WAYNE, Pa., Sept. 28 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC)
today announced results for its fiscal fourth quarter and year ended June 30,
2000.  For the fourth quarter of fiscal 2000, Escalon Medical reported a net
loss of $363,504, or $0.112 per diluted share, compared to net income of
$71,550, or $0.022 per diluted share.
    Product revenue in the fourth quarter of fiscal 2000 increased 11% to
$2,250,481 from $2,032,905 in the fourth quarter of fiscal 1999.  The
composition of the Company's revenue has changed significantly as a result of
its strategy to focus on niche products that it owns, rather than products
that it distributes.  Sonomed, which was acquired in January 2000, contributed
$1,375,504 to revenue in the quarter.  This was a sequential increase of
19% over third quarter revenue of $1,160,680.  Revenue attributed to Sonomed
in the quarter was more than sufficient to replace revenue from the Silicone
Oil product line, which was sold in August 1999.  The vascular access
business, acquired in January 1999, contributed $625,265 to revenue in the
quarter, an increase of 47% over the fourth fiscal quarter of 1999.  Revenue
for the Company's original ophthalmic equipment business was $222,712 in the
quarter, a 32% decline from the third fiscal quarter due to a shortage of
ISPAN(TM) gas product supplies.
    Escalon has been focused on establishing the systems and management
infrastructure necessary to support the planned growth of the business.
While marketing, general and administrative expenses increased to 54% of
sales from 48% of sales in the year ago period primarily due to the addition
of Sonomed-related expenses, they declined from 66% of sales in the fiscal
third quarter.  Research and development costs also declined sequentially to
10% of sales from 14% of sales in the third fiscal quarter, primarily due to
the discontinuance of funding for Ocufit(R) SR.
    "Having completed the first phase of our strategic repositioning, we begin
fiscal 2001 with a portfolio of businesses capable of supporting the Company's
infrastructure," said Richard J. DePiano, Chairman and Chief Executive
Officer.  Having divested products where we were purely distributors and
focusing on proprietary products in niche markets where we can be an important
player, we are in a much better position to create a foundation from which to
grow."
    Mr. DePiano continued, "We have been very pleased with our progress
integrating our most recent acquisition, Sonomed, with Escalon's ophthalmic
businesses.  We believe this division is now poised to realize its full
potential as seen by the last two quarters of revenue improvement.  We are
also optimistic about opportunities to expand Sonomed's reach into Europe and
the Far East.  Our joint venture with MegaVision, Inc. to develop a high-end
digital camera system for ophthalmologists is also moving ahead.  If the
program continues on plan, we expect the camera system to be available for
sale in the second quarter of fiscal 2001."
    "We remain committed to our strategy of enhancing our current product
portfolio and will continue to look to add unique niche products to enhance
shareholder value.  On the research and development front, the Sonomed line is
currently undergoing a redesign to improve customer satisfaction.  In the
vascular access area we are looking to expand the products reach beyond
cardiac catherization into hematology, oncology and I.V. therapies.  In
addition, we continue to search for a joint venture partner in order to begin
clinical studies of 2.5% Povidone-Iodine.  This product has significant
potential as a viable alternative in the prevention of neonatal conjunctivitis
in the 3.5 million infants born annually," added Mr. DePiano.
    For fiscal 2000, Escalon Medical reported a net loss of $862,652, or
$0.266 per diluted share, compared to net income of $1,193,787, or $0.103 per
diluted share, in fiscal 1999.  Included in net income in fiscal 2000 is a
gain of $1,863,914 for the August 1999 sale of the license and distribution
rights of Adatosil(R)5000 Silicone Oil as well as the $417,849 non-cash charge
related to Ocufit SR(R).  Net income for the previous period included
$879,159 for the sale of the Betadine(R) product line.
    Revenues for fiscal 2000 were $6,670,214 compared to $7,559,011 in fiscal
1999.  The decline reflects the sale of the Silicone Oil and Betadine(R)
product lines in August and March of 1999, respectively and the changing
composition of the Company's revenue and is primarily due to the five-month
time frame between the acquisition of Sonomed and the divestiture of
Adatosil(R)5000 Silicone Oil.
    Founded in 1987, Escalon develops, markets and distributes ophthalmic
diagnostic, surgical and pharmaceutical products as well as vascular access
devices.  The Company utilizes 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
the Company's distribution capabilities.  Escalon has headquarters in Wayne,
Pennsylvania and manufacturing operations in Long Island, New York and near
New Berlin, Wisconsin.
    Note:  This press release contains statements that are forward-looking,
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 improve upon
the operations of Sonomed and the vascular access business, continue to make
gains in its research and development programs as well as 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.
    To receive additional information on Escalon Medical Corp., via fax, at no
charge, dial 1-800-PRO-INFO and enter code ESMC.


 ESCALON MEDICAL CORP. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF
                                  OPERATIONS

                             Three Months Ended            Year Ended
                                   June 30,                  June 30,
                              2000         1999         2000        1999
                           (unaudited)  (unaudited)   (audited)   (audited)

    Product revenues       $2,250,481   $2,032,905   $6,670,214  $7,559,011

    Costs and expenses:
      Cost of goods sold      899,130      851,006    2,874,194   3,282,177
      Research and
       development            219,586      154,623      983,853     738,124
      Marketing, general
       and administrative   1,216,917      981,744    4,660,824   3,331,562
      Write-down of patent
       costs & goodwill,
       Ocufit                 (15,010)          --      417,849          --
         Total costs and
          expenses          2,320,623    1,987,373    8,936,720   7,351,863
    Income (loss) from
     operations               (70,142)      45,532   (2,266,506)    207,148

    Other income and
     (expenses):
      Gain on sale of
       Silicone Oil
       product line            10,700           --    1,863,915          --
      Gain on Sale of
       Betadine product
       line                        --           --           --     879,159
      Equity in loss of
       unconsolidated
       joint venture          (33,382)          --      (33,382)         --
      Interest income          22,739       43,613      149,086     144,877
      Interest expense       (293,419)     (17,595)    (575,765)    (37,397)
         Total other income
          and (expense)      (293,362)      26,018    1,403,854     986,639
    Income (loss) before
     income taxes            (363,504)      71,550     (862,652)  1,193,787
    Income taxes                   --           --           --          --
    Net income (loss)       $(363,504)     $71,550    $(862,652) $1,193,787
    Basic net income
     (loss) per share         $(0.112)      $0.022      $(0.266)    $0.104*
    Diluted net income
     (loss) per share         $(0.112)      $0.022      $(0.266)    $0.103*

     Weighted average
      shares - basic        3,242,184    3,242,184    3,242,184   3,114,823
     Weighted average
      shares - diluted      3,242,184    3,278,082    3,242,184   3,150,721

    *  Earnings per share (basic and diluted) reflect reductions for deemed
    dividend on issuance/retirement of convertible preferred stock as a result
    of EITF Topic No. D-60, SFAS No. 128 and SAB Topic 3.C.


    SELECTED BALANCE SHEET DATA:               June 30, 2000   June 30, 1999
                                                  (audited)     (audited)
    Cash, cash equivalents and investments
     (restricted and unrestricted)                  $177,106     $4,854,240
    Total current assets                           3,319,297      7,192,512
    Total assets                                  16,845,290     10,402,773
    Current liabilities                            6,530,241      3,391,740
    Long-term debt                                 4,900,000        733,332
    Total shareholders' equity                     5,415,049      6,277,701

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