BIOMERICA, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME YEARS ENDED MAY 31, ------------------------------- 2007 2006 -------------- -------------- Net Sales $ 5,748,319 $ 7,184,992 Cost of sales 3,502,607 4,779,615 -------------- -------------- GROSS PROFIT 2,245,712 2,405,377 -------------- -------------- OPERATING EXPENSES Selling, general and administrative 1,468,821 2,263,463 Research and development 256,101 239,004 -------------- -------------- Total operating expenses 1,724,922 2,502,467 -------------- -------------- OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS 520,790 (97,090) OTHER INCOME (EXPENSE) Interest expense, net of interest income (35,051) (44,790) Other income, net 40,040 45,575 -------------- -------------- INCOME (LOSS) FROM CONTINUING OPERATIONS, before minority interest in net loss of consolidated subsidiary and income taxes 525,779 (96,305) MINORITY INTEREST IN NET LOSS OF CONSOLIDATED SUBSIDIARY -- 251,670 -------------- -------------- INCOME FROM CONTINUING OPERATIONS, before income taxes 525,779 155,365 INCOME TAX EXPENSE 16,769 1,600 -------------- -------------- INCOME FROM CONTINUING OPERATIONS 509,010 153,765 DISCONTINUED OPERATIONS Income from discontinued operations, net 27,869 76,508 -------------- -------------- NET INCOME 536,879 230,273 OTHER COMPREHENSIVE LOSS, net of tax Unrealized loss on available-for-sale securities (2,746) (227,497) -------------- -------------- COMPREHENSIVE INCOME $ 534,133 $ 2,776 ============== ============== BASIC NET INCOME PER COMMON SHARE: Income from continuing operations $ .09 $ .03 Income from discontinued operations .00 .01 -------------- -------------- Basic net income per common share $ .09 $ .04 -------------- -------------- DILUTED NET INCOME PER COMMON SHARE: Income from continuing operations $ .08 $ .02 Income from discontinued operations .00 .01 -------------- -------------- Diluted net income per common share $ .08 $ .03 ============== ============== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES Basic 5,929,445 5,759,082 ============== ============== Diluted 6,513,477 6,220,335 ============== ============== Pro Forma Statement of Operations by Company for the year ended May 31, 2006 Intercompany Pro-forma Biomerica Actual Eliminations adjustments Stand-alone ------------ ------------ ------------ ------------ Net sales $ 7,184,992 $(2,925,038) $ 4,259,954 Cost of sales 4,779,615 $ 15,780(1) (2,190,495) 2,604,900 ------------ ------------ ------------ ------------ Gross profit 2,405,377 $ (15,780) (734,543) 1,655,054 ------------ ------------ ------------ ------------ Operating expenses: Selling, general and admin 2,263,463 (1,029,059) 1,234,404 Research and development 239,004 (42,470) 196,534 ------------ ------------ ------------ ------------ Total operating expenses 2,502,467 (1,071,529) 1,430,938 ------------ ------------ ------------ ------------ Operating income (loss) (97,090) (15,780) 336,986 224,116 Other (income) expense Interest expense 44,790 (14,456) 30,334 Other expense (income) (45,575) (15,780)(2) 33,096 (28,259) ------------ ------------ ------------ ------------ (785) (15,780)(2) 18,640 2,075 Income (loss) from operations before interest in net income (loss) of consolidated subsidiary and income taxes (96,305) 318,346 222,041 Minority interest in net loss (income) of Lancer 251,670 (319,146)(3) -- -- 67,476 (4) ------------ ------------ ------------ ------------ Income (loss) from operations before income taxes 155,365 (251,670) 318,346 222,041 Income tax expense 1,600 (800) 800 ------------ ------------ ------------ ------------ Discontinued operation (76,508) (76,508) ------------ ------------ ------------ ------------ Net income (loss) $ 230,273 $ (251,670) $ 319,146 $ 297,749 ============ ============ ============ ============ (1) To record the charge for rent by Lancer at the manufacturing facility in Mexico, which was eliminated in consolidation. (2) To record the income from Biomerica received by Lancer for rent at the Mexico facility, which was eliminated in consolidation. (3) To de-consolidate Lancer's loss. (4) Elimination of Biomerica's portion of Lancer's operations as if the termination of the voting agreement occurred May 31, 2005.
Contact Information: Contact: Zackary Irani 949-645-2111