Fiscal Year -September 30
Total Authorized Shares - 25,000,000
Shares outstanding as of August 12, 1996 - 6,966,884
Preferred Stock Authorized 5 million - 1.2 mil outstanding
Free Trading - 6,627,884
Management Control - 339,000
Current Price - $1.00
Market Cap - $7,000,000.00
Current Book Value as of 6-30-96 - $.77 (includes $4.9 million in goodwill)
PE estimate 1997 - fiscal year September - 12.5
PE estimate 1998 - fiscal year September - 6
Dividend - NM
Long term debt - $301,000.00
Shareholders - 1,700
Employees - 80
Stock Price range 1996 - $2.81 - .31
Warrants Outstanding - 2,733,219 redeemable. Each warrant is estimated to enable its holder to purchase 3.57 shares at an exercised price of $1.96/share any time until November 30, 1996. A registration statement on form S-3 covering the shares underlying the Redeemable Warrants was filed with the SEC on 7-31-96 and became effective on 8-7-96.
Transfer Agent - Continental Stock & Transfer & Trust, NY, NY
Auditor - BDO Seedman, NY, NY
Credit Line -$1,250,00 from Silicon Valley Financial. As of June 30, 1996. AVIT had only borrowed $195,000.00
Other information - During May and June, 1996, the company completed Regulation S placements of 1,492,144 shares of its common stock to offshore investors resulting in net proceeds of approximately $1,250,000. In addition, the Company sold 143,116 shares of its common stock during May and June 1996 for an aggregate amount of $100K.
Legal Proceeding - September 20, 1996, A.S. Goldman Co. filed court action pursuant to warrant registration. AVIT believes suit is without merit.



The Company designs, develops, manufactures and markets health care products and services including Hydrasorb™, a proprietary line of polyurethane wound care dressing. The Company also provides health care cost containment services to employers and third-party payers.
Avitar Technologies develops and manufactures disposable products for the medical, dental and consumer markets utilizing its proprietary, hydrophilic polyurethane formulation technology.
Some of the companies using or marketing AT's products include the Conva Tec Division of Bristol-Meyers Squibb, Smith and Nephew Richards, U.S. Surgical, Bose and CCA Industries.
Avitar's Hydrasorb™ wound dressing product is a highly absorbent foam dressing. In addition to the Hydrasorb line, Avitar Tech has custom developed specialty wound dressing for the cardiac catheter lab market as well the orthopedic market. The Illizarov Dressing used for dressing external bone fixators in the orthopedic procedures is marketed and sold by the Richards Division of Smith & Nephew.
Avitar Tech recently developed and is in the early stages of marketing a saliva collector device which is used as a component in the diagnostic testing of such diseases as HIV and Hepatitis. Avitar has the worldwide rights for the technology which utilizes the nonprotein binding characteristics of its polyurethane foam technology.
Avitar Tech continues to expand the number of applications for its proprietary technologies in a variety of other medical/consumer markets. They include a molded foam component which provides cushioning and sealing functions for laparoscopic surgery, a molded dental applicator for a consumer teeth bleaching system, disposable ear cushions for a high-tech noise attenuation device and several applications in the feminine hygiene market.

Corporate Headquarters

Contact: Peter Phildius - 617-821-2440
Jay Leatherman - 203-265-3594

Officers & Directors

Peter Phildius - COB, CEO, Director
Doug Scott - President
Director J.C. Leatherman - Chief Financial Officer


S.A. Advisory, an advisory firm, acts as a consultant to AVIT. We received compensation for production of this anecdotal research report. We may buy and/or sell shares in this issue at our own discretion.

HOTLINE 1-900-990-0909, EXT 192 ($2.00/min)

Division #2

Managed Health Benefits is a mental health cost containment company specializing in psychiatric and substance abuse claim review services, fraud and case management. The company has been conducting business on a national basis since 1993 and provides a variety of services for companies such as Chubb Life - America, The Guardian Life Insurance Company, John Alden Life Insurance Company, Relia Star Financial Corp., First UNUM, Commercial Life Insurance Company, and Trustmark Insurance Company.
Managed Health Benefits performs psychiatric and substance abuse bill review on inpatient, residential and partial programs, post discharge and prior to payment. Specifically, MHB identifies and documents savings through a line-by-line review of each bill. These reviews examine all or any portion of the following: 1) medical necessity, 2) appropriateness of charges; 3) double billing, 4) documentation, 5) staff credentials, 6) reasonable and customary, and 7) pre-certification information compared to the admission history in the medical record.

Fraud Support
MHB has proprietary fraud triggers used to evaluate treatment and billing patterns found in inpatient mental health and substance abuse facilities. These triggers are the basis of reviews conducted of facility's treatment programs to establish whether these are, in fact, patterns of abuse. MHB produces detailed reports documenting evidence of overcharging which payers may use to pursue legal settlements or refunds.
MHB's reviews for Special Investigation Units focused on targeted facilities has resulted in savings of 75%.

Inpatient Psychiatric Utilization Review.
MHB's inpatient psychiatric and substance abuse utilization review and case management program is focused upon reaching clinically sound treatment plans. Professionals discuss the patient's history, treatment plan and anticipated outcome.

Outpatient Psychiatric Management.
MHB conducts focused outpatient reviews that reduce over-utilization while ensuring that treatment is clinically appropriate.

Disability Case Management.
MHB reviews both short and long-term psychiatric and substance abuse disability claims to verify the legitimacy of the disability.


Brief Fundamental Analysis

Upon review of Chart A, we compared AVIT against five other peer companies, namely, Ballard Medical Products (BMP), Meridian Diagnostics (KITS), Utah Medical Product, Inc. (UTMD), Tyco International LTD (TYC) and Diagnostic Products Corp. (DP).
Our only comparison within chart A pertains to PE estimates during the next two fiscal years. During fiscal 97 it is estimated that AVIT will earn .08 during 97 and .18 during 98 yielding a 12.5 and 6 PE estimate based upon the current share valuation of AVIT common shares ($1.00 share price).
Upon close examination of our peer companies, namely, BMP - PE est 21 and 17, respectively, KITS - PEest 36 and 28, UTMD - PE est 13 and 12, TYC - PE est 19 and 16 and DP - PE est 18 and 16, when averaged, yields a PE est for the current fiscal at 21x and 18x for the following year.
If AVIT were to trade at comparable PE valuations of its peers then AVIT would trade at $1.65 based upon fiscal 97 and $3.24 based upon fiscal 98.
Upon review of Chart 1 when we developed a model based upon growth rate of AVIT and calculating a share price based upon half its rate of growth during the next few years. Our share valuation equalled $1.65 and $3.78, respectively.
From our brief analysis, it appears that AVIT has little down side risk from current levels. The numbers that we derived from our calculation indicate that during the next 24 months AVIT could trade 280% above the current levels - if, of course, all estimates are met. Of Course, if expectations are exceeded, share valuation could appreciate even more so.
During May and June of 1996, AVIT successfully raised $1.4 million dollars via sale of common shares. Of course, this was an extremely bullish development for the company. The financial market place obviously feels quite positive on the company's prospects.
The company also has a sizable line of credit and if all redeemable purchase warrants that are currently trading (AVITW) were to be exercised an additional $19 million conceivably could be raised. These warrants are registered and expire during November, 1996.
It is obviously a no-brainer that they will be extended and possibly the exercise price could be lowered. (Note: Management holds an additional approximately 3 million options and warrants exercisable at various prices. So in essence, additional money could be raised).
The availability of additional working during the next few years bodes well for AVIT for future internal growth as well as synergistic acquisitions.
At present, AVIT trades at an estimated PSR of 1.4x 1996 est. revenues ending September 30, 1996. If we were to value AVIT with a PSR of 3 (most believe this value indicates fair value), then our share price could approach $2.00/share. Obviously, 1997 est. revenues indicates an even more attractive value based upon revenue estimates of $8 million, a PSR value of .87 surfaces. Again, upside potential in our opinion exists for AVIT.
In summation, the company has ample cash and plenty of cash raising potential, AVIT's PE and PSR indicate limited downside risk, while at the same time indicating attractive upside potential during the next 24 months. The management is qualified and dedicated to grow AVIT and in our opinion, AVIT is relatively unknown and under followed. All bodes well for calculated upside potential.



9 Months

1994A 1995A 1996A 1996E 1997E 1998E
Revenues $1,458,170 3,512,825 3,591,472 5,036,000 7,893,000 10,265,000
Net Income (loss) (.01) (.14) (.13) (.23) .08 .18
Shares outstanding 3.6 mil 4.9mil 5,379,828 6,966,884 6,966,884 6,966,884

If we examine revenue growth from 1995 to 1998E on a per year, growth has been consistently impressive, that is, 43%, 56% and 30%. Our overall growth rate equals around 43%.
Based upon a share price of $1.00 and earnings of .08 based upon 1997 and .18 for 1998, we are able to calculate an estimated PE of 12.5x and 6x, respectively.
If we were to assume that AVIT were to trade at half the growth rate and based upon AVIT's current earnings estimate of .08 and .18, respectively, then a share price of $1.68 and $3.78 would result, respectively.
Concerning the earnings turnaround anticipated during fiscal 97, we can see a (.23) for fiscal 96 to a positive .08 for fiscal 97, this resulting in a dramatic 3,000% increase. By any measure, an impressive directional change.


Company Symbol Current Price Earnings/share E for fiscal 1997 & PE Est. Earnings/share E for fiscal 1998 & PE Est.
1. Avitar, Inc. AVIT (NASDAQ small caps) 1 .08 Sept yr end
PE est. 12.5
.18 Sept yr end
PE est 6
2. Ballard Medical Products BMP (NYSE) 18 1/8 .88 Sept yr end 96
PE est 21
1.06 Sept yr end 97
PE est 17
3. Meridan Diagnostic KITS (NASDAQ) 13.25 .37 Sept yr end 96
PE est 36
.48 Sept yr end 97
PE est 28
4. Utah Medical Products, Inc. UTMD (NASDAQ) 12.25 .94 Dec yr end 96
PE est 13
1.05 Dec yr end 97
PE est 12
5. Tyco International LTD TYC (NYSE) 44.25 2.36 June yr end 97
PE est 19
2.75 June yr end 98
PE est 16
6. Diagnostic Products Corp. DP (NYSE) 37 2.03 Dec yr end 96
PE est 18
2.37 Dec yr end 97
PE est 16
AVERAGE PE : 21 18



  1. The health care industry faces a number of challenges, but continues to possess above average long term growth potential.
  2. The Diagnostics Industry is about $5 billion in size worldwide.
  3. According to the US Department of Health and Human Services, the nation's health care outlays have risen at a rate of about 9.1% annually in the 10 years through 1994, compared with 6% annual growth in the overall US economy.
  4. Stocks of medical device manufacturers have also exhibited a robust showing, with the S & P Medical Product and Supplies Index up more than 50%, year to year, as of the end of August 1995. The introduction of new high-tech products, expansion into foreign markets, and a more favorable regulatory climate have also benefitted this group.
  5. The worldwide market for medical devices was pegged at about $93 billion in 1993.
  6. Based on government sources, per capita consumption of health technology is $118 in the US, $53 in Europe and substantially lower in most other areas throughout the world.
  7. Foreign demand for US made medical goods is expected to grow significantly over the next five years: from $9.2 billion in 1994 to $10 billion in 1995 and $18 billion by 2,000.
  8. Estimates for the market potential of home HIV tests range from $200 million to $800 million.
  9. Mental health and substance abuse equal $90 billion/year.



Geared towards "risk tolerant investors". Dramatic growth potential exists during the next 24 months.

AVIT is considered speculative and all risk adverse accounts should fully understand all the adversities of investing in micro-mine caps.


AVITAR TECHNOLOGIES, INC., has a core medical product mix from Wound Dressings and Medical Surgical Specialties to Skin Barrier Products. Our Accu-sorb Saliva Collector component can be used with diagnostic testing kits or in laboratory procedures for a wide range of testing applications.* The collector is made of our proprietary Hydrophilic Foam component and Special Collection Tube component, which provides a device that is efficacious, easy to use and cost effective.

  • Non-protein binding
  • Neutral pH
  • Higher concentration of analytes from oral fluid collection
  • Non-ionic
  • Non-invasive
  • Safer handling
  • Lower cost specimen collection & extraction
  • Visual verification of sample collection
Saliva Collection
Remove saliva tester from tube. Place dry foam collector in mouth. Gently squeeze the foam collector between your teeth, using a chewing motion for three to four minutes.
Remove device from mouth and place in the tube to return to technician
Saliva Extraction
Unscrew cap from tube and pull foam collector approximately 1/3 of the way of the tube.
Squeeze top of the tube closed between the thumb and index finger of one hand.
With the other hand squeeze from the top of the tube in a downward motion without releasing the foam. This will extract saliva from the foam to the bottom of the tube.
Recap tube and stand in an upright position so that the collected saliva is not reabsorbed into the foam.



The Hydrasorb* Advantage

The Nursing Advantage
  • Improved Wound Healing Environment
  • Highly Absorbent/Fewer Changes Required
  • Easy to Apply
The Patient Advantage
  • Soft, Comfortable
  • Helps Reduce Irritation and Pain
  • Gently Protects Delicate Tissue
The Hospital Advantage
  • Cost Effective/Saves Nursing Time • Reduces Line Items
  • Helps Decrease Length of Stay
  • Softness
  • Non-Linting
  • Hydrophilic - Highly Absorbent
  • Maintains Moist Wound Environment
  • Transpires Moisture
  • Semi-Occlusive
  • Conformability
  • Patient Comfort
  • Better Wound Care
  • Fewer Changes
  • Pain-Free Healing
  • Prevents Skin Maceration
  • Oxygen Permeable While Providing a Bacterial Barrier
  • Better Wound Coverage.



Copyright © 1996 S.A. Advisory