SOURCE: Trimedyne, Inc.

August 20, 2007 09:30 ET

Trimedyne Reports Financial Results for the Quarter and Nine Month Periods Ended June 30, 2007

LAKE FOREST, CA--(Marketwire - August 20, 2007) - Trimedyne, Inc. (OTCBB: TMED) today reported its financial results for the quarter and nine month period ended June 30, 2007. Revenues for the current quarter were $1,197,000, a 26% decline from revenues of $1,626,000 for the year earlier quarter. The net loss for the current quarter was $348,000, compared to a net loss of $27,000 in the year ago quarter.

For the current nine month period, revenues were $4,090,000, a decline of 17% from revenues of $4,956,000 for the year earlier nine month period, and the net loss for the current nine month period was $162,000, compared to a profit of $70,000 for the nine month period of last year.

Revenues declined in the quarter and nine month period ending June 30, 2007, compared to the year earlier periods, due to our management's focusing its efforts on the development of the new side firing fiber optic device.

Royalties from Lumenis in the current quarter declined by $125,000 from the year ago quarter due to credits issued by Lumenis as a result of an offer to Boston Scientific to replace their existing inventory of Lumenis' side firing fiber optic devices with a newer model. Also, R&D costs increased $245,000 and $363,000 in the current quarter and nine month period, respectively, due to increased expenses incurred in developing the new devices, compared to the year earlier periods. These factors all contributed to the net losses in the current quarter and the nine month period of this fiscal year.

Marvin P. Loeb, Sc.D., Chairman of Trimedyne, explained, "We encountered an unexpected series of delays in the development of our new side firing fiber optic device, which caused us to push-back the expected shipment dates of the new device to Boston Scientific, Inc. and Lumenis, Ltd. several times. Our new side firing fiber optic device, if and when its development and its testing by us and Boston Scientific have been successfully completed, will be marketed for use with Lumenis' Holmium lasers and Trimedyne's Holmium lasers for the treatment of enlarged prostates in men, technically benign prostatic hyperplasia or 'BPH,' a condition affecting an estimated 50% of men over age 55. This side firing fiber optic device has been cleared for sale by the U.S. FDA.

"Over the past year, we have focused a very substantial portion of our management and R&D efforts on the development of our new side firing fiber optic device. We believe we have determined what causes side firing fiber optic devices to sometimes fail at the high peak powers generated by Holmium lasers, and we believe we now know what we have to do to make our new devices consistently durable. However, until we test the new devices, we will not know if they will perform satisfactorily.

"Unhappily, it will take at least a few more months to obtain the equipment and specially made fiber optic components needed to manufacture and test the new devices, and there is no assurance they will function as planned, which may entail making further changes in the equipment and fiber optic components to enable the devices to meet our durability objective. And, if and when the development and testing process is successfully completed, it will take Boston Scientific a few more months to complete its quality review and testing, before they can begin to order these devices.

"We are sorry this process is taking longer than we anticipated. Boston Scientific recently assured us they remain committed to marketing our side firing fiber optic devices. We believe our new device, if and when completed and available for use on Lumenis' and our Holmium lasers for the treatment of enlarged prostates, would be well received in the marketplace due to its faster vaporization rate and consistent reliability.

"As you may know, Trimedyne developed and marketed the first side firing fiber optic devices for the treatment of enlarged prostates in the early 1990s, and we manufactured many thousands of such devices for use with a different type of laser, whose energy is not pulsed and, as a result of these factors, is not as effective in vaporizing tissue as pulsed Holmium lasers. In addition, this earlier type of laser was used at only up to 60 watts of power.

"Lumenis' pulsed Holmium lasers are presently used in the treatment of enlarged prostates at 100 watts of power, and each pulse at this power level can exceed 10,000 watts. The high peak power of Lumenis' and our 80 watt Holmium lasers is what enables them to vaporize tissue faster than other non-pulsed, continuous wave or CW lasers presently used in the treatment of enlarged prostates. Also, between the brief pulses of Holmium laser energy, saline infused through an endoscope in these procedures cools the prostate, reducing the coagulation and charring produced by non-pulsed, CW lasers.

"Our side firing fiber optic devices were shown in laboratory bench testing with Lumenis' 100 watt and our 80 watt Holmium lasers to vaporize soft animal tissue faster than other side firing fiber optic devices then used in the treatment of enlarged prostates. The problem that side firing optic devices face is durability at the high power used today.

"When used with pulsed Holmium lasers or non-pulsed, CW lasers at high power levels, current side firing fiber optic devices sometimes prematurely fail during the treatment of an enlarged prostate, causing a delay in the operating room while a second device is brought from storage to the operating room, unpackaged, inserted into an endoscope and repositioned in the patient's prostate. In addition to consuming extra operating room time, which is expensive, using a second device, which can cost up to $800 or more, adds to the expense of the procedure. The amount a hospital or surgery center in the U.S. is paid for treating an enlarged prostate by Medicare is fixed at about $2,500, whether additional operating room time is required or one fiber optic device or two are used.

"We are striving to develop a side firing fiber optic device which rapidly vaporizes tissue and is sufficiently durable to allow treatment of enlarged prostates of any size typically encountered in a urologist's practice. Our objective is to have our devices consistently operate at 100 watts of pulsed Holmium laser energy for at least one hour."

Dr. Loeb added, "Our financial condition remains strong, and we have no debt. While our cash and cash equivalents declined by $476,000 to $3,339,000 at June 30, 2007 from $3,815,000 on December 31, 2006, our inventories increased by $294,000 to $3,069,000 at June 30, 2007, from inventories of $2,775,000 at December 31, 2006.

"We appreciate the patience and forbearance of our shareholders, and we expect Trimedyne will reap the benefit of marketing the best laser device for treating enlarged prostates in the future."

Trimedyne manufactures lasers and proprietary fiber optic devices for a variety of minimally invasive surgical procedures, many of which are performed on an outpatient basis at substantially less cost than conventional surgery. Trimedyne has a broad portfolio of patents on side firing laser devices and unique laser features of our lasers. For product, financial and other information, please visit Trimedyne's website at

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act:

Statements in this news release may contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1993 and Section 21E of the Securities and Exchange Act of 1934. Such statements may involve various risks and uncertainties, some of which may be discussed in the Company's most recent report on Form 10-KSB and subsequently filed SEC reports. There is no assurance any new products can be cleared for sale by the FDA or successfully commercialized or any forward-looking statements will prove accurate, as actual results and future events could differ materially from those presently anticipated.

                                 TRIMEDYNE, INC.
                           CONSOLIDATED BALANCE SHEET

                                                                June 30,
< S >                                                               < C >
Current assets:
  Cash and cash equivalents                                   $  3,339,000
  Trade accounts receivable, net of allowance for doubtful
    accounts of $12,000                                            539,000
  Inventories                                                    3,069,000
  Other current assets                                             206,000
   Total current assets                                          7,153,000

  Note due from related party                                       18,000
  Property and equipment, net                                      924,000
  Other                                                             39,000
  Goodwill                                                         544,000
                                                              $  8,678,000

Current liabilities:
  Accounts payable                                            $    329,000
  Accrued expenses                                                 360,000
  Deferred revenue                                                  30,000
  Accrued warranty                                                  20,000
  Notes payable and current portion of long-term debt                2,000
    Total current liabilities                                      741,000
Deferred rent                                                       92,000

    Total liabilities                                              833,000
Commitments and contingencies

Stockholders' equity:
  Preferred stock - $0.01 par value, 1,000,000 shares
    authorized, none issued and outstanding                             --
  Common stock - $0.01 par value; 30,000,000 shares
    authorized, 18,463,969 shares issued,
     18,362,360 shares outstanding                                 184,000
  Additional paid-in capital                                    51,359,000
  Accumulated deficit                                          (42,985,000)
  Treasury stock, at cost (101,609 shares)                        (713,000)

                            TRIMEDYNE, INC.

                           Three Months Ended         Nine Months Ended
                                June 30,                  June 30,
                           2007         2006        2007         2006
                       ------------ ------------ ------------ ------------

Net revenues           $  1,197,000 $  1,626,000 $  4,090,000 $  4,956,000
Cost of revenues            685,000      954,000    2,324,000    3,030,000
                       ------------ ------------ ------------ ------------
  Gross profit              512,000      672,000    1,766,000    1,926,000

Operating expenses:
 Selling, general
  and administrative        566,000      710,000    1,598,000    1,875,000
 Research and
 development                391,000      146,000      804,000      441,000
                       ------------ ------------  ----------- ------------
   Total operating
    expenses                957,000      856,000    2,402,000    2,316,000
                       ------------ ------------ ------------ ------------

Loss from operations       (445,000)    (184,000)    (636,000)    (390,000)

Other income, net           101,000      155,000      482,000      461,000
                       ------------ ------------ ------------ ------------

Loss before provision
  for income taxes         (344,000)     (29,000)    (154,000)      71,000
Provision (benefit)
 for income taxes             4,000       (2,000)       8,000        1,000
                       ------------ ------------ ------------ ------------

Net (loss) income      $   (348,000) $   (27,000) $  (162,000)      70,000
                       ============ ============ ============ ============

Net (loss) income
 per share:
  Basic                $      (0.02) $        -- $      (0.01)  $       --
                       ============ ============ ============ ============
  Diluted              $      (0.02) $        --  $     (0.01)  $       --
                       ============ ============ ============ ============

Weighted average
 number of shares

   Basic                 17,963,623   14,633,443   17,334,137   14,616,909
                       ============ ============ ============ ============
   Diluted               17,963,623   14,633,443   17,334,137   14,774,922
                       ============ ============ ============ ============

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