Chembio Announces Second Quarter Results; Revenue Gains from Targeted Markets in Africa.

MEDFORD, N.Y. -- Chembio Diagnostics, Inc. (OTCBB: CEMI) announced today its results for the three and six months ended June 30, 2005.

Net sales for the quarter ended June 30, 2005 increased to $814,307 as compared with $746,954 in 2004. Net sales for the six months decreased to $1,160,432 as compared with $1,236,595 in 2004. Net sales of HIV and Chagas rapid tests increased by $220,398 or 77% for the quarter and $150,330 or 32% for the six months compared to 2004. Total revenues which include net sales of products as well as license revenue, research grants and development income were $905,689 and $1,637,574 for the three and six months ended June 30, 2005 compared to $995,075 and $1,580,377 for the comparable periods in 2004.

The 77% and 32% increase in net sales of HIV and Chagas rapid tests in the three and six months is attributable to the Company's strategic focus on these product lines. In particular, this increase is due to increased sales to Africa as the Company begins to see results from its marketing efforts in this region.

The Company also reported today that it has (1) approximately $500,000 of HIV product orders in hand for delivery in the third quarter which will result in further revenue gains as compared to the second quarter of 2005 and the third quarter of 2004; (2) made substantial progress toward FDA approval of its HIV rapid tests based upon communications it has had with the agency during this latest quarter, and; (3) developed prototypes of its patent pending lateral flow rapid test platform that it believes will provide it with proprietary intellectual property to develop a pipeline of new products.

Gross Profit for the three and six month periods ended June 30, 2005 was $269,309 and $536,664 as compared with $321,459 and $441,359 for the comparable periods in 2004. Gross profit includes net product sales as well as license, contract and grant revenues. These later items were $248,121 in the three months ended June 30, 2004 as compared with $91,382 in the three months ended June 30, 2005 which accounts for the higher total gross profit figure in 2004. The Company anticipates that its backlog and additional orders, if realized, should generate increased gross margins on net sales for the balance of 2005.

Research and development expenses for the three months and six months ended June 30, 2005 were $426,782 and $761,532 compared with $377,473 and $515,801 for the comparable periods in 2004. Included in this category are expenses for Clinical & Regulatory Affairs which totaled $170,376 for the three months ended June 30, 2005, a decrease of $46,194 compared to the three months ended June 30, 2004. Selling, general and administrative expense for the three and six month periods was $729,435 and $1,285,495 as compared with $773,624 and $1,129,298 for the same periods in 2004. The 2004 SG&A expenses included over $240,000 related to officer's salary resulting from the value of stock issued at the time of the merger to a former officer. 2005 SG&A expenses include increased expenses for marketing, commissions, royalties, Sarbanes-Oxley compliance, and board of directors,

Net loss was $875,142 and $1,495,127 for the three and six month periods as compared with a net loss of $717,345 and $1,147,189 for the comparable periods in 2004. Net loss attributable to common stockholders for the three and six month periods was $1,087,203 ($.15 per share) and $4,588,067 ($.64 per share) compared with a net loss of $1,035,421 ($.18 per share) and $1,465,265 ($.27 per share) for the comparable periods in 2004. The current year six month results include an accounting adjustment for a beneficial conversion feature associated with the Company's convertible preferred stock.

Lawrence Siebert, President of Chembio commented, "The increased HIV and Chagas rapid test sales together with the approximately $500,000 we have in our backlog for delivery this quarter is strong evidence that we are executing our international marketing strategy well. Not only are we seeing growth in Brazil as we had expected, but we are particularly gratified by the results we are seeing emerge from our Africa marketing strategy. Our international marketing is focused on participating in the international donor-funded programs, particularly the United States Presidential Emergency Plan for AIDS Relief, as well as in programs for Chagas disease, with the rapid test technology and products that we develop and manufacture in the United States. We also continue working toward United States FDA approval of two of our HIV rapid tests which we believe will enhance our international efforts as well as facilitating our US marketing strategy."

ABOUT CHEMBIO

Chembio Diagnostics, Inc. (Chembio) possesses expertise in the development and manufacturing of rapid test products for various infectious diseases, including HIV, Tuberculosis and Chagas Disease. References to Chembio Diagnostics, Inc. may actually refer to Chembio Diagnostic Systems, Inc., the 100%-owned subsidiary of Chembio Diagnostics, Inc. Chembio is located at 3661 Horseblock Road, Medford, NY 11763. Chembio's telephone number is 631-924-1135. Email can be directed to [e-mail]. Additional information can be found at www.chembio.com.

FORWARD-LOOKING STATEMENTS 

This news release contains forward-looking statements reflecting Chembio's current expectations. When used in this press release, the words "anticipate", "could", "enable", "estimate", "intend", "expect", "believe", "potential", "will", "should", "project" "plan" and similar expressions as they relate to Chembio 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 Chembio at this time. Such risks and uncertainties include, without limitation, changes in demand for products, 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 second 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 Chembio's public filings with the U.S. Securities and Exchange Commission.