Avitar, Inc. Reports Third Quarter 1997 Results.

CANTON, MA--(BUSINESS WIRE)--August 15, 1997--Avitar, Inc. [Nasdaq SmallCap Market:AVIT (Common Stock); AVITW (Redeemable Warrants)] today reported financial results for its third quarter and nine months ended June 30, 1997.

Revenues for the three months ended June 30, 1997 were $523,000 compared to $1,592,000 for the corresponding period of the prior year. For the nine months ended June 30, 1997 and June 30, 1996, revenues were $1,615,000 and $3,591,000, respectively.

Net loss for the three months ended June 30, 1997 was $926,000, or $.07 per share. This compares to net income of $41,000, or $.01 per share, for the three months ended June 30, 1996. For the nine months ended June 30, 1997, the net loss was $2,715,000 versus a net loss of $709,000 for the corresponding period of the prior year. The operating results for the three and nine month periods ended June 30, 1996 included other income of $493,000 in connection with amendments to the Company's License and Supply Agreements with Convatec, a division of Bristol Meyers Squibb.

As previously reported, the lower revenues in 1997 resulted primarily from reduced sales of the Company's wound dressing products due to excess inventory of these products in the distribution system. This excess inventory is rapidly being eliminated, and the Company has begun to experience an increase in orders for the wound dressing products. In addition, as previously announced, the Company has received positive results from the evaluations and trials being conducted on its saliva- based point of care drugs of abuse tests and other uses of its saliva collection technology.

Peter Phildius, Avitar's Chairman and CEO, commented, "As previously indicated, we continue to make significant progress in our development program for saliva-based diagnostic products. We are also expanding the distribution of our existing products to new markets and customers. This, combined with the resumption of sales growth of our existing products in our established markets, should enable us to exceed historical revenue levels."

The Company designs, develops, manufactures and markets healthcare products and services including Hydrasorb, a proprietary line of polyurethane wound care dressings. The Company also provides healthcare cost containment services to employers and third-party payors.

This press release contains forward looking statements which involve numerous risks and uncertainties. The Company's actual results could differ materially from those anticipated in such forward looking statements as a result of certain factors, including those set forth in the Company's filings with the Securities and Exchange Commission. -0-

                             AVITAR, INC.
                     SUMMARY OF FINANCIAL RESULTS
               (in thousands, except per share amounts)
                              (unaudited)

                              Three Months Ended   Nine Months Ended
                                   June 30,            June 30,
                              1997      1996        1997      1996
Revenue                      $563     $1,592       $1,615    $3,591

Operating Income (Loss)      (891)        82       (2,632)     (602)

Net Income (Loss)            (926)        41       (2,715)     (709)

Net Income (Loss) Per Share ($.07)      $.01        ($.27)    ($.13)

Net Income (Loss)
-Exclusive of Amortization of
    Goodwill                ($751)       181      ($2,295)    ($290)

Net Income (Loss) Per Share
-Exclusive of Amortization of
     Goodwill               ($.06)      $.03        ($.23)    ($.05)

Weighted Average Number of
 Common and Common
 Equivalent Shares
  Outstanding          12,523,910  5,785,495    9,936,191 5,379,828

CONTACT: AVITAR, INC.

Peter Phildius, Chairman of the Board

[phone]

Jay Leatherman, Chief Financial Officer

[phone]