Poly U/A Stockholders Tender Supermajority of Shares; IRIS Extends Tender Offer for One Week.

CHATSWORTH, Calif.--(BUSINESS WIRE)--July 19, 1999--

International Remote Imaging Systems Inc., or IRIS (AMEX:IRI), a leading manufacturer and worldwide marketer of automated in vitro diagnostic (IVD) imaging systems used to enhance productivity and improve outcomes in genetics, urinalysis and cytology, Monday announced that, as of the close of business on July 16, 1999, the stockholders of Poly U/A Systems Inc. (Poly U/A) had tendered 177,000 shares of Poly U/A common stock, greater than a supermajority of the outstanding Poly U/A common stock, in response to an IRIS tender offer originally scheduled to expire on July 16.

In order to accommodate late tenders, IRIS also announced an extension of the tender offer deadline until 5 p.m. Los Angeles time on Monday, July 26, 1999.

IRIS commenced the tender offer on June 8, 1999, with the approval of the Poly U/A Board of Directors by mailing to the Poly U/A stockholders an offer to purchase all of their outstanding shares of Poly U/A common stock. IRIS offered three shares of IRIS common stock, one share of a new class of three-year callable preferred stock and three-year warrants to purchase three shares of IRIS common stock in exchange for each share of Poly U/A common stock and a release of any claims against IRIS and Poly U/A from the tendering stockholder.

Although the offer was initially conditioned upon stockholders tendering at least 90% of the outstanding shares, IRIS amended this condition and plans to purchase all tendered shares on July 26, 1999, provided that the number of tendered shares remains a supermajority of the outstanding shares of Poly U/A common stock.

The "callable" feature of the preferred stock will entitle IRIS to convert the new preferred stock at any time into a number of shares of IRIS common stock equal to the liquidation value of the preferred stock divided by the market price of the IRIS common stock at the time of conversion (subject to a minimum valuation of $2.00 per share of IRIS common stock regardless of the prevailing market price).

The preferred stock will automatically convert into IRIS common stock under the same formula at the end of three years if not called sooner by IRIS. IRIS will also have the right to redeem any unexercised warrants for a nominal amount of cash any time after the 30-day average closing price of its common stock exceeds 200% of the warrant exercise price.

One-half of the warrants are exercisable at $1.00 per share, the other one-half at $2.00 per share. If all of the Poly U/A common stock is tendered and accepted, IRIS would issue 768,000 shares of IRIS common stock, 256,000 shares of the new $3.00 three-year callable preferred stock and warrants to purchase an additional 768,000 shares of IRIS common stock.

IRIS designs, develops, manufactures and markets IVD imaging systems based on its patented and proprietary AIM technology for automating microscopic procedures performed in hospital and reference clinical laboratories and genetics laboratories worldwide. Its major product lines are The Yellow IRIS(R) family of urinalysis workstations, the PowerGene(TM) line of cytogenetic analyzers and the StatSpin line of centrifugal specimen preparation devices.

This news release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to uncertainties and other factors that could cause actual results to differ materially from the forward-looking statements. For example, the number of tendered shares could fall below the new supermajority condition during the extension, and IRIS may withdraw the tender offer and not purchase any tendered shares if dissatisfied Poly U/A stockholders file a lawsuit. The transaction could also be affected by material changes in the company's stock price, results of operations or financial conditions. IRIS refers interested persons to its most recent Annual Report on Form 10-K and its other Securities and Exchange Commission filings for a description of certain additional uncertainties and factors that may affect forward-looking statements. For further information regarding this transaction, see the company's current report on Form 8-K filed on May 7, 1999, with the Securities and Exchange Commission.