Trimedyne, Inc. Reports Its Financial Results for the Quarter Ended March 31, 2010

LAKE FOREST, CA--(Marketwire - May 24, 2010) - TRIMEDYNE, INC. (OTCBB: TMED) today reported its financial results for the quarter ended March 31, 2010.

Revenues for the current quarter were $1,727,000, an increase of 5.8% from revenues of $1,632,000 for the prior year’s quarter. The $95,000 increase in revenues was due to higher revenues from sales of fiber optic devices and service and rentals, offset by a small decrease in sales of lasers. The Company had a net loss of $307,000 or $0.02 per share for the current quarter, compared to a loss of $345,000 or $0.02 per share for the prior year quarter.

Commenting on the financial results for the quarter, Marvin P. Loeb, Sc.D., Chairman of Trimedyne, said, “We are pleased with the 5.8% increase in revenues in the current quarter over the year ago quarter, but we regret that we had a loss for the quarter, even though it was smaller than the loss for the same quarter of 2009 and about the same as the loss of $300,000 in the immediately preceding quarter.

“Our working capital has declined, and we incurred losses from developing our new side firing optical fiber and from operations during the past four years. We have taken steps to lower our expenses by reducing our personnel and overhead costs, and I volunteered to defer 15% of my compensation, beginning in April 2009. We renegotiated the lease on our facility in Lake Forest, California, which will result in a savings of more than $111,000 in rent expense through the next twelve months. However, we cannot assure that we will be able to further reduce our costs or achieve or maintain sales growth to reverse these losses. We plan to raise additional capital through the sale of notes, debentures, equity capital or other assets, but we cannot assure that our efforts to do so will be successful.”

Dr. Loeb continued, “We developed a new side firing optical fiber for use with our 80 watt Holmium Lasers for the treatment of benign prostate hyperplasia or BPH, commonly called an enlarged prostate. We commenced a limited marketing release of the new fiber under our VaporMAX® trademark in April 2009, with a wider release to follow.

“BPH is a condition which affects an estimated 50% of men over age 55 and an increasing percentage of men at older ages. Worldwide, approximately 1.2 million men are presently treated each year in a surgical procedure using radiofrequency (RF), laser or other energy to remove excess prostate tissue, which is obstructing urine flow. The laser procedure is usually performed on an outpatient basis and reduces the adverse effects and requirements of the RF surgical procedure, which include hospitalization, bleeding, infections and the risks of general anesthesia, a blood transfusion, impotence and incontinence.”

Dr. Loeb also advised, “To help our stockholders understand the long delay we encountered with Lumenis, Ltd. of Yokneam, Israel (‘Lumenis’) in their commencing to purchase our new side firing laser fibers, this is what transpired. We settled our lawsuit against Lumenis for patent infringement, unfair competition and trade libel, and we entered into a Terms of Settlement Agreement with Lumenis on June 23, 2003. Two years later, on August 24, 2005, we entered into an OEM Agreement with Lumenis. Under these Agreements, Lumenis is required to purchase from us all of its requirements for side firing optical fibers (emitting laser energy at an angle of 75 degrees or greater) and 75% of its requirements for angled firing optical fibers (emitting laser energy at an angle less than 75 degrees), subject to certain conditions.

“Lumenis is one of the world’s largest manufacturers of medical lasers with annual sales of approximately $250 million. Lumenis markets its side firing fibers through Boston Scientific Corporation in the United States and Japan and through Lumenis’ direct sales force and distributors in other countries. Under the Terms of Settlement Agreement, Lumenis is required to pay us a royalty of 7.5% of its quarterly sales of such fibers, except for fibers Lumenis purchases from us, until July 21, 2014.

“We have spent a significant amount of money to complete the development and testing of our new, reliable, durable and fast-vaporizing side firing optical fiber device, primarily for sale to Lumenis under the above-described Agreements. As of this date, Lumenis has not completed certain of the requirements of these Agreements, including the testing of 30 of our side firing fibers and reporting the results to us within the time period proscribed by the OEM Agreement, and Lumenis has not commenced its audit of our quality system.

“In response to this, in February 2010, we submitted an addendum to the OEM Agreement to Lumenis, setting forth firm timelines for completion of the above steps and Lumenis’ commencing the purchasing of these devices from us, with monetary penalties during the implementation of the timelines and larger monetary penalties if these timelines are missed. As of this date, Lumenis has not agreed to the terms of such addendum, and therefore, we have given Lumenis until May 31, 2010 to execute this addendum, with whatever reasonable changes are made in the timelines to which the parties may mutually agree.”

Trimedyne manufactures proprietary Holmium lasers and patented, disposable and reusable fiber optic laser energy delivery devices. For product, financial and other information, visit our website, http://www.trimedyne.com.

“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 1933 and Section 21E of the Securities and Exchange Act of 1934, including words like “expect,” “anticipate,” “may,” “could” and others. Such statements may involve various risks and uncertainties, some of which may be discussed in the Company’s current 10-K Report and other SEC reports. There is no assurance such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

 CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS March 31, 2010 September 30, 2009 ------------------ ------------------ Current assets: Cash and cash equivalents $ 822,000 $ 1,621,000 Trade accounts receivable, net of allowance for doubtful accounts of $12,000 at March 31, 2010 and September 30, 2009 774,000 988,000 Inventories 2,656,000 2,266,000 Other current assets 122,000 226,000 ------------------ ------------------ Total current assets 4,374,000 5,101,000 Property and equipment, net 1,030,000 1,168,000 Other 80,000 87,000 Goodwill 544,000 544,000 ------------------ ------------------ Total Assets $ 6,028,000 $ 6,900,000 ================== ================== LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 384,000 $ 449,000 Accrued expenses 455,000 497,000 Deferred revenue 84,000 100,000 Accrued warranty 40,000 54,000 Income tax payable 29,000 20,000 Current portion of note payable and capital leases 164,000 209,000 ------------------ ------------------ Total current liabilities 1,156,000 1,329,000 Note payable and capital leases, net of current portion 151,000 232,000 Deferred rent 34,000 51,000 Long term warrant liability 29,000 -- ------------------ ------------------ Total liabilities 1,370,000 1,612,000 ------------------ ------------------ 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, 18,467,569 shares issued at March 31, 2010 and September 30, 2009, 18,365,960 shares outstanding at March 31, 2010 and September 30, 2009 186,000 186,000 Additional paid-in capital 51,232,000 51,461,000 Accumulated deficit (46,047,000) (45,646,000) ------------------ ------------------ 5,371,000 6,001,000 Treasury stock, at cost (101,609 shares) (713,000) (713,000) ------------------ ------------------ Total stockholders’ equity 4,658,000 5,288,000 ------------------ ------------------ Total liabilities and stockholder’s equity $ 6,028,000 $ 6,900,000 ================== ================== TRIMEDYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended March 31, March 31, 2010 2009 2010 2009 ------------ ------------ ------------ ------------ Net revenues $ 1,727,000 $ 1,632,000 $ 3,381,000 $ 3,242,000 Cost of revenues 1,126,000 1,074,000 2,202,000 2,150,000 ------------ ------------ ------------ ------------ Gross profit 601,000 558,000 1,179,000 1,092,000 Operating expenses: Selling, general and administrative 659,000 673,000 1,288,000 1,389,000 Research and development 316,000 318,000 621,000 614,000 ------------ ------------ ------------ ------------ Total operating expenses 975,000 991,000 1,909,000 2,003,000 ------------ ------------ ------------ ------------ Loss from operations (374,000) (433,000) (730,000) (911,000) Other income, net 71,000 87,000 132,000 125,000 ------------ ------------ ------------ ------------ Loss before provision for income taxes (303,000) (346,000) (598,000) (786,000) Provision for income taxes 4,000 (1,000) 9,000 4,000 ------------ ------------ ------------ ------------ Net loss $ (307,000) $ (345,000) $ (607,000) $ (790,000) ============ ============ ============ ============ Net loss per share: Basic $ (0.02) $ (0.02) $ (0.03) $ (0.04) ============ ============ ============ ============ Diluted $ (0.02) $ (0.02) $ (0.03) $ (0.04) ============ ============ ============ ============ Weighted average number of shares outstanding: Basic 18,365,960 18,365,960 18,365,960 18,365,960 ============ ============ ============ ============ Diluted 18,365,960 18,365,960 18,365,960 18,365,960 ============ ============ ============ ============