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

|                                                                           |                                                                                          
|-------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------
|Mark one                                                                  
|                                                                           |                                                                                          
|x                                                                          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934 
|                                                                           |                                                                                          
|For the quarterly period ended
 April 30, 2010                            
|                                                                           |                                                                                          
|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 001-09974                                          

|                                                      
|------------------------------------------------------
|ENZO
 BIOCHEM, INC.                                   
|                                                      
|(Exact name of registrant as specified in its charter)

|                                                      |  |                    
|----------------------------------------------------- |  | -------------------
|New York                                              |  | 13-2866202         
|                                                      |  |                    
|(State or Other Jurisdiction                          |  | (IRS. Employer     
|of Incorporation or
 Organization)                    |  | Identification No.)
|                                                      |  |                    
|527 Madison Ave, New York, New
 York                  |  | 10022              
|                                                      |  |                    
|(Address of Principal Executive office)               |  | (Zip Code)         
|                                                      |  |                    
|212-583-0100                                          |  |                    
|                                                      |  |                    
|(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 has
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes xNoo

Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 45 of Regulation S-T (§232.405 of that
chapter) during the preceding 12 months (or such shorter period that the
registrant was required to submit and post such files).

Yes oNoo

Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

|                          |                     |                         |                            
|------------------------- | ------------------- | ----------------------- | ---------------------------
|Large accelerated filer o | Accelerated filer x | Non-accelerated filer o | Smaller reporting company o

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

Yes oNox

As of June
1, 2010 the Registrant had approximately 38,150,800 shares of common stock
outstanding.

---



ENZO BIOCHEM, INC. 
FORM 10-Q 
April 30, 2010

INDEX

|                               |                                                                                                                              |  |   
|------------------------------ | ---------------------------------------------------------------------------------------------------------------------------- |  | --
|PART I - FINANCIAL INFORMATION
|                               |                                                                                                                              |  |   
|Item 1.                        | Financial
 Statements                                                                                                        |  |   
|                               |                                                                                                                              |  |   
|                               | Consolidated
 Balance Sheets - April 30, 2010 (unaudited) and July 31, 2009 (audited)                                        |  | 3 
|                               |                                                                                                                              |  |   
|                               | Consolidated
 Statements of Operations for the three and nine months ended April 30, 2010
 and 2009 (unaudited)              |  | 4 
|                               |                                                                                                                              |  |   
|                               | Consolidated
 Statement of Stockholders Equity and Comprehensive Loss for the nine months
 ended April 30, 2010 (unaudited) |  | 5 
|                               |                                                                                                                              |  |   
|                               | Consolidated
 Statements of Cash Flows for the nine months ended April 30, 2010 and 2009
 (unaudited)                        |  | 6 
|                               |                                                                                                                              |  |   
|                               | Notes
 to Consolidated Financial Statements                                                                                  |  | 7 
|                               |                                                                                                                              |  |   
|Item 2.                        | Managements
 Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 18
|                               |                                                                                                                              |  |   
|Item 3.                        | Quantitative
 and Qualitative Disclosures About Market Risk                                                                  |  | 34
|                               |                                                                                                                              |  |   
|Item 4.                        | Controls
 and Procedures                                                                                                     |  | 34
|                               |                                                                                                                              |  |   
|Part II  OTHER INFORMATION   
|                               |                                                                                                                              |  |   
|Item 1.                        | Legal
 Proceedings                                                                                                           |  | 35
|                               |                                                                                                                              |  |   
|Item
 1A.                      | Risk
 Factors                                                                                                                |  | 35
|                               |                                                                                                                              |  |   
|Signatures                     |                                                                                                                              |  | 36

2

---



Part 1Financial Information Item 1
Financial Statements

ENZO BIOCHEM, INC.
CONSOLIDATED BALANCE SHEETS 
(in thousands, except share data)

|                                                                                                                                          |  |                              |          |                           |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | ------------------------- | - | -------- | -
|                                                                                                                                          |  | April 30,
 2010
 (unaudited) |          | July 31,
 2009
 (audited) |  
|                                                                                                                                          |  |                              |          |                           |  
|ASSETS                                                                                                                                    |  |                              |          |                           |   |          |  
|Current assets:                                                                                                                           |  |                              |          |                           |   |          |  
|Cash and cash equivalents                                                                                                                 |  | $                            | 8,597    |                           | $ | 6,929    |  
|Short term investments                                                                                                                    |  |                              | 25,805   |                           |   | 43,306   |  
|Accounts receivable, net of allowances                                                                                                    |  |                              | 12,038   |                           |   | 12,480   |  
|Inventories                                                                                                                               |  |                              | 10,191   |                           |   | 9,264    |  
|Prepaid expenses and other                                                                                                                |  |                              | 2,101    |                           |   | 2,482    |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total current assets                                                                                                                      |  |                              | 58,732   |                           |   | 74,461   |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Property, plant and equipment, net                                                                                                        |  |                              | 11,927   |                           |   | 11,323   |  
|Goodwill                                                                                                                                  |  |                              | 24,773   |                           |   | 24,896   |  
|Intangible assets, net                                                                                                                    |  |                              | 20,664   |                           |   | 22,009   |  
|Other                                                                                                                                     |  |                              | 392      |                           |   | 439      |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total assets                                                                                                                              |  | $                            | 116,488  |                           | $ | 133,128  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                      |  |                              |          |                           |   |          |  
|Current liabilities:                                                                                                                      |  |                              |          |                           |   |          |  
|Accounts payable  trade                                                                                                                  |  | $                            | 4,531    |                           | $ | 4,242    |  
|Accrued liabilities                                                                                                                       |  |                              | 6,526    |                           |   | 8,426    |  
|Other current liabilities                                                                                                                 |  |                              | 1,048    |                           |   | 1,062    |  
|Deferred taxes                                                                                                                            |  |                              | 195      |                           |   | 213      |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total current liabilities                                                                                                                 |  |                              | 12,300   |                           |   | 13,943   |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Deferred revenue                                                                                                                          |  |                              |         |                           |   | 38       |  
|Deferred taxes                                                                                                                            |  |                              | 2,148    |                           |   | 2,366    |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Commitments and contingencies                                                                                                             |  |                              |          |                           |   |          |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Stockholders equity:                                                                                                                     |  |                              |          |                           |   |          |  
|Preferred Stock, $.01 par value; authorized 25,000,000
 shares; no shares issued or outstanding                                           |  |                              |         |                           |   |         |  
|Common Stock, $.01 par value; authorized 75,000,000
 shares; shares issued: 38,774,611 at April 30, 2010 and 38,589,880 at July
 31, 2009 |  |                              | 388      |                           |   | 386      |  
|Additional paid-in capital                                                                                                                |  |                              | 306,242  |                           |   | 306,280  |  
|Less treasury stock at cost: 623,848 shares at April 30,
 2010 and 735,554 at July 31, 2009                                               |  |                              | (8,854   | )                         |   | (10,440  | )
|Accumulated deficit                                                                                                                       |  |                              | (196,441 | )                         |   | (179,721 | )
|Accumulated other comprehensive income                                                                                                    |  |                              | 705      |                           |   | 276      |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total stockholders equity                                                                                                                |  |                              | 102,040  |                           |   | 116,781  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total liabilities and stockholders equity                                                                                                |  | $                            | 116,488  |                           | $ | 133,128  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  

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

3

---



ENZO BIOCHEM, INC. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(UNAUDITED) 
(in thousands, except per share data)

|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|------------------------------------------------ |  | ------------------------------ | ------ | ----------------------------- | - | ------ | - | ---- | ------- | - | - | ------- | -
|                                                 |  | Three Months Ended 
 April 30, |        | Nine Months Ended 
 April 30, |  
|                                                 |  | 2010                           |        | 2009                          |   | 2010   |   | 2009 |        
|                                                 |  |                                |        |                               |   |        |   |      |        
|Revenues:                                        |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Product revenues                                 |  | $                              | 11,089 |                               | $ | 10,479 |   | $    | 32,599  |   | $ | 29,952  |  
|Royalty and license fee income                   |  |                                | 1,894  |                               |   | 1,963  |   |      | 7,044   |   |   | 6,783   |  
|Clinical laboratory services                     |  |                                | 10,805 |                               |   | 10,619 |   |      | 32,494  |   |   | 28,306  |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|                                                 |  |                                | 23,788 |                               |   | 23,061 |   |      | 72,137  |   |   | 65,041  |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Operating expenses:                              |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Cost of product revenues                         |  |                                | 5,394  |                               |   | 6,812  |   |      | 15,771  |   |   | 20,208  |  
|Cost of clinical laboratory services             |  |                                | 7,588  |                               |   | 6,543  |   |      | 21,623  |   |   | 19,115  |  
|Research and development                         |  |                                | 2,479  |                               |   | 2,425  |   |      | 7,273   |   |   | 6,645   |  
|Selling, general, and administrative             |  |                                | 12,070 |                               |   | 10,026 |   |      | 36,841  |   |   | 29,633  |  
|Provision for uncollectible accounts
 receivable |  |                                | 650    |                               |   | 715    |   |      | 2,073   |   |   | 3,949   |  
|Legal                                            |  |                                | (127   | )                             |   | 859    |   |      | 1,030   |   |   | 3,356   |  
|Litigation settlement and related legal
 costs   |  |                                |       |                               |   |       |   |      | 3,698   |   |   |        |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Total operating expenses                         |  |                                | 28,054 |                               |   | 27,380 |   |      | 88,309  |   |   | 82,906  |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Operating loss                                   |  |                                | (4,266 | )                             |   | (4,319 | ) |      | (16,172 | ) |   | (17,865 | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Other income (expense):                          |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Interest                                         |  |                                | (1     | )                             |   | 17     |   |      | 13      |   |   | 569     |  
|Other                                            |  |                                | 84     |                               |   | (43    | ) |      | 39      |   |   | 108     |  
|Foreign currency (loss) gain                     |  |                                | (216   | )                             |   | 119    |   |      | (384    | ) |   | (837    | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Loss before income taxes                         |  |                                | (4,399 | )                             |   | (4,226 | ) |      | (16,504 | ) |   | (18,025 | )
|Provision for income taxes                       |  |                                | (177   | )                             |   | (16    | ) |      | (216    | ) |   | (260    | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Net loss                                         |  | $                              | (4,576 | )                             | $ | (4,242 | ) | $    | (16,720 | ) | $ | (18,285 | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Net loss per common share:                       |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Basic and Diluted                                |  | $                              | (0.12  | )                             | $ | (0.11  | ) | $    | (0.44   | ) | $ | (0.49   | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Weighted average common shares outstanding:      |  |                                |        |                               |   |        |   |      |         |   |   |         |  
|Basic and Diluted                                |  |                                | 38,095 |                               |   | 37,484 |   |      | 37,950  |   |   | 37,423  |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |         |  

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

4

---



ENZO BIOCHEM, INC
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE LOSS
Nine months ended April 30, 2010
(UNAUDITED)
(In thousands, except share data)

|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   |   |         |  
|--------------------------------------------------------- |  | ------------------- | ---------- | --------------------- |  | --------------------- | - | ---------------------------- | --- | ----------------------- | - | -------------------- | - | ----------------------------------------- | ------- | ---------------------------- | - | ------------------- | - | - | --- |  | - | ------- | - | - | ------- | -
|                                                          |  | Common
Stock
Shares |            | Treasury
Stock
Shares |  | Common
 Stock
 Amount |   | Additional
 Paid-in
 Capital |     | Treasury
 Stock
 Amount |   | Accumulated
 Deficit |   | Accumulated
 Other
 Comprehensive
 Income |         | Total
 Stockholders
 Equity |   | Comprehensive
 Loss |  
|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |  
|Balance at July 31, 2009                                  |  |                     | 38,589,880 |                       |  | 735,554               |   | $                            | 386 |                         | $ | 306,280              |   | $                                         | (10,440 | )                            | $ | (179,721            | ) | $ | 276 |  | $ | 116,781 |   |   |         |  
|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   |   |         |  
|Net loss for the period ended April 30, 2010              |  |                     |           |                       |  |                      |   |                              |    |                         |   |                     |   |                                           |        |                              |   | (16,720             | ) |   |    |  |   | (16,720 | ) | $ | (16,720 | )
|Vesting of restricted stock                               |  |                     | 184,731    |                       |  |                      |   |                              | 2   |                         |   |                     |   |                                           |        |                              |   |                    |   |   |    |  |   | 2       |   |   |        |  
|Stock based compensation charges                          |  |                     |           |                       |  |                      |   |                              |    |                         |   | 851                  |   |                                           |        |                              |   |                    |   |   |    |  |   | 851     |   |   |        |  
|Issuance of treasury stock for employee 401(k) plan match |  |                     |           |                       |  | (111,706              | ) |                              |    |                         |   | (889                 | ) |                                           | 1,586   |                              |   |                    |   |   |    |  |   | 697     |   |   |        |  
|Foreign currency translation adjustments                  |  |                     |           |                       |  |                      |   |                              |    |                         |   |                     |   |                                           |        |                              |   |                    |   |   | 429 |  |   | 429     |   |   | 429     |  
|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   |   |         |  
|Comprehensive loss                                        |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   | $ | (16,291 | )
|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   |   |         |  
|Balance at April 30, 2010                                 |  |                     | 38,774,611 |                       |  | 623,848               |   | $                            | 388 |                         | $ | 306,242              |   | $                                         | (8,854  | )                            | $ | (196,441            | ) | $ | 705 |  | $ | 102,040 |   |   |         |  
|                                                          |  |                     |            |                       |  |                       |   |                              |     |                         |   |                      |   |                                           |         |                              |   |                     |   |   |     |  |   |         |   |   |         |  

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

5

---



ENZO BIOCHEM, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) 
(in thousands)

|                                                                             |  |                              |          |      |   |          |  
|---------------------------------------------------------------------------- |  | ---------------------------- | -------- | ---- | - | -------- | -
|                                                                             |  | Nine Months Ended
 April 30, |         
|                                                                             |  | 2010                         |          | 2009 |  
|                                                                             |  |                              |          |      |  
|Cash flows from operating activities:                                        |  |                              |          |      |   |          |  
|Net loss                                                                     |  | $                            | (16,720  | )    | $ | (18,285  | )
|Adjustments to reconcile net loss to net
 cash used in operating activities: |  |                              |          |      |   |          |  
|Depreciation and amortization of property,
 plant and equipment              |  |                              | 2,050    |      |   | 1,533    |  
|Amortization of intangible assets                                            |  |                              | 1,174    |      |   | 818      |  
|Provision for uncollectible accounts
 receivable                             |  |                              | 2,073    |      |   | 3,949    |  
|Write off and/or reserve taken for obsolete
 inventory                       |  |                              | (9       | )    |   | 175      |  
|Deferred income tax benefit                                                  |  |                              | (136     | )    |   | (237     | )
|Share based compensation charges                                             |  |                              | 851      |      |   | 1,016    |  
|Deferred revenue recognized                                                  |  |                              | (337     | )    |   | (358     | )
|Foreign currency loss on intercompany loan                                   |  |                              | 237      |      |   | 813      |  
|Issuance of treasury stock for 401(k)
 employer match                        |  |                              | 697      |      |   | 582      |  
|                                                                             |  |                              |          |      |   |          |  
|Changes in operating assets and
 liabilities:                                |  |                              |          |      |   |          |  
|Accounts receivable                                                          |  |                              | (1,574   | )    |   | (2       | )
|Inventories                                                                  |  |                              | (798     | )    |   | 1,649    |  
|Prepaid expenses                                                             |  |                              | 388      |      |   | 721      |  
|Accounts payable  trade                                                     |  |                              | 336      |      |   | (1,836   | )
|Accrued liabilities                                                          |  |                              | (1,759   | )    |   | 883      |  
|Other current liabilities                                                    |  |                              | 286      |      |   | (158     | )
|                                                                             |  |                              |          |      |   |          |  
|Total adjustments                                                            |  |                              | 3,479    |      |   | 9,548    |  
|                                                                             |  |                              |          |      |   |          |  
|Net cash used in operating activities                                        |  |                              | (13,241  | )    |   | (8,737   | )
|                                                                             |  |                              |          |      |   |          |  
|                                                                             |  |                              |          |      |   |          |  
|Cash flows from investing activities:                                        |  |                              |          |      |   |          |  
|Purchases of short term investments                                          |  |                              | (177,028 | )    |   | (273,956 | )
|Maturities of short term investments                                         |  |                              | 194,529  |      |   | 226,253  |  
|Capital expenditures                                                         |  |                              | (2,569   | )    |   | (2,156   | )
|Decrease in security deposits and other
 assets                              |  |                              | 25       |      |   | 368      |  
|Acquisition, including costs paid                                            |  |                              |         |      |   | (12,738  | )
|                                                                             |  |                              |          |      |   |          |  
|Net cash provided by (used in) investing
 activities                         |  |                              | 14,957   |      |   | (62,229  | )
|                                                                             |  |                              |          |      |   |          |  
|                                                                             |  |                              |          |      |   |          |  
|Cash flows from financing activities:                                        |  |                              |          |      |   |          |  
|Proceeds from the exercise of stock options                                  |  |                              |         |      |   | 348      |  
|                                                                             |  |                              |          |      |   |          |  
|Net cash provided by financing activities                                    |  |                              |         |      |   | 348      |  
|                                                                             |  |                              |          |      |   |          |  
|                                                                             |  |                              |          |      |   |          |  
|Effect of exchange rate changes on cash and
 cash equivalents                |  |                              | (48      | )    |   | (150     | )
|                                                                             |  |                              |          |      |   |          |  
|                                                                             |  |                              |          |      |   |          |  
|Increase (decrease) in cash and cash
 equivalents                            |  |                              | 1,668    |      |   | (70,768  | )
|Cash and cash equivalents - beginning of
 period                             |  |                              | 6,929    |      |   | 78,322   |  
|                                                                             |  |                              |          |      |   |          |  
|Cash and cash equivalents - end of period                                    |  | $                            | 8,597    |      | $ | 7,554    |  
|                                                                             |  |                              |          |      |   |          |  

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

6

---



ENZO BIOCHEM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of April 30, 2010 
and for the nine month period ended 
April 30, 2010 and 2009 
(Unaudited)

Note 1  Basis of Presentation

The accompanying consolidated financial statements include the accounts
of Enzo Biochem, Inc. and its wholly-owned subsidiaries, Enzo Clinical Labs,
Enzo Life Sciences, Enzo Therapeutics and Enzo Realty LLC, collectively
referred to as the Company or Companies. The consolidated balance sheet as
of April 30, 2010, the consolidated statement of stockholders equity and
comprehensive loss for the nine months ended April 30, 2010, the consolidated
statements of cash flows for the nine months ended April 30, 2010 and 2009, and
the consolidated statements of operations for the three and nine months ended
April 30, 2010 and 2009, are unaudited. In the opinion of management, all
adjustments (which include normal recurring adjustments) necessary to present
fairly the financial position and operating results for the interim periods
have been made. Certain information and footnote disclosure, normally included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States, have been condensed or omitted. The
consolidated financial statements should be read in conjunction with the
consolidated financial statements for the year ended July 31, 2009 and notes
thereto contained in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The consolidated balance sheet at July 31,
2009 has been derived from the audited financial statements at that date. The
results of operations for the three and nine months ended April 30, 2010 are
not necessarily indicative of the results that may be expected for the fiscal
year ending July 31, 2010.

Recent Accounting Pronouncements

Effective August 1, 2009, the Company adopted The Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC or Codification)
of Generally Accepted Accounting Principles  Overall. The Codification
established one source for all U.S. GAAP and became the source of authoritative
accounting principles for nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The Codification is not intended to change existing GAAP and as
such did not have an impact on the consolidated financial statements of the
Company.

The adoption of the following accounting standards and updates during
the first nine months of fiscal 2010 did not result in a significant impact to
our consolidated financial statements.

Effective August 1, 2009, we adopted the revised accounting standard
relating to business combinations, including assets acquired and liabilities
assumed arising from contingencies. This standard requires the use of the
acquisition method of accounting, defines the acquirer, establishes the
acquisition date and applies to all transactions and other events in which one
entity obtains control over one or more other businesses. Upon our adoption of
this standard, we will be required to expense certain transaction costs and
related fees associated with business combinations that were previously
capitalized. In addition, with the adoption of this standard, changes to
valuation allowances for acquired deferred income tax assets and adjustments to
unrecognized tax benefits acquired generally are to be recognized as
adjustments to income tax expense rather than goodwill.

Effective August 1, 2009, we adopted the accounting standard regarding
the determination of the useful life of intangible assets that removes the
requirement to consider whether an intangible asset can be renewed without substantial
cost or material modifications to the existing terms and conditions, and
replaces it with a requirement that an entity consider its own historical
experience in renewing similar arrangements, or a consideration of market
participant assumptions in the absence of historical experience. This standard
also requires entities to disclose information that enables users of financial
statements to assess the extent to which the expected future cash flows
associated with the asset are affected by the entitys intent and/or ability to
renew or extend the arrangements.

7

---



Reclassifications

Certain amounts in fiscal 2009 have been reclassified to conform to
current year presentation. In fiscal 2009, the Company reclassified certain
payroll taxes and employee benefits included in selling, general and
administrative expense to cost of sales. The payroll taxes and benefits
reclassified were approximately $401,000 and $1,162,000, respectively for the
three and nine months ended April 30, 2009.

Note 2  Short-term Investments

At April 30, 2010 and July 31, 2009, the Companys short-term
investments, whose fair value approximates cost, are in U.S. Government
Treasury bills, which are purchased at discounts with remaining maturities of
less than ninety days.

The Company has adopted the accounting pronouncement that establishes a
common definition for fair value to be applied to existing GAAP that require
the use of fair value measurements, establishes a framework for measuring fair
value and expands disclosure about such fair value measurements. The adoption
of the pronouncement did not have an impact on the Companys financial position
or operating results, but did expand certain disclosures.

The pronouncement defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Additionally,
the pronouncement requires the use of valuation techniques that maximize the
use of observable inputs and minimize the use of unobservable inputs. These
inputs are prioritized below:

| |           |                                                                                                                                    
| | --------- | -----------------------------------------------------------------------------------------------------------------------------------
| | Level
 1: | Observable inputs
 such as quoted market prices in active markets for identical assets or
 liabilities.                            
| |           |                                                                                                                                    
| | Level2:   | Observable
 market-based inputs or unobservable inputs that are corroborated by market
 data.                                      
| |           |                                                                                                                                    
| | Level3:   | Unobservable
 inputs for which there is little or no market data, which require the use of
 the reporting entitys own assumptions.

At April 30, 2010 and July 31, 2009, the Companys short-term
investments are classified as Level 1 assets.

Note 3  Acquisitions

Assay Designs, Inc.

On March 12, 2009, Enzo Life Sciences, Inc. and Enzo Life Sciences
Acquisition, Inc., a newly formed wholly owned subsidiary of Enzo Life
Sciences, Inc. (Acquisition Sub), entered into an asset purchase agreement
(Purchase Agreement) with Assay Designs, Inc. (Assay Designs). Assay
Designs, a privately owned company with annual sales of approximately $11
million, was engaged in researching, developing, manufacturing, distributing,
marketing and selling specialty immunological and biochemical protein detection
kits, assays, reagents, antibodies, recombinant proteins and related products
and providing related services for use in the biotechnology, pharmaceutical and
life sciences research industries (Business). Under the terms of the Purchase
Agreement, Acquisition Sub purchased from Assay Designs substantially all of
its assets, including trade accounts receivable, inventory, fixed assets, and
intellectual property, used in or related to the Business and assumed certain
of Assay Designs liabilities, including trade accounts payable, capital lease
obligations and certain other current liabilities.

The execution of the Purchase Agreement and the closing of the
transaction occurred simultaneously on March 12, 2009. The purchase price
consisted of $12,228,000 in cash, exclusive of acquisition costs of
approximately $540,000, and was subject to an upward or downward post-closing
purchase price adjustment based on Assay Designs working capital as of the
closing date, $100,000 of which was held in escrow for approximately 60-90 days
to secure the payment of any downward post-closing purchase price adjustment
and $750,000 of which was held in escrow for 12 months to secure the payment of
any indemnification obligations of Assay Designs under the Purchase Agreement.
The $100,000 and $750,000 were released by the escrow agent in June 2009 and
March 2010, respectively. Subsequent to the acquisition date, the Company paid
$270,000 in additional purchase price in connection with the working capital
adjustment and released the escrow amounts. The cost of the acquisition
included costs to consolidate a leased facility and the involuntary termination
of certain employees, which occurred during the measurement period. The Assay
Designs Acquisition strengthened the Companys position as a global provider of
life sciences reagents by broadening our product offerings and manufacturing
capabilities.

8

---



The acquisition was funded with the Companys cash. Effective March 12,
2009, Assay Designs became a wholly-owned subsidiary of Enzo Life Sciences. The
consolidated financial statements include the results of operations for Assay
Designs from the date of acquisition.

The following table presents the fair values of the assets acquired and
liabilities assumed (in thousands):

|                          |  |   |        | 
|------------------------- |  | - | ------ | 
|Current assets            |  | $ | 4,235  | 
|Property and
 equipment   |  |   | 1,747  | 
|Other assets              |  |   | 11     | 
|Intangible assets         |  |   | 6,360  | 
|Goodwill                  |  |   | 1,823  | 
|                          |  |   |        | 
|Total assets acquired     |  |   | 14,176 | 
|                          |  |   |        | 
|Less:                     |  |   |        | 
|Current
 liabilities      |  |   | 1,115  | 
|                          |  |   |        | 
|Total liabilities assumed |  |   | 1,115  | 
|                          |  |   |        | 
|Net assets
 acquired      |  | $ | 13,061 | 
|                          |  |   |        | 

The purchase price allocation is based on a valuation of acquired
tangible and intangible assets based on the final valuation completed in fiscal
2010. The Company determined the fair value of the identifiable intangible
assets based on various factors including: cost, discounted cash flow and
relief from royalty approaches in determining the purchase price allocation.
The excess of the total purchase price over the fair value of the net assets
acquired, including the estimated fair value of the identifiable intangible
assets, has been allocated to goodwill.

Biomol International, L.P.

On May 8, 2008, Enzo Life Sciences, Inc. acquired substantially all of
the U.S. based assets and certain liabilities of Biomol International, LP
(Biomol LP) through a newly formed US subsidiary Biomol International, Inc.
and all of the stock of Biomols wholly-owned United Kingdom subsidiary,
Affinity Limited, through Axxora UK, a wholly-owned subsidiary of Enzo Life
Sciences, collectively referred to as Biomol for approximately $18.1 million
in cash and stock, subject to adjustment, exclusive of acquisition costs of
approximately $800,000 and two contingent earn-out payments accounted for as
additional purchase consideration if and when the contingencies are resolved
beyond a reasonable doubt. At closing, the purchase price was satisfied as
follows: $12.9 million in cash was paid to Biomol LP, issuance of 352,000
shares of Enzo common stock, at fair market value, to Biomol LP, $1.5 million
in cash was paid to an escrow agent for the two-year period following the
closing to satisfy any indemnification obligations of the sellers under the
Agreement and $550,000 was paid to an escrow agent, for the 60 day period
following the closing to satisfy any specified purchase price adjustments. The
$550,000 and $1.5 million were released by the escrow agent in August 2008 and
May 2010, respectively. The earn-outs of $2.5 million on each of the next two
anniversaries of the acquisition date will be based on attaining certain
revenue and EBITDA targets, as defined. The Agreement provides for the delivery
of the earn-out statement within 75 days of the respective anniversary dates.
Biomol was a privately owned, closely held global manufacturer and marketer of
specialty life sciences research products. Effective May 8, 2008, Biomol became
a wholly-owned subsidiary of Enzo Life Sciences. The acquisition was financed
with the Companys cash and cash equivalents and Enzo common stock. The
consolidated financial statements include the results of operations for Biomol
from the date of acquisition. Effective February 2, 2009, the names of Biomol
International, Inc. and Affinity Limited were changed to Enzo Life Sciences
International, Inc. and Enzo Life Sciences (UK) Ltd., respectively.

In June 2009, the conditions for the first annual earn-out of $2.5
million were met and the Company recorded $2.5 million of additional goodwill.
The Company issued 202,196 shares of Enzo common stock at fair value and paid
$1.5 million in cash to satisfy the $2.5 million earn-out liability. As of June
9, 2010, the calculation of the second and final earn-out has not been
finalized.

9

---



The following table presents the fair values of the assets acquired and
liabilities assumed (in thousands):

|                           |  |   |        | 
|-------------------------- |  | - | ------ | 
|Current assets             |  | $ | 5,167  | 
|Property and
 equipment    |  |   | 939    | 
|Other assets               |  |   | 18     | 
|Intangible assets          |  |   | 7,660  | 
|Goodwill                   |  |   | 9,226  | 
|                           |  |   |        | 
|Total assets
 acquired     |  |   | 23,010 | 
|                           |  |   |        | 
|Less:                      |  |   |        | 
|Current
 liabilities       |  |   | 1,100  | 
|Deferred tax
 liabilities  |  |   | 609    | 
|                           |  |   |        | 
|Total liabilities
 assumed |  |   | 1,709  | 
|                           |  |   |        | 
|Net assets
 acquired       |  | $ | 21,301 | 
|                           |  |   |        | 

The purchase price allocation is based on a valuation of acquired
tangible and intangible assets based on the final valuation completed in fiscal
2009. The Company determined the fair value of the identifiable intangible
assets based on various factors including: cost, discounted cash flow and
relief from royalty approaches in determining the purchase price allocation.
The excess of the total purchase price over the fair value of the net assets
acquired, including the estimated fair value of the identifiable intangible
assets, has been allocated to goodwill.

For financial reporting purposes, useful lives for the intangibles
acquired in the acquisitions have been assigned as follows:

|                       |           
|---------------------- | ----------
|Customer relationships | 8-15 years
|Trademarks             | Indefinite
|Other intangibles      | 4-5 years 

The following unaudited pro forma financial information presents the
combined results of operations of the Company and the acquisition completed in
fiscal 2009 as if the acquisition had occurred as of August 1, 2008. The pro
forma financial information reflects appropriate adjustments primarily for
amortization of intangible assets and interest expense. The pro forma financial
information presented is not necessarily indicative of either the actual
consolidated operating results had the acquisitions been completed at the
beginning of each period or future operating results of the consolidated
entities.

|                                              |  |                                      |        |                                      |   |         |  
|--------------------------------------------- |  | ------------------------------------ | ------ | ------------------------------------ | - | ------- | -
|In thousands
 (except per share amounts)      |  | Three months
 ended 
 April 30, 2009 |        | Nine months 
 ended 
 April 30, 2009 |  
|                                              |  |                                      |        |                                      |  
|Net revenues                                  |  | $                                    | 24,444 |                                      | $ | 73,079  |  
|Net loss                                      |  |                                      | (4,258 | )                                    |   | (18,752 | )
|                                              |  |                                      |        |                                      |   |         |  
|Net loss per common share  basic and diluted |  | $                                    | (0.11  | )                                    | $ | (0.50   | )
|                                              |  |                                      |        |                                      |   |         |  

Note 4  Net loss per share

Basic net income (loss) per share represents net income (loss) divided
by the weighted average number of common shares outstanding during the period.
The dilutive effect of potential common shares, consisting of outstanding stock
options and unvested restricted stock, is determined using the treasury stock
method. Diluted weighted average shares outstanding for the three and nine
months ended April 30, 2010 and 2009 do not include the potential common shares
from stock options and unvested restricted stock because to do so would have
been antidilutive. Accordingly, basic and diluted net loss per share is the
same during these periods.

The following table summarizes the potential number of shares issued
from exercise of in the money stock options, net of shares repurchased with
the option exercise proceeds and potential shares from restricted stock awards,
which are excluded from the computation of diluted net loss per share.

|                                                                                                                                                                                      |  |                                |   |                               |  |      |  |      |   |  |  |    | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | - | ----------------------------- |  | ---- |  | ---- | - |  |  | -- | 
|                                                                                                                                                                                      |  | Three months ended 
 April 30, |   | Nine months ended 
 April 30, | 
|(In thousands)                                                                                                                                                                        |  | 2010                           |   | 2009                          |  | 2010 |  | 2009 |  
|                                                                                                                                                                                      |  |                                |   |                               |  |      |  |      |  
|Potential net
 shares, issued from exercise of in the money employee and director stock
 options and restricted stock awards, excluded from diluted net loss per share
 calculation |  |                                |  |                               |  |     |  |      |  |  |  | 39 | 
|                                                                                                                                                                                      |  |                                |   |                               |  |      |  |      |   |  |  |    | 

10

---



The following table summarizes the number of out of the money options
excluded from the computation of diluted net loss per share because the effect
of their potential exercise is anti-dilutive.

|                                                        |  |                                |       |                               |  |       |  |      |       |  |  |       | 
|------------------------------------------------------- |  | ------------------------------ | ----- | ----------------------------- |  | ----- |  | ---- | ----- |  |  | ----- | 
|                                                        |  | Three months ended 
 April 30, |       | Nine months ended 
 April 30, | 
|(In thousands)                                          |  | 2010                           |       | 2009                          |  | 2010  |  | 2009 |      
|                                                        |  |                                |       |                               |  |       |  |      |      
|Out of the money
 employee and director stock options |  |                                | 1,132 |                               |  | 1,785 |  |      | 1,163 |  |  | 1,743 | 
|                                                        |  |                                |       |                               |  |       |  |      |       |  |  |       | 

Note 5  Share-based compensation

The following table sets forth the amount of expense related to
share-based payment arrangements included in specific line items in the accompanying
statements of operations:

|                                     |  |   |                               |  |                              |     |      |   |      |  |   |       |  | 
|------------------------------------ |  | - | ----------------------------- |  | ---------------------------- | --- | ---- | - | ---- |  | - | ----- |  | 
|                                     |  |   | Three months ended
 April 30, |  | Nine months ended
 April 30, |    
|In thousands                         |  |   | 2010                          |  | 2009                         |     | 2010 |   | 2009 | 
|                                     |  |   |                               |  |                              |     |      |   |      | 
|Cost of clinical laboratory services |  | $ | 3                             |  | $                            |    |      | $ | 9    |  | $ | 3     | 
|Research and development             |  |   | 4                             |  |                              | 2   |      |   | 10   |  |   | 30    | 
|Selling, general and administrative  |  |   | 264                           |  |                              | 299 |      |   | 832  |  |   | 983   | 
|                                     |  |   |                               |  |                              |     |      |   |      |  |   |       | 
|                                     |  | $ | 271                           |  | $                            | 301 |      | $ | 851  |  | $ | 1,016 | 
|                                     |  |   |                               |  |                              |     |      |   |      |  |   |       | 

No excess tax benefits were recognized during the three and nine month
periods ended April 30, 2010 and 2009.

Stock option plans

A summary of the activity relating to the Companys stock option plans
for the nine month period ended April 30, 2010 is as follows:

|                                             |  |         |           |                                   |   |                            |  |   |   | 
|-------------------------------------------- |  | ------- | --------- | --------------------------------- | - | -------------------------- |  | - | - | 
|                                             |  | Options |           | Weighted
 Average
 Exercise Price |   | Aggregate
 Intrinsic Value | 
|                                             |  |         |           |                                   |   |                            | 
|Outstanding at August 1, 2009                |  |         | 1,191,519 |                                   | $ | 14.41                      |  | $ |  | 
|                                             |  |         |           |                                   |   |                            |  |   |   | 
|Exercised                                    |  |         |          |                                   | $ |                           |  |   |   | 
|Cancelled                                    |  |         | (59,069   | )                                 | $ | 16.14                      |  |   |   | 
|                                             |  |         |           |                                   |   |                            |  |   |   | 
|Outstanding and exercisable at end of period |  |         | 1,132,450 |                                   | $ | 14.32                      |  | $ |  | 
|                                             |  |         |           |                                   |   |                            |  |   |   | 

As of April 30, 2010, there was no unrecognized compensation cost
related to unvested stock option-based compensation.

During the nine months ended April 30, 2009, the Company received cash
proceeds of approximately $348,000 from the exercise of 44,586 stock options.
The aggregate intrinsic value of stock options exercised during the nine months
ended April 30, 2009, including the non-cash transactions (Note 6) was
approximately $1.4 million.

Restricted Stock Awards

A summary of the activity pursuant to the Companys restricted stock
awards for the nine months ended April 30, 2010 is as follows:

|                           |  |        |          |                                |   |        |  
|-------------------------- |  | ------ | -------- | ------------------------------ | - | ------ | -
|                           |  | Awards |          | Weighted
 Average
 Award Price |  
|                           |  |        |          |                                |  
|Unvested at August 1, 2009 |  |        | 377,400  |                                | $ | 6.05   |  
|Awarded                    |  |        | 220,110  |                                | $ | 5.60   |  
|Vested                     |  |        | (184,731 | )                              | $ | (6.25  | )
|Forfeited                  |  |        | (5,100   | )                              | $ | (11.64 | )
|                           |  |        |          |                                |   |        |  
|Unvested at end of period  |  |        | 407,679  |                                | $ | 5.65   |  
|                           |  |        |          |                                |   |        |  

The fair value of a restricted stock award is determined based on the
closing stock price on the award date. As of April 30, 2010, there was
approximately $2.0 million of total unrecognized compensation cost related to
unvested restricted stock-based compensation to be recognized over a weighted
average remaining period of twenty two months.

The total number of shares available for grant as stock options or
award as restricted stock is approximately 186,700 as of April 30, 2010.

11

---



Note 6  Supplemental disclosure for statement of cash flows

Supplemental information with respect to the Companys consolidated
statements of cash flows is as follows (In thousands):

|                 |  |                              |     |      |   |     | 
|---------------- |  | ---------------------------- | --- | ---- | - | --- | 
|                 |  | Nine months ended
 April 30, |    
|                 |  | 2010                         |     | 2009 |  
|                 |  |                              |     |      |  
|Taxes paid  net |  | $                            | 162 |      | $ | 181 | 
|                 |  |                              |     |      |   |     | 

During the nine months ended April 30, 2009, certain officers of the
Company exercised 206,576 stock options in a non-cash transaction. The officers
surrendered 99,985 shares of previously acquired common stock to exercise the
stock options. The Company recorded approximately $1.1 million, the market
value of the surrendered shares, as treasury stock. There were no stock options
exercises during the nine months ended April 30, 2010.

Note 7  Comprehensive loss and Accumulated Other Comprehensive Income

During the three months ended April 30, 2010 and 2009, total
comprehensive loss was approximately $4.4 million and $4.0 million,
respectively. During the nine months ended April 30, 2010 and 2009, total
comprehensive loss was approximately $16.3 million and $20.1 million,
respectively.

Note 8- Inventories

At April 30, 2010 and July 31, 2009 inventories, net of reserves of
$1.0 million consist of:

|                  |  |   |                 |  |                |       |  | 
|----------------- |  | - | --------------- |  | -------------- | ----- |  | 
|Inthousands       |  |   | April 30,
 2010 |  | July 31,
 2009 |      
|                  |  |   |                 |  |                |      
|Raw materials     |  | $ | 840             |  | $              | 499   | 
|Work in process   |  |   | 2,174           |  |                | 1,801 | 
|Finished products |  |   | 7,177           |  |                | 6,964 | 
|                  |  |   |                 |  |                |       | 
|                  |  | $ | 10,191          |  | $              | 9,264 | 
|                  |  |   |                 |  |                |       | 

Note 9  Goodwill and intangible assets

The Companys change in the net carrying amount of goodwill by business
segment is as follows (in thousands):

|                             |  |                     |        |                      |   |       |  |   |        |  
|---------------------------- |  | ------------------- | ------ | -------------------- | - | ----- |  | - | ------ | -
|                             |  | Enzo Life
 Sciences |        | Enzo
 Clinical
 Labs |   | Total | 
|                             |  |                     |        |                      |   |       | 
|Balance August 1, 2009       |  | $                   | 17,444 |                      | $ | 7,452 |  | $ | 24,896 |  
|Other                        |  |                     | 20     |                      |   |      |  |   | 20     |  
|Foreign currency translation |  |                     | (143   | )                    |   |      |  |   | (143   | )
|                             |  |                     |        |                      |   |       |  |   |        |  
|Balance April 30, 2010       |  | $                   | 17,321 |                      | $ | 7,452 |  | $ | 24,773 |  
|                             |  |                     |        |                      |   |       |  |   |        |  

Intangible assets, all of which are included in the Life Sciences
segment, consist of the following (in thousands):

|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|-------------------------------------- |  | -------------- | ------ | ------------------------- | - | ------- | - | ----- | ------ | ------------------------- | - | ------ |  | - | ------- | - | - | ------ | 
|                                       |  | April 30, 2010 |        | July 31, 2009             |  
|                                       |  |                |        |                           |  
|                                       |  | Gross          |        | Accumulated
 Amortization |   | Net     |   | Gross |        | Accumulated
 Amortization |   | Net    | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        | 
|Finite-lived intangible assets:        |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Patents                                |  | $              | 11,027 |                           | $ | (10,122 | ) | $     | 905    |                           | $ | 11,027 |  |   | (10,030 | ) | $ | 997    | 
|Customer
 relationships                |  |                | 12,019 |                           |   | (1,920  | ) |       | 10,099 |                           |   | 12,125 |  |   | (1,190  | ) |   | 10,935 | 
|Non-compete and
 employment agreements |  |                | 469    |                           |   | (365    | ) |       | 104    |                           |   | 469    |  |   | (280    | ) |   | 189    | 
|Website and
 acquired content          |  |                | 1,001  |                           |   | (442    | ) |       | 559    |                           |   | 1,005  |  |   | (303    | ) |   | 702    | 
|Licensed
 technology and other         |  |                | 617    |                           |   | (256    | ) |       | 361    |                           |   | 588    |  |   | (83     | ) |   | 505    | 
|Indefinitely-lived intangible assets:  |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Trademarks                             |  |                | 8,636  |                           |   |        |   |       | 8,636  |                           |   | 8,681  |  |   |        |   |   | 8,681  | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Total                                  |  | $              | 33,769 |                           | $ | (13,105 | ) | $     | 20,664 |                           | $ | 33,895 |  | $ | (11,886 | ) | $ | 22,009 | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 

At April 30, 2010, the weighted average useful life of finite-lived
intangible assets was approximately nine and a half years.

12

---



Note 10  Accrued
Liabilities and Other Current Liabilities

At April 30, 2010 and July 31, 2009, accrued liabilities consist of:

|                                                                            |  |   |                 |  |                |       |  | 
|--------------------------------------------------------------------------- |  | - | --------------- |  | -------------- | ----- |  | 
|Inthousands                                                                 |  |   | April 30,2010   |  | July 31,
 2009 |      
|                                                                            |  |   |                 |  |                |      
|Legal                                                                       |  | $ | 394             |  | $              | 1,095 | 
|Payroll, benefits, and commissions                                          |  |   | 2,429           |  |                | 2,737 | 
|Research and development                                                    |  |   | 702             |  |                | 656   | 
|Professional fees                                                           |  |   | 1,868           |  |                | 1,752 | 
|Other                                                                       |  |   | 1,133           |  |                | 2,186 | 
|                                                                            |  |   |                 |  |                |       | 
|                                                                            |  | $ | 6,526           |  | $              | 8,426 | 
|                                                                            |  |   |                 |  |                |       | 
|                                                                            |  |   |                 |  |                |       | 
|At April 30, 2010
 and July 31, 2009, other current liabilities consist of: |  |   |                 |  |                |       | 
|                                                                            |  |   |                 |  |                |       | 
|In thousands                                                                |  |   | April 30,
 2010 |  | July 31,
 2009 |      
|                                                                            |  |   |                 |  |                |      
|Deferred revenue                                                            |  |   | 550             |  |                | 850   | 
|State and local taxes, tax on capital                                       |  |   | 330             |  |                |      | 
|Other                                                                       |  |   | 168             |  |                | 212   | 
|                                                                            |  |   |                 |  |                |       | 
|                                                                            |  | $ | 1,048           |  | $              | 1,062 | 
|                                                                            |  |   |                 |  |                |       | 

Self-Insured Medical Plan - In an attempt to help offset the cost of rising health care
expenses, beginning in February 2010, the Company began self-funding medical
insurance coverage for certain of its U.S. based employees. The risk to the
Company is being limited through the use of individual and aggregate stop loss
insurance. As of April 30, 2010, the Company has established a reserve of $0.4
million, which is included in accrued liabilities, for claims that have been
reported but not paid and incurred but not reported. The reserve is based upon
the Companys historical claim experience and will be adjusted based on actual
claim settlements and reported claims.

Note 11 - Income
taxes

At the end of each interim reporting period, the Company estimates its
effective income tax rate expected to be applicable for the full year. This
estimate is used to determine the income tax provision or benefit on a
year-to-date basis and may change in subsequent interim periods.

The Companys effective tax rate provision for the three months ended
April 30, 2010 was 4.0% compared to 0.4% during the three months ended April
30, 2009. The tax provision for the three months ended April 30, 2010 and 2009
was based on state and local taxes, domestic and foreign tax for tax deductible
goodwill and indefinite lived intangibles, and book to tax differences for
acquired inventory.

The Companys effective tax rate provision for the nine months ended
April 30, 2010 was 1.3% compared to 1.4% during the nine months ended April 30,
2009. The tax provision for the nine months ended April 30, 2010 and 2009 was
based on state and local taxes, domestic and foreign tax for tax deductible
goodwill and indefinite lived intangibles, and book to tax differences for
acquired inventory.

The Companys effective tax rate for both periods differed from the
expected net operating loss carryforward benefit at the U.S. federal statutory
rate of 34% primarily due to the inability to recognize such benefit. The
carryforward benefit cannot be recognized because of uncertainties relating to
future taxable income in terms of both its timing and its sufficiency, which
would enable the Company to realize the federal carryforward benefit.

The Company files a consolidated Federal income tax return. The Company
files a combined California, and New York State and City return with certain
subsidiaries. Other subsidiaries file separate state and foreign tax returns.
With few exceptions, the periods that remain subject to examination are fiscal
years ended July 31, 2007 through 2009. In connection with a business
combination, the Company recorded as of May 31, 2007 approximately $300,000 for
an uncertain tax position, including accrued interest of $39,000, with respect
to a deemed dividend. During the nine months ended April 30, 2010, the Company
reduced the balance of this liability by approximately $106,000 and recognized
a corresponding tax benefit as a result of the expiration of the statute of
limitations. The Companys policy is to recognize interest and penalties
accrued on any uncertain tax positions as a component of income tax expense.

Note 12  Royalty and licensing income

In fiscal 2005, the Company as plaintiff finalized and executed a
settlement and license agreement with Digene Corporation to settle a patent
litigation lawsuit (the Agreement). Digene Corporation was acquired by
QIAGEN. The license agreement with the Company was assigned to QIAGEN
Gaithersburg Inc. (Qiagen).

13

---



The Agreement provides for the Company to receive quarterly running
royalties on the net sales of Qiagen products subject to the license until the
expiration of the patent in April 2018. During the three months ended April 30,
2010 and 2009, the Company recorded royalties from the Agreement of
approximately $1.1 million and $1.3 million, respectively, and during both nine
month periods ended April 30, 2010 and 2009 recorded approximately $4.8
million.

During both three months periods ended April 30, 2010 and 2009, the
Company recorded $0.7 million of royalties and license fee income under a
licensing agreement with Abbott Molecular, Inc. (Abbott) entered into in
fiscal 2007. During the nine months ended April 30, 2010 and 2009, the Company
recorded $2.2 million and $2.0 million in royalties and license fee income
respectively, from this agreement.

Note 13  Segment reporting

The Company has three reportable segments: Life Sciences, Therapeutics,
and Clinical Labs. The Companys Life Sciences segment develops, manufactures,
and markets products to research and pharmaceutical customers. The Companys
Therapeutic segment conducts research and development activities for
therapeutic drug candidates. The Clinical Labs segment provides diagnostic
services to the health care community. The Company evaluates segment
performance based on segment income (loss) before taxes. Costs excluded from
segment income (loss) before taxes and reported as Other, consist of corporate
general and administrative costs which are not allocable to the three
reportable segments.

Management of the Company assesses assets on a consolidated basis only
and, therefore, assets by reportable segment have not been included in the
reportable segments below. The accounting policies of the reportable segments
are the same as those described in the summary of significant accounting
policies.

The following financial information (in thousands) represents the
operating results of the reportable segments of the Company:

Three months ended April 30, 2010

|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|----------------------------------------------- |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                       |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                |  | $              | 11,089 |              |   |               |   |       |       |              |   |       |   | $ | 11,089 |  
|Royalty and license fee income                  |  |                | 1,894  |              |   |               |   |       |       |              |   |       |   |   | 1,894  |  
|Clinical laboratory services                    |  |                |       |              |   |               |   | $     | 10,805 |              |   |       |   |   | 10,805 |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                |  |                | 12,983 |              |   |               |   |       | 10,805 |              |   |       |   |   | 23,788 |  
|Operating expenses:                             |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                        |  |                | 5,394  |              |   |               |   |       |       |              |   |       |   |   | 5,394  |  
|Cost of clinical laboratory services            |  |                |       |              |   |               |   |       | 7,588  |              |   |       |   |   | 7,588  |  
|Research and development                        |  |                | 1,858  |              | $ | 621            |   |       |       |              |   |       |   |   | 2,479  |  
|Provision for uncollectible accounts receivable |  |                |       |              |   |               |   |       | 650    |              |   |       |   |   | 650    |  
|Selling, general and administrative and legal   |  |                | 5,054  |              |   |               |   |       | 4,801  |              | $ | 2,088  |   |   | 11,943 |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total operating expenses                        |  |                | 12,306 |              |   | 621            |   |       | 13,039 |              |   | 2,088  |   |   | 28,054 |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Operating income (loss)                         |  |                | 677    |              |   | (621           | ) |       | (2,234 | )            |   | (2,088 | ) |   | (4,266 | )
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Other income (expense)                          |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Interest                                        |  |                | (2)    |              |   |               |   |       |       |              |   | 1      |   |   | (1     | )
|Other                                           |  |                | 77     |              |   |               |   |       | 7      |              |   |       |   |   | 84     |  
|Foreign exchange loss                           |  |                | (216   | )            |   |               |   |       |       |              |   |       |   |   | (216   | )
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes               |  | $              | 536    |              | $ | (621           | ) | $     | (2,227 | )            | $ | (2,087 | ) | $ | (4,399 | )
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included above    |  | $              | 744    |              | $ | 12             |   | $     | 249    |              | $ | 33     |   | $ | 1,037  |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:     |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost
     of clinical laboratory services       |  | $              |       |              |   |               |   |       | 3      |              |   |       |   | $ | 3      |  
|Research and
 development                       |  |                | 4      |              | $ |               |   |       |       |              |   |       |   |   | 4      |  
|Selling, general
 and administrative and legal  |  |                | 16     |              |   |               |   | $     | 21     |              | $ | 227    |   |   | 264    |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                           |  | $              | 20     |              |   |               |   | $     | 24     |              | $ | 227    |   | $ | 271    |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital expenditures                            |  | $              | 257    |              | $ |               |   | $     | 268    |              | $ |        |   | $ | 525    |  
|                                                |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

14

---



Three months ended April 30, 2009

|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 10,479 |              |   |               |   |       |       |              |   |       |   | $ | 10,479 |  
|Royalty and license fee income                   |  |                | 1,963  |              |   |               |   |       |       |              |   |       |   |   | 1,963  |  
|Clinical laboratory services                     |  |                |       |              |   |               |   | $     | 10,619 |              |   |       |   |   | 10,619 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 12,442 |              |   |               |   |       | 10,619 |              |   |       |   |   | 23,061 |  
|Operating expenses:                              |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 6,812  |              |   |               |   |       |       |              |   |       |   |   | 6,812  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 6,543  |              |   |       |   |   | 6,543  |  
|Research and development                         |  |                | 1,572  |              | $ | 853            |   |       |       |              |   |       |   |   | 2,425  |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 715    |              |   |       |   |   | 715    |  
|Selling, general, and administrative and
 legal  |  |                | 3,909  |              |   |               |   |       | 3,781  |              | $ | 3,195  |   |   | 10,885 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total operating expenses                         |  |                | 12,293 |              |   | 853            |   |       | 11,039 |              |   | 3,195  |   |   | 27,380 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Operating income (loss)                          |  |                | 149    |              |   | (853           | ) |       | (420   | )            |   | (3,195 | ) |   | (4,319 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Other income (expense):                          |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Interest                                         |  |                |       |              |   |               |   |       |       |              |   | 17     |   |   | 17     |  
|Other                                            |  |                | (54    | )            |   |               |   |       | 11     |              |   |       |   |   | (43    | )
|Foreign exchange gain                            |  |                | 119    |              |   |               |   |       |       |              |   |       |   |   | 119    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 214    |              | $ | (853           | ) | $     | (409   | )            | $ | (3,178 | ) | $ | (4,226 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 548    |              | $ | 13             |   | $     | 230    |              | $ | 38     |   | $ | 829    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost
     of clinical laboratory services        |  | $              |       |              | $ |               |   | $     |       |              | $ |       |   | $ |       |  
|Research and development                         |  |                |       |              |   | 2              |   |       |       |              |   |       |   |   | 2      |  
|Selling, general and administrative and
 legal   |  |                | 22     |              |   | 8              |   |       | 26     |              |   | 243    |   |   | 299    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 22     |              | $ | 10             |   | $     | 26     |              | $ | 243    |   | $ | 301    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital expenditures                             |  | $              | 504    |              | $ | 1              |   | $     | 79     |              | $ | 14     |   | $ | 598    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

15

---



Nine months ended April 30, 2010

|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------- | - | - | ------- | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Product revenues                                 |  | $              | 32,599 |              |   |               |   |       |       |              |   |        |   | $ | 32,599  |  
|Royalty and license fee income                   |  |                | 7,044  |              |   |               |   |       |       |              |   |        |   |   | 7,044   |  
|Clinical laboratory services                     |  |                |       |              |   |               |   | $     | 32,494 |              |   |        |   |   | 32,494  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                | 39,643 |              |   |               |   |       | 32,494 |              |   |        |   |   | 72,137  |  
|Operating expenses:                              |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost of product revenues                         |  |                | 15,771 |              |   |               |   |       |       |              |   |        |   |   | 15,771  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 21,623 |              |   |        |   |   | 21,623  |  
|Research and development                         |  |                | 5,348  |              | $ | 1,925          |   |       |       |              |   |        |   |   | 7,273   |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 2,073  |              |   |        |   |   | 2,073   |  
|Selling, general, and administrative and
 legal  |  |                | 15,254 |              |   |               |   |       | 13,859 |              | $ | 8,758   |   |   | 37,871  |  
|Litigation settlement and related legal
 costs   |  |                |       |              |   |               |   |       |       |              |   | 3,698   |   |   | 3,698   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Total operating expenses                         |  |                | 36,373 |              |   | 1,925          |   |       | 37,555 |              |   | 12,456  |   |   | 88,309  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Operating income (loss)                          |  |                | 3,270  |              |   | (1,925         | ) |       | (5,061 | )            |   | (12,456 | ) |   | (16,172 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Other income (expense):                          |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Interest                                         |  |                |       |              |   |               |   |       |       |              |   | 13      |   |   | 13      |  
|Other                                            |  |                |       |              |   |               |   |       | 39     |              |   |        |   |   | 39      |  
|Foreign exchange loss                            |  |                | (384   | )            |   |               |   |       |       |              |   |        |   |   | (384    | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Income (loss) before income taxes                |  | $              | 2,886  |              | $ | (1,925         | ) | $     | (5,022 | )            | $ | (12,443 | ) | $ | (16,504 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Depreciation and amortization included
 above    |  | $              | 2,352  |              | $ | 39             |   | $     | 739    |              | $ | 94      |   | $ | 3,224   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost
     of clinical laboratory services        |  | $              |       |              | $ |               |   | $     | 9      |              | $ |        |   | $ | 9       |  
|Research and development                         |  |                | 10     |              |   |               |   |       |       |              |   |        |   |   | 10      |  
|Selling, general and administrative and
 legal   |  |                | 82     |              |   |               |   |       | 62     |              |   | 688     |   |   | 832     |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Total                                            |  | $              | 92     |              | $ |               |   | $     | 71     |              | $ | 688     |   | $ | 851     |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Capital expenditures                             |  | $              | 1,082  |              | $ |               |   | $     | 1,425  |              | $ | 62      |   | $ | 2,569   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  

16

---



Nine months ended April 30, 2009

|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------- | - | - | ------- | -
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Product revenues                                 |  | $              | 29,952 |              |   |               |   |       |       |              |   |        |   | $ | 29,952  |  
|Royalty and license fee income                   |  |                | 6,783  |              |   |               |   |       |       |              |   |        |   |   | 6,783   |  
|Clinical laboratory services                     |  |                |       |              |   |               |   | $     | 28,306 |              |   |        |   |   | 28,306  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                | 36,735 |              |   |               |   |       | 28,306 |              |   |        |   |   | 65,041  |  
|Operating expenses:                              |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost of product revenues                         |  |                | 20,208 |              |   |               |   |       |       |              |   |        |   |   | 20,208  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 19,115 |              |   |        |   |   | 19,115  |  
|Research and development                         |  |                | 4,006  |              | $ | 2,639          |   |       |       |              |   |        |   |   | 6,645   |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 3,949  |              |   |        |   |   | 3,949   |  
|Selling, general, and administrative and
 legal  |  |                | 10,286 |              |   |               |   |       | 11,399 |              | $ | 11,304  |   |   | 32,989  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Total operating expenses                         |  |                | 34,500 |              |   | 2,639          |   |       | 34,463 |              |   | 11,304  |   |   | 82,906  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Operating income (loss)                          |  |                | 2,235  |              |   | (2,639         | ) |       | (6,157 | )            |   | (11,304 | ) |   | (17,865 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Other income (expense):                          |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Interest                                         |  |                |       |              |   |               |   |       | 57     |              |   | 512     |   |   | 569     |  
|Other                                            |  |                | 76     |              |   |               |   |       | 32     |              |   |        |   |   | 108     |  
|Foreign exchange loss                            |  |                | (837   | )            |   |               |   |       |       |              |   |        |   |   | (837    | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Income (loss) before income taxes                |  | $              | 1,474  |              | $ | (2,639         | ) | $     | (6,068 | )            | $ | (10,792 | ) | $ | (18,025 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Depreciation and amortization included
 above    |  | $              | 1,503  |              | $ | 36             |   | $     | 714    |              | $ | 98      |   | $ | 2,351   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost
     of clinical laboratory services        |  | $              |       |              | $ |               |   | $     | 3      |              | $ |        |   | $ | 3       |  
|Research and development                         |  |                | 13     |              |   | 17             |   |       |       |              |   |        |   |   | 30      |  
|Selling, general and administrative and
 legal   |  |                | 86     |              |   | 24             |   |       | 120    |              |   | 753     |   |   | 983     |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Total                                            |  | $              | 99     |              | $ | 41             |   | $     | 123    |              | $ | 753     |   | $ | 1,016   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Capital expenditures                             |  | $              | 1,073  |              | $ | 78             |   | $     | 973    |              | $ | 32      |   | $ | 2,156   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  

Note 14  Contingencies

1. On April 30, 2009, Shahram K. Rabbani (Mr. Rabbani), former
Secretary, Treasurer and member of the board of directors of the Company and
the former President of Enzo Clinical Labs, Inc., in connection with the
termination of his employment, submitted a demand for arbitration and related
statement of claim to the American Arbitration Association. The statement of
claim named the Company, Dr. Elazar Rabbani, the Chairman of the Board and
Chief Executive Officer of the Company, and Barry W. Weiner, the President,
Chief Financial Officer of the Company and a member of the Board, as
respondents and alleged, among other things, claims relating to the termination
of Mr. Rabbanis employment as President of Clinical Labs. The statement of
claim purported to allege claims for breach of contract against the Company,
unlawful retaliation under the Sarbanes-Oxleys whistleblower statute (the
Claims) against the Company, Dr. Rabbani and Mr. Weiner, and tortious
interference with contract against Dr. Rabbani and Mr. Weiner. Mr. Rabbani sought
damages of no less than $10 million consisting of contractually prescribed
severance payments (approximately $2.5 million), plus additional base salary
and bonus going forward for several years, compensatory damages, and punitive
damages, including attorneys fees and costs in connection with these
proceedings. Subsequent to April 30, 2009, the Company conducted a review, as
directed by a special committee of the Board of Directors, relating to the
aforementioned Claims pertaining to Enzo Clinical Labs. The review concluded
that the purported Claims were unsubstantiated.

17

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On January 28, 2010, the Company reached an agreement
    with Mr. Rabbani, to settle all of the Claims as well as all of his claims
    against Dr. Rabbani and Mr. Weiner. Under the terms of the agreement, Mr.
    Rabbani discontinued all actions he commenced against the Company, Dr. Rabbani
    and Mr. Weiner. In exchange, the Company agreed to pay Mr. Rabbani a lump
    sum payment of $2.7 million. The parties also agreed to execute mutual general
    releases. On February 7, 2010 the parties executed the mutual general releases
    and the Company paid the aforementioned settlement of $2.7 million. During
    the three months ended January 31, 2010 and nine months ended April 30, 2010,
    the Company recorded a settlement expense of approximately $3.7 million,
    consisting of the lump sum payment of $2.7 million and approximately $1.0
    million of legal expenses incurred in connection with the Claims.

2. On January 8, 2010, Mr. Rabbani commenced, as plaintiff, an action
(the Action) in the Supreme Court of the State of New York, County of New
York, seeking a temporary restraining order and a preliminary and permanent
injunction to enjoin the Company from convening the Annual Meeting on January
29, 2010. On January 11, 2010, the Company petitioned to remove the Action to
the U.S. District Court for the Southern District of New York (the Court),
which petition was granted. A hearing on the matter was held on January 12,
2010. On January 27, 2010, the Court entered an order denying Mr. Rabbanis
motion for a preliminary injunction to enjoin the Company from convening the
Annual Meeting on January 29, 2010.

3. In connection with the suit filed by the Company and Enzo Life
Sciences, Inc., in the United States District Court for the District of
Connecticut on June 6, 2004 against Applera Corporation and its wholly-owned
subsidiary Tropix, Inc. for alleged infringement of certain patents in which
the Company was seeking an appeal, on March 26, 2010, the Federal Circuit
issued an order concluding that the claims of U.S. Patent Nos. 5,328,824 and
5,449,767 were not indefinite and that there were genuine issues of material
fact as to anticipation. The Court reversed the district courts summary
judgment of invalidity of those two patents and remanded the case back to the
Connecticut Court. Applera and Tropix then filed a combined petition for panel
rehearing and rehearing en banc. On May 26, 2010, the Federal Circuit issued an
order denying both petitions. (See Note 16 to the Form 10-K for the fiscal year
ended July 31, 2009.)

4. There have been no other material developments with respect to other
previously reported legal proceedings discussed in the annual report on Form
10-K for the fiscal year ended July 31, 2009 filed with the Securities and
Exchange Commission.

Note 15  Subsequent Events

The Company has evaluated events and transactions subsequent to April
30, 2010. No subsequent events require recognition in the consolidated
financial statements or in the notes to the consolidated financial statements
by the Company.

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

The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and related notes 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.

18

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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 2009 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.

Overview

The Company is a life sciences and biotechnology company focused on
harnessing genetic processes to develop research tools and therapeutics and the
provision of diagnostic services to the medical community. Since its founding
in 1976, Enzos strategic focus has been on the development, for commercial
purposes, of enabling technologies in the life sciences field. Enzos
pioneering work in genomic analysis coupled with its extensive patent estate
and enabling platforms have strategically positioned Enzo to play a crucially
important role in the rapidly growing life sciences and molecular medicine
marketplaces.

We are comprised of three operating companies that have evolved out of
our core competence: the use of nucleic acids as informational molecules and
the use of compounds for immune modulation. These wholly owned operating
companies conduct their operations through three reportable segments. Below are
brief descriptions of each of the three operating segments (see Note 13 in the
notes to consolidated financial statements):

Enzo Life Sciencesis a company that manufactures,
develops and markets functional biology and cellular biochemistry products and
tools to research and pharmaceutical customers world-wide and has amassed a
large patent and technology portfolio. The companys sources of revenues are
from the direct sales of products consisting of labeling and detection reagents
for the genomics and sequencing markets and royalty and licensing fee income.
The pioneering platforms developed by Enzo Life Sciences enable the development
of a wide range of products in the research products marketplace.

The division is internationally recognized and acknowledged as a leader
in manufacturing, in-licensing, and commercialization of over 12,000 innovative
high quality research reagents in the primary key research areas of
epigenetics, live cell analysis, protein degradation pathways and metabolism.
The division is an established source for a comprehensive panel of products to
scientific experts in the fields of Antibiotics, Autophagy, Cancer, Cell Cycle,
Cell Death, Cell Signaling, Cell trafficking, Genomics/Molecular Biology,
Immunology, Inflammation, Lipid Signaling, Neurobiology, Protein Degradation,
ROS/RNS and Stress/Heat Shock.

Enzo Clinical Labsis a regional clinical laboratory
serving the greater New York and New Jersey medical community. The Company
believes having clinical diagnostic services allows us to capitalize firsthand
on our extensive advanced molecular and cytogenetic capabilities and the
broader trends in predictive and personalized diagnostics. We offer a menu of
routine and esoteric clinical laboratory tests or procedures used in general
patient care by physicians to establish or support a diagnosis, monitor
treatment or medication, or search for an otherwise undiagnosed condition. We
operate a full-service clinical laboratory in Farmingdale, New York, a network
of 30 patient service centers throughout greater New York and New Jersey, a
stand alone stat or rapid response laboratory in New York City, and a
full-service phlebotomy department. Payments for clinical laboratory testing
services are made by the Medicare program, healthcare insurers and patients.

Enzo Therapeuticsis a biopharmaceutical company that
has developed multiple novel approaches in the areas of gastrointestinal,
infectious, ophthalmic and metabolic diseases, many of which are derived from
the pioneering work of Enzo Life Sciences. The Company has focused its efforts
on developing treatment regimens for diseases and conditions in which current
treatment options are ineffective, costly, and/or cause unwanted side effects.
This focus has generated a clinical and preclinical pipeline, as well as more
than 40 patents and patent applications.

19

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Recent Developments

Assay Designs, Inc.

On March 12, 2009, Enzo Life Sciences, Inc. and Enzo Life Sciences
Acquisition, Inc., a wholly owned subsidiary of Enzo Life Sciences, Inc.
(Acquisition Sub), entered into an asset purchase agreement (Purchase
Agreement) with Assay Designs, Inc. (Assay Designs or ADI). Assay Designs,
a privately owned company with annual sales of approximately $11 million, was
engaged in researching, developing, manufacturing, distributing, marketing and
selling specialty immunological and biochemical protein detection kits, assays,
reagents, antibodies, recombinant proteins and related products and providing
related services for use in the biotechnology, pharmaceutical and life sciences
research industries (Business). Under the terms of the Purchase Agreement,
Acquisition Sub purchased from Assay Designs substantially all of its assets,
including trade accounts receivable, inventory, fixed assets, intellectual
property and goodwill, used in or related to the Business and assumed certain
of Assay Designs liabilities, including trade accounts payable, capital lease
obligations and certain other accrued and other current liabilities.

The execution of the Purchase Agreement and the closing of the
transaction occurred simultaneously on March 12, 2009. The purchase price
consisted of $12,228,000 in cash exclusive of acquisition costs of
approximately $540,000, subject to an upward or downward post-closing purchase
price adjustment based on Assay Designs working capital as of the closing
date, $100,000 of which was held in escrow for approximately 60-90 days to
secure the payment of any downward post-closing purchase price adjustment and
$750,000 of which was held in escrow for 12 months to secure the payment of any
indemnification obligations of Assay Designs under the Purchase Agreement. Subsequent
to the acquisition date, the Company paid $270,000 in additional purchase price
in connection with the working capital adjustment and released the escrow
amounts. The $100,000 and $750,000 were released by the escrow agent in June
2009 and March 2010, respectively. The cost of the acquisition included the
cost to consolidate a leased facility and the involuntary termination of
certain employees, which occurred during the measurement period.

The Assay Designs acquisition strengthens the Companys position as a
global provider of life sciences reagents by broadening our product offerings
and manufacturing capabilities. Effective March 12, 2009, Assay Designs became
a wholly-owned subsidiary of Enzo Life Sciences. The acquisition was funded
with the Companys cash. The consolidated financial statements include the
results of operations for Assay Designs from the date of acquisition.

Biomol International L.P.

On May 8, 2008, Enzo Life Sciences, Inc. acquired substantially all of
the U.S. based assets and certain liabilities of Biomol International, LP
(Biomol LP) through a newly formed US subsidiary Biomol International, Inc.
and all of the stock of Biomols wholly-owned United Kingdom subsidiary,
Affinity Limited, through Axxora UK, a wholly-owned subsidiary of Enzo Life
Sciences, collectively referred to as Biomol for approximately $18.1 million
in cash and stock, subject to adjustment, exclusive of acquisition costs of
approximately $800,000 and two contingent earn-out payments which will be accounted
for as additional purchase consideration over the next two years if and when
the contingencies are resolved beyond a reasonable doubt. At closing, the
purchase price was satisfied as follows: $12.9 million in cash was paid to
Biomol LP, issuance of 352,000 shares of Enzo common stock, at fair market
value, to Biomol LP, $1.5 million in cash was paid to an escrow agent for the
two-year period following the closing to satisfy any indemnification
obligations of the sellers under the Agreement and $550,000 was paid to an
escrow agent, for the 60 day period following the closing to satisfy any
specified purchase price adjustments. The $550,000 and $1.5 million were
released by the escrow agent in August 2008 and May 2010, respectively. The
earn-outs of $2.5 million on each of the first two anniversaries of the
acquisition date will be based on attaining certain revenue and EBITDA targets,
as defined.

In June 2009, the conditions for the first annual earn-out of $2.5
million were met and the Company recorded $2.5 million of additional goodwill.
The Company issued 202,196 shares of Enzo common stock at fair value and paid
$1.5 million in cash to satisfy the $2.5 million earn-out liability. As of June
9, 2010, the calculation of the second and final earn-out has not been
finalized.

20

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Results of Operations
Three months ended April 30, 2010 as compared to April 30, 2009

Comparative Financial Data for the Three Months Ended April 30,

(In thousands)

|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|------------------------------------------------ |  | ---- | ------ | ---- | - | -------------------- | - | --------- | ------ | - |  | ---- | -
|                                                 |  | 2010 |        | 2009 |   | Increase
 (Decrease) |   | %
 Change |       
|                                                 |  |      |        |      |   |                      |   |           |       
|Revenues:                                        |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Product
 revenues                                |  | $    | 11,089 |      | $ | 10,479               |   | $         | 610    |   |  | 6    | %
|Royalty and
 license fee income                  |  |      | 1,894  |      |   | 1,963                |   |           | (69    | ) |  | (4   | )
|Clinical
 laboratory services                    |  |      | 10,805 |      |   | 10,619               |   |           | 186    |   |  | 2    |  
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Total
 revenues                                  |  |      | 23,788 |      |   | 23,061               |   |           | 727    |   |  | 3    |  
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Operating
 expenses:                             |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Cost of
 product revenues                        |  |      | 5,394  |      |   | 6,812                |   |           | (1,418 | ) |  | (21  | )
|Cost of
 clinical laboratory services            |  |      | 7,588  |      |   | 6,543                |   |           | 1,045  |   |  | 16   |  
|Research and
 development                        |  |      | 2,479  |      |   | 2,425                |   |           | 54     |   |  | 2    |  
|Selling,
 general, and administrative            |  |      | 12,070 |      |   | 10,026               |   |           | 2,044  |   |  | 20   |  
|Provision
 for uncollectible accounts receivable |  |      | 650    |      |   | 715                  |   |           | (65    | ) |  | (9   | )
|Legal                                            |  |      | (127   | )    |   | 859                  |   |           | (986   | ) |  | (115 | )
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Total
 operating expenses                        |  |      | 28,054 |      |   | 27,380               |   |           | 674    |   |  | 2    |  
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Operating
 loss                                  |  |      | (4,266 | )    |   | (4,319               | ) |           | 53     |   |  | (1   | )
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Other income
 (expense):                         |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Interest                                         |  |      | (1     | )    |   | 17                   |   |           | (18    | ) |  | (106 | )
|Other                                            |  |      | 84     |      |   | (43                  | ) |           | 127    |   |  | (295 | )
|Foreign
 currency                                |  |      | (216   | )    |   | 119                  |   |           | (335   | ) |  | (282 | )
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  
|Loss before
 income taxes                        |  | $    | (4,399 | )    | $ | (4,226               | ) | $         | (173   | ) |  | (4   | )
|                                                 |  |      |        |      |   |                      |   |           |        |   |  |      |  

Consolidated Results:

The 2010
period and the 2009 period refer to the three months ended April 30, 2010
and 2009, respectively. The 2010 period includes the three months results of
ADI which was acquired on March 12, 2009. The 2009 period includes the results
of ADI from March 12, 2009 to April 30, 2009.

Product
revenues increased overall by $0.6 million or 6% in 2010 to $11.1 million as
compared to the 2009 period. Acquisition growth from the recently acquired ADI
business was $1.2 million or 11% which was partially offset by an organic
decline of $0.8 million or 7% due to a decline in low margin, third-party
distribution business. Foreign currency fluctuation positively affected
revenues by $0.2 million or 2%.

Royalty and
license fee income during the 2010 period was $1.9 million compared to $2.0
million in the 2009 period, a decrease of $0.1 million or 4%. Royalties are
primarily earned from the reported net sales of Qiagen products subject to a
license agreement and from a license agreement with Abbott. During the 2010
period, the Company recognized royalties of approximately $1.1 million from
Qiagen and royalties and license fees under the Abbott License Agreement of
approximately $0.8 million. There are no direct expenses relating to royalty
and license fee income.

Clinical
laboratory revenues during the 2010 period were $10.8 million compared to $10.6
million in the 2009 period. The 2010 periods increase over the 2009 period
was $0.2 million or 2%. During the 2010 period revenue increased due to higher
priced esoteric testing volume, despite being adversely affected by severe
winter weather in the Northeast in February affecting service volume by approximately
5%, a general slowdown in physician office visits impacting service volume by
approximately 4% and a 1.9% decrease in Medicare reimbursement rates effective
January 1, 2010.

The cost of
product revenues during the 2010 period was $5.4 million compared to $6.8
million in the 2009 period, a decrease of $1.4 million or 21%. The decrease is
primarily due to the impact of $0.7 million in lower costs from low margin
third party distribution business, reduced fair value accounting adjustments
    of $0.8 million in accordance with purchase accounting rules and reclassification
of $0.8 million in costs relating to the realignment of manufacturing
facilities and personnel. Such amounts in 2010 were partially offset by product
cost increases relating to ADI of $0.6 million.

21

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We believe
that cost of product revenues for future periods will be affected by, among
other things, the further integration of acquired businesses in addition to
sales volumes, competitive conditions and foreign currency rates.

The cost of
clinical laboratory services during the 2010 period was $7.5 million as
compared to $6.5 million in the 2009 period, an increase of $1.0 million or
16%. Increases occurred in reagent costs and supplies of $0.5 million, and
laboratory personnel costs of $0.5 million. Laboratory personnel and related
benefit costs increased primarily due to additional headcounts in phlebotomists
to expand patient collection sites and other personnel to manage expanded operations
and the development of esoteric and gene-based test capabilities.

Research and
development expenses were approximately $2.5 million during the 2010 period,
compared to $2.4 million in the 2009 period, an increase of $0.1 million or 2%.
The increase was principally attributed to higher costs of $0.3 million at Enzo
Life Sciences primarily from the acquired ADI offset by $0.2 million in lower
clinical trial and related activities at the Therapeutics segment.

Selling,
general and administrative expenses were approximately $12.0 million during the
2010 period as compared to $10.0 million in the 2009 period, an increase of
$2.0 million or 20%. The increase was primarily due to the net increase at the
Enzo Life Sciences segment of $1.1 million in the 2010 period which included
approximately $0.2 million of selling, general and administrative expenses
related to ADI operations, the impact of realigning manufacturing facilities
and certain personnel of $0.5 million and additional payroll and benefit costs
of $0.3 million. The Clinical Lab segments selling general and administrative
increased $1.0 million primarily due to increased payroll and related benefits
attributed to increases in headcounts in our sales force and management
personnel partially related to the marketing and
development of esoteric and gene based testing capabilities.

The provision
for uncollectible accounts receivable, primarily relating to the Clinical Labs
segment was $0.6 million for the 2010 period as compared to $0.7 million in the
2009 period, a decrease of $0.1 million or 9% due to improved collections.

Legal expense
was a credit of $0.1 million during the 2010 period compared to an expense of
$0.8 million in the 2009 period, a decrease of $0.9 million, due to reduction
in legal services provided relating to certain patent litigation and general
matters and decreases in fees recorded due to negotiated fee settlements and
    other adjustments of $0.5 million.

Interest
expense was $1,000 during the 2010 period as compared to $17,000 interest
income during the 2009 period. The low level of interest during both periods is
attributed to the decline in interest rates in response to monetary policy
actions taken by the U.S. Federal Reserve. Furthermore, the Company had higher
average invested balances during the 2009 period. The Company earns interest by
investing primarily in short term US treasury bills, and money market accounts.

The loss on
foreign currency was $0.2 million during the 2010 period was primarily due to a
non-cash loss on an intercompany term loan denominated in British pounds
sterling and the fluctuations of other foreign currencies relative to the US
dollar during the period and the impact that had on settled transactions during
the period. During the 2009 period, the gain on foreign currency transactions
was $0.1 million primarily due to a non-cash gain on the intercompany term loan
denominated in British pounds sterling. The British currency appreciated
against the US dollar during the 2009 period and depreciated during the 2010
period.

The Companys
effective income tax rate provision for the 2010 period was 4.0% compared to
0.4% during the 2009 period. The tax provisions for the 2010 and 2009 periods
were based on state and local taxes, domestic and foreign tax for tax
deductible goodwill and indefinite lived intangibles, and book to tax
differences for acquired inventory and differed from the expected net operating
loss carry forward benefit at the U.S. federal statutory rate of 34% primarily
due to the inability to recognize such benefit. The carry forward benefit
cannot be recognized because of uncertainties relating to future taxable
income, in terms of both its timing and its sufficiency.

22

---



Segment Results

The Life
Sciences segments income before taxes was $0.5 million for the 2010 period as
compared to $0.2 million for the 2009 period. Product revenues increased by
$0.6 million in the 2010 period primarily due to the full periods contribution
of product revenues from the March 2009 acquisition of Assay Designs which
replaced low margin, high volume distribution product revenues principally to
one customer offset by an organic decline in core products. Royalty and license
fee income decreased $0.1 million from the Qiagen agreement. The segments
gross profit increased to $7.6 million from $5.6 million. Gross profit margins
increased to 58% from 45% due to favorable impact from ADIs higher margin,
which replaced lower margin revenue in 2009, lower inventory fair value
adjustments and realignment of personnel from manufacturing to trading
activity. The segments other operating expenses, including selling, general
and administrative, legal and research and development, increased by $1.4
million during the 2010 period primarily due to the inclusion of Assay Designs
expenses and the impact of the aforementioned realignment of personnel. The
segment experienced a non-cash foreign currency loss of $0.2 million during the
2010 period resulting from the slight strengthening foreign currencies had on
settled transactions and on an intercompany loan denominated in pounds
sterling. In aggregate, the inventory fair value adjustment and amortization of intangibles negatively
impacted the segment operating results in the 2010 period by $0.4 million.

The Clinical
Laboratory segments loss before taxes was $2.2 million for the 2010 period
as compared to a loss of $0.4 million in the 2009 period. The revenue from
laboratory services increased in the 2010 period by $0.2 million due to increased
service volume in higher priced testing despite being adversely affected by
severe winter weather in the Northeast in February, a general slowdown in
physician office visits and a decrease in Medicare reimbursement rates. The gross
profit of $3.2 million, which decreased by $0.8 million in 2010, was impacted
by the increase in the cost of laboratory services of $1.0 million. In the 2010
period, selling, general and administrative costs increased by approximately
$1.0 million due to increases in payroll and payroll related costs primarily
due to increased headcount in sales and lab administration partially attributed
to development and marketing of esoteric and gene-based testing capabilities.
The provision for uncollectible accounts receivable decreased by $0.1 million
as compared to the 2009 period.

The
Therapeutics segments loss before income taxes was approximately $0.6 million
for the 2010 period as compared to a loss of $0.9 million for the 2009 period.
The decrease in the segment loss of $0.3 million was primarily due to decreases
in clinical trial activities.

The Other
segments loss before taxes for the 2010 period was approximately $2.1 million
as compared to $3.2 million in the 2009 period, a decrease of $1.1 million. The
Other segments 2010 period loss reflects the decrease in legal expenses
of $1.0 million due to reduced services provided relating to certain patent
litigation activity and general matters and negotiated fee settlements and other
adjustments recorded.

23

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Results of
Operations
Nine months ended April 30, 2010 as compared to April 30, 2009

Comparative Financial Data for the Nine Months Ended April 30,

(in thousands)

|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|------------------------------------------------ |  | ---- | ------- | ---- | - | --------------------- | - | -------- | ------ | - |  | --- | -
|                                                 |  | 2010 |         | 2009 |   | Increase 
 (Decrease) |   | % Change |       
|                                                 |  |      |         |      |   |                       |   |          |       
|Revenues:                                        |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Product revenues                                 |  | $    | 32,599  |      | $ | 29,952                |   | $        | 2,647  |   |  | 9   | %
|Royalty and
 license fee income                  |  |      | 7,044   |      |   | 6,783                 |   |          | 261    |   |  | 4   |  
|Clinical
 laboratory services                    |  |      | 32,494  |      |   | 28,306                |   |          | 4,188  |   |  | 15  |  
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Total revenues                                   |  |      | 72,137  |      |   | 65,041                |   |          | 7,096  |   |  | 11  |  
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Operating
 expenses:                             |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Cost of product
 revenues                        |  |      | 15,771  |      |   | 20,208                |   |          | (4,437 | ) |  | (22 | )
|Cost of clinical
 laboratory services            |  |      | 21,623  |      |   | 19,115                |   |          | 2,508  |   |  | 13  |  
|Research and
 development                        |  |      | 7,273   |      |   | 6,645                 |   |          | 628    |   |  | 9   |  
|Selling, general,
 and administrative            |  |      | 36,841  |      |   | 29,633                |   |          | 7,208  |   |  | 24  |  
|Provision for
 uncollectible accounts receivable |  |      | 2,073   |      |   | 3,949                 |   |          | (1,876 | ) |  | (48 | )
|Legal                                            |  |      | 1,030   |      |   | 3,356                 |   |          | (2,326 | ) |  | (69 | )
|Litigation
 settlement and related legal costs   |  |      | 3,698   |      |   |                      |   |          | 3,698  |   |  |     |  
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Total operating
 expenses                        |  |      | 88,309  |      |   | 82,906                |   |          | 5,403  |   |  | 7   |  
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Operating loss                                   |  |      | (16,172 | )    |   | (17,865               | ) |          | 1,693  |   |  | (9  | )
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Other income
(expense):                          |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Interest                                         |  |      | 13      |      |   | 569                   |   |          | (556   | ) |  | (98 | )
|Other                                            |  |      | 39      |      |   | 108                   |   |          | (69    | ) |  | (64 | )
|Foreign currency                                 |  |      | (384    | )    |   | (837                  | ) |          | 453    |   |  | (54 | )
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  
|Loss before income
 taxes                        |  | $    | (16,504 | )    | $ | (18,025               | ) | $        | 1,521  |   |  | (8  | )
|                                                 |  |      |         |      |   |                       |   |          |        |   |  |     |  

Consolidated Results:

The 2010 period and the 2009 period refer to the nine months ended
April 30, 2010 and 2009, respectively. The 2010 period includes the nine months
results of ADI which was acquired on March 12, 2009. The 2009 period includes
the results of ADI from March 12, 2009 to April 30, 2009.

Product revenues increased overall by $2.6 million in 2010 to $32.6
million as compared to the 2009 period. Acquisition growth from the recently
acquired ADI business was $6.4 million or 22% which was partially offset by a
net organic decline of $4.4 million or 15% due to a $4.9 million decline in low
margin, third-party distribution business. Our core product revenues
demonstrated organic growth of $0.5 million or 2%. Foreign currency fluctuation
positively affected revenues by $0.6 million or 2%.

Royalty and license fee income during the 2010 period was $7.0 million
compared to $6.8 million in the 2009 period, an increase of $0.2 million or 4%.
Royalties are primarily earned from the reported net sales of Qiagen products
subject to a license agreement and from a license agreement with Abbott. During
the 2010 and 2009 period, the Company recognized royalties of approximately
$4.8 million from Qiagen, and royalties and license fees under the Abbott
License Agreement of approximately $2.2 million, an increase of $0.2 million
over the 2009 period. There are no direct expenses relating to royalty and
license fee income.

Clinical laboratory revenues during the 2010 period
    were $32.5 million compared to $28.3 million in the 2009 period. The 2010
    periods increase over
the 2009 period was $4.2 million or 15%. During the 2010 period revenue
increased due to increased service volume including higher priced testing volume
    despite being adversely affected by severe winter weather in the Northeast
    in February and a general slowdown in physician office visits in the fiscal
    third quarter and a 1.9% decrease in Medicare reimbursement rates effective
    January 1, 2010. During the 2009 period, revenues were negatively affected
    by contractual adjustments of $2.3 million. These immaterial contractual
    adjustments in 2009 related to computational errors that affected the calculated
    expected reimbursement rate in fiscal 2008, 2007 and 2006 and for periods
    prior to August 1, 2005 for the majority of payers and credits issued which
    were not accrued for timely.

24

---



The cost of product revenues during the 2010 period was $15.8 million
compared to $20.2 million in the 2009 period, a decrease of $4.4 million or
22%. The decrease is primarily due to the impact of $4.4 million in lower costs
from low margin third-party distribution business, reduced fair value
accounting adjustments of $1.5 million in accordance with purchase accounting
rules and reclassification of $1.2 million in costs relating to the realignment
of manufacturing facilities and personnel. Such amounts in 2010 were partially
offset by product cost relating to ADI of $2.9 million and by the cost of sales
from organic growth. We believe that cost of product revenues for future
periods will be affected by, among other things, the further integration of
acquired businesses in addition to sales volumes, competitive conditions and
foreign currency rates.

The cost of clinical laboratory services during the
    2010 period was $21.6 million as compared to $19.1 million in the 2009 period,
    an increase of $2.5 million or 13%. The Company incurred increased costs
    partially due to increased reagent costs and
supplies of $1.0 million, laboratory personnel and related costs of $1.1
million and outside reference lab costs of $0.4 million. Laboratory personnel
and related costs increased primarily due to additional headcounts in phlebotomists
to expand patient collection sites and other personnel to manage expanded operations
and the development of esoteric and gene-based test capabilities.

Research and development expenses were approximately $7.3 million during
the 2010 period, compared to $6.7 million in the 2009 period, an increase of
$0.6 million or 9%. The increase was principally attributed to higher costs of
$1.3 million at Enzo Life Sciences primarily related to Assay Designs offset by
$0.7 million in lower clinical trial and related activities and payroll costs
at the Therapeutics segment.

Selling, general and administrative expenses were approximately $36.8
million during the 2010 period as compared to $29.6 million in the 2009 period,
an increase of $7.2 million or 24%. The increase was primarily due to the net
increase at the Enzo Life Sciences segment of $4.5 million in the 2010 period
which included approximately $2.0 million of selling, general and
administrative expenses related to Assay Designs operations, the impact of
realigning manufacturing facilities and certain personnel of $1.2 million, $0.7
million in payroll and benefit costs and increased depreciation and
amortization of $0.4 million. The Clinical Lab segments selling general and
administrative increased $2.3 million primarily due to increased payroll and
related benefits of $1.6 million primarily due to increased payroll and related
benefits attributed to increases in headcounts in our sales force and
management personnel partially related to increased service volume and the
marketing and development of esoteric and gene based testing capabilities,
information technology costs of $0.2 million, and other overhead expenses of
$0.5 million. These increases were offset by a decrease in the Other segments
selling general and administrative of approximately $0.3 million, primarily due
to decreases in payroll and payroll related costs of $0.1 million.

The provision for uncollectible accounts receivable, primarily relating
to the Clinical Labs segment was $2.0 million for the 2010 period as compared
to $3.9 million in the 2009 period, a decrease of $1.9 million or 48%. The
decrease is attributed to a charge in 2009 attributed to increased provisions
for the Clinical Labs legacy billing system, which was replaced in August 2008,
due to reduced collection efforts relating to the legacy billing system, the
correction of an immaterial error relating to fiscal 2008, and increased
provisions required based on changes in payer mix, offset by a reduced requirement
under the new billing system.

Legal expense was $1.0 million during the 2010 period
    compared to $3.3 million in the 2009 period, a decrease of $2.3 million,
    due to overall reduction in legal services provided relating to certain patent
    litigation matters and general matters, the reimbursement of $0.5 million
    in legal costs under our insurance policy, reductions in fees recorded due
    to negotiated fee settlements and other adjustments of $0.5 million offset
    by approximately $0.6 million in incremental legal costs incurred for proxy
    related costs for the January 2010 annual meeting.

In connection with the litigation settlement with
    Mr. Shahram K. Rabbani to settle all of his claims against the Company, and
    certain of its executive officers, the Company agreed to pay a lump sum payment
    of $2.7 million. The Company recorded a settlement expense of approximately
    $3.7 million in the fiscal quarter ending January 31, 2010, consisting of
    the lump sum payment of $2.7 million and approximately $1.0 million of legal
    expenses incurred in connection with the claims (See Note 14 in notes to
    consolidated financial statements).

Interest income was $13,000 during the 2010 period as compared to $0.6
million during the 2009 period. The interest income decrease during the 2010
period is attributed to the decline in interest rates in response to monetary
policy actions taken by the U.S. Federal Reserve. Furthermore, the Company had
higher average invested balances during the 2009 period. The Company earns
interest by investing primarily in short term US treasury bills and money
market accounts.

25

---



The loss on foreign currency was $0.4 million during the 2010 period,
due to a $0.2 million non-cash loss on an intercompany term loan denominated in
British pounds sterling and the fluctuations of other foreign currencies
relative to the US dollar during the period and the impact that had on settled
transactions during the period. During the 2009 period, the loss on foreign
currency transactions was $0.8 million primarily due to a non-cash loss on the
intercompany term loan denominated in British pounds sterling. The British
currency depreciated more significantly against the US dollar during the 2009
period than in the 2010 period.

The Companys effective income tax rate for the 2010 period was 1.3%
compared to 1.4% during the 2009 period. The tax provision for the 2010 and
2009 periods were based on state and local taxes, domestic and foreign tax for
tax deductible goodwill and indefinite lived intangibles, and book to tax
differences for acquired inventory and differed from the expected net operating
loss carry forward benefit at the U.S. federal statutory rate of 34% primarily
due to the inability to recognize such benefit. The carry forward benefit
cannot be recognized because of uncertainties relating to future taxable
income, in terms of both its timing and its sufficiency. In the 2010 period,
the Company recognized a benefit of $0.1 million primarily as a result of the
expiration of the statute of limitations for an uncertain tax position.

Segment Results

The Life Sciences segments income before taxes was $2.9 million for
the 2010 period as compared to $1.5 million for the 2009 period. Product
revenues increased by $2.6 million in the 2010 period primarily due to the
contribution of product revenues from the March 2009 acquisition of Assay
Designs and organic growth from our core products which replaced low margin,
high volume distribution product revenues principally to one customer. Royalty
and license fee income increased $0.3 million from the Qiagen agreement and the
Abbott license agreement. The segments gross margin of $23.9 million increased
by $7.3 million in 2010. Gross profit margins increased to 60% from 45% due to
favorable impact from ADIs higher margin, which replaced lower margin revenue
in 2009, lower inventory fair value adjustments and realignment of personnel
from manufacturing to trading activity. The segments other operating expenses,
including selling, general and administrative, legal and research and
development, increased by approximately $6.2 million during the 2010 period
primarily due to the inclusion of Assay Designs expenses of $2.9 million, the
impact of the aforementioned realignment of personnel of payroll and related
costs of $1.2 million, increased payroll and related costs of $0.7 million and
depreciation and amortization of $0.5 million. The segment experienced a
non-cash foreign currency loss of $0.4 million during the 2010 period resulting
from the impact that fluctuations in foreign currencies had on settled
transactions and on an intercompany loan denominated in pounds sterling. In
aggregate, the inventory fair value adjustment and amortization of intangibles
negatively impacted the segment operating results in the 2010 period by $1.5
million.

The Clinical Laboratory segments loss before
    taxes was $5.0 million for the 2010 period as compared to a loss of $6.0
    million in the 2009 period. The revenue from laboratory services increased
    in the 2010 period by $4.2 million due to increased service volume despite
    being adversely affected by severe winter weather in the Northeast in February,
    a general slowdown in physician office visits in the fiscal third quarter,
    a decrease in Medicare reimbursement rates effective January 1, 2010 and
    during the 2009 period revenues were negatively impacted by contractual adjustments
    of $2.3 million. The 2010 period gross profit of $10.9 million increased
    $1.7 million over the 2009 period due to service volume increases, increased
    headcount and other costs to perform increased testing, and the impact the
    aforementioned $2.3 million contractual adjustment had on the 2009 period
    gross profit. In the 2010 period, the selling, general and administrative
    costs increased by approximately $2.3 million primarily due to increases
    in payroll and payroll related costs of $1.6 million attributed to increases
    in headcounts in our sales force and management personnel partially related
    to increased service volume and the marketing and development of esoteric
    and gene-based testing capabilities, information technology costs of $0.2
    million, and other operating costs of $0.5 million. The provision for uncollectible
    accounts receivables decreased by $1.9 million as compared to the 2009 period.
    During the 2009 period, the Company recorded a charge attributed to increased
    provisions for the Clinical Labs legacy billing system, which was replaced
    in August 2008, due to reduced collection efforts relating to the legacy
    billing system, the correction of an immaterial error relating to fiscal
    2008, and increased provisions required based on changes in payer mix, offset
    by a reduced requirement under the new billing system.

The Therapeutics segments loss before income taxes was approximately
$1.9 million for the 2010 period as compared to a loss of $2.6 million for the
2009 period. The decrease in the segment loss of $0.7 million was primarily due
to decreases in clinical trial activities of $0.6 million and decreases in
salaries and related costs of $0.1 million.

26

---



The Other segments loss before taxes for the
    2010 period was approximately $12.4 million as compared to $10.8 million
    in the 2009 period, an increase of $1.6 million. The Other segments
    2010 period loss reflects the litigation settlement of $3.7 million and an
    increase in professional fees, consulting costs and public relations of $0.1
    million, offset by decreases in payroll and payroll related costs of $0.1
    million, and $0.3 million in other costs. Legal expenses decreased $2.2 million
    due to the reimbursement of $0.5 million in legal fees; reduced services
    provided relating to certain patent litigation activity and general matters
    and reductions in fees recorded due to negotiated fee settlements and other
    adjustments of $0.5 million, offset by incremental legal costs incurred for
    proxy related matters in 2010. Interest income declined $0.5 million due
    to the decline in interest rates. The Company earns interest by investing
    primarily in short term US treasury bills, and money market accounts.

Liquidity and Capital Resources

At April 30, 2010, the Company had cash and cash equivalents
    of $8.6 million and short-term investments of $25.8 million, or $34.4 million
    in aggregate as compared to $50.2 million at July 31, 2009. Short term investments
are in US treasury bills. The Company had working capital of $46.4 million at
April 30, 2010 compared to $60.5 million at July 31, 2009. The decrease in
working capital was primarily the result of the 2010 period net loss which included
    the litigation settlement to a former officer and related legal costs of
    $3.7 million and funding capital expenditures.

Net cash used in operating activities for the nine months ended April
30, 2010 was approximately $13.2 million as compared to $8.7 million for the
nine months ended April 30, 2009. The increase in net cash used in operating
activities in the 2010 period over the 2009 period of approximately $4.5
million was primarily due to changes in operating assets and liabilities of
$4.4 million and the effect of lower non-cash adjustments in the 2010 period
over the 2009 period aggregating $1.7 million, partially offset by the decrease
in the period net loss of $1.6 million.

Net cash provided by investing activities was approximately $15.0
million as compared to a use of cash of $62.2 million in the year ago period.
The change from 2009 to 2010 of $77.2 million is primarily due to the net
increase in short term investments in US treasury bills of $47.7 million and
cash used in acquisitions of $12.7 million in the 2009 period and the net
maturities of short-term investments of $17.5 million in 2010. In the 2010 and
the 2009 period cash used for capital expenditures was $2.6 million and $2.2
million, respectively.

There were no financing activities in 2010. Net cash provided by
financing activities was approximately $0.3 million in the 2009 period,
attributed primarily to stock option exercise proceeds. There were no stock
option exercises in the 2010 period.

Biomol International L.P.

On May 8, 2008, the Companys wholly-owned subsidiary, Enzo Life Sciences,
acquired substantially all of the U.S. based assets of Biomol International,
L.P. (Biomol) through Enzo Life Sciences newly-formed subsidiary, Biomol
International, Inc., and all of the outstanding capital stock of Biomols two
wholly owned United Kingdom subsidiaries through Enzo Life Sciences wholly
owned subsidiary, Axxora (UK) Ltd. (the Biomol Acquisition), for a purchase
price of $18 million, comprised of $15 million in cash, subject to downward
adjustment based on net asset value on the closing date, and $3 million of
unregistered common stock of the Company. In addition, Biomol may be entitled
to receive a maximum of $5 million in earn-out payments over the next two
years, payable in two installments of $2.5 million on each of the next two anniversaries
of the closing date, if certain revenues and EBITDA targets for the acquired
business are attained. The earn-out payments, if any, will be payable in a
combination of cash and shares of the Companys common stock, provided no more
than 50% of the earn-out payments will be paid in stock.

In June 2009, the conditions for the first annual earn-out of $2.5
million were met and the Company recorded $2.5 million of additional goodwill.
The Company issued 202,196 shares of Enzo common stock at fair value and paid
$1.5 million in cash to satisfy the $2.5 million earn-out liability. As of June
9, 2010, the calculation of the second and final earn-out has not been
finalized.

The Company believes that its current cash position is sufficient for
its foreseeable liquidity and capital resource needs over the next 12 months,
including the earn-out payment if determined to be due the sellers, although
there can be no assurance that future events will not alter such view.

27

---



Contractual Obligations

There have been no material changes to our Contractual Obligations
reported in our Form 10-K for the fiscal year ended July 31, 2009, except for
the increase in future minimum lease obligations relating to our corporate
office. In connection with a lease amendment and extension executed in February
2010, our minimum lease commitments increased $5.6 million reflective of both a
lease extension and an increase in square feet. The increase in the
presentation periods (in thousands) based on the July 31, 2009 fiscal year end
is: less than 1 year: $0; 1-3 years: $0.5 million; 4-5 years: $0.7 million; and
over 5 years: $4.4 million. We are currently seeking to sublease the additional
space, which aggregates $2.7 million in future rental costs, until such time it
is needed by the Company. The Company has entered into a six month sublease for
the additional space effective May 31, 2010 and is continuing to secure a
longer term sublease. The minimum sublease rentals aggregate $0.1 million.

Management is not aware of any material claims, disputes or settled
matters concerning third party reimbursement that would have a material effect
on our financial statements.

Off-Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements as such
term is defined in Item 303(a)(4) of Regulation S-K.

Critical Accounting Policies

The Companys discussion and analysis of its financial condition and
results of operations are based upon Enzo Biochem, Inc.s consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses;
these estimates and judgments also affect related disclosure of contingent
assets and liabilities. On an ongoing basis, we evaluate our estimates,
including those related to contractual adjustments, allowance for uncollectible
accounts, inventory, intangible assets and income taxes. The Company bases its
estimates on experience and on various other assumptions that are believed to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Product revenues

Revenues from product sales are recognized when the products are
shipped and title transfers, the sales price is fixed or determinable and
collectibility is reasonably assured. During the three and nine months ended
April 30, 2009, one customer in the Life Science segment represented $1.2
million and $5.6 million respectively of total product revenues.

Royalties

Royalty revenues are recorded in the period earned. Royalties received
in advance of being earned are recorded as deferred revenues.

License fees and multiple element
arrangements

When evaluating multiple element arrangements, the Company considers
whether the components of the arrangement represent separate units of
accounting, which requires subjective determinations and requires management to
make judgments about the fair value of the individual elements and whether such
elements are separable from the other aspects of the contractual relationship.

Revenues  Clinical laboratory services

Revenues from the clinical laboratory are recognized upon completion of
the testing process for a specific patient and reported to the ordering
physician. These revenues and the associated accounts receivable are based on
gross amounts billed or billable for services rendered, net of a contractual
adjustment, which is the difference between amounts billed to payers and the
expected approved reimbursable settlements from such payers.

28

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The following are tables of the Clinical Labs segments net revenues
and percentages by revenue category for the three and nine months ended April
30, 2010 and 2009:

Clinical Labs net revenues

Net revenues

|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|----------------- |  | ---------------------------------- | ------ | ---------------------------------- |  | -------------- | - | ------ | ------ |  |  | --- | -
|                  |  | Three months ended
 April 30, 2010 |        | Three months ended
 April 30, 2009 | 
|                  |  |                                    |        |                                    | 
|                  |  | (In thousands)                     |        | (in %)                             |  | (In thousands) |   | (in %) |       
|                  |  |                                    |        |                                    |  |                |   |        |       
|Revenue category  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Medicare          |  | $                                  | 2,711  |                                    |  | 25             |   | $      | 2,137  |  |  | 20  |  
|Third-party payer |  |                                    | 4,714  |                                    |  | 44             |   |        | 5,445  |  |  | 51  |  
|Patient self-pay  |  |                                    | 2,247  |                                    |  | 21             |   |        | 1,729  |  |  | 17  |  
|HMOs             |  |                                    | 1,133  |                                    |  | 10             |   |        | 1,278  |  |  | 12  |  
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Total             |  | $                                  | 10,805 |                                    |  | 100            | % | $      | 10,619 |  |  | 100 | %
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Net revenues     
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|                  |  | Nine months ended
 April 30, 2010  |        | Nine months ended
 April 30, 2009  | 
|                  |  |                                    |        |                                    | 
|                  |  | (In thousands)                     |        | (in %)                             |  | (In thousands) |   | (in %) |       
|                  |  |                                    |        |                                    |  |                |   |        |       
|Revenue category  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Medicare          |  | $                                  | 8,279  |                                    |  | 25             |   | $      | 6,738  |  |  | 24  |  
|Third-party payer |  |                                    | 14,274 |                                    |  | 44             |   |        | 14,010 |  |  | 49  |  
|Patient self-pay  |  |                                    | 6,402  |                                    |  | 20             |   |        | 4,544  |  |  | 16  |  
|HMOs             |  |                                    | 3,538  |                                    |  | 11             |   |        | 3,014  |  |  | 11  |  
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Total             |  | $                                  | 32,494 |                                    |  | 100            | % | $      | 28,306 |  |  | 100 | %
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  

The Company provides services to certain patients covered by various
third-party payers, including the Federal Medicare program. Laws and
regulations governing Medicare are complex and subject to interpretation for
which action for noncompliance includes fines, penalties and exclusion from the
Medicare programs. The Company believes that it is in compliance with all
applicable laws and regulations and is not aware of any pending or threatened
investigations involving allegations of potential wrongdoing.

Other than the Medicare program, one provider whose programs are
included in the Third-party payer and Health Maintenance Organizations
(HMOs) categories represented 25% of the Clinical Labs services net revenues
for the three months ended April 30, 2010 and 2009 and 25% for the nine months
ended April 30, 2010 and 2009.

Contractual Adjustment

The Companys estimate of contractual adjustment is based on
significant assumptions and judgments, such as its interpretation of payer
reimbursement policies, and bears the risk of change. The estimation process is
based on the experience of amounts approved as reimbursable and ultimately
settled by payers, versus the corresponding gross amount billed to the
respective payers. The contractual adjustment is an estimate that reduces gross
revenue, based on gross billing rates, to amounts expected to be approved and
reimbursed. Gross billings are based on a standard fee schedule we set for all
third party payers, including Medicare, HMOs and managed care. The Company
adjusts the contractual adjustment estimate quarterly, based on its evaluation
of current and historical settlement experience with payers, industry
reimbursement trends, and other relevant factors. The other relevant factors
that affect our contractual adjustment include the monthly and quarterly review
of: 1) current gross billings and receivables and reimbursement by payer, 2)
current changes in third party arrangements, 3) the growth of in-network
provider arrangements and managed care plans specific to our Company.

Our clinical laboratory business is primarily dependent upon
reimbursement from third-party payers, such as Medicare (which principally
serves patients 65 and older) and insurers. We are subject to variances in
reimbursement rates among different third-party payers, as well as constant
changes of reimbursement rates. Changes that decrease reimbursement rates or
coverage would negatively impact our revenues.

The number of
individuals covered under managed care contracts or other similar arrangements
has grown over the past several years and may continue to grow in the future.
In addition, Medicare and other government healthcare programs continue to
shift to managed care. These trends may negatively affect our revenues per
test.

29

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During the
three months ended April 30, 2010 and 2009, the contractual adjustment
percentages, determined using current and historical reimbursement statistics,
were 83.1% and 83.0%, respectively, of gross billings. During the nine months
ended April 30, 2010 and 2009, the contractual adjustment percentages,
determined using current and historical reimbursement statistics, were 82.9%,
and 79.9%, respectively, of gross billings. During the nine months ended April
30, 2009, the Company also made a $2.3 million adjustment increasing the
contractual allowance to correct immaterial errors in the computation of the
contractual allowance percentages affecting the periods August 1, 2005 through
July 31, 2008 and periods prior to August 1, 2005, and credits not recorded
correctly. The adjustment increased the 2009 periods loss before income tax by
$2.3 million or $0.06 per share.

The Company
believes the negative impact on revenues from the decline in reimbursement
rates or the shift to managed care, other primary third party payers, or
similar arrangements may be offset by the positive impact of the number of
tests we perform. However, there can be no assurance that we can increase the
number of tests we perform or that if we do increase the number of tests we
perform, that we can maintain that higher number of tests performed, or that an
increase in the number of tests we perform would result in increased revenue.

The Company
estimates (by using a sensitivity analysis) that each 1% point change in the
contractual adjustment percentage could result in a change in clinical
laboratory services revenues of approximately $1,901,000, and $1,389,000 for
the nine months ended April 30, 2010 and 2009, respectively, and a change in
the net accounts receivable of approximately $301,000 as of April 30, 2010.

Our clinical
laboratory financial billing system records gross billings using a standard fee
schedule for all payers and does not record contractual adjustment by payer at
the time of billing. Adjustments to our standard fee schedule will impact the
contractual adjustment recorded. Therefore, we are unable to quantify the
effect of contractual adjustment recorded during the current period that
relates to revenue recorded in a previous period. However, we can reasonably
estimate our contractual adjustment to revenue on a timely basis based on our
quarterly review process, which includes:

| |   |                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------
| |  | an analysis
 of industry reimbursement trends;                                                                               
| |   |                                                                                                                              
| |  | an
 evaluation of third-party reimbursement rates changes and changes in
 reimbursement arrangements with third-party payers;
| |   |                                                                                                                              
| |  | a variance
 reimbursement analysis of current and historical claim settlement and
 reimbursement experience with payers;     
| |   |                                                                                                                              
| |  | an analysis
 of current gross billings and receivables by payer.                                                             

Accounts Receivable and Allowance for
Doubtful Accounts

Accounts
receivable are reported at realizable value, net of allowances for doubtful
accounts, which is estimated and recorded in the period of the related revenue.

The following
is a table of the Companys net accounts receivable by segment. The clinical
laboratory segments net receivables are detailed by billing category and as a
percent to its total net receivables. At April 30, 2010 and July 31, 2009,
approximately 46% and 40%, respectively, of the Companys net accounts
receivable relates to its clinical laboratory business, which operates in the
New York and New Jersey Metropolitan areas.

The Life
Sciences segments accounts receivable, of which $2.0 million or 31% and $2.1
million or 28% represents foreign receivables as of April 30, 2010 and July 31,
2009 respectively, includes royalty receivables of $1.7 million and $2.5
million, as of April 30, 2010 and July 31, 2009, respectively, of which
approximately $1.1 million and $1.9 million, respectively is from Qiagen
Corporation (Note 12).

Net accounts
receivable

|                           |  |                       |        |                      |  |             |   |        |        |  |  |     |  
|-------------------------- |  | --------------------- | ------ | -------------------- |  | ----------- | - | ------ | ------ |  |  | --- | -
|                           |  | As of
 April 30, 2010 |        | As of
 July 31, 2009 | 
|                           |  |                       |        |                      | 
|Billing category           |  | (In
 000s)           |        | (in %)               |  | (In
 000s) |   | (in %) |       
|                           |  |                       |        |                      |  |             |   |        |       
|Clinical
 Labs             |  |                       |        |                      |  |             |   |        |        |  |  |     |  
|Medicare                   |  | $                     | 933    |                      |  | 17          |   | $      | 1,113  |  |  | 22  |  
|Third party payers         |  |                       | 2,308  |                      |  | 42          |   |        | 2,003  |  |  | 40  |  
|Patient self-pay           |  |                       | 1,990  |                      |  | 36          |   |        | 1,635  |  |  | 32  |  
|HMOs                      |  |                       | 269    |                      |  | 5           |   |        | 303    |  |  | 6   |  
|                           |  |                       |        |                      |  |             |   |        |        |  |  |     |  
|Total
 clinical labs       |  | $                     | 5,500  |                      |  | 100         | % | $      | 5,054  |  |  | 100 | %
|                           |  |                       |        |                      |  |             |   |        |        |  |  |     |  
|Total life
 sciences       |  |                       | 6,538  |                      |  |             |   |        | 7,426  |  |  |     |  
|                           |  |                       |        |                      |  |             |   |        |        |  |  |     |  
|Total
 accounts receivable |  | $                     | 12,038 |                      |  |             |   | $      | 12,480 |  |  |     |  
|                           |  |                       |        |                      |  |             |   |        |        |  |  |     |  

30

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Changes in the
Companys allowance for doubtful accounts are as follows:

|                                 |  |                  |        |   |                 |        |  
|-------------------------------- |  | ---------------- | ------ | - | --------------- | ------ | -
|In 000s                         |  | April
 30,
 2010 |        |   | July
 31,
 2009 |       
|                                 |  |                  |        |   |                
|Beginning
 balance               |  | $                | 4,786  |   | $               | 886    |  
|Provision
 for doubtful accounts |  |                  | 2,073  |   |                 | 5,189  |  
|Write-offs,
 net                 |  |                  | (4,717 | ) |                 | (1,289 | )
|                                 |  |                  |        |   |                 |        |  
|Ending
 balance                  |  | $                | 2,142  |   | $               | 4,786  |  
|                                 |  |                  |        |   |                 |        |  

For the
Clinical Labs segment, the allowance for doubtful accounts represents amounts
that the Company does not expect to collect after the Company has exhausted its
collection procedures. The Company estimates its allowance for doubtful
accounts in the period the related services are billed and adjusts the estimate
in future accounting periods as necessary. It bases the estimate for the
allowance on the evaluation of historical collection experience, the aging
profile of accounts receivable, the historical doubtful account write-off
percentages, payer mix, and other relevant factors.

The allowance
for doubtful accounts includes the balances, after receipt of the approved
settlements from third party payers for the insufficient diagnosis information
received from the ordering physician, which result in denials of payment and
the uncollectible portion of receivables from self payers, including
deductibles and copayments, which are subject to credit risk and patients
ability to pay. During the three and nine months ended April 30, 2010 and 2009,
the Company determined an allowance for doubtful accounts less than 210 days
and wrote off 100% of accounts receivable over 210 days, as it assumed those
accounts are uncollectible, except for certain fully reserved balances,
principally related to Medicare. These accounts have not been written off
because the payers filing date deadline has not occurred or the collection
process has not been exhausted. The Companys collection experience on Medicare
receivables beyond 210 days has been insignificant. The Company adjusts the
historical collection analysis for recoveries, if any, on an ongoing basis.

The Companys
ability to collect outstanding receivables from third party payers is critical
to its operating performance and cash flows. The primary collection risk lies
with uninsured patients or patients for whom primary insurance has paid but a
patient portion remains outstanding. The Company also assesses the current
state of its billing functions in order to identify any known collection or
reimbursement issues in order to assess the impact, if any, on the allowance
estimates, which involves judgment. The Company believes that the
collectibility of its receivables is directly linked to the quality of its
billing processes, most notably, those related to obtaining the correct
information in order to bill effectively for the services provided.

Should
circumstances change (e.g. shift in payer mix, decline in economic conditions
or deterioration in aging of receivables), our estimates of net realizable
value of receivables could be reduced by a material amount. During the nine
month periods ended April 30, 2010 versus 2009, our bad debt expense decreased
by $1.9 million. During the nine month period ended April 30, 2009, the Company
recorded a charge of $2.6 million, attributed to increased provisions for the
Clinical Labs legacy billing system, which was replaced in August 2008, due to
reduced collection efforts relating to the legacy billing system, increased
provisions required based on changes in payer mix, and the correction of an
immaterial error in the allowance for doubtful accounts relating to fiscal
2008. During the quarter ended April 30, 2010 the Company completed all
collection efforts for legacy billing system receivables, and wrote off the
fully reserved receivables totaling $2.3 million. Billing for laboratory
services is complicated because of many factors, especially: the differences
between our standard gross fee schedule for all payers and the reimbursement
rates of the various payers we deal with, disparity of coverage and information
requirements among the various payers, and disputes with payers as to which
party is responsible for reimbursement.

31

---



The following table indicates the Clinical Labs aged gross receivables
by payer group (in thousands), which is prior to adjustment to gross
receivables for: 1) contractual adjustment, 2) fully reserved balances not yet
written off, and 3) other revenue adjustments.

|                       |  |               |        |   |  |                  |   |   |       |                             |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|---------------------- |  | ------------- | ------ | - |  | ---------------- | - | - | ----- | --------------------------- |  | --- | - | ---------------- | ------ | - |  | ------------- | - | - | ----- |  |  | --- | - | - | ----- |  |  | --- | -
|As of April 30,
 2010  |  | Total
 Amount |        | % |  | Medicare
 Amount |   | % |       | Third
 Party Payers
 Amount |  | %   |   | Self-pay
 Amount |        | % |  | HMOs
 Amount |   | % |      
|                       |  |               |        |   |  |                  |   |   |       |                             |  |     |   |                  |        |   |  |               |   |   |      
|                       |  |               |        |   |  |                  |   |   |       |                             |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|1-30 days              |  | $             | 18,605 |   |  | 64               | % | $ | 3,018 |                             |  | 60  | % | $                | 8,907  |   |  | 60            | % | $ | 3,625 |  |  | 58  | % | $ | 3,055 |  |  | 98  | %
|31-60 days             |  |               | 4,327  |   |  | 15               | % |   | 404   |                             |  | 8   | % |                  | 2,724  |   |  | 18            | % |   | 1,175 |  |  | 19  | % |   | 24    |  |  | 1   | %
|61-90 days             |  |               | 2,162  |   |  | 7                | % |   | 201   |                             |  | 4   | % |                  | 1,203  |   |  | 8             | % |   | 745   |  |  | 12  | % |   | 13    |  |  |    | %
|91-120 days            |  |               | 1,625  |   |  | 6                | % |   | 172   |                             |  | 3   | % |                  | 832    |   |  | 6             | % |   | 603   |  |  | 10  | % |   | 18    |  |  | 1   | %
|121-150 days           |  |               | 659    |   |  | 2                | % |   | 199   |                             |  | 4   | % |                  | 451    |   |  | 3             | % |   | 0     |  |  | 0   | % |   | 9     |  |  |    | %
|Greater than 150 days* |  |               | 1,719  |   |  | 6                | % |   | 1,022 |                             |  | 20  | % |                  | 636    |   |  | 4             | % |   | 58    |  |  | 1   | % |   | 3     |  |  |    | %
|                       |  |               |        |   |  |                  |   |   |       |                             |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|Totals                 |  | $             | 29,097 |   |  | 100              | % | $ | 5,016 |                             |  | 100 | % | $                | 14,753 |   |  | 100           | % | $ | 6,206 |  |  | 100 | % | $ | 3,122 |  |  | 100 | %
|                       |  |               |        |   |  |                  |   |   |       |                             |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  

|                        |  |               |        |   |  |                  |   |   |       |                              |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|----------------------- |  | ------------- | ------ | - |  | ---------------- | - | - | ----- | ---------------------------- |  | --- | - | ---------------- | ------ | - |  | ------------- | - | - | ----- |  |  | --- | - | - | ----- |  |  | --- | -
|As of July 31,
 2009    |  | Total
 Amount |        | % |  | Medicare
 Amount |   | % |       | Third 
 Party Payers
 Amount |  | %   |   | Self-pay
 Amount |        | % |  | HMOs
 Amount |   | % |      
|                        |  |               |        |   |  |                  |   |   |       |                              |  |     |   |                  |        |   |  |               |   |   |      
|                        |  |               |        |   |  |                  |   |   |       |                              |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|1-30 days               |  | $             | 19,251 |   |  | 70               | % | $ | 3,193 |                              |  | 61  | % | $                | 9,695  |   |  | 73            | % | $ | 2,882 |  |  | 51  | % | $ | 3,481 |  |  | 99  | %
|31-60 days              |  |               | 4,508  |   |  | 17               | % |   | 894   |                              |  | 16  | % |                  | 1,957  |   |  | 15            | % |   | 1,635 |  |  | 29  | % |   | 22    |  |  | 1   | %
|61-90 days              |  |               | 1,783  |   |  | 6                | % |   | 256   |                              |  | 5   | % |                  | 680    |   |  | 5             | % |   | 836   |  |  | 15  | % |   | 11    |  |  |    | %
|91-120 days             |  |               | 1,019  |   |  | 4                | % |   | 249   |                              |  | 5   | % |                  | 483    |   |  | 4             | % |   | 280   |  |  | 5   | % |   | 7     |  |  |    | %
|121-150 days            |  |               | 340    |   |  | 1                | % |   | 134   |                              |  | 3   | % |                  | 202    |   |  | 2             | % |   |      |  |  |    | % |   | 4     |  |  |    | %
|Greater than 150 days** |  |               | 636    |   |  | 2                | % |   | 536   |                              |  | 10  | % |                  | 100    |   |  | 1             | % |   |      |  |  |    | % |   |      |  |  |    | %
|                        |  |               |        |   |  |                  |   |   |       |                              |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  
|Totals                  |  | $             | 27,537 |   |  | 100              | % | $ | 5,262 |                              |  | 100 | % | $                | 13,117 |   |  | 100           | % | $ | 5,633 |  |  | 100 | % | $ | 3,525 |  |  | 100 | %
|                        |  |               |        |   |  |                  |   |   |       |                              |  |     |   |                  |        |   |  |               |   |   |       |  |  |     |   |   |       |  |  |     |  

|   |                                                                        
|-- | -----------------------------------------------------------------------
|*  | Total includes
 $748 fully reserved over 210 days as of April 30, 2010.
|   |                                                                        
|** | Total includes
 $340 fully reserved over 210 days as of July 31, 2009. 

Income Taxes

The Company accounts for income taxes under the liability method of
accounting for income taxes. Under the liability method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. The liability method requires
that any tax benefits recognized for net operating loss carry forwards and
other items be reduced by a valuation allowance where it is not more likely
than not the benefits will be realized in the foreseeable future.

Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under the liability
method, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

In fiscal 2008, the Company adopted the accounting pronouncement that
prescribes a more-likely-than-not threshold for the recognition and
derecognition of tax positions, provides guidance on the accounting for
interest and penalties relating to tax positions and requires that the
cumulative effect of applying the provisions of the pronouncement be reported
as an adjustment to the opening balance of retained earnings or other
appropriate components of equity or net assets in the statement of financial
position. The Company did not have any significant unrecognized tax positions
and there was no material effect on our financial condition or results of
operations as a result of implementing the pronouncement.

Inventory

The Company values inventory at the lower of cost (first-in, first-out)
or market. Work-in-process and finished goods inventories consist of material,
labor, and manufacturing overhead. On a quarterly basis, we review inventory
quantities on hand and analyze the provision for excess and obsolete inventory
based on our estimate of sales forecasts based on sales history and anticipated
future demand. Our estimate of future product demand may not be accurate and we
may understate or overstate the provision for excess and obsolete inventory.
Accordingly, unanticipated changes in demand could have a significant impact on
the value of our inventory and results of operations. At April 30, 2010 and
July 31, 2009, our reserve for excess and obsolete inventory was $1.0 million.

32

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Goodwill and Indefinite-Lived Intangibles

Goodwill, representing the cost of acquired businesses in excess of the
fair value of net assets acquired, and indefinite-lived intangibles are not
amortized, but are evaluated annually for impairment. The Company performs its
annual impairment test as of the first day of its fiscal fourth quarter or if
indicators of potential impairment exist. Goodwill is considered impaired if
the carrying amount of the reporting unit exceeds its estimated fair value. In
assessing the recoverability of goodwill, the Company reviews both quantitative
as well as qualitative factors to support its assumptions with regard to fair
value. The fair value of a reporting unit, which is based on geographic region,
is estimated using both a discounted cash flow model and a weighted average
multiple of earnings before interest and taxes from comparable companies. To
date, there have been no impairment charges recorded. As of May 1, 2009, one of
the Companys reporting units fair value exceeded its carrying value by 10%.
This reporting units goodwill was $5.3 million at the date of our annual
impairment test. In determining fair value, the Company makes certain judgments,
including the identification of reporting units and the selection of comparable
companies. If these estimates or their related assumptions change in the future
as a result of changes in strategy and/or market conditions, the Company may be
required to record an impairment charge.

Intangible Assets

Intangible assets (exclusive of patents), arose primarily from
acquisitions and primarily consist of customer relationships, trademarks,
licenses, employment and non-compete agreements, and website and database content.
Finite-lived intangible assets are amortized according to their estimated
useful lives, which range from 4 to 15 years. The Company has capitalized
certain legal costs directly incurred in pursuing patent applications as patent
costs. When such applications result in an issued patent, the related costs are
amortized over a ten year period or the life of the patent, whichever is
shorter, using the straight-line method. The Company reviews its issued patents
and pending patent applications, and if it determines to abandon a patent
application or that an issued patent no longer has economic value, the
unamortized balance in deferred patent costs relating to that patent is
immediately expensed.

Recent Accounting Pronouncements

Effective August 1, 2009, the Company adopted The Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC or Codification)
of Generally Accepted Accounting Principles  Overall. The Codification
established one source for all U.S. GAAP and became the source of authoritative
accounting principles for nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The Codification is not intended to change existing GAAP and as
such did not have an impact on the consolidated financial statements of the
Company.

The adoption of the following accounting standards and updates during
the first three months of fiscal 2010 did not result in a significant impact to
our consolidated financial statements.

Effective August 1, 2009, we adopted the revised accounting standard
relating to business combinations, including assets acquired and liabilities
assumed arising from contingencies. This standard requires the use of the
acquisition method of accounting, defines the acquirer, establishes the
acquisition date and applies to all transactions and other events in which one
entity obtains control over one or more other businesses. Upon our adoption of
this standard, we will be required to expense certain transaction costs and
related fees associated with business combinations that were previously
capitalized. In addition, with the adoption of this standard, changes to
valuation allowances for acquired deferred income tax assets and adjustments to
unrecognized tax benefits acquired generally are to be recognized as
adjustments to income tax expense rather than goodwill.

Effective August 1, 2009, we adopted the accounting standard regarding
the determination of the useful life of intangible assets that removes the
requirement to consider whether an intangible asset can be renewed without
substantial cost or material modifications to the existing terms and
conditions, and replaces it with a requirement that an entity consider its own
historical experience in renewing similar arrangements, or a consideration of
market participant assumptions in the absence of historical experience. This
standard also requires entities to disclose information that enables users of
financial statements to assess the extent to which the expected future cash
flows associated with the asset are affected by the entitys intent and/or
ability to renew or extend the arrangements.

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 in short-term
instruments, which 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 2009 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 April
30, 2010, our assets and liabilities would increase or decrease by $2.0 million
and $0.8 million, respectively, and our net sales and net (loss) or earnings
would increase or decrease by $1.4 million and $0.1 million, 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 April 30, 2010, our pre-tax earnings would be favorably or
unfavorably impacted by approximately $0.4 million, on an annual basis.

Interest Rate Risk

Our excess cash is invested in highly liquid short term money market
funds and short term investments in US Government agency discount notes with
high credit ratings. Changes in interest rates may affect the investment income
we earn on money market funds and short term investments and therefore affect
our cash flows and results of operations. As of April 30, 2010, we were exposed
to interest rate change market risk with respect to our money market accounts
and short term investments totaling $28.8 million. The money market accounts
and short-term investments yield or bear interest rates ranging from 0% to
0.5%. Each 100 basis point (or 1%) fluctuation in interest rates will increase
or decrease interest income on the money market funds and short-term
investments by approximately $0.3 million on an annual basis.

As of April 30, 2010, we did not maintain any fixed or variable
interest rate financing.

Item 4. Controls
and Procedures

| |                                                      
| | -----------------------------------------------------
| | (a) Evaluation of
 Disclosure Controls and Procedures

As of the end of the period covered by this report, the Companys
management conducted an evaluation (as required under Rules 13a-15(b) and
15d-15(b) under the Securities Exchange Act of 1934, as amended (the Exchange
Act)) of the Companys disclosure controls and procedures (as such term is
defined under the Exchange Act), under the supervision and with the participation
of the principal executive officer and the principal financial officer. Based
on this evaluation, the principal executive officer and the principal financial
officer concluded that the Companys disclosure controls and procedures are
effective as of the end of the period covered by this report, and 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. Notwithstanding the foregoing, a
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that it will detect or uncover failures
within the Company to disclose material information otherwise required to be
set forth in the Companys periodic reports.

| |                                                           
| | ----------------------------------------------------------
| | (b) Changes in
 Internal Controls over Financial Reporting

There was no change in the Companys internal controls over financial
reporting during the fiscal quarter covered by this report that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.

34

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PART
II  OTHER INFORMATION

|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

As previously reported in Item 1 in the Form 10-Q for the quarterly
period ended January 31, 2010 filed on March 12, 2010, Mr. Shahram Rabbani, the
former president of the Clinical Labs segment, commenced on January 8, 2010, as
plaintiff, an action (the Action) in the Supreme Court of the State of New
York, County of New York, seeking a temporary restraining order and a
preliminary and permanent injunction to enjoin the Company from convening the
Annual Meeting on January 29, 2010. On January 11, 2010, the Company petitioned
to remove the Action to the U.S. District Court for the Southern District of
New York (the Court), which petition was granted. A hearing on the matter was
held on January 12, 2010. On January 27, 2010, the Court entered an order
denying Mr. Rabbanis motion for a preliminary injunction to enjoin the Company
from convening the Annual Meeting on January 29, 2010.

On January 28, 2010, the Company and Mr. Rabbani reached a settlement
in the arbitration lawsuit brought by Mr. Rabbani in connection with the
termination of Mr. Rabbanis employment, as previously disclosed in the
Companys Annual Report on Form 10-K for the year ended July 31, 2009. For a
full description regarding this settlement, please see Note 14 in notes to
consolidated financial statements in Part 1, Item 1 of this Form 10-Q.

In connection with the suit
filed by the Company and Enzo Life Sciences, Inc., in the United States
District Court for the District of Connecticut on June 6, 2004 against Applera
Corporation and its wholly-owned subsidiary Tropix, Inc. for alleged
infringement of certain patents in which the Company was seeking an appeal, on
March 26, 2010, the Federal Circuit issued an order concluding that the claims
of U.S. Patent Nos. 5,328,824 and 5,449,767 were not indefinite and that there
were genuine issues of material fact as to anticipation. The Court reversed the
district courts summary judgment of invalidity of those two patents and remanded
the case back to the Connecticut Court. Applera and Tropix then filed a
combined petition for panel rehearing and rehearing en banc. On May 26, 2010,
the Federal Circuit issued an order denying both petitions. (See Note 16 to the
Form 10-K for the fiscal year ended July 31, 2009)

There have been no material developments with respect to previously
reported legal proceedings discussed in the annual report on Form 10-K for the
fiscal year ended July 31, 2009 filed with the Securities and Exchange Commission.

|         |             
|-------- | ------------
|Item 1A. | Risk Factors

There have been no material changes from the risk factors disclosed in
Part 1, Item 1, of the Companys Annual Report on Form 10-K for the fiscal year
ended July 31, 2009.

35

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SIGNATURES

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

|                   |                      |                                                                                | 
|------------------ | -------------------- | ------------------------------------------------------------------------------ | 
|                   | ENZO BIOCHEM, INC.   |                                                                               
|                   |                      |                                                                               
|                   | (Registrant)         |                                                                               
|                   |                      |                                                                                | 
|Date: June 9, 2010 | by: /s/ Barry Weiner |                                                                               
|                   |                      |                                                                               
|                   |                      | Chief Financial
 Officer, Principal Accounting Officer, Treasurer and Director

36

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