Dynamic Reports Second Quarter 2001 Results.

Business/Technology Editors and Health/Medical Writers

LAKE MARY, Fla.--(BUSINESS WIRE)--Aug. 1, 2001

Dynamic Healthcare Technologies, Inc. (Nasdaq: DHTI Nasdaq: DHTID), a leading provider of information technology geared to transform diagnostic medicine, today announced results for the second quarter ended June 30, 2001. The Company reported second quarter revenues of $6.3 million and a net loss of $(0.04) per common share, which excludes a non-recurring realignment charge in connection with the elimination of certain duplicative staff and middle management positions of $465,000 taken during the quarter. This compares to revenues of $6.5 million and a net loss of $(0.08) per common share, on a reverse split adjusted basis, for the same period a year ago.

Second-quarter EBITDA, (earnings before interest, taxes, depreciation, and amortization) was a positive $0.08 per common share, excluding the realignment charge. This marks the first time the Company has generated positive EBITDA since second quarter 2000. The Company also generated positive cash flow from operations during the quarter. This represents the Company's eleventh consecutive quarter of generating positive cash flow from operations.

Key highlights for the six-month period ended June 30, 2001 include:

-- Near record bookings of Company's clinical systems. A total of twenty-three systems across all diagnostic disciplines were sold to new and current clients spanning all major market segments during the first half of 2001.

-- Systems and support services backlog grew to $23 million.

-- The Company sold and implemented its CoMed suite of Internet

and ASP delivered products to multiple client sites during the first half of 2001.

-- Proposal activity is up 90% over the same period from a year ago.

Christopher Assif, CEO of Dynamic, commented: "We are pleased with our progress evidenced by this quarter's improved operating results. The Company reiterates its previously issued revenue and earnings expectations for 2001 and 2002 based on revenue visibility from our backlog and the increased marketplace demand for its clinical and diagnostic focused information technology products and services."

As previously announced, the Company will host a conference call at 10:00 a.m. (EST) on Thursday, August 2, 2001, to discuss these results. The call will be led by Dynamic's Chief Executive Officer, Christopher Assif. Interested investors can access the call via a webcast through the Company's web site, www.dht.com, or via the StreetEvents web site, www.streetevents.com. Replays will be available on these web sites for 30 days. Investors interested in participating in the live conference call may dial 877-721-9309.

About Dynamic

Dynamic Healthcare Technologies is transforming diagnostic medicine through its clinical and diagnostic workflow solutions for pathology, laboratory and radiology services in hospitals, clinics and ambulatory care settings. The company's systems are installed in more than 640 client locations, including half of the nation's "Best Hospitals" and 40% of the "Best Hospitals" in cancer treatment, as reported in US News and World Reports magazine. Dynamic is expanding its reach even deeper into the care process through Internet-based clinical connectivity and application service provider capabilities marketed under the name CoMed.

Forward Looking Statement

This press release contains forward looking statements that involve a number of risks and uncertainties, including, but not limited to, certain areas beyond the Company's control with respect to future business events and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.

                        SELECTED FINANCIAL DATA
                 DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                       STATEMENTS OF OPERATIONS

                         Three Months Ended        Six Months Ended
                       June 30,    June 30,     June 30,     June 30,
                         2000        2001         2000         2001
                     (Unaudited) (Unaudited) (Unaudited)  (Unaudited)
Operating revenues:
 Computer system
  equipment sales
  and support           155,510    $207,877     573,506      $536,309
 Application
  software licenses   1,996,275   1,748,330   3,505,958     3,247,507
 Software support     2,925,892   2,877,177   5,826,009     5,779,509
 Services and other   1,388,350   1,510,805   3,142,631     2,989,021
  Total operating
   revenues           6,466,027   6,344,190  13,048,104    12,552,346
Costs and expenses:
 Cost of
  products sold         456,776     484,443     983,065     1,025,445
 Software
  amortization          569,462     328,960   1,149,483       639,893
 Client services
  expense             2,560,281   2,224,993   5,146,707     4,723,449
 Software
  development costs   1,123,561   1,109,613   2,350,572     2,168,427
 Sales and
  marketing           1,141,630   1,249,829   2,227,456     2,686,779
 General and
  administrative      1,046,330   1,105,460   1,957,713     2,255,074
 Realignment costs         --       465,204        --         465,204
  Total costs and
   expenses           6,898,040   6,968,502  13,814,996    13,964,271
Operating
 income (loss)         (432,013)   (624,312)   (766,892)   (1,411,925)
Other income
 (expense):
 Interest expense
  and financing
  costs                 (44,778)    (58,467)    (85,588)     (128,202)
 Interest income
  and other              27,979      16,259      54,239        64,421
 Gain/(Loss) on
  disposal of
  fixed assets          (30,493)       --       (30,603)         --
  Total other
   income (expense)     (47,292)    (42,208)    (61,952)      (63,781)
Earnings (loss)
 before income taxes   (479,305)   (666,521)   (828,844)   (1,475,707)
Income taxes               --          --          --            --
Net earnings (loss)   $(479,305)  $(666,521)  $(828,844)  $(1,475,707)

Net earnings (loss)
 available for
 common shareholders  $(519,305)  $(706,521)  $(908,844)  $(1,555,707)
Weighted average
 number of common
 and potential
 common shares
 outstanding
 assuming full
 dilution - basic
 and diluted          6,304,521   6,476,047   6,295,487     6,475,301

Earnings (loss)
 per common
 share basic
 and diluted             $(0.08)     $(0.11)     $(0.14)       $(0.24)

EBITDA                 $360,255     $50,655  $1,012,767     $(220,518)



                                               BALANCE SHEETS
                                       December 31,       June 30,
                                           2000             2001
                                                        (Unaudited)
ASSETS
Current assets:
 Cash and cash equivalents              $3,197,743        $893,094
 Accounts receivable, net                5,309,700       3,767,561
 Unbilled receivables                    3,633,931       4,751,559
 Contracts receivable - current            329,255         286,795
 Other current assets                      848,652         724,974
  Total current assets                  13,319,281      10,423,983
Property and equipment, net              3,507,870       3,149,277
Capitalized software
 development
 costs, net                              4,093,560       3,509,540
Goodwill, net                              847,934         644,159
Contracts receivable
 - non-current                             713,052         597,763
Other assets                                22,872          17,479
                                       $22,504,569     $18,342,201

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and
  accrued expenses                      $3,061,461      $2,733,558
 Deferred revenue                        5,929,122       5,992,778
 Advance billings                        1,197,266       1,993,429
 Line of credit                          2,875,000               0
 Deferred lease incentives                 190,230         190,230
 Other current liabilities                 380,335         306,483
  Total current liabilities             13,633,414      11,216,478
Deferred lease incentives
 - non-current                             602,403         507,288
Other                                      639,740         504,983
  Total liabilities                     14,875,557      12,228,749

Shareholders' equity:
 Series C preferred stock                1,811,327       1,811,327
 Common stock                               64,494          64,761
 Warrants                                    3,000           3,000
 Additional paid-in capital             45,830,110      45,789,990
 Deficit                               (39,837,199)    (41,312,906)
 Less: notes receivable
  from officer                            (242,720)       (242,720)
  Total shareholders' equity             7,629,012       6,113,452
                                       $22,504,569     $18,342,201

The financial data should be read in conjunction with the disclosures contained in the Company's Form 10-K For the year ended December 31, 2000. Prior years common shares have been retroactively adjusted to reflect reverse stock split.