Cardiotronics Systems Inc. announces record sales.

CARLSBAD, Calif.--(BUSINESS WIRE)--March 29, 1996--Cardiotronics Systems Inc. (NASDAQ:CDIO) reported that its sales for the year ending Dec. 31, 1995, reached $8,424,001, a record level and an increase from sales of $2,923,909 in the prior year.

Sales in 1995 benefited from the acquisition of R2 Medical Systems Inc. in September 1994. Although not comparable for the entire year, Cardiotronics sales in the fourth quarter ended Dec. 31, 1995, increased by 30 percent to $2,232,295 from $1,718,903 in the fourth quarter of 1994, with both periods including the operations of R2 Medical.

Cardiotronics reported a net loss of $8,106,869 in 1995 compared with a net loss of $2,682,032 in 1994. The company's net loss in 1995 includes intangible asset writedowns and amortization of $4,429,331, patent litigation expense of $1,031,491, and significant inventory writedowns and other expenses related to the consolidation of R2 Medical.

Ron Bromfield, president and CEO of Cardiotronics, said: "During 1995 we made the investments in research and development necessary to improve Cardiotronics' position as a leading competitor in the stimulation electrode marketplace.

"Despite the large loss incurred in 1995, Cardiotronics' sales and operating results improved during the year and into 1996. Evidencing these trends, I am pleased to report that Cardiotronics operated profitably in February for the first month in its history. While significant challenges remain, we are confident that our strategies will benefit Cardiotronics' profitability and growth in the future."

Cardiotronics Systems develops, manufactures and markets medical devices for the acute management of heart rate disorders.

The company's disposable stimulation electronics are applied to a patient's chest in order to facilitate external defibrillation and pacing of patients experiencing an irregular heart rate as a result of a heart attack or an interventional heart procedure such as coronary angioplasty, cardiac arrhythmia ablation and open heart surgery. -0-

             Cardiotronics Systems Inc. and Subsidiary
               Consolidated Statements of Operations

                         Three months ended      12 months ended
                             Dec. 31,                Dec. 31,
                        1995         1994         1995         1994

Net sales         $2,232,295   $1,718,903   $8,424,001   $2,923,909
Cost of sales      1,215,142      894,651    4,498,485    1,256,220
Gross profit       1,017,153      824,252    3,925,516    1,667,689

Expenses:
Selling, general
  and
  administrative   1,483,115    1,714,618    5,722,977    3,682,134
Research and
  development        149,915       75,174      423,132      128,389
Patent litigation     80,671      246,568    1,031,491      246,568
Amortization of
  intangible
  assets           3,724,605      234,874    4,429,331      234,874
Operating loss    (4,421,153)  (1,446,982)  (7,681,415)  (2,624,276)
Interest
  income              (1,612)      19,862       33,791       60,504
Interest
  expense            128,567       99,590      459,245      118,260
Net loss         $(4,551,332) $(1,526,710) $(8,106,869) $(2,682,032)
Net loss per
  common share   $     (9.65) $     (3.24) $    (17.18) $     (5.68)
Weighted
  average
  number of
  common shares
  outstanding/a      471,811      471,811      471,811      471,811

Note /a: Excludes preferred stock convertible into 2,892,031 shares of common stock in 1995 and 1994.

CONTACT: Cardiotronics Systems Inc., Carlsbad

Scott P. Youngstrom, 619/431-9446