CANTON, Mass., Dec. 30 /PRNewswire-FirstCall/ -- Avitar, Inc. (Amex: - ) today announced financial results for the three and 12 months ended September 30, 2002.

For the 12 months ended September 30, 2002, Avitar reported revenues of $9.6 million, up approximately 47% from $6.5 million in the same period the previous year. The increase in revenues for the 12-month period occurred primarily as the result of increased sales of the Company's ORALscreen(TM) products. Operating loss narrowed to $4.2 million in the 12-month period, from $6.0 million in the comparable period. Net loss was $4.1 million, or $0.11 a share, compared with net loss of $6.0 million, or $0.26 a share. Net loss per share for the twelve months ended September 30, 2001 included an accounting charge of $0.08 a share for warrant valuations and original discounts related to preferred stock issuances.

Revenues for the fourth quarter of fiscal 2002 were $1.9 million, a decrease of 17% from revenues of $2.3 million in the prior year's fourth fiscal quarter ended September 30, 2001, which included an inventory buildup by a major channel partner. Operating loss narrowed to $1.4 million in the September quarter, from $1.5 million in the fourth quarter of fiscal 2001. Net loss was $1.4 million, or $0.04 per share, compared with net loss of $1.5 million, or $0.04 per share.

"This past fiscal year we made progress on several fronts, most notably marketing and product development," commented Peter P. Phildius, Avitar's Chairman and Chief Executive Officer. "Our attention is now focused on optimizing distribution channel alliances and increasing marketing capabilities. Additionally, we plan to continue developing and enhancing our drugs-of-abuse product offering."

Mr. Phildius continued, "Oral fluid testing is changing the dynamics of the whole drugs-of-abuse testing industry. This new technology has demonstrated that it eliminates extraneous costs, provides immediate results, and prevents potential adulterations. As a first-mover in the oral fluid testing space, we are well-positioned to capitalize on the expected future growth in this area."

ABOUT AVITAR

Avitar, Inc. develops, manufactures and markets innovative and proprietary products in the oral fluid diagnostic market, disease and clinical testing market, and customized polyurethane applications used in the wound dressing industry. Oral fluid diagnostics includes the estimated $1.5 billion drugs-of- abuse testing market, which encompasses the corporate workplace and criminal justice markets. Avitar's products include ORALscreen(TM), the world's first non-invasive, rapid, onsite oral fluid test for drugs-of-abuse, and HAIRscreen(TM), a laboratory-based hair test for detecting long-term drug abuse. Additionally, Avitar manufactures and markets HYDRASORB(TM), an absorbent topical dressing for moderate to heavy exudating wounds. In the estimated $25 billion in vitro diagnostics market, Avitar is developing diagnostic strategies for disease and clinical testing. Some examples include influenza, diabetes and pregnancy. For more information, see Avitar's website at avitarinc.com.

Safe Harbor Statement. This release contains forward looking statements that are subject to risks and uncertainties including the development and marketing of new applications and other risks that are detailed from time to time in the Company's filings with the Securities and Exchange Commission. In view of such risks and uncertainties, the Company's actual results could differ materially from those anticipated in such forward looking statements.

     Avitar, Inc.
     Summary of Financial Results
     (in thousands, except per share amounts)



                                Quarter Ended                Year Ended
                                 September 30,               September 30,
                              2002          2001         2002          2001
    Sales                   $1,910        $2,274       $9,617        $6,542

    Operating Expenses:
    Cost of Sales            1,134         1,502        5,555         4,263
    Selling, General and
     Administrative          1,660         1,670        6,460         6,064
    Research and Development   488           557        1,489         1,959
    Amortization of Goodwill    78            77          310           298

    Total Operating Expenses 3,360         3,806       13,814        12,584

    Operating Loss         (1,450)       (1,532)      (4,197)       (6,042)

    Other Income(Expenses)      80          (10)           51          (47)

    Net Loss              $(1,370)      $(1,542)     $(4,146)      $(6,089)

    Basic and Diluted Loss Per Share:
    Before accounting charges
     for warrant valuations
     and original discounts
     related to preferred
     stock issuances       $(0.04)       $(0.04)      $(0.11)      $ (0.18)

    Accounting charges for warrant
     valuations and original
     discounts related to
     preferred stock issuances   -             -            -        (0.08)

    Total Basic and Diluted
     Loss Per Share        $(0.04)       $(0.04)      $(0.11)      $ (0.26)


    Weighted Average Number
     of Shares and
    Common Equivalent Shares
     Outstanding        44,662,830    35,125,300   42,675,660    32,553,839



     Selected Balance Sheet Items:

                           9/30/02                     9/30/01
    Cash                       503                         245
    Total Assets             5,142                       5,055
    Total Liabilities        5,012                       2,981
    Shareholders' Equity       131                       2,073


                                        

Jay Leatherman Chief Financial Officer Avitar Inc.

Kim Golodetz Vice President Lippert/Heilshorn and Associates