CANTON, Mass., Aug. 14 /PRNewswire-FirstCall/ -- Avitar, Inc. (OTC:AVTI) (BULLETIN BOARD: AVTI) today announced financial results for the three and nine months ended June 30, 2007. For the quarter ended June 30, 2007, Avitar reported revenues of $779,000 from continuing operations compared to $1,202,000 from continuing operations for the quarter ended June 30, 2006. The operating loss from continuing operations amounted to $597,000 versus $696,000. The net income was $301,000, or $0.01 per basic share and $0.00 per diluted share, for the quarter ended June 30, 2007 compared with net loss of $1,329,000, or $0.31 per share for the quarter ended June 30, 2006. The reduction in net loss for the quarter ended June 30, 2007 compared to the quarter ended June 30, 2006 resulted primarily from an increase in non-cash income from the change in the fair market value of derivative securities and warrants of $1,062,000, a decrease in operating expenses of $522,000 and lower interest and financing costs related to short-term and long-term borrowings of $462,000; offset in part by a reduction in sales of $423,000. Revenues from continuing operations for the first nine months of fiscal 2007 were $2,440,000 compared to $3,162,000 from continuing operations for the nine months ended June 30, 2006. The operating loss from continuing operations amounted to $2,136,000 versus $2,293,000. The net loss was $1,542,000 or $0.08 per share, for the nine months ended June 30, 2007 compared with net loss of $3,256,000, or $0.78 per share, for the nine months ended June 30, 2006. The change in net loss for the nine months ended June 30, 2007 compared to the corresponding period of Fiscal 2006 resulted primarily from an increase in non-cash income from the change in the fair market value of derivative securities and warrants of $1,449,000, a decrease in operating expenses of $878,000 and lower interest and financing costs related to short-term and long-term borrowings of $204,000; offset in part by a reduction in sales of $722,000 and a decrease in income from discontinued operations of $96,000. Peter P. Phildius, Chairman and CEO commented, "Our total revenue continues to be negatively impacted by the decline in Hydrasorb sales through our U.S. distributor. We hope to improve the performance of our foam business in the coming quarters." Mr. Phildius continued, "The diagnostic business, however, is showing continued improvement as our value proposition of random testing with oral fluid gains traction. An example of this change is the law recently passed in Hawaii which provides for oral fluid random testing for employers. We continue to work on further enhancing our product offerings and to be optimistic about this large market opportunity." 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. Company Contact: Jay C. Leatherman, CFO Avitar, Inc. 781-821-2440 x139 http://www.avitarinc.com/ (Chart Follows) Avitar, Inc. Summary of Financial Results (in thousands, except per share amounts) Quarter Ended June 30, Nine Months Ended June 30, 2007 2006 2007 2006 Sales $779 $1,202 $2,440 $3,162 Operating Expenses: Cost of Sales 562 875 1,803 2,245 Selling, General and Administrative 742 913 2,528 2,861 Research and Development 72 110 245 349 Total Operating Expenses 1,376 1,898 4,576 5,455 Operating Loss (597) (696) (2,136) (2,293) Other Income (Expenses) 918 (607) 651 (1,003) Income (Loss) From Continuing Operations 321 (1,303) (1,485) (3,296) Discontinued Operations: Loss form the Operations of BJR (20) (26) (57) (80) Income from the Disposal of USDTL - - - 120 Income (Loss) from Discontinued Operations (20) (26) (57) 40 Net Income (Loss) $301 $(1,329) $(1,542) $(3,256) Basic Income (Loss) Per Share From Continuing Operations $0.01 $(0.30) $(0.08) $(0.79) Basic Income (Loss) Per Share From Discontinued Operations - (0.01) - 0.01 Basic Income (Loss) Per Share $0.01 $(0.31) $(0.08) $(0.78) Diluted Income (Loss) Per Share From Continuing Operations $- $(0.30) $(0.08) $(0.79) Diluted Income (Loss) Per Share From Discontinued Operations - (0.01) - 0.01 Diluted Income (Loss) Per Share $- $(0.31) $(0.08) $(0.78) Basic Weighted Average Number of Shares and Common Equivalent Shares Outstanding 28,025,823 4,480,981 19,726,267 4,301,369 Diluted Weighted Average Number of Shares and Common Equivalent Shares Outstanding 100,000,000 4,480,981 19,726,267 4,301,369 Selected Balance Sheet Items: 06/30/2007 Cash 80 Total Assets 1,684 Total Liabilities 7,709 Redeemable Convertible and Convertible Preferred Stock 3,208 Stockholders' Deficit (9,233) DATASOURCE: Avitar, Inc. CONTACT: Jay C. Leatherman, CFO of Avitar, Inc., +1-781-821-2440 x139 Web site: http://www.avitarinc.com/

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