WAYNE, Pa., Sept. 28 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC)
today announced results for its fiscal year ended June 30, 2001.  For fiscal
2001, Escalon Medical reported net income of $592,200 or $0.18 per diluted
share, compared to a net loss of $862,652, or $0.27 per diluted share, in
fiscal 2000.  Revenues for fiscal 2001 increased 78.1% to $11,880,017 compared
to $6,670,214 in fiscal 2000.  The increase reflects the changing composition
of the Company's revenue and is primarily due to the acquisition of Sonomed,
the Company's subsidiary that manufactures and markets ophthalmic ultrasound
diagnostic devices, which contributed only five-and-one half months of revenue
to the prior year period, as well as revenue earned in connection with
Silicone Oil.  For fiscal 2001, revenue from Sonomed increased to $5,988,000
from $2,536,000 in fiscal 2000.  Revenue in the Company's Medical / Trek
business increased 111.0% to $3,775,000 from $1,789,000 in fiscal 2000.
Included in this figure is revenue earned in connection with the sale of the
license and distribution rights of Silicone Oil.  Revenue from Silicone Oil
was $2,254,000 in fiscal 2001 compared to $574,000 in the year ago period,
which was prior to the sale of the rights.  Product revenue in the Vascular
business decreased 9.7% to $2,117,000 in fiscal 2001 compared to $2,345,000 in
the year ago period, primarily as a result of a shift in the Company's sales
strategy away from distributors.
    Richard J. DePiano, Chairman and Chief Executive Officer commented; "This
was the best year ever for Escalon in terms of revenue and operating profit.
We completed the year with strong profit improvement in all four quarters.  We
anticipate further improvement in fiscal 2002 as we continue to follow our
operating strategy of organic and partnership growth."
    "We experienced 78% growth in our top line this year due to our Sonomed
business and the revenue we derive from Bausch & Lomb for Silicone Oil.  Going
forward, we see additional excellent opportunities in Asia and South America,
and we are establishing enhanced distributor networks in each of these areas.
We recently appointed Steve Dillow as Vice President of Sales for Latin
America.  Steve was previously a Director of Sales for Canada and Latin
America at Bausch & Lomb."
    "Our Vascular business suffered a short-term decrease in revenue as
distributors reduced inventory which had built up in the pipeline. It is
important to note that during the year the rate of sales to medical
institutions grew by approximately 9%.  Once the pipeline issues have been
resolved, we should enjoy a corresponding increase in revenue. At the same
time, under-performing distributor relationships were cancelled, and we
shifted many of the territories to our internal sales force. We also sought to
expand our product range during the year.  Product development in the Vascular
business has now reached a prototype stage, and clinical evaluations will be
conducted during the second and third quarter of 2002.  A successful
evaluation will enable us to develop markets that are considerably larger than
the current one."
    Mr. DePiano continued, "The product mix we've established has provided us
with a 64% gross margin for the year.  We suspended work in our pharmaceutical
segment which reduced research and development expenses by 50%.  We continue
to rigorously pursue R&D programs for our ophthalmic and Vascular businesses.
We experienced an increase in marketing, general and administrative expenses
of $769,989 for the fiscal year as a result of our building the new management
team and the infrastructure necessary for the growth of our business.
Simultaneously, management has been reducing non-value adding expenses."
    Escalon Medical Imaging has released version 1.13 of EyePhoto, which
includes several new features and enhancements, some of which are beneficial
for photodynamic therapy.  This software is used in conjunction with our CFA
digital imaging system.  The system is now available with OcuNet PC, an image
storage and patient management application, which has been customized for use
with the CFA system by its developer, Justice Digital Solutions, located in
Memphis, Tennessee.  The system has been successfully implemented in
preeminent institutions across the nation.  The Company is now in a position
to aggressively market the CFA digital imaging system.
    "We are pleased to have achieved a record year in terms of revenue and
operating profits.  Over the next 12 months we will focus on global expansion
with our current product range, and the further development of our market
position in the vascular access and digital imaging," concluded Mr. DePiano.
    Revenue in the fourth quarter of fiscal 2001 increased 40.3% to $3,158,102
from $2,250,481 in the fourth quarter of fiscal 2000.  Sonomed contributed
$1,506,283 to revenue in the quarter, an increase over the $1,375,504
contributed in the fourth quarter of fiscal 2000.  The Vascular business
contributed $608,071 to revenue in the quarter, a decline from $625,265 in the
year ago period.  Revenue for the Company's Medical / Trek business increased
by $821,036 to $1,043,748 in the quarter from $222,712 in the prior year,
largely from Escalon Medical receiving a $725,526 quarterly payment earned in
connection with the divestment of the Silicone Oil product line.  Additional
consideration based upon future sales of Silicone Oil are expected to continue
through fiscal 2005.
    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 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, generate cash and
identify, finance and enter into business relationships and acquisitions,
uncertainties and risks related to new product development, manufacturing and
market acceptance of new products, research and development activities,
including failure to demonstrate clinical efficacy, delays by regulatory
authorities, scientific and technical advances by the Company or third
parties, introduction of competitive products, third party reimbursement and
physician training 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.

                    ESCALON MEDICAL CORP. and SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                              Three Months Ended            Year Ended
                                   June 30,                  June 30,
                                2001         2000        2001        2000
                             (unaudited)  (unaudited)

    Product revenues, net    $3,158,102  $2,250,481  $11,880,017  $6,670,214

    Costs and expenses:
      Cost of goods sold      1,289,427     899,130    4,296,525   2,874,194
      Research and development  130,392     219,586      491,582     983,853
      Marketing, general and
       administrative         1,335,588   1,216,917    5,430,813   4,660,824
      Write-down of patent
       costs & goodwill/Outfit       --     (15,010)          --     417,849
        Total costs and
         expenses             2,755,407   2,320,623   10,218,920   8,936,720
    Income (loss) from
     operations                 402,695     (70,142)   1,661.097  (2,266,506)

    Other income and
     (expenses):
      Gain on sale of Silicone
       Oil product line              --      10,700           --   1,863,915
      Equity in income (loss) of
       unconsolidated joint
       venture                   (3,760)    (33,382)     (19,164)    (33,382)
      Interest income              (632)     22,739        2,297     149,086
      Interest expense         (228,022)   (293,419)  (1,052,030)   (575,765)
        Total other income
         and (expense)         (232,414)   (293,362)  (1,068,897)  1,403,854

    Net income (loss)           170,282    (363,504)     592,200   $(862,652)

    Basic net income (loss)
     per share                  $0.0517     $(0.112)       $0.18      $(0.27)

    Diluted net income (loss)
     per share                  $0.0515     $(0.112)       $0.18      $(0.27)

     Weighted average shares
      - basic                 3,292,184   3,242,184    3,292,184   3,242,184
     Weighted average shares
      - diluted               3,307,986   3,242,184    3,307,986   3,242,184


    SELECTED BALANCE SHEET DATA:               June 30, 2001  June 30, 2000
                                                   (audited)      (audited)

    Cash, cash equivalents and investments
     (restricted and unrestricted)                   $80,830       $177,106
    Total current assets                           4,185,152      3,319,297
    Total assets                                  17,798,422     16,845,290
    Current liabilities                            7,188,848      6,530,241
    Long-term debt                                 4,502,325      4,900,000
    Total shareholders' equity                     6,107,249      5,415,049

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