CANTON, Mass., Aug. 14 /PRNewswire-FirstCall/ -- Avitar, Inc. (OTC:AVTI.OB) (BULLETIN BOARD: AVTI.OB) has released its financial results for the three and nine months ended June 30, 2006. For the quarter ended June 30, 2006, Avitar reported revenues of $1,309,000 from continuing operations compared to $1,233,000 from continuing operations for the quarter ended June 30, 2005. The loss from operations amounted to $722,000 versus $1,068,000. The net loss was $1,329,000 or $0.31 per share, for the quarter ended June 30, 2006 compared with net loss of $459,000, or $0.50 per share for the quarter ended June 30, 2005. The increase in the net loss for the quarter ended June 30, 2006 compared to the quarter ended June 30, 2005 resulted primarily from higher interest and financing costs related to short-term and long-term borrowings that took place since April 2005, non-cash interest expense in connection with the warrant replacement that occurred in May 2006 and non-cash expense from the reduction in the fair market value of derivative securities and warrants. Revenues from continuing operations for the first nine months of fiscal 2006 were $3,513,000 compared to $3,224,000 from continuing operations for the nine months ended June 30, 2005. The loss from operations amounted to $2,372,000 versus $2,852,000. The net loss was $3,256,000 or $0.79 per share, for the nine months ended June 30, 2006 compared with net loss of $2,088,000, or $1.50 per share, for the nine months ended June 30, 2005. The increase in the net loss for the nine months ended June 30, 2006 compared to the corresponding period of Fiscal 2005 resulted primarily from higher interest and financing costs related to short-term and long-term borrowings that took place since April 2005, non-cash interest expense in connection with the warrant replacement that occurred in May 2006 and non-cash expense from the reduction in the fair market value of derivative securities and warrants, offset in part by income from discontinued operations of $120,000. "We continue to see the benefits of our marketing strategy of communicating the value of random testing to deter drug use in the workplace," said Peter P. Phildius, Chairman and CEO. "Informing the corporate markets about the more than $140 billion cost of drug use in the workplace is key to our growth, as evidenced by the very positive responses to our industry specific Roundtables, which we have conducted." ABOUT AVITAR Avitar, Inc. develops, manufactures and markets innovative and proprietary products in the oral fluid diagnostic market, disease and clinical testing market, and customized polyurethane applications used in the wound dressing industry. Oral fluid diagnostics includes the estimated $1.5 billion drugs-of-abuse testing market, which encompasses the corporate workplace and criminal justice markets. Avitar's products include ORALscreen(TM), the world's first non-invasive, rapid, onsite oral fluid test for drugs-of-abuse. Additionally, Avitar manufactures and markets HYDRASORB(TM) an absorbent topical dressing for moderate to heavy exudating wounds. In the estimated $25 billion in vitro diagnostics market, Avitar is developing diagnostic strategies for disease and clinical testing. Some examples include influenza, diabetes and pregnancy. For more information, see Avitar's website at http://www.avitarinc.com/. Safe Harbor Statement. This release contains forward looking statements that are subject to risks and uncertainties including the development and marketing of new applications and other risks that are detailed from time to time in the Company's filings with the Securities and Exchange Commission. In view of such risks and uncertainties, the Company's actual results could differ materially from those anticipated in such forward looking statements Contact: Jay C. Leatherman Avitar Inc. 781-821-2440 http://www.avitarinc.com/ The Investor Relations Group Investors: Erika Moran / Tom Caden, 212-825-3210 Media: Susan Morgenbesser, 212-825-3210 Avitar, Inc. Summary of Financial Results (in thousands, except per share amounts) Quarter Ended Nine Months Ended June 30, June 30, 2006 2005 2006 2005 Sales $1,309 $1,233 $3,513 $3,224 Operating Expenses: Cost of Sales 972 911 2,531 2,341 Selling, General and Administrative 948 1,209 3,005 3,174 Research and Development 110 181 349 561 Total Operating Expenses 2,030 2.301 5,885 6,076 Operating Loss (722) (1,068) (2,372) (2,852) Other Income (Expenses) (607) 609 (1,004) 764 Loss from Continuing Operations (1,329) (459) (3,376) (2,088) Discontinued Operations: Income from the Disposal of USDTL - - 120 - Income (Loss) from Discontinued Operations - - 120 - Net Loss $(1,329) $(459) $(3,256) $(2,088) Basic and Diluted Loss Per Share from Continuing Operations $(0.31) $(0.50) $(0.81) $(1.50) Basis and Diluted Income Per Share from Discontinued Operations - - 0.02 - Basic and Diluted Loss Per Share $(0.31) $(0.50) $(0.79) $(1.50) Weighted Average Number of Shares and Common Equivalent Shares Outstanding 4,480,981 3,211,978 4,301,369 2,924,128 Selected Balance Sheet Items: 6/30/06 Cash 36 Total Assets 1,855 Total Liabilities 6,472 Redeemable Convertible and Convertible Preferred Stock 2,875 Shareholders' Deficit (7,493) DATASOURCE: Avitar, Inc. CONTACT: Jay C. Leatherman of Avitar Inc., +1-781-821-2440, ; or Investors: Erika Moran, , or Tom Caden, , both of The Investor Relations Group at +1-212-825-3210; or Media: Susan Morgenbesser of The Investor Relations Group, +1-212-825-3210, Web site: http://www.avitarinc.com/

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