Company Reports Improved Second Quarter Product Revenue and Continues to
                         Broaden Product Portfolio

    WAYNE, Pa., Feb. 14 /PRNewswire-FirstCall/ -- Escalon Medical Corp.
(Nasdaq: ESMC) today announced results for its fiscal second quarter and
six months ended December 31, 2007.

    For the second quarter of fiscal 2008, the Company reported improved
sales in the Company's Drew, Vascular and Escalon Digital Solutions (EMI)
business units, which increased approximately 16%, 10% and 36%,
respectively, compared with the same period last fiscal year. Product
revenue increased approximately $415,000, or 6%, to $7,450,000 during the
three-month period ended December 31, 2007, compared with the same period
in 2006. The Company reported net revenue of $7,495,080, a 1.8% decrease
from the $7,636,740 reported in the prior year period. This decline was
primarily due to decreased royalties received from the IntraLase License
Agreement as a result of the settlement agreement between the Company and
IntraLase dated February 27, 2007. These decreases were offset by the sales
increases at Drew, Vascular and EMI mentioned above.

    For the second quarter of fiscal 2008, the Company reported a net loss
of $(639,346), or $(0.10) per diluted share, compared with a net loss of
$(470,103), or $(0.07) per diluted share, in the second quarter of fiscal
2007. This was attributable to decreased royalties received from the
IntraLase License Agreement, as well as increased expenses for the ongoing
development of new products. Cost of goods sold totaled approximately
$3,951,000, or 53% of product revenue, for the three-month period ended
December 31, 2007, compared with $3,878,000, or 55% of product revenue, for
the same period last fiscal year.

    For the six-month period ended December 31, 2007, the Company reported
net revenue of $14,388,351 compared with $14,804,900 in the prior period.
This decline was primarily due to decreased royalties received from the
IntraLase License Agreement as a result of the settlement agreement between
the Company and IntraLase dated February 27, 2007. Product revenue
increased approximately 5% during the six-month period ended December 31,
2007 as compared with the same period last fiscal year. The increase was
primarily related to increases in the Drew and EMI business units.

    The Company reported a net loss for the six months ended December 31,
2007 of $(1,468,137), or $(0.23) per diluted share, compared with a net
loss of $(1,184,220), or $(0.19) per diluted share, in the prior year
period. Cost of goods sold totaled approximately $7,874,000, or 55% of
product revenue, for the six-month period ended December 31, 2007, compared
with $7,509,000, or 55% of product revenue, for the same period last fiscal
year.

    Operating expenses decreased approximately 5% during the six-month
period ended December 31, 2007 as compared with the same period in the
prior fiscal year. This was due to a significant decrease in legal fees
related to the IntraLase litigation and to the Company's realizing the
effect of the cost reduction plan implemented in the prior fiscal year.

    Recap of Fiscal Second Quarter 2008

    Richard J. DePiano, Chairman and Chief Executive Officer, commented,
"During the second quarter, we continued to see the benefits of the
restructuring plans implemented in fiscal 2007, as evidenced by our lower
operating expenses for the six-month period. Further, we extended our
product portfolio during the second quarter. In January, we received our
third FDA market clearance since December for our VascuView(TM) Visual
Ultrasound System. This follows earlier clearances to market of our
MASTER-VU(R) and D3 Hematology Systems. We are very pleased with these
developments, as we expect these products will be well received in the U.S.
marketplace."

    Mr. DePiano added, "Turning to our operating performance for the second
quarter of fiscal 2008, product revenue grew by $415,000, or 6%, to
$7,450,000 compared to $7,034,000 last year. In the Drew business unit,
product revenue increased $437,000, or 16%, compared with the same period
last fiscal year. This is mainly due to the introduction of the newly
introduced Trilogy and D3 instruments, and increased reagent revenues
generated from Drew's United Kingdom facility."

    "At our Sonomed business unit, product revenue decreased $203,000, or
7%, compared with the last fiscal year. This was primarily caused by an
increase in sales discounts during the period, resulting from a large
increase in sales to more price sensitive international markets combined
with a decrease in overall domestic sales. Product revenue increased
$80,000, or 10%, to $876,000 in the Vascular business unit during the
three-month period ended December 31, 2007, compared with the same period
last fiscal year. This was due to an increase in direct sales to end users
by the Company's domestic sales team, and by turning over the territory of
a terminated domestic distributor to the domestic sales team."

    "In our Medical/Trek business unit, product revenue decreased $48,000,
or 13%, to $331,000 during the second quarter 2008 as compared with the
same period last fiscal year. This is primarily attributable to a decrease
in the sale of Trek's mature product line and less contract work than in
the same period last fiscal year. Additionally, product revenue increased
$149,000, or 36% in our EMI business unit, when compared with last year.
This is due to increased sales of digital imaging systems. The EMI division
continues to realize the benefits of the successful expansion of its sales
effort and product offerings."

    Mr. DePiano concluded, "We continue to see improved sales progress at
our Drew, Vascular and EMI units and improved results in our Medical/Trek
business unit. Additionally, we expect to maintain momentum during the
second half of fiscal 2008 regarding new product introductions. We also
expect continued benefits from new product introductions and our
streamlined operations in fiscal 2008."

    Non-GAAP Measures

    To supplement the Company's consolidated financial statements presented
in accordance with GAAP, the Company has begun providing certain non-GAAP
measures of financial performance. These non-GAAP measures include non-GAAP
net loss and non-GAAP loss per fully diluted share.

    Specifically, the Company believes the non-GAAP measures provide useful
information to both management and investors by isolating certain expenses,
gains and losses that may not be indicative of its core operating results
and business outlook. In addition, the Company believes non-GAAP measures
that exclude stock-based compensation expense enhance the comparability of
results against prior periods.

    The Company's reference to these non-GAAP measures should be considered
in addition to results prepared under current accounting standards, but are
not a substitute for, nor superior to, GAAP results. These non-GAAP
measures are provided to enhance investors overall understanding of the
Company's current financial performance and provide further information for
comparative purposes due to depreciation and amortization and the adoption
of the new accounting standard FAS 123R.

    The non-GAAP measures and the reconciliation to the most directly
comparable GAAP measure of all non-GAAP measures are as follows:




                              Six Months Ended          Three Months Ended
                                December 31,               December 31,
                             2007          2006          2007         2006
    Net Income (Loss)   $(1,468,137)  $(1,184,220)   $(639,346)   $(470,103)

    Non-GAAP adjustments:

    Stock based
     compensation          $172,911      $123,774     $159,977     $123,774
    Depreciation and
     amortization          $296,328      $282,082     $151,245     $146,803

    Total adjustments      $469,239      $405,856     $311,222     $270,577

    Non-GAAP adjusted
     income (loss)        $(998,898)    $(778,364)   $(328,124)   $(199,526)

    Shares used in
     computing fully
      diluted earnings
      per share           6,388,701     6,346,315    6,389,315    6,347,972

    Non-GAAP adjusted
     income (loss) per
     fully diluted share     $(0.16)       $(0.12)      $(0.05)      $(0.03)

    Founded in 1987, Escalon develops markets and distributes ophthalmic
diagnostic and surgical products as well as vascular access devices. Drew,
which operates as a separate business unit, provides instrumentation and
consumables for the diagnosis and monitoring of medical disorders in the
areas of diabetes, cardiovascular diseases and hematology, as well as
veterinary hematology and blood chemistry. The Company seeks to utilize
strategic partnerships to help finance its development programs and is also
seeking acquisitions to further diversify its product line to achieve
critical mass in sales and take better advantage of Escalon's distribution
capabilities. Escalon has headquarters in Wayne, Pennsylvania and
manufacturing operations in Long Island, New York, New Berlin, Wisconsin,
Dallas, Texas, Waterbury, Connecticut and Barrow-in-Furness, U.K.

    Note: This press release contains statements that are considered
forward- looking under the Private Securities Litigation Reform Act of
1995, including statements about the Company's future prospects. They are
based on the Company's current expectations and are subject to a number of
uncertainties and risks, and actual results may differ materially. The
uncertainties and risks include whether the Company is able to:


    -- implement its growth and marketing strategies, improve upon the
       operations of the Company's business units, including the integration
       of Drew's and MRP's operations, the reorganization of the Drew business
       and the integration of any acquisitions it may undertake, if any, of
       which there can be no assurance,
    -- implement cost reductions,
    -- generate cash,
    -- identify, finance and enter into business relationships and
       acquisitions.


    Other factors include uncertainties and risks related to:
    -- new product development, commercialization, manufacturing and market
       acceptance of new products,
    -- marketing acceptance of existing products in new markets,
    -- research and development activities, including failure to demonstrate
       clinical efficacy,
    -- delays by regulatory authorities, scientific and technical advances by
       Escalon or third parties,
    -- introduction of competitive products,
    -- third party reimbursement and physician training, and
       general economic conditions.

    Further information about these and other relevant risks and
uncertainties may be found in the Company's report on Form 10- K, and its
other filings with the Securities and Exchange Commission, all of which are
available from the Commission as well as other sources.





                    ESCALON MEDICAL CORP. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (Unaudited)


                               Three Months Ended        Six Months Ended
                                   December 31,             December 31,
                                2007         2006         2007        2006
    Net revenues:
    Product revenue         $7,449,626   $7,033,860  $14,282,976  $13,577,446
    Other revenue               45,454      602,880      105,375    1,227,454
    Revenues, net            7,495,080    7,636,740   14,388,351   14,804,900

    Costs and expenses:
     Cost of goods sold      3,951,607    3,878,214    7,874,193    7,508,594
     Research and development  876,750    1,080,950    1,800,111    1,794,555
     Marketing, general and
      administrative         3,372,353    3,144,611    6,312,261    6,700,511
       Total costs and
        expenses             8,200,710    8,103,775   15,986,565   16,003,660
    Loss from operations      (705,630)    (467,035)  (1,598,214)  (1,198,760)

    Other (expense) and
     income:
     Equity in Ocular
      Telehealth Management,
      LLC                      (16,611)     (12,155)     (50,722)     (30,698)
     Interest income            85,391       13,498      187,088       58,934
    Interest expense            (2,496)      (5,654)      (6,289)     (14,939)
      Total other income        66,284       (4,311)     130,077       13,297
    Net (loss) before taxes   (639,346)    (471,346)  (1,468,137)  (1,185,463)
    Benefit from income taxes        -       (1,243)           0       (1,243)
    Net (loss)               $(639,346)   $(470,103) $(1,468,137) $(1,184,220)

    Basic net (loss) per
     share                      $(0.10)      $(0.07)      $(0.23)      $(0.19)

    Diluted net (loss) per
     share                      $(0.10)      $(0.07)      $(0.23)      $(0.19)

    Weighted average shares
     - basic                 6,389,315    6,347,972    6,388,701    6,346,315
    Weighted average shares
     - diluted               6,389,315    6,347,972    6,388,701    6,346,315


    SELECTED BALANCE SHEET DATA:
                                                 December 31,    June 30,
                                                     2007          2007
    Cash, cash equivalents and Investments       $7,527,023    $8,879,462
    Total current assets                        $20,063,637   $21,763,012
    Total assets                                $43,292,124   $45,017,213
    Current liabilities                          $4,131,912    $4,524,607
    Long-term debt                                       $-            $-
    Total shareholders' equity                  $38,073,212   $39,405,606

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