|   |
|--------|

| **UNITED                STATES                SECURITIES AND EXCHANGE COMMISSION** |
|------------------------------------------------------------------------------------|
|                                                                               |
| **Washington, D.C.                20549**                                          |
|                                                                     |
| **FORM                10-Q**                                                       |
|                                                                     |

|                                                                                 | x      | **QUARTERLY                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934**  |
|---------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------|
|                                                                                 |   |                                                                                                                       |
| For the quarterly period ended                ** September 1, 2007 ** |
|                                                                            |
| **OR**                                                                          |
|                                                                                 |   |                                                                                                                       |
|                                                                                 | o      | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934** |

|                                                                                                                                    |
|-----------------------------------------------------------------------------------------------------------------------------------------|
| For the                    transition period from **_________** to **_________**

Commission file number                    **0-13003** |
|                                                                                                                                    |

| **E-Z-EM,                Inc.**                                       |
|-----------------------------------------------------------------------|
|                                                                       |
| (Exact name                of registrant as specified in its charter) |
|                                                                  |

| **Delaware**                                                                                      |   | **11-1999504**                                                                |
|---------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------|
|                                                                                                   |   |                                                                               |
| (State or other                jurisdiction ofincorporation or                organization)  |   |  (I.R.S.                EmployerIdentification                No.)  |
|                                                                                              |   |                                                                          |

| **1111 Marcus                Avenue, Lake Success, New York** |   | **11042**                       |
|---------------------------------------------------------------|--------|---------------------------------|
|                                                               |   |                                 |
|  (Address of principal                executive offices) |   |  (Zip                Code) |
|                                                          |   |                            |

| **(516)                333-8230**                                       |
|-------------------------------------------------------------------------|
|                                                                         |
| Registrant’s telephone                number, including area code |

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

Yesx                        Noo

Indicate                    by check mark whether the registrant is a large accelerated filer, an                    accelerated filer, or a non-accelerated filer. See definition of                    “accelerated filer and large accelerated filer” in Rule 12b-2 of                    the Exchange Act (Check one). |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

| Large accelerated                filero |   | Accelerated filerx |   | Non-accelerated                filer o |
|-----------------------------------------|--------|--------------------|--------|---------------------------------------------|

|                                                                                                                                                   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| Indicate                    by check mark whether the registrant is a shell company (as defined in Rule                    12b-2 of the Exchange Act). |
|                                                                                                                                                   |
| Yeso                     Nox                                                                                                       |
|                                                                                                                                                   |
| As of October 5, 2007,                        there were 10,976,549 shares of the issuer’s common stock                        outstanding.      |

|  |
|--|

| **E-Z-EM,                Inc. and Subsidiaries** |
|--------------------------------------------------|
|                                             |
| **INDEX**                                        |

| **Part                I:** |   | **Financial                Information** |   | **Page** |   |
|----------------------------|--------|------------------------------------------|--------|----------|--------|
|                            |   |                                          |   |          |   |

|                                                                                                 |           |                                                                                                 |    |   |   |
|------------------------------------------------------------------------------------------------------|----------------|------------------------------------------------------------------------------------------------------|---------|--------|--------|
|                                                                                                 | Item l.   | Financial                Statements                                                                  |    |   |
|                                                                                                 |           |
|                                                                                                 |           | Consolidated                Balance Sheets – September 1, 2007 and June 2, 2007                |    | 3 - 4  |   |
|                                                                                                 |           |
|                                                                                                 |           | Consolidated                Statements of Earnings – Thirteen weeks ended                      |
|                                                                                                 |           |    September 1,                2007 and September 2, 2006                             |    | 5      |   |
|                                                                                                 |           |
|                                                                                                 |           | Consolidated                Statement of Stockholders’ Equity and                              |    |   |   |
|                                                                                                 |           |    Comprehensive                Income – Thirteen weeks ended September 1, 2007 |    | 6      |   |
|                                                                                                 |           |
|                                                                                                 |           | Consolidated                Statements of Cash Flows – Thirteen weeks ended                    |    |   |   |
|                                                                                                 |           |    September 1,                2007 and September 2, 2006                             |    | 7 - 8  |   |
|                                                                                                 |           |
|                                                                                                 |           | Notes to                Consolidated Financial Statements                                            |    | 9 - 23 |   |
|                                                                                                 |           |
|                                                                                                 | Item 2.   | Management’s Discussion                and Analysis of Financial Condition and Results    |    |   |   |
|                                                                                                 |           |    of                Operations                                                       | 24 - 33 |
|                                                                                                 |           |
|                                                                                                 | Item 3.   | Quantitative                and Qualitative Disclosures About Market Risk                            |    | 34     |   |
|                                                                                                 |           |
|                                                                                                 | Item 4.   | Controls and                Procedures                                                               |    | 35     |   |
|                                                                                                 |           |
| **Part                II:****                      Other Information** |
|                                                                                                 |           |
|                                                                                                 | Item 1.        | Legal                Proceedings                                                                     |    | 36     |   |
|                                                                                                 |           |
|                                                                                                 | Item 1A.  | Risk                Factors                                                                          |    | 36     |   |
|                                                                                                 |           |
|                                                                                                 | Item 2.   | Unregistered                Sales of Equity Securities and Use of Proceeds                           |    | 36     |   |
|                                                                                                 |           |
|                                                                                                 | Item 3.   | Defaults Upon                Senior Securities                                                       |    | 37     |   |
|                                                                                                 |           |
|                                                                                                 | Item 4.   | Submission of                Matters to a Vote of Security Holders                                   |    | 37     |   |
|                                                                                                 |           |
|                                                                                                 | Item 5.   | Other                Information                                                                     |    | 37     |   |
|                                                                                                 |           |
|                                                                                                 | Item 6.   | Exhibits                                                                                             |    | 37     |   |
|                                                                                                      |                |                                                                                                      |

| - 2                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                 |
|--------------------------------------------------------------|
|                                                         |
| **CONSOLIDATED                BALANCE SHEETS**(in thousands) |
|                                                         |

| ASSETS                                                                                                  | **September 1,                2007** |    | **June 2,                2007** |   |
|---------------------------------------------------------------------------------------------------------|--------------------------------------|---------|---------------------------------|--------|
||
||
|                                                                                               |
| CURRENT                ASSETS                                                                           |                                 |         |                            |   |  |   |
|     Cash                and cash equivalents                                        | $                                    | 7,919   |                            | $      | 8,037 |   |
|     Debt                and equity securities, at fair value                        |                                 | 36,509  |                            |   | 36,163 |   |
|     Accounts                receivable, principally                                 |
|        trade,                net of allowance for doubtful           |
|        accounts                of $904 and $928 at September 1, 2007 |
|                       and June 2, 2007, respectively                      |                                 | 21,536  |                            |   | 23,460 |   |
|     Inventories,                net                                                 |                                 | 34,928  |                            |   | 29,799 |   |
|     Refundable                income taxes                                          |                                 | 857     |                            |   | 981 |   |
|     Other                current assets                                             |                                 | 5,721   |                            |   | 5,788 |   |
|                                                                                                    |                                      |    |                                 |   |
|                                                                                               |
|           Total                current assets         |                                 | 107,470 |                            |   | 104,228 |   |
|                                                                                               |
| PROPERTY,                PLANT AND EQUIPMENT - AT COST,                                                 |
|     less                accumulated depreciation and                                |
|     amortization                of $29,444 and $28,574 at                           |
|     September                1, 2007 and June 2, 2007,                              |
|     respectively                                                                    |                                 | 17,782  |                            |   | 16,863 |   |
|                                                                                               |
| INTANGIBLE                ASSETS, less accumulated                                                      |
|     amortization                of $1,777 and $1,591 at                             |
|     September                1, 2007 and June 2, 2007,                              |
|     respectively                                                                    |                                 | 3,194   |                            |   | 3,380 |   |
|                                                                                               |
| DEBT AND                EQUITY SECURITIES, at fair value                                                |                                 | 599     |                            |   | 1,196 |   |
|                                                                                                    |                                 |    |                            |   |   |   |
| CASH SURRENDER                VALUE OF LIFE INSURANCE                                                   |                                 | 6,605   |                            |   | 6,471 |   |
|                                                                                                    |                                 |    |                            |   |   |   |
| OTHER                ASSETS                                                                             |                                 | 2,914   |                            |   | 2,804 |   |
|                                                                                                    |                                      |    |                                 |   |
|                                                                                               |
|           Total                assets                 | $                                    | 138,564 |                            | $      | 134,942 |   |
|                                                                                                    |                                      |    |                                 |   |
|                                                                                                    |                                 |    |                            |   |
| The accompanying notes are an                integral part of these financial statements.               |

| - 3                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                                  |
|-----------------------------------------------------------------------------------------------|
|                                                                                          |
| **CONSOLIDATED BALANCE                SHEETS**(in thousands, except share and per share data) |
|                                                                                          |

| **LIABILITIES AND                STOCKHOLDERS’ EQUITY**                                                               | **September 1,                2007** |    | **June 2,                2007** |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------------------------------------|---------|---------------------------------|--------|
||
||
|                                                                                                                   |
| CURRENT                LIABILITIES                                                                                          |                                 |         |                            |   |  |   |
|     Accounts                payable                                                                     | $                                    | 8,194   |                            | $      | 7,574 |   |
|     Accrued                liabilities                                                                  |                                 | 7,912   |                            |   | 8,435 |   |
|     Deferred                revenue                                                                     |                                 | 3,585   |                            |
|     Accrued                income taxes                                                                 |                                 | 507     |                            |   | 1,175 |   |
|                                                                                                                        |                                      |    |                                 |   |
|                                                                                                                   |
|           Total                current liabilities                        |                                 | 20,198  |                            |   | 17,184 |   |
|                                                                                                                        |                                 |    |                            |   |   |   |
| NONCURRENT LIABILITIES                                                                                                      |                                 | 3,705   |                            |   | 3,721 |   |
|                                                                                                                        |                                      |    |                                 |   |
|                                                                                                                   |
|           Total                liabilities                                |                                 | 23,903  |                            |   | 20,905 |   |
|                                                                                                                        |                                      |    |                                 |   |
|                                                                                                                   |
| COMMITMENTS                AND CONTINGENCIES                                                                                |                                 |         |                            |   |  |   |
|                                                                                                                        |                                 |    |                            |   |   |   |
| STOCKHOLDERS’                EQUITY                                                                                   |                                 |         |                            |   |  |   |
|     Preferred                stock, par value $.10 per                                                  |                                 |         |                            |   |  |   |
|        share                - authorized, 1,000,000 shares;                              |                                 |         |                            |   |  |   |
|        issued,                none                                                       |                                 |         |                            |   |  |   |
|     Common                stock, par value $.10 per share -                                             |                                 |         |                            |   |  |   |
|        authorized,                16,000,000 shares; issued                              |                                 |         |                            |   |  |   |
|        and                outstanding 10,976,549 shares at                               |                                 |         |                            |   |  |   |
|        September                1, 2007 and June 2, 2007                                 |                                 |         |                            |   |  |   |
|        (excluding                89,205 shares held in                                   |                                 |         |                            |   |  |   |
|        treasury                at September 1, 2007 and                                  |                                 |         |                            |   |  |   |
|        June                2, 2007)                                                      |                                 | 1,098   |                            |   | 1,098 |   |
|     Additional                paid-in capital                                                           |                                 | 31,857  |                            |   | 31,779 |   |
|     Retained                earnings                                                                    |                                 | 73,451  |                            |   | 72,806 |   |
|     Accumulated                other comprehensive income                                               |                                 | 8,255   |                            |   | 8,354 |   |
|                                                                                                                        |                                      |    |                                 |   |
|                                                                                                                   |
|           Total                stockholders’ equity                 |                                 | 114,661 |                            |   | 114,037 |   |
|                                                                                                                        |                                      |    |                                 |   |
|                                                                                                                   |
|           Total                liabilities and stockholders’ equity | $                                    | 138,564 |                            | $      | 134,942 |   |
|                                                                                                                        |                                      |    |                                 |   |

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

| - 4                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                                                                           |
|----------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                   |
| **CONSOLIDATED                STATEMENTS OF EARNINGS**                (unaudited)                (in thousands, except per share data) |
|                                                                                                                                   |

|                                                                                   | **Thirteen weeks                ended** |   |
|----------------------------------------------------------------------------------------|-----------------------------------------|--------|
||
||
||
|                                                                              |
| Net sales                                                                              | $                                       | 32,967 |   | $ | 33,440 |   |
| Cost of goods                sold                                                      |                                    | 18,501 |   |   | 18,849 |   |
||
|                                                                              |
|       Gross                profit                        |                                    | 14,466 |   |   | 14,591 |   |
||
| Operating                expenses                                                      |                                    |   |   |   |   |   |
|   Selling, general                and administrative                         |                                    | 12,168 |   |   | 11,141 |   |
|   Research and                development                                    |                                    | 1,935  |   |   | 1,376 |   |
|                                                                                        |                                         |        |
||
|                                                                              |
|     Total operating                expenses                        |                                    | 14,103 |   |   | 12,517 |   |
||
|                                                                              |
|       Operating                profit                    |                                    | 363    |   |   | 2,074 |   |
|                                                                              |
| Other income                (expense)                                                  |                                    |   |   |   |   |   |
|   Interest                income                                             |                                    | 420    |   |   | 356 |   |
|   Interest                expense                                            |                                    | (70    | ) |   | (70 | ) |
|   Foreign currency                exchange gains (losses)                    |                                    | (56    | ) |   | 219 |   |
|   Other,                net                                                  |                                    | 183    |   |   | 55 |   |
||
|       Earnings                from continuing operations |                                    |   |   |   |   |   |
|         before                income taxes     |                                    | 840    |   |   | 2,634 |   |
|                                                                              |
| Income tax                provision                                                    |                                    | 195    |   |   | 851 |   |
||
|                                                                              |
|       Earnings                from continuing operations |                                    | 645    |   |   | 1,783 |   |
|                                                                              |
| Loss from discontinued                operation, net of                                |                                    |   |   |   |   |   |
|   income tax                benefit of $120 in 2006                          |                                    |   |   |   | (221 | ) |
||
|                                                                              |
|       NET                EARNINGS                        | $                                       | 645    |   | $ | 1,562 |   |
||
|                                                                              |
| Basic earnings (loss) per                common share                                  |                                    |   |   |   |   |   |
|   From continuing                operations                                  | $                                       | 0.06   |   | $ | 0.16 |   |
|   From                discontinued operation,                                |                                    |   |   |   |   |   |
|     net                of income tax benefit                       |                                    |   |   |   | (0.02 | ) |
||
|                                                                              |
|   From total                operations                                       | $                                       | 0.06   |   | $ | 0.14 |   |
||
|                                                                              |
| Diluted earnings (loss) per                common share                                |                                    |   |   |   |   |   |
|   From continuing                operations                                  | $                                       | 0.06   |   | $ | 0.16 |   |
|   From                discontinued operation,                                |                                    |   |   |   |   |   |
|     net                of income tax benefit                       |                                    |   |   |   | (0.02 | ) |
||
|                                                                              |
|   From total                operations                                       | $                                       | 0.06   |   | $ | 0.14 |   |
||

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

| - 5                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                                                                      |
|-----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              |
| **CONSOLIDATED                STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME**                                  |
|                                                                                                                              |
|                                                                                                                                   |
| Thirteen                weeks ended September 1, 2007                (unaudited)                (in thousands, except share data) |
|                                                                                                                              |

|                                                                              | Common stock |            | Additional                paid-in                capital |        | Retained                earnings |        | Accumulated                other                comprehensive                income |        | Total  |        | **Compre-                hensive                income** |        |
|------------------------------------------------------------------------------|--------------|------------|----------------------------------------------------------|--------|----------------------------------|--------|-------------------------------------------------------------------------------------|--------|--------|--------|----------------------------------------------------------|--------|
||
||
||
||
| Balance                at June 2, 2007                                       |         | 10,976,549 |                                                     | $      | 1,098                            |   | $                                                                                   | 31,779 |   | $      | 72,806                                                   |   | $ | 8,354 |   | $ | 114,037 |   |   |   |   |
|                                                                         |
| Compensation related                to                                       |
|   stock option                plans                                |         |       |                                                     |   |                             |   |                                                                                | 78     |   |   |                                                     |   |   |   |   |   | 78 |   |   |   |   |
| Net                earnings                                                  |         |       |                                                     |   |                             |   |                                                                                |   |   |   | 645                                                      |   |   |   |   |   | 645 |   | $ | 645 |   |
| Unrealized holding loss on                debt                               |
|   and equity                securities                             |
|     Arising                during the period             |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   | (268 | ) |   | (268 | ) |   | (268 | ) |
|     Reclassification                adjustment           |
|       for                gains included in net |
|       earnings                                 |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   | (82 | ) |   | (82 | ) |   | (82 | ) |
| Foreign                currency translation                                  |
|   adjustments                                                      |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   | 251 |   |   | 251 |   |   | 251 |   |
||
|                                                                         |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                income                                          |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   |   |   |   |   |   | $ | 546 |   |
|                                                                         |         |       |                                                     |   |                             |   |                                                                                |   |   |   |                                                     |   |   |   |   |   |   |   |  |   |
| Balance                at September 1, 2007                                  |         | 10,976,549 |                                                     | $      | 1,098                            |   | $                                                                                   | 31,857 |   | $      | 73,451                                                   |   | $ | 8,255 |   | $ | 114,661 |   |   |   |   |
||

|                                                                                    |
|-----------------------------------------------------------------------------------------|
| The accompanying notes are                an integral part of this financial statement. |

| - 6                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                                                      |
|-------------------------------------------------------------------------------------------------------------------|
|                                                                                                              |
| **CONSOLIDATED                STATEMENTS OF CASH FLOWS**                (unaudited)                (in thousands) |
|                                                                                                              |

|                                                                                                                    | **Thirteen weeks                ended** |    |
|-------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|---------|
||
||
||
|                                                                                                               |
| Cash flows from operating                activities:                                                                    |                                    |         |   |   |  |   |
|   Net                earnings                                                                                 | $                                       | 645     |   | $ | 1,562 |   |
|   Loss from                discontinued operation,                                                            |
|     net                of tax                                                                       |                                    |    |   |   | 221 |   |
|   Adjustments to                reconcile net earnings                                                        |
|     to                net cash provided by (used in)                                                |
|     operating                activities                                                             |
|       Depreciation                and amortization                                        |                                    | 963     |   |   | 884 |   |
|       Gain on                sale of investments                                          |                                    | (126    | ) |   |   |   |
|       Provision                for (reduction in)doubtful                                 |
|         accounts                                                                |                                    | (24     | ) |   | 23 |   |
|       Deferred                income tax provision                                        |                                    | 17      |   |   | 288 |   |
|       Stock                option compensation cost                                       |                                    | 78      |   |   | 21 |   |
|       Changes                in operating assets and                                      |
|         liabilities,                net of business divested                    |
|           Accounts                receivable                          |                                    | 1,994   |   |   | (726 | ) |
|           Inventories                                                 |                                    | (4,997  | ) |   | (2,109 | ) |
|           Other                current assets                         |                                    | 233     |   |   | 1,522 |   |
|           Other                assets                                 |                                    | (98     | ) |   | 43 |   |
|           Accounts                payable                             |                                    | 599     |   |   | (251 | ) |
|           Accrued                liabilities                          |                                    | (545    | ) |   | (2,619 | ) |
|           Deferred                revenue                             |                                    | 3,579   |   |   |   |   |
|           Accrued                income taxes                         |                                    | (675    | ) |   | 157 |   |
|           Other                noncurrent liabilities                 |                                    | (20     | ) |   | (12 | ) |
|       Net cash                used in operating activities                                |
|         of                discontinued operation                                |                                    |    |   |   | (208 | ) |
||
|                                                                                                               |
|             Net                cash provided by (used in)   |
|               operating                activities |                                    | 1,623   |   |   | (1,204 | ) |
|                                                                                                                         |                                         |         |
||
|                                                                                                               |
| Cash flows from investing                activities:                                                                    |
|   Additions to                property, plant and                                                             |
|     equipment,                net                                                                   |                                    | (1,639  | ) |   | (1,190 | ) |
|   Available-for-sale                securities                                                                |
|     Purchases                                                                                       |                                    | (52,130 | ) |   | (147,140 | ) |
|     Proceeds from                sale                                                               |                                    | 51,971  |   |   | 151,764 |   |
|   Net cash                provided by investing activities                                                    |
|     of                discontinued operation                                                        |                                    |    |   |   | 2 |   |
|                                                                                                                         |                                         |         |
||
|                                                                                                               |
|       Net cash                provided by (used in) investing activities                  |                                    | (1,798  | ) |   | 3,436 |   |
||

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

| - 7                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                               |
| **CONSOLIDATED STATEMENTS OF                CASH FLOWS                (continued)** (unaudited)                (in thousands) |
|                                                                                                                               |

|                                                                                                  | **Thirteen weeks                ended** |    |
|-------------------------------------------------------------------------------------------------------|-----------------------------------------|---------|
||
||
||
|                                                                                             |
| Cash flows from financing                activities:                                                  |                                    |         |   |   |  |   |
|   Repayments of                debt                                                         |                                    |    |   | $ | (13 | ) |
|   Proceeds from                exercise of stock options                                    |                                    |    |   |   | 50 |   |
|   Tax benefit on                exercise of stock options                                   |                                    |    |   |   | 115 |   |
|   Net cash used in                financing activities                                      |
|     of                discontinued operation                                      |                                    |    |   |   | (105 | ) |
||
|                                                                                             |
|       Net cash                provided by financing                     |
|         activities                                            | $                                       | — |   |   | 47 |   |
||
|                                                                                             |
| Effect of exchange rate                changes on                                                     |
|   cash and cash                equivalents                                                  |                                    | 57      |   |   | (46 | ) |
||
|                                                                                             |
|       INCREASE                (DECREASE) IN CASH AND                    |
|         CASH                EQUIVALENTS                       |                                    | (118    | ) |   | 2,233 |   |
|                                                                                             |
| Cash and cash                equivalents                                                              |
|   Beginning of                period                                                        |                                    | 8,037   |   |   | 6,749 |   |
||
|                                                                                             |
|   End of                period                                                              | $                                       | 7,919   |   | $ | 8,982 |   |
||
|                                                                                             |
| Supplemental disclosures of                cash flow                                                  |
|   information:                                                                              |
|     Cash                paid (refunded) during the period for:                    |
|       Interest                                                          | $                                       | 50      |   | $ | 34 |   |
||
|                                                                                             |
|       Income                taxes (net of refunds of $ 468 and          |
|         $1,162                in 2007 and 2006, respectively) | $                                       | 719     |   | $ | (858 | ) |
||

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

| - 8                    - |
|--------------------------|

| E-Z-EM, Inc.                and Subsidiaries                                      |
|-----------------------------------------------------------------------------------|
|                                                                              |
| **NOTES TO                CONSOLIDATED FINANCIAL STATEMENTS**                     |
|                                                                              |
| September 1,                2007 and September 2, 2006                (unaudited) |
|                                                                              |

| **NOTE A                    – NATURE OF BUSINESS AND BASIS OF PRESENTATION** |
|------------------------------------------------------------------------------------|
|                                                                               |

|   | **Nature                of Business**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | E-Z-EM, Inc. and its                        subsidiaries (“the Company” or “E-Z-EM”) is a                        leading provider of medical devices and contrast products used by                        radiologists, gastroenterologists and speech language pathologists                        primarily in screening for and diagnosing diseases and disorders of the                        gastrointestinal (“GI”) tract. Products are used for computed                        tomography (CT) and magnetic resonance (MR) imaging, colorectal cancer                        screening, evaluation of swallowing disorders (dysphagia), and testing for                        other diseases and disorders of the GI system. The Company is also the                        exclusive worldwide manufacturer and marketer of its RSDL skin                        decontaminant (“RSDL”) product for military services and                        first-responder organizations. RSDL is a patented, broad-spectrum liquid                        chemical warfare agent decontaminant that neutralizes or removes chemical                        agents from skin on contact, leaving a non-toxic residue that can be rinsed                        off with water. The Company also leverages its capacities in manufacturing,                        automation and quality control by providing contract manufacturing to                        third-parties. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | **Basis of                Presentation**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The consolidated                        balance sheet as of September 1, 2007, the consolidated statement of                        stockholders’ equity and comprehensive income for the thirteen weeks                        ended September 1, 2007, and the consolidated statements of earnings and                        cash flows for the thirteen weeks ended September 1, 2007 and September 2,                        2006, have been prepared by the Company without audit. The consolidated                        balance sheet as of June 2, 2007 was derived from audited consolidated                        financial statements. In the opinion of management, all adjustments (which                        include normal recurring adjustments) necessary to present fairly the                        financial position, changes in stockholders’ equity and comprehensive                        income, results of operations and cash flows at September 1, 2007 (and for                        all periods presented) have been made.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Certain information and                        footnote disclosures, normally included in financial statements prepared in                        accordance with accounting principles generally accepted in the United                        States of America, have been condensed or omitted. These consolidated                        financial statements should be read in conjunction with the financial                        statements and notes thereto included in the Annual Report on Form 10-K for                        the fiscal year ended June 2, 2007, filed by the Company on August 16,                        2007. The results of operations for the periods ended September 1, 2007,                        and September 2, 2006, are not necessarily indicative of the operating                        results for the respective full years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | The consolidated                        financial statements include the accounts of E-Z-EM, Inc. and all wholly                        owned subsidiaries. Toho Kagaku Kenkyusho Co., Ltd. (“Toho”),                        the Company’s wholly owned Japanese subsidiary, is reported                        separately as a discontinued operation for the period ended September 2,                        2006 within the consolidated financial statements (see Note B). All                        significant intercompany balances and transactions have been                        eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

| - 9                    - |
|--------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    B – DISCONTINUED OPERATION** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                         |

|   | In fiscal 2007, the                        Company completed the wind-down of Toho. The Company decided to close Toho                        and exit this market because it was unable to generate sufficient                        income from operations and grow the business due to a limited product                        offering and scope of operation. Also, a change in manufacturing location                        required a re-registration of Toho’s principal products with Japanese                        regulatory authorities, resulting in a projected interruption of supply                        during the first quarter of fiscal 2007. Management planned a market                        withdrawal on a staged basis so that inventory could be sold, accounts                        receivable collected and the property sold in an organized fashion, while                        also satisfying all outstanding liabilities.                                                                                                                                                                                                                                                          |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | As a result of this                        exit, foreign currency translation losses of $33,000 included in                        accumulated other comprehensive income have been charged to results of                        operations for the thirteen weeks ended September 2, 2006 in accordance                        with EITF Issue No. 01-5, “Application of FASB Statement No. 52 to an                        Investment Being Evaluated for Impairment That Will Be Disposed Of.”                        EITF 01-5 requires that accumulated foreign currency translation                        adjustments be included as part of the carrying amount of a foreign                        investment being evaluated for impairment under a committed plan of                        disposal. For the period ended September 2, 2006, Toho is accounted for as                        a discontinued operation in the Company’s financial statements in                        accordance with Statement of Financial Accounting Standards                        (“SFAS”) No. 144, “Accounting for Impairment and Disposal                        of Long-Lived Assets.” |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | For the thirteen weeks                        ended September 2, 2006, project costs, primarily severance and the                        above-mentioned impairment, aggregated $230,000. Changes in project costs                        are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   |                             | **September 2,                2006** |   |   |
|--------|----------------------------------|--------------------------------------|--------|--------|
||
||
||
|   | Beginning                balance | $                                    | 333    |   |   |
|   | Recorded                         |                                 | 230    |   |   |
|   | Paid                             |                                 | (300   | )      |   |
|   |                             |
||
|   | Ending balance                   | $                                    | 263    |   |   |
|   |                             |                                      |   |   |

| - 10                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    B – DISCONTINUED OPERATION (continued)** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                     |

|   | Summarized results of                        operations for Toho as reported in loss from discontinued operation in the                        accompanying consolidated statements of earnings are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                            |

|   |                                                         | Thirteen                weeks ended                September 2,                2006 |   |   |
|--------|--------------------------------------------------------------|-------------------------------------------------------------------------------------|--------|--------|
|   |                                                         |
||
||
|   |  Net sales                                              |                                                                                |        |   |   |
|   |    From                unaffiliated customers | $                                                                                   | 194    |   |   |
|   |                                                         |
||
|   |  Total net                sales                         | $                                                                                   | 194    |   |   |
|   |                                                         |
||
|   |  Loss before income                taxes                | $                                                                                   | (341   | )      |   |
|   |  Income tax                benefit                      |                                                                                | (120   | )      |   |
|   |                                                         |
||
|   |  Loss from discontinued                operation        | $                                                                                   | (221   | )      |   |
|   |                                                         |

|                                                     |
|----------------------------------------------------------|
| **NOTE                    C - STOCK-BASED COMPENSATION** |
|                                                     |

|   | Effective June 4, 2006,                        the Company adopted the provisions of SFAS No. 123(R), “Share-Based                        Payment,” which revises SFAS No. 123, “Accounting for                        Stock-Based Compensation” and supersedes APB Opinion No. 25,                        “Accounting for Stock Issued to Employees.” SFAS No. 123(R)                        requires that all stock-based compensation be recognized as an expense in                        the financial statements and that such cost be measured at the fair value                        of the award.                                                                                                                                                                                                                                                                                                                                               |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The Company adopted                        SFAS No. 123(R) using the modified prospective method, which requires the                        Company to recognize compensation expense on a prospective basis.                        Therefore, prior period financial statements have not been restated. Under                        this transition method, the Company applies the provisions of SFAS No.                        123(R) to new awards and to awards modified, repurchased or cancelled on or                        after June 4, 2006. The provisions of SFAS No. 123(R) did not apply to any                        stock options outstanding as of June 4, 2006, since all such options were                        fully vested.                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Prior to the adoption                        of SFAS No. 123(R), the Company accounted for stock-based compensation                        awards under its three stock-based compensation plans using the intrinsic                        value method of Accounting Principles Board (“APB”) Opinion No.                        25, “Accounting for Stock Issued to Employees” and related                        interpretations. Accordingly, no compensation expense had been recognized                        under these plans concerning stock options granted to employees and to                        members of the Board of Directors, as all such stock options granted had                        exercise prices equal to or greater than the market value of the underlying                        common stock on the dates of grant. No awards other than stock options have                        been granted under the Company’s plans. |

| - 11                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    C - STOCK-BASED COMPENSATION (continued)** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                 |

|   | Additionally, in                        periods prior to June 4, 2006, the Company followed the disclosure-only                        requirements of SFAS No. 123, which allowed entities to continue to apply                        the provisions of APB No. 25 for transactions with employees and directors                        and provide pro forma net earnings and pro forma earnings per share                        disclosures for employee and director stock option grants made as if the                        fair value based method of accounting in SFAS No. 123 had been applied to                        these transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | For the thirteen weeks                        ended September 1, 2007, the Company recognized pre-tax share-based                        compensation expense of $78,000 ($51,000 after tax effects) for awards to                        members of the Board of Directors granted during the fourth quarter of                        fiscal 2007. For the thirteen weeks ended September 2, 2006, the Company                        recognized pre-tax share-based compensation expense of $21,000 ($13,000                        after tax effects) for options granted in prior years to a former director                        serving as a consultant. These expenses are included in selling, general                        and administrative expense in the accompanying consolidated statements of                        earnings. The Company recognizes share-based compensation costs on a                        straight-line basis over the service period. At September 1, 2007, there                        was $234,000 of total unrecognized compensation cost related to non-vested                        stock options granted under the Company’s stock-based compensation                        plans, which will be recognized over a weighted-average remaining life of                        approximately three-quarters of one year. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | In November 2005,                        the Financial Accounting Standards Board (“FASB”) issued Staff                        Position No. FAS 123(R)-3, “Transition Election Related to Accounting                        for the Tax Effects of Share-Based Payment Awards” (“FSP                        123R-3”). The Company has elected to adopt the alternative transition                        method provided in FSP 123R-3 for calculating the tax effects of                        stock-based compensation under SFAS 123R. The alternative transition method                        includes simplified methods to establish the beginning balance of the                        additional paid-in-capital pool (“APIC pool”) related to the                        tax effects of stock-based compensation, and for determining the subsequent                        impact on the APIC pool and consolidated statements of cash flows of the                        tax effects of stock-based compensation awards that are outstanding upon                        adoption of SFAS No. 123(R).                                                                                                                                                                                                          |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Prior to the adoption                        of SFAS No. 123(R), the Company presented all tax benefits resulting from                        the exercise of stock options as operating cash flows in the consolidated                        statement of cash flows. SFAS No. 123(R) requires that cash flows from the                        exercise of stock options resulting from tax benefits in excess of                        recognized cumulative compensation cost (excess tax benefits) be classified                        as financing cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

| - 12                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    C - STOCK-BASED COMPENSATION (continued)** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                 |

|   | **2004                Stock and Incentive Award Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In October 2004, the                        Company adopted the 2004 Stock and Incentive Award Plan (the “2004                        Plan”). The 2004 Plan provides for the grant of incentive stock                        options to employees and for the grant of nonstatutory stock options,                        restricted stock, stock appreciation rights, performance units, performance                        shares and other incentive awards to employees, directors and other service                        providers. A total of 1,708,425 shares (including 700,000 shares authorized                        in October 2006) of the Company’s common stock are available for                        issuance under the 2004 Plan, including 576,346 shares and 82,079 shares                        reallocated from the 1983 Stock Option Plan and 1984 Directors and                        Consultants Stock Option Plan, respectively. A committee of the board                        administers the 2004 Plan. The committee determines the vesting terms and                        exercise price of options granted under the 2004 Plan and the terms and                        conditions of any other awards made under the 2004 Plan. For all incentive                        stock options the exercise price must at least be equal to the fair market                        value of the Company’s common stock on the date of grant. The term of                        an incentive stock option may not exceed ten years, and up to 800,000                        shares of the Company’s common stock may be issued upon exercise of                        incentive stock options. No awards may be granted under the 2004 Plan after                        October 26, 2014. At September 1, 2007, there were 696,175 shares available                        for grants of options and other awards under the 2004 Plan. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **1983                Stock Option Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In 1983, the Company                        adopted the 1983 Stock Option Plan (the “1983 Plan”). The 1983                        Plan provides for the grant to key employees of both nonqualified stock                        options and incentive stock options. A total of 2,041,628 shares (giving                        effect to the reallocation of 576,346 shares to the 2004 Plan) of the                        Company’s common stock may be issued under the 1983 Plan pursuant to                        the exercise of options. All outstanding stock options have an exercise                        price of not less than the market value of the shares on the date of grant.                        Outstanding options are exercisable over a period of time designated by the                        administrators of the 1983 Plan (but not more than 10 years from the date                        of grant) and are subject to such other terms and conditions as the                        administrators have determined. No further options will be issued under the                        1983 Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

| - 13                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    C - STOCK-BASED COMPENSATION (continued)** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                 |

|   | **1984                Stock Option Plan**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | In 1984, the Company                        adopted the 1984 Directors and Consultants Stock Option Plan (the                        “1984 Plan”). The 1984 Plan provides for the grant to members                        of the Board of Directors and consultants of nonqualified stock options. A                        total of 377,411 shares (giving effect to the reallocation of 82,079 shares                        to the 2004 Plan) of the Company’s common stock may be issued under                        the 1984 Plan pursuant to the exercise of options. All outstanding stock                        options have an exercise price of not less than the market value of the                        shares on the date of grant. Outstanding options are exercisable over a                        period of time designated by the administrators of the 1984 Plan (but not                        more than 10 years from the date of grant) and are subject to such other                        terms and conditions as the administrators have determined. No further                        options will be issued under the 1984 Plan.                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The fair value of                        options granted is estimated on the date of grant using the Black-Scholes                        option-pricing model based on weighted-average assumptions for all plans                        for expected life (years), expected volatility, risk-free interest rate,                        dividend yield and pre-vesting forfeitures. No options were granted during                        the thirteen weeks ended September 1, 2007 and September 2, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The expected life of                        the options represents the estimated period of time until exercise and is                        based on historical experience of similar awards, giving consideration to                        the contractual terms, vesting schedules and expectations of future                        behavior. The expected volatility is estimated using the historical                        volatility of the Company’s stock. The risk-free interest rate is                        based on the U.S. Treasury rates at the date of grant with maturity dates                        approximately equal to the expected life at the grant date. The Company has                        not recently paid any dividends and does not expect to in the foreseeable                        future. The amount of stock-based compensation expense recognized during a                        period is based on the portion of the awards that are ultimately expected                        to vest. The Company estimates pre-vesting forfeitures at the time of grant                        by analyzing historical data and revises those estimates in subsequent                        periods if actual forfeitures differ significantly from those estimates.                        Ultimately, the total expense recognized over the vesting period will equal                        the fair value of awards that actually vest. |

| - 14                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    C - STOCK-BASED COMPENSATION (continued)** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                 |

|   | The following is a                        summary of the stock option activity during the thirteen weeks ended                        September 1, 2007: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                     |

|              |                                                                              | Number of                Shares                (000) |       | Weighted                Average                Exercise                Price |   | Weighted                Average                Remaining                Contractual                Life in                Years |        | Aggregate                Intrinsic                Value                (000) |      |
|--------------|------------------------------------------------------------------------------|------------------------------------------------------|-------|------------------------------------------------------------------------------|---|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|------|
||
|         |  Outstanding at                beginning of period                      |                                                 | 1,279 |                                                                         | $ | 12.45                                                                                                                           |   |                                                                         | 6.80 |   |   |   |   |
||
|    |
|         |  Outstanding at end of                period                            |                                                 | 1,279 |                                                                         | $ | 12.45                                                                                                                           |   |                                                                         | 6.55 |   | $ | 3,068 |   |
||
|    |
|         |  Vested or expected to                vest at                           |
|         |         end                of period |                                                 | 1,244 |                                                                         | $ | 12.33                                                                                                                           |   |                                                                         | 6.46 |   | $ | 3,132 |   |
||
|    |
|         |  Exercisable at end of                period                            |                                                 | 1,244 |                                                                         | $ | 12.33                                                                                                                           |   |                                                                         | 6.46 |   | $ | 3,132 |   |
||

|   |                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The following is a                        summary of the stock option activity during the thirteen weeks ended                        September 2, 2006: |
|        |                                                                                                                                                     |

|              |                                                                        | Number of                Shares                (000) |       | Weighted                Average                Exercise                Price |   | Weighted                Average                Remaining                Contractual                Life in                Years |        | Aggregate                Intrinsic                Value                (000) |      |
|--------------|------------------------------------------------------------------------|------------------------------------------------------|-------|------------------------------------------------------------------------------|---|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|------|
||
|    |
|         | Outstanding at beginning of                period                      |                                                 | 1,358 |                                                                         | $ | 12.23                                                                                                                           |   |                                                                         | 7.65 |   |   |   |   |
|         | Exercised                                                              |                                                 | (7    | )                                                                            | $ | 6.75                                                                                                                            |   |                                                                         | 5.93 |   |   |   |   |
|         | Forfeited                                                              |                                                 | (6    | )                                                                            | $ | 14.39                                                                                                                           |   |                                                                         | 8.50 |   |   |   |   |
||
|    |
|         | Outstanding at end of                period                            |                                                 | 1,345 |                                                                         | $ | 12.25                                                                                                                           |   |                                                                         | 7.40 |   | $ | 3,608 |   |
||
|    |
|         | Vested or expected to vest                at                           |
|         |        end                of period |                                                 | 1,345 |                                                                         | $ | 12.25                                                                                                                           |   |                                                                         | 7.40 |   | $ | 3,608 |   |
||
|    |
|         | Exercisable at end of                period                            |                                                 | 1,345 |                                                                         | $ | 12.25                                                                                                                           |   |                                                                         | 7.40 |   | $ | 3,608 |   |
||

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The aggregate intrinsic                        value in the table above is before applicable income taxes and is based on                        the Company’s closing stock price as of the last business day of the                        respective period. The total intrinsic value of stock options exercised                        during the thirteen weeks ended September 2, 2006 was $51,000.                                                                                |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The Company received                        cash of $50,000 from stock options exercised during the thirteen weeks                        ended September 2, 2006. These cash receipts are included in financing                        activities in the accompanying consolidated statements of cash flows. The                        Company realized tax benefits from the exercise of stock options during the                        thirteen weeks ended September 2, 2006 of $115,000. |

| - 15                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE D - EARNINGS PER                    COMMON SHARE** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                      |

|         | Basic earnings per                        share are based on the weighted average number of common shares outstanding                        without consideration of potential common stock. Diluted earnings per share                        are based on the weighted average number of common and potential dilutive                        common shares outstanding. The calculation takes into account the shares                        that may be issued upon exercise of stock options, reduced by the shares                        that may be repurchased with the funds received from the exercise, based on                        the average price during the period. |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|         | The following table                        sets forth the reconciliation of the weighted average number of common                        shares:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|   |                                         | Thirteen weeks                ended |   |
|--------|----------------------------------------------|-------------------------------------|--------|
||
||
||
||
||
|   | Basic                                        |                                | 10,977 |   |   | 10,867 |   |
|   | Effect of dilutive                securities |
|   |   (stock                options)   |                                | 190    |   |   | 192 |   |
||
||
|   | Diluted                                      |                                | 11,167 |   |   | 11,059 |   |
||

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Excluded from the                        calculation of earnings per common share, are options to purchase 228,750                        and 224,750 shares of common stock for the thirteen weeks ended September                        1, 2007 and September 2, 2006, respectively, as their inclusion would be                        anti-dilutive. For the thirteen weeks ended September 1, 2007, the range of                        exercise prices on the excluded options was $16.69 to $17.49 per share and,                        for the thirteen weeks ended September 2, 2006, the range of exercise                        prices on the excluded options was $15.64 to $17.49 per share. |

|                                                                                 |
|--------------------------------------------------------------------------------------|
| **NOTE                    E - EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS** |
|                                                                                 |

|   | In June 2006, the FASB                        issued FASB Interpretation No. 48, “Accounting for Uncertainty in                        Income Taxes,” an interpretation of FASB Statement No. 109                        (“FIN 48”). FIN 48 clarifies the accounting for uncertainties                        in income taxes recognized in an enterprise’s financial statements.                        The interpretation requires that the Company determine whether it is more                        likely than not that a tax position will be sustained upon examination by                        the appropriate taxing authority. If a tax position meets the more likely                        than not recognition criteria, FIN 48 requires that the tax position be                        measured at the largest amount of benefit greater than 50 percent likely of                        being realized upon ultimate settlement. This accounting standard is                        effective for fiscal years beginning after December 15, 2006. The Company                        adopted FIN 48 as of June 3, 2007. The adoption of FIN 48 has not had a                        material effect on the Company’s financial condition or results of                        operations. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - 16                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE E - EFFECTS OF                    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (continued)** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                             |

|   | In September 2006,                        the FASB issued SFAS No. 157, “Fair Value                        Measurements.” This statement defines fair value, establishes a                        framework for measuring fair value in generally accepted accounting                        principles, and expands disclosures about fair value measurements. The                        standard applies whenever other standards require (or permit) assets or                        liabilities to be measured at fair value but does not expand the use of                        fair value in any new circumstances. This statement is effective for                        financial statements issued for fiscal years beginning after                        November 15, 2007, and interim periods within those fiscal years. The                        Company does not believe that the adoption of SFAS No. 157 will have a                        material impact on its financial condition or results of operations.                                                                                                                                                                                                                                                                                                                                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In February 2007, the                        FASB issued SFAS No. 159, “*The                        Fair Value Option for Financial Assets and Financial Liabilities -                        Including an amendment of FASB Statement No.                        115*.” SFAS No. 159 permits entities to choose to                        measure many financial instruments and certain other items at fair value                        that are not currently required to be measured at fair value. The objective                        of SFAS No. 159 is to provide opportunities to mitigate volatility in                        reported earnings caused by measuring related assets and liabilities                        differently without having to apply hedge accounting provisions. SFAS No.                        159 also establishes presentation and disclosure requirements designed to                        facilitate comparisons between companies that choose different measurement                        attributes for similar types of assets and liabilities. SFAS No. 159 is                        effective for fiscal years beginning after November 15, 2007. The Company                        does not believe that the adoption of SFAS No. 159 will have a material                        impact on its financial condition or results of operations. |

| - 17                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    F - COMPREHENSIVE INCOME** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                 |

|   | The components of                        comprehensive income, net of related tax, are as follows: |
|--------|----------------------------------------------------------------------------------------------------|
|   |                                                                                               |

|   |                                                                                                         | Thirteen weeks                ended |   |
|--------|--------------------------------------------------------------------------------------------------------------|-------------------------------------|--------|
||
||
||
||
||
|   | Net earnings                                                                                                 | $                                   | 645    |   | $ | 1,562 |   |
|   | Unrealized holding gain                (loss) on debt and                                                    |                                |   |   |   |   |   |
|   |   equity                securities:                                                                |                                |   |   |   |   |   |
|   |     Arising during the                period                                             |                                | (268   | ) |   | 100 |   |
|   |     Reclassification                adjustment for gains                                 |                                |   |   |   |   |   |
|   |       included                in net earnings                                  |                                | (82    | ) |   |   |   |
|   | Foreign                currency translation adjustments                  arising during the period |                                | 251    |   |   | (40 | ) |
||
||
|   |         Comprehensive                income                          | $                                   | 546    |   | $ | 1,622 |   |
||

|   |                                                                                                                        |
|--------|-----------------------------------------------------------------------------------------------------------------------------|
|   | The components                of accumulated other comprehensive income, net of related tax, are as                follows: |
|   |                                                                                                                        |

|        |                                                                               | September                1,                2007 |       | June 2,                2007 |        |
|--------|-------------------------------------------------------------------------------|-------------------------------------------------|-------|-----------------------------|--------|
||
||
||
|   | Unrealized holding gain on                debt and equity                     |                                            |       |                        |   |  |   |
|   |   securities                                                        | $                                               | 263   |                        | $      | 613 |   |
|   | Cumulative translation                adjustments                             |                                            | 7,992 |                        |   | 7,741 |   |
||
||
|   |     Accumulated other                comprehensive income | $                                               | 8,255 |                        | $      | 8,354 |   |
||

| - 18                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    G - DEBT AND EQUITY SECURITIES** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                       |

|   | Debt and                equity securities at September 1, 2007 consisted of the following: |
|--------|--------------------------------------------------------------------------------------------|
|   |                                                                                       |

|         |                                                                              | **Amortized                cost** |   | **Fair                value** |   | **Unrealized                holding                gain** |   |
|--------------|-----------------------------------------------------------------------------------|-----------------------------------|--------|-------------------------------|--------|-----------------------------------------------------------|--------|
||
||
|         | Current                                                                           |                              |        |                          |   |                                                           |   |   |  |   |
|         | Available-for-sale                securities                                      |
|         |   (carried on the                balance sheet                          |
|         |   at fair                value)                                         |
|         |     Municipal bonds with                maturities            |
|         |       Due in                one through 10 years    | $                                 | 6,000  |                          | $      | 6,000                                                     |   |
|         |       Due after                10 years and through |                              |        |                          |   |                                                           |   |
|         |         20                years           |                              | 2,965  |                          |   | 2,965                                                     |   |
|         |       Due after                20 years             |                              | 15,100 |                          |   | 15,100                                                    |   |
|         |     Municipal                funds                            |                              | 12,176 |                          |   | 12,176                                                    |   |
|         |     Other                                                     |                              | 268    |                          |   | 268                                                       |   |
|         |                                                                              |
|    |
|         |                                                          | $                                 | 36,509 |                          | $      | 36,509                                                    |   |
|         |                                                                              |
|         | Noncurrent                                                                        |
|         | Available-for-sale                securities                                      |
|         |   (carried on the                balance sheet                          |
|         |   at fair                value)                                         |
|         |     Equity                securities                          | $                                 | 196    |                          | $      | 599                                                       |   | $ | 403 |   |
|         |                                                                              |
|    |
|         |                                                          | $                                 | 196    |                          | $      | 599                                                       |   | $ | 403 |   |
|         |                                                                              |

| - 19                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    G - DEBT AND EQUITY SECURITIES (continued)** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                   |

|   | Debt and                equity securities at June 2, 2007 consisted of the following: |
|--------|---------------------------------------------------------------------------------------|
|   |                                                                                  |

|   |                                                                                                                                                      | **Amortized                cost** |   | **Fair                value** |   | **Unrealized                holding                gain** |   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|-------------------------------|--------|-----------------------------------------------------------|--------|
||
||
||
|   | Current                                                                                                                                                   |                              |        |                          |   |                                                           |   |   |  |   |
|   | Available-for-sale                securities                                                                                                              |
|   |   (carried on the                balance sheet                                                                                                  |
|   |   at fair                value)                                                                                                                 |
|   |     Municipal bonds with                maturities                                                                                    |
|   |       Due after                10 years and through                        20 years | $                                 | 18,400 |                          | $      | 18,400                                                    |   |
|   |       Due after                20 years                                                                                     |                              | 17,575 |                          |   | 17,575                                                    |   |
|   |     Other                                                                                                                             |                              | 188    |                          |   | 188                                                       |   |
||
|   |                                                                                                                                  |
|   |                                                                                                                                  | $                                 | 36,163 |                          | $      | 36,163                                                    |   |
||
|   | Noncurrent                                                                                                                                                |
|   | Available-for-sale                securities                  (carried on the balance sheet                  at fair value)           |
|   |     Equity                securities                                                                                                  | $                                 | 257    |                          | $      | 1,196                                                     |   | $ | 939 |   |
||
|   |                                                                                                                                  |
|   |                                                                                                                                  | $                                 | 257    |                          | $      | 1,196                                                     |   | $ | 939 |   |
||

|                                        |
|---------------------------------------------|
| **NOTE                    H - INVENTORIES** |
|                                        |

|   | Inventories                consist of the following: |
|--------|------------------------------------------------------|
|   |                                                 |

|        |                 | September                1,                2007 |        | June 2,                2007 |        |
|--------|-----------------|-------------------------------------------------|--------|-----------------------------|--------|
||
||
||
|   | Finished goods  | $                                               | 15,700 |                        | $      | 15,016 |   |
|   | Work in process |                                            | 278    |                        |   | 247 |   |
|   | Raw materials   |                                            | 18,950 |                        |   | 14,536 |   |
||
|   |       | $                                               | 34,928 |                        | $      | 29,799 |   |
||

| - 20                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    I - DEFERRED REVENUE** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                             |

|   | In March 2007, the                        Company received its initial order for RSDL, for $5.07 million, from the                        U.S. Army Space and Missile Command. The U.S. Department of Defense (DoD)                        inspected and accepted this product in May 2007 and paid for this product                        in July 2007. At the DoD’s request, the Company is storing RSDL                        product with a carrying value of approximately $1.2 million and a current                        sales value of approximately $3.6 million relating to this order at its                        Canadian facility pending physical delivery. Such amount is included in                        finished goods inventory. The Company expects to make physical delivery in                        its second fiscal quarter, at which time it will recognize the revenue from                        this transaction. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |
|----------------------------------------------|
| **NOTE                    J - INCOME TAXES** |
|                                         |

|   | For the thirteen weeks                        ended September 1, 2007, the Company’s effective tax rate of 23%                        differed from the Federal statutory tax rate of 34% due primarily to                        tax-exempt income, partially offset by non-deductible expenses. For the                        thirteen weeks ended September 2, 2006, the Company’s effective tax                        rate of 32% differed from the Federal statutory tax rate of 34% due                        primarily to tax-exempt income, partially offset by non-deductible                        expenses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The Company files a                        Federal income tax return and tax returns in various state jurisdictions.                        The Company’s subsidiaries also file tax returns in their local                        jurisdictions of Canada, the United Kingdom and the Netherlands.                                                                                                                                                                                                                                                                                                                              |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The U.S. Federal income                        tax returns of the Company through May 31, 2003 are closed by Internal                        Revenue Code regulations. The income tax returns filed by the                        Company’s Canadian and Netherlands subsidiaries in their local tax                        jurisdictions through May 31, 2003 are closed by local statutes. The U.K.                        income tax returns filed by the Company’s U.K. subsidiary through May                        31, 2005 are closed by local statutes.                                                           |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The Company’s New                        York State tax returns for fiscal years 2003 through 2005 are currently                        under audit. The Company does not anticipate any material changes to the                        returns as filed.                                                                                                                                                                                                                                                                                                                                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The Company accounts                        for interest and penalties related to income tax matters in income tax                        provision.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

| - 21                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE                    K – CONTINGENCIES** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                |

|   | **Litigation                Matters**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | On June 20, 2007, an action was filed against the Company entitled Tyco                        Healthcare Group LP, Mallinckrodt Inc. and Liebel-Flarsheim Company vs.                        E-Z-EM, Inc. Case no. 2-07CV-262 in the U.S. District Court for the Eastern                        District of Texas, Marshall Division. The complaint alleged that the                        Company willfully, deliberately and intentionally infringed and is                        continuing to infringe on U.S. patent no. 5,868,710 (the “710                        patent”) by making, using, offering to sell, selling and/or importing                        certain injector systems, including but not limited to its Empower CT®                        and Empower CTA® injectors. The complaint alleged that the                        Company’s actions have caused, and will continue to cause, the                        plaintiffs to suffer substantial damage and irreparable injury. The                        complaint sought to prohibit the Company from continuing to market and sell                        these products and asked for compensatory and treble money damages,                        reasonable attorneys’ fees, costs and pre-judgment                        interest. |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | On August 30, 2007, the Company filed an answer denying the allegations in                        the complaint, pleading several affirmative defenses and bringing a                        counterclaim seeking a declaration that the claims of the 710 patent are                        invalid. The Company also moved to dismiss Tyco and Mallinckrodt as                        plaintiffs for lack of standing. The parties entered into a stipulation to                        remove Tyco as a plaintiff in the action and, on September 19, 2007, the                        court ordered the dismissal of Tyco with prejudice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | On September 18, 2007, Mallinckrodt and Liebel-Flarsheim filed a first                        amended complaint that substantially restated the claims alleged in the                        initial complaint. On October 1, 2007, the Company filed its answer denying                        the allegations in the first amended complaint, pleading several                        affirmative defenses and bringing a counterclaim seeking a declaration that                        the claims of the 710 patent are invalid. The Company believes that it has                        valid defenses to the infringement claims, including invalidity of certain                        claims of the 710 patent, and intends to defend the matter                        vigorously.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The Company is party to                        other claims, legal actions and complaints that arise in the ordinary                        course of business. The Company believes that any liability that may                        ultimately result from the resolution of these matters will not,                        individually or in the aggregate, have a material adverse effect on its                        financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | **Concentration of Credit                Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | For the thirteen weeks                        ended September 1, 2007 and September 2, 2006, sales of products to Merry                        X-Ray Corporation (“Merry X-Ray”) represented 31% and 35% of                        total sales, respectively. Approximately 36% and 35% of accounts receivable                        pertained to Merry X-Ray at September 1, 2007 and June 2, 2007,                        respectively. While the accounts receivable related to Merry X-Ray are                        significant, the Company does not believe the credit risk to be significant                        given the consistent payment history of this distributor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

| - 22                    - |
|---------------------------|

| E-Z-EM,                    Inc. and Subsidiaries

**NOTES                    TO CONSOLIDATED FINANCIAL STATEMENTS**

September                    1, 2007 and September 2, 2006                    (unaudited)

**NOTE L - COMMON                    STOCK** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                         |

|   | **Stock                Repurchase Program**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In March 2003, the                        Board of Directors authorized the repurchase of up to 300,000 shares of the                        Company’s common stock at an aggregate purchase price of up to                        $3,000,000. During the thirteen weeks ended September 1, 2007 no shares                        were repurchased under this program. In aggregate, the Company has                        repurchased 74,234 shares of common stock for approximately $716,000 under                        this program. |

| - 23                    - |
|---------------------------|

| Item                2. | **Management’s                        Discussion and Analysis of Financial Condition and Results of                        Operations** |
|------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| The                    following information should be read together with the consolidated financial                    statements and the notes thereto and other information included elsewhere in                    this Quarterly Report on Form 10-Q.

**Forward-Looking                    Statements**

Our                    disclosure and analysis in this report, including but not limited to the                    information discussed in this Item 2, contain forward-looking information about                    our Company’s financial results and estimates, business prospects and                    products in research that involve substantial risks and uncertainties. From                    time to time, we also may provide oral or written forward-looking statements in                    other materials we release to the public. Forward-looking statements give our                    current expectations or forecasts of future events. You can identify these                    statements by the fact that they do not relate strictly to historic or current                    facts. They use words such as “anticipate,” “estimate,”                    “expect,” “project,” “intend,”                    “plan,” “believe,” “will,” and other words                    and terms of similar meaning in connection with any discussion of future                    operations or financial performance. In particular, these include statements                    relating to future actions, prospective products or product approvals, future                    performance or results of current and anticipated products, sales efforts,                    expenses, interest rates, foreign exchange rates, intellectual property                    matters, the outcome of contingencies, such as legal proceedings, and financial                    results.

We                    cannot guarantee that any forward-looking statement will be realized, although                    we believe we have been prudent in our plans and assumptions. Achievement of                    future results is subject to risks, uncertainties and inaccurate assumptions.                    Should known or unknown risks or uncertainties materialize, or should                    underlying assumptions prove inaccurate, actual results could vary materially                    from past results and those anticipated, estimated or projected. As a result,                    investors are cautioned not to place undue reliance on any of our                    forward-looking statements. Investors should bear this in mind as they consider                    forward-looking statements.

We do                    not assume any obligation to update or revise any forward-looking statement                    that we make, even if new information becomes available or other events occur                    in the future. We are also affected by other factors that may be identified                    from time to time in our filings with the Securities and Exchange Commission,                    some of which are set forth in Item 1A – “Risk Factors” in                    our Form 10-K filing for the 2007 fiscal year. You are advised to consult any                    further disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K                    reports to the Securities and Exchange Commission. Although we have attempted                    to provide a list of important factors which may affect our business, investors                    are cautioned that other factors may prove to be important in the future and                    could affect our operating results. You should understand that it is not                    possible to predict or identify all such factors or to assess the impact of                    each factor or combination of factors on our business. Consequently, you should                    not consider any such list to be a complete set of all potential risks or                    uncertainties. |

| - 24                    - |
|---------------------------|

| **Overview**

We are a                    leading provider of medical diagnostic contrast agents and devices used in the                    diagnosis of abdominal disease. Our customers include radiologists,                    gastroenterologists and speech language pathologists. We are focused on                    becoming a worldwide CT solutions company for the computed tomography (CT)                    market. This focus is driven by the trend away from older fluoroscopic                    procedures (e.g., barium enema) to CT-based applications for imaging the entire                    abdominal tract because of the enhanced benefits of Multi-detector CT                    technology.

We have                    pioneered solutions for the emerging area of Virtual Colonography, which may                    offer unique capabilities for the early detection of colorectal cancer, and                    have also developed new imaging contrast agents, for example VoLumen, that                    allow enhanced images from CT and CT Angiography applications utilizing                    Multi-detector CT technology. We also manufacture and market a line of CT power                    injectors that deliver injectable CT contrast agents.

In                    addition to our products for the radiology market, we also market a unique                    healthcare decontaminant product. RSDL skin decontaminant (“RSDL”)                    is a liquid skin decontaminant that neutralizes or removes a broad spectrum of                    chemical warfare and T-2 toxic agents. In April 2005, we purchased from our                    strategic partner, O’Dell Engineering, all its assets related to the RSDL                    technology. We now have exclusive, worldwide rights to the RSDL technology for                    the military and first-responder markets. Prior to the acquisition, we were the                    exclusive manufacturer of RSDL under an agreement between O’Dell                    Engineering and our Canadian subsidiary. In March 2007, the U.S.                    Department of Defense (DoD) determined that RSDL had satisfied all final                    configuration testing criteria, and was approved for initial procurements by                    the individual service branches. The decision, known as Milestone C, cleared                    the way for deployment of RSDL to war-fighters as the DoD’s next                    generation skin decontaminant for protection against chemical warfare agents.                    In March 2007, we received an initial order for $5.07 million for RSDL from the                    U.S. Army Space and Missile Command. At the DoD’s request, we are                    currently storing RSDL product at our facilities, with a carrying value of                    approximately $1.2 million and a current sales value of approximately $3.6                    million, relating to this initial order. The DoD inspected and formally                    accepted this product in May 2007 and paid for this product in July 2007. The                    product is currently pending physical delivery, which we expect to occur in our                    second fiscal quarter, at which time we will recognize the revenue from this                    transaction. We have subsequently received several additional orders from the                    U.S. Army Space and Missile Command with a combined value of approximately                    $12.5 million for RSDL and its training variant. We expect to ship these orders                    by the end of our fiscal year. Revenues will be recognized when the product is                    shipped.

In                    fiscal 2007, we completed the wind-down of Toho Kagaku Kenkyusho Co., Ltd.                    (“Toho”), our wholly owned Japanese subsidiary. We decided to close                    Toho and exit this market because we were unable to generate sufficient income                    from operations to grow the business due to a limited product offering and the                    scope of Toho’s operations. Also, a recent change in manufacturing                    location required us to re-register Toho’s principal products with the                    Japanese regulatory authorities, which we projected would cause an interruption                    of supply during the first quarter of 2007. We planned a staged market                    withdrawal to allow us to sell inventory, collect accounts receivable and sell                    the property in an organized fashion, while also satisfying all outstanding                    liabilities. For the quarter ended September 2, 2006, Toho is accounted for as                    a discontinued operation in our financial statements in |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - 25                    - |
|---------------------------|

| accordance with SFAS No.                    144, “Accounting for Impairment and Disposal of Long-Lived                    Assets.”

Our                    pricing flexibility is constrained under our agreements with large group                    purchasing organizations (“GPO” or “GPOs”) - groups of                    hospitals and other large customers formed to combine purchasing power. Due to                    the multi-year terms of typical GPO contracts, our ability to pass along base                    cost increases through increased prices is limited. Consolidation in the                    healthcare industry has also resulted in a broader product range in typical GPO                    contracts. Transactions with GPOs are often larger, more complex, and involve                    more long-term contracts than in the past. GPOs’ enhanced purchasing                    power may continue to increase the pressure on product pricing in the market as                    a whole. Additionally, some of our competitors have, and may in the future                    enter into other, agreements with GPOs. In the past, some of these GPOs have                    not strictly enforced these contracts against their members, and, by lowering                    our prices, we have been able to continue to sell our products directly to                    their members. However, should these GPOs determine to enforce this contractual                    obligation against their members, it could have a material adverse effect on                    our sales, and thus our operating results, in future periods.

The CT                    imaging market in calendar 2007 has been hindered by the Deficit Reduction Act                    of 2005 (DRA), which took effect on January 1, 2007. The DRA effectively                    reduced the Medicare and Medicaid reimbursement rates for MR, CT and PET/CT                    procedures performed at outpatient imaging centers. The impact of DRA is being                    felt in the market and remains to be quantified. Some of our customers have                    advised us that they have delayed plans to purchase imaging equipment, at least                    in the near term, in order to assess the impact of DRA on their                    businesses.

**Results of                    Operations**

Our                    quarters ended September 1, 2007 and September 2, 2006 both represent thirteen                    weeks.

**Consolidated                    Results of Operations**

For the                    quarter ended September 1, 2007, we reported net earnings of $645,000, or $.06                    per common share on both a basic and diluted basis, as compared to net earnings                    of $1,562,000, or $.14 per common share on both a basic and diluted basis, for                    the comparable period of last year.

The                    following table sets forth earnings from continuing operations and loss from                    discontinued operation for the quarters ended September 1, 2007 and September                    2, 2006: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|        |                                                    | 2007   |        | 2006   |        |
|--------|----------------------------------------------------|--------|--------|--------|--------|
||
||
||
|   | Earnings from continuing                operations | $      | 645    |   | $      | 1,783 |   |
|   | Loss from discontinued                operation    |   |   |   |   | (221 | ) |
||
|   |                                               |   |   |   |   |   |   |
|   | Net earnings                                       | $      | 645    |   | $      | 1,562 |   |
||

| - 26                    - |
|---------------------------|

| Our                    results are expressed as a percentage of net sales for the quarters ended                    September 1, 2007 and September 2, 2006 in the following table: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                |

|                                                                                        | 2007   |        | 2006   |        |
|----------------------------------------------------------------------------------------|--------|--------|--------|--------|
||
| Net sales                                                                              |   | 100.0  | %      |   | 100.0 | % |
| Cost of goods                sold                                                      |   | 56.1   |   |   | 56.4 |   |
|                                                                                   |
|                                                                                   |
|       Gross                profit                        |   | 43.9   |   |   | 43.6 |   |
|                                                                                   |
|                                                                                   |
| Operating                expenses                                                      |
|   Selling, general                and administrative                         |   | 36.9   |   |   | 33.3 |   |
|   Research and                development                                    |   | 5.9    |   |   | 4.1 |   |
|                                                                                   |
|                                                                                   |
|     Total operating                expenses                        |   | 42.8   |   |   | 37.4 |   |
|                                                                                   |
|                                                                                   |
|       Operating                profit                    |   | 1.1    |   |   | 6.2 |   |
|                                                                                   |
| Other income                (expense)                                                  |
|   Interest                income                                             |   | 1.3    |   |   | 1.1 |   |
|   Interest                expense                                            |   | (0.2   | )      |   | (0.2 | ) |
|   Foreign currency                exchange gains (losses)                    |   | (0.2   | )      |   | 0.7 |   |
|   Other,                net                                                  |   | 0.6    |   |   | 0.1 |   |
|                                                                                   |
|                                                                                   |
|       Earnings                from continuing operations |
|         before                income taxes     |   | 2.6    |   |   | 7.9 |   |
|                                                                                   |
| Income tax                provision                                                    |   | 0.6    |   |   | 2.5 |   |
|                                                                                   |
|                                                                                   |
|       Earnings                from continuing operations |   | 2.0    |   |   | 5.4 |   |
|                                                                                   |
| Loss from discontinued                operation,                                       |
|   net of income                tax benefit                                   |   |   |   |   | (0.7 | ) |
|                                                                                   |
|                                                                                   |
|       NET                EARNINGS                        |   | 2.0    | %      |   | 4.7 | % |
|                                                                                   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Continuing                    Operations**

Operating profit for the                    current quarter declined by $1,711,000 due to decreased sales and increased                    operating expenses.

Net                    sales for the quarter ended September 1, 2007 decreased 1%, or $473,000, as                    compared to the quarter ended September 2, 2006, due to lower sales volumes,                    partially offset by price increases and foreign currency exchange fluctuations,                    which increased the translated amounts of foreign subsidiaries’ sales to                    U.S. dollars for financial reporting purposes by $448,000. Price increases                    accounted for approximately 3% of net sales for the current quarter, as a                    significant portion of our domestic products are sold under fixed pricing,                    long-term group purchasing organization contracts. On a product line basis, the                    net sales decline resulted primarily from decreased sales of CT imaging                    contrast products of $1,060,000, X-ray fluoroscopy products of $542,000,                    healthcare decontaminants of $253,000 and accessory medical devices of                    $195,000, partially offset by increased sales of CT injector systems of                    $1,696,000.

The CT                    imaging market in calendar 2007 has been hindered by the Deficit Reduction Act                    of 2005 (DRA), which took effect on January 1, 2007. The DRA effectively                    reduced the Medicare and Medicaid reimbursement rates for MR, CT and PET/CT                    procedures performed at outpatient imaging centers. The impact of |

| - 27                    - |
|---------------------------|

| DRA is                    being felt in the market and remains to be quantified. Some of our customers                    have advised us that they have delayed plans to purchase imaging equipment, at                    least in the near term, in order to assess the impact of DRA on their                    businesses. We believe that this has reduced sales of our CT imaging products                    in the current quarter and may continue to adversely affect these sales in                    future quarters.

Net                    sales in international markets, including direct exports from the United                    States, increased 2%, or $162,000, for the current quarter from the prior                    year’s quarter due to foreign currency exchange fluctuations, which                    increased the translated amounts of foreign subsidiaries’ sales to U.S.                    dollars for financial reporting purposes by $403,000, and price increases,                    which accounted for approximately 2% of net sales in international markets for                    the current quarter, partially offset by lower sales volumes. On a product line                    basis, the net sales increase resulted from increased sales of CT imaging                    products of $429,000, contract manufacturing products of $164,000 and other                    products of $93,000, partially offset by decreased sales of healthcare                    decontaminants of $305,000 and X-ray fluoroscopy products of                    $219,000.

The                    following table sets forth net sales by product category for the quarters ended                    September 1, 2007 and September 2, 2006: |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|        |                                                   | 2007   |        | 2006   |        |
|--------|---------------------------------------------------|--------|--------|--------|--------|
||
||
||
||
||
|   | CT Imaging                Contrast                | $      | 8,188  |   |   | 24.8 |   | $ | 9,248 |   |   | 27.6 |   |
|   | CT Injector                Systems                |   | 8,241  |   |   | 25.0 |   |   | 6,545 |   |   | 19.6 |   |
||
||
|   |    Total CT                Imaging |   | 16,429 |   |   | 49.8 |   |   | 15,793 |   |   | 47.2 |   |
|   | X-Ray                Fluoroscopy                  |   | 10,316 |   |   | 31.3 |   |   | 10,858 |   |   | 32.5 |   |
|   | Contract                Manufacturing             |   | 1,685  |   |   | 5.1 |   |   | 1,684 |   |   | 5.0 |   |
|   | Accessory Medical                Devices          |   | 1,258  |   |   | 3.8 |   |   | 1,453 |   |   | 4.3 |   |
|   | Gastroenterology                                  |   | 1,098  |   |   | 3.3 |   |   | 1,135 |   |   | 3.4 |   |
|   | Virtual                Colonoscopy                |   | 1,073  |   |   | 3.3 |   |   | 1,188 |   |   | 3.6 |   |
|   | Healthcare                Decontaminants          |   | 244    |   |   | 0.8 |   |   | 497 |   |   | 1.5 |   |
|   | Other                                             |   | 864    |   |   | 2.6 |   |   | 832 |   |   | 2.5 |   |
||
||
|   |                                              | $      | 32,967 |   |   | 100.0 |   | $ | 33,440 |   |   | 100.0 |   |
||

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Gross                    profit, expressed as a percentage of net sales, was 44% for both the current                    quarter and the comparable quarter of the prior year. Sales price increases                    offset increased costs for finished products purchased from our Canadian                    subsidiary, which were more expensive due to the continued weakening of the                    U.S. dollar against the Canadian dollar.

Selling,                    general and administrative (“SG&A”) expenses were $12,168,000                    for the quarter ended September 1, 2007 compared to $11,141,000 for the quarter                    ended September 2, 2006. This increase of $1,027,000, or 9%, was due to costs                    of $384,000 associated with an increase in the size of our North American sales                    force, legal fees of $262,000 incurred in the defense of the Tyco lawsuit,                    severance costs of $216,000, and unfavorable foreign currency exchange                    fluctuations, which increased the translated amounts of foreign                    subsidiaries’ SG&A expenses to U.S. dollars for financial reporting                    purposes by $186,000. We expect to continue to incur legal fees associated with                    the defense of the Tyco lawsuit until this matter is settled.

Research                    and development (“R&D”) expenditures increased 41% for the                    current quarter to $1,935,000, or 6% of net sales, from $1,376,000, or 4% of                    net sales, for the comparable quarter of the prior year due primarily                    to |

| - 28                    - |
|---------------------------|

| increased general                    regulatory costs of $278,000, resulting from additional personnel to support                    planned increases in international product registrations, and increased costs                    of $247,000 for CT imaging and X-ray fluoroscopy projects. Of the R&D                    expenditures for the current quarter, approximately 53% related to CT imaging                    and X-ray fluoroscopy projects, 32% to general regulatory costs, 7% to                    gastroenterology projects, 3% to virtual colonoscopy projects, 2% to healthcare                    decontaminant projects and 3% to other projects. R&D expenditures are                    expected to be 5% of net sales for the remainder of this fiscal                    year.

Other                    income (expense) totaled $477,000 of income for the current quarter compared to                    income of $560,000 for the comparable period of last year. This decline is due                    primarily to unfavorable changes in foreign currency exchange gains and losses                    of $275,000, resulting from the weakening of the U.S. dollar in the current                    quarter, partially offset by gains of $126,000 on the sale of non-core equity                    securities in the current quarter and increased interest income of                    $64,000.

For the                    quarter ended September 1, 2007, our effective tax rate of 23% differed from                    the Federal statutory tax rate of 34% due primarily to tax-exempt income,                    partially offset by non-deductible expenses. For the quarter ended September 2,                    2006, our effective tax rate of 32% differed from the Federal statutory tax                    rate of 34% due primarily to tax-exempt income, partially offset by                    non-deductible expenses.

**Discontinued                    Operation**

We have                    consolidated the financial statements of Toho and reported its results as a                    discontinued operation. Summarized results of operations for Toho as reported                    in loss from discontinued operation in the accompanying consolidated statement                    of earnings for the quarter ended September 2, 2006 are as follows: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|         |                                                         | (in                thousands) |   |   |
|--------------|--------------------------------------------------------------|-------------------------------|--------|--------|
||
|         |  Net sales                                              |                          |        |   |   |
|         |    From                unaffiliated customers | $                             | 194    |   |   |
|         |                                                         |
|    |
|         |  Total net                sales                         | $                             | 194    |   |   |
|         |                                                         |
|    |
|         |  Loss before income                taxes                | $                             | (341   | )      |   |
|         |  Income tax                benefit                      |                          | (120   | )      |   |
|         |                                                         |
|    |
|         |  Loss from discontinued                operation        | $                             | (221   | )      |   |
|         |                                                         |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Liquidity and Capital                    Resources**

For the                    quarter ended September 1, 2007, operations and capital expenditures were                    funded by working capital and cash reserves. Our policy has generally been to                    fund operations and capital requirements without incurring significant debt. At                    September 1, 2007 and June 2, 2007, we had no outstanding indebtedness for                    borrowed money. We have available $1,894,000 under a bank line of credit, of                    which no amounts were outstanding at September 1, 2007.

Our                    contractual obligations and their effect on liquidity and cash flows as of                    September 1, 2007 are set forth in the table below. We have no variable                    interest entities or other off-balance sheet arrangements. |

| - 29                    - |
|---------------------------|

|                                                                                                | Payments Due By Period as of                September 1, 2007 |        |
|------------------------------------------------------------------------------------------------|---------------------------------------------------------------|--------|
||
||
||
||
|                                                                                      |
| Contractual                Obligations:                                                        |                                                          |        |   |   |  |   |   |  |   |   |  |   |   |  |   |
|    Operating                leases (1)                                          | $                                                             | 6,443  |   | $ | 1,908 |   | $ | 3,470 |   | $ | 428 |   | $ | 637 |   |
|    Purchase                obligations (1)                                      |                                                          | 6,340  |   |   | 6,218 |   |   | 122 |   |   |   |   |   |   |   |
|    Employment                contract (1)                                       |                                                          | 720    |   |   | 720 |   |   |   |   |   |   |   |   |   |   |
|    Other                liabilities reflected                                   |
|       on the                consolidated                         |
|       balance                sheet                               |
|          Deferred                compensation (2) |                                                          | 2,755  |   |   | 99 |   |   | 232 |   |   | 265 |   |   | 2,159 |   |
|          License                arrangements      |                                                          | 36     |   |   | 36 |   |   |   |   |   |   |   |   |   |   |
|          Accrued                severance         |
|             benefits               |                                                          | 420    |   |   | 420 |   |   |   |   |   |   |   |   |   |   |
||
|                                                                            |
|    Total                                                                        | $                                                             | 16,714 |   | $ | 9,401 |   | $ | 3,824 |   | $ | 693 |   | $ | 2,796 |   |
||

|   |                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |
|   |                                                                                                                                                                                                                                                                                                                                                                                         |
| (1)    | The non-cancelable                        operating leases, purchase obligations, and employment contract are not                        reflected on the consolidated balance sheet under accounting principles                        generally accepted in the United States of America. The purchase                        obligations consist of finished product and component parts. |
|        |                                                                                                                                                                                                                                                                                                                                                                                         |
| (2)    | Deferred compensation                        costs covering active employees are assumed payable after five years,                        although certain circumstances, such as termination, would require earlier                        payment.                                                                                                                                         |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| At                    September 1, 2007, approximately $44,428,000, or 32%, of our assets consisted                    of cash and cash equivalents and short-term debt and equity securities. The                    current ratio was 5.32 to 1, with net working capital of $87,272,000, at                    September 1, 2007, compared to the current ratio of 6.07 to 1, with net working                    capital of $87,044,000, at June 2, 2007. We believe that our cash reserves,                    cash provided from operations and existing bank line of credit will provide                    sufficient liquidity to meet our cash requirements for the next 12                    months.

In March                    2003, the Board of Directors authorized the repurchase of up to 300,000 shares                    of our common stock at an aggregate purchase price of up to $3,000,000. During                    the quarter ended September 1, 2007, no shares were repurchased under this                    program. In aggregate, we have repurchased 74,234 shares of common stock for                    approximately $716,000 under this program.

**Critical Accounting                    Policies**

Our                    significant accounting policies are summarized in Note A to the Consolidated                    Financial Statements included in our Annual Report on Form 10-K for our fiscal                    year ended June 2, 2007. While all these significant accounting policies affect                    the reporting of our financial condition and results of operations, we view                    certain of these policies as critical. Policies determined to be critical are                    those policies that have the most significant impact on our financial                    statements and require us to use a greater degree of judgment and/or estimates.                    Actual results may differ from those estimates.

We                    believe that given current facts and circumstances, it is unlikely that                    applying any other reasonable judgment or estimate methodologies would cause a                    material effect on our consolidated results of operations, financial position                    or liquidity for the periods presented in this report. The accounting policies                    identified as critical are as follows: |

| - 30                    - |
|---------------------------|

| **Revenue                    Recognition**

We                    recognize revenues in accordance with generally accepted accounting principles                    as outlined in Staff Accounting Bulletin No. 104, “Revenue Recognition in                    Financial Statements,” which requires that four basic criteria be met                    before revenue can be recognized: (1) persuasive evidence of an arrangement                    exists; (2) the price is fixed or determinable; (3) collectibility is                    reasonably assured; and (4) product delivery has occurred or services have been                    rendered. Decisions relative to criterion (3) regarding collectibility are                    based upon our judgments, as discussed under “Accounts Receivable”                    below. Should conditions change in the future and cause us to determine this                    criterion is not met, our results of operations may be affected. We recognize                    revenue on the date the product is shipped or when the product is delivered,                    depending on when title passes to the customer. Shipping and credit terms are                    negotiated on a customer-by-customer basis. Products are shipped primarily to                    distributors at agreed upon list prices. The distributor then resells the                    products primarily to hospitals and, depending upon contracts between us, the                    distributor and the hospital, the distributor may be entitled to a rebate. We                    deduct all rebates from sales and have a provision for rebates based on                    historical information for all rebates that have not yet been submitted to us                    by the distributors.

Changes                    in our rebate allowance for the quarters ended September 1, 2007 and September                    2, 2006 are as follows: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

|         |                                      | 2007   |   | 2006   |   |   |
|--------------|--------------------------------------|--------|--------|--------|--------|--------|
||
||
|    |
|         | Beginning                balance     | $      | 2,082  |   | $      | 1,866  |   |   |
|         | Provision for                rebates |   | 7,829  |   |   | 6,691  |   |   |
|         | Rebate credits                issued |   | (7,797 | )      |   | (6,418 | ) |   |
|         |                                 |        |   |        |   |   |
|    |
|         | Ending                balance        | $      | 2,114  |   | $      | 2,139  |   |   |
|         |                                 |        |   |        |   |   |

|                                                                      |
|---------------------------------------------------------------------------|
| The                    rebate allowance is comprised of three components: |
|                                                                      |

| • | actual rebate requests                        received from distributors prior to the closing of our financial                        statements;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • | an estimate, compiled                        by distributor, of rebate requests not yet received based on historical                        submissions, adjusted for any material changes in purchasing patterns or                        market conditions; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| • | an estimate of                        distributors’ inventory-on-hand available for future sale pursuant to                        group purchasing organization (“GPO”) contracts. We do not know                        the specific inventory levels held by our distributors. However, based on                        discussions with our customers, who uniformly attempt to maintain                        just-in-time purchasing programs, and our knowledge of their ordering                        patterns, we estimate a one-week wholesale inventory level. Since most of                        our product sales are subject to GPO contracts, most distributor                        inventory-on-hand will be subject to rebate. This portion of the rebate                        estimate is derived by first determining the total quantity of each product                        sold by us during the last week of the fiscal period multiplied by two                        factors, (a) and (b), where (a) is the percentage of the product rebated                        during the prior six-month period based on historical sales and (b) is the                        average rebate paid on the product during that period. |

|                                                                                                                                                                                                             |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| All                    product returns must be pre-approved by us and may be subject to a 20%                    restocking charge. To be accepted, a returned product must be                    unadulterated, |

| - 31                    - |
|---------------------------|

| undamaged and have at least                    12 months remaining on its stated expiration date.

We                    record revenue on warranties and extended warranties on a straight-line basis                    over the term of the related warranty contracts, which generally cover one                    year. Deferred revenues related to warranties and extended warranties were                    $1,042,000 and $1,003,000 at September 1, 2007 and June 2, 2007, respectively.                    Service costs are expensed as incurred.

**Accounts                    Receivable**

Accounts                    receivable are generally due within 30 to 90 days and are stated at amounts due                    from customers, net of an allowance for doubtful accounts. We perform ongoing                    credit evaluations and adjust credit limits based upon payment histories and                    customers’ current creditworthiness, as determined by a review of their                    current credit information. We continuously monitor aging reports, collections                    and payments from customers, and maintain a provision for estimated credit                    losses based upon historical experience and any specific customer collection                    issues we identify. While such credit losses have historically been within                    expectations and the provisions established, we cannot guarantee the same                    credit loss rates will be experienced in the future. We write off accounts                    receivable when they become uncollectible. Concentration risk exists relative                    to our accounts receivable, as 36% and 35% of our total accounts receivable                    balances at September 1, 2007 and June 2, 2007, respectively, were concentrated                    in one distributor. While the accounts receivable related to this distributor                    are significant, we do not believe the credit risk to be significant given the                    distributor’s consistent payment history.

Changes                    in our allowance for doubtful accounts for the quarters ended September 1, 2007                    and September 2, 2006 are as follows: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|         |                                                               | 2007   |   | 2006   |   |   |
|--------------|---------------------------------------------------------------|--------|--------|--------|--------|--------|
||
||
|    |
|         | Beginning                balance                              | $      | 928    |   | $      | 888    |   |   |
|         | Provision for                (reduction in) doubtful accounts |   | (24    | )      |   | 23     |   |   |
|         |                                                          |        |   |        |   |   |
|    |
|         | Ending                balance                                 | $      | 904    |   | $      | 911    |   |   |
|         |                                                          |        |   |        |   |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Income                    Taxes**

In                    preparing our financial statements, income tax expense is calculated for each                    jurisdiction in which we operate. This involves estimating actual current taxes                    due plus assessing temporary differences arising from differing treatment for                    tax and accounting purposes that are recorded as deferred tax assets and                    liabilities. Deferred tax assets are periodically evaluated to determine their                    recoverability, based primarily on our ability to generate future taxable                    income. Where their recovery is not likely, we establish a valuation allowance                    and record a corresponding additional tax expense in our statement of earnings.                    If actual results differ from our estimates due to changes in assumptions, the                    provision for income taxes could be materially affected.

As of                    June 3, 2007, we adopted Financial Accounting Standards Board                    (“FASB”) Interpretation No. 48, “Accounting for Uncertainty                    in Income Taxes,” an interpretation of FASB Statement No. 109 (“FIN                    48”). The interpretation requires that we determine whether it is more                    likely than not that a tax position will be sustained upon examination by the                    appropriate taxing |

| - 32                    - |
|---------------------------|

| authority.  If a tax                    position meets the more likely than not recognition criteria, FIN 48 requires                    that the tax position be measured at the largest amount of benefit greater than                    50 percent likely of being realized upon ultimate settlement. The adoption of                    FIN 48 has not had a material effect on our financial condition or results of                    operations.

**Inventories**

We value                    inventories at the lower of cost (on the first-in, first-out method) or market.                    On a quarterly basis, we review inventory quantities on hand and analyze the                    provision for excess and obsolete inventory based primarily on product                    expiration dating and our estimated sales forecast, which is based on sales                    history and anticipated future demand. Our estimates of future product demand                    may not be accurate and we may understate or overstate the provision required                    for excess and obsolete inventory. Accordingly, any significant unanticipated                    changes in demand could have a significant impact on the value of our inventory                    and results of operations. At September 1, 2007 and June 2, 2007, our reserve                    for excess and obsolete inventory was $1,346,000 and $1,243,000,                    respectively.

**Effects of Recently                    Issued Accounting Pronouncements**

In June                    2006, the FASB issued FIN 48. FIN 48 clarifies the accounting for uncertainties                    in income taxes recognized in an enterprise’s financial statements. The                    interpretation requires that we determine whether it is more likely than not                    that a tax position will be sustained upon examination by the appropriate                    taxing authority. If a tax position meets the more likely than not recognition                    criteria, FIN 48 requires that the tax position be measured at the largest                    amount of benefit greater than 50 percent likely of being realized upon                    ultimate settlement. This accounting standard is effective for fiscal years                    beginning after December 15, 2006. We adopted FIN 48 as of June 3, 2007. The                    adoption of FIN 48 has not had a material effect on our financial condition or                    results of operations.

In                    September 2006, the FASB issued SFAS No. 157, “Fair Value                    Measurements.” This statement defines fair value, establishes a                    framework for measuring fair value in generally accepted accounting principles,                    and expands disclosures about fair value measurements. The standard applies                    whenever other standards require (or permit) assets or liabilities to be                    measured at fair value but does not expand the use of fair value in any new                    circumstances. This statement is effective for financial statements issued for                    fiscal years beginning after November 15, 2007, and interim periods within                    those fiscal years. We do not believe the adoption of SFAS No. 157 will have a                    material impact on our financial condition or results of operations.

In                    February 2007, the FASB issued SFAS No. 159,                    “*The Fair Value Option for Financial                    Assets and Financial Liabilities - Including an amendment of FASB Statement No.                    115*.” SFAS No. 159 permits entities to choose to measure                    many financial instruments and certain other items at fair value that are not                    currently required to be measured at fair value. The objective of SFAS No. 159                    is to provide opportunities to mitigate volatility in reported earnings caused                    by measuring related assets and liabilities differently without having to apply                    hedge accounting provisions. SFAS No. 159 also establishes presentation and                    disclosure requirements designed to facilitate comparisons between companies                    that choose different measurement attributes for similar types of assets and                    liabilities. SFAS No. 159 is effective for fiscal years beginning after                    November 15, 2007. We do not believe the adoption of SFAS No. 159 will have a                    material impact on our financial condition or results of operations. |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| - 33                    - |
|---------------------------|

| Item 3.                     **Quantitative and Qualitative Disclosures About Market                    Risk**

We are                    exposed to market risk from changes in foreign currency exchange rates and, to                    a much lesser extent, interest rates on investments and financing, that could                    impact our results of operations and financial position. We do not currently                    engage in any hedging or market risk management tools. There have been no                    material changes with respect to market risk previously disclosed in our Annual                    Report on Form 10-K for our 2007 fiscal year.

**Foreign Currency                    Exchange Rate Risk**

The                    financial reporting of our non-U.S. subsidiaries is denominated in currencies                    other than the U.S. dollar. Since the functional currency of our non-U.S.                    subsidiaries is the local currency, foreign currency translation adjustments                    are accumulated as a component of accumulated other comprehensive income in                    stockholders’ equity. Assuming a hypothetical aggregate change of 10% in                    the exchange rates of foreign currencies against the U.S. dollar at September                    1, 2007, our assets and liabilities would increase or decrease by $4,823,000                    and $1,015,000, respectively, and our net sales and net earnings would increase                    or decrease by $2,912,000 and $340,000, respectively, on an annual                    basis.

We also                    maintain intercompany balances and loans receivable with subsidiaries with                    different local currencies. These amounts are at risk of foreign exchange                    losses if exchange rates fluctuate. Assuming a hypothetical aggregate change of                    10% in the exchange rates of foreign currencies against the U.S. dollar at                    September 1, 2007, our pre-tax earnings would be favorably or unfavorably                    impacted by approximately $1,002,000 on an annual basis.

**Interest Rate                    Risk**

Our                    excess cash is invested in highly liquid, short-term, investment grade                    securities with maturities of less than one year. These investments are not                    held for speculative or trading purposes. Changes in interest rates may affect                    the investment income we earn on cash, cash equivalents and debt securities and                    therefore affect our cash flows and results of operations. As of September 1,                    2007, we were exposed to interest rate change market risk with respect to our                    investments in tax-free municipal bonds in the principal amount of $24,065,000.                    The bonds bear interest at a floating rate established between seven and 35                    days. For the quarter ended September 1, 2007, the after-tax interest rate on                    the bonds approximated 4.0%. Each 100 basis point (or 1%) fluctuation in                    interest rates will increase or decrease interest income on the bonds by                    approximately $241,000 on an annual basis.

As of                    September 1, 2007, we did not maintain any fixed or variable interest rate                    financing.

As of                    September 1, 2007, we have available $1,894,000 under a working capital bank                    line of credit, of which no amounts were outstanding. Advances under this line                    of credit will bear interest at an annual rate indexed to the Canadian prime                    rate. We will thus be exposed to interest rate risk with respect to this credit                    facility to the extent that interest rates rise when there are amounts                    outstanding under this facility. |
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| Item 4.                    **Controls and Procedures**

**Evaluation of Disclosure                    Controls and Procedures**

As                    required by Rule 13a-15(e) of the Securities Exchange Act of 1934, as                    amended (the “Exchange Act”), we conducted an evaluation of the                    effectiveness of the design and operation of our disclosure controls and                    procedures as of September 1, 2007. This evaluation was carried out under                    the supervision and with the participation of our Chief Executive Officer and                    Chief Financial Officer. There are inherent limitations to the effectiveness of                    any system of disclosure controls and procedures. Therefore, effective                    disclosure controls and procedures can only provide reasonable assurance of                    achieving their control objectives. Based upon our evaluation, our Chief                    Executive Officer and Chief Financial Officer concluded that our disclosure                    controls and procedures are effective as of September 1, 2007, to provide                    reasonable assurance that information required to be disclosed in the reports                    that we file under the Exchange Act is recorded, processed, summarized and                    reported in a timely manner and is accumulated and communicated to management,                    including our Chief Executive Officer and Chief Financial Officer, as                    appropriate, to allow timely decisions regarding required                    disclosure.

**Changes in Internal                    Control over Financial Reporting**

There                    was no change in our internal control over financial reporting during our                    fiscal quarter ended September 1, 2007 that has materially affected, or is                    reasonably likely to materially affect, our internal control over financial                    reporting. |
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| **E-Z-EM, Inc. and                    Subsidiaries**

**Part                    II:  Other Information**

Item                    1.   **Legal Proceedings**

                    On June 20, 2007, an action was filed against us entitled Tyco Healthcare Group                    LP, Mallinckrodt Inc. and Liebel-Flarsheim Company vs. E-Z-EM, Inc. Case no.                    2-07CV-262 in the U.S. District Court for the Eastern District of Texas,                    Marshall Division. The complaint alleged that we willfully, deliberately and                    intentionally infringed and are continuing to infringe on U.S. patent no.                    5,868,710 (the “710 patent”) by making, using, offering to sell,                    selling and/or importing certain injector systems, including but not limited to                    our Empower CT® and Empower CTA® injectors. The complaint alleged that                    our actions have caused, and will continue to cause, the plaintiffs to suffer                    substantial damage and irreparable injury. The complaint sought to prohibit us                    from continuing to market and sell these products and asked for compensatory                    and treble money damages, reasonable attorneys’ fees, costs and                    pre-judgment interest.

                    On August 30, 2007, we filed an answer denying the allegations in the                    complaint, pleading several affirmative defenses and bringing a counterclaim                    seeking a declaration that the claims of the 710 patent are invalid. We also                    moved to dismiss Tyco and Mallinckrodt as plaintiffs for lack of standing. The                    parties entered into a stipulation to remove Tyco as a plaintiff in the action                    and, on September 19, 2007, the court ordered the dismissal of Tyco with                    prejudice.

                    On September 18, 2007, Mallinckrodt and Liebel-Flarsheim filed a first                    amended complaint that substantially restated the claims alleged in the initial                    complaint. On October 1, 2007, we filed our answer denying the                    allegations in the first amended complaint, pleading several affirmative                    defenses and bringing a counterclaim seeking a declaration that the claims of                    the 710 patent are invalid. We believe that we have valid defenses to the                    infringement claims, including invalidity of certain claims of the 710 patent,                    and intend to defend the matter vigorously.

Item                    1A. **Risk Factors**

In                    addition to the other information set forth in this report, you should                    carefully consider the factors discussed in Part I, “Item 1A. Risk                    Factors” in our Annual Report on Form 10-K for the fiscal year ended June                    2, 2007, which could materially affect our business, financial condition and/or                    future results. The risks described in our Form 10-K are not the only risks                    facing our company. Additional risks and uncertainties not currently known to                    us or that we currently deem to be immaterial also may materially adversely                    affect our business, financial condition and/or future results. There have been                    no material changes from the risk factors previously disclosed in Part I,                    “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the                    fiscal year ended June 2, 2007.

Item                    2.   **Unregistered Sales of Equity Securities and Use of                    Proceeds**

None. |
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| Item                    3. **Defaults Upon Senior Securities**

None.

Item                    4.  **Submission Of Matters to a Vote of Security                    Holders**

None.

Item                    5. **Other Information**

None.

Item                    6. **Exhibits** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                        |

| **No.**      |   | **Description**                                                                                                                                                                               |   | **Page**  |   |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|
|              |   |                                                                                                                                                                                               |   |           |   |
|    |
| 3.1          |   | Restated Certificate of                Incorporation of the Registrant, as amended                                                                                                            |   |  (a) |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 3.2          |   | Amended and Restated                By-laws of the Registrant                                                                                                                                 |   | (b)       |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 10.1         |   | Employment agreement dated                as of June 27, 2007, betweenE-Z-EM, Inc. and Anthony A.                Lombardo                                                                     |   | (c)       |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 31.1         |   | Certification                pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002  (Anthony A. Lombardo)             |   | 39        |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 31.2         |   | Certification                pursuant to Rule 13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002 (Joseph A. Cacchioli)         |   | 41        |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 32.1         |   | Certification                pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to                Section 906 of the Sarbanes-Oxley Act of 2002 (Anthony A. Lombardo) |   | 43        |   |
|         |   |                                                                                                                                                                                          |   |      |   |
| 32.2         |   | Certification                pursuant to Title 18, United States Code, Section 1350 as adopted pursuant to                Section 906 of the Sarbanes-Oxley Act of 2002 (Joseph A. Cacchioli) |   | 44        |   |
|         |   |                                                                                                                                                                                          |   |      |   |

|   | (a) |   | Incorporated by reference                to Exhibit 3.1 to the Registrant’sRegistration Statement on Form                8-A filed with the Commissionon April 8, 2005. |   |
|--------|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |     |   |                                                                                                                                                                          |   |
|   | (b) |   | Incorporated by reference                to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the                Commission on January 21, 2005.    |   |
|   |     |   |                                                                                                                                                                          |   |
|   | (c) |   | Incorporated by reference                to Exhibit 10.1 to the Registrant’sCurrent Report on Form 8-K                filed with the Commission onJuly 3, 2007.         |   |

| - 37                    - |
|---------------------------|

| **SIGNATURES**

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. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                     |

|                                                   |   |    E-Z-EM,                Inc.                                                                                                                                                                       |
|--------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                   |   |                                                                                                                                                                                                                     |
|                                                   |   |      (Registrant)                                                                                                                                                                          |
|                                              |
|                                                   |   |                                                                                                                                                                                                                |
| Date                   October 11, 2007 |   |    /s/                Anthony A. Lombardo                                                                                                                                                            |
|                                                        |   |                                                                                                                                                                                                                     |
|                                                   |   | Anthony A. Lombardo,                President,                Chief Executive Officer, Director                (Principal Executive Officer)                                                                        |
|                                              |
|                                                   |   |                                                                                                                                                                                                                |
| Date                   October 11, 2007 |   |   /s/ Joseph A.                Cacchioli                                                                                                                                                                  |
|                                                        |   |                                                                                                                                                                                                                     |
|                                                   |   | Joseph A. Cacchioli,                Vice President -                Controller and Acting Chief Financial                Officer (Principal Financial Officer                and Principal Accounting Officer) |
|                                                   |   |                                                                                                                                                                                                                |

| - 38                    - |
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