Derma Sciences Reports Results for Second Quarter and Six Months.

Business Editors

PRINCETON, N.J.--(BUSINESS WIRE)--Aug. 15, 2002

Derma Sciences, Inc. (OTC Bulletin Board: DSCI.OB) today reported its 6th consecutive profitable quarter since the Company began its turnaround in July 2000.

Adjusted net income continues to grow and cash flow remains positive.

Net sales for the quarter were $2.1 million verses $2.4 million in 2001. The decrease of $305,084, or 12.8%, was primarily the result of the discontinuation in May 2001of low margin product sales associated with a nursing home supply agreement. Gross profit for the quarter increased by $17,109 despite the sales decrease and gross profit percentage increased to 56.6% from 48.7% due to a favorable shift in sales mix to higher margin products.

Net income for the second quarter 2002 was $8,387 compared with $21,004 in 2001. Second quarter 2002 included a $94,928 charge relating to a cancelled acquisition initiative. Non cash imputed interest costs of $7,500 and $40,000 were included in 2002 and 2001 net income, respectively. Second quarter 2001 also included $26,500 of goodwill amortization expense. Adjusting for these items, net income would have been $110,815 and $87,504 in the second quarter 2002 and 2001, respectively.

For the first six months of 2002 net sales decreased $561,651, or 11.8%, to $4.2 million from $4.8 million in 2001. Gross profit increased $92,367, or 4%, and gross profit percentage increased to 55.8% from 47.3% in 2001. Operating expenses continued to be in line with revenues. Net income for the first six months of 2002 was $72,602 compared to $30,193 in 2001. Six months 2002 net income included the $94,928 acquisition charge discussed above. Non cash imputed interest costs of $135,200 and $80,000 were included in 2002 and 2001 net income, respectively. Additionally, 2001 net income included $53,000 of goodwill amortization expense. Adjusting for these items, net income would have been $302,730 and $163,193 in the first half of 2002 and 2001, respectively.

For the first half of 2002 cash flow from operations was $369,463. During this period $595,200 of bonds and related accrued interest was converted to equity. The company also put in place a $2.5 million revolving line of credit and completed a private placement sale of common stock with proceeds of $650,000.

Edward J. Quilty, President and CEO of Derma, noted, "All of these results and actions have strengthened the Company's financial health which will better position Derma to achieve its goals of increasing profit and enhancing shareholder value. Later this month we expect to complete the acquisition of Dumex Medical, a Canadian based manufacturer and distributor of wound care products and medical devices. This addition will double our sales and strengthen our product offering."

Derma Sciences, Inc. provides a full range of skin care, wound management and specialty securement devices that are used primarily in the professional markets, specifically hospitals, nursing homes and home care settings. For more information about Derma Sciences, Inc., visit its home page on the Internet at http://www.dermasciences.com.

Statements contained in this release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements which may be made in this release or which are otherwise made by or on behalf of the Company. Factors which may affect the Company's results include, but are not limited to, product demand, market acceptance, impact of competitive products and prices, product development, completion of an acquisition, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements Include, but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission.

                          DERMA SCIENCES, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                              (Unaudited)

                         Three months ended       Six months ended
                              June 30,                June 30,
                          2002        2001        2002        2001

Net Sales              $2,076,724  $2,381,808  $4,191,215  $4,752,866

Cost of Sales             900,678   1,222,871   1,850,632   2,504,650
Gross Profit            1,176,046   1,158,937   2,340,583   2,248,216
Operating Expenses      1,071,692   1,115,501   2,057,213   2,147,480
Interest Expenses           6,723      44,828     131,098      93,850
Other (income) expense,
 net                       89,244     (22,396)     79,670     (23,307)
Total Expenses          1,167,659   1,137,933   2,267,981   2,218,023
Income before provision
 for income taxes           8,387      21,004      72,602      30,193
Provision for income
 taxes                          -           -           -           -
Net Income             $    8,387  $   21,004  $   72,602  $   30,193
Income per common share
 - basic               $     0.00  $     0.01  $     0.02  $     0.01
Income per common share
 - diluted             $     0.00  $     0.00  $     0.01  $     0.01
Shares used in
 computing income per
  common share - basic  3,854,609   2,407,109   3,438,970   2,343,490
Shares used in
 computing income per
  common share
   - diluted            7,154,322   4,370,451   6,814,264   4,361,185