IsoTis Reports Third Quarter Results (y 2)

    
                     IsoTis S.A.
    Consolidated Statements of Operations-Unaudited
    US Dollars

                       Three Months Ended                Nine Months Ended
                      30-Sep-06      30-Sep-05     30-Sep-06     30-Sep-05
                             -               -              -              -
    Revenues
    Product
     sales      US$ 10,161,972   US$ 8,146,900 US$ 30,729,113 US$ 23,450,049
    Other revenue             -              -         35,816         38,825
                              -              -              -              -
    Total revenues   10,161,972      8,146,900     30,764,929     23,488,874
                              -              -              -              -
    Operating expenses
    Costs of sales    3,630,693      3,261,653     11,304,813      9,183,912
    Research and
     development      1,983,751      1,735,114      5,591,768      4,171,131
    Marketing and
     selling          4,667,770      3,315,938     13,200,975      9,310,025
    General and
     administrative   2,978,011      2,152,586      8,445,734      7,938,321
                              -              -              -              -
    Total operating
     expenses        13,260,225     10,465,291     38,543,290     30,603,389
                              -              -              -              -
    Loss from
     operations     (3,098,253)    (2,318,391)    (7,778,361)    (7,114,515)

    Interest income     161,784        131,427        440,021        385,975
    Interest expense   (75,735)       (31,807)      (132,219)      (156,555)
    Foreign exchange
     gain/(loss)        941,506        301,706    (4,568,038)      8,625,190
    Other               146,019        431,548        142,100        663,351
                              -              -              -              -
    Net (loss)
     income before
     taxes          (1,924,679)    (1,485,517)   (11,896,497)      2,403,446
    Provision for
     income taxes             -              -              -              -
                              -              -              -              -
    Net (loss)  
     income     US$ (1,924,679)US$ (1,485,517)US$ (11,896,497) US$ 2,403,446

                              -              -              -              -
    Basic and diluted
     net (loss) income per
     share           US$ (0.03)     US$ (0.02)     US$ (0.17)       US$ 0.03
                              -              -              -              -
    Weighted average
     common shares
     outstanding
    Basic            70,940,713     70,681,023    70,918,356      70,349,586
    Diluted          70,940,713     70,681,023    70,918,356      72,407,899

    
    IsoTis S.A.
    Consolidated Balance Sheets

                                         ------------------ -----------------
                                         September 30, 2006 December 31, 2005

                                         ------------------ -----------------
    Assets                               (Unaudited)        (Audited)
    Current assets:
    Cash and cash equivalents               US$ 16,909,442     US$ 15,714,442
    Restricted cash                              1,634,357          2,184,063
    Trade receivables, net                       7,548,822          6,306,518
    Inventories                                 12,921,460         10,020,906
    Unbilled receivables                            74,069            295,115
    Value added tax receivable                     120,944             95,505
    Prepaid expenses and other current assets      979,227            761,355
                                         ------------------ -----------------
    Total current assets                        40,188,321         35,377,904

    Non-current assets:
    Restricted cash                              1,500,000          2,250,000
    Property, plant and equipment, net           3,420,410          1,359,280
    Goodwill                                    16,383,069         16,383,069
    Intangible assets, net                      11,659,113         13,585,250

                                         ------------------ -----------------
    Total non-current assets                    32,962,592         33,577,599

                                         ------------------ -----------------
    Total assets                            US$ 73,150,913     US$ 68,955,503

                                         ------------------ -----------------

    Liabilities and shareholders' equity
    Current liabilities:
    Trade payables                           US$ 5,234,565      US$ 2,910,114
    Accrued liabilities                          7,727,924          6,680,989
    Deferred revenue                             1,342,797            344,719
    Current portion of interest-bearing
     loans and borrowings                        2,217,473          1,015,471

                                         ------------------ -----------------
    Total current liabilities                   16,522,759         10,951,293

                                         ------------------ -----------------
    Non-current liabilities:
    Interest-bearing loans and borrowings        2,083,692          2,043,781
    Deferred revenue                             5,132,910                  -
    Other long term liabilities                    133,266                  -

                                         ------------------ -----------------
    Total non-current liabilities                7,349,868          2,043,781

                                         ------------------ -----------------
                                                50,716,173         50,644,949
                                               106,655,281        106,212,297
                                                17,631,722         12,932,003
                                             (125,724,890)      (113,828,820)

                                         ------------------ -----------------
    Total shareholders' equity                  49,278,286         55,960,429

                                         ------------------ -----------------
    Total liabilities and shareholders'
     equity                                 US$ 73,150,913     US$ 68,955,503

    
    IsoTis S.A.
    Consolidated Statements of Cash Flows-Unaudited
    US Dollars
                                                          Nine Months Ended
                                                      30-Sep-06     30-Sep-05
                                                             -              -
    Cash flows from operating activities

    Net (loss) income from continuing
     operations                                 US$ (11,896,497)US$ 2,403,446

    Adjustments to reconcile net (loss) income
    to net cash used in operating activities:
    Depreciation and amortization                    2,516,901      2,405,608
    Bad debt expense                                   213,709        141,535
    Gain (loss) on sale of assets                           17      (659,898)
    Stock-based compensation expense                   413,598        479,719
    Foreign currency transaction (gain) loss         4,568,038    (8,625,190)
    Change in operating assets and liabilities:
    Inventories                                    (2,863,302)      (204,946)
    Trade receivables                              (1,399,926)    (1,895,226)
    Other current assets                                47,521        646,321
    Deferred revenue                                 (414,257)        136,910
    Trade and other payables                         2,854,413      (833,008)
    Other long term liabilities                        133,266              -
    Restructuring provision                                  -      (673,197)

                                                  -------------- ------------
    Net cash flows used in operating activities    (5,826,519)    (6,677,926)

    Cash flows from investing activities

    Purchase of property, plant and equipment      (2,633,905)      (439,516)
    Proceeds from sale of dental assets              6,984,277
    Proceeds from sale of property, plant and
     equipment and assets                               22,411      2,590,700
    Change in restricted cash                        1,378,164      1,381,372

                                                  -------------- ------------
    Net cash flows provided by investing
     activities                                      5,750,947      3,532,556

    Cash flow from financing activities

    Proceeds from issuance of common
     shares                                            100,610        865,689
    Proceeds from interest-bearing loans and
     borrowings                                      2,000,000              -
    Repayment of interest-bearing loans
     and borrowings                                (762,090)      (6,190,650)
                                                  -------------- ------------
    Net cash flows provided by (used in)
     financing activities                          1,338,520      (5,324,961)

    (Loss) on cash held in foreign currency         (67,948)         (30,701)

                                                  -------------- ------------

    Net increase/(decrease) in cash and cash
     equivalents                                   1,195,000      (8,501,032)
    Cash and cash equivalents at the
     beginning of the period                        15,714,442     25,539,602

                                                  -------------- ------------
    Cash and cash equivalents at the end of
     the period                                 US$ 16,909,442 US$ 17,038,570

For information contact: Hans Herklots, Director, Tel: +41-21-620-6011, E-mail: hans.herklots@isotis.com. IR Rob Morocco, CFO, +1-949-855-7155, robert.morocco@isotis.com