Trimedyne Reports Sharply Lower Losses for the Quarter and Nine Months Ended June 30, 2002

Business Wire, August 23, 2002

Business Editors

IRVINE, Calif.--(BUSINESS WIRE)--Aug. 23, 2002

Trimedyne Inc. (Nasdaq:TMED) today announced revenues of $1,896,000 and $5,408,000 for the quarter and nine month period ended June 30, 2002, respectively, compared with revenues of $1,829,000 and $5,445,000 for the quarter and nine month period ended June 30, 2001, respectively.

For the quarter and nine month period ended June 30, 2002, net losses were $287,000 or $0.02 per share and $1,050,000 or $0.08 per share, respectively. Included in the above results were $97,000 and $173,000, respectively, of non-cash, stock-based compensation. For the same quarter and nine month period of the prior year, the net losses were substantially higher, $2,191,000 or $0.17 per share and $6,362,000 or $0.51 per share, respectively.

While revenues for these periods were flat, gross profits increased to $961,000 and $2,437,000, for the current quarter and nine month period, respectively, from gross profits of $575,000 and $1,175,000, respectively, for the same quarter and nine month period of the prior year. By tight control of costs, operating expenses were reduced to $1,276,000 and $3,615,000, respectively, for the current quarter and nine month period, from $1,913,000 and $5,943,000, respectively, for the same quarter and nine month period a year ago.

Marvin P. Loeb, chairman and CEO of Trimedyne, said: "We have significantly reduced our expenses and improved our product mix, concentrating on the sale of higher margin disposable devices used in our outpatient laser procedures for treating herniated and ruptured lumbar (lower back) discs. This has enabled us to significantly improve our gross profits."

"We have filed an application with the FDA for clearance to market our lasers and disposable devices for the outpatient treatment of cervical (neck) and thoracic (mid-back) discs, with clinical data showing success rates of 95%. If and when FDA clearance for these applications is received, the potential market for our lasers and disposables in the treatment of herniated and ruptured discs is expected to double.

"Approximately 540,000 conventional surgeries to treat herniated and ruptured discs are performed each year in the United States at a cost of approximately $16 billion annually."

"I recently demonstrated my confidence in Trimedyne by purchasing $200,000 of its 12% Senior Secured Convertible Notes in February and April 2002, and I agreed to accept shares of common stock of Trimedyne, valued at the closing price on the last business day of each month, in lieu of cash compensation.

"Through June 30, 2002, I am being issued 225,400 shares of Trimedyne in lieu of cash compensation of approximately $120,000. Also, in August 2001, I exercised stock options to purchase 332,000 shares of Trimedyne's common stock, all of which are still being held.

"The current market environment is making it difficult for companies with promising products to raise capital to market their wares. As a result, we are exploring marketing alliances with established companies to distribute our products and make a significant investment in Trimedyne. Our objective is to expand our sales and return to profitability."

Note: On Aug. 14, 2002, Trimedyne received written notice of the Nasdaq staff's determination that Trimedyne fails to meet the minimum $1 bid price per share requirement set forth in Marketplace Rule 4310 (c)(8)(D) and the $2,500,000 of stockholders' equity requirement for continued listing set forth in Marketplace Rule 4310 (c)(2)(B), and that its shares are, therefore, subject to delisting from the Nasdaq Small Cap Market. Trimedyne has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Nasdaq staff's determination. There can be no assurance the panel will grant Trimedyne's request for continued listing.

Trimedyne is a leading manufacturer of surgical lasers and proprietary disposable and reusable fiber optic devices for applications in a variety of minimally invasive surgical procedures in orthopedics, urology, ENT surgery, gynecology, gastrointestinal surgery and general surgery. For product, financial or other information, visit Trimedyne's Web site at www.trimedyne.com.

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Reform Act

Statements in this news released may contain forward-looking information 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. All statements, other than statements of historical fact included in this release, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statement. Some of the risks and uncertainties may be discussed in the company's most recent report on Form 10K-SB and subsequently filed SEC reports.