Careside Reports Second Quarter 2002 Results


CULVER CITY, Calif., Aug. 14, 2002 (PRIMEZONE) -- Careside, Inc. (AMEX:CSA), a provider of point-of-care blood analysis instrumentation and records management, today announced its results for the second quarter ended June 30, 2002. Revenues for the second quarter were $409,000, compared to $192,000 in the prior year period and $601,000 for the first quarter of 2002. While revenues decreased, operating expenses in the second quarter of 2002 declined 42% percent to $1.62 million, from $2.763 million in the second quarter of 2001. However, for the three months ended June 30, 2002, the Company incurred a net loss of $5.204 million, which resulted in a $0.27 net loss per share. Accounting for $3.0 million of the loss is interest expense (see below). This compares with the net loss for the same period in the prior year of $3,674 million, which resulted in a net loss per share of $0.73.

In the second quarter, Careside authorized $5,000,000 of debt financing to be issued. Subject to shareholder approval, the debt will, in effect, be convertible into common stock. As of June 30, 2002 $3,000,000 of the authorized $5,000,000 was issued in a private placement, and 1,350,000 warrants were issued in connection with the debt. These warrants had an aggregate fair value, using the Black-Scholes pricing model, of $1,684,000. In accordance with generally accepted accounting principles, the Company allocated the proceeds of the private placement to the warrants based on the relative pro-rata values of the debt and warrants, which resulted in $1,052,000 being allocated to the warrants. This discount is being amoritized as interest expense over the seven year term of the debt.

At the time the $3,00,000 debt was issued during the second quarter, the fair value of the company's common stock exceeded the conversion price, and as a result, the Company recognized interest expense on the beneficial conversion feature of the debt of $3,000,000. Another $1 million in debt financing has been committed so far in the third quarter, and Careside expects to close on an additional $1 million before the end of the third quarter. Should the fair value of the Company's common stock at the time of issuance exceed the conversion price, the Company will recognize additional interest expense on the beneficial conversion feature of the debt.

"In connection with this financing, Careside has initiated the transfer of the manufacturing of the Careside Analyzer to Peak Industries. This change has enabled Careside to reduce internal costs associated with validating Analyzers, as the validation process will be incorporated into Peak's quality control process. Careside expects Peak to begin delivering Analyzers to Careside in September of this year. While this transfer resulted in lower sales of the Careside Analyzer in the second quarter, as reflected in the financial results for the quarter, and will impact third quarter sales, Careside expects to be fully supplied with Analyzers beginning in October. In anticipation of this re-supply, the Company has entered into discussions with its largest distributor, PSS, to re-release the Careside products to new PSS customers.

"In addition, Careside has taken significant steps to reduce monthly expenses, including management overhead, research and development costs as well as regulatory affairs expenditures, and the associated savings are being redirected to the manufacturing, as well as to sales and marketing and customer services," stated CEO W. Vickery Stoughton.

In May of 2002, Careside received a letter from the American Stock Exchange ( AMEX ) indicating that the Company is below certain of the Exchange's continued listing standards due to losses in two of its most recent fiscal years and stockholders' equity below $2 million, as set forth in Section 1003 of the Amex Company Guide. Careside submitted a plan of compliance to the Exchange and responded to questions from its staff. On August 13, 2002, the Exchange notified the Company that it had accepted the Company's plan of compliance and granted the Company an extension of time to regain compliance with the plan period. The Company will be subject to periodic review by the Exchange staff during the plan period. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards could result in the Company being delisted from AMEX.

"Careside submitted a realistic plan to AMEX and received full cooperation from its staff," stated Mr. Stoughton. "Careside fully expects to achieve the plan submitted to the AMEX. With the additional investment that Careside has received, coupled with the cost reductions that have been implemented, Careside can focus on selling its products that are now receiving increasing customer interest because of accuracy, convenience and ease of use," said Mr. Stoughton.

About Careside

Careside, Inc. markets a proprietary blood testing system including its Careside Analyzer, a companion hematology system called the H-2000 Hematology Analyzer, and its Careside Connect record management system linking patient test results into a single report. The Careside Analyzer provides a cost-effective and efficient means of measuring blood chemistry, electrochemistry, and coagulation function near the patient by producing accurate test results within 15 minutes. Careside, Inc. is one of the world's leading developers of advanced point-of-care blood testing technology.

Safe Harbor: Statements in this press release regarding Careside Inc. which are not historical facts, including statements regarding availability of products for sale, re-release of products, reduction of expenses and securing financing, customer interest in the Company's products, and the Company's compliance with AMEX listing requirements are forward-looking statements that involve risks and uncertainties. Key factors which may impact these statements include product acceptance, market forces and other challenges inherent in sales, marketing and manufacturing, and the other factors discussed in the Company's prospectus that was effective dated December 2001. The Company undertakes no obligation to update forward-looking statements. Please see the risk factors listed from time to time in the Company's prospectus and reports on file with the SEC.


                             Careside Inc.
                  Abbreviated Statement of Operations
                            (in thousands)

                           Three months ended      Six months ended
                                 June 30,               June 30,
                           2001        2002        2001        2002
                         --------    --------    --------    --------

 SALES, net              $    192    $    409    $    376    $  1,010

 COST OF SALES              1,032         847       2,035       2,148
                         --------    --------    --------    --------

 GROSS PROFIT                (840)       (438)     (1,659)     (1,138)
 OPERATING EXPENSES:

  Research and development
   costs - product            808         305       1,614         688
  Research and development
   costs - software           248         180         451         417
  Selling and marketing     1,010         714       1,863       1,430
  General and
   administrative             555         417         960         912
  Goodwill Amortization       142        --           283          50
                         --------    --------    --------    --------

   Total operating
    expenses                2,763       1,616       5,171       3,497
                         --------    --------    --------    --------
 OPERATING LOSS:           (3,603)     (2,054)     (6,830)     (4,635)


 INTEREST INCOME
  (EXPENSE):                  (71)     (3,150)       (171)     (3,309)
                         --------    --------    --------    --------
 NET LOSS                $ (3,674)   $ (5,204)   $ (7,001)   $ (7,944)
                         ========    ========    ========    ========


 Beneficial conversion
  feature                  (3,799)       --        (3,799)       --

 Dividends on Preferred
  Stock                      (892)       --          (939)       --
                         --------    --------    --------    --------
 NET LOSS to common
  shareholders           $ (8,365)   $ (5,204)   $(11,739)   $ (7,944)
                         ========    ========    ========    ========

 NET LOSS PER SHARE      $  (0.73)   $  (0.27)   $  (1.04)   $  (0.43)
                         ========    ========    ========    ========
 NET LOSS PER SHARE to
  common shareholders    $  (0.73)   $  (0.27)   $  (1.04)   $  (0.43)
                         ========    ========    ========    ========


 Weighted average number
  of common stock and
  common stock
  equivalents 
  outstanding              11,416      19,066      11,255      18,290


                      Abbreviated Balance Sheets
                            (in thousands)

                                        Dec. 31, 2001   June 30, 2002
                                           -------         -------
                                                         (unaudited)

 CURRENT ASSETS
  Cash and cash equivalents                $    39         $   336
  Accounts Receivable                          158             232
  Inventories                                2,498           1,772
  Prepaid expenses and other                   480             342
 PROPERTY AND EQUIPMENT (net)                3,964           3,431
 DEPOSITS                                       24              24
 GOODWILL (net)                                 50             --
                                           -------         -------
   Total Assets                            $ 7,214         $ 6,137
                                           =======         =======

 LIABILITIES AND STOCKHOLDER'S EQUITY

 CURRENT LIABILITIES                         5,659           7,986
                                           -------         -------
 LONG-TERM DEBT                                483             305
                                           -------         -------
 STOCKHOLDER'S EQUITY                        1,072          (2,154)
                                           -------         -------

   Total liabilities and
    stockholder's equity                   $ 7,214         $ 6,137
                                           =======         =======

            

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