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SDIX Reports Third Quarter 2012 Results

  SDIX Reports Third Quarter 2012 Results

 Food Safety and GMO Businesses Sold for $13.5 million; Adds Over $12 million
                         to Quarter End Cash Balance

            Transition to Dedicated Life Science Business Complete

             Conference Call to Review Results at 4:30PM ET Today

Business Wire

NEWARK, Del. -- November 12, 2012

SDIX (Nasdaq: SDIX), a leading provider of biotechnology-based products and
services for a broad range of life science, biotechnology and diagnostic
applications, today reported financial results for the quarter ended September
30, 2012.

Highlights

  *Sold Food Safety and GMO Businesses to Romer Laboratories– On September
    28, 2012, SDIX announced that it had signed an agreement to sell the
    assets of its Food Safety and GMO businesses to Romer Labs for $13.5
    million. The sale, which was completed in October, included the
    intellectual property, current inventory and commercial contracts, as well
    as equipment and staff of the two businesses. The Company is now focused
    solely on its Life Science business.
  *Advanced Technology for Transmembrane Targets – The Company has completed
    work on its technology for generating monoclonal antibodies to
    transmembrane proteins and has presented a comprehensive data set to
    potential customers and partners for evaluation. Business development
    activities are now the focus as the Company seeks to build additional
    partnerships around this technology. The Company expects that spending on
    R&D will decrease in the coming quarters due to the completion of the data
    package.
  *Balance Sheet Strengthened- The Company completed the third quarter of
    2012 with cash and cash equivalents of $7.0  million and stockholders’
    equity of $16.8 million. The cash balance does not reflect the estimated
    net proceeds of $12.4 million from the October sale of the Food Safety and
    GMO assets.

Revenue for the third quarter of 2012 was $4.0 million, decreasing from $4.1
million for the same period in 2011. Year to date revenue for the nine months
ended September 30, 2012 was $11.6 million, decreasing 9% from $12.7 million
for the same period in 2011.

Net loss for the third quarter of 2012 was $1.0 million, compared to a net
loss of $694,000 for the same period in 2011. The net loss for the quarter
included income from discontinued operations of $690,000 in 2012 and $863,000
in 2011. Net loss for the nine months ended September 30, 2012 was $3.7
million, compared to a net loss of $2.0 million for the same period in 2011.
Net loss for the nine months ended September 30, 2012 included income from
discontinued operations of $1.7 million compared with income from discontinued
operations of $2.7 million in the same period in 2011.

Fran DiNuzzo, President and CEO, stated “The sale of our Food Safety and GMO
businesses to Romer Labs was another step in our strategic plan to be solely
focused on our Life Science business. A critical aspect of this focus is the
development of new technologies that we believe will provide clear
differentiation for SDIX in the marketplace. In June, we presented an initial
version of our 'data package' demonstrating the performance of our novel
technology for generating monoclonal antibodies to transmembrane proteins,
speaking to over 20 pharmaceutical companies at BIO in Boston. Early in
September we achieved our next development milestone and released an updated
version of the 'data package' now containing a comprehensive set of data that
we feel clearly demonstrates the capabilities and advantages of the
technology. We continue to engage with several pharma and biotech companies to
develop potential projects utilizing the technology. During the fourth
quarter, we plan to launch the technology commercially to further build market
opportunities. In addition, we have initiated the process to obtain
intellectual property protection for our technology, including specific
composition of matter patents on the antibodies developed to CXCR4 and ADORA2,
well known drug targets for a broad range of therapeutic indications,
including cancer and inflammatory diseases. Future R&D efforts are now focused
on a novel technology we have been developing to replace conventional
hybridoma fusion with a microfluidics system for b-cell isolation and
screening. Based on current development plans, we believe we will have
demonstrated proof of performance from this technology by the end of the first
quarter of 2013; at which point we would expect to begin to offer the
technology commercially.”

Financials

Due to the sale of the Company’s Food Safety and GMO assets, the financial
results of the Food Safety and GMO divisions has been reflected in the
financial statements as discontinued operations for all periods presented and
the Food Safety and GMO assets have been presented as held for sale. Due to
the sale of the Company’s Water Quality assets during the fourth quarter of
2011, the financial results of the Water Quality division has been reflected
in the financial statements as discontinued operations for the three and nine
months periods ended September 30, 2011.

Gross profit for the third quarter of 2012 was $1.9 million, as compared to
$2.3 million for the same period in 2011. Gross margins were 48% for the third
quarter of 2012, compared to 56% for the same period in 2011. Gross profit for
the nine months ended September 30, 2012 was $5.9 million, as compared to $7.0
million in for the same period in 2011. Gross margin in the first nine months
of 2012 was 51%, compared to 55% for the same period in 2011.

Third quarter operating expenses were $3.6 million, down $187,000 compared to
the third quarter of 2011. Operating expenses for the nine months ended
September 30, 2012 were $11.3 million, compared to $11.6 million for the same
period in 2011. Increased R&D expenses resulting from planned R&D investments
in SDIX’s advanced technologies for generating monoclonal antibodies were
offset by reduced selling, general and administrative expenses. The operating
loss from continuing operations for the third quarter of 2012 was $1.7
million, compared to $1.5 million for the third quarter of 2011. Operating
loss from continuing operations for the nine months ended September 30, 2012
was $5.3 million, compared to $4.7 million for the same period in 2011.

Income from discontinued operations for the third quarter was $690,000 in 2012
as compared with $863,000 in 2011. Net loss for the third quarter of 2012 was
$1.0 million, or $0.05 per diluted share, compared to a net loss of $694,000,
or $0.03 per diluted share, for the same period in 2011. Net loss for the nine
months ended September 30, 2012 was $3.7 million, or $0.18 per diluted share,
compared to a net loss of $2.0 million, or $0.10 per diluted share, for the
same period in 2011 which reflect income from discontinued operations of $1.7
million in 2012 and $2.7 million in 2011.

Conference Call

The dial-in number for the live conference call at 4:30PM ET today will be
877-407-8035 (201-689-8035 outside the U.S.). A live webcast of the conference
call will be available on the Company’s website, www.sdix.com, as well
aswww.investorcalendar.com. For those who cannot listen to the live
broadcast, an audio replay of the call will be available on each of these
websites for 90 days. Telephone replays of the call will be available from
7:30 p.m. ET on November 12, 2012 through 11:59 p.m. ET on November 26, 2012.
To listen to the telephone replay, dial 877-660-6853 (201-612-7415 outside the
U.S.) and enter account number 286 and conference ID 403556.

About SDIX  (www.sdix.com)

SDIX is a biotechnology company with a core expertise in creating better
antigens, better antibodies and better assays for the pharmaceutical and
biotechnology markets. For over 20 years, SDIX has been a leading
immuno-solutions company, developing results-oriented and innovative
antibody-based solutions that enable customers to meet high performance
research, diagnostic and commercialization objectives.

In the life science market, SDIX’s technology and capabilities are being used
to help discover disease mechanisms, facilitate development of new drugs and
provide antibodies and assays for the diagnosis of disease.

This news release may contain forward-looking statements reflecting SDIX's
current expectations. When used in this press release, words like
“anticipate”, “could”, “enable”, “estimate”, “intend”, “expect”, “feel’,
“believe”, “can”, “potential”, “will”, “should”, “project”, “plan” and similar
expressions as they relate to SDIX are intended to identify said
forward-looking statements. Investors are cautioned that all forward-looking
statements involve risks and uncertainties, which may cause actual results to
differ from those anticipated by SDIX at this time. Such risks and
uncertainties include, without limitation, changes in demand for products, the
application of our technologies to various uses, delays in product
development, delays in market acceptance of new products, retention of
customers and employees, adequate supply of raw materials, inability to obtain
or delays in obtaining fourth party, or required government approvals, the
ability to meet increased market demand, competition, protection of
intellectual property, non-infringement of intellectual property, seasonality,
and other factors more fully described in SDIX's public filings with the U.S.
Securities and Exchange Commission.


STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
                                                             
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)

                                                                             
                                             September 30,   December 31,
                                             2012            2011
ASSETS
Current Assets:
Cash and cash equivalents                       $  6,995          $  10,665
Restricted cash                                    -                 300
Receivables, net                                   3,173             3,758
Inventories                                        1,763             2,142
Other current assets                               662               618
Current assets held for sale                    948           -       
Total current assets                            13,541        17,483  
                                                                             
Property and equipment, net                        4,743             3,890
Other assets                                       52                6
Deferred tax asset                                 37                36
Intangible assets, net                             -                 1,207
Non-current assets held for sale                1,245         -       
Total assets                                  $  19,618      $  22,622  
                                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of debt                         $  46             $  300
Accounts payable                                   401               556
Accrued expenses                                   2,044             1,769
Deferred revenue                                117           -       
Total current liabilities                       2,608         2,625   
                                                                             
Long-term debt                                  204           -       
                                                                             
Stockholders' Equity:
Preferred stock, $.01 par value, 20,920,648
shares authorized, no shares issued or             -                 -
outstanding
Common stock, $.01 par value, 50,000,000
shares authorized, 21,389,259 and                  210               210
21,000,960 issued at September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital                         42,610            42,146
Treasury stock, 406,627 common shares at
cost at September 30, 2012 and December 31,        (555     )        (555    )
2011
Accumulated deficit                                (25,221  )        (21,537 )
Cumulative translation adjustments              (238     )     (267    )
Total stockholders' equity                      16,806        19,997  
Total liabilities and stockholders' equity    $  19,618      $  22,622  
                                                                             


STRATEGIC DIAGNOSTICS INC. AND SUBSIDIARIES
                                                                   
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)

                                                                                         
                   Three Months Ended September 30,      Nine Months Ended September 30,
                   2012             2011               2012             2011
                                                                                         
Revenues           $ 3,995            $ 4,085            $ 11,610           $ 12,735
                                                                                         
Cost of sales        2,085              1,793              5,664              5,784
                                                                              
Gross profit        1,910            2,292            5,946            6,951      
                                                                                         
Operating
expenses:
Research and         987                930                2,837              2,414
development
Selling,
general and         2,638            2,882            8,429            9,214      
administrative
Total
operating           3,625            3,812            11,266           11,628     
expenses
                                                                                         
Operating loss       (1,715     )       (1,520     )       (5,320     )       (4,677     )
                                                                                         
Interest            (5         )      (10        )      (22        )      (27        )
expense, net
                                                                                         
Loss from
continuing           (1,720     )       (1,530     )       (5,342     )       (4,704     )
operations
before taxes
                                                                                         
Income tax          -                27               -                29         
expense
                                                                                         
Loss from
continuing           (1,720     )       (1,557     )       (5,342     )       (4,733     )
operations,
net of taxes
                                                                                         
                                                                                         
Income from
discontinued        690              863              1,658            2,724      
operations
                                                                                         
                                                                                         
Net loss           $ (1,030     )     $ (694       )     $ (3,684     )     $ (2,009     )
                                                                                         
Basic loss per
share from         $ (0.08      )     $ (0.08      )     $ (0.26      )     $ (0.23      )
continuing
operations
Basic income
per share from      0.03             0.04             0.08             0.13       
discontinued
operations
                                                                                         
Basic net loss     $ (0.05      )     $ (0.03      )     $ (0.18      )     $ (0.10      )
per share
                                                                                         
Shares used in
computing           20,536,745       20,467,245       20,510,751       20,423,521 
basic net loss
per share
                                                                                         
Diluted loss
per share from     $ (0.08      )     $ (0.08      )     $ (0.26      )     $ (0.23      )
continuing
operations
Diluted income
per share from      0.03             0.04             0.08             0.13       
discontinued
operations
                                                                                         
Diluted net        $ (0.05      )     $ (0.03      )     $ (0.18      )     $ (0.10      )
loss per share
                                                                                         
Shares used in
computing           20,536,745       20,467,245       20,510,751       20,423,521 
diluted net
loss per share
                                                                                         

Contact:

SDIX Company Contact:
Kevin Bratton, 302-456-6789
VP and CFO
kbratton@sdix.com
 
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