MICRO BIO MEDICS INC, 424B3, 1995-06-08

MICRO BIO MEDICS INC
424B3, 1995-06-08
MEDICAL, DENTAL & HOSPITAL EQUIPMENT & SUPPLIES

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SUPPLEMENT TO PROSPECTUS DATED MARCH 3, 1995

The expiration date of the Series 1 Warrants of Micro Bio-Medics, Inc. has
been extended for one additional year until the close of business on June 18,
1996. All other terms and conditions of the Series 1 Warrants remain unchanged.

THE DATE OF THIS SUPPLEMENT IS MAY 31, 1995
<PAGE>

PROSPECTUS
MICRO BIO-MEDICS, INC.

APPROXIMATELY 948,670 COMMON SHARES AND 138,138 UNDERWRITER'S WARRANTS

Micro Bio-Medics, Inc. (the "Company" or "Micro") granted to all holders of
its outstanding common stock ("Common Stock") of record on March 31, 1992
("Record Date"), in those states where qualified, or exempt from qualification,
the nontransferable right ("Rights") to subscribe for Units at $9.00 per Unit on
the basis of one Unit for every four shares of Common Stock owned on the Record
Date. See "Results of Rights Offering." Each Unit consisted of two shares of
the Company's Common Stock and three Series 1 Redeemable Common Stock Purchase
Warrants (the "Series 1 Warrant(s)"). Each Series 1 Warrant originally
purchased one share of Common Stock at an exercise price of $8.00 per share
until lowered to $6.00 per share by the Board of Directors in August 1993. As a
result of the October/November 1993 issuance of $3,000,000 of convertible
debentures, which triggered the anti-dilution provisions contained in the Series
1 Warrant, every Series 1 Warrant exercised at a price of $6.00 will purchase
1.047 shares of the Company's Common Stock. The Series 1 Warrants are
exercisable at any time until June 18, 1995 and are callable by the Company upon
30 days prior written notice, at any time during the exercise period at $.05 per
Warrant provided the high bid price for the shares of the Company's Common Stock
is at least $11.00 per share on each day during the thirty (30) trading day
period immediately preceding the date of the written notice. See "Description
of Securities." This Prospectus relates to approximately 707,619 shares
issuable upon exercise of the Company's 675,854 issued and outstanding publicly
held Series 1 Warrants.

On June 19, 1992, the Company sold to Royce Investment Group, Inc.
("Royce") for $.0001 per Warrant, Warrants to purchase 46,046 Units (the
"Underwriter's Unit Warrants"). The Underwriter's Unit Warrants are exercisable
at $11.25 per Unit until June 19, 1997. As a result of the October/November
1993 issuance of $3,000,000 of convertible debentures which triggered the anti-
dilution provisions contained in the Underwriter's Unit Warrants, the Units that
may be purchased by the holder of the Underwriter's Unit Warrants contain 2.094
shares of Common Stock and three Warrants that are identical to the Series 1
Warrants (the "Underwriter's Warrants") sold pursuant to the rights offering
described above, except that the Underwriter's Warrants that are issuable upon
exercise of the Underwriter's Unit Warrants are not callable, were not
exercisable until June 19, 1993 and are exercisable at $10.00 per 1.047 shares
of the Company's Common Stock. This Prospectus relates to the 46,046 Units
(i.e. 96,420 shares of Common Stock and 138,138 Underwriter's Warrants) issuable
upon exercise of the Underwriter's Unit Warrants including the 144,631 shares of
Common Stock issuable upon exercise of the Underwriter's Warrants.

No fractional shares of Common Stock will be issued on the exercise of
Series 1 Warrants. Fractional shares less than 1/2 of one share will be
disregarded. Fractional shares of 1/2 or greater will be rounded to the nearest
whole share. The Company reserves the right to pay cash in lieu of fractional
shares based upon the base current market price (i.e. high bid price) of the
Common Stock on the last business day prior to the day of exercise.

THE COMPANY'S SECURITIES ARE SPECULATIVE IN THAT THEY INVOLVE CERTAIN RISKS.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF MATTERS WHICH SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THESE SECURITIES.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OR REGULATORY AUTHORITY OF ANY
STATE. FURTHERMORE, THE FOREGOING COMMISSIONS AND AUTHORITIES HAVE NOT PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS MARCH 3, 1995
<PAGE>

Warrant holders who desire to exercise their Warrants should execute the
Subscription Form contained in the back of the Warrant and submit same together
with a certified check or bank draft made payable to "Micro Bio-Medics, Inc." to
the transfer agent, American Stock Transfer & Trust Co., 40 Wall Street, New
York, New York 10005. The Company has agreed to pay Royce Investment Group,
Inc. a commission for the solicitation of Series 1 Warrants as described under
"Description of Securities." All expenses of this offering, estimated to be
$10,000, are being paid by the Company.

Holders of the Underwriter's Unit Warrants who desire to exercise these
Warrants should execute the Purchase Form contained in the Underwriter's Unit
Warrant and submit same together with a certified check or bank check made
payable to Micro Bio-Medics, Inc. to the Company at its principal executive
office at 846 Pelham Parkway, Pelham Manor, New York 10803.

The Company's Common Stock is traded in the over-the-counter market in the
National Market System under the NASDAQ symbol "MBMI." On February 21, 1995,
the reported last sales prices per share for the Common Stock as reported on
NASDAQ was $9.50. See "Certain Market Information."

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER, SOLICITATION OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
SEE "INVESTMENT CONSIDERATIONS" REGARDING THE COMPANY'S OBLIGATION TO HAVE A
CURRENT AND EFFECTIVE REGISTRATION STATEMENT ON FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION.

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
those requirements files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.D. 20549
or at its regional offices located at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. This Prospectus, which constitutes
part of a Registration Statement filed by the

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Company with the Commission under the Securities Act of 1933, as amended, (the
"Securities Act") omits certain of the information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and to the
exhibits thereto for further information with respect to the Company and its
securities. Statements contained herein concerning provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by reference to the copy of the complete document filed with the
Commission.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The following document(s) filed by the Company with the Commission are
incorporated in this Prospectus by reference:

(1) The Company's annual report on Form 10-K for the fiscal year ended
November 30, 1994, as amended.

Any statement contained in the foregoing document incorporated by reference
shall be deemed to be modified or superseded for the purposes of this
Prospectus, to the extent that a statement herein modifies, supersedes or
replaces such incorporated statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.

The Company will furnish, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of the filings
with the Commission enumerated above, excluding exhibits thereto (unless those
exhibits are specifically incorporated by reference into the document(s) which
this Prospectus is incorporated). Requests should be directed to Micro Bio-
Medics, Inc., 846 Pelham Parkway, Pelham Manor, New York 10803, Attention:
Shareholder Communications, telephone number (914) 738-8400.

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TABLE OF CONTENTS

Page
----

Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Management's Discussion and Analysis of
Financial Condition and Results of Operation . . . . . . . . . . . . . . . .13
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Security Ownership of Certain Beneficial Owners
and Management and Others. . . . . . . . . . . . . . . . . . . . . . . . . .43
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .45
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Results of the Rights Offering . . . . . . . . . . . . . . . . . . . . . . . .52
Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Index to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . F-1

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in or incorporated into
this Prospectus. Unless otherwise indicated, the information in this Prospectus
assumes no exercise of the outstanding options, Series 1 Warrants or the
Underwriter's Warrants. All share and per share amounts give retroactive effect
to a one-for-three reverse stock split effective on the close of business on
June 28, 1991. (Since no fractional shares were issued in connection with such
split, all amounts were rounded up to the nearest whole share).

THE COMPANY

THE OFFERING

Micro granted to all holders of its outstanding common stock ("Common
Stock") of record on March 31, 1992 ("Record Date"), in those states where
qualified, or exempt from qualification, the nontransferable right ("Rights") to
subscribe for Units at $9.00 per Unit on the basis of one Unit for every four
shares of Common Stock owned on the Record Date. See "Results of Rights
Offering." Each Unit consisted of two shares of the Company's Common Stock and
three Series 1 Redeemable Common Stock Purchase Warrants (the "Series 1
Warrant(s)"). Each Series 1 Warrant originally purchased one share of Common
Stock at an exercise price of $8.00 per share until lowered to $6.00 per share
by the Board of Directors in August 1993. As a result of the October/November
1993 issuance of $3,000,000 of convertible debentures, which triggered the anti-
dilution provisions contained in the Series 1 Warrant, every Series 1 Warrant
exercised at a price of $6.00 will purchase 1.047 shares of the Company's Common
Stock. See "Description of Securities." This Prospectus relates to
approximately 707,619 shares issuable upon exercise of the Company's 675,854
issued and outstanding publicly held Series 1 Warrants.

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Common Stock outstanding
as of February 15, 1995 3,620,207 shares

Common Stock to be
outstanding assuming
exercise of all
Series 1 Warrants (1) 4,327,826 shares (approximately)

Use of Proceeds To be added to the Company's working capital and to be
used for general corporate purposes including reducing
the outstanding balance under a revolving loan
agreement or possible acquisitions.

NASDAQ/NMS Symbol MBMI - Common Stock (2)

- ----------------
(1) Does not include the following: (i) the possible exercise of the
Underwriter's Unit Warrants and Underlying Underwriter's Warrants to
purchase a maximum of 241,051 shares, (ii) outstanding stock options
granted to officers, directors, employees and consultants covering
approximately 1,372,369 shares, and (iii) 375,000 shares issuable upon
conversion of certain Debentures.

(2) See "Investment Consideration - Lack of Public Market for Units and
Series 1 Warrants" and "Market Information."

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SELECTED FINANCIAL INFORMATION

1994 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED OR AT NOVEMBER 30,

NET SALES $121,604,461 $ 73,951,410 $ 61,629,435 $ 50,739,534 $ 43,392,482
COST OF GOODS SOLD 94,923,689 56,347,353 47,287,409 38,561,458 32,489,552
------------------------------------------------------------------------
GROSS PROFIT 26,680,772 17,604,057 14,342,026 12,178,076 10,902,930
------------------------------------------------------------------------
EXPENSES:
Selling, shipping and warehouse 14,421,280 8,521,021 6,852,670 5,760,276 5,256,493
General and administrative 8,581,615 6,525,488 5,015,128 4,303,953 3,844,170
Interest and financing costs - net 1,044,257 502,329 289,355 425,694 606,527
Non-recurring items:
Provision for consolidation
of facilities -- -- -- 483,000 --
Write-down of manufacturing
equipment -- -- -- -- 245,829
------------------------------------------------------------------------
Total expenses 24,047,152 15,548,838 12,157,153 10,972,923 9,953,019
------------------------------------------------------------------------
INCOME BEFORE PROVISION FOR
INCOME TAXES 2,633,620 2,055,219 2,184,873 1,205,153 949,911
PROVISION FOR INCOME TAXES 952,000 853,000 962,000 537,000 430,000
------------------------------------------------------------------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 1,681,620 1,202,219 1,222,873 668,153 519,911

CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES
PRIOR TO 1994 (60,000) -- -- -- --
------------ ------------ ------------ ------------ ------------
NET INCOME $ 1,621,620 $ 1,202,219 $ 1,222,873 $ 668,153 $ 519,911
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------

EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE BEFORE
CUMULATIVE EFFECT OF
ACCOUNTING CHANGE $ .37 $ .30 $ .41 $ .37 $ .30
CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES PRIOR
TO 1994 (.01) -- -- -- --
------------------------------------------------------------------------
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $ .36 $ .30 $ .41 $ .37 $ .30
------------------------------------------------------------------------
------------------------------------------------------------------------
AVERAGE NUMBER OF SHARES USED
TO COMPUTE EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE 4,896,518* 4,734,746* 3,481,415* 1,784,986 1,761,315
------------------------------------------------------------------------
------------------------------------------------------------------------
DIVIDENDS PAID None None None None None
------------------------------------------------------------------------
------------------------------------------------------------------------
WORKING CAPITAL $ 30,141,450 $ 20,965,370 $ 15,819,417 $ 11,793,261 $ 10,099,758
------------------------------------------------------------------------
------------------------------------------------------------------------
LONG-TERM DEBT
(net of current maturities) $ 19,381,239 $ 9,584,684 $ 9,410,079 $ 8,022,054 $ 6,956,503
------------------------------------------------------------------------
------------------------------------------------------------------------
TOTAL ASSETS $ 54,461,087 $ 32,784,324 $ 27,934,060 $ 19,488,491 $ 16,460,354
------------------------------------------------------------------------
------------------------------------------------------------------------
STOCKHOLDERS' EQUITY $ 18,067,056 $ 16,193,524 $ 10,461,736 $ 5,822,407 $ 5,116,593
------------------------------------------------------------------------
------------------------------------------------------------------------
STOCKHOLDERS' EQUITY PER SHARE $ 3.69* $ 3.42* $ 3.01* $ 3.26 $ 2.91
------------------------------------------------------------------------
------------------------------------------------------------------------
TANGIBLE BOOK VALUE PER SHARE $ 2.92* $ 3.13* $ 2.72* $ 2.69 $ 2.31
------------------------------------------------------------------------
------------------------------------------------------------------------

<FN>
* Includes additional shares assuming conversion of stock options and
warrants utilizing the modified treasury stock method. For the other years,
outstanding stock options and warrants have not been included since their
effect would be antidilutive or immaterial.

All references to shares and per share data have been restated for all
periods presented due to a reverse stock split on June 28, 1991.

</TABLE>

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INVESTMENT CONSIDERATIONS

The securities offered hereby are speculative and involve a high degree of
risk. Therefore, each prospective investor should consider very carefully the
various risks and speculative factors inherent in and affecting the business of
the Company prior to the making of an investment in the Company. Purchase of
the Company's securities are not recommended for investors who do not have
sufficient financial means to sustain the loss of their entire investment.
Among the risks involved in an investment in the Company are the following:

SUBSTANTIAL INDEBTEDNESS. The Company's operating activities require the
Company to incur substantial indebtedness and the Company is, therefore, subject
to the risks associated with significant leverage, including the risks that
interest rates may fluctuate and cash flow may not be adequate to make required
payments on indebtedness. At November 30, 1994, the Company owed $14,650,000
under the Company's revolving loan agreement to its principal lender. The debt
is collateralized by accounts receivable and inventory (the "Assets"). In
connection with the loan agreement, the Company has agreed to certain
restrictions relating to limitations on its indebtedness and liens, and has
agreed to maintain specified financial ratios and covenants. The loan prohibits
the Company from paying any cash dividends and restricts capital distributions
or redemptions and purchases or retirements of any of the Company's capital
stock except in limited circumstances. If for any reason, the Company were
unable to meet such obligations as they become due, such lender could terminate
the credit facility, demand payment of the loan and elect to foreclose on the
Company's assets, which would have a material adverse effect on the Company's
operations.

DEPENDENCE UPON FINANCING. Although the Company's terms of sale require
payment of invoices within 30 days and in some cases discounts are given for
prompt payment, the average collection period on its accounts receivable during
the fiscal years ended November 30, 1994 and November 30, 1993 were
approximately 79 days and 78 days, respectively. The Company is dependent on the
financing of its operations under a credit facility which expires in November,
1996 to meet differences in timing of cash flow resulting from the extension of
credit on the Company's receivables and receipt of payments from customers.
Although the Company intends to use substantially all of the net proceeds of
this offering, if any, to reduce outstanding indebtedness under its credit
facility (See "Use of Proceeds"), the Company will, in all likelihood, draw down
funds under such facility in the future in order to continue to finance its
operations. In the event that the Company is unable to obtain financing from
its principal lender or alternative sources of financing, or if able to do so
but not on favorable terms, the Company's ability to operate profitably would be
materially adversely affected.

DILUTION. Persons exercising the Series 1 Warrants, Underwriter's Unit
Warrants and Underwriter's Warrants will

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experience an immediate and substantial dilution in the net tangible book value
of their investment. See "Dilution."

REGULATORY REQUIREMENTS. The manufacturers of many products sold by the
Company are required to obtain U.S. Food and Drug Administration ("FDA")
approval for such products, failing such approval, sales of such products
cannot lawfully be made. The Company's assembly, warehousing and distribution
procedures are subject to the Good Manufacturing Practices regulation of the
FDA. The Company has registered itself with the FDA and has renewed said
registration annually. Said registration permits the Company to distribute
supplies and medical devices. The Caligor Division, among its various
activities, operates as a wholesaler and retailer of prescription drugs and
medical devices in the State of New York. The practice of pharmacy at the
wholesale and retail level is regulated by federal, state and local statutes,
rules and regulations. The Company is duly licensed to permit its Caligor
Division to operate as wholesalers and retailers in prescription drugs and
medical devices in the State of New York. No assurances can be given that the
Company's activities will be able in the future to comply with all applicable
federal, state and local regulations. In such event, the Company's operations
may be materially affected adversely by the failure to comply with such laws or
the costs to comply with such laws may impair the Company's profitability.

COMPETITION. The Company, in all phases of its activities, experiences
competition from other manufacturers and distributors of products in the same
categories as those of the Company, as well as from wholesale and retail
pharmacies, selling to the same general markets as those of the Company.
Additionally, the Caligor Division's services are subject to competition from
similar service organizations. Many of the Company's competitors have far
greater resources than the Company and, in addition, many larger and better
financed firms not presently in the Company's lines of business may conceivably
enter these lines of business in the future. Moreover, most of the Company's
markets are serviced by hospital and surgical supply dealers, athletic
retailers, pharmacies and equipment repair firms. The Company believes that its
purchasing power, quick service including next day delivery where possible,
competitive pricing and marketing expertise enables it to compete favorably with
such firms although it continues to experience significant competition from
other firms which are better established and have substantially greater
financial resources than the Company. There can be no assurance that the
Company will be able to compete successfully with present or future competitors.

USE OF PROCEEDS AT THE DISCRETION OF MANAGEMENT. The net proceeds of this
offering, if any, will be used to temporarily reduce the balance outstanding
under the Company's bank line-of-credit which may then be drawn upon for all
general corporate purposes including, without limitation, for a possible
acquisition(s). At February 27, 1995, the Company does not have agreements for
any material acquisition that may be deemed probable. Accordingly, the
expenditure of these funds will be at

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the discretion of Management. See "Use of Proceeds" and "Investment
Consideration - Dependence on Financing."

LACK OF PUBLIC MARKET FOR SERIES 1 WARRANTS. The Company's Common Stock is
traded on the National Market System of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ/NMS") under the symbol "MBMI."
However, the Company does not intend to qualify the Series 1 Warrants or any
other securities referred to in this Prospectus on NASDAQ except for the
Company's Common Stock referred to above. Since August 20, 1992, National
Quotation Bureau, Inc. has advised the Company that its Series 1 Warrants may be
quoted in the "pink sheets." An established market for the Company's Series 1
Warrants may not develop in the over-the-counter market or otherwise, or if
developed may not be sustained and, therefore, owners of such securities may
have difficulty in selling or liquidating their securities.

LACK OF DIVIDENDS. The Company has not previously paid any dividends
since its inception and intends to follow a policy of retaining all of its
earnings, if any, to finance the development and continued expansion of its
business. There can be no assurance that dividends will ever be paid by the
Company. Additionally, under the terms of its revolving loan agreement with its
principal lender, the Company may not pay dividends without such lender's
consent. See "Description of Securities."

EFFECT OF SERIES 1 REDEEMABLE WARRANTS - COMPANY'S RIGHT TO REDEEM
WARRANTS. For the life of the outstanding Series 1 Redeemable Warrants, the
holders will have, at a nominal cost, the opportunity to profit from a rise in
the market price of the Company's Common Stock, and the exercise of such
Warrants could result in a dilution of their investment since the net tangible
book value of their shares of Common Stock after exercise is expected to be less
than the exercise price of such Warrants. Furthermore, the holders of such
Warrants might be expected to exercise them at a time when the Company would, in
all likelihood, be able to obtain any needed capital by a new offering of
securities on terms more favorable than those provided in the Warrants.
However, no assurances can be given that the Company will not redeem the
Warrants at a time when the holders of such Warrants are financially unable to
exercise such Warrants.

LOSS OF KEY PERSONNEL. The success of the Company is dependent upon the
efforts of the Company's executive officers, in particular, the services of
Bruce J. Haber, the Company's President. The loss of the services of any of the
Company's officers may have a detrimental impact on the Company's operations
until other individuals can be hired and trained to replace the loss of any such
officer. The Company does not have key man life insurance and does not
presently intend to obtain same. The Company has an employment agreement with
Mr. Haber through 1998. Such agreement contains a restrictive covenant which
provides generally that he can not compete with the Company for the 12 months
after the termination of his service to the Company.

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<PAGE>

EMPLOYMENT AGREEMENT FOR THE COMPANY'S PRESIDENT. On February 11, 1992,
the Company entered into an Employment Agreement with Bruce J. Haber. Pursuant
to this agreement, Mr. Haber has agreed to devote his full time and efforts to
the business of the Company and to serve as the Company's President and Chief
Executive Officer. If Mr. Haber's employment agreement is terminated for any
reason other than his willful misconduct or in the event he resigns due to
changes in Management of the Company as defined in his Employment Agreement,
then Mr. Haber shall be entitled, as liquidated damages, to an amount of money
equal to the greater of $2,000,000 or the sum of five years compensation. In the
event there is a dispute as to the amount of liquidated damages payable to Mr.
Haber, then on the termination date the Company shall be required to pay into an
interest bearing escrow account, the sum of $4,000,000 less the amount of
liquidated damages paid to him which is not in dispute. Mr. Haber will continue
to receive his full compensation during the continuation of any dispute.

CONTROL BY PRINCIPAL STOCKHOLDERS. The present nine executive officers and
directors beneficially own approximately 1,670,867 shares of Common Stock (34.6%
of the outstanding Common Stock). Since the Company's Certificate of
Incorporation does not provide for cumulative voting, the holders of more than
50% of the outstanding shares can elect all of the directors if they choose to
do so, in which event the holders of the remaining shares can not elect any
directors. The Company's officers and directors are likely to be in a position
to elect all of the Company's directors and continue to be in a position to
control all of the affairs of the Company. See "Security Ownership of Certain
Beneficial Owners and Management and Others."

POTENTIAL FUTURE SALES OF COMMON STOCK. An estimated 400,000 shares of the
Company's issued and outstanding Common Stock are "restricted securities" as
that term is defined under Rule 144 promulgated under the Securities Act of
1933. In general, under Rule 144, a person who has satisfied a two-year holding
period may, under certain circumstances, sell within any three-month period a
number of shares which does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly trading volume in shares during the
four calendar weeks immediately prior to such sale. Rule 144 also permits,
under certain circumstances, the sale of shares without any quantity or other
limitation by a person who is not an affiliate of the Company and who has
satisfied a three-year holding period. Future sales of such shares made under
Rule 144 may have an adverse effect on the then prevailing market price, if any,
of the Common Stock and adversely affect the Company's ability to obtain future
financing in the capital markets as well as create a potential market overhang.
See "Description of Securities."

SERIES 1 WARRANTS - REQUIREMENT OF CONTINUING REGISTRATION.

The Company must have a current and effective registration statement on
file with the Securities and Exchange Commission in order for a warrant holder
to be able to exercise his Series 1

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Warrants. The Warrant Agreement relating to the Series 1 Warrants contains
certain provisions requiring the Company to file for, and endeavor to secure,
such current and effective registration of the shares of Common Stock issuable
upon exercise of such Warrants so long as there is a reasonable likelihood of
exercise. Various state securities laws relating to qualification of securities
for sale in such states may also be applicable. Necessarily, there can be no
assurance that the Company will, at all times during the life of the Series 1
Warrants, be able to secure or maintain such registration or qualification; and
in the event it is unable to do so, the Series 1 Warrants will not be
exercisable and will be valueless. If the Company is unable to qualify the
shares of Common Stock underlying the Series 1 Warrants for sale in particular
states, Warrant holders in those states will have no choice but to sell their
Series 1 Warrants or let them expire. See "Description of Securities."

EFFECT OF ISSUANCE OF COMMON STOCK UNDERLYING OUTSTANDING OPTIONS, SERIES 1
WARRANTS, UNDERWRITER'S UNIT WARRANTS AND UNDERWRITER'S WARRANTS.

At various times from March 1982 until February 15, 1995, the Company has
granted options to purchase shares of Common Stock. As of February 15, 1995,
there are outstanding options to acquire approximately 1,372,369 shares of
Common Stock granted to key employees, officers and directors of the Company.
The Company has filed a Registration Statement on Form S-8 to register shares of
the Company's Common Stock covered by its 1982 Incentive Stock Option Plan
covering 166,017 shares, 1989 Non-Qualified Stock Option Plan covering 416,666
shares, 1992 Incentive and Non-Statutory Stock Option Plan covering 850,000
shares and 72,001 shares of Common Stock issuable upon exercise of non-statutory
stock options not granted under any plan. Possible or actual sales of the
Company's Common Stock issuable upon exercise of the aforesaid options,
Underwriter's Unit Warrants, Underwriter's Warrants and/or the Series 1 Warrants
may have a depressive effect upon the price of the Company's Common Stock.

12
<PAGE>

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

For fiscal 1994 net sales increased 64.4% as compared with the prior year.
This increase in sales resulted from the Company's acquisition of Clark Surgical
Corp. and its continuing effort to increase market penetration and sales volume
on the existing customer base and the addition of new customers. For fiscal
1993, net sales increased 20% as compared with the prior year. This increase in
sales resulted from the Company's continuing effort to increase market
penetration and sales volume on the existing customer base and the addition of
new customers. During the aforesaid periods, the introduction of new products,
changing prices and inflation had no material impact on the Company's
operations.

Net income for fiscal 1994 was 1.3% of net sales versus 1.6% of sales in
fiscal 1993. Net income before the cumulative effect of accounting change was
1.4% of net sales versus 1.6 % of net sales in fiscal 1993. Net income for
fiscal 1993 was 1.6% of net sales versus 2% of net sales for fiscal 1992. The
decrease for fiscal 1994 vs. fiscal 1993 was due primarily to costs associated
with the acquisition of Clark Surgical Corp., the expansion of the Company's
hospital and physician sales forces and increases in the interest rates charged
by financial institutions. The decrease for fiscal 1993 versus fiscal 1992 was
due primarily to increases in credit losses and costs associated with the
expansion of the Company's hospital sales force. Management believes that
future credit losses will be in line with the Company's prior experiences.

GROSS PROFIT/OPERATING EXPENSES

Gross profit expressed as a percent of net sales was 21.9%, 23.8% and 23.3%
for fiscal 1994, 1993 and 1992, respectively. These variations in gross profit
percentage are a result of changes in the Company's product mix and increased
sales to hospitals. Selling, shipping and warehouse and general and
administrative expenses expressed as a percent of net sales decreased 1.4% for
fiscal 1994 as compared to fiscal 1993. Selling, shipping and warehouse and
general and administrative expenses expressed as a percent of net sales
increased 1% for fiscal 1993 as compared to fiscal 1992.

INTEREST AND FINANCING COSTS (NET OF INTEREST INCOME)

Interest expense net of interest income expressed as a percent of net sales
increased .2% for fiscal 1994 when compared to the prior year as a result of
increases in accounts receivable and increases in the interest rates charged by
financial institutions. Interest expense net of interest income expressed as a
percent of net sales increased .2% for fiscal 1993 as compared to the comparable
period of the prior year, as a result of increases in

13
<PAGE>

accounts receivable, inventory and capital expenditures needed to support the
company's continued growth.

LIQUIDITY AND CAPITAL RESOURCES

Management believes that its working capital of approximately $30,000,000
at November 30, 1994 together with its $25,000,000 line of credit and cash flow
from operations provide sufficient liquidity for its short and long term
requirements and that the Company's long-term liquidity is not to be materially
effected by any restrictive covenants contained in the Company's Revolving
Credit Agreement. Further, Management believes that the Company should not
experience a problem in connection with the maintenance of such covenants.

During the past three fiscal years, the Company continued to meet its cash
needs via cash flow from operations and borrowings. During 1994, 1993 and 1992,
the Company had an average of approximately $11,000,000, $4,000,000 and
$3,200,000 respectively, of unused credit lines available each month over its
normal operating requirements.

For fiscal 1994, the Company generated cash flow from operating activities.
An increase in accounts payable over and above increases in inventory accounts
receivable and prepaid expenses contributed to the Company's generation of cash.
During fiscal 1994, the Company's financing activities used cash as a result of
repayments of the bank loan under its long-term credit agreement. For fiscal
1994 the Company used cash in investing activities to make capital expenditures
and payments of net assets. During fiscal 1994, the Company acquired the
business and certain assets of Clark through an increase in the Company's line-
of-credit and the use of same.

For fiscal 1993, the Company used cash for operating activities. An
increase in accounts receivable, inventory, prepaid expenses and a decrease in
accrued expenses and accounts payable contributed to the Company's use of cash.
During fiscal 1993, the Company's financing activities generated cash flow as a
result of the net proceeds from the exercise of Series 1 Warrants and the sale
of Debentures. For fiscal 1993, the Company used cash in investing activities
to make capital expenditures.

For fiscal 1992, the Company used cash for operating activities as a result
of increases in accounts receivable and inventory over and above an increase in
accounts payable and accrued expenses. During fiscal 1992, the Company
generated cash flow as a result of the net proceeds of approximately $3,300,000
received from the completion of a public rights offering and increases in
borrowings under its long-term credit agreement.

Between August and September 1993, the Company received approximately
$4,000,000 in gross proceeds from the exercise of Series 1 Warrants. In
November 1993, Micro completed the private sale and issuance of its 7%
convertible subordinated Debentures due October 30, 2003 (the "Debentures").
Net proceeds from the issuance of the Debentures with a face value of $3 million
was

14
<PAGE>

approximately $2.7 million. The Debentures are immediately convertible into
shares of Common Stock at the rate of $8.00 per share until October 28, 2003,
subject to adjustment in certain events. These proceeds combined with
borrowings under the Company's line of credit were used on December 1, 1993 to
purchase the assets of Clark Surgical Corp. at a purchase price of approximately
$16,500,000.

15
<PAGE>

SELECTED FINANCIAL DATA

1994 1993 1992 1991 1990
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED OR AT NOVEMBER 30,

All references to shares and per share data have been restated for all
periods presented due to a reverse stock split on June 28, 1991.

</TABLE>

16
<PAGE>

USE OF PROCEEDS

The net proceeds to be received by the Company assuming the exercise of all
of the Series 1 Warrants (of which no assurances can be given in this regard)
are estimated to be approximately $4,055,124 before deducting estimated offering
expenses payable by the Company of $10,000. Such net proceeds (combined with
any proceeds received from the exercise of the Underwriter's Unit Warrants and
Underwriter's Warrants) will be used to temporarily reduce the balance
outstanding under the Company's bank line-of-credit which may then be drawn upon
for all general corporate purposes including, without limitation, for a possible
acquisition(s). At February 27, 1995, the Company does not have agreements for
any material acquisition that may be deemed probable. Accordingly, the
expenditure of these funds will be at the discretion of Management. See
"Investment Considerations - Dependence on Financing and "Investment
Considerations - Use of Proceeds at the Discretion of Management."

MARKET INFORMATION

Since September 1992, the Company's Common Stock is quoted on the National
Association of Securities Dealers' Automated Quotation System National Market
System ("NASDAQ/NMS") under the symbol "MBMI." Prior to the listing of the
Company's Common Stock on NASDAQ/NMS, the Common Stock was traded under the same
symbol as a NASDAQ small-cap issue. Since August 20, 1992, the Company's Series
1 Warrants may be quoted in the "pink sheets" published by National Quotation
Bureau, Inc. The Company does not intend to qualify the Series 1 Warrants for
trading on NASDAQ. During the period December 1, 1992 to November 30, 1994, the
Company's Series 1 Warrants were unpriced. The over-the-counter market
quotation reported above reflects inter-dealer prices, without retail markup,
markdown or commission and may not represent actual transactions.

Except as otherwise noted, the following table reflects the high and low
sales prices for the Company's Common Stock for the periods indicated as
reported by the National Association of Securities Dealers, Inc. ("NASD") from
its NASDAQ system:

17
<PAGE>

COMMON STOCK

<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------
February 28 May 31 August 31 November 30
High Low High Low High Low High Low
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Fiscal Year Ended
November 30, 1993 8-29/32 6-3/8 8-1/2 7-1/2 11-1/4 7-3/4 14-1/8 10-3/4
- ---------------------------------------------------------------------------------------------------------
Fiscal Year Ended
November 30, 1994 13 8 10-3/4 9-1/8 10 9-1/2 10 9-1/2
- ---------------------------------------------------------------------------------------------------------

</TABLE>

The over-the-counter market quotation reported above reflects inter-dealer
prices, without retail markup, markdown or commission.

As of February 15, 1995 at 4:00 P.M. Eastern Standard Time, the last sale
price of the Common Stock in the over-the-counter market was 9.50.

Management has been advised by its transfer agent (American Stock Transfer
& Trust Company) that the approximate number of record holders of the Company's
Common Stock, as of February 15, 1995, the record date, was 655. No cash
dividends have been paid by the Company on its Common Stock and no such payment
is anticipated in the foreseeable future.

18
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
November 30, 1994:

Amount
-----------
<S> <C>

Long term-debt, net of current
maturities $19,381,239
-----------
Stockholders' equity
Preferred Stock, $1.00 par value;
authorized 1,000,000 shares,
no shares issued
Common Stock, $.03 par value,
7,000,000 authorized
3,595,409 shares outstanding 107,862
Capital in excess of par value 10,527,552
Retained earnings 7,432,806
Less: cost of 1,167 shares of
Common Stock in treasury (1,164)
-----------
Total stockholders' equity 18,067,056
-----------
Total capitalization $37,448,295
-----------
-----------

<FN>
(1) Does not include the following: (i) the possible exercise of the
Underwriter's Warrants issued in 1992 to Royce Investment Group, Inc. to
purchase a maximum of 241,051 shares, (ii) outstanding stock options
granted to officers, directors, employees and consultants covering
approximately 1,372,369 shares, or (iii) 375,000 shares issuable upon
conversion of certain Debentures.

</TABLE>

DILUTION

Persons exercising the Series 1 Warrants will incur an immediate and
substantial dilution of the net tangible book value per share of their
investment. As of November 30, 1994, the Common Stock of the Company had a net
tangible book value of approximately $14,273,000 or $3.97 per share based upon
3,595,409 shares outstanding at that date. Without taking into account any other
changes in the Company's net tangible book value after November 30, 1994 other
than those resulting from the assumed exercise of Series 1 Warrants (of which no
assurances can be given in this regard) at an average exercise price of $5.73
per share, the pro forma net tangible book value of the Company's Common Stock
as of November 30, 1994 would be approximately $18,341,000 or $4.26 per share
for the Company's then stockholders and an immediate dilution of $1.47 per share
to the persons exercising the Series 1 Warrants. The following table
illustrates the per share dilution on the basis discussed in the immediately
preceding paragraph:

19
<PAGE>

TABLE I - DILUTION

<TABLE>

Exercise Price per share $5.73
Net tangible book value per
share before offering $3.97
Increase in net tangible book value
per share attributable to the shares
offered .29
-----
Pro forma net tangible book value
per share after offering (1) 4.26
-----
Dilution to new investors 1.47
-----
-----

<FN>
- ---------------
(1) After deduction of $10,000 of estimated offering expenses to be paid by the
Company.

</TABLE>

As of November 30, 1994, the Common Stock of the Company had a net tangible
book value of 14,273,000 or $3.41 per share under the Modified Treasury Stock
Method after adjusting net tangible book value and the number of shares used to
compute net tangible book value per share assuming that the Series 1 Warrants
are not outstanding. Without taking into account any other changes in the
Company's net tangible book value after that date other than those resulting
from the assumed exercise of Series 1 Warrants (of which no assurances can be
given in this regard) at an average price of $5.73 per share, the pro forma net
tangible book value of the Company's Common Stock under the Modified Treasury
Stock Method as of November 30, 1994 would be approximately $18,341,000 or $3.75
per share for the Company's then stockholders and an immediate dilution of $1.98
per share to the persons exercising the Series 1 Warrants.

The following table illustrates the per share dilution on the basis
discussed in the immediately preceding paragraph:

TABLE II - DILUTION

<TABLE>

Exercise Price per share $5.73
Net tangible book value per
share before offering $3.41
Increase in net tangible book value
per share attributable to the shares
offered .34
-----
Pro forma net tangible book value
per share after offering (1) 3.75
-----
Dilution to new investors $1.98
-----
-----

<FN>
- ---------------
(1) After deduction of $10,000 of estimated offering expenses to be paid by the
Company.

</TABLE>

The foregoing tables do not reflect the possible exercise or conversion of
the following: (i) Underwriter's Unit Warrants and/or Underwriter's Warrants to
purchase a maximum of 241,051 shares, (ii) outstanding stock options granted to
officers, directors, employees and consultants covering approximately 1,372,369
shares and (iii) certain Debentures covering a maximum of 375,000 shares
issuable upon conversion of same. Persons exercising the Underwriter's Unit

20
<PAGE>

Warrants and/or Underwriter's Warrants will experience substantial and immediate
dilution in the net tangible book value of their investment.

BUSINESS

OVERVIEW

Micro Bio-Medics, Inc. (the "Company" or "Micro") is a New York company
which was incorporated in 1971. The Company distributes medical supplies to
physicians and hospitals in the New York metropolitan area, as well as to health
care professionals in the sports medicine, emergency medicine, school health,
industrial safety, government and laboratory markets nationwide. The Company
depends upon the continued supply of the products it distributes, however, it
does not depend upon any single source. The Company has neither encountered nor
does it anticipate any difficulty in obtaining the necessary products. No one
customer has accounted for more than 10% of the Company's revenues during the
fiscal years ended November 30, 1994, November 30, 1993 and November 30, 1992.

CALIGOR DIVISION

The Company's Caligor Division is a physician supplier in the New York
metropolitan area, serving over 12,000 physicians and laboratories. It also
serves local hospitals, nursing homes and industrial medical departments.

Caligor provides its physicians with a comprehensive selection of supplies
and related services. The division's estimated 50,000 supplies range from
bandages and pharmaceuticals to sophisticated diagnostic equipment, while the
services range from equipment repair to the complete design and installation of
new offices, waiting rooms, exam rooms and laboratories.

The Caligor division through Caligor Physicians & Hospital Supply Corp., a
wholly owned subsidiary of the Company, also operates a pharmacy in Manhattan
to serve local physicians and their patients. In addition, the Caligor Division
supplies independent clinical labs, hospital labs, and physician in-office labs
with diagnostic equipment, test kits, reagents and disposables.

Over the past few years, the Caligor Division has been able to acquire a
number of smaller distributors, resulting in significant economies of scale and
improved operating efficiencies. Caligor has increased its market share in
these new territories with the same combination of sales force support, direct
mail, catalogs and telemarketing sales that it uses in existing territories.

Caligor is the Company's largest division in terms of annual sales.
Revenues during fiscal 1994 were approximately $101,000,000 or 83.1% of the
Company's total revenues for the same period as compared to $55,100,000 or 74.6%
of total revenues for the comparable period of fiscal 1993, as compared to
$44,200,000 or 71.8% of the total revenues for the comparable period of fiscal
1992. The increase over the prior fiscal periods resulted primarily from the
Company's acquisition of the business and assets from Clark Surgical as

21
<PAGE>

described under "Acquisition of Assets of Clark Surgical Corp." and "recent
developments" as well as sales and marketing efforts aimed at the acquired and
existing customer base.

MBM DIVISION

The MBM Division distributes sports medicine supplies, school nurse
supplies, medical equipment and rehabilitation equipment to over 10,000 schools,
colleges, municipalities, emergency medical units and professional sports teams
around the country, including many of the major and minor league baseball,
basketball, football and hockey teams. Revenues derived from municipalities and
school districts are derived from competitive bidding.

Like the Caligor Division, MBM Division serves its customers with a
comprehensive line of supplies and services, ranging from the delivery of
athletic tape to an NFL team on the road to the complete design, furnishing and
stocking of a training room, sports medicine clinic, or school nurse office.

MBM Division markets its product line primarily via three catalogs which it
distributes to customers and prospective customers each year. These catalogs
are supported by direct mail, telemarketing, professional journal advertising,
national and local trade show exhibitions, and an inside sales and customer
service staff.

The seasonal buying habits of the Company's school and athletic customers
is concentrated between the months of June and September of each year. Although
the Company's marketing expenses relating to such customers are incurred
throughout the year, the Company has experienced no problem in meeting its cash
requirements as a result of its working capital and extension of credit under
its Revolving Credit Agreement.

Revenues derived from the MBM Division during fiscal 1994 were
approximately $18,100,000 or 14.9% of the Company's total revenues for the same
period as compared with approximately $16,500,000 or 22.3% of total revenues for
fiscal 1993 and $15,100,000 or 24.5% total revenues for fiscal 1992. Revenues
increased as a result of the addition of a Southern Regional sales office,
increased market penetration and an increase in Company sales personnel.

HEALER PRODUCTS DIVISION

The Company's Healer Products Division is an assembler and wholesaler of
first aid kits and private label medical products. These products, in turn, are
marketed by the Company's other divisions, and sold to numerous outside markets
through a network of commissioned sales agents. The first aid and medical kits
are produced in a variety of forms and sizes, but are generally designed for use
in government, industry, schools, emergency medical organizations, hospitals,
homes and recreational facilities.

22
<PAGE>

The Healer Products Division also produces specialized kits for volunteer
ambulance corps, emergency squads, corporate offices, construction operations,
restaurants, retail stores, boats, athletic activities, motor vehicles, and
sales promotion purposes as well as for specific medical problems such as
burns, poisoning, insect stings, traumatic accidents, obstetrical emergencies
and eye injuries.

Many of the products contained in the kits are generic and are marketed
under the Company's private label. The use of private-label generic products
permits attractive pricing for the Company and its customers and creates a
consistent, positive brand image among customers.

Revenues derived from the Healer Products Division during fiscal year 1994
were approximately $2,459,000 representing 2.0% of the Company's total revenues
as compared with $2,300,000 representing 3.1% of total revenues for fiscal 1993
and as compared to $2,300,000 representing 3.7% of total revenues for fiscal
1992. Revenues for fiscal 1994 increased as a result of increased market
penetration and the addition of more independent commission sales
representatives.

ACQUISITION OF JOSEPH WEINTRAUB, INC.

On June 1, 1994, the Company acquired certain assets and customer accounts
of Joseph Weintraub, Inc., a distributor of physician and hospital supplies for
approximately $1,100,000. The purchase price was allocated based upon the fair
market value of the assets at the date of acquisition. The operations of Joseph
Weintraub Inc. have been combined into the Caligor Division.

ACQUISITION OF ASSETS OF CLARK SURGICAL CORP.

On November 19, 1993, MBM Hospital Supply Corp., a wholly owned subsidiary
of the Company entered into an agreement with Clark Surgical Corp. ("Clark") to
acquire from Clark substantially all of the assets and customer accounts subject
to certain specific liabilities and obligations arising out of the contracts and
personal property leases acquired (the "Agreement"). This transaction closed on
December 1, 1993 and was accounted for as a purchase.

The purchase price for all the assets was approximately $16,500,000. The
purchase price was based upon the book value of the inventory, accounts
receivable and fixed assets purchased by MBM Hospital plus $1 million for
Clark's goodwill as described in the Agreement. Micro also issued to certain
persons warrants to purchase an aggregate of 40,000 shares of Micro's Common
Stock at a purchase price of $8.00 per share, subject to Micro's right to
terminate the unvested portion of the Warrants upon certain conditions at the
sole discretion of the Board of Directors. The Warrants vested 20% at closing
and the balance was scheduled to vest in four equal annual amounts on the
anniversary date of the Closing Date. As of November 29, 1994, the unvested
portion of the Warrants to purchase 32,000 shares have been terminated.

The Agreement also provided for the execution of agreements not to compete
with Alfred S. Bretan and Burt Wexler, the sole shareholders of Clark
(hereinafter referred to as the "Shareholders"). The agreements not to compete
provide for the payment of $3.125 million in cash over a seven year period.

23
<PAGE>

Prior to entering into the Letter of Intent to acquire Clark dated
August 20, 1993 and the Agreement, there was no affiliation between Micro, MBM
Hospital, Clark and their officers and/or directors. The Letter of Intent
provided for Micro to loan Clark $1,000,000 which loan has been made. The loan
bore an interest rate of 1% above the prime rate announced by Chase. The loan
was collateralized by certain assets of Clark's stockholders as well as a second
lien on the accounts receivable and inventory of Clark. The loan was repaid on
December 1, 1993.

The operations of MBM Hospital Supply Corp. have been combined into the
various divisions of the Company.

ACQUISITION OF ASSETS OF HARRISBURG SURGICAL SUPPLY

On March 29, 1993, the Company acquired Harrisburg Surgical Supply, Inc., a
distributor of physician and nursing home supplies servicing the eastern
Pennsylvania, Philadelphia and Baltimore metropolitan markets. The
consideration paid consisted of a combination of $600,000 in cash and 71,229
shares of the Company's Common Stock for an aggregate purchase price of
approximately $1,200,000. The operations of Harrisburg Surgical Supply, Inc.
have been combined into the Caligor Division.

REVOLVING CREDIT AGREEMENT

On November 19, 1993, Micro entered into a Credit Agreement with Chase
Manhattan Bank N.A. ("Chase") to act as agent of and as a participant in a $25
million secured revolving credit facility for Micro. Fleet Bank of New York
("Fleet") also acted as a participant in the Credit Agreement. Chase's and
Fleet's commitment under the Credit Agreement is limited to $15 million and $10
million, respectively. All references to the Company include Micro and its
subsidiaries.

The Credit Agreement provides for a three year secured revolving credit in
an amount which shall not exceed the lesser of (a) $25,000,000 or (b) the
borrowing base as defined in the Credit Agreement.

The Credit Agreement provides for the Company to pay interest on loans made
under the facility at the rate of 1/4 of 1% over the Banks periodic base rate
unless the Company elects to pay based upon an alternative formula at the time
of each borrowing. Upon request by the Company, the Banks may, at their option,
create banker acceptances under the facility.

The Credit Agreement is subject to several conditions and financial
covenants such as the following:

- WORKING CAPITAL: The Company shall maintain a Consolidated Working
Capital of no less than $10,500,000 as of the end of each fiscal
quarter.

24
<PAGE>

- INTEREST COVERAGE RATIO: The Company shall maintain a ratio of
Consolidated EBIT (earnings before interest and taxes) to Consolidated
Interest Expense, measured at the end of each fiscal quarter for a
period comprised of such fiscal quarter and the three immediately
preceding fiscal quarters, of not less than (a) 3.00 to 1.0, as
measured during fiscal year December 1, 1992 - November 30, 1993; (b)
2.00 to 1.0, as measured during fiscal year December 1, 1993 -
November 30, 1994; and (c) 3.00 to 1.00 thereafter.

- CURRENT RATIO: The Company shall maintain a ratio of Consolidated
Current Assets to Consolidated Current Liabilities of not less than
1.20 to 1.0, calculated at each fiscal quarter end.

- LEVERAGE RATIO: The Company shall maintain a ratio of (a)(i) total
liabilities of the Company and its Consolidated Subsidiaries less (ii)
Approved Subordinated Debt divided by (b)(i) net worth of the Company
and its Consolidated Subsidiaries plus (ii) Approved Subordinated Debt
less (iii) intangible assets of the Company and its Consolidated
Subsidiaries, as of the end of each fiscal quarter of the Company of
not more than the number set forth opposite such fiscal quarter:

each fiscal quarter in:
fiscal year 1993 2.50 to 1.0
fiscal year 1994 2.50 to 1.0
fiscal year 1995 2.25 to 1.0
fiscal year 1996 2.00 to 1.0

- TANGIBLE NET WORTH: The Company shall maintain a Consolidated
Tangible Net Worth, calculated at the end of each fiscal year, of no
less than (a) for the fiscal year ending 1993, $300,000 more than the
Consolidated Tangible Net Worth for the immediately preceding fiscal
year and (b) for the fiscal year ending 1994 and each fiscal year
thereafter, $400,000 more than the Consolidated Tangible Net Worth for
the respective immediately preceding fiscal year.

The Credit Agreement provides, among other things that, (1) the Company
shall not declare or pay any dividends or make any distribution of assets to
stockholders, except that the Company may declare dividends and make
distributions solely in the Common Stock of the Company, (2) the Company shall
not purchase any of its capital stock now or hereafter outstanding which
purchase shall, when aggregated with all other such purchases, exceed $250,000
(excluding certain purchases as set forth in the Credit Agreement relating to
the Company's shares that were issued in connection with the Company's purchase
of Harrisburg Health Care, Inc.), (3) the Company shall not lease, assign,
transfer or dispose of assets other than in the ordinary course of business, (4)
the Company shall not change its fiscal year, (5) the Company shall not incur
any debt other than the following: debt owed to the Banks under the facility;
existing debt

25
<PAGE>

disclosed to and approved by the Banks; approved subordinated debt; debt between
the Company and a subsidiary; accounts payable to trade creditors incurred in
the ordinary course of business; commercial letters of credit issued for the
account of the Company by other than the Banks in amount not to exceed in the
aggregate at any time the principal sum of $500,000; and such other debt as
provided for in the Credit Agreement.

REGULATORY REQUIREMENTS

The manufacturers of many products sold by the Company are required to
obtain U.S. Food and Drug Administration ("FDA") approval for such products,
failing such approval, sales of such products cannot lawfully be made. The
Company's assembly, warehousing and distribution procedures are subject to the
Good Manufacturing Practices regulation of the FDA. The Company has registered
itself with the FDA and has renewed said registration annually. Such
registration permits the Company to distribute supplies and medical devices.

The Caligor Division and MBM Hospital, among its various activities,
operates as a wholesaler and retailer of prescription drugs and medical devices
in the State of New York. The practice of pharmacy at the wholesale and retail
level is regulated by federal, state and local statutes, rules and regulations.
The Company is duly licensed to permit its Caligor Division to operate as
wholesalers and retailers in prescription drugs and medical devices in the State
of New York. In the future, should the Company expand such activities, it will
have to comply with all applicable federal, state and local rules.

COMPETITION

The Company, in all phases of its activities, experiences competition from
other manufacturers and distributors of products in the same categories as those
of the Company, as well as from wholesale and retail pharmacies, selling to the
same general markets as those of the Company. Additionally, the Caligor
Division's services are subject to competition from similar service
organizations. Many of the Company's competitors have far greater resources
than the Company and, in addition, many larger and better financed firms not
presently in the Company's lines of business may conceivably enter these lines
of business in the future. However, most of the Company's markets are serviced
by hospital and surgical supply dealers, athletic retailers, pharmacies and
equipment repair firms. The Company believes that its purchasing power, quick
service including next day delivery where possible, competitive pricing and
marketing expertise enable it to compete favorably with such firms although it
continues to experience significant competition from other firms which are
better established and have substantially greater financial resources than the
Company.

26
<PAGE>

EMPLOYEES

At January 31, 1995, the Company employed 270 full-time employees,
including 101 sales and customer service persons, 81 warehouse and shipping
workers, 61 clerical workers, 7 delivery persons, 6 computer programmers, 2
pharmacists, 6 purchasing agents and 6 senior management officers. The Company
usually employs seasonal summer employees during peak sales volume periods. The
Company's employees are not covered under any collective bargaining agreements
and there have been no work stoppages. Management believes the Company has
satisfactory employee relations at all levels.

FACILITIES

In 1992, the Company consolidated its various Mount Vernon facilities
described below into one central location consisting of approximately 88,000
square feet of assembly and storage space and 20,000 square feet of office space
in a 31 year old industrial building at 846 Pelham Parkway, Pelham Manor, New
York. This location's facilities are leased from a non-affiliated entity and
are in good condition and sprinklered. The Company leased these premises
pursuant to a lease which expires on July 31, 2007. The Company pays an annual
rent of approximately $468,000, with certain additional sums based upon property
tax costs.

The Pelham Manor, New York facilities are equipped to house the assembly
processing, customer service, warehousing and shipping requirements of all the
Company's divisions to the extent located at these facilities. It contains an
order picking conveyor system, fork lifts, large numbers of pallet racks and
shelving, manually operated material handling equipment, packaging equipment,
assembly equipment (tables, benches and conveyers), engraving machinery (for
medical equipment), and conventional office equipment, including an electronic
data processing system used to facilitate all areas of the Company's business.

The Company leases for its Caligor Division approximately 5,000 square feet
of space at 1226 Lexington Avenue, New York, New York, under a lease which
expires on April 30, 2000, for which it presently pays an annual rental of
approximately $49,000 per annum, together with additional sums for heat,
utilities and property tax costs. This location contains a store front facility
fully equipped to operate as a wholesale and retail pharmacy, and a basement
storage facility.

The Company leases for its MBM division approximately 4,290 square feet of
space at 211 Harbor Way, South San Francisco, California under a lease which
expires on January 31, 1996 for which it pays an annual rental of approximately
$30,000. This location's facilities are in good condition with approximately
1,000 square feet being devoted to office space and the balance to warehouse
space.

The Company also leases approximately 3,100 square feet of space in
Jacksonville, Florida, under a lease which expires June 30, 1997. The annual
rental under the lease is approximately $16,800.

27
<PAGE>

The Company leases for its Caligor Division approximately 124,000 square
feet of warehouse space including offices and warehouse dock at 300 Michael
Drive, Syosset, New York. The building is fully sprinklered and alarmed. The
Company leases these facilities pursuant to a lease which expires on March 31,
1996, with an option to renew until April 29, 2001. The Company pays an annual
rent of $240,000 with certain additional sums based upon property tax costs,
insurance and utilities.

All of the Company's facilities are adequate for the Company's present
needs. In the event that additional facilities are needed, Management believes
that such facilities can be obtained at a reasonable cost.

None of the Company's leases are with related parties. Additionally, the
Company now owns 1 automobile and 3 trucks and leases 2 station wagons, 4
trucks, 3 delivery vans and 10 automobiles, all of which are utilized for
business purposes.

LEGAL PROCEEDINGS

There are no material legal proceedings pending against the Company.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The Directors and Executive Officers of the Company are as follows:

Name Age Title
---- --- -----

Bruce J. Haber 42 President, Chief
Executive Officer
and Director

Marvin Caligor 64 Consultant, Director

Renee Steinberg 72 Secretary and Director

K. Deane Reade, Jr. 53 Director

Louis Buther 41 Vice-President

Ernest W. Nelson 40 Vice President

Michael J. Levy 57 Vice-President

Gary L. Butler 52 Treasurer, Assistant
Secretary Principal
Financial and Accounting
Officer

28
<PAGE>

Bruce J. Haber is serving as President and a Director of the Company.
Mr. Haber was elected to the position of President in December, 1983; has served
as a Director of the Company since September, 1981; and, since that date, until
his election as President of the Company, served as Executive Vice-President of
the Company. Prior to his affiliation with the Company, Mr. Haber served from
1977 to August, 1981 as a Vice-President of Commercial Credit Business Services,
Inc., New York. Mr. Haber holds a Bachelor of Science degree from the City
College of New York and a Master of Business Administration from Baruch College
in New York. Mr. Haber is a full-time employee of the Company.

Louis Buther has been a Vice-President of the Company since December,
1983. He has served as Vice-President of the Company's wholly-owned subsidiary
Caligor Physicians and Hospital Supply Corp. since May, 1983 and from March 1,
1982 to April, 1983, served as its Sales Manager. Mr. Buther also served as
Sales Manager for the Caligor business from 1980 until its acquisition and prior
thereto served it in the capacity of a licensed pharmacist and pharmacist
intern. Mr. Buther holds an Associate Arts Science degree in Chemistry from
Bronx Community College and a Bachelor of Science degree in Pharmacy from Long
Island University. Mr. Buther is a full-time employee of the Company.

Ernest W. Nelson has been a Vice-President of the Company since December,
1983. From January, 1982 until his election as a Vice-President, he was employed
by the Company as a Sales Representative and then promoted to the position of
National Sales Manager for the Company's MBM division. Prior thereto,
Mr. Nelson was employed from June, 1981, to December, 1981, as a Sales
Representative for United States Lines and, from July, 1976, to June, 1981, as
an Athletic Trainer and Associate Professor at Columbia University, New
York City. Mr. Nelson holds a Bachelor of Science degree from Central
Connecticut State University and a Master of Arts degree from Columbia
University. Mr. Nelson is a full-time employee of the Company.

Michael Levy joined the Company in 1990 as Vice President of the Healer
Products Division. Prior to joining the Company, Mr. Levy served as a
Management Consultant in the women's apparel industry from 1987 to 1990. He was
Senior Vice President of Rudco Industries, Inc., a financial forms manufacturer
from 1975 to 1987 and held two management positions in the hardware industry
from 1960 to 1975. Mr. Levy is a full-time employee of the Company.

Gary L. Butler has been Treasurer of the Company and has served at various
times as an executive officer in other capacities since December, 1983. From
March 1, 1982 until December, 1983, Mr. Butler served as the Controller of the
Company's wholly-owned subsidiary, Caligor Physicians and Hospital Supply Corp.,
and, prior thereto, served in such capacity with the Caligor business from May,
1975 until its acquisition by the Company. From December, 1984 to the present,
Mr. Butler has served as Treasurer of Caligor Physicians & Hospital Supply Corp.
Mr. Butler holds a Bachelor of Science degree from New York University. Mr.
Butler is a full-time employee of the Company.

29
<PAGE>

Marvin S. Caligor, a Director of the Company since March 1, 1982, when
Caligor Physicians and Hospital Supply division of Health-Chem Corporation was
acquired by the Company. Mr. Caligor also served as Senior Vice-President of
the Company from March, 1982 until December, 1987. Since December, 1987, Mr.
Caligor has been employed by the Company as a consultant on a part-time basis.
From 1969 until its acquisition by the Company, Mr. Caligor was President of the
division and an officer and director of Health-Chem Corporation. Mr. Caligor is
a licensed pharmacist and holds a Bachelor of Science in Pharmacy from Columbia
University.

Renee Steinberg has served as Secretary and a Director of the Company for
more than the past 5 years and has not been associated with any firm other than
the Company and its subsidiaries during such period. Mrs. Steinberg received a
Bachelor of Science degree from Cornell University and is a founder of the
Company.

K. Deane Reade, Jr. has been a Director of the Company since July, 1987.
Mr. Reade is Managing Director of John Hancock Capital Growth Management, Inc.
and a General Partner of the John Hancock Capital Growth Partners, L.P. In
addition, Mr. Reade is a director of Bangert, Dawes, Reade, Davis & Thom, Inc.,
a private investment banking firm with offices in New York and San Francisco.
As a founder of Bangert, Dawes, Reade, Davis & Thom, Inc., he served as
president since its establishment in 1975. Mr. Reade is a graduate of Rutgers
University. He is a director of John Hancock Capital Growth Management, Inc.
(New York and San Francisco, California); Everlock Fastening Systems, Inc.
(Troy, Michigan); American/Elgen, Inc. (Irvington, New Jersey); Myers
Industries, Inc. (Lincoln, Illinois); Wundies Industries Inc. (New York, New
York), Zimpro Environmental, Inc. (Rothchild, Wisconsin), U. S. Souvenir, Inc.
(Honolulu, Hawaii) and Trail Blazers Camps, Inc. (New York, N.Y.) a 100 year old
social service organization with a year round educational program for
disadvantaged children from the Metropolitan New York - New Jersey area.

Directors are elected at the annual meeting of stockholders and hold
office until the following annual meeting. The terms of all officers expire at
the annual meeting of directors following the annual stockholders meeting.
Subject to their contract rights to compensation, if any, officers may be
removed, either with or without cause, by the Board of Directors, and a
successor elected by a majority vote of the Board of Directors, at any time.

In October, 1987, the Company established an Executive Compensation
Committee with Renee Steinberg as Chairman and Bruce Haber and K. Deane Reade as
members and an Audit Committee with K. Deane Reade as Chairman and Bruce Haber
and Marvin Caligor as members.

The Compensation Committee has the power to review compensation of the
Company's executive officers, including salaries, the granting of stock options
and other forms of compensation for executive officers whose salaries are within
the purview of the Board of Directors. In some cases, the Compensation Committee
may make recommendations to the entire Board of Directors for its approval or,

30
<PAGE>

itself exercise the powers and authority of the Board of Directors to designate
compensation.

The Audit Committee has the power to (i) select the independent certified
public accountant, (ii) satisfy itself on behalf of the Board that the external
and internal auditing procedures assure reliable and informative accounting and
financial reporting, (iii) have meetings with management, or with the auditors,
or with both management and auditors, to review the scope of the auditor's
examination, audit reports and the Corporation's internal auditing procedures
and reviews, (iv) monitor policies established to prohibit unethical,
questionable, or illegal activities by those associated with the Corporation;
and (v) review the compensation paid to the auditors through annual audit and
non-audit fees and the effect on the independence of the auditors in relation
thereto, and it may exercise the powers and authority of the Board of Directors
to implement changes in connection with the foregoing or, at its option, may
make recommendations to the entire Board of Directors for its approval.

Michael Levy, Marvin Caligor and Louis Buther each filed a Form 4 late on
one occasion during fiscal 1994.

31
<PAGE>

EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The following table provides a summary compensation table with respect to
the compensation of the Company's Chief Executive Officer (CEO) and the
executive officers other than the CEO who are serving as executive officers at
the end of fiscal 1994 whose total annual salary and bonus, if any, exceeded
$100,000.

SUMMARY COMPENSATION TABLE

Long Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)

Other All
Name Annual Restricted Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Number of Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) Options ($) ($)
(1) (2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Bruce J. Haber 1994 209,385 199,097 -0- -0- 70,000 -0- 16,848
CEO, 1993 191,846 154,594 -0- -0- 35,000 -0- 9,799
President 1992 176,961 168,977 -0- 100,000 510,000 -0- 9,656
- ------------------------------------------------------------------------------------------------------------------------------

Louis Buther 1994 114,058 89,365 -0- -0- 17,500 -0- 1,766
Vice President 1993 107,363 62,603 -0- -0- 15,000 -0- 1,581
1992 102,654 68,101 -0- -0- 90,000 -0- 1,656
- ------------------------------------------------------------------------------------------------------------------------------

Ernest Nelson 1994 85,346 46,445 -0- -0- 10,000 -0- 1,228
Vice President 1993 82,056 39,000 -0- -0- 15,000 -0- 1,340
1992 81,776 54,000 -0- -0- 50,000 -0- 1,656
- ------------------------------------------------------------------------------------------------------------------------------

<FN>
(1) The restricted stock awards are based upon the dollar value of restricted
stock, calculated by multiplying the closing market price of the
Registrant's unrestricted stock on the date of grant by the number of
shares awarded on that date.

(2) Includes contributions to the Company's 401(K) Plan and in the case of
Bruce Haber, all other compensation includes insurance premiums paid for a
whole life policy which Mr. Haber is allowed to designate the beneficiary.

</TABLE>

32
<PAGE>

During the past three fiscal years, the Company has not granted stock
appreciation rights. In addition, the Company does not have a defined benefit
or actuarial plan. See Section 401(k) or deferred retirement plan regarding the
cash or deferred retirement plan pursuant to Section 401(k) of the Code.
Outside directors currently receive $16,000 annual compensation for their
services as directors, $4,000 for services on each Audit and Compensation
Committee and are eligible to receive stock options.

OPTION GRANTS TABLE

The information provided in the table below provides information with
respect to individual grants of stock options during fiscal 1994 of each of the
executive officers named in the summary compensation table above. The Company
did not grant any stock appreciation rights during 1994.

OPTION GRANTS IN LAST FISCAL YEAR

Potential
Realizable Value at
Assumed Annual
Individual Grants Rates of Stock Price
Appreciation
for Option Term (2)
- -------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)

% of
Total
Options/
Granted to
Options Employees Exercise Expira-
Granted in Fiscal Price tion
Name (#)(3) Year (1) ($/Sh) Date 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Bruce Haber 70,000 38.8 10.00 6/13/04 440,300 1,113,000
- -------------------------------------------------------------------------------------------------------------------------------
Louis Buther 17,500 9.7 9.88 7/06/04 108,675 275,100
- -------------------------------------------------------------------------------------------------------------------------------
Ernest Nelson 10,000 5.5 10.00 6/13/04 62,900 159,000
- -------------------------------------------------------------------------------------------------------------------------------

<FN>
N/A - Not Applicable.
(1) The percentage of total options granted to employees in fiscal year is
based upon options granted to officers, directors and employees.
(2) The potential realizable value of each grant of options assumes that the
market price of the Company's Common Stock appreciates in value from the
date of grant to the end of the option term at annualized rates of 5% and
10%, respectively, and after subtracting the exercise price from the
potential realizable value.
(3) All options are exercisable at any time until the expiration date.

</TABLE>

33
<PAGE>

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES

The information provided in the table below provides information with respect to
each exercise of stock option during fiscal 1994 by each of the executive
officers named in the summary compensation table and the fiscal year end value
of unexercised options.

(a) (b) (c) (d) (e)

Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options
Shares Acquired Value FY-End (#) at Fy-End($)
on Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(1) Unexercisable Unexercisable(1)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Bruce Haber -0- -0- 658,334/6,666 3,167,417/48,333
- -------------------------------------------------------------------------------------------------------------------------

Louis Buther 5,000 28,750 131,833/1,000 586,745/7,250
- -------------------------------------------------------------------------------------------------------------------------

Ernest Nelson -0- -0- 86,999/1,667 386,076/12,083
- -------------------------------------------------------------------------------------------------------------------------

<FN>
- ---------------
(1) The aggregate dollar values in column (c) and (e) are calculated by
determining the difference between the fair market value of the Common
Stock underlying the options and the exercise price of the options at
exercise or fiscal year end, respectively. In calculating the dollar value
realized upon exercise, the value of any payment of the exercise price is
not included.

</TABLE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors (the "Committee") is
composed of three board members, namely, Bruce J. Haber, the Company's the Chief
Executive Officer ("CEO"), Renee Steinberg, the Company's Secretary, and K.
Deane Reade, Jr. This Committee is responsible for reviewing, determining and
recommending to the Board the annual salary, bonuses, stock option grants, stock
awards and other compensation of the executive officers of the Company.

The report describes the policies and rationales of the Committee in
establishing the principal components of executive compensation in 1994. The
Committee's review and determination of executive compensation includes
consideration of the following factors: (a) compensation surveys of similar
size companies, (b) past and future performance contributions of each executive
officer, (c) the performance of the Company, both separately and relative to
similar size companies, (d) historical compensation levels and (e)
recommendations of independent board members with respect to compensation
competitiveness.

34
<PAGE>

Under the direction of the Committee, the Company has developed a
compensation strategy designed to compensate its executives on a competitive
basis relative to performance and comparable to other companies of similar size.
The program is intended to (a) reward executives for long-term strategic
management and the enhancement of shareholder value, (b) facilitate the
Company's short- and long-term planning process and (c) attract and retain key
executives critical to the long-term success of the Company.

Compensation for each of the Named Executives consists of a fixed base
salary and variable components, including both short- and long-term incentive
compensation in the form of bonuses, stock option grants and stock awards. An
annual salary and performance incentive plan for each of the Company's executive
officers, other than the CEO, based on the above-described considerations and
the Company's compensation strategy, has been developed and prepared under the
direction of the CEO and approved by the Committee. Subject to the CEO's
contractual rights in his employment contract, the Committee reviews and fixes
the CEO's compensation based on similar data as well as an assessment of his
past and future contributions in leading the Company toward its objectives.

Based on the Company's profitable operations over the past eight years, the
Committee believes that the Company's executive management is dedicated to its
corporate objectives of achieving significant improvements in long-term
financial and operating performance. The executive compensation program
outlined below is designed to implement this strategy by rewarding management
for achieving these objectives.

BASE SALARY. The Company's base salary is designed to recognize the
sustained and cumulative effect on long-term results that its executives have
demonstrated. The base salary is a remuneration for services provided and is
fixed at levels which are competitive with amounts paid to executives at
comparable companies.

SHORT-TERM INCENTIVES. Short-term incentives in the form of annual bonuses
are paid to each of the Executives named in the summary compensation table to
recognize performance that is related to the achievement of key financial and
operating objectives that have been established for a fiscal year. Since short-
term incentives should generally reflect one year contributions, the size of the
payments may vary considerably from year to year, depending on performance. At
the beginning of each year, performance goals for the purposes of determining
annual incentive compensation are established in each of the Company's divisions
as well as in certain staff departments. These goals are objective, measurable
and controllable by the responsible executive.

LONG-TERM INCENTIVES. The Committee recognizes that long-term incentive
compensation is a substantial component of the total pay package linking
executive pay and corporate performance. At the Company, long-term incentive
compensation in the form of equity

35
<PAGE>

based compensation is intended to link the interests of its executives with the
interests of the Company's shareholders. The payment of stock option grants and
stock grant awards are designed to be issued to executives when the Company has
provided the shareholders with an acceptable return on their investment over a
prolonged period of time.

CHIEF EXECUTIVE OFFICER'S 1994 COMPENSATION. As more specifically set
forth in the Summary of Compensation table, Mr. Haber earned during fiscal 1994,
an annual salary of $209,385 (computed at the rate of $210,000 per annum) and an
annual bonus of $199,097 equal to 7% of the Company's income before deducting
taxes and the amount of his bonus in accordance with his employment contract.
In addition, Mr. Haber received options to purchase 70,000 shares of the
Company's Common Stock at the then current fair market value at the time of
grant.

In determining Mr. Haber's 1994 compensation, the Committee considered the
factors applied to the compensation of all executive officers as discussed
above. The Committee decided that, based on these criteria, the Company's
performance was successful. The Committee decided that Mr. Haber's total 1994
compensation package reflects the Company's overall performance based on the
creation of shareholder value, cash flow, and net income and that his annual
bonus which was based upon the terms of his employment contract, compares to
that paid to CEO's of similar sized companies.

The foregoing report has been
approved by all members of the
Committee.

Renee Steinberg, Chairperson
K. Deane Reade, Jr.
Bruce J. Haber

COMPARATIVE PERFORMANCE BY THE COMPANY

The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total shareholder return on its Common Stock with
the cumulative shareholder return of (1) a broad equity market index, and (2) a
published industry index or peer group for the past five years. Such chart
compares the performance of the Company's Common Stock with (1) the NASDAQ Stock
Market Index and (2) a group of public companies each of whom are listed in the
peer group machinery, equipment and supplies and assumes an investment of $100
on December 1, 1989 in each of the Company's Common Stock, the stock comprising
the NASDAQ Stock Market index and the stocks of the machinery, equipment and
supplies.

36
<PAGE>

COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
MICRO BIO-MEDICS, INC.

PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 02/17/95 including data to 11/30/94

[Line Graph]

LEGEND

CRSP TOTAL RETURNS INDEX FOR: 11/30/89 11/30/90 11/29/91 11/30/92 11/30/93 11/30/94
- ---------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>

Micro Bio-Medics, Inc. 100.0 88.9 145.7 261.7 493.8 375.3

Nasdaq Stock Market (US Companies) 100.0 81.1 121.0 152.3 175.3 175.6

NASDAQ Stocks (SIC 5080-5089 US + Foreign) 100.0 109.2 164.9 186.4 270.1 222.5
Machinery, Equipment, and Supplies

<FN>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 11/30/89.

</TABLE>

37
<PAGE>

EMPLOYMENT AND CONSULTING AGREEMENTS

On February 11, 1992, the Company entered into an Employment Agreement with
Bruce J. Haber. Pursuant to this agreement, Mr. Haber has agreed to devote his
full time and efforts to the business of the Company and to serve as the
Company's President and Chief Executive Officer. Mr. Haber is currently
receiving a base salary of $210,000 per annum which compensation is increased
annually by at least $5,000 per annum until the termination of the agreement,
subject to additional increases at the discretion of the Board of Directors.
The Compensation Committee of the Board of Directors has approved an increase in
Mr. Haber's annual salary to $225,000 per annum and to change Mr. Haber's
current Employment Agreement into a new five year contract, with an automatic
one year renewal feature, unless either party elects to terminate after giving
the other party at least 180 days prior written notice. Mr. Haber is also
entitled to be paid each year an annual bonus for the most recently completed
fiscal year equal to no less than 7% of the Company's income before income taxes
and Mr. Haber's bonus. Mr. Haber received a whole-life policy covering his
life, presently in the sum of $2,000,000 and the use of a Company motor vehicle.
In the event Mr. Haber's employment agreement is terminated for any reason
other than his willful misconduct, then Mr. Haber shall be entitled, as
liquidated damages, to an amount of money equal to the greater of $2,000,000 or
the sum of five years compensation. In the event there is a dispute as to the
amount of liquidated damages payable to Mr. Haber, then on the termination date
the Company shall be required to pay into an interest bearing escrow account,
the sum of $4,000,000 less the amount of liquidated damages paid to Mr. Haber
which is not in dispute. Mr. Haber will continue to receive his full
compensation during the continuation of any dispute.

If there is a substantial change in the management of the Company, wherein
any Board of Directors that may be elected becomes opposed to, or acts contrary
to, the policy of the Board of Directors now in control of the Company and, as a
result thereof, Mr. Haber, in his sole discretion, finds it difficult for him to
work harmoniously and effectively with any such Board of Directors of the
Company, or the Board of Directors of the Company shall determine that Mr. Haber
shall not be the President and Chief Executive Officer of the Company, or Mr.
Haber shall not be elected as a member of the Board of Directors of the Company,
then, in any of such events, Mr. Haber shall have the absolute right and option
to resign upon giving the Company 60 days written notice of his intention to do
so. Upon such resignation, Mr. Haber shall be entitled to the liquidated
damages and expenses as set forth above in consideration of Mr. Haber's
agreement not to compete with the Company for a period of one year following his
resignation.

Pursuant to Mr. Haber's employment agreement, the Company is obligated to
provide to Mr. Haber indemnification for any claim or lawsuit which may be
asserted against him when acting in his capacity as an officer and director of
the Company provided said

38
<PAGE>

indemnification is not in violation of any federal or state law, rule or
regulations.

On January 1, 1988, Mr. Caligor commenced serving the Company as a part-
time consultant at an annual cash compensation of $100,000. Mr. Caligor's
consulting contract which originally provided for a termination date of
December 31, 1990 was extended by the Company's Board of Directors and currently
terminates on December 31, 1995.

STOCK OPTION PLANS

An Incentive Stock Option Plan (the "1982 Incentive Plan") was adopted by
the Board of Directors on February 24, 1982 and terminated on February 24, 1992
as to the granting of new options. The 1982 Plan, which was approved by
stockholders in 1982, provided that an aggregate of 166,666 shares of the
Company's Common Stock were issuable, subject to adjustment in the event of
changes in the capital structure of the Company. Employees of the Company were
eligible for selection as participants.

Under the 1982 Plan, an option may be exercised only if the participant has
been continuously employed by the Company for a period of one year since the
date of grant of the option, and pursuant to a five year exercise schedule. The
purchase price of any shares on exercise of options so granted was generally
100% of the fair market value of said shares on the date of the grant. An
optionee who terminates his employment with the Company other than by reason of
his death may not exercise or transfer his option. The lawful heirs and/or
beneficiaries of a deceased optionee may exercise such options for a period of
six months after the optionee's death.

The 1982 Plan is administered by the Board of Directors, which has full
power to construe and administer the 1982 Plan and has the responsibility of
determining which potential participants were to be granted options thereunder,
the number of shares or options to be granted and the terms and conditions
thereof. The criteria used by the Board of Directors in determining the amount
of stock options granted to each employee was based upon employee performance,
employee contribution and length of service with the Company; however, no more
than $100,000 in value (measured at the date of grant of the Option) of shares
of the Common Stock of the Company was granted to any one individual under the
1982 Plan.

During fiscal 1994, 1993 and 1992, 12,666 shares, 15,333 shares and 15,168
shares, respectively, of the Company's Common Stock were issued at exercise
prices ranging from $2.25 per share to $4.00 per share. As of November 30,
1994, the Company has 111,334 options outstanding under the 1982 Plan at
exercise prices ranging from $2.25 per share to $4.00 per share.

On April 14, 1989, the Board of Directors adopted and the shareholders
later approved a 1989 Non-qualified Stock Option Plan, (the "1989 Plan"), in
order to attract and retain qualified

39
<PAGE>

employees, officers and directors. Under the 1989 Plan, options to purchase a
maximum of 416,666 shares of Common Stock may be granted to employees, officers
and directors of the Company. If any options granted under the 1989 Plan expire
or terminate for any reason without having been exercised in full, the
unpurchased shares shall become available for further options pursuant to the
1989 Plan. The 1989 Plan also provides that no options may be granted after
April 13, 1999.

The 1989 Plan is administered by the Board of Directors of the Company or
by a Stock Option Committee appointed by the Board which consists of not less
than three directors. The maximum term of any option under the Plan is ten
years. The Board of Directors or Committee appointed by the Board determines
which employee, officer or director shall have options under the 1989 Plan, the
number of shares of Common Stock that may be purchased under each option, the
option price and all other provisions of the respective option agreements (which
need not be identical), including but not limited to provisions concerning the
time or times when, and the extent to which, the options may be exercised and
any limitations upon the transferability of such shares.

As of November 30, 1994, the Company had outstanding options under the 1989
Plan to purchase an aggregate of 404,900 shares of the Company's Common Stock at
exercise prices from $2.25 per share to $4.00 per share to various officers and
members of the Board of Directors. As of November 30, 1994, substantially all
of these options are exercisable. During fiscal 1994, 1993 and 1992, 4,000
shares 4,333 shares and 3,333 shares, respectively, of the Company's Common
Stock were issued at exercise prices ranging from $2.25 to $4.00 per share.
Each option granted under the 1989 Plan is non-transferable, may be exercised
only if the participant has been continuously a director, consultant or employee
of the Company. However, in the case of death, the lawful heirs and/or
beneficiaries of a deceased optionee may exercise such options for a period of
six months after the optionee's death.

On January 28, 1992, the Board of Directors of the Company adopted a Stock
Option Plan (the "1992 Plan") which was approved by stockholders on
September 17, 1992. The 1992 Plan, as amended, covers 850,000 shares of Common
Stock. The 1992 Plan authorizes the issuance of the options covered thereby as
either "Incentive Stock Options" within the meaning of the Internal Revenue Code
of 1986, as amended, or as "Non-Statutory Stock Options." Persons eligible to
receive options under the 1992 Plan includes employees, directors, officers,
consultants or advisors, provided that bona fide services shall be rendered by
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital raising transaction; however, only
employees are eligible to receive an Incentive Option. The 1992 Plan also
provides that no options may be granted after January 27, 2002.

The 1992 Plan is administered by the Company's Board of Directors or a
stock option committee consisting of three members

40
<PAGE>

of the Board which has the authority to determine the persons to whom options
shall be granted, whether any particular option shall be an Incentive Option or
a Non-Statutory Option, the number of shares to be covered by each option, the
time or times at which options will be granted or may be exercised and the other
terms and provisions of the Options. An Optionee of a Stock Option who
terminates his employment with the Company, other than by reason of his death or
disability, may not exercise his Option. The lawful heirs or beneficiaries of a
deceased Optionee may exercise Stock Options for a maximum period of six months
after the Optionee's death, so long as the Option has otherwise not expired.
All Stock Options are non-transferable except by will or the laws of descent and
distribution.

The 1992 Plan also provides that: (i) the exercise price of options
granted thereunder is not less than 100% (or in the case of an Incentive Option,
110% if the optionee owns 10% or more of the outstanding voting securities of
the Company) of the fair market value of such shares on the date of grant, as
determined by the Board or Stock Option Committee, and (ii) no option by its
terms may be exercised more than ten years (five years in the case of an
Incentive Option, where the optionee owns 10% or more of the outstanding voting
securities of the Company) after the date of grant. Any options which are
canceled or not exercised within the option period become available for future
grants.

In case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of
outstanding shares of Common Stock of the class issuable upon exercise of the
Options) or in case of any sale or conveyance to another corporation of the
property of the Company as an entity or substantially as an entity where part
or all of the consideration received by the Company includes securities of the
acquiring corporation, the Company, or such successor or acquiring corporation,
as the case may be, shall provide that the holder of each Option then
outstanding shall have the right thereafter to receive an Option convertible
into the kind and amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock of the Company
into which such Option might have been converted immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. This
paragraph shall apply to all incentive stock options granted on or after May 1,
1994 and to all non-statutory stock options granted under the Plan.

As of November 30, 1994, the Company has under the 1992 Plan Incentive and
Non-Statutory Stock Options outstanding to purchase 795,100 shares of the
Company's Common Stock at exercise prices ranging from $4.00 per share to $10.25
per share. Stock Options covering 647,640 shares are currently exercisable and
the balance vests between 1994 and 1998.

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<PAGE>

SECTION 401(k) OR DEFERRED RETIREMENT PLAN

Effective December 1, 1985, the Company initiated a cash or deferred
retirement plan pursuant to Section 401(k) of the Code (the "Plan"). All
employees are eligible to enroll and to receive benefits under the Plan,
beginning February 1, 1986, the commencement date of the plan. Employees can
elect to contribute up to 20% of their compensation to the Plan and the Company
will make matching contributions in an amount equal to 20% of the amount of the
Participant's contribution that is not in excess of 5% of compensation. A
Participant shall at all times have a one hundred (100%) percent vested interest
in his contribution Account. Any distributions to be made under the Plan to a
Participant will begin not later than the 60th day after the latest of the close
of the Plan year in which (a) the Participant attains his normal retirement age
(i.e. 59-1/2), or (b) the date the Participant terminates his employment with
the Company, or (c) such later date pursuant to his written election. Prior to
retirement, Plan savings may be payable upon an employee's death (payable to his
or her designated beneficiary), disability (as defined in the Plan) or
termination by the Company. Plan savings are payable, at the Plan
Administrator's option, in either one lump sum or in installments. The
Participant may be consulted prior to making such determination. For the fiscal
years ended November 30, 1994, 1993 and 1992, the Company's matching
contributions amounted to $29,985, $24,687, and $24,942, respectively.

CERTAIN TRANSACTIONS

On January 28, 1992, the Company sold for services rendered 25,000 shares
of the Company's Common Stock to Bruce Haber.

On March 31, 1993, the Company issued 72,376 shares, later adjusted to
71,229 shares, as part of the consideration to acquire Harrisburg Surgical
Supply Incorporated from an unaffiliated third party. Mr. Haber has the right
to vote these shares until the earlier of March 31, 1996 or the transfer of
these shares to an unrelated third party.

Reference is made to "Description of Securities-Description of Debentures"
regarding a discussion of the Company's sale in a private placement offering of
$3,000,000 of its 7% Convertible Subordinated Debentures Due October 30, 2003.
K. Deane Reade, Jr. purchased $130,000 of the Debentures and may be deemed to
have a beneficial ownership in an additional $70,000 purchased in the private
placement. See also "Security Ownership of Certain Beneficial Owners and
Management and Others."

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<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND OTHERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock by all persons known by the Company to
be beneficial owners of more than 5% of its Common Stock and all officers and
directors, both individually and as a group. For purposes of calculating the
amount of beneficial ownership and the respective percentages, the number of
shares of Common Stock which may be acquired by a person are considered
outstanding notwithstanding the vesting schedule or the need to obtain
stockholder approval of an increase in the number of shares subject to the 1992
Plan in order to permit certain options to become exercisable, but shall not be
deemed to be outstanding for the purpose of computing the percentage of Common
Stock owned by any other person.

Amount
and Nature Approximate
Name and Address of of Beneficial Percent
Beneficial Owner (1) Ownership (1) of Class (2)
- -------------------- ------------- ------------

Renee Steinberg (3)(12)
20080 Boca West Drive
Apt. 458
Boca Raton, FL 33434 175,701 4.8

Bruce J. Haber (4)(14) 925,063 21.2

Louis Buther (5) 166,667 4.4

Marvin S. Caligor (11) 101,083 2.7

Ernest W. Nelson (6) 111,834 3.0

Gary Butler (7) 15,000 *

K. Deane Reade, Jr.(8)(10)
One Madison Ave. Suite 25A
Box 20
New York, NY 10010 174,519 4.6

Michael Levy (13) 1,000 *

All officers and
directors as a group
(eight persons) (9)(14) 1,670,867 34.6

- ----------------
* Represents less than one percent of the outstanding Common Stock.

(1) Unless otherwise indicated, all shares are directly owned and investing
power is held by the persons named. All addresses, except as otherwise
noted, are c/o of Micro Bio-Medics, Inc., 846 Pelham Parkway, Pelham Manor,
NY 10803.

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<PAGE>

(2) Based upon approximately 3,621,000 shares of Common Stock issued at
March 1, 1995.

(3) May be deemed to be a "founder" or "parent" of the Company for purposes of
the Securities Act of 1933, as amended.

(4) Includes options to purchase 735,000 shares granted to Mr. Haber.

(5) Includes options to purchase 150,333 shares granted to Mr. Buther.

(6) Includes options to purchase 103,666 shares granted to Mr. Nelson.

(7) Includes options to purchase 8,666 shares granted to Mr. Butler.

(8) Includes shares owned under certain retirement trusts and profit sharing
plans.

(9) Includes options to purchase 1,211,999 shares granted to officers and
directors, 25,000 shares issuable upon exercise of Debentures and 20,021
shares issuable upon exercise of 19,122 Series 1 Warrants.

(10) Includes options to purchase 108,333 shares. Also includes 7,853 shares
issuable upon exercise of 7,500 Series 1 Warrants and 25,000 shares
issuable upon conversion of certain Debentures.

(11) Includes options to purchase 69,667 shares granted to Caligor and 12,168
shares issuable upon exercise of 11,622 Series 1 Warrants.

(12) Includes options to purchase 35,334 shares granted to Renee Steinberg.

(13) Includes options to purchase 1,000 shares granted to Mr. Levy.

(14) Includes 71,229 shares in which Mr. Haber has the right to vote until the
earlier of March 31, 1996 or the transfer of these shares to an unrelated
third party.

The Company does not know of any arrangement or pledge of its securities by
persons now considered in control of the Company that might result in a change
of control of the Company.

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<PAGE>

DESCRIPTION OF SECURITIES

CAPITAL STOCK

The authorized capital stock of the Company consists of 7,000,000 shares of
Common Stock, par value $.03 per share and 1,000,000 shares of Preferred Stock,
$1.00 per share.

COMMON STOCK

Holders of shares of the Company's Common Stock are entitled to one vote
per share on all matters to be voted upon by the stockholders and are not
entitled to cumulative voting for the election of directors. As a result,
holders of a majority of shares are able to elect all of the directors standing
for election and to control the Company. Holders of shares of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor
subject to the rights of Preferred Stockholders, if any. However, it is the
present intention of the Company not to pay any cash dividends and to reinvest
earnings, if any, of the Company. The Company also has restrictions with its
principal lender on the payment of dividends. See "Dividend Policy" below. In
the event of liquidation, dissolution or winding up of the Company, the holders
of shares of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities and the preferences of Preferred Stockholders, if
any. Shares of common Stock have no preemptive, conversion or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock.

PREFERRED STOCK

The Preferred Stock is issuable in one or more series and the Board is
authorized to fix the number of shares of Preferred Stock constituting each
series and, as to each series, the dividend rate, the time of payment and
relative priority of such dividends, whether such dividends are to be cumulative
or non-cumulative, the redemption rights and prices, the amount payable upon the
liquidation, dissolution or winding up of the Company, the conversion and voting
rights, the sinking fund requirements, and such other designations, preferences
or special rights or qualifications, limitations or restrictions as may be
permitted by law. The authority of the Board to issue Preferred Stock and to
determine the designations, preferences and certain rights of one or more series
of Preferred Stock of the Company could be used in a manner calculated to
prevent the removal of Management, and make more difficult or discourage a
change in control of the Company.

Shareholders of the Company do not have any preemptive rights with respect
to any Preferred Stock which might be issued. No Preferred Stock has been
issued as of the date of this Prospectus and the Company has no plans to issue
such Preferred Stock in the near future.

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<PAGE>

SERIES 1 WARRANTS

Each Series 1 Warrant originally purchased one share of Common Stock at an
exercise price of $8.00 per share until lowered to $6.00 per share by the Board
of Directors in August 1993. As a result of the October/November 1993 issuance
of $3,000,000 of convertible debentures, which triggered the anti-dilution
provisions contained in the Series 1 Warrant, every Series 1 Warrant exercised
at a price of $6.00 will purchase 1.047 shares of the Company's Common Stock.
The Series 1 Warrants are exercisable at any time until June 18, 1995 and are
callable by the Company upon 30 days prior written notice, at any time during
the exercise period at $.05 per Warrant provided the high bid price for the
shares of the Company's Common Stock is at least $11.00 per share on each day
during the thirty (30) trading day period immediately preceding the date of the
written notice.

No fractional shares of Common Stock will be issued on the exercise of
warrants. Fractional shares less than 1/2 of one share will be disregarded.
Fractional shares of 1/2 or greater will be rounded to the nearest whole share.
The Company reserves the right to pay cash in lieu of fractional shares based
upon the base current market price (i.e. high bid price) of the Common Stock on
the last business day prior to the day of exercise.

The holders of the Warrants do not have any of the rights, privileges or
liabilities of stockholders of the Company prior to the exercise of Warrants.
The exercise price of the Warrants and the number of shares issuable upon
exercise of the Warrants are subject to anti-dilution adjustment to protect
against sales of Common Stock below the higher of the exercise price or the then
existing market price, stock dividends, stock splits, mergers,
recapitalizations, or any similar events.

The foregoing brief description of the Warrants does not purport to be
complete and is qualified in its entirety by reference to the terms of the
Warrant Agreement and Warrant Certificates, the forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus is a part.

The Company has agreed to pay to Royce Investment Group, Inc., (Royce") a
commission of up to five (5%) percent of the exercise price of the Series 1
Warrants for each Series 1 Warrant exercised provided (i) at least one year has
elapsed from June 19, 1992, (ii) the market price for the Common Stock is
greater than the exercise price of the Series 1 Warrants and (iii) Royce had
solicited the holder to exercise such Series 1 Warrants with such solicitation
being confirmed in writing by each holder. The commission is further
conditioned upon the Series 1 Warrant Agent being furnished by Royce with a
certificate stating that:

(a) the Warrants exercised were not held in a discretionary account;

(b) Royce did not within the time period specified in Rule 10b-6 under the
Securities Exchange Act of 1934, as

46
<PAGE>

amended, immediately preceding the solicitation of the exercise of
the Warrant or the date of such exercise, bid for or purchase the
Common Stock of the Company or any securities of the Company
immediately convertible into or exchangeable for the Common Stock
(including the Warrants) or otherwise engage in any activity that
would be prohibited by said Rule 10b-6, with one engaged in a
distribution of the Company's securities; and

SEC Rule 10b-6 would prohibit Royce from acting as a market maker for the
Company's securities for the period beginning two or nine business days prior to
any solicitation of the exercise of the Warrants or distribution of the
Underwriter's Unit Warrants and/or underlying securities, until (a) the later of
the termination of such solicitation activity or the termination of any right
that Royce may have to receive a fee for the exercise of such Warrants following
such solicitation and (b) the completion of the distribution of the
Underwriter's Unit Warrants and/or underlying securities.

POTENTIAL FUTURE SALES OF COMMON STOCK PURSUANT TO RULE 144

An estimated 400,000 shares of the Company's issued and outstanding Common
Stock are "restricted securities" as that term is defined under Rule 144
promulgated under the Securities Act of 1933. In general, under Rule 144, a
person who has satisfied a two-year holding period may, under certain
circumstances, sell within any three-month period a number of shares which does
not exceed the greater of 1% of the then outstanding shares of Common Stock or
the average weekly trading volume in shares during the four calendar weeks
immediately prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity or other limitation by a
person who is not an affiliate of the Company and who has satisfied a three-year
holding period. Future sales of such shares made under Rule 144 may have an
adverse effect on the then prevailing market price, if any, of the Common Stock
and adversely affect the Company's ability to obtain future financing in the
capital markets as well as create a potential market overhang.

DIVIDEND POLICY

The Company has not previously paid any dividends since its inception and
intends to follow a policy of retaining all of its earnings, if any, to finance
the development and continued expansion of its business. There can be no
assurance that dividends will ever be paid by the Company. Additionally, under
the terms of its revolving loan agreement with its principal lender, the Company
may not pay dividends without such lender's consent.

47
<PAGE>

TRANSFER AGENT

The Transfer Agent for the Common Stock, and Warrant Agent for the
Company's Series 1 Warrants is American Stock Transfer & Trust Company, 40 Wall
Street, New York, NY.

UNDERWRITER'S WARRANTS

During the Warrant Exercise Term, the holders of the Underwriter's Warrants
are given at nominal cost, the opportunity to profit from a rise in the market
price of the Company's securities. To the extent that the Underwriter's
Warrants are exercised, dilution to the interests of the Company's stockholders
may occur. Further, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of the
Underwriter's Warrants can be expected to exercise them at a time when the
Company would, in all likelihood, be able to obtain any needed capital on terms
more favorable to the Company than those provided in the Underwriter's Warrants.
Any profit realized by the Underwriter on the sale of the Underwriter's Warrants
or the underlying securities may be deemed additional underwriting compensation.
The Company has agreed, for a period of four (4) years commencing June 19, 1993,
that on any occasion that it files a new Registration Statement within such
period (except on Form S-8 or any other inappropriate form) it will include in
each such filing the Underwriter's Warrants and/or underlying securities to the
extent permitted by the then applicable rules and regulations of the Commission,
at the request of any holder or holders of such Underwriter's Warrants and/or
underlying securities at no expense to them.

Further, the Company has agreed to qualify or register the Underwriter's
Warrants and/or the underlying securities once at its own expense during the
four (4) year period commencing June 19, 1993, upon request of the Underwriter
or its specific duly authorized designee or the holders of at least 50% of the

48
<PAGE>

Underwriter's Warrants and/or underlying securities together with the consent of
the Underwriter or its specific duly authorized designee.

DESCRIPTION OF DEBENTURES

7% DEBENTURES

GENERAL

In October and November 1993, the Company issued $3,000,000 of its
unsecured and unregistered 7% Debentures. Each 7% Debenture is a subordinated
obligation of the Company, payable on October 30, 2003 and bearing interest at
the rate of 7% per annum, payable in equal semi-annual amounts on the 30th day
of April and October commencing April 30, 1994, at which time interest accrued,
if any, on all Debentures from their respective dates of issuance will be paid.

CONVERSION

Each Debenture is convertible into shares of the Company's Common Stock,
$.03 par value, at the option of its holder at the rate of $8.00 per share,
subject to adjustment as provided below, until the earlier of October 28, 2003
or the date which is at least 30 calendar days after the date of notification by
the Company of its election to redeem the Debentures.

The conversion price of the Debentures is subject to adjustment in certain
specific events such as subdivision or combinations of Common Stock, dividends
payable in Common Stock and, in some cases, issuances of Common Stock at a price
below the higher of the current market price or conversion price. Adjustment is
required to be made for interest accrued on Debentures submitted for conversion
but no adjustment is required to be made for cash dividends on Common Stock to
be issued upon such conversion. The Company shall not be required to issue
fractions of shares of Common Stock upon any conversion, but shall make
adjustments therefor in cash.

In case of any consolidation or merger of the Company with or into another
corporation (other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification or change of
outstanding shares of Common Stock of the class issuable upon conversion of the
Debentures) or in case of any sale or conveyance to another corporation of the
property of the Company as an entity or substantially as an entity, the Company,
or such successor or purchasing corporation, as the case may be, shall provide
that the holder of each Debenture then outstanding shall have the right
thereafter to convert such Debenture into the kind and amount of shares of stock
and other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock of the Company into which such Debenture might have been converted
immediately prior to such

49
<PAGE>

reclassification, change, consolidation, merger, sale or conveyance.

REDEMPTION PROVISIONS

Commencing in November, 1995, the Debentures are redeemable at the option
of the Company, in whole and not in part, at the redemption prices set forth
herein by giving written notice to the holders to that effect at least 30
calendar days prior to the redemption date. However, the Company has agreed not
to redeem the Debentures at any time unless the Company is current in filing all
reports required under the Federal Securities Laws.

The redemption prices of the Debentures for redemption at the option of the
Company (expressed in percentages of principal amount) are as follows for the
indicated 12-month periods commencing two years from the date hereof: Year
three - 105%, year four - 104%, year five - 103%, year six - 102%, year seven -
101%, and thereafter at 100% until the maturity date of the Debentures. Since
the final closing date was November 4, 1993 then between November 4, 1995 and
November 3, 1996, hereinabove referred to as year three, the redemption price is
105% of the principal amount of the Debentures decreasing to 104% on November 4,
1996, 103% on November 4, 1997, 102% on November 4, 1998, 101% on November 4,
1999 and 100% on and after November 4, 2000 until maturity on October 30, 2003.)

SUBORDINATION OF DEBENTURES

The payment of the principal of and interest on the Debentures is
subordinated, in the event of any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company (whether
in bankruptcy, insolvency, reorganization or receivership proceedings or upon
any assignment for benefit of creditors or any other marshalling of the assets
or liabilities of the Company or otherwise), in right of payment to the prior
payment in full of all Senior Indebtedness. The Debentures, however, in all
respects, shall rank equally with, or prior to (as the case may be), all
existing and future indebtedness of the Company that is not Senior Indebtedness.
The term "Senior Indebtedness" shall mean the principal of, and premium (if any)
on, and interest on all indebtedness of the Company (other than the Debentures),
whether outstanding on the date of this Debenture or hereafter created for money
borrowed by the Company or other monetary obligations of the Company (whether
the same be evidenced by bonds, notes or debentures - other than the Debentures
- - or evidenced by a letter of credit, loan agreement or an indenture or similar
instrument) from, owing to, or guaranteed to, banks, trust companies, leasing
companies, insurance companies or other institutional lenders and any renewal,
extension refunding, amendment or modifications of any such Senior Indebtedness,
including without limitation of the foregoing, purchase money mortgages,
mortgages made or given or guaranteed by the Company as mortgagor or guarantor,
and assumed or guaranteed mortgages, upon property, but excluding any
indebtedness to trade creditors or suppliers on open account for work, labor,
services and materials and excluding any indebtedness which by the terms of the
instrument

50
<PAGE>

creating or evidencing the same is stated to be not superior in right of payment
to the Debentures. During the continuation of any default in the payment of
principal or interest on any Senior Indebtedness, no payment of principal or
interest may be made by the Company on the Debentures. The Debentures contain
no limitation on the amount of Senior Indebtedness or other indebtedness that
may be issued or incurred. However, the Company will not incur indebtedness
that is senior to the Debentures other than Senior Indebtedness. By reason of
the described subordination, in the event of insolvency, creditors of the
Company, other than holders of Senior Indebtedness or of the Debentures, may
recover less, ratably, than the holders of Senior Indebtedness, but may recover
more, ratably, than the holders of the Debentures upon any distribution of
assets of the Company.

MODIFICATION OF DEBENTURES

Sixty-Five (65%) percent of the holders, by amount, of the Debentures may
consent to change any terms covering the Debentures, except those terms related
to:

- subordination
- interest rate
- payment dates
- maturity date
- conversion rate

which may be changed only by unanimous vote of the Debenture holders. The
Debentures and shares of Common Stock issuable upon conversion of the Debentures
are restricted securities and may be sold only in compliance with applicable
securities laws.

PLAN OF DISTRIBUTION

Warrant holders who desire to exercise their Warrants should execute the
Subscription Form contained in the back of the Warrant and submit same together
with any appropriate check made payable to "Micro Bio-Medics, Inc." to the
transfer agent, American Stock Transfer & Trust Co., 40 Wall Street, New York,
New York 10005. The Company will pay Royce Investment Group, Inc. solicitation
fees for the exercise of its Warrants. "Description of Securities Series 1
Warrants." All expenses of this offering, estimated to be $10,000, are being
paid by the Company.

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<PAGE>

RESULTS OF THE RIGHTS OFFERING

During the offering period of the Rights Offering, shareholders of the
Company subscribed to purchase 20,729 Units and the Underwriter purchased
439,736 Units pursuant to the Standby Agreement.

COUNSEL

The legality of the securities offered hereby will be passed upon for the
Company by Lester Morse P.C., 111 Great Neck Road, Suite 420, Great Neck, NY
11021. Members of Lester Morse's family own Debentures convertible into less
than 1% of the Company's issued and outstanding shares of Common Stock.

EXPERTS

The audited financial statements for fiscal 1994, 1993 and 1992 included
herein and elsewhere in the Registration Statement have been included herein and
in the Registration Statement in reliance upon the report of Miller Ellin & Co.,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.

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<PAGE>

MICRO BIO-MEDICS INC. AND SUBSIDIARIES

INDEX

FINANCIAL STATEMENTS

PAGE
----

Independent Auditors' Report F-2

Consolidated Balance Sheets
November 30, 1994 and 1993 F-3 - F-4

Consolidated Statements of Income
Years Ended November 30, 1994, 1993 and 1992 F-5

Consolidated Statements of Cash Flows
Years Ended November 30, 1994, 1993 and 1992 F-6 - F-7

Consolidated Statements of Changes in
Stockholders' Equity
Years Ended November 30, 1994, 1993 and 1992 F-8

Notes to Consolidated Financial Statements F-9 - F-23

FINANCIAL STATEMENT SCHEDULES:

Schedule VIII - Valuation and Qualifying Accounts F-24

Exhibit 11 - Earnings Per Share Calculation F-25

Schedules other than those referred to above have
been omitted as the conditions requiring their
filing are not presented or the information has
been presented elsewhere in the financial statements

Separate financial statements and schedules of
Micro Bio-Medics, Inc. (Parent) have been omitted
since the conditions for omission have been met

F-1
<PAGE>

INDEPENDENT ACCOUNTANTS' REPORT

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
MICRO BIO-MEDICS, INC. AND SUBSIDIARIES

We have audited the accompanying consolidated balance sheets of Micro
Bio-Medics, Inc. and Subsidiaries as at November 30, 1994 and 1993, and the
related consolidated statements of income, cash flows, and changes in
stockholders' equity for each of the three years in the period ended November
30, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Micro Bio-Medics,
Inc. and Subsidiaries as at November 30, 1994 and 1993, and their consolidated
results of operations and cash flows for each of the three years in the period
ended November 30, 1994, in conformity with generally accepted accounting
principles.

We have also audited Schedule VIII and Exhibit 11 for the years ended
November 30, 1994, 1993 and 1992 included in the 1994 annual report of Micro
Bio-Medics, Inc. and Subsidiaries on Form 10K. In our opinion, such schedules
present fairly the information required to be set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes effective December 1, 1993.

MILLER, ELLIN & COMPANY
Certified Public Accountants
February 10, 1995

F-2
<PAGE>

CONSOLIDATED BALANCE SHEETS

ASSETS NOVEMBER 30, 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

CURRENT ASSETS:
Cash $ 3,333,345 $ 2,484,015
Accounts receivable, less allowance for doubtful accounts
of $650,000 in 1994 and $600,000 in 1993 (Note 5) 26,780,044 15,592,555
Inventory (Note 5) 15,449,465 8,199,999
Note receivable (Note 2) -- 1,000,000
Deferred income taxes (Note 6) 518,362 188,930
Prepaid expenses and other current assets 771,026 505,984
---------------------------
Total current assets 46,852,242 27,971,483

PROPERTY, PLANT AND EQUIPMENT - at cost,
net of accumulated depreciation and amortization of
$2,852,004 in 1994 and $2,134,646 in 1993 (Notes 2, 3 and 5) 3,453,607 3,086,307

INTANGIBLE ASSETS, net of accumulated amortization
of $769,088 in 1994 and $534,337 in 1993 (Notes 2 and 4) 3,793,654 1,380,554

OTHER ASSETS 361,584 345,980
---------------------------
$ 54,461,087 $ 32,784,324
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

LIABILITIES AND STOCKHOLDERS' EQUITY NOVEMBER 30, 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>

CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5) $ 437,970 $ 362,631
Accounts payable 13,760,015 5,318,054
Accrued expenses and sundry liabilities (Note 7) 1,581,341 1,325,428
Due to seller (Note 2) 931,466 --
---------------------------
Total current liabilities 16,710,792 7,006,113

LONG-TERM DEBT, net of current maturities (Note 5) 19,381,239 9,584,687

DEFERRED INCOME TAXES (Note 6) 302,000 --
---------------------------
Total liabilities 36,394,031 16,590,800
---------------------------

COMMITMENTS AND CONTINGENCIES (Note 8)

STOCKHOLDERS' EQUITY (Notes 5 and 9):
Preferred stock $1.00 par value:
Authorized - 1,000,000 shares, no shares issued -- --
Common stock $.03 par value:
Authorized - 7,000,000 shares
Issued - 3,595,409 shares in 1994
- 3,535,452 shares in 1993 107,862 106,063
Capital in excess of par value 10,527,552 10,277,439
Retained earnings 7,432,806 5,811,186
Less: Cost of 1,167 shares of common stock in treasury (1,164) (1,164)
---------------------------
Total stockholders' equity 18,067,056 16,193,524
---------------------------
$ 54,461,087 $ 32,784,324
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

</TABLE>

The notes to financial statements are made a part hereof.

F-3
<PAGE>

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

NET SALES $ 121,604,461 $ 73,951,410 $ 61,629,435

COST OF GOODS SOLD 94,923,689 56,347,353 47,287,409
-------------------------------------------
GROSS PROFIT 26,680,772 17,604,057 14,342,026
-------------------------------------------

OPERATING EXPENSES:
Selling, shipping and warehouse 14,421,280 8,521,021 6,852,670
General and administrative 8,581,615 6,525,488 5,015,128
Interest and financing costs (net of
interest income of approximately
$173,000 in 1994, $198,500 in 1993
and $210,000 in 1992) 1,044,257 502,329 289,355
-------------------------------------------

Total operating expenses 24,047,152 15,548,838 12,157,153
-------------------------------------------

INCOME BEFORE PROVISION FOR INCOME TAXES 2,633,620 2,055,219 2,184,873

PROVISION FOR INCOME TAXES (Note 6) 952,000 853,000 962,000
-------------------------------------------

INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 1,681,620 1,202,219 1,222,873

CUMULATIVE EFFECT OF ACCOUNTING
CHANGE FOR INCOME TAXES PRIOR TO 1994 (60,000) -- --
-------------------------------------------

NET INCOME $ 1,621,620 $ 1,202,219 $ 1,222,873
-------------------------------------------
-------------------------------------------

EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE (Note 10) $ .37 $ .30 $ .41

CUMULATIVE EFFECT OF ACCOUNTING CHANGE
FOR INCOME TAXES PRIOR TO 1994 (.01) -- --
-------------------------------------------

EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE $ .36 $ .30 $ .41
-------------------------------------------
-------------------------------------------

AVERAGE NUMBER OF SHARES USED TO
COMPUTE EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE (Note 10) 4,896,518 4,734,746 3,481,415
-------------------------------------------
-------------------------------------------

DIVIDENDS PAID None None None
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

</TABLE>

The notes to financial statements are made a part hereof.

F-4
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED NOVEMBER 30, 1994 1993 1992
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

NET INCOME $ 1,621,620 $ 1,202,219 $ 1,222,873
-----------------------------------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Expenses not requiring the use of cash:
Cumulative effect of accounting change 60,000 -- --
Depreciation and amortization 952,109 666,589 390,357
Provision for losses on accounts receivable 268,551 321,526 87,245
Issuance of common stock as compensation -- -- 50,000
Deferred income taxes (96,000) (59,930) 112,000
Changes in assets and liabilities, net of
effect of asset acquisitions (Note 2):
Accounts receivable (1,055,450) (1,000,255) (4,252,199)
Inventory (2,506,516) (310,553) (2,511,330)
Prepaid expenses and other current assets (265,042) (75,031) 81,532
Other assets (15,604) 86,723 (10,959)
Prepaid and deferred income taxes -- -- 434
Accounts payable 8,441,961 (651,390) 2,016,939
Accrued expenses and sundry liabilities 255,913 (25,286) 123,174
Income taxes payable -- (270,284) (47,716)
-----------------------------------------
6,039,922 (1,317,891) (3,960,523)
-----------------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 7,661,542 (115,672) (2,737,650)
-----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from exercise of warrants 126,409 3,831,104 --
Proceeds from public stock offering -- -- 3,298,002
Net borrowings (repayments) under revolving
loan agreements (3,224,695) (3,350,000) 1,001,000
Net proceeds from issuance of debentures -- 2,725,000 --
Proceeds from long-term debt -- -- --
Repayments of long-term debt (380,085) (623,128) (289,870)
Exercise of employee stock options 125,503 107,975 68,454
-----------------------------------------

NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES $(3,352,868) $ 2,690,951 $ 4,077,586
-----------------------------------------
-----------------------------------------

</TABLE>

The notes to financial statements are made a part hereof.

F-5
<PAGE>

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES:

Payments for certain net assets of
businesses acquired $ (2,718,009) $ (590,490) $ --
Capital expenditures (1,741,335) (440,878) (1,240,083)
Proceeds from sale and leaseback of equipment -- 425,736 --
Note receivable 1,000,000 (1,000,000) --
-------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (3,459,344) (1,605,632) (1,240,083)
-------------------------------------------

NET INCREASE IN CASH 849,330 969,647 99,853

CASH - beginning of year 2,484,015 1,514,368 1,414,515
-------------------------------------------

CASH - end of year $ 3,333,345 $ 2,484,015 $ 1,514,368
-------------------------------------------
-------------------------------------------

SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:

Cash paid during the year for:
Interest $ 1,217,000 $ 700,000 $ 500,000
-------------------------------------------
-------------------------------------------

Income taxes $ 1,214,000 $ 1,157,000 $ 898,000
-------------------------------------------
-------------------------------------------

CHANGES WHICH ARE NOT REFLECTED IN THE
ABOVE STATEMENT:

Assets Acquired for debt - capital leases $ 202,658 $ 489,004 $ 1,017,713
-------------------------------------------
-------------------------------------------
Net assets of a business acquired
for issuance of common stock -- $ 590,490 --
-------------------------------------------
-------------------------------------------

Business Acquired for issuance of
long-term debt $ 14,217,981 -- --
-------------------------------------------
-------------------------------------------

</TABLE>

The notes to financial statements are made a part hereof.

F-6
<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992
- -------------------------------------------------------------------------------------------------------------------
COMMON STOCK CAPITAL IN
$.03 PAR VALUE EXCESS OF RETAINED TREASURY
SHARES AMOUNT PAR VALUE EARNINGS STOCK
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES AT NOVEMBER 30, 1991 1,794,185 $ 53,825 $ 2,383,652 $ 3,386,094 $ 1,164

Shares issued to officers
as compensation 25,000 750 49,250 -- --
Shares issued for stock options 23,844 715 67,739 -- --
Shares issued through
public offering 920,930 27,628 3,270,374 -- --
Net income -- -- -- 1,222,873 --
----------------------------------------------------------------------

BALANCES AT NOVEMBER 30, 1992 2,763,959 82,918 5,771,015 4,608,967 1,164

Shares issued for stock options 25,967 779 107,196 -- --
Shares issued for exercise
of warrants 674,297 20,229 3,810,875 -- --
Shares issued for purchase
of net assets (Note 2) 71,229 2,137 588,353 -- --
Net income -- -- -- 1,202,219 --
----------------------------------------------------------------------

BALANCES AT NOVEMBER 30, 1993 3,535,452 106,063 10,277,439 5,811,186 1,164

Shares issued for exercise
of warrants 29,057 872 125,537 -- --
Shares issued for stock options 30,900 927 124,576 -- --
Net income -- -- -- 1,621,620 --
----------------------------------------------------------------------

BALANCES AT NOVEMBER 30, 1994 3,595,409 $ 107,862 $ 10,527,552 $7,432,806 $ 1,164
----------------------------------------------------------------------
----------------------------------------------------------------------

</TABLE>

The notes to financial statements are made a part hereof.

F-7
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED NOVEMBER 30, 1994, 1993 AND 1992

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONCENTRATION OF CREDIT RISK

Micro Bio-Medics, Inc. (the "Company") and its subsidiaries are engaged in the
distribution, at wholesale, of emergency medical service products and the
assembly and distribution of first-aid and medical kits and school and athletic
medical supplies. The Company distributes medical supplies to physicians and
hospitals in the New York metropolitan area, as well as to health care
professionals in sports medicine, industrial safety, and government and
laboratory markets nationwide. The foregoing operations are all considered as
one business segment. Historically, the Company has not experienced significant
losses related to receivables from any individual customers or group of
customers in any industry or geographic area.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its subsidiaries, which are all wholly-owned. All significant intercompany
accounts and transactions have been eliminated in consolidation.

CASH

The Company maintains various bank accounts and at times, balances may be in
excess of the FDIC insurance limit. At November 30, 1994 and 1993, the amounts
in excess of FDIC insurance limits were approximately $2,800,000 and $2,000,000,
respectively.

INVENTORY

Inventory is valued at the lower of cost (first-in, first-out method) or market
and consists of finished goods.

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are being depreciated primarily on the
straight-line basis over the estimated useful lives of the individual classes of
assets.

INTANGIBLES

Computer programming costs are being amortized over five years using the
straight-line method.

The excess of the purchase price paid over the net assets of businesses acquired
is being amortized over fifteen to forty years using the straight-line method.

DEFERRED INCOME TAXES

Effective December 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS No. 109), "Accounting for Income Taxes,"
which requires the use of the liability method of accounting for income taxes.
The liability method measures deferred income taxes by applying enacted
statutory rates in effect at the balance sheet date to the differences between
the tax bases of assets and liabilities and their reported amounts in the
financial statements. The resulting deferred tax asset or liability is adjusted
to reflect changes in tax laws as they occur. The Company reported the
cumulative effect of the change in the method of accounting for income taxes in
the 1994 consolidated statement of income.

REVENUE RECOGNITION

The Company recognizes revenues when its products are shipped.

F-8
<PAGE>

NOTE 2: ACQUISITIONS

Effective March 29, 1993, the Company acquired Harrisburg Surgical Supply, Inc.,
a distributor of physician and nursing home supplies. The consideration paid
consisted of a combination of approximately $600,000 in cash and 71,229 shares
of the Company's common stock for an aggregate purchase price of $1,180,900.
The purchase price was allocated based upon the fair market value of the assets
at the date of acquisition.

On December 1, 1993, a subsidiary of the Company purchased certain net assets
and customer accounts of Clark Surgical Corp. ("Clark") subject to certain
specific liabilities and obligations under existing contracts and leases. Clark
was a major distributor of physician, hospital and veterinary supplies in the
New York Metropolitan area and Southern Florida. In September 1993, Clark
borrowed $1,000,000 from the Company in connection with an asset purchase
agreement which was represented by an interest-bearing collateralized note and
personally guaranteed by the two stockholders of Clark. This note was paid in
full on December 1, 1993, including interest at the rate of 1% over prime. The
purchase price as adjusted was approximately $16,500,000 consisting of inventory
of approximately $5,000,000, accounts receivable of approximately $10,200,000,
property and equipment of approximately $300,000 and goodwill of $1,000,000. The
Company borrowed approximately $14,200,000 under its existing bank line of
credit to finance this acquisition and made payments during the year of
approximately $1,000,000. The remaining $930,000 is being held in reserve
pending final adjustments to be made in December 1995.

In addition, the agreement provides that the Company will pay the two former
stockholders of Clark an aggregate of $3,125,000 in cash, payable over a seven-
year period ending December 31, 2000, for their agreement not to compete for a
period of twenty years. These two shareholders also entered into employment
agreements with the Company for a term of one year on mutually acceptable terms.
As part of the acquisition of Clark's assets, which is included above, the
Company issued 40,000 warrants at an exercise price of $8.00 to these two
stockholders of which 20% are exercisable immediately and the remainder are
contingent upon certain conditions being met. Effective November 29, 1994, these
warrants were canceled.

Effective June 1, 1994, the Company acquired certain assets and customer
accounts of Joseph Weintraub, Inc., a distributor of physician and hospital
supplies for approximately $1,100,000. The purchase price was allocated based
upon the fair market value of the assets at the date of acquisition.

NOTE 3: PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

NOVEMBER 30, ESTIMATED
1994 1993 USEFUL LIFE (YEARS)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Furniture, fixtures and equipment* $ 5,015,883 $ 4,220,318 5 - 7
Transportation equipment 72,026 21,393 5
Leasehold improvements 1,217,701 979,242 Life of lease
----------------------------------------------
6,305,610 5,220,953
Less: Accumulated depreciation and amortization 2,852,003 2,134,646
----------------------------------------------
$ 3,453,607 $ 3,086,307
----------------------------------------------
----------------------------------------------
<FN>
* Equipment held under capital leases as of November 30, 1994 and 1993
amounted to approximately $2,249,000 and $2,046,000, respectively.

</TABLE>

Depreciation expense amounted to approximately $717,000, $584,000 and $328,000
for the years ended November 30, 1994, 1993 and 1992, respectively.

F-9
<PAGE>

NOTE 4: INTANGIBLE ASSETS

Intangible assets consist of the following:

NOVEMBER 30,
1994 1993
---------------------------------------------------------------------
<S> <C> <C>
Excess cost of acquisitions over net
tangible assets acquired $ 3,743,840 $ 1,592,554
Agreement not to compete 467,857 --
Deferred computer programming costs 351,045 322,337
--------------------------
4,562,742 1,914,891

Less: Accumulated amortization 769,088 534,337
--------------------------
$ 3,793,654 $ 1,380,554
--------------------------
--------------------------
<FN>
Amortization expense amounted to approximately $235,000, $82,000
and $62,000 for the years ended November 30, 1994, 1993 and 1992,
respectively.
---------------------------------------------------------------------
---------------------------------------------------------------------

</TABLE>

NOTE 5: LONG-TERM DEBT

Long-term debt consists of the following:

NOVEMBER 30,
1994 1993
---------------------------------------------------------------------------------------------------
<S> <C> <C>
Capitalized leases (collateralized by equipment
with an aggregate cost of approximately
$2,249,000 and $2,046,000) payable in various
installments through fiscal 2001; interest at 7.5%
to 12.4% or varies with changes in prime rate * $ 1,788,511 $1,947,318
Bank loans (i) 14,650,000 5,000,000
7% convertible subordinated debentures, due
October 30, 2003 (ii) 3,000,000 3,000,000
Obligation related to acquisition (Note 2):
Joseph Weintraub, Inc. - $26,343 payable
quarterly to June 1999; interest at 7% 380,698 --
--------------------------
19,819,209 9,947,318
Less: Current maturities 437,970 362,631
--------------------------
$19,381,239 $9,584,687
--------------------------
--------------------------

<FN>
* Includes equipment loans payable of approximately $69,000 and $159,000 as
of November 30, 1994 and 1993, respectively.

</TABLE>

The non-current portion of long-term debt at November 30, 1995 is
payable as follows:

YEAR ENDING NOVEMBER 30,
----------------------------------------------
<S> <C>
1996 $ 15,123,573
1997 472,152
1998 310,235
1999 253,521
2000 191,559
Subsequent 3,030,199
-------------
$ 19,381,239
-------------
-------------
</TABLE>

F-10
<PAGE>

NOTE 5: LONG-TERM DEBT (CONT.)

(i) On November 19, 1993, the Company refinanced its $12,500,000 revolving loan
agreement with Chase Manhattan Bank, N.A. and entered into a revolving loan
agreement with Chase Manhattan Bank, N.A. to act as agent of and as a
participant in a $25,000,000 secured credit facility. Fleet Bank of New
York also acted as a participant in the loan agreement. Chase's and Fleet's
commitment under the loan agreement is limited to $15,000,000 and
$10,000,000, respectively. The loan agreement expires on November 18, 1996.
The loan bears interest at the bank's prime rate plus 1/4%, except for
Eurodollar loans. As of November 30, 1994, $12,750,000 of the $14,650,000
revolving loan outstanding was utilized for Eurodollar loans at an average
interest rate of 7%. The debt is collateralized by accounts receivable and
inventory. In connection with the loan agreement, the Company has agreed to
certain restrictions relating to its indebtedness and liens and has agreed
to maintain specified financial ratios and covenants. The loan agreement
prohibits the Company from paying any dividends and restricts capital
distributions or redemptions and purchases or retirements of any of the
Company's capital stock. There are also restrictions as to investments,
acquisitions, capital expenditures and payments to related parties. A
commitment fee equal to 1/8% per annum will be charged on the unused
portion of the loan. The loan may be repaid at any time.

(ii) In November 1993, the Company completed the private sale and issuance of
its 7% convertible subordinated Debentures due October 30, 2003 (the
"Debentures"). Net proceeds from the issuance of the Debentures with a face
value of $3,000,000 were approximately $2,700,000. The offering fees are
being amortized over a life of ten years.

The Debentures are immediately convertible into shares of common stock at
the rate of $8.00 per share until October 28, 2003, subject to adjustment
under certain circumstances. Interest is payable semi-annually on the 30th
day of April and October commencing April 30, 1994. Commencing in November
1995, the Debentures are redeemable at the option of the Company, in whole
and not in part, at the redemption prices set forth below, provided that
the Company is current in filing all required reports pursuant to Federal
Securities Laws. The Debentures are subordinated to all existing and future
indebtedness of the Company for money borrowed from institutional lenders.

The redemption prices of the Debentures for redemption at the option of the
Company (expressed in percentages of principal amount) are as follows for
the indicated twelve month periods commencing two years from the closing
date: year three - 105%, year four - 104%, year five - 103%, year six -
102%, year seven - 101% and thereafter at 100% until the maturity date of
the Debentures.

F-11
<PAGE>

NOTE 6: INCOME TAXES

Provision for income taxes comprises the following:

YEARS ENDED NOVEMBER 30,
1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Currently payable:
Federal $745,000 $654,000 $613,000
State and local 303,000 259,000 237,000

Deferred:
Federal (77,000) (36,000) 68,000
State and local (19,000) (24,000) 44,000
--------------------------------------

$952,000 $853,000 $962,000
--------------------------------------
--------------------------------------

</TABLE>

The difference between the statutory United States federal income tax rate and
the effective income tax rate is as follows:

YEARS ENDED NOVEMBER 30,
1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Statutory federal income tax rate 34.0% 34.0% 34.0%
Current year state and local taxes
(net of federal tax effect) 7.0 7.6 7.9
Other (4.9) (.1) 2.1
----------------------------------
36.1% 41.5% 44.0%
----------------------------------
----------------------------------

</TABLE>

The net current and non-current components of deferred income taxes recognized
in the balance sheet at November 30, 1994 are as follows:

<TABLE>

<S> <C>

Net current assets $518,362
Net non-current liabilities 302,000
--------
Net asset $216,362
--------
--------

</TABLE>

The components of the net deferred tax asset as of November 30, 1994
are as follows:

<TABLE>

<S> <C>

Deferred tax assets:
Accounts receivable allowances $269,362
Inventory - uniform capitalization 232,000
Other 17,000
--------
518,362
Deferred tax liability:
Depreciation and amortization 302,000
--------

Net deferred tax asset $216,362
--------
--------

</TABLE>

F-12
<PAGE>

NOTE 7: ACCRUED EXPENSES

Accrued expenses and sundry liabilities consist of:

NOVEMBER 30,
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>

Compensation $ 816,875 $ 537,941
Freight-out 128,500 --
Interest 97,366 --
Underwriter fees - warrants -- 200,000
Consolidation of facilities 7,336 127,535
Commissions 86,083 79,481
Insurance 31,069 48,121
Other 414,112 332,350
-------------------------

$1,581,341 $1,325,428
-------------------------
-------------------------

</TABLE>

NOTE 8: COMMITMENTS AND CONTINGENCIES

RETIREMENT PLAN

The Company's 401(k) deferred retirement plan provides for matching
contributions by the Company equal to 20% of the amount of the participants'
contributions that are not in excess of 5% of compensation. For the years ended
November 30, 1994, 1993 and 1992, the Company's matching contributions were
approximately $30,000, $25,000 and $25,000, respectively.

In December 1990, the Financial Accounting Standards Board issued Statement No.
106, "Employers' Accounting for Post Retirement Benefits Other Than Pensions,"
which will require accrual accounting for post retirement health care and life
benefits. In November 1992, the Financial Accounting Standards Board issued
Statement No. 112, "Employers' Accounting for Post-Employment Benefits," which
requires accrual accounting for post-employment benefit obligations other than
pensions or benefits covered by SFAS No. 106. These standards were implemented
effective December 1, 1993 and such adoption had no impact on the Company's
consolidated financial statements.

EMPLOYMENT/CONSULTING CONTRACTS

The Company entered into an employment agreement with its Chief Executive
Officer and a consulting agreement with a director, terminating on February 11,
1998 and December 31, 1995, respectively. The current aggregate annual
compensation under these contracts is approximately $310,000. The Chief
Executive Officer's contract provides for annual increments of $5,000 and, if
terminated prior to expiration, payments equal to the greater of $2,000,000 or
the sum of five years' salary, based upon the rate of compensation then in
effect, plus five times the last annual bonus received.

For the years ended November 30, 1994, 1993 and 1992, bonuses of $199,000,
$155,000 and $219,000, respectively, were paid under the employment contract.

SELF-INSURANCE

The Company acts as a self-insurer for its employees' health insurance up to a
maximum of $15,000 per covered individual. The Company is liable for a maximum
of $260,000 for the year based upon the number of employees covered. Claims,
including estimates for charges incurred but not reported, are charged to
operations during the year in which they occur. As of November 30, 1994, 1993
and 1992, the liability for self-insurance amounted to $75,000, $112,000 and
$82,000, respectively.

F-13
<PAGE>

NOTE 8: COMMITMENTS AND CONTINGENCIES (CONT.)

LEASES

The approximate aggregate minimum annual rental commitments under long-term
operating leases in effect at November 30, 1994 are as follows:

OFFICE, WAREHOUSE TRANSPORTATION
YEAR ENDING NOVEMBER 30, AND SALES EQUIPMENT TOTAL
- ------------------------------------------------------------------------------
<S> <C> <C> <C>

1995 $ 1,102,000 $ 94,000 $ 1,196,000
1996 986,000 77,000 1,063,000
1997 870,000 69,000 939,000
1998 823,000 42,000 865,000
1999 757,000 34,000 791,000
Thereafter 6,098,000 31,000 6,129,000
-----------------------------------------------
$10,636,000 $347,000 $10,983,000
-----------------------------------------------
-----------------------------------------------

</TABLE>

Certain leases contain escalation clauses which increase the rents for various
operating expenses and fluctuations in property taxes.

Rent expense comprises the following:

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Office, warehouse and sales $1,392,046 $1,019,534 $678,130
Transportation equipment 85,555 102,241 125,165
----------------------------------------
$1,477,601 $1,121,775 $803,295
----------------------------------------
----------------------------------------

</TABLE>

The Company leases certain equipment under capital leases. The following is a
schedule by years of approximate future minimum lease payments under the
capitalized leases, together with the present value of the net minimum lease
payments at November 30, 1994:

YEAR ENDING NOVEMBER 30,
<S> <C>

1995 $ 445,000
1996 445,000
1997 445,000
1998 254,000
1999 243,000
Subsequent 231,000
----------

Total minimum lease payments 2,063,000

Less: Amount representing interest at 6.5% to 9% 344,000
----------
$1,719,000
----------
----------

</TABLE>

In December 1992, the Company entered into a sales and leaseback agreement with
regard to its computer equipment. The transaction has been recorded as a sale of
approximately $761,000 with approximately $336,000 of the cash proceeds used to
repay borrowings on this equipment and approximately $425,000 used for working
capital purposes. The Company recorded a gain of approximately $15,000 which
will be amortized over the life of the capital lease of five years. The future
minimum lease payments are included above.

TAX CONTINGENCIES

The Internal Revenue Service has completed an examination of the Company's
consolidated federal income tax returns for the years ended November 30, 1990,
1991 and 1992 which resulted in a tax assessment of no significant effect.

F-14
<PAGE>

NOTE 9: STOCK ISSUANCES, REPURCHASES, OPTIONS AND WARRANTS

ISSUANCES

On January 23, 1992, the board of directors approved the issuance of 25,000
shares of common stock to an officer of the corporation at $2.00 a share as
additional compensation.

On July 29, 1992, the Company completed a public offering of non-transferrable
Rights to purchase 460,465 Units at $9.00 per Unit. Each Unit consisted of two
shares of the Company's common stock and three redeemable Common Stock Purchase
Warrants which are exercisable at $8.00 per share at any time until June 18,
1995. The Company received net proceeds of $3,298,002 from this offering.

STOCK REPURCHASE AGREEMENT

In January 1984, the Company's board of directors granted certain employees the
right to purchase 56,333 shares of common stock at the Company's purchase price.
Each employee will be permitted to borrow from the Company an amount equal to
the purchase price pursuant to a five-year promissory note bearing interest at
the rate of 9% per annum, with interest due and payable annually. As security
for such loans, the shares of the borrowing employee will be endorsed and
deposited with the Company. In the event an employee leaves the Company, the
Company may repurchase such shares at the purchase price in amounts up to 100%
of the stock if prior to the third anniversary; 40% if prior to the fourth
anniversary and 20% if prior to the fifth anniversary of the note.

OPTIONS

1982 PLAN

Pursuant to an incentive stock option plan adopted in February 1982, 166,667
shares of the Company's common stock have been reserved for options to be
granted to officers and employees of the Company. The option price may not be
less than the fair market value of the common stock at the time the options are
granted. No options may be granted which are exercisable for a period in excess
of ten years.

Option transactions are as follows:

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Outstanding at beginning of year
(exercisable at a price range
of $2.25 to $4.00 a share) 127,000 147,933 108,517
Add (deduct):
Granted -- -- 57,500
Terminated (3,000) (5,600) (2,916)
Exercised (12,666) (15,333) (15,168)
---------------------------

Outstanding at end of year
(exercisable at a price range
of $2.25 to $4.00 a share) 111,334 127,000 147,933
---------------------------
---------------------------

Remaining shares reserved for issuance 123,000 135,666 150,999
---------------------------
---------------------------

</TABLE>

F-15
<PAGE>

NOTE 9: STOCK ISSUANCES, REPURCHASES, OPTIONS AND WARRANTS (CONT.)

NON-STATUTORY STOCK OPTIONS

On October 7, 1987, the Company's board of directors granted non-qualified stock
options to certain members of the board of directors to purchase 72,000 shares
of the Company's common stock at prices ranging from $3.00 to $3.38 per share.

Option transactions are as follows:

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Outstanding at beginning of year
(exercisable at a price range
of $3.00 to $3.38 a share) 64,367 66,667 72,000

Deduct:
Exercised (3,333) (2,300) (5,333)
--------------------------

Outstanding at end of year
(exercisable at a price range
of $3.00 to $3.38 a share) 61,034 64,367 66,667
--------------------------
--------------------------

Remaining shares reserved for issuance 61,034 64,367 66,667
--------------------------
--------------------------

</TABLE>

1989 PLAN

In April 1989, the board of directors of the Company adopted a non-qualified
stock option plan in order to attract and retain qualified employees, officers
and directors. Under the plan, options to purchase a maximum of 416,666 shares
of common stock at a price not less than fair market value at the date of grant
may be granted to April 1999. If any options granted under the plan expire or
terminate for any reason without having been exercised in full, the unpurchased
shares shall become available for further options pursuant to the plan.

Option transactions are as follows:

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Outstanding at beginning of year
(exercisable at a price range
of $2.25 to $4.00 a share) 408,900 413,233 53,566

Add (deduct):
Granted -- -- 363,000
Exercised (4,000) (4,333) (3,333)
---------------------------

Outstanding at end of year
(exercisable at a price range
of $2.25 to $4.00 a share) 404,900 408,900 413,233
---------------------------
---------------------------

Remaining shares reserved for issuance 404,900 408,900 413,233
---------------------------
---------------------------

</TABLE>

F-16
<PAGE>

NOTE 9: STOCK ISSUANCES, REPURCHASES, OPTIONS AND WARRANTS (CONT.)

1992 PLAN

In January 1992, the board of directors adopted an incentive and non-statutory
stock option plan. Under this plan, 850,000 of the Company's authorized but
unissued shares of common stock are reserved for issuance. The board of
directors granted options to purchase 399,000 shares of the Company's common
stock at an exercise price of $4.00 per share (stock options covering 30,000
shares were granted to employees pursuant to a five-year vesting schedule and
the balance of options covering 369,000 shares were granted to officers and
directors which became exercisable on August 1, 1992).

Incentive stock option transactions are as follows:

YEARS ENDED NOVEMBER 30, 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>

Outstanding at beginning of year
(exercisable at a price range
of $4.00 to $7.50 a share) 244,500 133,000 --

Add (deduct):
Granted 80,500 125,500 133,000
Terminated (19,000) (10,000) --
Exercised (10,900) (4,000) --
---------------------------

Outstanding at end of year
(exercisable at a price range
of $4.00 to $10.25 a share) 295,100 244,500 133,000
---------------------------
---------------------------

Non-statutory stock option transactions are as follows:

Outstanding at beginning of year
(exercisable at a price range
of $4.00 to $7.50 a share) 400,000 342,000 --

Add:
Granted 100,000 58,000 342,000
---------------------------

Outstanding at end of year
(exercisable at a price range
of $4.00 to $10.00 a share) 500,000 400,000 342,000
---------------------------
---------------------------

</TABLE>

WARRANTS

In August 1993, the Company permanently reduced the exercise price of its
1,381,395 outstanding Series 1 Warrants as referred to above to $6.00 per share
from $8.00 per share.

Subsequent to the lowering of the exercise price, 703,354 Series 1 Warrants were
exercised. The net proceeds from the exercise of these warrants was
approximately $3,800,000.

F-17
<PAGE>

MICRO BIO-MEDICS, INC. AND SUBSIDIARIES

SCHEDULE VIII

VALUATION AND QUALIFYING ACCOUNTS

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------- ----------- ---------
BALANCE AT ADDITIONS BALANCE
BEGINNING CHARGED TO AT END OF
OF YEAR OPERATIONS DEDUCTIONS* YEAR
---------- ---------- ----------- ---------
Description
-----------
<S> <C> <C> <C> <C>

Allowance for Doubtful
Accounts

Year ended November 30,
1992 $212,755 $101,040 $ 13,795 $300,000

Year ended November 30,
1993 300,000 321,526 21,526 600,000

Year ended November 30,
1994 600,000 268,551 218,551 650,000

<FN>
*Deductions represent accounts written off, net of recoveries of accounts
written off in prior years.

</TABLE>

F-18
<PAGE>

MICRO BIO-MEDICS, INC. AND SUBSIDIARIES

EXHIBIT 11 - STATEMENT RE:

COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE

YEARS ENDED NOVEMBER 30,
--------------------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>

PRIMARY EARNINGS PER COMMON
AND COMMON EQUIVALENT SHARE

EARNINGS

Income before cumulative effect of
accounting change $1,681,620 $1,202,219 $1,222,873

MODIFIED TREASURY STOCK METHOD

Incremental income after the application
of assumed proceeds toward repurchase
of 20% of the outstanding common shares
at the average market price, the reduc-
tion of debt and the balance of funds
invested in US government securities,
net of applicable income taxes 146,222 223,048 206,849
---------- ---------- ----------

Adjusted earnings $1,827,842 $1,425,267 $1,429,722
---------- ---------- ----------
---------- ---------- ----------

Weighted average number of common
shares outstanding 3,551,732 2,995,536 2,179,576

Additional shares assuming conversion of:
Stock options and warrants utilizing
the modified treasury stock method 1,344,786 1,739,210 1,301,839
---------- ---------- ----------

Number of common and common
equivalent shares 4,896,518 4,734,746 3,481,415
---------- ---------- ----------
---------- ---------- ----------

Earnings per common and common
equivalent share before cumulative
effect of accounting change $.37 $.30 $.41
---- ---- ----
---- ---- ----

</TABLE>

Fully diluted earnings per common and common equivalent share were the same.

F-19