Avitar Reports Third Quarter Financial Results for Fiscal 2007

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., [phone] x139



Web site:  http://www.avitarinc.com/ 

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