Class A and B Warrants to Expire

    WAYNE, Pa., Nov. 14 /PRNewswire/ -- Escalon Medical Corp. (Nasdaq: ESMC)
today announced results for its fiscal first quarter ended September 30, 2000.
For the first quarter of fiscal 2001, Escalon Medical reported net income of
$107,391, or $0.032 per diluted share.  In the first quarter of 2000, the
Company reported net income of $1,398,921, or $0.429 per diluted share, which
included a gain of $1,848,215 for the August 1999 sale of the license and
distribution rights of Adatosil(R)5000 Silicone Oil.  Excluding the gain,
Escalon would have reported a net loss of $449,294, or $0.138 per diluted
share, in the prior year period.
    Revenue in the first quarter of fiscal 2001 increased 107.9% to $2,959,966
from $1,423,677 in the first quarter of fiscal 2000.  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, the Company's subsidiary that manufactures and markets
of ophthalmic ultrasound diagnostic devices and was acquired in January 2000,
contributed $1,535,773 to revenue in the quarter.  This was a sequential
increase of 12% over fourth quarter revenue of $1,375,504.  The vascular
access business, acquired in January 1999, contributed $495,456 to revenue in
the quarter, relatively flat year over year.  Revenue for the Company's
original ophthalmic equipment business was $928,737 in the quarter and
benefited from increased sales of ISPAN(TM) gas products that had been back
ordered and a $346,000 quarterly payment earned in connection with the sale of
Silicone Oil.  Quarterly payments of varying amounts are expected to continue
through fiscal 2005.
    Having strategically repositioned the business and boosted sales levels,
Escalon's cost structure has been improved.  The gross margin as a percent of
sales improved from 48.5% in the year ago period to 64.7% in the current
quarter.  Marketing, general and administrative expenses declined as a percent
of sales to 45.8% from 65.9% in the year ago period and from 54% of sales in
the fourth quarter of fiscal 2000.  In addition, research and development
costs continued to decline from 10% of sales in the fourth fiscal quarter to
4% of sales in the current period.  This led to the Company's return to
profitability in the first quarter of fiscal 2001.
    "As a result of our strategic repositioning, we have turned the corner
with regard to profitability and see many opportunities ahead for the
Company," said Richard J. DePiano, Chairman and Chief Executive Officer.
"Sonomed has played an important part in our improved financial performance.
In addition, we see opportunities to expand this business into Europe and the
Far East.  We also see significant opportunities ahead for the vascular access
business, where we expect to expand beyond our current cardiac catherization
focus into hematology, oncology and I.V. therapies."
    Mr. DePiano continued, "Our joint venture with MegaVision, Inc. to develop
a high-end digital camera system for ophthalmologists is also moving ahead.
Beta testing is expected to be completed by the end of calendar 2000 with
marketing to begin early in calendar 2001.  If the program continues on plan,
we expect the camera system to be available for sale later in fiscal 2001.
Other recently announced new products include the NB2000(TM) Needle, the first
Doppler Ultrasound device designed to administer regional anesthesia.  With
clinicals partially complete, our plan is to file a 510-K by the end of
calendar 2000 and introduce the product in fiscal 2001.  We also have
developed a surgical knife with a new, revolutionary retractable MVR blade
designed to eliminate accidental sticks during surgery.  Our knife received a
strong reception at the recent American Academy of Ophthalmology Meeting and
we have begun to take orders."
    Mr. DePiano added, "While we continue to look at improving our cost
structure, with much of Escalon's restructuring complete we can now also focus
our efforts on growing the business.  In addition to growth in our current
product portfolio, we will continue to look for opportunities to add unique
niche products to further enhance shareholder value."

    Warrants to Expire
    The Company also announced that its Class A and Class B redeemable stock
purchase warrants are scheduled to expire on November 17, 2000.
    The Class A and B warrants, cusips 296074115 and 296074123, were issued in
November 1993 and entitle the holder to purchase one share of common stock for
four warrants plus $25 and $30 respectively, as adjusted for the Company's
1 for 4 reverse split in November 1997.  Escalon Medical's common stock closed
on November 13, 2000 at $2.50.  With the stock significantly below the
warrants' strike prices, the warrants are expected to expire worthless and are
scheduled to be delisted from Nasdaq effective November 14, 2000.
    Escalon Chairman and Chief Executive Officer, Richard J. DePiano,
commented, "The expiration of these warrants will help simplify the capital
structure of the Company, leaving just the common shares, which trade under
the ticker ESMC on the Nasdaq Small Cap market."
    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.

    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, complete testing and
begin marketing its digital camera back, file and receive approval with the
FDA to market its NB2000(TM) Neeedle, successfully market its new surgical
knife 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
                                                        September 30,
                                                     2000           1999
                                                 (unaudited)    (unaudited)

    Product revenues                              $2,959,966     $1,423,677

    Costs and expenses:
      Cost of goods sold                           1,044,671        732,840
      Research and development                       111,065        235,434
      Marketing, general and administrative        1,356,305        938,601
        Total costs and expenses                   2,512,041      1,906,875

    Income (loss) from operations                    447,925       (483,198)

    Other income and (expenses):
      Gain on sale of Silicone Oil product line           --      1,848,215
      Equity in loss of unconsolidated
       joint venture                                 (54,822)            --
      Interest income                                  2,918         48,885
      Interest expense                              (288,630)       (14,981)
        Total other income and (expense)            (340,534)     1,882,119
    Net income                                       107,391     $1,398,921

    Basic net income (loss) per share                 $0.033         $0.431

    Diluted net income (loss) per share               $0.032         $0.429

      Weighted average shares - basic              3,242,184      3,242,184
      Weighted average shares - diluted            3,309,033      3,264,610


    SELECTED BALANCE SHEET DATA:               Sept. 30, 2000   June 30, 2000
                                                 (unaudited)      (audited)
    Cash, cash equivalents and investments
     (restricted and unrestricted)                  $429,155       $177,106
    Total current assets                           4,050,592      3,319,297
    Total assets                                  17,443,382     16,845,290
    Current liabilities                            7,020,943      6,530,241
    Long-term debt                                 4,900,000      4,900,000
    Total shareholders' equity                     5,522,439      5,415,049

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