legislation to offer more protection to those targeted and is
encouraging the police and courts to ensure the law is enforced. This national
initiative continues to develop, particularly as the government and police deal
with protecting an increasing range of animal rights targets in the UK. Of
particular note, in April 2005 the Serious Organised Crime and Police Act was
introduced with new powers to deal with protests outside homes, harassment and
economic damage. Moreover in July 2005 that Act was further amended to introduce
the new offense of "interference with business contracts so as to damage an
animal research organization", commonly referred to as the "economic terrorism
law". These new measures are designed to tackle secondary and tertiary targeting
by animal rights extremists, this is the intimidation of businesses doing
business with animal research facilities. Additionally, legislation has been
proposed by the Government to create an offense of "glorifying terrorism". There
have been public statements made by the UK Home Secretary indicating the
Government's intention to apply such legislation, if passed, to animal rights
extremists.

Running in parallel with the introduction of new legislation the Company has
used the civil route to protect itself and its staff. In April 2003 the Company
obtained a groundbreaking legal injunction from the London High Court of Justice
protecting its employees against harassment from SHAC and similar animal rights
activists. This order, obtained under the Protection from Harassment Act, bans
protesters from approaching within 50 yards of employees' homes and sets up
similar exclusion zones around the Company's two UK research centers. Several
months later, a group of five international Japanese pharmaceutical companies
followed a similar course, obtaining protective injunctions for their employees
who were being harassed. Since then approximately twenty other organizations
similarly targeted by animal rights extremists have obtained injunctions of this
type. Notably, during 2004, Oxford University became the target of animal rights
extremists attempting to halt the construction of an animal research facility.
The University also successfully obtained a broad-ranging injunction against
such protests.

Although the animal rights movement is less developed in the US and appears to
enjoy less public support than in the UK, the Company is addressing it
proactively with actions similar to those it has utilized in the UK. These steps
include a strategy of openness and media co-operation; legislative and
regulatory lobbying in association with industry trade bodies such as Americans
for Medical Progress, National Association for Biomedical Research and the
Foundation for Biomedical Research; and legal actions including close
co-operation with law enforcement authorities at all levels. For example,
following incidents of vandalism associated with home protests against the
Company's US employees, the Company obtained orders of the New Jersey Superior
Court, the New York Supreme Court and the California Supreme Court placing
restrictions on both home protests and protests at the Company's Princeton
Research Center by animal rights activists. During 2002 criminal indictments
were brought against SHAC extremists in New York City and Boston. In the New
York prosecution, felony convictions, including prison terms, have been handed
down. In Washington D.C., legislation was enacted in May 2002 which
significantly increased the penalties under the Animal Enterprise Terrorism Act
for acts of vandalism against medical research and animal based research
facilities. In October 2005, legislation was introduced to expand the Animal
Enterprise Terrorism Act to address secondary and tertiary targeting.

In May 2004, seven leading US animal rights extremists, including Kevin Kjonas,
the President of SHAC-USA, were arrested and criminally indicted by the New
Jersey US Attorney's Office on federal charges of animal enterprise terrorism,
interstate stalking and conspiracy to engage in interstate stalking. Each of the
charges carries a maximum penalty of three to five years in federal prison and a
$250,000 fine for each count. An additional criminal charge of conspiracy to
anonymously utilize a telecommunications device to abuse, threaten and harass
persons was added to the indictment in September 2004. On March 2, 2006,
SHAC-USA and the six individual defendants remaining in the case were convicted
on all counts. Sentencing is scheduled for June 7, 2006, and the Government has
indicated an intention to request prison sentences for the individual defendants
of up to seven years.

Management recognizes that there are, and expects that there will always be,
individuals with strong views on animal rights. Such people believe that animals
should not be used for the betterment of humanity, including biomedical
research. Regardless of whether this political issue directly impacts the
Company's business, the Company remains committed to its strategy of informing
the public of the value of biomedical research using animals, of advancing
animal welfare, and of supporting our clients' desire to maximize the safety of
vital new medicines and other products being developed for the benefit of
society.

Available Information

The Company's Internet website is located at http://www.lsrinc.net. The Company
posts on its website its filings with the Securities and Exchange Commission
(SEC) including those on Form 10-K, Form 10-Q and Form 8-K. The reference to the
Company's Internet website does not constitute incorporation by reference of the
information contained on or hyperlinked from the Internet website and should not
be considered part of this document.

The public may read and copy any materials the Company files with the SEC at the
SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Rooms by
calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. The SEC's Internet
website is located at http://www.sec.gov.
<PAGE>

ITEM 1A. RISK FACTORS

This section discusses various risk factors that are attendant to the Company's
business and the provision of its services. If the events outlined below were to
occur individually or in the aggregate, the Company's business, results of
operations, financial condition, and cash flows could be materially adversely
affected.

Changes in government regulation or in practices relating to the pharmaceutical
industry could decrease the need for the services the Company provides

Governmental agencies throughout the world, but particularly in the United
States, strictly regulate the drug development process. The Company's business
involves helping pharmaceutical and biotechnology companies navigate the
regulatory drug approval process. Changes in regulation, such as a relaxation in
regulatory requirements or the introduction of simplified drug approval
procedures, or an increase in regulatory requirements that the Company has
difficulty satisfying or that make its services less competitive, could
eliminate or substantially reduce the demand for the Company's services. Also,
if government were to introduce measures to contain drug costs or pharmaceutical
and biotechnology company profits from new drugs, the Company's customers may
spend less, or reduce their growth in spending on research and development.

Failure  to comply  with  applicable  governmental  regulations  could  harm the
Company's business

As a company in the contract research industry, the Company is subject to a
variety of governmental regulations, both in the US and the UK, relating to
animal welfare and the conduct of its business. Failure by it to comply with
such laws and regulations could result in material liabilities, the suspension
of licenses or a material adverse effect on its business or financial condition.
In addition, these laws and regulations could significantly restrict the
Company's ability to expand its facilities or require it to acquire costly
equipment or incur other material costs to comply with regulations.

The Company depends on the pharmaceutical and biotechnology industries

The Company's revenues depend greatly on the expenditures made by the
pharmaceutical and biotechnology industries in research and development.
Accordingly, economic factors and industry trends that affect the Company's
clients in these industries also affect its business. For example, if health
insurers were to change their practices with respect to reimbursements for
pharmaceutical products, the Company's customers may spend less, or reduce their
growth in spending on research and development.

Pharmaceutical industry consolidation may negatively impact revenues

The process of consolidation within the pharmaceutical industry should
accelerate the move towards outsourcing work to contract research organizations
such as the Company in the longer term as resources are increasingly invested in
in-house facilities for discovery and lead optimization, rather than development
and regulatory safety evaluation. However, in the short term, there is a
negative impact with development pipelines being rationalized and a focus on
integration rather than development. This can have a material adverse impact on
the Company's net revenues and net income.

The Company competes in a highly competitive market

Competition in both the pharmaceutical and non-pharmaceutical market segments
ranges from in-house research and development divisions of large pharmaceutical,
agrochemical and industrial chemical companies, who perform their own safety
assessments, to contract research organizations like the Company who provide a
full range of services to the industries and niche suppliers focusing on
specific services or industries.

Providers of outsourced drug development services compete on the basis of many
factors, including the following:

-    reputation for on-time quality performance;
-    expertise, experience and stability;
-    scope of service offerings;
-    how well services are integrated;
-    strength in various geographic markets;
-    technological expertise and efficient drug development processes; and
-    ability to acquire,  process,  analyze  and report  data in a  time-saving,
     accurate manner.

The Company has traditionally competed effectively in the above areas, but there
can be no assurance that it will be able to continue to do so. If the Company
fails to compete successfully, its business could be seriously harmed.

The  Company may not be able to  successfully  develop and market or acquire new
services

The Company may seek to develop and market new services that complement or
expand its existing business or expand its service offerings through
acquisition. If the Company is unable to develop new services and/or create
demand for those newly developed services, or expand its service offerings
through acquisition, its future business, results of operations, financial
condition, and cash flows could be adversely affected.

The Company may expand its business through acquisitions

The Company may expand its business through acquisitions. Factors which may
affect its ability to grow successfully through acquisitions include:

o    difficulties  and  expenses in  connection  with  integrating  the acquired
     companies and achieving the expected benefits;
o    diversion of management's attention from current operations;
o    the possibility that the Company may be adversely  affected by risk factors
     facing  the  acquired  companies;
o    acquisitions could be dilutive to earnings, or in the event of acquisitions
     made though the issuance of the Company's  common stock to the shareholders
     of the acquired  company,  dilutive to the  percentage  of ownership of the
     Company's existing stockholders;
o    potential  losses  resulting  from  undiscovered  liabilities  of  acquired
     companies  not covered by the  indemnification  the Company may obtain from
     the seller;
o    risks  of not  being  able to  overcome  differences  in  foreign  business
     practices,  language and other  cultural  barriers in  connection  with the
     acquisition of foreign companies; and
o    loss of key employees of the acquired companies.

The Company's non-US locations account for a majority of its revenues, making
the Company exposed to risks associated with operating internationally

Approximately 80% of the Company's revenues are generated by its facilities
outside the United States. As a result of these foreign sales and facilities,
the Company's operations are subject to a variety of risks unique to
international operations, including the following:

o    adverse  changes in value of foreign  currencies  against  the US dollar in
     which results are reported;
o    import and export duties and value-added taxes;
o    import and export  regulation  changes that could erode  profit  margins or
     restrict exports;
o    potential restrictions on the transfer of funds; and
o    the burden and cost of complying with foreign laws.

The Company is exposed to exchange rate fluctuations and exchange controls

The Company's Convertible Capital Bonds are denominated in US dollars whereas
the Company's functional currency is the UK pound sterling, which results in the
Company recording other income/loss associated with the debt as a function of
relative changes in foreign exchange rates.

The Company operates on a world-wide basis and generally invoices its clients in
the currency of the country in which it operates. Thus, for the most part,
exposure to exchange rate fluctuations is limited as sales are denominated in
the same currency as costs. Trading exposures to currency fluctuations do occur
as a result of certain sales contracts, performed in the UK for US clients,
which are denominated in US dollars and contribute approximately 6% of total
revenues. Management has decided not to hedge against this exposure.

As the Company operates on an international basis, movements in exchange rates,
particularly against sterling, can have a significant impact on its price
competitiveness vis a vis competitors who trade in currencies other than
sterling or dollars.

The Company's quarterly operating results may vary

The Company's operating results may vary significantly from quarter to quarter
and are influenced by factors over which it has little control such as:

o        exchange rate fluctuations;
o        the commencement, completion or cancellation of large contracts;
o        the progress of ongoing contracts;
o        changes in the mix of its services.

Management believes that operating results for any particular quarter are not
necessarily a meaningful indication of future results. While fluctuations in the
Company's quarterly operating results could negatively or positively affect the
market price of its common stock, these fluctuations may not be related to the
Company's future overall operating performance.

The Company's contracts are generally terminable on little or no notice.
Termination of a large contract for services or multiple contracts for services
could adversely affect the Company's revenue and profitability

In general, the Company's clients may terminate the agreements that they enter
into with the Company or reduce the scope of services under these contracts upon
little or no notice. Contracts may be terminated for various reasons, including:

-       unexpected or undesired study results;
-       production problems resulting in shortages of the drug being tested;
-       adverse reactions to the drug being tested;
-       regulatory restrictions placed on the drug or compound being tested; or
-       the client's decision to forego or terminate a particular study

Because most of the Company's pre-clinical revenues are from fixed price
contracts, these contracts may be subject to under-pricing and cost overruns

The majority of the Company's contracts with its clients are fixed price
contracts creating the risk of cost overruns under these contracts. The Company
typically has some flexibility under these contracts to adjust the price to be
charged under these contracts if it is asked to provide additional services. If
the Company did have to bear significant costs of under-pricing or cost-overruns
under these contracts, its business, financial condition and operating results
could be adversely affected.

The Company depends on its senior management team, and the loss of any member
may adversely affect its business

The Company believes its success will depend on the continued employment of its
senior management team, especially Andrew Baker (Chairman and CEO) and Brian
Cass (President and Managing Director). If one or more members of the senior
management team were unable or unwilling to continue in their present positions,
those persons could be difficult to replace and the Company's business could be
harmed. If any of the Company's key employees were to join a competitor or to
form a competing company, some of the Company's clients might choose to use the
services of that competitor or new company instead of the Company. Furthermore,
clients or other companies seeking to develop in-house capabilities may hire
away some of the Company's senior management or key employees. The loss of one
or more of these key employees could adversely affect the Company's business.

The Company must recruit and retain qualified personnel

Because of the specialized scientific nature of the Company's business, it is
highly dependent upon qualified scientific, technical and managerial personnel.
There is intense competition for qualified personnel in the pharmaceutical and
biotechnology fields. Therefore, although traditionally the Company has
experienced a relatively low turnover in its staff, in the future it may not be
able to attract and retain the qualified personnel necessary for the conduct and
further development of its business. The loss of the services of existing
personnel, as well as the failure to recruit additional key scientific,
technical and managerial personnel in a timely manner, could have a material
adverse effect on the Company's ability to expand its businesses and remain
competitive in the industries in which it participates.

Reliance on transportation

The Company's central laboratories operation, to a lesser extent, its other
businesses, are heavily reliant on transport for the movement of clinical trial
kits and other material and a significant disruption to the transport systems
could have a material adverse effect on the Company's business.

The Company relies on third parties for important services

The Company depends on third parties to provide it with services critical to its
business. The failure of any of these third parties to adequately provide the
needed services could have a material adverse effect on the Company's business.

Actions of animal rights extremists may affect the Company's business

The Company's development services utilize animals (predominantly rodents) to
test the safety and efficacy of drugs. Such activities are required for the
development of new medicines and medical devices under regulatory regimes in the
United States, Europe, Japan and other countries. The Company is targeted by
extreme animal rights activists who oppose all testing on animals, for whatever
purpose, including the Company's animal testing activities in support of its
safety and efficacy testing for clients. These groups, which include Stop
Huntingdon Animal Cruelty (SHAC) and the Animal Liberation Front (ALF), among
others, have publicly stated that the goal of their campaign is to "shut
Huntingdon". Acts of vandalism and other acts by these animal rights extremists
who object to the use of animals in drug development could have a material
adverse effect on the Company's business.

Animal rights extremists have targeted, and may continue to target, the US
financial community that trades LSR Voting Common Stock, which has caused and
may continue to cause illiquidity and a lower market price of the Voting Common
Stock.

The animal rights extremists have in the past harassed the financial community
that trades in LSR shares, including market makers and stockbrokers. As a
result, LSR has had difficulty identifying market makers to make a market in the
Voting Common Stock, which has greatly reduced liquidity in those shares. The
liquidity and market price of the shares of LSR Voting Common Stock could be
adversely affected in the future by such actions.

ITEM 1B. UNRESOLVED STAFF COMMENTS

N/A

<PAGE>


ITEM 2.  PROPERTIES

The Company's head office is situated within the Princeton Research Center in
New Jersey.

The Company believes that its facilities, described below, are adequate for its
operations and that suitable additional space will be available if and when
needed.

The following table shows the location of the facilities of the Company,
approximate size, based on occupancy, and the principal activities conducted at
such facilities.
<TABLE>
<CAPTION>

                                    Laboratories
Location                            and Offices       Size         Principal Activities
--------                            -----------       ----         --------------------
<S>                                <C>               <C>          <C>
Princeton Research Center, East     150,000 sq.ft.    53.5 acres   Laboratories, animal accommodation and
Millstone, NJ, US                                                  offices
Huntingdon Research Center,         559,000 sq.ft.    80 acres     Laboratories, animal accommodation and
Huntingdon, England                                                offices
Eye Research Center, Eye, England   257,000 sq.ft.    28 acres     Laboratories, animal accommodation and
                                                                   offices
</TABLE>
On June 14, 2005 the Company entered into and consummated the Sale/Leaseback
Transaction with Alconbury, a newly formed company wholly owned by LSR's
Chairman and CEO, Andrew Baker.

As part of the Sale/Leaseback Transaction, the Company (through subsidiaries)
entered into thirty-year leases with Alconbury for each facility , with two
five-year renewal options. Base aggregate annual rent for the facilities is $4.9
million (approximately $1.8 million in the US and approximately $3.1 million in
the UK) which amount will increase by 3% each year for the UK facilities and by
an amount equal to the annual US consumer price index for the US facility. Under
the terms of the leases, no security deposit was initially required, but a
three-month security deposit will be required at such time that Alconbury
refinances its current financing arrangements. Additionally, because the leases
are "triple net" leases, LSR will also pay for all of the costs associated with
the operation of the facilities, including costs such as insurance, taxes and
maintenance.

The proceeds from the Sale/Leaseback Transaction (plus additional cash in hand)
were used by the Company to pay in full its (pound)22.6 million non-bank debt
(approximately $41.4 million).

ITEM 3.  LEGAL PROCEEDINGS

The Company is party to certain legal actions arising out of the normal course
of its business. In management's opinion, none of these actions will have a
material effect on the Company's operations, financial condition or liquidity.
No form of proceedings has been brought, instigated or is known to be
contemplated against the Company by any governmental agency.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

  No matter was submitted during the fourth quarter of the fiscal year ended
  December 31, 2005, to a vote of the stock holders.

<PAGE>


              PART II

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
     ISSUER PURCHASES OF EQUITY SECURITIES

  LSR's Voting Common Stock trades on the Other OTC Market (Pink Sheets) under
  the symbol "LSRI". The closing market price of the Voting Common Stock on
  March 10, 2006 was $10.00 per share.

  Until January 24, 2002 Huntingdon's Ordinary Shares were listed on the London
  Stock Exchange Ltd., under the Stock Exchange Automated Quotation symbol
  "HTD". The company completed its re-domiciling from the UK to the US on March
  26, 2002 with a conversion ratio of 50:1 for the HTD common shares to LSR
  common shares (or a ratio of 2 HTD ADRs per 1 LSR common share). LSR common
  stock commenced trading on the Over the Counter Bulletin Board (OTCBB) Market
  on April 8, 2002.

  The Company's common stock traded on the OTCBB up until February 6, 2006.
  Since that time it has traded on the Other OTC Market (Pink Sheets). The high
  and low quarterly sales price of LSR's common stock on the OTCBB for the two
  years to December 31, 2005 were as follows:

                                        HIGH SALES              LOW SALES
QUARTER ENDED                             PRICE                   PRICE
-------------                      ------------------       -----------------
                                            $                       $
March 31, 2004                            2.80                     1.75
June 30, 2004                             5.00                     1.60
September 30, 2004                        7.15                     4.00
December 31, 2004                           12.50                  6.95
March 31, 2005                           13.25                    10.50
June 30, 2005                            13.25                    11.00
September 30, 2005                       18.30                    11.75
December 31, 2005                        15.60                     8.00

In August 2005, the New York Stock Exchange (the "NYSE") approved the Company's
Voting Common Stock for listing on the NYSE and agreed to commence trading in
that stock on September 7, 2005 under the ticker symbol "LSR". However on
September 7, 2005, the NYSE postponed that commencement of trading without
official explanation. Since that date the Company has received no specific
information from the NYSE about the status of that postponement. A NYSE
representative publicly stated at a US Senate Committee hearing in October 2005,
that "we continue to consider the application". The Company does not know when,
or whether, the postponement will be lifted and the Voting Common Stock will
commence trading on the NYSE.

The Company has not paid any cash dividends in the two most recent fiscal years
and does not expect to declare or pay cash dividends on the Company's Voting
Common Stock in the near future. The Board of Directors will determine the
extent to which legally available funds will be used to pay dividends. In making
decisions regarding dividends, the Board will exercise its business judgment and
will take into account such matters as results of operations and financial
condition and any then-existing or proposed commitments for the use of available
funds.

Life Sciences Research Limited, the UK holding company for the two main
operating companies Huntingdon Life Sciences Limited and Huntingdon Life
Sciences Inc. has a deficit on shareholders equity of (pound)34.6 million. Until
this deficit is cleared, under UK company law it is not permitted to pay
dividends to its parent company, LSR. This may effect the payment of dividends
by LSR.

As of March 13, 2006 LSR had 2,123 holders of record of Voting Common Stock

On March 28, 2002, LSR closed the sale in a private placement of an aggregate of
5,085,334 shares of voting Common Stock at a price of $1.50 per share. Of the
aggregate proceeds of approximately $7.6 million, $4.4 million was in cash, $2.4
million represented conversion into equity of debt owed to Mr. Baker ($2.1
million) and Focused Healthcare Partners ("FHP") ($0.3 million) and $825,000 was
paid with promissory notes. $128,000 of such promissory notes have been repaid
to the end of 2005.

Equity Incentive Plans

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR Board has adopted the LSR 2001 Equity Incentive Plan. Adoption of the
LSR 2001 Equity Incentive Plan enables LSR to use stock options (and other
stock-based awards) as a means to attract, retain and motivate key personnel.
This stock option plan was approved by the shareholders of LSR, prior to the
acquisition of Huntingdon.

Awards under the LSR 2001 Equity Incentive Plan (which has designated the
Compensation Committee for such purpose) may be granted by a committee
designated by the LSR Board pursuant to the terms of the LSR 2001 Equity
Incentive Plan and may include: (i) options to purchase shares of LSR Voting
Common Stock, including incentive stock options ("ISOs"), non-qualified stock
options or both; (ii) stock appreciation rights ("SARs"), whether in conjunction
with the grant of stock options or independent of such grant, or stock
appreciation rights that are only exercisable in the event of a change in
control or upon other events; (iii) restricted stock consisting of shares that
are subject to forfeiture based on the failure to satisfy employment-related
restrictions; (iv) deferred stock, representing the right to receive shares of
stock in the future; (v) bonus stock and awards in lieu of cash compensation;
(vi) dividend equivalents, consisting of a right to receive cash, other awards,
or other property equal in value to dividends paid with respect to a specified
number of shares of LSR Voting Common Stock or other periodic payments; or (vii)
other awards not otherwise provided for, the value of which are based in whole
or in part upon the value of the LSR Voting Common Stock. Awards granted under
the LSR 2001 Equity Incentive Plan are generally not assignable or transferable
except pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award, thereby requiring forfeiture of all or part of any
award if performance objectives are not met or linking the time of
exercisability or settlement of an award to the attainment of performance
conditions. For awards intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the United States Internal Revenue Code
such performance objectives shall be based solely on (i) annual return on
capital; (ii) annual earnings or earnings per share; (iii) annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's Compensation Committee, which administers the 2001 LSR Equity Incentive
Plan, has the authority, among other things, to: (i) select the directors,
officers and other employees and independent contractors entitled to receive
awards under the 2001 LSR Equity Incentive Plan; (ii) determine the form of
awards, or combinations of awards, and whether such awards are to operate on a
tandem basis or in conjunction with other awards; (iii) determine the number of
shares of LSR Voting Common Stock or units or rights covered by an award; and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity Incentive Plan, including any restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting schedules, any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for participating personnel and
the Company including by way of example to ensure that there is no tax on the
grant of the rights and that such tax only arises on the exercise of rights or
otherwise when the LSR Voting Common Stock unconditionally vests and is at the
disposal of such participating personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased pursuant to the grant of stock options
under the 2001 LSR Equity Incentive Plan is to be determined by the option
committee at the time of grant in its discretion, which discretion includes the
ability to set an exercise price that is below the fair market value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The number of shares of LSR Voting Common Stock that may be subject to
outstanding awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately after the grant of any award) may not exceed 20 percent of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The 2001 LSR Equity Incentive Plan may be amended, altered, suspended,
discontinued, or terminated by the LSR Board without LSR Voting Common
Stockholder approval unless such approval is required by law or regulation or
under the rules of any stock exchange or automated quotation system on which LSR
Voting Common Stock is then listed or quoted. Thus, LSR Voting Common
Stockholder approval will not necessarily be required for amendments, which
might increase the cost of the plan or broaden eligibility. LSR Voting Common
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable tax treatment on such approval, although the LSR Board
may, in its discretion, seek LSR Voting Common Stockholder approval in any
circumstances in which it deems such approval advisable.

The LSR Board has designated the Compensation Committee of the Board to serve as
the stock option committee. LSR made grants under the LSR 2001 Equity Incentive
Plan on March 1, 2002 to certain directors and key employees at the time.

Grants to Directors
=======================================================
Name                          Number Granted
----                          --------------
Gabor Balthazar                   20,000
John Caldwell                     20,000
Kirby Cramer                      40,000

Grants to Named Executive Officers
----------------------------------
Name                          Number Granted
----                          --------------
Andrew Baker                      200,000
Mark Bibi                          50,000
Brian Cass                        200,000
Julian Griffiths                   60,000
Richard Michaelson                 90,000

All such options have ten-year terms; 50% of the shares subject to grant are
immediately exercisable with the remaining 50% exercisable one year after the
grant date (meaning all such options fully vested as of March 1, 2003); and all
have an exercise price of $1.50 per share, the price at which the Company sold
shares of Common Stock in the Private Placement. Options to purchase an
aggregate of 1,188,000 shares of LSR Common Stock (including those specified
above) were granted during the two years 2002 and 2003 to employees and
directors, on the terms set forth above, are listed below.

Date of Grant               Numbers Granted            Exercise Price
-------------               ---------------            --------------
March 1, 2002                 1,142,000                $1.50
September 3, 2002                20,000                $2.40
October 21, 2002                 15,000                $2.03
February 14, 2003                11,000                $1.80

In 2004, in addition to the options granted under the 2004 LTIP referred to
below, options to purchase an aggregate of 67,100 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant                Numbers Granted         Exercise Price
-------------                ---------------         --------------
April 12, 2004                  37,100                  $1.85
October 28, 2004                17,400                  $7.70
December 15, 2004               12,600                  $9.52

In 2005, options to purchase an aggregate of 23,600 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, or the terms set forth above, are listed below:

Date of Grant               Numbers Granted           Exercise Price
-------------               ---------------           --------------
May 23, 2005                      3,600                  $12.00
June 27, 2005                    20,000                  $11.00

2004 Long Term Incentive Plan

Effective June 1, 2004 the Company adopted the 2004 Long Term Incentive Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components: a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663 shares of common stock were granted
to 32 key employees of the Company as of June 1, 2004 under the 2004 LTIP;
55,500 of such options were granted to Andrew Baker, the Company's Chairman and
CEO, 55,500 of such options were granted to Brian Cass, the Company's Managing
Director and President, 30,303 of such options were granted to Richard
Michaelson, the Company's CFO, 27,750 of such options were granted to Julian
Griffiths, the Company's Vice President of Operations and 20,545 were granted to
Mark Bibi, the Company's General Counsel and Secretary. The exercise price of
all such options is $3.30, the market price of LSR common stock on June 1, 2004.
All such options have ten-year terms and are exercisable in full on March 31,
2007. At December 31, 2005, 356,419 shares under the 2004 LTIP option plan were
outstanding and none were exercisable.

The following table summarizes stock option activity under the Company's option
plans.
<TABLE>
<CAPTION>

                                                   Shares       Wtd Avg. Ex        Number of securities remaining
                                                   (000)            Price          available for future issuance
<S>                                               <C>            <C>                    <C>
Outstanding - December 31, 2004                    1,386           $2.13
Granted                                              24           $11.15
Lapsed                                              (14)           $1.64
Exercised                                          (112)           $1.61
                                                 -----------    -------------     ------------------------------
Outstanding - December 31, 2005                    1,284            2.35                     1,791,000
                                                 -----------    -------------     ------------------------------
Exercisable at end of year                          916
Weighted average fair value per
option granted in 2005 was                          $7.74

</TABLE>
Huntingdon Life Sciences Group plc Stock Option Plans

Huntingdon Life Sciences Group plc issued options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such Huntingdon plans lapsed on March 26, 2002 in connection with
LSR's acquisition of Huntingdon, except for those granted under the Unapproved
Stock Option Plan (the "Unapproved Plan"). Under the Unapproved Plan, some
options technically remain outstanding. However, such options are exercisable
only for shares of Huntingdon, a 100% wholly owned subsidiary of LSR, and as
such are considered to have no value.

Warrants

On October 9, 2001, on behalf of Huntingdon, LSR issued to Stephens Group Inc.
warrants to purchase up to 704,425 shares of LSR Voting Common Stock at a
purchase price of $1.50 per share. Stephens Group Inc. subsequently sold the
warrants to independent third parties. The LSR warrants are exercisable at any
time and will expire on October 9, 2011. These warrants arose out of
negotiations regarding the refinancing of the bank loan by the Stephens Group
Inc., (Stephens' Loan) in January 2001. In accordance with APB Opinion No. 14,
Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants
("APB 14") the warrants were recorded at their pro rata fair values in relation
to the proceeds received on the date of issuance. As a result the value of the
warrants was $430,000. 154,425 of such warrants were exercised in 2004. No
additional warrants were exercised in 2005.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914 shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are exercisable at any time and will expire on June 11, 2012. These warrants
arose out of negotiations regarding the provision of the $2.9 million loan
facility made available to the Company on September 25, 2000 by Mr. Baker, who
controls FHP. In accordance with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the proceeds received. As a result,
the value of the warrants was $250,000. None of these warrants have been
exercised as of December 31, 2005.

On October 24, 2003, 100,000 warrants were issued at the market price on the day
of $2.05. On January 4, 2005 100,000 warrants were issued at the market price on
the day of $10.70. 50,000 are exercisable from January 4, 2007 and 50,000 from
January 4, 2008. In all cases, these warrants were issued to independent
consultants in connection with financial and strategic advice.

On November 9, 2005 625,000 warrants were issued to a third party
advisory/lobbying firm at the closing market price on the day of $10.46. These
warrants will vest upon the successful completion of specific goals outlined in
the engagement letter with such firm, and will expire on November 9, 2010.

On November 9, 2005 300,000 warrants were issued to an independent third party
financial advisor as partial consideration for providing financial advisory
services to the Company in obtaining financing. These were issued at an exercise
price of $10.46 per share, the closing market price on the date the Company
engaged the financial advisor. Such warrants will vest upon closing of said
financing, and will expire on November 9, 2005.

See Note 16 - Subsequent Events

In accordance with Emerging Issues Task Force No. 96-18, the Company has
recorded the value of the November 2005, performance-based warrant issuances, at
their lowest aggregate market value, which is zero. When the performance
conditions have been met, the Company will record these issuances based upon the
fair value of the warrants on the date of performance completion.

A summary of warrants outstanding at December 31, 2005 is as follows:

Date of Issue          Warrants        Exercise Price       Expiration Date
--------------         --------        --------------       ---------------
October 9, 2001         550,000             $1.50            October 9, 2011
June 11, 2002           410,914             $1.50            June 11, 2012
October 24, 2003        100,000             $2.05            October 24, 2013
January 4, 2005         100,000            $10.70            January 4, 2015
November 9, 2005        625,000            $10.46            November 9, 2010
November 9, 2005        300,000            $10.46            November 9, 2015

Share purchase loan

Brian Cass, President and Managing Director of LSR, acquired 400,000 shares of
LSR Common Stock in the Private Placement. Mr. Cass acquired such shares through
the delivery of two promissory notes. Both such promissory notes, each in the
amount of (pound)211,679 ($363,411), are due on March 28, 2007; bear interest at
the rate of 5% per annum; and are secured by the 200,000 shares of LSR Common
Stock purchased with the proceeds of each such loan. The due date of each
promissory note would be accelerated if Mr. Cass voluntarily resigned from his
employment with LSR or had his employment terminated. Repayment of one of the
promissory notes will be made by automatic deduction of (pound)44,000 ($75,539)
per year from the (pound)66,000 ($113,309) per year pension contribution made by
the Company to a pension plan established by Mr. Cass. The other note is further
collateralized by the (pound)214,500 ($368,254) accrued in such pension account.
In addition, one-third of any yearly bonus received by Mr. Cass will be used to
reduce the principal of the promissory notes. Total amount of this loan as of
December 31, 2005 is (pound)120,000 ($205,000 at year-end foreign exchange
rates).

Julian Griffiths, a former director of LSR and current Vice President of
Operations, acquired 50,000 shares of LSR Common Stock in the Private Placement.
Mr. Griffiths acquired such shares through the delivery of a promissory note in
the principal amount of (pound)52,817 ($90,676), which was due on March 28,
2007; bore interest at the rate of 5% per annum; and was secured by the 50,000
shares of LSR Common Stock purchased with the proceeds of the loan. This loan
was paid in full in 2003.

Repurchase of equity securities

The Company did not repurchase any equity securities during 2005.

<PAGE>

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data presented below as of and for each of
the years ended December 31, 2005, 2004, 2003, 2002 and 2001 has been derived
from LSR's audited consolidated financial statements on Form 10-K.

The selected consolidated financial data should be read in conjunction with
LSR's audited consolidated statements and accompanying notes included elsewhere
in this Annual Report. See also "Management's Discussion and Analysis of
Financial Conditions and Results of Operations". Historical consolidated
financial data may not be indicative of the Company's future performance.
<TABLE>
<CAPTION>

                                                               As of and for the year ended December 31
                                            ------------- --------------- -------------- ------------- --------------
                                                    2005            2004           2003          2002           2001
                                            -------------------------------------------------------------------------
                                                                 ($000, except per share data)
<S>                                            <C>            <C>             <C>           <C>             <C>
Statement of Operations Data
Revenues                                        $172,013        $157,551       $132,434      $115,742        $99,206
Cost of revenues                               (124,820)       (117,061)      (104,798)      (93,403)       (84,133)
                                            ------------- --------------- -------------- ------------- --------------
Gross profit                                      47,193          40,490         27,636        22,339         15,073
Selling, general and administrative             (26,174)        (24,666)       (20,867)      (18,075)       (15,966)
                                            ------------- --------------- -------------- ------------- --------------
Operating income/(loss) before
   other operating income/(expense)               21,019          15,824          6,769         4,264          (893)
Other operating income/(expense)                       -               -        (3,522)             -          (750)
                                            ------------- --------------- -------------- ------------- --------------
Operating income/(loss)                           21,019          15,824          3,247         4,264        (1,643)
Interest expense (net)                           (7,993)         (6,521)        (5,990)       (6,238)        (6,510)
Other income/(expense)
  Foreign exchange gain/(loss) on
      Convertible Capital Bonds                  (5,144)           3,345          4,760         4,977        (1,386)
  Foreign exchange gain/(loss) on
      Intercompany balances                          518               -              -             -              -
  Gain on repurchase of
      Convertible Capital Bonds
  Capital Bonds                                        -               -            602         1,191              -
  Cost of currency hedge contract                      -           (455)              -             -              -
  Merger/Offer costs                                   -               -              -       (1,246)        (2,868)
  Refinancing costs                              (2,780)               -              -             -          (217)
                                            ------------- --------------- -------------- ------------- --------------
Income/(loss) before income taxes                  5,620          12,193          2,619         2,948       (12,624)
Income tax benefit/(expense)                     (4,129)           5,401          1,109         (251)          2,996
                                            ------------- --------------- -------------- ------------- --------------
Net income/(loss)                                  1,491          17,594         $3,728        $2,697       ($9,628)
                                            ------------- --------------- -------------- ------------- --------------
Income/(loss) per share
     -  basic                                      $0.12           $1.45          $0.31         $0.25        ($1.64)
     -  diluted                                    $0.10           $1.29          $0.29         $0.24        ($1.64)
Weighted average number of
Common stock (000)
     -  basic                                     12,518          12,153         11,958        10,679          5,868
     -  diluted                                   14,533          13,607         12,700        11,083          5,868

Balance Sheet Data
Working capital*                               $(54,495)          $1,800       $(3,911)        $(844)       $(1,896)
Total assets                                     184,369         200,075        156,273       148,410        133,964
Long term debt and related party loans            30,430          89,685         87,560        84,075         88,123
Total shareholders deficit                      (14,568)         (2,064)        (8,446)       (7,804)        (4,724)
Common stock and paid in capital                  75,974          75,796         75,221        75,217         66,094
Book value per share                             ($1.16)         ($0.17)        ($0.71)       ($0.73)        ($0.81)

Other Financial Data

Depreciation and amortization                     $9,581          $9,530         $9,049        $8,108         $8,307
Capital expenditure                               15,973          11,096          8,716         4,177          3,295
Cash generated/(used) in the year               (17,921)          16,070          2,627        12,404        (1,046)
Net days sales outstanding (DSO)                      16               4              8             9             47
Gross profit %                                     27.4%           25.7%          20.9%         19.3%          15.2%
Operating income/(expense) before
  other operating income/(expense)%                12.2%           10.0%           5.1%          3.7%         (0.9)%
Operating income/(expense) %                       12.2%           10.0%           2.5%          3.7%         (1.7)%
Net income/(loss) %                                 9.0%           11.2%           2.8%          2.3%         (9.7)%
Other operating income/(expense) is comprised of:
Restructuring costs                                    -               -        (3,551)             -              -
Animal rights costs                                    -               -          (575)             -          (400)
Recovery/bad debt relating to
  bankruptcy of an exchange broker                     -               -            396             -          (350)
Share of associate company income                      -               -            208             -              -

                                            ------------- --------------- -------------- ------------- --------------
                                                       -               -        (3,522)             -          (750)
                                            ------------- --------------- -------------- ------------- --------------
<FN>

*Working capital is defined as current assets less current liabilities.
</FN>
</TABLE>

<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

The following should be read in conjunction with the consolidated financial
statements of LSR as presented in "Item 8, Financial Statements and
Supplementary Data".

The Company is a global provider of pre-clinical and non-clinical safety testing
services to the pharmaceutical, agrochemical and industrial chemical industries.
The Company provides those services under contracts, which may range from one
day to three years. Income from these contracts is recognized as services are
rendered towards the preparation of the final report. Contracts are generally
terminable upon notice by the client with the client being responsible for
reimbursing the Company for the value of work performed through the date of
cancellation plus the value of work required to wind down a study on an orderly
basis.

The Company's business is characterized by high fixed costs, in particular staff
and facility related costs. Such a high proportion creates favorable conditions
for the Company as excess capacity is utilized, such as has been the case during
the last three years. However, during periods of declining revenue, careful
planning is required to reduce costs without impairing revenue-generating
activities.

CRITICAL ACCOUNTING POLICIES

Management's Discussion and Analysis of Financial Condition and Results of
Operations discusses the Company's consolidated financial statements, which have
been prepared in accordance with US GAAP. The Company considers the following
accounting policies to be critical accounting policies.

Revenue recognition

The majority of the Company's net revenues have been earned under contracts,
which generally range in duration from a few months to three years. Revenue from
these contracts is generally recognized over the term of the contracts as
services are rendered. Contracts may contain provisions for re-negotiation in
the event of cost overruns due to changes in the level of work scope.
Renegotiated amounts are included in net revenue when earned and realization is
assured. Provisions for losses to be incurred on contracts are recognized in
full in the period in which it is determined that a loss will result from
performance of the contractual arrangement. Most service contracts may be
terminated for a variety of reasons by the Company's customers, either
immediately or upon notice of a future date. The contracts generally require
payments to the Company to recover costs incurred, including costs to wind down
the study, and payment of fees earned to date, and in some cases to provide the
Company with a portion of the fees or income that would have been earned under
the contract had the contract not been terminated early.

Unbilled receivables are recorded for revenue recognized to date that is
currently not billable to the customer pursuant to contractual terms. In
general, amounts become billable upon the achievement of certain aspects of the
contract or in accordance with predetermined payment schedules. Unbilled
receivables are billable to customers within one year from the respective
balance sheet date. Fees in advance are recorded for amounts billed to customers
for which, revenue has not been recognized at the balance sheet date (such as
upfront payments upon contract authorization, but prior to the actual
commencement of the study).

If the Company does not accurately estimate the resources required or the scope
of work to be performed, or does not manage its projects properly within the
planned periods of time or satisfy its obligations under the contracts, then
future margins may be significantly and negatively affected or losses on
existing contracts may need to be recognized. While such errors have not
historically been significant, any such resulting reductions in margins or
contract losses could be material to the Company's results of operations.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of
the dates of the financial statements and the results of operations during the
reporting periods. These also include management estimates in the calculation of
pension liabilities covering discount rates, return on plan assets and other
actuarial assumptions. Although these estimates are based upon management's best
knowledge of current events and actions, actual results could differ from those
estimates.

Taxation

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting For Income Taxes"
("SFAS 109"). SFAS 109 requires recognition of deferred tax assets and
liabilities for the estimated future tax consequences of events attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets and liabilities are measured using enacted
rates in effect for the year in which the differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of
changes in tax rates is recognized in the statement of operations in the period
in which the enactment rate changes. Deferred tax assets and liabilities are
reduced through the establishment of a valuation allowance at such time as,
based on available evidence, it is more likely than not that the deferred tax
assets will not be realized. While the Company has considered future taxable
income and ongoing prudent and feasible tax planning strategies in assessing the
need for the valuation allowance, in the event that the Company were to
determine that it would not be able to realize all or part of its net deferred
tax assets in the future, an adjustment to the deferred tax assets would be
charged to income in the period such determination was made. Likewise, should
the Company determine that it would be able to realize its deferred tax assets
in the future in excess of its net recorded amount, an adjustment to the
deferred tax assets would increase income in the period such determination was
made.

Consolidation of Alconbury

On June 14, 2005, the Company entered into and consummated purchase and sale
agreements with Alconbury Estates Inc. and subsidiaries (collectively
"Alconbury") for the sale and leaseback of the Company's three operating
facilities in Huntingdon and Eye, England and East Millstone, New Jersey (the
"Sale/Leaseback Transaction"). Alconbury is a newly formed company controlled by
LSR's Chairman and CEO, Andrew Baker. The total consideration paid by Alconbury
for the three properties was $40 million, consisting of $30 million in cash and
a five year, $10 million variable rate subordinated promissory note, which
Alconbury agreed to make a best effort to repay within twelve months.

In accordance with the provisions of FASB Interpretation No. 46R (FIN 46R), the
Company will reflect the consolidation of Alconbury as long as it is considered
the "primary beneficiary" of Alconbury's variable interests. The Company will
not record the gain and loss associated with the sale of the properties, nor
recognize the associated changes in depreciation, interest, and rent expenses,
until FIN 46R consolidation accounting no longer applies. At that time, the
Company will record a non-cash loss of approximately $44 million for the sale of
the UK properties, and a gain of approximately $10 million, amortized over the
term of the lease, for the US property. In addition, the Company anticipates a
net reduction in its annual depreciation charge of approximately $2.7million,
offset by a net increase of $0.5 million in interest and rent expenses. The
Company anticipates that it will no longer be the primary beneficiary of
Alconbury when the $10 million subordinated promissory note has been repaid.

RESULTS OF OPERATIONS

Year ended December 31, 2005 compared with year ended December 31, 2004

Revenues in the year ended December 31, 2005 were $172.0 million, an increase of
9.2% on revenues of $157.6 million for the year ended December 31, 2004. The
underlying increase, after adjusting for the impact of the movement in exchange
rates was 9.7%; with the UK showing a 6.9% increase and the US a 21.6% increase.
The growth in revenues reflects the increase in orders and, consequently,
backlog over the last 18 months, principally from the pharmaceutical industry.
Orders for the year ended December 31, 2005, of $182.7 million at constant
exchange rates were 3% above the previous year. At December 31, 2005 backlog
(booked-on work) amounted to approximately $122 million, an increase of 3% above
the level at December 31, 2004 (7% net of foreign currency effect). The growth
in revenues in the UK was lower than that in the US, in part because the UK
includes a higher proportion of non-pharmaceutical business, a market that is
not growing.

Cost of sales in the year ended December 31, 2005 were $124.8 million (72.6% of
revenue), an increase of 6.6% on cost of sales of $117.1 million (74.3% of
revenue) for the year ended December 31, 2004. The underlying increase after
adjusting for the impact of the movement in exchange rates was 7.3%. In the UK
cost increases in sterling were only 4.7%, which is lower than the revenue
growth as capacity is filled without the corresponding increase in fixed costs,
the main increase being in labour and direct study costs. Increases in costs in
the US were 18.6%, mainly due to increases in labor costs and direct study costs
reflecting the growth in revenues.

Selling, general and administrative expenses rose by 6.1% to $26.2 million for
the year ended December 31, 2005 (15.2% of revenue) from $24.7 million (15.7% of
revenue) in the year ended December 31, 2004. The underlying increase after
adjusting for the impact of the movement in exchange rates was 2.9%.

Net interest expense increased by 22.6% to $8.0 million for the year ended
December 31, 2005 from $6.5 million in the year ended December 31, 2004.
Approximately $1.1 million of this increase was due to higher rates of interest
as a result of the Sale/Leaseback transaction and a further $0.2 million
represented additional expense associated with the warrants.

Other expense of $7.4 million for the year ended December 31, 2005 comprised
$5.1 million from the non-cash foreign exchange remeasurement loss on the
Convertible Capital Bonds denominated in US dollars (the functional currency of
the financing subsidiary that holds the bonds is UK sterling), finance
arrangement fees of $2.8 million, offset by other exchange gains $0.5 million.
In the year ended December 31, 2004 there was other income of $2.9 million which
was comprised of a non-cash foreign exchange remeasurement gain on the Capital
Bonds of $3.3 million offset by $0.4 million relating to the cost of a currency
hedge contract.

Taxation expense on income for the year ended December 31, 2005 was $4.1 million
representing an expense at 73% compared to a taxation benefit of $5.4 million
representing a benefit at 44% for the year ended December 31, 2004. A
reconciliation between the US statutory tax rate and the effective rate of
income tax benefit on losses before income taxes for the year ended December 31,
2005 and December 31, 2004 is shown below:

                                                      % of income before
                                                         income taxes
                                                  2005               2004
                                                    %                  %

US statutory rate                                  35                 35
Foreign rate differential                          24                 (6)
US property sale gain                              59                  -
UK R & D credit and non-deductible items          (45)               (36)
State taxes                                         8                  1
Change in estimate                                 (8)               (38)
                                              ---------------    --------------
Effective tax rate                                 73                (44)
                                              ---------------    --------------

The US leaseback gain has arisen from the sale of the US property as part of the
sale and leaseback deal. The gain on the sale of the UK assets has been offset
against brought forward capital losses resulting in a deferred tax movement.

The losses before tax of the British Virgin Islands represents the Alconbury
balances which have been consolidated in accordance with the provisions of FASB
Interpretation No. 46R.

The main reason for the change in estimate in 2004 relates to the Huntingdon
2003 tax provisions. The UK government from April 1, 2002 introduced a new tax
allowance, `Research and Development (R & D) Tax Credit', for large companies.
At the end of 2002, it was not certain how this would apply to Huntingdon. When
submitting Huntingdon's 2002 corporation tax computation, and following
discussions with the UK Inland Revenue, Huntingdon made a claim for the R & D
Tax Credit, which has now been accepted. The 2003 provision has been included in
the 2004 change in estimate. The 2004 and 2005 claims are part of the
non-deductible items above.

The overall net income for the year ended December 31, 2005 was $1.5 million
compared to $17.6 million in the year ended December 31, 2004. The diluted
income per share for the year ended December 31, 2005 was $0.10 compared to
$1.29 for the year ended December 31, 2004.

Earnings before interest, taxes, depreciation and amortization, other
income/(expense) and other operating expenses in 2005 ("EBITDA") was $30.6
million, or 17.8% of revenues, compared with $25.4 million, or 16.1% of revenues
for 2004.

The Company believes that EBITDA information, which for this Company excludes
other income/(expense) and other operating expenses, enhances an investor's
understanding of our financial performance and our ability to satisfy principal
and interest obligations with respect to our indebtedness. However, EBITDA
should not be considered in isolation or viewed as a substitute for net income,
cash flow from operations or other measures of performance as defined by
generally accepted accounting principles in the United States. We understand
that while securities analysts, lenders and others in their evaluation of
companies frequently use EBITDA, EBITDA as used herein is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies in the method of calculation. Our management uses
EBITDA to assess financial performance and debt service capabilities. In
assessing financial performance, our management reviews EBITDA as a general
indicator of economic performance compared to prior periods. Because EBITDA
excludes interest, income tax, depreciation and amortization, other
income/(expense) and other operating expenses, EBITDA provides an indicator of
general economic performance that is not affected by changes in debt levels,
fluctuations in interest rates or effective tax rates, levels of depreciation
and amortization, exchange rate movements on the Convertible Capital Bonds or
one off operating expenses. Our management believes this type of measurement is
useful for comparing general operating performance from period to period and
making certain management decisions. Nevertheless, our management recognizes
that there are material limitations associated with the use of EBITDA as
compared to n et income, which reflects overall financial performance, including
the effects of interest, taxes, depreciation, amortization, other
income/(expense) and other operating expenses.

Year ended December 31, 2004 compared with the year ended December 31, 2003

Revenues in the year ended December 31, 2004 were $157.6 million, an increase of
19% on revenues of $132.4 million for the year ended December 31, 2003. The
underlying increase, after adjusting for the impact of the movement in exchange
rates was 8.5%; with the UK showing a 8.6% increase and the US an 8.4% increase.
Orders for the year ended December 31, 2004, at constant exchange rates of
$179.4 million were 24% above the previous year. At December 31, 2004 backlog
(booked-on work) amounted to approximately $119 million, an increase of 27%
above the level at December 31, 2003 (14% net of foreign currency effect). This
reflected strong demand in the industry as companies invested in their early
stage pipelines together with LSR's success in winning new studies due to its
scientific expertise and focus on customer service.

Cost of sales in the year ended December 31, 2004 were $117.1 million (74.3% of
revenue), an increase of 11.7% on cost of sales of $104.8 million (79.1% of
revenue) for the year ended December 31, 2003. This increase was partly due to
exchange rate movements, which increased cost of sales in the year by $10.0
million. Without these movements cost of sales would have increased by 2.2%. In
the UK cost increases in sterling were only 2%, which is lower than the revenue
growth as capacity is filled without the corresponding increase in fixed costs.
The main increase was in direct material costs reflecting the higher revenues,
offset by a reduction in labor costs as a result of the restructuring completed
in the first quarter. Increases in costs in the US were 3.3%, mainly due to
increases in labor costs offset by a reduction in direct material costs compared
to the previous year.

Selling, general and administrative expenses rose by 18.2% to $24.7 million for
the year ended December 31, 2004 (15.7% of revenue) from $20.9 million (15.8% of
revenue) in the year ended December 31, 2004. Of this increase, $2.1 million
related to exchange rate movements. This growth was due to a continuation of the
build-up of the sales activity during the year and higher labor costs, including
bonuses paid or accrued to senior employees.

Other operating expenses in the year ended December 31, 2003 were $3.5 million.
These comprised $0.6 million in connection with specific legal actions taken
against animal rights groups and $3.5 million in respect of a restructuring of
the business. These restructuring costs comprise redundancy (severance) payments
and asset write downs in the UK arising from a consolidation of duplicate
facilities in response to changes in the market, particularly for non
pharmaceutical services and a closure of excess and outdated toxicology
capacity. This restructuring was effected to improve the efficiency of the
Company's operations without impairing its ability to service clients' needs.
These expenses were offset by income of $0.2 million representing the Group's
share of an associated company's income (recognized following its acquisition in
June 2003) and $0.4 million from the recovery of funds, written off in 2001
following the bankruptcy of an exchange broker.

Net interest expense increased by 8.9% to $6.5 million for the year ended
December 31, 2004 from $6.0 million in the year ended December 31, 2003.
Excluding the effect of exchange rate movements, there was a net decline of $0.2
million, reflecting the full year impact of loans and bonds repaid during 2003.

Other income of $2.9 million for the year ended December 31, 2004 comprised $3.3
million from the non-cash foreign exchange remeasurement gain on the Convertible
Capital Bonds denominated in US dollars (the functional currency of the
financing subsidiary that holds the bonds is UK sterling), offset by $0.4
million relating to the cost of a currency hedge contract. In the year ended
December 31, 2003 there was other income of $5.4 million which was comprised of
a non-cash foreign exchange remeasurement gain on the Convertible Capital Bonds
of $4.8 million and a $0.6 million gain made on the partial repurchase of the
Convertible Capital Bonds.

Taxation benefit on income for the year ended December 31, 2004 was $5.4 million
representing a benefit at 44% compared to a taxation benefit of $1.1 million
representing a benefit at 42% for the year ended December 31, 2003. A
reconciliation between the US statutory tax rate and the effective rate of
income tax benefit on losses before income taxes for the year ended December 31,
2004 and December 31, 2003 is shown below:

                                                   % of income before
                                                      income taxes
                                                 2004               2003
                                                   %                  %
US statutory rate                                 35                 35
Foreign rate differential                         (6)                (3)
UK R & D credit and non-deductible items         (36)                13
State taxes                                        1                  2
Change in estimate                               (38)               (89)
                                            ----------------    --------------
Effective tax rate                               (44)               (42)
                                            ----------------    --------------

The main reason for the change in estimate above relates to the Huntingdon 2002
and 2003 tax provisions. The UK government from April 1, 2002 introduced a new
tax allowance, `Research and Development (R & D) Tax Credit', for large
companies. At the end of 2002, it was not certain how this would apply to
Huntingdon. When submitting Huntingdon's 2002 corporation tax computation, and
following discussions with the UK Inland Revenue, Huntingdon made a claim for
the R & D Tax Credit, which has now been accepted. The 2003 provision has been
included in the current year benefit as a change in estimate. The 2004 claim is
part of the non-deductible items above.

The overall net income for the year ended December 31, 2004 was $17.6 million
compared to $3.7 million in the year ended December 31, 2003. The diluted income
per share for the year ended December 31, 2004 was $1.29 compared to $0.29 for
the year ended December 31, 2003.

Earnings before interest, taxes, depreciation and amortization, other
income/(expense) and other operating expenses in 2004 ("EBITDA") was $25.4
million, or 16.1% of revenues, compared with $14.6 million, or 11.0% of revenues
for 2003.

The Company believes that EBITDA information, which for this Company excludes
other income/(expense) and other operating expenses, enhances an investor's
understanding of our financial performance and our ability to satisfy principal
and interest obligations with respect to our indebtedness. However, EBITDA
should not be considered in isolation or viewed as a substitute for net income,
cash flow from operations or other measures of performance as defined by
generally accepted accounting principles in the United States. We understand
that while securities analysts, lenders and others in their evaluation of
companies frequently use EBITDA, EBITDA as used herein is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies in the method of calculation. Our management uses
EBITDA to assess financial performance and debt service capabilities. In
assessing financial performance, our management reviews EBITDA as a general
indicator of economic performance compared to prior periods. Because EBITDA
excludes interest, income tax, depreciation and amortization, other
income/(expense) and other operating expenses, EBITDA provides an indicator of
general economic performance that is not affected by changes in debt levels,
fluctuations in interest rates or effective tax rates, levels of depreciation
and amortization, exchange rate movements on the Convertible Capital Bonds or
one off operating expenses. Our management believes this type of measurement is
useful for comparing general operating performance from period to period and
making certain management decisions. Nevertheless, our management recognizes
that there are material limitations associated with the use of EBITDA as
compared to n et income, which reflects overall financial performance, including
the effects of interest, taxes, depreciation, amortization, other
income/(expense) and other operating expenses.


SEGMENT ANALYSIS

The analysis of the Company's revenues and operating loss between segments for
the three years ended December 31, 2005 is as follows:

The   performance  of  each  segment  is  measured  by  revenues  and  operating
income/(loss) before other operating expenses.
<TABLE>
<CAPTION>

Company                                                               2005                 2004                 2003
                                                                      $000                 $000                 $000
<S>                                                              <C>                   <C>                   <C>
Revenues
           UK                                                      135,054              127,148              104,324
           US                                                       36,959               30,403               28,110
                                                            ---------------     ----------------     ----------------
                                                                  $172,013             $157,551             $132,434

                                                            ---------------     ----------------     ----------------
Operating income/(loss) before other operating expenses

           UK                                                       22,531               18,716                9,282
           US                                                        5,239                3,861                2,085
           Corporate                                               (6,751)              (6,753)              (4,598)

                                                            ---------------     ----------------     ----------------
                                                                   $21,019              $15,824               $6,769
                                                            ---------------     ----------------     ----------------
Other operating expense

           UK                                                            -                    -              (3,155)
           US                                                            -                    -                    -
           Corporate                                                     -                    -                (367)
                                                            ---------------     ----------------     ----------------

                                                                        $-                   $-             $(3,522)

                                                            ---------------     ----------------     ----------------
Operating income/(loss)

           UK                                                       22,531               18,716                6,127
           US                                                        5,239                3,861                2,085
           Corporate                                               (6,751)              (6,753)              (4,965)

                                                            ---------------     ----------------     ----------------
                                                                   $21,019              $15,824               $3,247
                                                            ---------------     ----------------     ----------------

</TABLE>


UK

2005 v 2004

Revenues increased by 6.2% in the year ended December 31, 2005 compared with the
year ended December 31, 2004. After allowing for the effect of exchange rate
movements the increase was 6.9%. The growth in revenues reflects the increase in
orders and, consequently, backlog over the last eighteen months, principally
from the pharmaceutical industry. Orders for the year ended December 31, 2005 at
constant exchange rates were 2.2% above the previous year.

Costs increased 6.5% in the year ended December 31, 2005 compared with the year
ended December 31, 2004. After allowing for the effect of exchange rate
movements, the increase was 6.5%. The main increases were in labour and direct
material costs, and reflected the increase in revenues.

The operating income for the year ended December 31, 2005 was $22.5 million
compared with $18.7 million in the previous year.

2004 v 2003

Revenues increased by 21.9% in the year ended December 31, 2004 compared with
the year ended December 31, 2003. After allowing for the effect of exchange rate
movements the increase was 8.6%. Orders for the year ended December 31, 2004 at
constant exchange rates were 23.7% above the previous year and 11.7% above
revenues for the year.

Costs increased by 14.0% in the year ended December 31, 2004 compared with the
year ended December 31, 2003. After allowing for the effect of exchange rate
movements, the increase was 2.8%. The main increase was in direct material costs
reflecting the increase in revenues; however, this was offset by a reduction in
labor as a result of the restructuring undertaken in the first quarter.

The operating income before other operating expenses for the year ended December
31, 2004 was $18.7 million compared with $9.3 million in the year to December
31, 2003.

In the year ended December 31, 2003, other operating expenses of $3.2 million
comprised $3.5 million in respect of a restructuring of the business. These
restructuring costs comprise redundancy (severance) payments and asset write
downs arising from a consolidation of duplicate facilities in response to
changes in the market, particularly for non pharmaceutical services, and a
closure of excess and outdated toxicology capacity. These expenses were offset
by income of $0.3 million from the recovery of funds, written off in 2001,
following the bankruptcy of an exchange broker.

The operating income for the year ended December 31, 2004 was $18.7 million
compared with $6.1 million in the previous year.


US

2005 v 2004

Revenues increased by 21.6% in the year ended December 31, 2005 as compared to
the year ended December 31, 2004. The growth in revenues reflects the increase
in orders and consequently, backlog, over the last 18 months, principally from
the pharmaceutical industry. Orders for the year ended December 31, 2005 were
0.7% above the previous year .

Costs increased by 16.8% in the year ended December 31, 2005 as compared with
the year ended December 31, 2004. This cost increase was mainly due to higher
labour and direct materials, and reflected the increase in revenues.

The operating income for the year ended December 31, 2005 was $5.2 million
compared with an operating income of $3.9 million in the previous year.

2004 v 2003

Revenues increased by 8.4% in the year ended December 31, 2004 as compared to
the year ended December 31, 2003. Orders for the year ended December 31, 2004
were 25.1% above the previous year and 21.5% above revenues for the year.

Costs increased by 2% in the year ended December 31, 2004 as compared with the
year ended December 31, 2003. This cost increase was mainly due to higher direct
materials as a result of the higher revenues.

The operating income for the year ended December 31, 2004 was $3.9 million
compared with an operating income of $2.1 million in the previous year.

Corporate

2005 v 2004

Corporate costs for the year ended December 31, 2005 were $6.8 million, an
increase of 0% on corporate costs for the year ended December 31, 2004 of $6.8
million. Increases in labour and general expenses were offset by lower bonuses
accrued for senior employees.

The operating loss for the year ended December 31, 2005 was $6.8 million
compared with an operating loss for the year ended December 31, 2004 of $6.8
million.

2004 v 2003

Corporate costs for the year ended December 31, 2004 were $6.8 million, an
increase of 47% on corporate costs for the year ended December 31, 2003 of $4.6
million. Excluding the effects of exchange rate movements the increase was 42%.
The main reasons for the increase are the discretionary bonus plan relating to
those senior employees in the Company's corporate headquarters of $1.5 million,
together with general increases in labor costs and legal and professional fees.

In the year ended December 31, 2003, other operating expenses were $0.4 million
for specific legal action taken against animal rights groups.

The operating loss for the year ended December 31, 2004 was $6.8 million
compared with an operating loss for the year ended December 31, 2003 of $5.0
million.

LIQUIDITY AND CAPITAL RESOURCES

Bank Loan and Non-Bank Loans

On January 20, 2001, the Company's net non-bank loan of (pound)22.6 million
(approximately $43.4 million), was refinanced by Stephens' Group Inc. and other
parties. The loan was transferred from Stephens Group Inc., to an unrelated
third party effective February 11, 2002. It was repayable on June 30, 2006 and
interest was payable quarterly at LIBOR plus 1.75%. At the same time the Company
was required to take all reasonable steps to sell off such of its real estate
assets through sale/leaseback transactions and/or obtaining mortgage financing
secured by the Company's real estate assets to discharge this loan. The loan was
held by LSR Ltd., and was secured by the guarantees of wholly owned subsidiaries
of the Company including, LSR Ltd, Huntingdon Life Sciences Ltd, and Huntingdon
Life Sciences Inc., and collateralized by all the assets of these companies. On
June 14, 2005 this non-bank loan was fully repaid using the proceeds from the
Sale/Leaseback Transaction and cash on hand.

On October 9, 2001, on behalf of Huntingdon, LSR issued to Stephens Group Inc.
warrants to purchase 704,425 shares of LSR Voting Common Stock at a purchase
price of $1.50 per share. The warrants were subsequently transferred to an
unrelated third party. The LSR warrants are exercisable at any time and will
expire on October 9, 2011. These warrants arose out of negotiations regarding
the refinancing of the bank loan by the Stephens Group Inc. in January 2001. In
accordance with APB Opinion No. 14, Accounting for Convertible Debt and Debt
Issued with Stock Purchase Warrants ("APB 14"), the warrants were recorded at
their pro rata fair values in relation to the proceeds received on the date of
issuance. As a result, the value of the warrants was $430,000. 154,425 of such
warrants were exercised in 2004. No additional exercises were made in 2005.

On June 14, 2005, the Company entered into and consummated the Sale/Leaseback
Transaction with Alconbury. Alconbury is a newly formed company controlled by
LSR's Chairman and CEO, Andrew Baker. The total consideration paid by Alconbury
for the three properties was $40 million, consisting of $30 million cash and a
five year, $10 million variable rate subordinated promissory note, which
Alconbury has agreed to make a best effort to repay within twelve months. The
Company agreed to pay the expenses incurred by Alconbury in the Sale/Leaseback
Transaction of approximately $4.8 million, subject to Alconbury's obligation to
reimburse those expenses in the future. Such reimbursement shall be made in
equal installments in each year of the five-year period beginning on June 14,
2008, the third anniversary of the closing date of the Sale/Leaseback
Transaction.

As part of the Sale/Leaseback Transaction, the Company (through subsidiaries)
entered into thirty-year leases with Alconbury for each facility, with two
five-year renewal options. Base aggregate annual rent for the facilities is $4.9
million (approximately $1.8 million in the US and approximately $3.1 million in
the UK) which amount will increase by 3% each year for the UK facilities and by
an amount equal to the annual US consumer price index for the US facility. Under
the terms of the leases, no security deposit was initially required, but a
three-month security deposit will be required at such time that Alconbury
refinances its current financing arrangements. Additionally, because the leases
are "triple net" leases, LSR will also pay for all of the costs associated with
the operation of the facilities, including costs such as insurance, taxes and
maintenance.

Since the Sale/Leaseback Transaction was with a related party (Mr. Baker, LSR's
Chairman and CEO and the controlling owner of Alconbury), an Independent
Committee of LSR's Board of Directors (the "Committee") was formed to analyze
and consider the proposed Sale/Leaseback Transaction. The Committee was
comprised of the three independent directors of LSR: Gabor Balthazar, Afonso
Junqueiras and Yaya Sesay. The Committee retained independent legal and
financial advisors to assist in its analysis. The Committee and LSR's senior
management (other than Mr. Baker) negotiated the key terms and provisions of the
Sale/Leaseback Transaction with Alconbury. The Committee also obtained
appraisals of the facilities from independent real estate appraisal firms.

The proceeds from the Sale/Leaseback Transaction (plus additional cash on hand)
were used by the Company to pay in full its (pound)22.6 million non-bank debt
(approximately $41.1 million).

In accordance with the provisions of FASB Interpretation No. 46R (FIN 46R), the
Company will reflect the consolidation of Alconbury as long as it is considered
the "primary beneficiary" of Alconbury's variable interests. The Company will
not record the gain and loss associated with the sale of the properties, nor
recognize the associated changes in depreciation, interest, and rent expenses,
until FIN 46R consolidation accounting no longer applies. At that time, the
Company will record a non-cash loss of approximately $44 million for the sale of
the UK properties, and a gain of approximately $6 million, amortized over the
term of the lease, for the US property. In addition, the Company anticipates a
net reduction in its annual depreciation charge of approximately $2.7 million
offset by a net increase of $0.5 million in interest and rent expenses. The
Company anticipates that it will no longer be the primary beneficiary of
Alconbury when the $10 million subordinated promissory note has been repaid.

Due to the consolidation resulting from the Company's adoption of FIN 46R, the
Company's financial statements reflect a loan by an unrelated third party in the
aggregate principal amount of $30 million. This loan has a maturity date of June
14, 2006, with the right to extend the term one additional year. Alconbury
intends to refinance this debt on a long-term basis prior to the maturity date
of June 14, 2006. However, if the long term financing is not available,
Alconbury has advised the Company that it intends to exercise the one-year
renewal option, and accordingly, has classified the loan as long-term debt. The
loan, which carries an annual interest rate of 15%, has been secured by first
priority lien on all the assets, including the facilities, of Alconbury, and is
also personally guaranteed by the owner of Alconbury. This loan is currently
payable in twelve monthly installments of interest only, with a balloon payment
of $30 million due on June 14, 2006.

Convertible Capital Bonds

The remainder of the Company's long term financing is provided by Convertible
Capital Bonds repayable in September 2006. At the time of the issue in 1991,
these bonds were for $50 million par and at December 31, 2005, $46.2 million
were outstanding. They carry interest at a rate of 7.5% per annum, payable
biannually in March and September. During 2002, the Company repurchased and
cancelled $2,410,000 principal amount of such bonds resulting in a $1.2 million
gain recorded in other income/expense. In 2003 the Company further repurchased
and cancelled $1,345,000 principal amount of such bonds resulting in a gain of
$0.6 million recorded in other income/expense. At the current conversion rate,
the number of shares of Voting Common Stock to be issued on conversion and
exchange of each unit of $10,000 comprised in a bond would be 49. The conversion
rate is subject to adjustment in certain circumstances.

As indicated in Note 16 - Subsequent Events, these bonds are being redeemed with
the proceeds from the New Financing, which occurred in March 2006.

Related Party Loans

Financing which totaled $5.7 million was provided to the company in 2000 and
2001 and was fully repaid in 2002. This financing had been provided in part by a
$2.9 million loan facility made available on September 25, 2000 by the Company's
Chairman and CEO, Mr. Baker. In connection with this financing, the company
authorized, subject to shareholder approval, the issuance of warrants to
purchase 410,914 shares of LSR Voting Common Stock at a purchase price of $1.50
per share to FHP, a company controlled by Mr. Baker. Such shareholder approval
was granted on June 12, 2002. Additionally, other financing also included a $2.8
million facility from the Stephens Group Inc. made available on July 19, 2001.
Effective February 11, 2002 the Stephens Group Inc. debt was transferred to an
unrelated third party. $550,000 of the loan from Mr. Baker was transferred to
and assumed by FHP in March 2001. On March 28, 2002, $2.1 million of Mr. Baker's
loan was converted into 1,400,000 shares of LSR Voting Common Stock and $300,000
of FHP's loan was converted into 200,000 shares of LSR Voting Common Stock; in
each case as part of LSR's private placement of approximately 5.1 million shares
of Voting Common Stock. The remaining principal amounts were repaid in full to
Mr. Baker and FHP, inclusive of 10% interest, respectively, in 2002. The other
$2.8 million facility was also repaid in full as of October 1, 2002.

As noted above, on June 11, 2002 LSR issued to FHP warrants to purchase up to
410,914 shares of LSR Voting Common Stock at a purchase price of $1.50 per
share. These LSR warrants are exercisable at any time and will expire on June
11, 2012. These warrants arose out of negotiations regarding the provision of
the $2.9 million loan facility made available to the Company on September 25,
2000 by Mr. Baker, who controls FHP. In accordance with APB 14 the loan and
warrants were recorded at their pro rata fair values in relation to the proceeds
received. As a result, the value of the warrants was $250,000.

Common Shares

On January 10, 2002, LSR issued 99,900 shares of Voting Common Stock and 900,000
shares of Non-Voting Common Stock at a price of $1.50 per share (or an aggregate
of $1.5 million). Effective July 25, 2002, all of the 900,000 shares of the
Non-Voting Common Stock were converted into 900,000 shares of Voting Common
Stock.

On March 28, 2002, LSR closed the sale in a private placement of an aggregate of
5,085,334 shares of Voting Common Stock at a price of $1.50 per share. Of the
aggregate proceeds of approximately $7.6 million, $4.4 million was in cash, $2.4
million represented conversion into equity of debt owed to Mr. Baker ($2.1
million) and FHP ($0.3 million) and $825,000 was paid with promissory notes.
$128,000 of such promissory notes have been repaid through December 31, 2004.

<PAGE>
Cash flows

During the year ended December 31, 2005 funds used were $17.9 million,
decreasing cash on hand and on short-term deposit from $33.3 million at December
31, 2004 to $15.4 million at December 31, 2005. The cash used by operating,
investing and financing activities was as follows (in millions):
<TABLE>
<CAPTION>

                                                                        2005               2004               2003
                                                                        ----               ----               ----
<S>                                                                  <C>                 <C>                <C>
Operating income before other operating expense                        $21.0              $15.8               $6.8
Depreciation and loss on disposal of fixed assets                        9.6                9.5                9.3
Impairment of fixed assets                                                 -                  -                2.0
Working capital movement                                               (5.5)               10.1              (0.6)
Interest                                                               (8.0)              (5.9)              (6.0)
Capital expenditure                                                   (16.0)             (11.1)              (8.7)
Cash acquired on business acquisition                                      -                  -                1.9
Other (expense)/income                                                                    (2.6)              (1.5)
Loan repayments net of shares issued                                   (9.9)              (0.1)              (1.1)
Effect of exchange rate changes on cash                                (9.1)                0.3                0.6
                                                                -------------      -------------      -------------
                                                                     $(17.9)              $16.0               $2.7
                                                                -------------      -------------      -------------
</TABLE>

The movement in working capital for the year ended December 31, 2005 was due to
a decline in net days sales outstanding (DSOs) and the Sale/Leaseback
transaction expenses paid on behalf of Alconbury, offset by an increase in
the current portion of the pension liability.

Net days sales outstanding (DSOs) at December 31, 2005 were 16 days, a decline
from the 4 days at December 31, 2004. DSO is calculated as a sum of accounts
receivable, unbilled receivables and fees in advance over total revenue. The
impact on liquidity from a one-day change in DSO is approximately $377,000.

Loan repayments for the year ended December 31, 2005 represented the additional
cash on hand used in the Sale/Leaseback transaction used to repay the Company's
(pound)22.6 million ($41.1 million) non-bank debt.

At December 31, 2005, the Company had a working capital deficit of $56.5 million
as the Convertible Capital Bonds repayable in September 2006 are now classified
as a current liability. The Company believes that projected
cash flow from operations will satisfy its other contemplated cash requirements
for at least the next 12 months.  See Note 16 - Subsequent Events.

Commitment and Contingencies

Commitments

The Company leases certain equipment under various non-cancelable operating and
capital leases. The Company is also obligated under purchase agreements,
including long term power contracts. Finally Life Sciences Research Limited is
obliged to make contributions to its defined pension plan of (pound)2.7 million
($4.6 million) per year, plus expenses estimated at (pound)0.3 million ($0.5
million) a year for the next 5 years. These commitments are set out in the table
below:
<TABLE>
<CAPTION>

                                                                  Year ended December 31
                                          Total       2006      2007      2008       2009       2010       2011+
                                          $000        $000      $000      $000       $000       $000       $000
<S>                                      <C>         <C>       <C>        <C>       <C>       <C>         <C>
Capital lease obligations                $1,524      $  609    $  550     $  365         -         -        -
Operating leases                          1,852         781       571        345       154         1        -
Purchase obligations                      3,716       2,809       907          -         -         -        -
Pension plan obligations                  25,750      5,150     5,150      5,150     5,150     5,150

                                        ----------- --------- --------- --------- --------- ---------- ---------
                                         $32,842     $9,349    $7,178     $5,860    $5,304     $5,151        -
                                        ----------- --------- --------- --------- --------- ---------- ---------
</TABLE>

Contingencies

The Company is party to certain legal actions arising in the normal course of
its business. In management's opinion, none of these actions will have a
material effect on the Company's operations, financial condition or liquidity.
No form of proceedings has been brought, instigated or is known to be
contemplated against the Company by any government agency.
<PAGE>


ORDERS

New  business  signings  totaled  $183  million for the year ended  December 31,
2005,  an increase of 3% exclusive of the impact of movements in exchange  rates
from  the  prior  year.   2004  saw  a  rapid   growth  in  business   from  the
Pharmaceutical  industry  and this growth in business  was  maintained  in 2005,
with  particularly  strong  order  growth in  toxicology  testing  as  companies
invested  in their  early stage  pipelines.  However  there was a decline in the
amount of work outsourced from the Agrochemical  industry,  both on new chemical
entities  and  as  registration   work  under  European   Directive   91/414/EEC
diminished.

EXCHANGE RATE FLUCTUATIONS AND EXCHANGE CONTROLS

The Company operates on a worldwide basis and generally invoices its clients in
the currency of the country in which the Company operates. Thus, for the most
part, exposure to exchange rate fluctuations is limited as sales are denominated
in the same currency as costs. Trading exposures to currency fluctuations do
occur as a result of certain sales contracts, performed in the UK for US
clients, which are denominated in US dollars and contribute approximately 6% of
total revenues. Management has decided not to hedge against this exposure.

Also, exchange rate fluctuations may have an impact on the relative price
competitiveness of the Company vis a vis competitors who trade in currencies
other than sterling or dollars. Such fluctuations also have an impact on the
translation of the 7.5% Convertible Capital Bonds payable in September 2006.

The Company has debt denominated in US dollars, whereas the Company's functional
currency is the UK pound sterling, which results in the Company recording other
income/loss associated with US dollars debt as a function of relative changes in
foreign exchange rates. To manage the volatility relating to these exposures,
from time to time, the Company might enter into certain derivative transactions.
The Company holds and issues derivative financial instruments for economic
hedging purposes only. There were no derivative financial instruments in place
at December 31, 2005.

Finally, the consolidated financial statements of LSR are denominated in US
dollars. Changes in exchange rates between the UK pound sterling and the US
dollar will affect the translation of the UK subsidiary's financial results into
US dollars for the purposes of reporting the consolidated financial results. The
process by which each foreign subsidiary's financial results are translated into
US dollars is as follows: income statement accounts are translated at average
exchange rates for the period; balance sheet asset and liability accounts are
translated at end of period exchange rates; and equity accounts are translated
at historical exchange rates. Translation of the balance sheet in this manner
affects the stockholders' equity account referred to as the accumulated other
comprehensive loss account. Management has decided not to hedge against the
impact of exposures giving rise to these translation adjustments as such hedges
may impact upon the Company's cash flow compared to the translation adjustments
which do not affect cash flow in the medium term.

Exchange rates for translating sterling into US dollars were as follows:


                            At December 31                 Average Rate (1)
                            --------------                 ----------------
         2002                   1.6099                       1.5039
         2003                   1.7857                       1.6354
         2004                   1.9199                       1.8321
         2005                   1.7168                       1.8195

(1) Based on the average daily exchange rates during the period.

On March 13, 2006 the noon buying rate for sterling was (pound)1.00 = $1.7310.

The Company has not experienced difficulty in transferring funds to and
receiving funds remitted from those countries outside the US or UK in which it
operates and management expects this situation to continue.

While the UK has not at this time entered the European Monetary Union, the
Company has ascertained that its financial systems are capable of dealing with
Euro denominated transactions.

The following table summarizes the financial instruments denominated in
currencies other than the US dollar held by LSR and its subsidiaries as of
December 31, 2005:
<TABLE>
<CAPTION>

                                                            Expected Maturity Date
                                      2005    2006     2007    2008    2009  Thereafter    Total  Fair
                                                                                                      Value
(In US Dollars, amounts in thousands)
<S>               <C>               <C>         <C>      <C>     <C>     <C>       <C>   <C>         <C>
Cash              - Pound Sterling   4,755       -        -       -       -          -     4,755      4,755
                  - Euro             1,450       -        -       -       -          -     1,450      1,450
                  - Japanese Yen     1,823       -        -       -       -          -     1,823      1,823

Accounts

receivable        - Pound Sterling  20,335       -        -       -       -          -    20,335     20,335
                  - Euro             1,012       -        -       -       -          -     1,012      1,012
                  - Japanese Yen     1,789       -        -       -       -          -     1,789      1,789

Debt              - Japanese Yen       283       -        -       -       -          -       283        283

</TABLE>


INFLATION

While most of the Company's net revenues are earned under fixed price contracts,
the effects of inflation do not generally have a material adverse effect on its
operations or financial condition as only a minority of the contracts have
duration in excess of one year.

RECENTLY ISSUED ACCOUNTING STANDARDS

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123R,
Share-Based  Payment,  which is a  revision  of SFAS  No.  123.  SFAS  No.  123R
supersedes  APB 25 and amends SFAS No. 95,  Statement of Cash Flows.  Generally,
the approach in SFAS No. 123R is similar to the  approach  described in SFAS No.
123. However,  SFAS No. 123R requires all share-based  payments to employees and
non-employee  directors,  including grants of stock options, to be recognized in
the income  statement  based on their fair  values  and  requires  the use of an
option  pricing model for estimating  fair value,  which is amortized to expense
over the service periods. Pro forma disclosure is no longer an alternative. SFAS
No. 123R will be effective for the first annual period  beginning after June 15,
2005.  The impact of adoption of SFAS No. 123R cannot be  predicted at this time
because it will depend on the  amounts of  share-based  payments  granted in the
future. The Company adopted SFAS 123R effective January 1, 2006.
<PAGE>

FORWARD LOOKING STATEMENTS

Statements in this Management's Discussion and Analysis of Financial Condition
and Results of Operations, as well as in certain other parts of this Annual
Report on Form 10-K (as well as information included in oral statements or other
written statements made or to be made by the Company) that look forward in time,
are forward looking statements made pursuant to the safe harbor provisions of
the Private Litigation Reform Act of 1995. Forward looking statements include
statements concerning plans, objectives, goals, strategies, future events or
performance, expectations, predictions, and assumptions and other statements
which are other than statements of historical facts. Although the Company
believes such forward-looking statements are reasonable, it can give no
assurance that any forward-looking statements will prove to be correct. Such
forward-looking statements are subject to, and are qualified by, known and
unknown risks, uncertainties and other factors that could cause actual results,
performance or achievements to differ materially from those expressed or implied
by those statements. These risks, uncertainties and other factors include, but
are not limited to the Company's ability to estimate the impact of competition
and of industry consolidation and risks, uncertainties and other factors set
forth in the Company's filings with the Securities and Exchange Commission,
including without limitation this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LSR is subject to market risks arising from changes in interest rates and
foreign currency exchange rates.

The Company has debt denominated in US dollars, whereas the Company's functional
currency is the UK pound sterling, which results in the Company recording other
income/loss associated with US dollars debt as a function of relative changes in
foreign exchange rates. To manage the volatility relating to these exposures,
from time to time, the Company might enter into certain derivative transactions.
The Company holds and issues derivative financial instruments for economic
hedging purposes only. There were no derivative financial instruments in place
at December 31, 2005.

Non-Bank Loans

The Company's (pound)22.6 million (approximately $41.1 million on June 14, 2005)
non-bank loan was UK pound sterling denominated and did not contribute to
transaction gains and losses on the income statement. Interest on all
outstanding borrowings on this non-bank loan was based upon LIBOR plus a margin,
approximately 6.66% per annum for the period ended June 14, 2005. On June 14,
2005 this non-bank loan was fully repaid using the proceeds from the
Sale/Leaseback Transaction and cash on hand.

Revenue

For the year ended December 31, 2005, approximately 73% of the Company's net
revenues were from outside the US.

Convertible Capital Bonds

The Company's $46.2 million principal amount of Convertible Capital Bonds are US
dollar denominated, but are held by a non-US subsidiary of the Company. As a
result, with respect to these bonds, the Company experiences exchange related
gains and losses which only has a non-cash impact on the financial statements,
based on the movement of exchange rates. The Company is unable to predict
whether it will experience future gains or future losses from such
exchange-related risks on the bonds.

These bonds are being redeemed with the proceeds from the New Financing received
in March 2006. Please see Note 16 - Subsequent Events.

See Management's  Discussion and Analysis of Financial  Condition and Results of
Operations.

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                        Page
<CAPTION>


<S>                                                                                                <C>
Managements' Report on Consolidated Financial Statements and Internal Control ......................44

Internal Control Report of Auditors.................................................................45

Independent Auditors' Report - December 31, 2005 and 2004...........................................46

Consolidated Statements of Operations-
Years ended December 31, 2005, 2004 and 2003........................................................47

Consolidated Balance Sheets - December 31, 2005 and 2004............................................48

Consolidated Statements of Shareholders' (Deficit)/Equity and
Comprehensive Income/(Loss) - Years ended December 31, 2005, 2004 and 2003..........................50

Consolidated Statements of Cash Flows - Years ended December 31, 2005, 2004 and 2003................52

Notes to Consolidated Financial Statements  ........................................................53

</TABLE>

<PAGE>

Managements' Report on Consolidated Financial Statements and Internal Control

The management of Life Sciences Research, Inc. (the "Company") has prepared, and
is responsible for, the Company's  consolidated financial statements and related
footnotes.  These  consolidated  financial  statements  have  been  prepared  in
conformity with U.S. generally accepted accounting principles.

The  Company's  management  is  responsible  for  establishing  and  maintaining
effective  internal  control over  financial  reporting  and for  assessing  the
effectiveness of internal control over financial reporting.  The purpose of this
system of internal  accounting  controls over financial  reporting is to provide
reasonable assurance that assets are safeguarded, that transactions are executed
in accordance with  management's  authorization and are properly  recorded,  and
that  accounting  records may be relied upon for the preparation of accurate and
complete consolidated financial statements.  The design, monitoring and revision
of internal accounting control systems involve, among other things, management's
judgment  with  respect to the relative  cost and expected  benefits of specific
control  measures.  The Company also  maintains an internal  audit function that
evaluates and reports on the adequacy and  effectiveness  of internal  controls,
policies and procedures.

The Company's  management  concluded  that its internal  control over  financial
reporting as of December 31, 2005 was effective  and adequate to accomplish  the
objectives described above.  Management's assessment was based upon the criteria
in  Internal  Control  --  Integrated  Framework  issued  by  the  Committee  of
Sponsoring Organizations of the Treadway Commission.  The Company's consolidated
financial  statements and the effectiveness of control over financial  reporting
have been audited by an independent  registered  public  accounting  firm,  Hugh
Scott, P.C., as stated in their reports which are included elsewhere herein.


/ S /    Andrew Baker
Chairman and Chief Executive Officer - Principal Executive Officer



/ S /    Richard Michaelson
Chief Financial Officer   - Principal Financial and Accounting Officer



East Millstone, New Jersey

February 17, 2006

<PAGE>

Report of Independent Registered Public Accounting Firm on Internal Control Over
Financial Reporting

The Board of Directors and Shareholders of Life Sciences Research, Inc.

We have audited management's assessment, included in Managements' Report on
Consolidated Financial Statements and Internal Control, that Life Sciences
Research, Inc. maintained effective internal control over financial reporting as
of December 31, 2005, based on criteria established in Internal Control --
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the COSO criteria). Life Sciences Research, Inc.'s
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
management's assessment and an opinion on the effectiveness of the company's
internal control over financial reporting 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 effective
internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over
financial reporting, evaluating management's assessment, testing and evaluating
the design and operating effectiveness of internal control, and performing such
other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that Life Sciences Research, Inc.
maintained effective internal control over financial reporting as of December
31, 2005, is fairly stated, in all material respects, based on the COSO
criteria. Also, in our opinion, Life Sciences Research, Inc. maintained, in all
material respects, effective internal control over financial reporting as of
December 31, 2005, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
Life Sciences Research, Inc. as of December 31, 2005 and 2004, and the related
consolidated statements of operations, shareholders equity (deficit) and
comprehensive income (loss), and cash flows for each of the three years in the
period ended December 31, 2005 and our report dated February 17, 2006 expressed
an unqualified opinion thereon.


/s/ Hugh Scott, P.C.

Lakewood, New Jersey
February 17, 2006

<PAGE>

Report of Independent Registered Public Accounting Firm on financial statements
The Board of Directors and Shareholders of Life Sciences Research, Inc.

We have audited the accompanying consolidated balance sheets of Life Sciences
Research, Inc. as of December 31, 2005 and 2004, and the related consolidated
statements of operations, shareholders equity (deficit) and comprehensive income
(loss), and cash flows for each of the three years in the period ended 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 audits.

We conducted our audits 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Life
Sciences Research, Inc. at December 31, 2005 and 2004, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2005, in conformity with U.S. generally accepted
accounting principles.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of Life Sciences
Research, Inc.'s internal control over financial reporting as of December 31,
2005, based on criteria established in Internal Control - Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
and our report dated February 17, 2006 expressed an unqualified opinion thereon.


/s/ Hugh Scott, P.C.

Lakewood, New Jersey
February 17, 2006, except for Note 16 which is dated March 2, 2006

<PAGE>

<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Operations
Dollars in (000's), except per share amounts
<CAPTION>

                                                                        Year Ended December 31,
                                                                  2005                  2004                2003

<S>                                                        <C>                   <C>                 <C>
Revenues                                                      $172,013              $157,551            $132,434
Cost of sales                                                (124,820)             (117,061)           (104,798)
                                                    -------------------     -----------------     ---------------

Gross profit                                                    47,193                40,490              27,636
Selling, general and administrative expenses                  (26,174)              (24,666)            (20,867)
Other operating expense                                              -                     -             (3,522)
                                                    -------------------     -----------------     ---------------
Operating income                                                21,019                15,824               3,247
Interest income                                                     79                   114                  94
Interest expense                                               (8,072)               (6,635)             (6,084)
Other (expense) income                                         (7,406)                 2,890               5,362

                                                    -------------------     -----------------     ---------------
Income before income taxes                                       5,620                12,193               2,619
Income tax (expense)/benefit                                   (4,129)                 5,401               1,109
                                                    -------------------     -----------------     ---------------
Net income                                                      $1,491               $17,594              $3,728
                                                    ===================     =================     ===============
Income per share
 -basic                                                          $0.12                 $1.45               $0.31
 -diluted                                                        $0.10                 $1.29               $0.29

Weighted average number of common stock outstanding
 -basic                                                     12,517,636            12,153,105          11,957,760
 -diluted                                                   14,533,377            13,607,308          12,699,576

<FN>

The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>

<PAGE>

<TABLE>

Life Sciences Research Inc. & Subsidiaries
Consolidated Balance Sheets
Dollars in (000's), except per share amounts
<CAPTION>

                                                                                              December 31,
ASSETS                                                                                    2005             2004
<S>                                                                                 <C>               <C>
Cash and cash equivalents                                                              $15,420          $33,341
Accounts receivable, net of allowance of $618 and $255 in 2005 and 2004,
  respectively                                                                          26,810           27,841
Unbilled receivables                                                                    11,981           11,516
Inventories                                                                              1,992            2,024
Prepaid expenses and other current assets                                                7,062            2,929
                                                                                  -------------   --------------
Total current assets                                                                   $63,265          $77,651
                                                                                  -------------   --------------
Property and equipment, net                                                            105,605          109,999
Goodwill                                                                                 1,195              901
Other intangibles                                                                          901                -
Unamortized capital bonds issue costs                                                       70              271
Deferred income taxes                                                                   13,333           11,253
                                                                                  -------------   --------------
Total assets                                                                          $184,369         $200,075
                                                                                  -------------   --------------
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable                                                                       $15,742          $13,547
Accrued payroll and other benefits                                                       3,655            4,024
Accrued expenses and other liabilities                                                  15,862           19,987
Pension Liabilities                                                                      4,635               -
Short-term debt                                                                         46,946              719
Fees invoiced in advance                                                                32,920           37,574
                                                                                  -------------   --------------
Total current liabilities                                                             $119,760          $75,851
                                                                                  -------------   --------------
Long-term debt                                                                          30,430           89,685
Pension liabilities, less short-term portion                                            48,747           36,603
                                                                                  -------------   --------------
Total liabilities                                                                     $198,937         $202,139
                                                                                  -------------   --------------

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

Commitments and contingencies                                                                -                -
Shareholders' equity/(deficit)
Preferred Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding: None                                                                 -                -
Non-Voting Common Stock, $0.01 par value. Authorized: 5,000,000
Issued and outstanding: None                                                                 -                -
Voting Common Stock, $0.01 par value. Authorized: 50,000,000
Issued and outstanding at December 31, 2005: 12,553,251
(December 31, 2004: 12,441,281)                                                            126              125
Paid in capital                                                                         75,848           75,671
Less: Promissory notes for issuance of common stocks                                     (205)            (697)
Accumulated other comprehensive loss                                                  (49,389)         (34,724)
Accumulated deficit                                                                   (40,948)         (42,439)
                                                                                  ------------------------------
Total shareholders' (deficit)                                                        $(14,568)         $(2,064)
                                                                                  ------------------------------
Total liabilities and shareholders' equity/(deficit)                                  $184,369         $200,075
                                                                                  -------------   --------------

<FN>
</FN>

The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>

<PAGE>
<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Shareholders' (Deficit)/Equity and Comprehensive Income/(Loss)
Dollars in (000's), except per share amounts
<CAPTION>

                                  Common    Common     Promissory     Additional   Accumulated  Accumulated     Total
                                  Stock      Stock     Notes for        Paid in      Deficit    Other
                                            at Par    Issuance of       Capital                 Compre-hensive
                                                      Common Stock                              Loss

<S>               <C> <C>           <C>         <C>      <C>               <C>       <C>             <C>        <C>
Balance, December 31, 2002          11,932      $119     $(684)            $75,098   $(63,761)       $(18,576)  $(7,804)
Issue of shares                        103         1          -                  3           -               -         4
Repayment of Promissory notes
                                         -         -         23                  -           -               -        23
Comprehensive loss:
    Net income for the year              -         -          -                  -       3,728               -         -
    Minimum pension liability,
    net of $971 deferred tax -
    Deficiency on UK defined
    benefit pension plan                 -         -          -                  -           -         (2,265)         -

    Translation adjustments,
    net of $123 tax                      -         -          -                  -           -         (2,132)         -
    Total comprehensive loss             -         -          -                  -           -               -     (669)

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

Balance, December 31, 2003          12,035      $120     $(661)            $75,101   $(60,033)       $(22,973)  $(8,446)

Issue of shares                        406         5          -                570           -               -       575
Increase in value net of
repayment of Promissory notes
                                         -         -       (36)                  -           -               -      (36)
Comprehensive loss:
    Net income for the year              -         -          -                  -      17,594               -         -
    Minimum pension liability,
    net of $4,385 deferred tax
    - Deficiency on UK defined
    benefit pension plan                 -         -          -                  -           -        (10,233)         -

    Translation adjustments,
    net of $232 tax                      -         -          -                  -           -         (1,518)         -
    Total comprehensive income
                                         -         -          -                  -           -               -     5,843
                                -----------------------------------------------------------------------------------------

Balance, December 31, 2004          12,441      $125     $(697)            $75,671   $(42,439)       $(34,724)  $(2,064)

</TABLE>

<PAGE>

<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Shareholders' (Deficit)/Equity and Comprehensive Income/(Loss)
Dollars in (000's), except per share amounts
<CAPTION>

                                  Common    Common     Promissory     Additional   Accumulated  Accumulated      Total
                                  Stock      Stock     Notes for        Paid in      Deficit    Other
                                            at Par    Issuance of       Capital                 Compre-hensive
                                                      Common Stock                              Loss

<S>                                <C>         <C>      <C>               <C>       <C>             <C>        <C>
Balance, December 31, 2004          12,441      $125     $(697)            $75,671   $(42,439)       $(34,724)  $(2,064)
Issue of shares                        112         1          -                177           -               -       178
Increase in value net of
repayment of Promissory notes
                                         -         -        492                  -           -               -       492
Comprehensive loss:
    Net income for the year              -         -          -                  -       1,491               -         -
    Minimum pension liability,
    net of $6,186 deferred tax
    - Deficiency on UK defined
    benefit pension plan
                                         -         -          -                  -           -        (14,435)         -

    Translation adjustments,
    net of $32 tax                       -         -          -                  -           -           (230)         -

    Total comprehensive loss             -         -          -                  -           -               -  (13,174)

Balance, December 31, 2005          12,553      $126     $(205)            $75,848   $(40,948)       $(49,389)  $(14,568)
                                -----------------------------------------------------------------------------------------
<FN>

The accompanying notes are an integral part of these consolidated financial
statements.
</FN>
</TABLE>

<PAGE>
<TABLE>

Life Sciences Research Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Dollars in (000's) except per share amounts
<CAPTION>

                                                                               Year Ended December 31,
                                                                         2005           2004          2003
<S>                                                                 <C>            <C>            <C>
Cash flows from operating activities:
Net income                                                             $1,491        $17,594        $3,728
Adjustments to reconcile net income to net cash from operating
activities
Depreciation and amortization                                           9,581          9,530         9,049
Impairment of fixed assets                                                  -              -         2,014
Loss on disposals of fixed assets                                           -              -           271
Foreign exchange loss/(gain) on Capital Bonds                           5,145        (3,345)       (4,760)
Foreign exchange gain on intercompany balances                          (518)              -             -
Deferred income tax expense/(benefit)                                   4,128        (5,512)       (1,234)
Gain on repurchase of Capital Bonds                                         -              -         (602)
Share of profit on acquisition                                              -              -         (208)
Provision for losses on accounts receivable                               363          (302)           244
Amortization of Capital Bonds issue costs                                 184            179           165
Amortization of Financing Costs                                         2,780              -             -
Amortization of warrants                                                  347            179           290
Changes in operating assets and liabilities:
Accounts receivable, unbilled receivables and prepaid expenses       (11,475)        (8,974)         5,063
Inventories                                                             (181)              -         (157)
Accounts payable, accrued expenses and other liabilities                6,072          4,841         2,048
Fees invoiced in advance                                                (859)         12,776       (5,972)

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

Net cash provided by operating activities                             $17,058        $26,966        $9,939
                                                                  ------------   ------------  ------------
Cash flows from investing activities:
Purchase of property, plant and equipment                            (15,973)       (11,096)       (8,716)
Cash acquired with Subsidiary                                               -              -         1,893
                                                                  ------------   ------------  ------------

Net cash used in investing activities                               $(15,973)      $(11,096)      $(6,823)

                                                                  ------------   ------------  ------------
Cash flows from financing activities:
Proceeds from issue of Voting Common Stock                                670            539            27
Proceeds from long-term borrowings                                     30,000              -           444
Repayments of long-term borrowings                                   (41,106)              -       (1,328)
Repayments of short term borrowings                                       500          (651)         (253)

                                                                  ------------   ------------  ------------
Net cash used in financing activities                                $(9,936)         $(112)      $(1,110)

                                                                  ------------   ------------  ------------
Effect of exchange rate changes on cash and cash equivalents          (9,070)            312           621
                                                                  ------------   ------------  ------------
(Decrease)/increase in cash and cash equivalents                     (17,921)         16,070         2,627
Cash and cash equivalents at beginning of year                         33,341         17,271        14,644
                                                                  ------------   ------------  ------------
Cash and cash equivalents at end of year                              $15,420        $33,341       $17,271
                                                                  ------------   ------------  ------------
Supplementary Disclosures:
Interest paid                                                          $7,913         $5,928        $5,544
Taxes paid:
              Japan                                                       $18           $139           $78
              US                                                         $298           $195           $35


<FN>
The accompanying notes are an integral part of these consolidated financial statements
</FN>
</TABLE>


<PAGE>

1.       THE COMPANY AND ITS OPERATIONS

Life Sciences Research Inc. ("LSR") and subsidiaries (collectively, the
"Company") is a global contract research organization, offering worldwide
pre-clinical and non-clinical testing for biological safety evaluation research
services to pharmaceutical, biotechnology, agrochemical and industrial chemical
companies. The Company serves the rapidly evolving regulatory and commercial
requirements to perform safety evaluations on new pharmaceutical compounds and
chemical compounds contained within the products that humans use, eat, and are
otherwise exposed to. In addition, it tests the effect of such compounds on the
environment and also performs work on assessing the safety and efficacy of
veterinary products.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies, is set out below:

Basis of Presentation and Principles of Consolidation

The consolidated financial statements incorporate the accounts of LSR and each
of its subsidiaries. All inter-company balances have been eliminated upon
consolidation.

On June 14, 2005,  the Company  entered into and  consummated  purchase and sale
agreements  with  Alconbury  Estates Inc. and  subsidiaries  and its  successors
(collectively  "Alconbury")  for the sale and leaseback of the  Company's  three
operating  facilities in Huntingdon  and Eye,  England and East  Millstone,  New
Jersey (the "Sale/Leaseback  Transaction").  Alconbury is a newly formed company
controlled by LSR's Chairman and CEO, Andrew Baker. The total consideration paid
by Alconbury for the three properties was $40 million, consisting of $30 million
in cash and a five year, $10 million variable rate subordinated promissory note,
which Alconbury  agreed to make a best effort to repay within twelve months.

In accordance with the provisions of FASB Interpretation No. 46R (FIN 46R), the
Company will reflect the consolidation of Alconbury as long as it is considered
the "primary beneficiary" of Alconbury's variable interests. The Company will
not record the gain and loss associated with the sale of the properties, nor
recognize the associated changes in depreciation, interest, and rent expenses,
until FIN 46R consolidation accounting no longer applies. At that time, the
Company will record a non-cash loss of approximately $44 million for the sale of
the UK properties, and a gain of approximately $10 million, amortized over the
term of the lease, for the US property. In addition, the Company anticipates a
net reduction in its annual depreciation charge of approximately $2.7 million
offset by a net increase of $0.5 million in interest and rent expenses. The
Company anticipates that it will no longer be the primary beneficiary of
Alconbury when the $10 million subordinated promissory note has been repaid.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with an original
maturity date of three months or less at the date of purchase.

Allowance for Uncollectible Accounts

The Company establishes an allowance for uncollectible accounts which it
believes is adequate to cover anticipated losses on the collection of all
outstanding trade receivable balances. The adequacy of the uncollectible account
allowance is based on historical information, a review of customer accounts and
related receivable balances, and management's assessment of current economic
conditions. The Company reassesses the allowance for uncollectible accounts
annually.

Inventories

Inventories are valued on a FIFO (first-in, first out) method at the lower of
cost, or market value. They comprise materials and supplies.

Property, Plant and Equipment

Property, plant and equipment, stated at cost, is depreciated over the estimated
useful lives of the assets on a straight-line basis. Estimated useful lives are
as follows:

         Buildings and facilities                 15 - 50 years
         Plant and equipment                      4 - 25 years
         Vehicles                                 5 years
         Computers and software                   3 - 5 years

Amounts spent to repair and maintain these assets arising out of the normal
course of business are expensed in the period incurred.

Concentration of Credit Risk

The Company maintains cash and cash equivalents in US financial institutions,
which, at times, may exceed federally insured limits. Based on the nature of the
financial instruments and/or historical realization of these instruments, the
Company believes they bear minimal risk.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting For Income Taxes" ("SFAS 109"). SFAS 109 requires recognition of
deferred tax assets and liabilities for the estimated future tax consequences of
events attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and
operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted rates in effect for the year in which the
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of changes in tax rates is recognized in the statement of
operations in the period in which the enactment rate changes. Deferred tax
assets and liabilities are reduced through the establishment of a valuation
allowance at such time as, based on available evidence, it is more likely than
not that the deferred tax assets will not be realized.

Revenue Recognition

The majority of the Company's net revenues have been earned under contracts,
which generally range in duration from a few months to three years. Revenue from
these contracts is recognized over the term of the contracts as services are
rendered. Contracts may contain provisions for renegotiation in the event of
cost overruns due to changes in the level of work scope. Renegotiated amounts
are included in net revenue when earned and realization is assured. Provisions
for losses to be incurred on contracts are recognized in full in the period in
which it is determined that a loss will result from performance of the
contractual arrangement. Most service contracts may be terminated for a variety
of reasons by the Company's customers either immediately or upon notice at a
future date. The contracts generally require payments to the Company to recover
costs incurred, including costs to wind down the study, and payment of fees
earned to date, and in some cases to provide the Company with a portion of the
fees or profits that would have been earned under the contract had the contract
not been terminated early. Unbilled receivables are recorded for revenue
recognized to date that is currently not billable to the customer pursuant to
contractual terms. In general, amounts become billable upon the achievement of
certain aspects of the contract or in accordance with predetermined payment
schedules. Unbilled receivables are billable to customers within one year from
the respective balance sheet date. Fees in advance are recorded for amounts
billed to customers for which revenue has not been recognized at the balance
sheet date (such as upfront payments upon contract authorization, but prior to
the actual commencement of the study).

Foreign Currencies

Transactions in currencies other than the functional currency of the entity are
recorded at the rates of exchange at the date of the transaction. Monetary
assets and liabilities in currencies other than the functional currency are
translated at the rates of exchange at the balance sheet date and the related
transaction gains and losses are reported in the statements of operations.
Exchange gains and losses on foreign currency transactions are recorded as other
income or expense. Certain intercompany loans are determined to be of a
long-term investment nature. The Company records gains and losses from
re-measuring such loans as a component of other comprehensive income.

Upon consolidation, the results of operations of subsidiaries and associates
whose functional currency is other than the US dollar are translated into US
dollars at the average exchange rate and assets and liabilities are translated
at year-end exchange rates and capital accounts are translated at historical
exchange rates, and retained earnings are translated at the weighted average of
historical rates. Translation adjustments are presented as a separate component
of other accumulated comprehensive loss in the financial statements.

Goodwill and Other Intangible Assets

Effective 2003, the Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets," which establishes financial accounting and reporting standards for
acquired goodwill and other intangible assets (Note 4). In accordance with SFAS
No. 142, goodwill and indefinite-lived intangible assets are no longer amortized
but are reviewed at least annually for impairment. Separate intangible assets
that have finite useful lives continue to be amortized over their estimated
useful lives.

SFAS No. 142 requires that goodwill be tested annually for impairment using a
two-step process. The first step is to identify a potential impairment. The
second step of the impairment test measures the amount of the impairment loss.
The Company, after completing the first step of the process, concluded there was
no impairment of goodwill at December 31, 2005 or 2004.

Impairment of Long-Lived Assets

The Company adopted the provisions of SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets". The Company evaluates long-lived
assets whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss would be
recognized when estimated undiscounted future cash flows expected to result from
the use of the asset and its eventual disposal are less than its carrying
amount. In such instances, the carrying value of long-lived assets is reduced to
the estimated fair value, as determined using an appraisal or discounted cash
flows, as appropriate.

Restructuring Costs

The Company recognizes obligations associated with restructuring activities in
accordance with SFAS No. 146, "Accounting for Costs Associated with Exit or
Disposal Activities." The Company adopted the provisions of SFAS No. 146 as of
the beginning of fiscal 2003, which generally requires a liability for costs
associated with an exit or disposal activity be recognized and measured
initially at its fair value in the period in which the liability is incurred.
The overall purpose of the Company's restructuring actions is to lower overall
operating costs and improve profitability by reducing excess capacities.
Restructuring costs (Note 8) are typically recorded in other operating expenses
in the period in which the plan is approved by the Company's senior management
and, where material, the Company's Board of Directors, and when the liability is
incurred.

Leased Assets

Assets held under the terms of capital leases are included in property and
equipment and are depreciated on a straight-line basis over the lesser of the
useful life of the asset or the term of the lease. Obligations for future lease
payments, less attributable finance charges are shown within liabilities and are
analyzed between amounts falling due within and after one year. Operating lease
rentals are charged to the Consolidated Statement of Operations as incurred.

Pension Costs

During the year the Company had two defined contribution plans. One of the
defined contribution pension plans covers all employees in the US; the other,
employees in the UK. Prior to December 31, 2002, a defined benefit pension plan
provided benefits to employees in the UK based on their final pensionable
salary. As of December 31, 2002, the defined benefit pension plan was curtailed.
The gain on curtailment was recognized in the Statement of Operations according
to SFAS No. 88, "Employees' Accounting for Settlements and Curtailments of
Deferred Benefit Pension Plan and for Termination Benefits". The pension cost of
the plan is accounted for in accordance with SFAS No. 87, "Employers' Accounting
For Pensions". Pension information is presented in accordance with the currently
required provisions of SFAS No. 132, "Employers' Disclosures About Pensions And
Other Post Retirement Benefits". The net asset at transition, prior service cost
and net (loss)/gain subject to amortization, outside the corridor, are being
amortized on a straight-line basis over periods of 15 years, 10 years and 10
years respectively. The Company recognized all actuarial gains and losses
immediately for the purposes of its minimum pension liability.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the dates of the financial
statements and the results of operations during the reporting periods. Although
these estimates are based upon management's best knowledge of current events and
actions, actual results could differ from those estimates.

Income Per Share

Income per share is computed in accordance with SFAS No. 128, "Earnings Per
Share". Basic income per share is computed by dividing net income available to
common stockholders by the weighted average number of common shares outstanding
during the year. The computation of diluted income per share is similar to the
computation of basic income per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. Diluted
income per share reflects the potential dilution that could occur if dilutive
securities and other contracts to issue common stock were exercised or converted
into common shares or resulted in the issuance of common shares that then shared
in the income of the Company.

Segment Analysis

In accordance with the Statement of Financial Accounting Standards No. 131,
"Disclosures About Segments of an Enterprise and Related Information" (SFAS
131), the Company discloses financial and descriptive information about its
reportable operating segments. Operating segments are components of an
enterprise about which separate financial information is available and regularly
evaluated by the chief operating decision maker in deciding how to allocate
resources and in assessing performance.

Loans and Warrants

In accordance with Accounting Principles Board ("APB") Opinion No. 14
"Accounting for Convertible Debt and Debt issued with Share Purchase Warrants",
loans and warrants are recorded at their pro-rata fair values in relation to the
proceeds received with the portion allowable to the warrants accounted for as
paid-in-capital. The costs of raising long-term financing are capitalized as an
asset and are amortized, using the effective interest method, over the term of
the debt.

Stock-Based Compensation

The Company accounts for its stock option and stock-based compensation
arrangements plans using the intrinsic-value method. Under the intrinsic value
method, the difference between the amount the employee will pay the Company for
stock acquired under the Company's incentive plans and the stock's fair value on
the date of grant is charged to expense. Since employees must pay the Company
the grant date fair value for stock options, no expense is recorded for stock
options. (Alternatively, if employees did not have to pay for stock issued for
deferred stock units granted, their grant date fair value would be recorded as
expense).

The following table reconciles net income and earnings per common stock (EPS),
as reported, to pro forma net income and EPS, as if the Company had expensed the
grant date fair value of both stock options and deferred stock units as
permitted by SFAS No. 123, "Accounting for Stock Based Compensation" ("SFAS
123"). These pro forma amounts may not be representative of the initial impact
of adopting SFAS 123 since, as amended, it permits alternative methods of
adoption.

<PAGE>
<TABLE>
<CAPTION>

                                                Year ended December         Year ended            Year Ended
                                                     31, 2005           December 31, 2004      December 31, 2003
                                              ------------------------ --------------------- ----------------------

                                                       $000                    $000                  $000
<S>                                               <C>       <C>          <C>                    <C>       <C>
Net income                   As reported               $1,491                  $17,594                $3,728
Less: Pro forma
expense as if stock
options were charged
against net income, net
of tax                                                   (431)                   (281)                  (67)
                                                      ----------           ------------          -------------
                             Pro forma                 $1,060                  $17,313                $3,661
Basic and Diluted EPS:       As Reported          $0.12 and $0.10        $1.45 and $1.29        $0.31 and $0.29
                             Pro forma            $0.08 and $0.07        $1.42 and $1.27        $0.31 and $0.29
</TABLE>

The weighted average fair value at the date of grant for options granted during
2005, 2004 and 2003 was $7.74, $3.44 and $1.03 respectively. The options granted
prior to 2002 are considered to have no value. These fair values were estimated
using the Black-Scholes option-pricing model, based on the following
assumptions:

                                            2005          2004          2003
Dividend yield                               0%            0%            0%
Volatility                                  56%           135%          40%
Risk-free interest rate                    3.93%          4.63%        3.72%
Expected term of options (in years)       10 years      10 years      10 years

Recently Issued Accounting Standards

In December 2004, the Financial Accounting Standards Board issued SFAS No. 123R,
Share-Based  Payment,  which is a  revision  of SFAS  No.  123.  SFAS  No.  123R
supersedes  APB 25 and amends SFAS No. 95,  Statement of Cash Flows.  Generally,
the approach in SFAS No. 123R is similar to the  approach  described in SFAS No.
123. However,  SFAS No. 123R requires all share-based  payments to employees and
non-employee  directors,  including grants of stock options, to be recognized in
the income  statement  based on their fair  values  and  requires  the use of an
option  pricing model for estimating  fair value,  which is amortized to expense
over the service periods. Pro forma disclosure is no longer an alternative. SFAS
No. 123R will be effective for the first annual period  beginning after June 15,
2005.  The impact of adoption of SFAS No. 123R cannot be  predicted at this time
because it will depend on the  amounts of  share-based  payments  granted in the
future. The Company adopted SFAS 123R effective January 1, 2006.

<PAGE>
3.       PROPERTY, PLANT AND EQUIPMENT
<TABLE>

Property, plant and equipment as of December 31 consisted of the following:
<CAPTION>
                                                                   2005            2004
                                                                   $000            $000
Property, plant and equipment at cost:

<S>                                                           <C>             <C>
Building and facilities                                         122,723         128,395
Plant, equipment, vehicles, computers and software              108,108         110,005
Assets in the course of construction                                316             330
                                                          -------------- ---------------
                                                                231,147         238,730
Less: Accumulated depreciation                                (125,542)       (128,731)
                                                          -------------- ---------------
Property and equipment, net                                    $105,605        $109,999
                                                          -------------- ---------------
</TABLE>

Depreciation expense aggregated $9,581,000, $9,530,000 and $9,049,000 for 2005,
2004 and 2003 respectively.

The net book value of assets held under capital leases and included above is as
follows:

                                      Cost       Depreciation   Net book
                                                                  Value
                                      $000          $000          $000
At December 31, 2005                  1,995         246           1,749
At December 31, 2004                    981         114            867

Depreciation on these capital leases and included above, amounted to $140,000,
$192,000, and $68,000 for the years ended at December 31, 2005, 2004 and 2003,
respectively.

4.    GOODWILL AND INTANGIBLE ASSETS

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
141, "Business Combinations", which eliminates the pooling of interests method
of accounting for business combinations and addresses the initial recognition
and measurement of goodwill and other intangible assets acquired in a business
combination. In June 2001, the FASB issued Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", or SFAS No. 142. The
Company adopted SFAS No. 142 as of January 1, 2003. SFAS No. 142 addresses the
financial accounting and reporting standards for the acquisition of intangible
assets outside of a business combination, and for goodwill and other intangible
assets subsequent to their acquisition. This statement requires that goodwill be
separately disclosed from other intangible assets in the statement of financial
position, and no longer be amortized but tested for impairment on a periodic
basis.

On July 1, 2003, the remaining 50% of the shares in HLS KK, not previously owned
by  Huntingdon,  was  purchased,  resulting  in HLS KK  becoming a wholly  owned
subsidiary  of  Huntingdon.  The  purchase  price is  payable  over a three year
period,  and is equal to the  greater of (a) $1  million  or (b) the  commission
which would have been paid if the purchase  had not  happened.  Payments  during
that  three year  period  shall be made at the rate which had been in effect for
commissions prior to the acquisition, and is payable semi-annually.  At December
31,  2005 and 2004,  goodwill on  purchase  was  Japanese  Yen  132,000,000  and
99,500,000 ($1,195,000 and $901,000 at year end rates) respectively.

Prior to this date, the shares owned by Huntingdon in HLS KK were held as an
investment, as the day to day control of HLS KK was not exercised by the
Company.

Other intangible assets represent finance costs of $922,000, associated with the
sale/leaseback  transaction,  net of  amortization  of $21,000.  These costs are
being amortized over the period of the lease.

<PAGE>

5.       INCOME TAXES

The components of income before taxes and the related benefit/(expense) for tax
for the years ended December 31 are as follows:
<TABLE>
<CAPTION>

Income/(loss) before taxes                                       2005             2004              2003
                                                                 $000             $000              $000
<S>                                                           <C>              <C>                <C>
United Kingdom                                                 10,823           13,761             1,452
United States                                                     207          (1,669)               887
Japan                                                              96              101               280
British Virgin Islands                                        (5,506)                -                 -
                                                         -------------    -------------     -------------
                                                         -------------    -------------     -------------

The benefit/(expense)for income taxes by location                2005              2004             2003
of the taxing jurisdiction for the years ended                   $000              $000             $000
December 31, consisted of the following:
Current Taxation:
-        State Taxes - US                                       (452)              (72)             (39)
-        Corporate Tax - US                                     (200)                 -                -
-        Corporate Tax - Japan                                   (55)              (44)             (86)
Deferred taxation:
-        United Kingdom                                         (326)             4,864            2,263
-        United States                                        (3,123)               651          (1,029)
-        Japan                                                     27                 2                -
                                                         -------------     -------------    -------------
                                                             $(4,129)            $5,401           $1,109
                                                         -------------     -------------    -------------

</TABLE>

Reconciliation between the US statutory rate and the effective rate is as
follows:
<TABLE>
<CAPTION>

                                                 % of income/(loss) before income taxes
                                                       2005        2004        2003
                                                          %           %           %
<S>                                                    <C>         <C>         <C>    <C>    <C>    <C>
US statutory rate                                        35          35          35
Foreign rate differential                                24         (6)         (3)
US Leaseback gain                                        59           -           -
UK R & D credit and non-deductible items               (45)        (36)          13
State taxes                                               8           1           2
Change in estimate                                      (8)        (38)        (89)

                                                ------------  ----------  ----------
Effective tax rate                                       73        (44)        (42)
                                                ------------  ----------  ----------

</TABLE>

The US leaseback gain has arisen from the sale of the US property as part of the
Sale/Leaseback  Transaction.  The  gain on the  sale of the UK  assets  has been
offset  against  brought  forward  capital  losses  resulting  in a deferred tax
movement.

The losses before tax of the British Virgin Islands represents the Alconbury
balances which have been consolidated in accordance with the provisions of FASB
Interpretation No. 46R.

The main reason for the change in estimate in 2004 relates to the Huntingdon
2002 and 2003 tax provisions. The UK government introduced a new tax allowance,
`Research and Development (R & D) Tax Credit, for large companies from April 1,
2002. At the end of 2002, it was not certain how this would apply to Huntingdon.
When submitting Huntingdon's 2002 corporation tax computation, and following
discussions with the UK Inland Revenue, Huntingdon has made a claim for the R &
D Tax Credit, which has now been accepted and the 2003 provision included in the
2004 change in estimate. The 2004 and 2005 claims are part of the non-deductible
items above. The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and liabilities as of December 31
are as follows:
<TABLE>
<CAPTION>

                                                                2005                   2004
                                                                $000                   $000

<S>                                                         <C>                    <C>

Non-current deferred tax assets:
Net operating losses - US                                     $2,285                 $5,189
Net operating losses - UK                                     18,376                 20,801
Net operating losses - Japan                                      46                     27
Net pension plan minimum liability adjustment - UK            16,001                 10,968
Capital losses - UK                                           10,739                 16,373

Valuation allowance - UK                                    (10,739)               (16,373)
                                                           ----------            -----------
Net non-current deferred tax assets                          $36,708                $36,985
                                                           ----------            -----------
Non-current deferred tax liabilities:
Property and equipment -  US                                 $   773                $   554
                       -  UK                                  22,602                 25,178
                                                           ----------            -----------
Total                                                        $23,375                $25,732
                                                           ----------            -----------
Net non-current deferred tax assets                          $13,333                $11,253

</TABLE>

In  accordance  with SFAS No. 109, the Company nets all current and  non-current
assets and liabilities by tax jurisdiction.

Of the gross amount of net operating losses in the US of $1,244,000 expires in
2018, $523,000 expires in 2019, $1,087,000 expires in 2021, $492,000 expires in
2022, $3,000 expires in 2023, $1,815,000 expires in 2024, and $495,000 expires
in 2025. The gross amount of net operating losses in the UK of $61,255,000 have
no expiration date. The Company has not provided a valuation allowance on the
net operating loss carry forwards because it believes that it is more likely
than not that those amounts will be realized through taxable income from future
operations. A full valuation allowance has been recorded for the total benefit
of capital losses incurred in prior years, as the Company does not anticipate
that the benefit will be realized in the foreseeable future through the
recognition of capital gains.
<PAGE>

6.       LONG-TERM DEBT AND RELATED PARTY LOANS

                                             2005                 2004
                                             $000                 $000
Non-bank loans                                  -               43,424
Alconbury loan                             30,000                    -
Warrants                                    (389)                (310)
Capital leases, net of current                819                  376
portion
Convertible Capital Bonds                       -               46,195

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

                                          $30,430              $89,685

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

<TABLE>
<CAPTION>

Repayment Schedule                     Total          2007         2008         2009          2010       Thereafter
                                       $000           $000         $000         $000          $000          $000

<S>                                    <C>          <C>             <C>          <C>         <C>           <C>
Alconbury loan                         30,000       30,000             -           -           -             -
Warrants                                 (389)        (389)            -           -           -             -
Capital leases                            819          473           346           -           -             -

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

                                      $30,430      $30,084          $346          $-          $-            $-

                                   -------------- ------------- ----------- ------------- ------------- -------------
</TABLE>

Bank Loans and Non-Bank Loans

On January 20, 2001, the Company's non-bank loan of (pound)22.6 million ($41.4
million approximately), was refinanced by Stephens Group Inc. and other parties.
The loan was transferred from Stephens Group Inc. to an unrelated third party
effective February 11, 2002. It was repayable on June 30, 2006 and interest was
payable quarterly at LIBOR plus 1.75%. At the same time the Company was required
to take all reasonable steps to sell off such of its real estate assets through
sale/leaseback transactions and/or obtaining mortgage financing secured by the
Company's real estate assets to discharge this loan. The loan was held by LSR
Ltd and was secured by the guarantees of the wholly owned subsidiaries of the
Company including LSR Ltd., Huntingdon Life Sciences Ltd and Huntingdon Life
Sciences Inc., and collateralized by all the assets of these companies. On June
14, 2005 this non bank loan was fully repaid using the proceeds from the
Sale/Leaseback Transaction and cash on hand.

On October 9, 2001, on behalf of Huntingdon, LSR issued to Stephens Group Inc.
warrants to purchase up to 704,425 shares of LSR Voting Common Stock at a
purchase price of $1.50 per share. These warrants were subsequently transferred
to an unrelated third party. The LSR warrants are exercisable at any time and
will expire on October 9, 2011. These warrants arose out of negotiations
regarding the refinancing of the bank loan by the Stephens Group Inc., in
January 2001. In accordance with APB Opinion No. 14, Accounting for Convertible
Debt and Debt Issued with Stock Purchase Warrants ("APB 14") the warrants were
recorded at their pro rata fair values in relation to the proceeds received on
the date of issuance and treated as a debt discount. The value of the warrants
was $430,000. 154,425 of such warrants were exercised in 2004. No additional
exercises were made in 2005.

On June 14, 2005, the Company entered into and consummated the Sale/Leaseback
Transaction with Alconbury. Alconbury is a newly formed company controlled by
LSR's Chairman and CEO, Andrew Baker. The total consideration paid by Alconbury
for the three properties was $40 million, consisting of $30 million cash and a
five year, $10 million variable rate subordinated promissory note, which
Alconbury agreed to make a best effort to repay within twelve months. The
Company agreed to pay the expenses incurred by Alconbury in the Sale/Leaseback
Transaction of approximately $4.8 million, subject to Alconbury's obligation to
reimburse those expenses in the future. Such reimbursement shall be made in
equal installments in each year of the five-year period beginning on June 14,
2008, the third anniversary of the closing date of the Sale/Leaseback
Transaction.

As part of the Sale/Leaseback Transaction, the Company (through subsidiaries)
entered into thirty-year leases with Alconbury for each facility, with two
five-year renewal options. Base aggregate annual rent for the facilities is $4.9
million (approximately $1.8 million in the US and approximately $3.1 million in
the UK) which amount will increase by 3% each year for the UK facilities and by
an amount equal to the annual US consumer price index for the US facility. Under
the terms of the leases, no security deposit was initially required, but a
three-month security deposit will be required at such time that Alconbury
refinances its current financing arrangements. Additionally, because the leases
are "triple net" leases, LSR will also pay for all of the costs associated with
the operation of the facilities, including costs such as insurance, taxes and
maintenance.

Since the Sale/Leaseback Transaction was with a related party (Mr. Baker, LSR's
Chairman and CEO and the controlling owner of Alconbury), an Independent
Committee of LSR's Board of Directors (the "Committee") was formed to analyze
and consider the proposed Sale/Leaseback Transaction. The Committee was
comprised of the three independent directors of LSR: Gabor Balthazar, Afonso
Junqueiras and Yaya Sesay. The Committee retained independent legal and
financial advisors to assist in its analysis. The Committee and LSR's senior
management (other than Mr. Baker) negotiated the key terms and provisions of the
Sale/Leaseback Transaction with Alconbury. The Committee also obtained
appraisals of the facilities from independent real estate appraisal firms.

The proceeds from the Sale/Leaseback Transaction (plus additional cash on hand)
were used by the Company to pay in full its (pound)22.6 million non-bank debt
(approximately $41.1 million).

Due to the consolidation resulting from the Company's adoption of FIN 46R, the
Company's financial statements reflect a loan by an unrelated third party in the
aggregate principal amount of $30 million. This loan has a maturity date of June
14, 2006, with the right to extend the term one additional year. Alconbury
intends to refinance this debt on a long-term basis prior to the maturity date
of June 14, 2006. However, if the long term financing is not available,
Alconbury has advised the Company that it intends to exercise the one-year
renewal option, and accordingly, has classified the loan as long-term debt. The
loan, which carries an annual interest rate of 15%, has been secured by first
priority lien on all the assets, including the facilities, of Alconbury, and is
also personally guaranteed by the owner of Alconbury. This loan is currently
payable in twelve monthly installments of interest only, with a balloon payment
of $30 million due on June 14, 2006.

Convertible Capital Bonds

The remainder of the Company's long term financing is provided by Convertible
Capital Bonds repayable in September 2006. At the time of the issue in 1991,
these bonds were for $50 million par and at December 31, 2005 and 2004 $46.2
million was outstanding. They carry interest at a rate of 7.5% per annum,
payable biannually in March and September. During 2002, the Company repurchased
and cancelled $2,410,000 principal amount of such bonds resulting in a $1.2
million gain recorded in other income/expense. In 2003 the Company further
repurchased and cancelled $1,345,000 principal amount of such bonds resulting in
a gain of $0.6 million recorded in other income/expense. At the current
conversion rate, the number of shares of Voting Common Stock to be issued on
conversion and exchange of each unit of $10,000 comprised in a bond would be 49.
The conversion rate is subject to adjustment in certain circumstances.

These bonds are currently being redeemed with the proceeds from the New
Financing, as disclosed in Note 16 - Subsequent Events.

<PAGE>

Related Party Transactions

On June 11, 2002 LSR issued to Focused Healthcare Partners ("FHP"), an entity
controlled by Andrew Baker, the Company's Chairman and CEO, warrants to purchase
up to 410,914 shares of LSR Voting Common Stock at a purchase price of $1.50 per
share. The LSR warrants are exercisable at any time and will expire on June 11,
2012. These warrants arose out of negotiations regarding the provision of a $2.9
million loan facility made available to the Company on September 25, 2000 by Mr.
Baker. This loan was paid in full in 2002. In accordance with APB 14 the loan
and warrants were recorded at their pro rata fair values in relation to the
proceeds received. As a result, the value of the warrants was $250,000.

On June 14, 2005, the Company completed the Sale/Leaseback Transaction with
Alconbury, a company controlled by Mr. Baker, LSR's Chairman and CEO. The
Company agreed to pay the expenses incurred by Alconbury in the Sale/Leaseback
Transaction of approximately $4.8 million, subject to Alconbury's obligation to
reimburse those expenses in the future. Such reimbursement shall be made in
equal instalments in each year of the five-year period beginning on June 14,
2008, the third anniversary of the closing date of the Sale/Leaseback
Transaction.

Alconbury has received an interest free loan of $250,000, which has been
included in accrued expenses and other liabilities, from Andrew Baker, LSR's
Chairman and CEO.

Brian Cass, President and Managing Director of LSR, acquired 400,000 shares of
LSR Common Stock in the Private Placement. Mr. Cass acquired such shares through
the delivery of two promissory notes. Both such promissory notes, each in the
amount of (pound)211,679 ($363,411), are due on March 28, 2007; bear interest at
the rate of 5% per annum; and are secured by the 200,000 shares of LSR Common
Stock purchased with the proceeds of each such loan. The due date of each
promissory note would be accelerated if Mr. Cass voluntarily resigned from his
employment with LSR or had his employment terminated. Repayment of one of the
promissory notes will be made by automatic deduction of (pound)44,000 ($75,539)
per year from the (pound)66,000 ($113,309) per year pension contribution made by
the Company to a pension plan established by Mr. Cass. The other note is further
collateralized by the (pound)214,500 ($368,254) accrued in such pension account.
In addition, one-third of any yearly bonus received by Mr. Cass will be used to
reduce principal of the promissory notes. Total amount of this loan as of
December 31, 2005 is (pound)120,000 ($205,000 at year-end foreign exchange
rates).

<PAGE>


7.    FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's principal financial instruments comprise cash and cash
equivalents, accounts receivables, unbilled receivables and long-term debt. The
Company does not hold financial instruments for trading purposes.

The estimated fair value of the Company's financial instruments as of December
31, 2005 and 2004 is summarized below. Certain estimates and judgments were
required to develop the fair value amounts. The fair value amounts shown below
are not necessarily indicative of the amounts that the Company would realize
upon disposition nor do they indicate the Company's intent or ability to dispose
of the financial instrument.
<TABLE>
<CAPTION>

                                                                    2005                          2004
                                                             Carrying       Estimated        Carrying    Estimated
                                                                Value      Fair Value           Value   Fair Value
                                                                 $000            $000            $000         $000

Primary financial instruments held or issued to finance the Company's operations:

<S>                                                           <C>             <C>             <C>          <C>
Cash and cash equivalents                                     $15,420         $15,420         $33,341      $33,341
Accounts receivable                                            26,810          26,810          27,841       27,841
Short-term debt (excluding the Convertible Capital
Bonds in 2005)                                                    751             751             719          719
Accounts payable                                               15,742          15,742          13,547       13,547
Fees invoiced in advance                                       32,920          32,920          37,574       37,574
Long-term debt (excluding the Convertible Capital
Bonds in 2004)                                                 30,430          30,430          43,490       43,490
Convertible Capital Bonds                                      46,195          46,195          46,195       46,195
Pension liabilities                                            53,382          53,382          36,603       36,603
</TABLE>

The following methods and assumptions were used by the Company in estimating its
fair value disclosure for financial instruments:

Cash and cash equivalents, capital leases - short term, accounts payable and
fees invoiced in advance: The estimated fair value of these financial
instruments approximates their carrying values due to their short maturities.

Accounts receivables: The estimated fair value of these financial instruments
approximates their carrying value due to their short maturities, less any
provision for bad debt.

Long-term debt: The carrying value of these financial instruments approximates
the fair value due to their variable interest rates.

Convertible Capital Bonds: The estimated fair value of the Company's Convertible
Capital Bonds is based on market prices at year-end.

8.       RESTRUCTURING COSTS

During the fourth quarter of 2003, the Company recorded restructuring charges of
$3,551,000 including impairment of fixed assets of $2,014,000, and employee
severance of $1,537,000 associated with the UK facilities. These charges arose
from the consolidation of duplicate facilities in response to changes in the
market, particularly for non-pharmaceutical services, and the closure of excess
and outdated toxicology capacity. This restructuring will improve the efficiency
of the Company's operations and did not impair its ability to service clients'
needs.

9.       OTHER INCOME/(EXPENSE)
<TABLE>
<CAPTION>

                                                               2005           2004           2003
                                                               $000           $000           $000
<S>   <C>                                                 <C>               <C>           <C>

      Exchange (loss)/gain on Capital Bonds                $(5,144)         $3,345         $4,760
      Other exchange gains - intercompany balances              518              -              -
      Amortization of financing costs                       (2,780)              -              -
      Gain on partial repurchase of Capital Bonds                 -              -            602
      Cost of currency hedge contract                             -          (455)              -
                                                     ---------------    -----------    -----------
                                                           $(7,406)         $2,890         $5,362
                                                     ---------------    -----------    -----------

</TABLE>


10.      COMMITMENTS AND CONTINGENCIES

Commitments

The Company leases certain equipment under various non-cancelable operating and
capital leases. The Company is also obligated under purchase agreements,
including long term power contracts. These commitments are set out in the table
below:

<TABLE>
<CAPTION>
                                                                   Year ended December 31
                                    Total     2006      2007       2008      2009      2010       2011+
                                    $000      $000      $000       $000      $000      $000       $000
<S>                               <C>         <C>       <C>        <C>       <C>      <C>       <C>
Capital lease obligations          $1,524     $  609     $ 550      $ 365         -       -          -
Operating leases                    1,852        781       571        345       154       1          -
Purchase obligations                3,716      2,809       907          -         -       -          -

Pension plan obligations           25,750      5,150      5,150      5,150     5,150    5,150        -
                                  ----------- --------- ---------- --------- --------- ---------- ---------
                                  $32,842     $9,349     $7,178     $5,860    $5,304   $5,151        -
                                  ----------- --------- ---------- --------- --------- ---------- ---------
</TABLE>

Capital lease payments are as follows:
                                                             $000
Total payments due                                          $1,524
Less amounts representing interest                           (241)
                                                             ----------------
Present value of net minimum lease payments                  1,283
Less current portion of capital lease obligations            (464)
                                                             ----------------
Non-current portion of capital lease obligations             $819

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

Depreciation on these capital leases amounted to $140,000, for the year ended
December 31, 2005.

Operating lease expenses were as follows:

                                 2005        2004       2003
                                 $000        $000       $000
Plant and equipment               441        291         451
Other operating leases            418        405         410

Contingencies

The Company is party to certain legal actions arising out of the normal course
of its business. In management's opinion, none of these actions will have a
material effect on the Company's operations, financial condition or liquidity.
No form of proceedings has been brought, instigated or is known to be
contemplated against the Company by any government agency.

<PAGE>

11.      SHAREHOLDERS' EQUITY

Common Stock

As of December 31, 2005 and 2004 LSR had outstanding 12,553,251 and 12,441,281
shares of Voting Common Stock of par value of $0.01 each respectively.

Share option plans

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR 2001 Equity Incentive Plan was adopted effective October 4, 2001.
Adoption of the LSR 2001 Equity Incentive Plan enables LSR to use stock options
(and other stock-based awards) as a means to attract, retain and motivate key
personnel. This stock option plan was approved by the shareholders of LSR, prior
to the acquisition of Huntingdon.

Awards under the LSR 2001 Equity Incentive Plan may be granted by a committee
designated by the LSR Board pursuant to the terms of the LSR 2001 Equity
Incentive Plan (which has designated the Compensation Committee for such
purpose) and may include: (i) options to purchase shares of LSR Voting Common
Stock, including incentive stock options ("ISOs"), non-qualified stock options
or both; (ii) stock appreciation rights ("SARs"), whether in conjunction with
the grant of stock options or independent of such grant, or stock appreciation
rights that are only exercisable in the event of a change in control or upon
other events; (iii) restricted stock consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v) bonus stock and awards in lieu of cash compensation; (vi) dividend
equivalents, consisting of a right to receive cash, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of LSR Voting Common Stock or other periodic payments; or (vii) other
awards not otherwise provided for, the value of which are based in whole or in
part upon the value of the LSR Voting Common Stock. Awards granted under the LSR
2001 Equity Incentive Plan are generally not assignable or transferable except
pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award, thereby requiring forfeiture of all or part of any
award if performance objectives are not met or linking the time of
exercisability or settlement of an award to the attainment of performance
conditions. For awards intended to qualify as "performance-based compensation"
within the meaning of Section 162 (m) of the United States Internal Revenue Code
such performance objectives shall be based solely on (i) annual return on
capital; (ii) annual earnings or earnings per share; (iii) annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's Compensation Committee, which administers the 2001 LSR Equity Incentive
Plan, has the authority, among other things, to: (i) select the directors,
officers and other employees and independent contractors entitled to receive
awards under the 2001 LSR Equity Incentive Plan; (ii) determine the form of
awards, or combinations of awards, and whether such awards are to operate on a
tandem basis or in conjunction with other awards; (iii) determine the number of
shares of LSR Voting Common Stock or units or rights covered by an award; and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity Incentive Plan, including any restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting schedules, any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for participating personnel and
the Company including by way of example to ensure that there is no tax on the
grant of the rights and that such tax only arises on the exercise of rights or
otherwise when the LSR Voting Common Stock unconditionally vests and is at the
disposal of such participating personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased pursuant to the grant of stock options
under the 2001 LSR Equity Incentive Plan is to be determined by the Compensation
Committee at the time of grant in its discretion, which discretion includes the
ability to set an exercise price that is below the fair market value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The number of shares of LSR Voting Common Stock that may be subject to
outstanding awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately after the grant of any award) may not exceed 20 percent of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The 2001 LSR Equity Incentive Plan may be amended, altered, suspended,
discontinued, or terminated by the LSR Board without LSR Common Stockholder
approval unless such approval is required by law or regulation or under the
rules of any stock exchange or automated quotation system on which LSR Voting
Common Stock is then listed or quoted. Thus, LSR Common Stockholder approval
will not necessarily be required for amendments, which might increase the cost
of the plan or broaden eligibility. LSR Common Stockholder approval will not be
deemed to be required under laws or regulations that condition favorable tax
treatment on such approval, although the LSR Board may, in its discretion, seek
LSR Common Stockholder approval in any circumstances in which it deems such
approval advisable.

The LSR Board has designated the Compensation Committee of the Board to serve as
the Stock Option Committee. LSR made grants under the LSR 2001 Equity Incentive
Plan on March 1, 2002 to certain directors and key employees at that time.

Grants to Directors
Name                                     Number Granted
----                                     --------------
Gabor Balthazer                                    20,000
John Caldwell                                      20,000
Kirby Cramer                                       40,000

Grants to Named Executive Officers
Name                                     Number Granted
----                                     --------------
Andrew Baker                                      200,000
Mark Bibi                                          50,000
Brian Cass                                        200,000
Julian Griffiths                                   60,000
Richard Michaelson                                 90,000

All such options have ten-year terms; 50% of the shares subject to grant are
immediately exercisable with the remaining 50% exercisable one year after the
grant date (meaning all such options fully vested as of March 1, 2003); and all
have an exercise price of $1.50 per share, the price at which the Company sold
shares of Common Stock in the Private Placement. Options to purchase an
aggregate of 1,188,000 shares of LSR Common Stock (including those specified
above) were granted during the two years 2002 and 2003 to employees and
directors, on the terms set forth above, are listed below:

Date of Grant                 Numbers Granted             Exercise Price
-------------                 ---------------             --------------
March 1, 2002                   1,142,000                 $1.50
September 3, 2002                  20,000                 $2.40
October 21, 2002                   15,000                 $2.03
February 14, 2003                  11,000                 $1.80

In 2004, in addition to the options granted under the 2004 LTIP referred to
below, options to purchase an aggregate of 67,100 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant                Numbers Granted              Exercise Price
-------------                ---------------              --------------
April 12, 2004                    37,100                  $1.85
October 28, 2004                  17,400                  $7.70
December 15, 2004                 12,600                  $9.52


In 2005, options to purchase an aggregate of 23,600 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, or the terms set forth above, are listed below:

Date of Grant               Numbers Granted             Exercise Price
-------------               ---------------             --------------
May 23, 2005                      3,600                 $12.00
June 27, 2005                    20,000                 $11.00

2004 Long Term Incentive Plan

Effective June 1, 2004 the Company adopted the 2004 Long Term Incentive Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components: a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663 shares of common stock were granted
to 32 key employees of the Company as of June 1, 2004 under the 2004 LTIP;
55,500 of such options were granted to Andrew Baker, the Company's Chairman and
CEO, 55,500 of such options were granted to Brian Cass, the Company's Managing
Director and President, 30,303 of such options were granted to Richard
Michaelson, the Company's CF0, 27,750 of such options were granted to Julian
Griffiths, the Company's Vice President of Operations and 20,545 were granted to
Mark Bibi the Company's General Counsel and Secretary. The exercise price of all
such options is $3.30, the market price of LSR common stock on June 1, 2004. All
such options have ten-year terms and are exercisable in full on March 31, 2007.
At December 31, 2005, 356,419 shares under the 2004 LTIP option plan were
outstanding and none were exercisable.

The following table summarizes stock option activity under the Company's option
plans.
<TABLE>
<CAPTION>

                                                   Shares         Wtd Avg. Ex         Number of securities remaining
                                                   (000)             Price             available for future issuance

<S>                                               <C>               <C>                         <C>
Outstanding - December 31, 2004                    1,386             $2.13

Granted                                              24              $11.15
Lapsed                                              (14)             $1.64
Exercised                                          (112)             $1.61
                                                 -----------    -----------------    ----------------------------------
Outstanding - December 31, 2005                    1,284             $2.35                       1,791,000
                                                 -----------    -----------------    ----------------------------------
Exercisable at end of year                          916
Weighted average fair value per
option granted in 2005 was                         $7.74
</TABLE>

Huntingdon Life Sciences Group plc Stock Option Plan

Huntingdon Life Sciences Group plc issued options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such Huntingdon plans lapsed on March 26, 2002 in connection with
LSR's acquisition of Huntingdon, except for those granted under the Unapproved
Stock Option Plan (the "Unapproved Plan"). Under the Unapproved Plan, some
options technically remain outstanding. However, such options are exercisable
only for shares of Huntingdon, a 100% wholly owned subsidiary of LSR, and are
therefore considered to have no value.

Warrants

On October 9, 2001, on behalf of Huntingdon, LSR issued to Stephens Group Inc.
warrants to purchase up to 704,425 shares of LSR Voting Common Stock at a
purchase price of $1.50 per share. Stephens Group Inc. subsequently sold the
warrants to independent third parties. The LSR warrants are exercisable at any
time and will expire on October 9, 2011. These warrants arose out of
negotiations regarding the refinancing of the bank loan by the Stephens Group
Inc., in January 2001. In accordance with APB Opinion No. 14, Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants ("APB 14") the
warrants were recorded at their pro rata fair values in relation to the proceeds
received on the date of issuance. As a result, the value of the warrants was
$430,000. 154,425 of such warrants were exercised in 2004. No additional
warrants were exercised in 2005.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914 shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are exercisable at any time and will expire on June 11, 2012. These warrants
arose out of negotiations regarding the provision of the $2.9 million loan
facility made available to the Company on September 25, 2000 by Mr. Baker, who
controls FHP. In accordance with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the proceeds received. As a result,
the value of the warrants was $250,000. None of these warrants have been
exercised as of December 31, 2005.

On October 24, 2003, 100,000 warrants were issued at the market price on the day
of $2.05. On January 4, 2005 100,000 warrants were issued at the market price on
the day of $10.70. 50,000 are exercisable from January 4, 2007 and 50,000 from
January 4, 2008. In all cases, these warrants were issued to independent
consultants in connection with financial and strategic advice.

On November 9, 2005 625,000 warrants were issued to a third party
advisory/lobbying firm at the closing market price on the day of $10.46. These
warrants will vest upon the successful completion of specific goals outlined in
the engagement letter with such firm, and will expire on November 9, 2010.

On November 9, 2005 300,000 warrants were issued to an independent third party
financial advisor as partial consideration for providing financial advisory
services to the Company in obtaining financing. These were issued at an exercise
price of $10.46 per share, the closing market price on the date the Company
engaged the financial advisor. Such warrants will vest upon closing of said
financing, and will expire on November 9, 2005.

See Note 16 - Subsequent Events

In accordance with Emerging Issues Task Force No. 96-18, the Company has
recorded the value of the November 2005, performance-based warrant issuances, at
their lowest aggregate market value, which is zero. When the performance
conditions have been met, the Company will record these issuances based upon the
fair value of the warrants on the date of performance completion.

A summary of warrants outstanding at December 31, 2005 is as follows:

Date of issue            Warrants      Exercise price      Expiration Date
October 9, 2001           550,000           $1.50          October 9, 2011
June 11, 2002             410,914           $1.50          June 11, 2012
October 24, 2003          100,000           $2.05          October 24, 2013
January 4, 2005           100,000          $10.70          January 4, 2015
November 9, 2005          625,000          $10.46          November 9, 2010
November 9, 2005          300,000          $10.46          November 9, 2015


<PAGE>


12.  EMPLOYEE BENEFITS

Prior to December 31, 2002, the Company operated the Huntingdon Life Sciences
Pension and Life Assurance Scheme (the "HLS Defined Benefit Pension Plan") a
funded pension plan providing benefits, based on final pensionable salary, for
certain Company employees in the UK. The Plan had been closed to new entrants
from April 5, 1997 and as of December 31, 2002, the accumulation of plan
benefits of employees in the plan was permanently suspended, and therefore, the
HLS Defined Benefit Pension Plan was curtailed. This suspension of benefits
resulted in a gain on curtailment of $8.4 million at December 31, 2002, which
has been recorded as a reduction of the Company's unrecognized net actuarial
loss.

The components of the net periodic benefit cost of the HLS Defined Benefit
Pension Plan for the years ended December 31, are as follows:
<TABLE>
<CAPTION>

                                                       2005                2004                2003
                                                       $000                $000                $000

<S>                                                  <C>                 <C>                 <C>
Interest cost on projected benefit obligation        $7,960              $7,294              $6,101
Expected return on plan assets                       (8,836)             (8,298)             (7,279)
Amortization of transition asset                          -                (145)               (277)
Amortization of actuarial loss                        1,627                 854                 710
                                                 ------------       ------------       -------------
Net periodic cost/(benefit)                            $751              $(295)              $(745)
                                                 ------------       ------------       -------------
</TABLE>

The major assumptions used in calculating the pension expense were:

                                                2005        2004       2003
Discount rate                                   5.5%        5.5%       5.5%
Rate of increase of future compensation          N/A         N/A        N/A
Long-term rate of return on plan assets         8.0%        8.0%       8.0%

The overall expected return on plan assets for 2005 was the average of 5.5% per
annum expected for debt securities and 9.0% per annum for equity securities and
other assets held. The expected returns were based on market yields at the
measurement date. Expected returns on the equity and `other' assets allowed for
expected economic growth.

<PAGE>

A reconciliation of the projected benefit obligation for the HLS Defined Benefit
Pension Plan to the accrued pension expense recorded as of December 31 is as
follows:
<TABLE>
<CAPTION>

                                                                      2005                2004                 2003
                                                                      $000                $000                 $000

<S>                                                             <C>                 <C>                  <C>
Projected benefit obligation                                    $(169,640)          $(154,613)           $(123,892)
Plan assets at market value                                        116,305             118,054              102,483
                                                               ------------       -------------       --------------
Funded status                                                    $(53,335)           $(36,559)            $(21,409)
Unrecognized net actuarial loss                                     57,472              41,211               24,875
Adjustment for minimum liability - pretax                         (57,472)            (41,211)             (24,734)
Unrecognized net asset at transition                                     -                   -                (141)
                                                               ------------       -------------       --------------
(Accrued)/prepaid pension expense                                $(53,335)           $(36,559)            $(21,409)
                                                               ------------       -------------       --------------
Change in plan assets
Fair value of assets, beginning of year                           $118,054            $102,483              $81,356
Foreign currency changes                                          (12,489)               7,702                8,884
Actual gain on plan assets                                          15,039              11,308               16,202
Employer contributions                                                 687                 768                  809
Benefit payments                                                   (4,986)             (4,207)              (4,768)
                                                               ------------        ------------       --------------
Fair value of assets, end of year                                 $116,305            $118,054             $102,483
                                                               ------------        ------------       --------------

Change in projected benefits obligation
Projected benefit obligation, beginning of year                   $154,613            $123,892              $99,068
Foreign currency changes                                          (16,356)               9,311               10,819
Interest cost                                                        7,511               7,643                6,216
Actuarial losses                                                    28,858              17,974               12,557
Benefit payments                                                   (4,986)             (4,207)              (4,768)

                                                               ------------        ------------       --------------
Projected benefit obligation, end of year                         $169,640            $154,613             $123,892

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

The major assumptions used in calculating the pension obligations were

                                                                      2005                 2004                 2003
Discount rate                                                        4.75%                 5.5%                 5.5%
Rate of compensation increase                                          N/A                  N/A                  N/A
</TABLE>

The accumulated benefit obligation is the same as the projected benefit
obligation as the pension plan has been curtailed.

The Trustees of the pension plan aim to invest with a broad split of 60/40
between their two fund managers. The first manager invests in unit funds that
hold portfolios of shares (76%), hedge funds (16%) and property funds (8%). The
second manager invests in funds holding predominantly index-linked bonds, gilts
and corporate bonds (67% in total) and in a fund of UK equities designed to
track the FTSE All-Share Index (33%). These percentages are approximate and kept
under review.

The pension plan target split of investment types is as follows:

Equity Securities                          59%
Debt Securities                            27%
Real Estate                                 5%
Other                                       9%
                                    -----------
Total                                     100%
                                    ===========


The asset allocation is weighted towards equity investment whilst the liability
profile contains a greater proportion of monetary liabilities. The investment
stance has been undertaken in expectation of higher long-term returns, but is
kept under review by the Trustees. Over the year the Trustees have reduced their
exposure to equities in stages, to introduce commercial property and `absolute
return' products, so as to increase the range of investments used by the scheme.
In principle, this wider range of assets should help maintain the overall
portfolio return, but should reduce variability (and hence reduce the risk to
the scheme).

The pension plan weighted average asset allocations at December 31, 2005 and
2004, by asset category are as follows:

                                  2005               2004
Equity Securities                 59%                61%
Debt Securities                   29%                30%
Real Estate                        4%                 4%
Other                              8%                 5%
                              -------------      -------------
Total                            100%               100%
                              =============      =============

The company expects to contribute $4,635,000 ((pound)2,700,000) plus expenses to
its pension plan in 2006. The following benefit payments are expected to be paid
in each of the next five years, and in aggregate for the following five years
thereafter.

                                              Pension Benefits
                                                   $000's
                                2006                3,535
                                2007                3,707
                                2008                3,798
                                2009                3,937
                                2010                4,084
                             2011 - 2015           24,758


On April 6, 1997 the Company established a defined contribution plan, the Group
Personal Pension Plan, for Company employees in the UK. Additionally, a defined
contribution plan (401-K plan) is also available for employees in the US. The
retirement benefit expense for these plans for the year ended December 31, 2005,
2004 and 2003 were $3.3 million, $2.5 million and $2.5 million respectively.

<PAGE>

13.  GEOGRAPHICAL ANALYSIS

During each of the years ended December 31, 2005, 2004 and 2003, the Company
operated from within two segments based on geographical markets, the United
Kingdom and the United States. The Company had one continuing activity, Contract
Research, throughout these periods.

The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies. Transactions
between segments, which are immaterial, are carried out on an arms-length basis.
Interest income, interest expense and income taxes are also not reported on an
operating segment basis because they are not considered in the performance
evaluation by the Company's chief operating decision-maker. Geographical segment
information is as follows:
<TABLE>
<CAPTION>
                                                                 US             UK          Corporate        Total
                                                                $000           $000            $000          $000

<C>                                                           <C>             <C>             <C>          <C>
2005       Revenues                                           $36,959         $135,054              -       $172,013
           Operating   income   before  other   operating
           income/(expense)                                     5,239           22,531         (6,751)        21,019
           Operating income                                     5,239           22,531         (6,751)        21,019
           Long-lived assets (A)                               21,569          134,436         12,874        168,879
           Property and equipment, net                         11,139           94,448             18        105,605
           Depreciation and amortization                        1,598            7,971             12          9,581
           Capital expenditure                                  2,795           13,178              -         15,973
           Total assets                                        25,771          143,881         14,717        184,369

2004       Revenues                                           $30,403         $127,148             $-       $157,551
           Operating income before other operating
           expense                                              3,861           18,716         (6,753)        15,824
           Operating income                                     3,861           18,716         (6,753)        15,824
           Long-lived assets (A)                               19,567          143,143          3,753        166,463
           Property and equipment, net                          9,941          100,035             23        109,999
           Depreciation & amortization                          1,307            8,213             10          9,530
           Capital expenditure                                  2,066            9,023              7         11,096
           Total assets                                        25,521          169,939          4,615        200,075

2003       Revenues                                           $28,110         $104,324             $-       $132,434
           Operating income before other expense/income
                                                                2,085            9,282         (4,598)         6,769
           Operating income                                     1,914            6,127         (4,794)         3,247
           Long-lived assets (A)                               15,091          119,282          4,200        138,573
           Property and equipment, net                          9,395           92,126             26        101,547
           Depreciation & amortization                          1,896            7,146              7          9,049
           Capital expenditure                                  1,904            6,804              8          8,716
           Total assets                                        17,588          132,731          5,954        156,273
<FN>

(A)  Long-lived  assets exclude cash and cash equivalents and unamortized  costs
     of raising long-term debt.
</FN>
</TABLE>

<PAGE>

Revenues from customers (based on location of customers)

                                    2005            2004             2003
                                    $000            $000             $000
United States                    $46,758         $44,530          $38,820
Europe                            87,520          78,277           61,110
Rest of World                     37,735          34,744           32,504
                           --------------   -------------     ------------
                                $172,013        $157,551         $132,434

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

14.  ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
<TABLE>
<CAPTION>


                                           Balance as of      Exchange       Charged to     Accounts     Balance as
                                           beginning of      Adjustment      operations    written off    of end of
                                              period                                                       period
                                               $000             $000            $000          $000          $000
Allowance for uncollectible accounts
deducted from trade debtors
<S>                                            <C>              <C>            <C>            <C>           <C>
December 31, 2005                               255             (18)            125            256           618
December 31, 2004                               561              15             (94)          (227)          255
December 31, 2003                               287              29             250            (5)           561
</TABLE>


<PAGE>
15.  UNAUDITED QUARTERLY FINANCIAL INFORMATION

The following is a summary of unaudited quarterly financial information for the
12 months ended December 31, 2005 and December 31, 2004.
<TABLE>
<CAPTION>

Year ended December 31, 2005                                        Quarter Ended
                                              March 31            June 30       September 30        December 31
                                                  $000               $000               $000               $000
<S>                                           <C>                <C>                <C>                <C>
Revenues                                       $43,294            $44,941            $43,758            $40,020
Cost of sales                                 (31,082)           (32,459)           (31,673)           (29,606)
                                      --------------------------------------------------------------------------
Gross profit                                    12,212             12,482             12,085             10,414
Selling and administrative expenses            (7,012)            (7,074)            (6,410)            (5,678)
Other operating (expense)/income                     -                  -                  -                  -
                                      --------------------------------------------------------------------------
Operating income                                 5,200              5,408              5,675              4,736
Interest income                                     23                 22                 21                 13
Interest expense                               (1,783)            (1,934)            (2,138)            (2,217)
Other expense                                    (732)            (2,703)            (1,760)            (2,211)
                                      --------------------------------------------------------------------------
Income before taxes                              2,708                793              1,798                321
Income tax expense                               (184)            (2,455)              (649)              (841)
                                      --------------------------------------------------------------------------
Net income/(loss)                               $2,524           $(1,662)             $1,149             $(520)
                                      --------------------------------------------------------------------------
Earnings/(loss) per share                        $0.20            $(0.13)              $0.09            $(0.04)

                                                                    Quarter Ended
Year ended December 31, 2004                  March 31            June 30       September 30        December 31
                                                  $000               $000               $000               $000

Revenues                                       $37,236            $38,315            $40,855            $41,145
Cost of sales                                 (29,435)           (28,111)           (29,674)           (29,841)
                                      --------------------------------------------------------------------------
Gross profit                                     7,801             10,204             11,181             11,304
Selling and administrative costs               (5,485)            (6,201)            (6,659)            (6,321)
Other operating(expense)/income                      -                  -                  -                  -
                                      --------------------------------------------------------------------------
Operating income                                 2,316              4,003              4,522              4,983
Interest income                                     14                 14                 13                 73
Interest expense                               (1,576)            (1,593)            (1,689)            (1,777)
Other income/(expense)                           1,355              (625)              (105)              2,265
                                      --------------------------------------------------------------------------
Income before taxes                              2,109              1,799              2,741              5,544
Income tax benefit/(expense)                     (716)              (597)              (945)              7,659
                                      --------------------------------------------------------------------------
Net income                                      $1,393             $1,202             $1,796            $13,203
                                      --------------------------------------------------------------------------
Earnings per share                               $0.12              $0.10              $0.15              $1.07


</TABLE>


16       SUBSEQUENT EVENTS

On March 2, 2006, the Company entered into a $70 million loan (the New
Financing) under the terms of a Financing Agreement dated March 1, 2006 with a
third party lender. The borrower under the Financing Agreement is Huntingdon
Life Sciences Limited and LSR and substantially all of LSR's other subsidiaries
guarantee all of the borrower's obligations thereunder. The loan matures on
March 1, 2011 and has an interest rate of 8.25% over LIBOR (which may be reduced
to 8.00% over LIBOR upon the Company meeting certain financial tests). The
Financing Agreement contains standard financial and business covenants,
including, without limitation, reporting requirements, limitations on the
incurrence of additional indebtedness, events of default, limitations on
dividends and other payment restrictions and various financial ratio
requirements. The loan is secured by substantially all of the assets of the
Company and the Company has in connection therewith entered into a customary
Security Agreement and a customary Pledge and Security Agreement.

As partial consideration for the loan, LSR has issued to the lender 10 year
warrants to acquire 500,000 shares of LSR's common stock at an exercise price of
$12.00 per share (such exercise price determined by a premium formula based on
LSR's recent closing market prices). In addition, as partial consideration for
providing financial advisory services to assist the Company in obtaining the
loan, LSR issued to its independent third party financial advisor 10 year
warrants to acquire 300,000 shares of LSR common stock at an exercise price of
$10.46 per share (the closing market price on the date the Company engaged the
financial advisor). Certain customary registration rights were granted in
connection with these warrants. The warrants are subject to customary
anti-dilution provisions.

In addition, the 300,000 warrants that were issued to an independent third party
financial advisor on November 9, 2005 became fully vested on the closing date of
the loan, March 2, 2006.

Net proceeds from the loan of approximately $63 million will be used to redeem
the $46.2 million outstanding principal amount of the Company's 7.5% Convertible
Capital Bonds, which are due to mature in September 2006, and for general
corporate purposes.

<PAGE>
ITEM 9.      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURES

None

ITEM 9A.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. The Company's Principal
Executive Officer (the CEO) and Principal Financial Officer (the CFO) have
reviewed and evaluated the effectiveness of the Company's disclosure controls
and procedures as of the end of the period covered in this report. Based on that
evaluation, the Principal Executive Officer and the Principal Financial Officer
have concluded that the Company's current disclosure controls and procedures are
effective. There have been no significant changes in the Company's internal
controls or in the other factors that significantly affect those controls.

Internal control over financial reporting. Please refer to pages 44-45 of
this Form 10-K for Management's Report on Consolidated Financial Statements and
Internal Control, and the Internal Control Reports of the Company's Auditors.

<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The table below sets forth certain information with respect to the current
directors and executive officers of LSR.
<TABLE>
<CAPTION>

Name                       Age              Office Held
<S>                       <C>              <C>
Andrew Baker               57               Director, Chairman of the Board and Chief Executive Officer
Gabor Balthazar            64               Director
Mark Bibi                  47               General Counsel and Secretary
Brian Cass                 58               Director, Managing Director/President
Julian Griffiths           53               Vice President of Operations
Afonso Junqueiras          49               Director
Richard Michaelson         54               Chief Financial Officer
Yaya Sesay                 63               Director

</TABLE>

(a)      Identification of Directors and Executive Officers

Andrew Baker became a director and Chairman and Chief Executive Officer of LSR
on January 10, 2002. He was appointed to the Board of Huntingdon as Executive
Chairman in September 1998. He is a chartered accountant and has operating
experience in companies involved in the delivery of healthcare ancillary
services. He spent 18 years until 1992 with Corning Incorporated ("Corning") and
held the posts of President and CEO of MetPath Inc., Corning's clinical
laboratory subsidiary, from 1985 to 1989. He became President of Corning
Laboratory Services Inc. in 1989, which at the time controlled MetPath Inc. (now
trading as part of Quest Diagnostics Inc.), and Hazleton Corporation,
G.H.Besselaar Associates and SciCor Inc., all three now trading as part of
Covance Inc. Since leaving Corning in 1992, Mr. Baker has focused on investing
in and developing companies in the healthcare sector including Unilab
Corporation, a clinical laboratory services provider in California, and Medical
Diagnostics Management, a US based provider of radiology and clinical laboratory
services to health care payers. In 1997, he formed Focused Healthcare Partners
("FHP"), an investment partnership that acts as general partner for healthcare
startup and development companies.

Gabor Balthazar became a director of LSR on January 10, 2002. He was appointed
to the Board of Huntingdon as the Senior Independent Non-Executive Director in
March 2000. He has been active in international marketing and management
consulting for almost 30 years. He was a founding Board member of Unilab
Corporation, serving as President from 1989 to 1992, and continuing to sit on
Unilab's Board until November 1999. From 1985 to 1997, Mr. Balthazar served as a
consultant to Frankfurt Consult, the merger/acquisition subsidiary of BHF-Bank,
Frankfurt, Germany and to Unilabs Holdings SA, a Swiss clinical laboratory
testing holding company, from 1987 to 1992. He is a graduate of the Columbia Law
School and the Columbia Business School in New York City.

Mark Bibi became Secretary and General Counsel of LSR effective July 28, 2005.
Prior thereto he served as General Counsel of LSR and Huntingdon Life Sciences
Inc. from April 1, 2002. He served as Executive Vice President, Secretary and
General Counsel of Unilab Corporation, a clinical laboratory testing company
based in Los Angeles, California from May 1998 to November 1999 and as Vice
President, Secretary and General Counsel of Unilab from June 1993 to May 1998.
Prior thereto, Mr. Bibi was affiliated with the New York City law firms, Schulte
Roth & Zabel and Sullivan & Cromwell.

Brian Cass, FCMA, CBE, became a director and Managing Director/President of LSR
on January 10, 2002. He was appointed to the Board of Huntingdon as Managing
Director/Chief Operating Officer in September 1998. Prior to joining Huntingdon
he was a Vice President of Covance Inc. and Managing Director of Covance
Laboratories Ltd., (previously Hazleton Europe Ltd) for nearly 12 years, having
joined the company in 1979 as Controller. Brian Cass worked at Huntingdon
Research Center between 1972 and 1974 and has previous experience with other
companies in the electronics and heavy plant industries. He has also held
directorships with North Yorkshire Training & Enterprise Council Ltd and
Business Link North Yorkshire Ltd. In June 2002, Mr. Cass was also appointed as
a Commander in the Most Excellent Order of the British Empire (CBE).

Julian Griffiths MA, FCA, has served as Vice President of Operations of LSR
since July 28, 2005. Prior thereto he was Director of Operations of Huntingdon
from April 2003. He was appointed to the Huntingdon Board as Finance Director in
April 1999 and Secretary in February 2000. He served as a director of LSR from
January 10, 2002 to June 11, 2002. Prior to joining Huntingdon he was most
recently Vice President of Analytical Services in the European pre-clinical
division of Covance Inc., having spent nine years as Vice President of Finance
in the same organization. Prior to that he held various positions with KPMG.

Afonso Junqueiras became a director of LSR on January 15, 2003. He is a civil
engineer and has been President and a director of a South American private civil
engineering firm since 1997.

Richard Michaelson became Chief Financial Officer and Secretary of LSR effective
January 10, 2002. Mr. Michaelson was Director of Strategic Finance of Huntingdon
from September 1998 to December 2001. He served as Senior Vice President of
Unilab Corporation, a clinical laboratory testing company based in Los Angeles,
California, from September 1997 to December 1997, Senior Vice President-Finance,
Treasurer and Chief Financial Officer of Unilab from February 1994 to September
1997, and Vice President-Finance, Treasurer and Chief Financial Officer of
Unilab from November 1993 to February 1994. Mr. Michaelson also served as Vice
President of Unilab beginning in October 1990. Mr. Michaelson joined MetPath,
Inc., the clinical laboratory subsidiary of Corning Incorporated, in 1980 and
served as Vice President of MetPath from 1983 and Treasurer of Corning Lab
Services, Inc. from 1990 through, in each case, September 1992.

Yaya Sesay, served as a senior government official of an African nation for
approximately 25 years, culminating in his service as Financial Secretary of the
Ministry of Finance for three years. For the past five years, Mr. Sesay has been
an international businessman with an interest in the development of
pharmaceutical products.

The Articles of Amendment and Restatement of LSR provide that the directors
shall be not less than one in number and there shall be no maximum number of
directors. Any director appointed by the board of directors holds office only
until the next following annual meeting, at which time he shall be eligible for
re-election by the stockholders. Directors may be removed from office only for
cause.

No director or executive officer has a family relationship with any other
director or executive officer.

(b)      Code of Ethics

The Company has adopted a Senior Officer and Financial Personnel Code of Ethics.
A copy of such Code of Ethics is filed as Exhibit 14 in this Form 10-K.


<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION

In the 12 months ended December 31, 2005 and 2004 the aggregate compensation of
the Executive Officers and key employees as a group, paid or accrued, was
$3,442,958 and $3,322,247 respectively.

Employment Agreements

Andrew Baker

The services of Mr. Baker are provided for not less than 100 days per year
through a management services contract between Huntingdon and FHP. Mr. Baker
controls FHP. Under the contract, FHP agrees to provide the services of Mr.
Baker as Chairman and CEO of the Company. The management services contract will
continue until terminated on 12 months' written notice from either party.

Under the management services contract FHP is paid an annual fee of
(pound)330,000. Mr. Baker receives health and medical insurance benefits from
the company. He is also entitled to a non-pensionable car allowance of up to
(pound)1,000 per month. Mr. Baker receives contributions to his private pension
arrangements, equivalent to 33 percent of this basic annual fee. He is also
entitled to a non-pensionable car allowance of (pound)1,000 gross per month and
(pound)2,000 per month as relocation allowance. The management services contract
may be terminated if either FHP or Mr. Baker is guilty of serious misconduct or
is in material breach of the terms of the contract, among other reasons. In the
event of termination without "cause" following a "change in control", as
defined, FHP would receive a payment equal to 2.99 times this annualized fee
plus an amount equal to 2.99 times all incentive compensation earned or received
by FHP or Mr. Baker during the 12 months prior to termination.

Both FHP and Mr. Baker are bound by confidentiality restrictions and a
restriction preventing Mr. Baker from holding any interests conflicting with
those of the Company, without the Company's consent. Mr. Baker has undertaken to
the Company that, during the continuance of the management services contract, he
will not without the prior consent of the Company, be concerned or interested in
any business, which competes, or conflicts with the business of the Company.

Mark Bibi

The services of Mark Bibi are provided through a service agreement between him
and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of Huntingdon). The
service agreement appointed Mr Bibi as General Counsel and Secretary of
Huntingdon Life Sciences Inc. and he now also serves as the Company's General
Counsel and Secretary. Mr Bibi's service agreement will continue until
terminated by Mr Bibi on thirty days' written notice or by Huntingdon Life
Sciences Inc. on 12 months' written notice. In the event of termination without
"cause" following a "change in control", as defined, Mr Bibi would receive a
payment equal to 2.99 times his annual salary plus an amount equal to 2.99 times
all incentive compensation earned or received by Mr Bibi during the 12 months
prior to termination.

Mr Bibi receives an annual salary of $300,000 gross and is entitled to health
insurance, life insurance, personal accident insurance, medical expenses
insurance and participation in the 401(k) Plan of Huntingdon Life Sciences Inc.
Mr Bibi's service agreement also provides for the payment of a bonus to Mr Bibi
in the absolute discretion of the Company's Board.

In addition, Mr Bibi is entitled to a car allowance of $1,000 gross per month.

The agreement may be terminated if Mr Bibi is guilty of serious misconduct or is
in material breach of the terms of the service agreement, amongst other reasons.

Mr Bibi is bound by confidentiality restrictions and a restriction preventing
him from being engaged, concerned or interested in any business conflicting with
the business of the Company or any subsidiary unless the Board otherwise
consents or the interest is limited to a holding or other interest of no more
than 5 percent of the total amount of shares or securities of any company quoted
on a recognized investment exchange.

Brian Cass

The services of Mr. Cass are provided through a service agreement between
Huntingdon Life Sciences Limited (a wholly owned subsidiary of Huntingdon) and
Mr. Cass, which appoints Mr. Cass as President/Managing Director of the Company.
Mr. Cass' service agreement can be terminated on two years' written notice from
either party.

Mr. Cass receives a gross salary of (pound)330,000 per annum. Under the service
agreement, Mr. Cass is also entitled to health insurance, life insurance,
personal accident insurance and medical expenses insurance. Mr. Cass receives
contributions to his private pension arrangements, equivalent to 33 percent of
his basic annual salary. He is also entitled to a non-pensionable car allowance
of (pound)1,000 gross per month and (pound)2,000 per month as relocation
allowance. Mr. Cass' service agreement also provides for payment to Mr. Cass of
a bonus, at the absolute discretion of the Company's Board. In the event of
termination without "cause" following a "change in control", as defined, Mr.
Cass would receive a payment equal to 2.99 times his annual salary plus an
amount equal to 2.99 times all incentive compensation earned or received by Mr.
Cass during the 12 months prior to termination.

Mr. Cass' service agreement may be terminated if Mr. Cass is guilty of serious
misconduct or is in material breach of the terms of the service agreement or is
in breach of the model code for securities transactions by directors of listed
companies, among other reasons.

Mr. Cass is bound by confidentiality restrictions and a restriction preventing
him from being engaged, concerned or interested in any business that conflicts
with the business of the Company or any subsidiary unless either the Company's
Board otherwise consents or the interest is limited to a holding or other
interest of no more than 5 percent of the total amount of shares or securities
of any company quoted on a recognized investment exchange.

Julian Griffiths

The services of Mr Griffiths are provided through a service agreement between
him and Huntingdon Life Sciences Limited (a wholly owned subsidiary of
Huntingdon). The service agreement appointed Mr Griffiths as Finance Director of
Huntingdon and he now holds the position of Vice President of Operations. Mr
Griffiths' service agreement will continue until terminated by Mr Griffiths on
six months' written notice or by Huntingdon Life Sciences Limited on 12 months'
written notice. In the event of termination without "cause" following a "change
in control", as defined, Mr Griffiths would receive a payment equal to 2.99
times is annual salary plus an amount equal to 2.99 times all incentive
compensation earned or received by Mr Griffiths during the 12 months prior to
termination.

Mr Griffiths received an annual salary of (pound)165,000 gross and is entitled
to permanent health insurance, life insurance, personal accident insurance,
medical expenses insurance and pension benefits. Mr Griffiths' service agreement
also provides for the payment of a bonus to Mr Griffiths in the absolute
discretion of the Huntingdon Board.

In addition, Mr Griffiths is entitled to a non-pensionable car allowance of
(pound)750 gross per month.

The agreement may be terminated if Mr Griffiths is guilty of serious misconduct
or is in material breach of the terms of the service agreement, amongst other
reasons.

Mr Griffiths is bound by confidentiality restrictions and a restriction
preventing him from being engaged, concerned or interested in any business
conflicting with the business of the Company or any subsidiary unless either the
Company's Board otherwise consents or the interest is limited to a holding or
other interest of no more than 5 percent of the total amount of shares or
securities of any company quoted on a recognized investment exchange.

Richard Michaelson

The services of Mr. Michaelson are provided through a service agreement between
him and Huntingdon Life Sciences Inc. (a wholly owned subsidiary of Huntingdon).
The service agreement appoints Mr. Michaelson as Chief Financial Officer of the
Company. Mr. Michaelson's service agreement will continue until terminated by
Mr. Michaelson on thirty days' written notice or by Huntingdon Life Sciences
Inc. on 12 months' written notice. In the event of termination without "cause"
following a "change in control", as defined, Mr. Michaelson would receive a
payment equal to 2.99 times his annual salary plus an amount equal to 2.99 times
all incentive compensation earned or received by Mr. Michaelson during the 12
months prior to termination.

Mr. Michaelson receives an annual salary of $300,000 gross and is entitled to
health insurance, life insurance, personal accident insurance, medical expenses
insurance and participation in the 401(k) Plan of Huntingdon Life Sciences Inc.
Mr. Michaelson's service agreement also provides for the payment of a bonus to
Mr. Michaelson in the absolute discretion of the Company's Board.

In addition,  Mr.  Michaelson is entitled to a car allowance of $1,000 gross per
month.

The agreement may be terminated if Mr. Michaelson is guilty of serious
misconduct or is in material breach of the terms of the service agreement,
amongst other reasons.

Mr. Michaelson is bound by confidentiality restrictions and a restriction
preventing him from being engaged, concerned or interested in any business
conflicting with the business of the Company or any subsidiary unless the Board
otherwise consents or the interest is limited to a holding or other interest of
no more than 5 percent of the total amount of shares or securities of any
company quoted on a recognized investment exchange.

Discretionary bonus plan

The Company operates a discretionary bonus plan for executive officers and key
managers based upon improvements to operating income and achievement of
pre-defined targets. No bonus awards were made in respect of 2003. In accordance
with the Company performance provisions established in June 2004 by the
Compensation Committee, aggregate bonus awards of $1,910,000 were paid to 31
senior employees of the Company in respect of 2004. Bonus awards of $1,245,497
are expected to be paid to 32 senior employees of the Company in March 2006 as a
result of the Company's achievement of specified fiscal year 2005 performance
goals established by the Compensation Committee.

<PAGE>
The following table shows the remuneration of Executive Officers and key
employees in the 12 months ended December 31, 2005, 2004, and 2003:

<TABLE>

                                                Annual Compensation                       Long Term Compensation
                                                                                                  Awards
<CAPTION>

     Name And Principal        Year      Salary         Bonus         Other Annual           Number Of Shares
          Position                                                    Compensation          Underlying Options

<S>                           <C>      <C>            <C>              <C>                       <C>
Andrew Baker                   2005     564,045        300,218           224,345                     -
Chairman and Chief             2004     427,489        576,000           141,805                  55,500
Executive Officer              2003     327,050           -              108,918                     -

Brian Cass                     2005     564,045        300,218           263,375                     -
President                      2004     427,489        576,000           218,691                  55,500
                               2003     327,080           -              175,843                     -

Richard Michaelson             2005     300,000        82,500            30,008                      -
Chief Financial Officer and    2004     287,952        150,000           42,108                   30,303
Secretary                      2003     222,108           -              18,633                      -

Julian Griffiths               2005     282,023        75,054            77,784                      -
Vice President of Operations   2004     266,667        137,408           70,638                   27,750
                               2003     204,425           -              44,692                      -

Mark Bibi                      2005     283,333        75,000            21,010                      -
General Counsel and
Secretary

Frank Bonner                   2005        -              -                 -                        -
Former Director of Science &   2004        -              -                 -                        -
Technology of Huntingdon       2003     141,945           -              13,817                      -

<FN>

Note - the bonuses were paid in March 2006
</FN>
</TABLE>

Messrs. Baker, Bonner, Cass and Griffiths are paid in UK pounds sterling. The
amounts have been converted at the rate of 2005: $1.8195, 2004: $1.8321, and
2003: $1.6354, to (pound)1.00 for the purposes of the above table.

The Officers' pension contributions are privately invested.

EQUITY INCENTIVE PLANS

LSR 2001 Equity Incentive Plan (the "LSR 2001 Equity Incentive Plan")

The LSR Board has adopted the LSR 2001 Equity Incentive Plan. Adoption of the
LSR 2001 Equity Incentive Plan enables LSR to use stock options (and other
stock-based awards) as a means to attract, retain and motivate key personnel.
This stock option plan is approved by the shareholders.

Awards under the LSR 2001 Equity Incentive Plan may be granted by a committee
designated by the LSR Board pursuant to the terms of the LSR 2001 Equity
Incentive Plan (which has designated the Compensation Committee for such
purpose) and may include: (i) options to purchase shares of LSR Voting Common
Stock, including incentive stock options ("ISOs"), non-qualified stock options
or both; (ii) stock appreciation rights ("SARs"), whether in conjunction with
the grant of stock options or independent of such grant, or stock appreciation
rights that are only exercisable in the event of a change in control or upon
other events; (iii) restricted stock consisting of shares that are subject to
forfeiture based on the failure to satisfy employment-related restrictions; (iv)
deferred stock, representing the right to receive shares of stock in the future;
(v) bonus stock and awards in lieu of cash compensation; (vi) dividend
equivalents, consisting of a right to receive cash, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of LSR Voting Common Stock or other periodic payments; or (vii) other
awards not otherwise provided for, the value of which are based in whole or in
part upon the value of the LSR Voting Common Stock. Awards granted under the LSR
2001 Equity Incentive Plan are generally not assignable or transferable except
pursuant to a will and by operation of law.

The flexible terms of the LSR 2001 Equity Incentive Plan are intended to, among
other things, permit the Compensation Committee to impose performance conditions
with respect to any award, thereby requiring forfeiture of all or part of any
award if performance objectives are not met or linking the time of
exercisability or settlement of an award to the attainment of performance
conditions. For awards intended to qualify as "performance-based compensation"
within the meaning of Section 162(m) of the United States Internal Revenue Code
such performance objectives shall be based solely on (i) annual return on
capital; (ii) annual earnings or earnings per share; (iii) annual cash flow
provided by operations; (iv) changes in annual revenues; (v) stock price; and/or
(vi) strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market penetration, geographic business expansion
goals, cost targets, and goals relating to acquisitions or divestitures.

LSR's Compensation Committee, which will administer the 2001 LSR Equity
Incentive Plan, will have the authority, among other things, to: (i) select the
directors, officers and other employees and independent contractors entitled to
receive awards under the 2001 LSR Equity Incentive Plan; (ii) determine the form
of awards, or combinations of awards, and whether such awards are to operate on
a tandem basis or in conjunction with other awards; (iii) determine the number
of shares of LSR Voting Common Stock or units or rights covered by an award; and
(iv) determine the terms and conditions of any awards granted under the 2001 LSR
Equity Incentive Plan, including any restrictions or limitations on transfer,
any vesting schedules or the acceleration of vesting schedules, any forfeiture
provision or waiver of the same and including any terms and conditions necessary
or desirable to ensure the optimal tax result for participating personnel and
the Company including by way of example to ensure that there is no tax on the
grant of the rights and that such tax only arises on the exercise of rights or
otherwise when the LSR Voting Common Stock unconditionally vests and is at the
disposal of such participating personnel. The exercise price at which shares of
LSR Voting Common Stock may be purchased pursuant to the grant of stock options
under the 2001 LSR Equity Incentive Plan is to be determined by the option
committee at the time of grant in its discretion, which discretion includes the
ability to set an exercise price that is below the fair market value of the
shares of LSR Voting Common Stock covered by such grant at the time of grant.

The number of shares of LSR Voting Common Stock that may be subject to
outstanding awards granted under the 2001 LSR Equity Incentive Plan (determined
immediately after the grant of any award) may not exceed 20 per cent of the
aggregate number of shares of LSR Voting Common Stock then outstanding.

The 2001 LSR Equity Incentive Plan may be amended, altered, suspended,
discontinued, or terminated by the LSR Board without LSR Voting Common
Stockholder approval unless such approval is required by law or regulation or
under the rules of any stock exchange or automated quotation system on which LSR
Voting Common Stock is then listed or quoted. Thus, LSR Voting Common
Stockholder approval will not necessarily be required for amendments, which
might increase the cost of the plan or broaden eligibility. LSR Voting Common
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable tax treatment on such approval, although the LSR Board
may, in its discretion, seek LSR Voting Common Stockholder approval in any
circumstances in which it deems such approval advisable.

The LSR Board has designated the Compensation Committee of the Board to serve as
the stock option committee.

LSR made grants under the LSR 2001 Equity Incentive Plan on March 1, 2002 to
certain directors as of that date, and employees, including the Named Executive
Officers:

Grants to Directors
-------------------
Name                          Number Granted
----                          --------------
Gabor Balthazar                  20,000
John Caldwell                    20,000
Kirby Cramer                     40,000

Grants to Named Executive Officers
----------------------------------
Name                          Number Granted
----                          --------------
Andrew Baker                    200,000
Mark Bibi                        50,000
Brian Cass                      200,000
Julian Griffiths                 60,000
Richard Michaelson               90,000

All such options have ten-year terms; 50% of the shares subject to grant are
immediately exercisable with the remaining 50% exercisable one year after the
grant date (meaning all such options, fully vested as of March 1, 2003); and all
have an exercise price of $1.50 per share, the price at which the Company sold
shares of Common Stock in the Private Placement. Options to purchase an
aggregate of 1,188,000 shares of LSR Common Stock (including those specified
above) were granted in the two years 2002 and 2003 to employees and directors,
on the terms set forth above, are listed below:

Date of Grant               Numbers Granted            Exercise Price
-------------               ---------------            --------------
March 1, 2002                     1,142,000                 $1.50
September 3, 2002                    20,000                 $2.40
October 21, 2002                     15,000                 $2.03
February  14, 2003                   11,000                 $1.80

In 2004, in addition to the options granted under the 2004 LTIP referred to
below, options to purchase an aggregate of 67,100 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, on the terms set forth in the previous paragraph, are listed below.

Date of Grant                 Numbers Granted          Exercise Price
-------------                 ---------------          --------------
April 12, 2004                       37,100                 $1.85
October 28, 2004                     17,400                 $7.70
December 15, 2004                    12,600                 $9.52

In 2005, options to purchase an aggregate of 23,600 shares of LSR Common Stock
were issued, all at exercise prices equal to the market price at the date of
grant, or the terms set forth above, are listed below:

Date of Grant                   Numbers Granted          Exercise Price
-------------                   ---------------          --------------
May 23, 2005                      3,600                     $12.00
June 27, 2005                    20,000                     $11.00

2004 Long Term Incentive Plan

Effective June 1, 2004 the Company adopted the 2004 Long Term Incentive Plan
("2004 LTIP"), pursuant to the terms of the 2001 Equity Incentive Plan. The 2004
LTIP has two components: a grant of stock options, with a vesting date of March
31, 2007, and a cash bonus to be awarded in 2007 based on 2006 Company financial
performance.

Options to purchase an aggregate of 362,663 shares of common stock were granted
to 32 key employees of the Company as of June 1, 2004 under the 2004 LTIP;
55,500 of such options were granted to Andrew Baker, the Company's Chairman and
CEO, 55,500 of such options were granted to Brian Cass, the Company's Managing
Director and President, 30,303 of such options were granted to Richard
Michaelson, the Company's CFO, 27,750 of such options were granted to Julian
Griffiths, the Company's Vice President of Operations and 20,545 were granted to
Mark Bibi, General Counsel and Secretary. The exercise price of all such granted
options is $3.30, the market price of LSR common stock on June 1, 2004. All such
options have ten-year terms and are exercisable in full on March 31, 2007. At
December 31, 2005, 356,419 shares under the 2004 LTIP option plan were
outstanding and none were exercisable.

The following table  summarizes stock option activity under the Company's option
plans:
<TABLE>
<CAPTION>

                                               Shares        Wtd Avg. Ex Price      Number of securities remaining
                                               (000)                                 available for future issuance
<S>                                           <C>                 <C>
                                               1,386               $2.13
Granted                                          24               $11.15
Lapsed                                          (14)               $1.64
Exercised                                      (112)               $1.61
                                             -----------     ------------------    ----------------------------------
Outstanding - December 31, 2005                1,284               $2.35                       1,791,000
                                             -----------     ------------------    ----------------------------------
Exercisable at end of year                      916
Weighted average fair value per
option granted in 2005 was                     $7.74
</TABLE>

Huntingdon Life Sciences Group plc Stock Option Plans

Huntingdon Life Sciences Group plc issued options prior to December 31, 1997
pursuant to several stock option plans. However, the ability to exercise options
under all such Huntingdon plans lapsed on March 26, 2002 in connection with
LSR's acquisition of Huntingdon, except for those granted under the Unapproved
Stock Option Plan (the "Unapproved Plan"). Under the Unapproved Plan, some
options technically remain outstanding. However, such options are exercisable
only for shares of Huntingdon, a 100% wholly owned subsidiary of LSR, and as
such are considered to have no value.

Warrants

On October 9, 2001, on behalf of Huntingdon, LSR issued to Stephens Group Inc.
warrants to purchase up to 704,425 shares of LSR Voting Common Stock at a
purchase price of $1.50 per share. Stephens Group Inc. subsequently sold the
warrants to independent third parties. The LSR warrants are exercisable at any
time and will expire on October 9, 2011. These warrants arose out of
negotiations regarding the refinancing of the bank loan by the Stephens Group
Inc., (Stephens' Loan) in January 2001. In accordance with APB Opinion No. 14,
Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants
("APB 14") the warrants were recorded at their pro rata fair values in relation
to the proceeds received on the date of issuance. As a result, the value of the
warrants was $430,000. 154,425 of such warrants were exercised in 2004. No
additional warrants were exercised in 2005.

On June 11, 2002 LSR issued to FHP warrants to purchase up to 410,914 shares of
LSR Voting Common Stock at a purchase price of $1.50 per share. The LSR warrants
are exercisable at any time and will expire on June 11, 2012. These warrants
arose out of negotiations regarding the provision of the $2.9 million loan
facility made available to the Company on September 25, 2000 by Mr. Baker, who
controls FHP. In accordance with APB 14 the loan and warrants were recorded at
their pro rata fair values in relation to the proceeds received. As a result,
the value of the warrants was $250,000. None of these warrants have been
exercised as of December 31, 2005.

On October 24, 2003, 100,000 warrants were issued at the market price on the day
of $2.05. On January 4, 2005 100,000 warrants were issued at the market price on
the day of $10.70. 50,000 are exercisable from January 4, 2007 and 50,000 from
January 4, 2008. In all cases, these warrants were issued to independent
consultants in connection with financial and strategic advice.

On November 9, 2005 625,000 warrants were issued to a third party
advisory/lobbying firm at the closing market price on the day of $10.46. These
warrants will vest upon the successful completion of specific goals outlined in
the engagement letter with such firm, and will expire on November 9, 2010.

On November 9, 2005 300,000 warrants were issued to an independent third party
financial advisor as partial consideration for providing financial advisory
services to the Company in obtaining financing. These were issued at an exercise
price of $10.46 per share, the closing market price on the date the Company
engaged the financial advisor. Such warrants will vest upon closing of said
financing, and will expire on November 9, 2005.

See Note 16 - Subsequent Events

In accordance with Emerging Issues Task Force No. 96-18, the Company has
recorded the value of the November 2005, performance-based warrant issuances, at
their lowest aggregate market value, which is zero. When the performance
conditions have been met, the Company will record these issuances based upon the
fair value of the warrants on the date of performance completion.

A summary of warrants outstanding at December 31, 2005 is as follows:

Date of Issue            Warrants      Exercise price      Expiration Date
October 9, 2001           550,000          $1.50           October 9, 2011
June 11, 2002             410,914          $1.50           June 11, 2012
October 24, 2003          100,000          $2.05           October 24, 2013
January 4, 2005           100,000         $10.70           January 4, 2015
November 9, 2005          625,000         $10.46           November 9, 2010
November 9, 2005          300,000         $10.46           November 9, 2015

ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The following table sets forth, as of March 13, 2006, certain information
regarding the beneficial ownership of the shares of LSR common stock, by (a)
each person or entity who is known by LSR to own beneficially 5% or more of its
outstanding shares of Common Stock (none other than Mr. Baker, who is a Director
and Executive Officer of LSR); (b) each Director or Executive Officer of LSR or
principal subsidiary; and (c) all Directors and Executive Officers as a group.

                                                Number            Percent of
Name                                          of Shares       Outstanding Shares

Andrew Baker                                   2,311,060 (1)        17.5%
Gabor Balthazar                                   20,000 (2)          *
Mark Bibi                                        148,409 (5)         1.2%
Brian Cass                                       620,000 (3)         4.9%
Julian Griffiths                                 110,000 (6)          *
Afonso Junqueiras                                     --              --
Richard Michaelson                               330,390 (4)         2.6%
Yaya Sesay                                            --              --
All Directors and Executive Officers
as a Group                                     3,539,859            26.0%

*    Signifies  less  than  1%.  All  percentages  calculated  on the  basis  of
     12,553,251  outstanding  shares  of  Voting  Common  Stock  outstanding  at
     December 31, 2005.  Shares subject to issuance upon  presently  exercisable
     options or warrants  are included in the number of  outstanding  shares for
     purposes of calculating that holder's percentage  interest,  as well as the
     aggregate  percentage interest of all Directors and Executive Officers as a
     group.

     (1)  Includes presently  exercisable options to purchase 200,000 shares and
          presently  exercisable warrants to purchase 410,914 shares.  1,604,001
          of such shares are beneficially owned by Focused  Healthcare  Partners
          Ltd, a Bahamas corporation that is controlled by Mr. Baker. 490,914 of
          such  shares  (including  the  410,914  shares  subject  to  presently
          exercisable  warrants noted above) are  beneficially  owned by Focused
          Healthcare  Partners LLC, a New Jersey limited  liability company that
          is controlled by Mr. Baker.

     (2)  Includes presently exercisable options to purchase 20,000 shares

     (3)  Includes presently exercisable options to purchase 200,000 shares

     (4)  Includes presently exercisable options to purchase 90,000 shares

     (5)  Includes presently exercisable options to purchase 50,000 shares

     (6)  Includes presently exercisable options to purchase 60,000 shares

From time to time US depositary institutions hold shares on behalf of their
clients to enable a market to be made in the LSR's shares. No holdings of 5% or
more have been reported by those institutions at March 13, 2006.

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(1)      On January 20, 2001 the Company's bank loan was refinanced by means of
         a loan from HLSF, LLC a subsidiary company of the Stephens Group Inc.,
         a related party at the time, and the other two banks that were part of
         the original loan syndicate. That loan was transferred to an unrelated
         third party effective February 11, 2002. The loan is now repayable on
         June 30, 2006 and interest is payable in quarterly breaks at a rate of
         "LIBOR" plus 1.75% per annum. The loan is secured by guarantees from
         LSR, Inc., LSR Ltd, Huntingdon Life Sciences Limited and Huntingdon
         Life Sciences Inc., collateralized by all the assets of those
         companies. As a result of the Sale/Leaseback entered into on June 14,
         2005 the loan was fully repaid in June 2005.

(2)      Brian Cass, President and Managing Director of LSR, acquired 400,000
         shares of LSR Common Stock in the Private Placement. Mr. Cass acquired
         such shares through the delivery of two promissory notes. Both such
         promissory notes, each in the amount of (pound)211,679 ($363,411), are
         due on March 28, 2007; bear interest at the rate of 5% per annum; and
         are secured by the 200,000 shares of LSR Common Stock purchased with
         the proceeds of each such loan. The due date of each promissory note
         would be accelerated if Mr. Cass voluntarily resigned from his
         employment with LSR or had his employment terminated. Repayment of one
         of the promissory notes will be made by automatic deduction of
         (pound)44,000 ($75,539) per year from the (pound)66,000 ($113,309) per
         year pension contribution made by the Company to a pension plan
         established by Mr. Cass. The other note is further collateralized by
         the (pound)214,500 ($368,254) accrued in such pension account. In
         addition, one-third of any yearly bonus received by Mr. Cass will be
         used to reduce principal of the promissory notes. Total amount of this
         loan as of December 31, 2005 is (pound)120,000 ($205,000 at year-end
         foreign exchange rates).

(3)      On June 14, 2005, the Company entered into and consummated purchase and
         sale agreements with Alconbury Estates Inc. and subsidiaries
         (collectively "Alconbury") for the sale and leaseback of the Company's
         three operating facilities in Huntingdon and Eye, England and East
         Millstone, New Jersey (the "Sale/Leaseback Transaction"). Alconbury is
         a newly formed company controlled by LSR's Chairman and CEO, Andrew
         Baker. The total consideration paid by Alconbury for the three
         properties was $40 million, consisting of $30 million in cash and a
         five year, $10 million variable rate subordinated promissory note,
         which Alconbury agreed to make a best effort to repay within twelve
         months.

(4)      Alconbury has received an interest free loan of $250,000, which has
         been included in accrued expenses and other liabilities, from Andrew
         Baker, LSR's Chairman and CEO.

<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Fees for audit services totaled approximately $366,000 in 2005 and $377,000 in
2004, including fees associated with the annual audit and the audit of internal
control over financial reporting and the reviews of the Company's quarterly
reports on Form 10-Q.

Audit-Related Fees

Fees for audit-related services totaled approximately $92,000 in 2005 and zero
in 2004. Audit-related services principally include consultation on tax and
accounting issues related to a sale leaseback transaction, consultation on other
accounting and internal control matters, including Sarbanes-Oxley requirements
and other attest services.

Tax Fees

Fees for tax services, including tax compliance, tax advice and tax planning,
totaled approximately $25,000 in 2005 and $27,000 in 2004.

All Other Fees

Hugh Scott,  P.C. did not provide any services not  described  above in 2005 and
2004.

Audit  Committee  Pre-Approval of Audit and  Permissible  Non-Audit  Services of
Independent Auditors

The Audit Committee pre-approves all audit and permissible non-audit services
provided by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. The Audit Committee has
adopted a policy for the pre-approval of services provided by the independent
auditors.

<PAGE>

                                     PART IV


ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

1.       List of documents filed as part of this report

2.       Index to Financial Statements
         Life Sciences Research, Inc.

         Management Report on Consolidated Financial Statements and Internal
         Control

         Independent Auditors Report on Internal Control over Financial
         Reporting

         Independent Auditors' Report

         Consolidated Statements of Operations- Years ended
         December 31, 2005, 2004, and 2003

         Consolidated Balance Sheets - December 31, 2005 and 2004

         Consolidated Statements of Changes in Shareholders' (Deficit)/Equity
         and Comprehensive Income/(Loss) Years ended December 31, 2005, 2004,
         and 2003

         Consolidated Statements of Cash Flows - Years ended December 31, 2005,
         2004, and 2003

         Notes to Consolidated Financial Statements

3.       Financial Statement Schedules

         Schedules are omitted because they are not applicable or the required
         information is shown in the consolidated financial statements or notes
         thereto.

<PAGE>
List of Exhibits

Exhibit No.      Description of Exhibit

2.1  Letter of Intent,  dated August 27, 2001,  between the  Registrant and HLS.
     INCORPORATED  BY REFERENCE TO REGISTRANT'S  REGISTRATION  STATEMENT ON FORM
     S-4, REGISTRATION NUMBER 333-71408.

3.1  Articles of Amendment and Restatement of the Registrant adopted on November
     7, 2001.  INCORPORATED BY REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT
     ON FORM S-4, REGISTRATION NUMBER 333-71408.

3.2  Bylaws  of  the  Registrant.  INCORPORATED  BY  REFERENCE  TO  REGISTRANT'S
     REGISTRATION STATEMENT ON FORM S-4, REGISTRATION NUMBER 333-71408.

4.1  Subscription  Agreement  dated  August 1, 1991  among HIH  Capital  Limited
     ("HCL"),  HLS, Chase Manhattan Bank Luxembourg  S.A. (the  "Custodian"),  J
     Henry Schroder Wagg & Co. Limited and Others.  INCORPORATED BY REFERENCE TO
     HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED  SEPTEMBER  30,
     1991.

4.2  Trust  Deed,  dated  August 12, 1991 among HCL,  HLS and The Law  Debenture
     Trust  Corporation  plc  INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON
     FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1991.

4.3  Deed  Poll,  dated  August  12,  1991,  executed  by HLS.  INCORPORATED  BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE  FISCAL  YEAR ENDED
     SEPTEMBER 30, 1991.

4.4  Custodian  Agreement,  dated August 1, 1991 among the  Custodian,  HCL, and
     HLS.  INCORPORATED BY REFERENCE TO HLS'S ANNUAL REPORT ON FORM 10-K FOR THE
     FISCAL YEAR ENDED SEPTEMBER 30, 1991.

4.5  Deed Poll, dated October 16, 2001, executed by Registrant.  INCORPORATED BY
     REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION
     NO. 333-71408.

10.1 A  Management  Services  Agreement  dated  August 7, 1998  between  HLS and
     Focused  Healthcare  Partners.  INCORPORATED  BY  REFERENCE  TO HLS' ANNUAL
     REPORT ON FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.2 A Deed  of  Undertaking  between  HLS and  Andrew  Baker.  INCORPORATED  BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 20-F FOR THE  FISCAL  YEAR ENDED
     DECEMBER 31, 1998.

10.3 Amendment dated January 26, 2000 to the Management Services Agreement dated
     August 7, 1999 between HLS and Focused Healthcare Partners. INCORPORATED BY
     REFERENCE  TO HLS'  ANNUAL  REPORT ON FORM 10-K FOR THE  FISCAL  YEAR ENDED
     DECEMBER 31, 1999.

10.4 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Mr. B Cass INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 20-F
     FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.5 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Mr. J Griffiths.  INCORPORATED  BY  REFERENCE TO HLS' ANNUAL  REPORT ON
     FORM 20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.6 Service Contract dated April 29, 1999 between  Huntingdon Life Sciences Ltd
     and Dr F Bonner.  INCORPORATED  BY REFERENCE TO HLS' ANNUAL  REPORT ON FORM
     20-F FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

10.7 A  letter  of  appointment  dated  March  21,  2000  between  HLS and Mr. G
     Balthazar. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR
     THE FISCAL YEAR ENDED DECEMBER 31, 1999.

10.8 Option  Deed  dated   September  2,  1998  between  HLS  and  Andrew  Baker
     INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 20-F FOR THE FISCAL
     YEAR ENDED DECEMBER 31, 1998.

10.9 Rules of the Huntingdon Life Sciences Group  Unapproved Share Option Scheme
     as amended on June 3, 1998. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT
     ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999.

10.10 Rules  of  the  Huntingdon  Life  Sciences  Group  Incentive  Option  Plan
     INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
     YEAR ENDED DECEMBER 31, 1999.

10.11 Registrant's  2001 Equity  Incentive  Plan.  INCORPORATED  BY REFERENCE TO
     REGISTRANT'S  REGISTRATION  STATEMENT  ON  FORM  S-4,  REGISTRATION  NUMBER
     333-71408.

10.12 Loan Facility  Letter,  dated  September 25, 2000,  between HLS and Andrew
     Baker. INCORPORATED BY REFERENCE TO HLS' ANNUAL REPORT ON FORM 10-K FOR THE
     FISCAL YEAR ENDED DECEMBER 31, 2000.

10.13 Amendment  No. 1 to Loan Facility  Letter,  dated as of February 22, 2001,
     between HLS and Andrew  Baker.  INCORPORATED  BY  REFERENCE  TO HLS' ANNUAL
     REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000.

10.14 Amendment  No. 2 to Loan Facility  Letter,  dated as of March 20, 2001, by
     and among Andrew Baker, HLS and Focused Healthcare  Partners.  INCORPORATED
     BY REFERENCE TO REGISTRANT'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.15 Subscription and Investor Rights Agreement, dated October 9, 2001, between
     LSR  and  Walter   Stapfer.   INCORPORATED  BY  REFERENCE  TO  REGISTRANT'S
     REGISTRATION   STATEMENT  ON  FORM  S-4,   REGISTRATION   STATEMENT  NUMBER
     333-71408.

10.16 Subscription and Investor Rights Agreement, dated October 9, 2001, between
     LSR and the persons named therein as Investors.  INCORPORATED  BY REFERENCE
     TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION STATEMENT
     NUMBER 333-71408.

10.17 Warrant, dated October 9, 2001, issued by the Registrant.  INCORPORATED BY
     REFERENCE TO REGISTRANT'S  REGISTRATION STATEMENT ON FORM S-4, REGISTRATION
     STATEMENT NUMBER 333-71408.

10.18 Form of Director's Irrevocable  Undertaking.  INCORPORATED BY REFERENCE TO
     REGISTRANT'S  REGISTRATION  STATEMENT ON FORM S-4,  REGISTRATION  STATEMENT
     NUMBER 333-71408.

10.19 Inducement  Agreement,  dated October 9, 2001 between the  Registrant  and
     HLS.  INCORPORATED BY REFERENCE TO REGISTRANT'S  REGISTRATION  STATEMENT ON
     FORM S-4, REGISTRATION STATEMENT NUMBER 333-71408.

10.20 Warrant,  dated June 11, 2002,  issued by the Registrant.  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  PROXY  STATEMENT ON SCHEDULE 14A, DATED MAY 10,
     2002.

10.21 Service  Agreement,  dated as of April 1, 2000,  between  Huntingdon  Life
     Sciences,  Inc.  and  Richard  Michaelson.  INCORPORATED  BY  REFERENCE  TO
     REGISTRANT'S  ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
     31, 2002.

10.22 Service  Agreement,  dated as of April 1, 2000,  between  Huntingdon  Life
     Sciences,  Inc. and Mark Bibi  INCORPORATED  BY  REFERENCE TO  REGISTRANT'S
     ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.

10.23 Amendment No. 1 to Service  Agreement  between  Huntingdon  Life Sciences,
     Inc. and Richard  Michaelson,  dated as of April 15, 2002.  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.24 Amendment  No. 1 to Service  Agreement  between  Huntingdon  Life Sciences
     Limited  and  Brian  Cass,  dated  as of April  15,  2002  INCORPORATED  BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.25 Amendment  No. 1 to Service  Agreement  between  Huntingdon  life Sciences
     Limited and Julian  Griffiths,  dated as of April 15, 2002  INCORPORATED BY
     REFERENCE TO  REGISTRANT'S  ANNUAL  REPORT ON FORM 10-K FOR THE FISCAL YEAR
     ENDED DECEMBER 31, 2002.

10.26 Amendment No. 2 to Management  Services  Agreement between Huntingdon Life
     Sciences Group plc and Focused Healthcare  Partners,  dated as of April 15,
     2002  INCORPORATED BY REFERENCE TO REGISTRANT'S  ANNUAL REPORT ON FORM 10-K
     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002.

10.27 Financing  Agreement  between  Huntingdon  Life  Sciences  Limited and the
     Lenders  thereto,  dated as of March 1, 2006  INCORPORATED  BY REFERENCE TO
     REGISTRANT'S CURRENT REPORT ON FORM 8-K DATED MARCH 7, 2006.

14   Code of Ethics - FILED HEREWITH

21.1 Subsidiaries - FILED HEREWITH

31.1 Certification  of Chief  Executive  Officer  pursuant  to SEC Rule  13(a) -
     14(a). FILED HEREWITH

31.2 Certification  of Chief  Financial  Officer  pursuant  to SEC Rule  13(a) -
     14(a). FILED HEREWITH

32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.Section 1350.
     FILED HEREWITH

32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.Section 1350.
     FILED HEREWITH

99.1 Press Release dated March 14, 2006, announcing fourth quarter and full year
     2005 results.  FILED HEREWITH

<PAGE>

                                    SIGNATURE

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

                           Life Sciences Research Inc.
                                  (Registrant)



By:      /s/ Andrew Baker
Name:    Andrew Baker
Title:   Chairman and Chief Executive Officer and Director
         Principal Executive Officer
Date:    March 16, 2006


By:      /s/ Richard Michaelson
Name:    Richard Michaelson
Title:   CFO - Principal Financial and Accounting Officer
Date:    March 16, 2006


<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

Signature                     Title                   Date

/s/ Gabor Balthazar           Director                March 16, 2006
Gabor Balthazar

/s/ Brian Cass                Director                March 16, 2006
Brian Cass

/s/ Afonso Junqueiras         Director                March 16, 2006
Afonso Junqueiras

/s/ Yaya Sesay                Director                March 16, 2006
Yaya Sesay