Oculus Innovative Sciences Provides Second Half CY 2012 Business Update

Oculus Innovative Sciences Provides Second Half CY 2012 Business Update

  *Cash Position of $8.3 Million at End of Q2 FY 2013 with EBITDAS Loss of
    $235,000 for First Six Months of FY 2013
  *Revenues of $8.6 Million for First Half FY 2013 with Product Revenue
    Growth of 32%
  *Reduction of $2.8 Million in Annual SG&A Costs as Result of Partnership
    with More Pharma
  *EBITDAS Profitability Anticipated During FY 2014
  *NASDAQ Net Worth Achieved
  *Scar Study Top-Line Data Expected Before End of FY 2013
  *New Dermatology Product to be Introduced in Q4 FY 2013
  *Additional International Regulatory Approvals and Commercialization in
    China and India Expected Q4 FY 2013
  *Potential Partnerships in Europe

PETALUMA, Calif., Dec. 11, 2012 (GLOBE NEWSWIRE) -- Oculus Innovative
Sciences, Inc. (Nasdaq:OCLS) a healthcare company that designs, produces and
markets innovative, safe and effective anti-infective medical devices while
also developing multiple drug candidates, today provided a market update for
the second half of 2012.

Financial Update/EBITDAS Profitability Expected During FY 2014

Total revenue was $8.6 million in the six months ended September 30, 2012,
compared to $6.6 million in the same period last year with product revenue
growing at 32% over the same period last year. Operating loss minus non-cash
expenses (EBITDAS) for these six months was $235,000 compared to $1.2 million
in the same period last year.If adjusted for one-time severance costs of
$410,000 relating to the transaction with Oculus partner, More Pharma, Oculus
would have been EBITDAS profitable for the first half of FY 2013.The
company's cash position as of September 30, 2012 was $8.3 million.

Oculus management believes the combination of the growing revenue, especially
in the United States, and reduced operating expenses in Mexico, should result
in consistent EBITDAS profitability sometime in fiscal year 2014, excluding
expenses directly related to clinical drug trials.Once realized, Oculus will
then target cash flow breakeven, which will be facilitated by continued
revenue growth and maintenance of reduced cash operating expenses. Management
provided product revenue growth guidance of up to 25% for the full fiscal year
2013, compared to the same period last year.

Revenue Growth

Oculus management anticipates sustainable revenue growth as a result of the
following domestic partnerships:

  *U.S. sales of Oculus' dermatology products and expansion of product lines
    will provide the greatest near-term revenue boost with revenue growth
    guidance of 40% to 60% for full fiscal year 2013.
  *Animal healthcare partner, Innovacyn, Inc., provided Oculus with revenue
    growth of 36% in the first half of FY 2013.The company has provided
    guidance of up to 20% revenue growth for FY 2013.

The company's international sales are expected to grow as a result of
additional drug and device approvals in both India and China in Q4 FY 2013
with commercialization to follow in Q1 FY 2014.Oculus will update guidance as
these initiatives move forward.

Scar Study

Oculus completed patient enrollment for its scar management trial. This trial
is being conducted based on an FDA-reviewed protocol to support the company's
pending FDA 510(k) clearance for management of hypertrophic and keloid scars.
The company expects to announce top line data from this trial in early
calendar year 2013. Upon successful completion of the clinical trial and
anticipated FDA clearance, AmDerma/Quinnova will reimburse Oculus for the cost
of the trial and will introduce another innovative Microcyn-based product into
the U.S. dermatology market.This is part of Oculus' strategy to provide
partners with growing and robust product pipelines for their respective
markets.

Two FY 2013 Licensing Agreements

Oculus' partner, More Pharma, assumed all Microcyn-based product marketing and
sales responsibilities in South America and the Caribbean as of August
2012.In addition to an upfront payment of $5.1 million to Oculus, More
Pharma's 200-person marketing/sales team has assumed all product
marketing/sales in Mexico, while also pursuing further regulatory approvals
and subsequent commercialization in other Latin American countries. Oculus
believes long-term sales will grow at a much greater pace as these regulatory
approvals are secured. More Pharma's 200-person marketing/sales team has
assumed all product marketing/sales in Mexico as of August 2012. As a result
of this successful transition the company eliminated its marketing and sales
team in that region, thus lowering its SG&A expenses by $2.8 million per
annum.

Secondly, Oculus signed a licensing agreement with AmDerma/Quinnova to develop
and commercialize Oculus' novel proprietary Microcyn®Technology drug
compounds for major dermatological conditions, including acne. The exclusive
agreement includes licensing of the dermatology compounds in the United States
and India.The product formulation is nearing finalization.AmDerma/Quinnova
will be responsible for the development costs for the acne formulation as well
as other dermatological compounds.

Future Planned Partnerships

Duplicating the successful blueprint of the FY 2013 partnerships, Oculus is
working to secure a series of CE mark approvals for use of its various product
formulations in the treatment of wounds and dermatology indications.The added
CE mark approvals will provide a significant opportunity for potential
partners to quickly commercialize and penetrate the European markets in FY
2014. 

NASDAQ Net Worth Target Achieved/Company Negotiating /Debt Restructured

On November 1, 2012, Oculus disclosed the company achieved a net worth of
approximately $4.5 million on a pro forma basis as a result of two
transactions as of September 30, 2012.The first transaction was the issuance
of $3.5 million in restricted common stock to the company's lender, Western
Technology Institute, to be used for the reduction of Oculus' debt
liabilities.In the second transaction, Oculus agreed to amend a warrant, held
by two of its investors, to remove a provision in the warrant that contained
certain cash-settlement features; this was in exchange for extending the
warrant by two years. These transactions allowed the company to regain
compliance with the $2.5 million stockholders' equity requirement for
continued listing on the NASDAQ capital market.

In the event the company receives a second delisting notice from NASDAQ
regarding trading of Oculus stock below the minimum bid price of $1 per share,
Oculus intends to request an extension so as to resolve this issue. 

Hoji Alimi, founder and CEO of Oculus said: "Our commitment is to drive the
company towards profitability while simultaneously unlocking the value of our
drug assets in the areas of acne, surgical and wound care."

About Oculus Innovative Sciences

Oculus Innovative Sciences is a healthcare company that designs, produces and
markets innovative, safe and effective anti-infective medical devices while
also developing multiple drug candidates for various indications including
treatment of acne and surgical suite use. Oculus is pioneering innovative
solutions in multiple markets for the dermatology, surgical, wound care, and
animal healthcare markets, and has commercialized products in the United
States, Europe, India, China, Mexico and select Middle East countries. The
company's headquarters are in Petaluma, California, with manufacturing
operations in the United States and Latin America. More information can be
found at www.oculusis.com.

Forward-Looking Statements

Except for historical information herein,matters set forth in this press
release are forward-looking within the meaning of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, including statements
about the Company's commercial and technology progress and futurefinancial
performance. These forward-looking statements are identified by the use of
words such as "receives," "drive" and"unlocking,"among others.
Forward-looking statements in this press release are subject to certain risks
and uncertainties inherent in the Company's business that could cause actual
results to vary, includingsuchrisks thatregulatory clinical and guideline
developments may change,scientific data may not be sufficient to meet
regulatory standards or receipt of required regulatory clearances or
approvals,clinical results may not be replicated in actual patient
settings,protection offered bythe Company'spatents and patent applications
may be challenged, invalidated or circumvented by its competitors,the
available market fortheCompany'sproducts will not be as large as
expected,the Company'sproducts will not be able to penetrate one or more
targeted markets,revenues will not be sufficient to fund further development
and clinical studies, the Company may not meet itsfuture capital needs, and
its ability to obtain additional funding, as well as uncertainties relative to
varying product formulations and a multitude of diverse regulatory and
marketing requirements in different countries and municipalities, and other
risks detailed from time to time in the Company's filings with the Securities
and Exchange Commission including the annual report on Form 10-K for theyear
ended March 31, 2011. Oculus Innovative Sciences disclaims any obligation to
update these forward-looking statements except as required by law.

Oculus and Microcyn Technology are trademarks or registered trademarks of
Oculus Innovative Sciences, Inc. All other trademarks and service marks are
the property of their respective owners.

CONTACT: Media and Investor Contact:

         Oculus Innovative Sciences, Inc.
         Dan McFadden
         Director of Public and Investor Relations
         (425) 753-2105
         dmcfadden@oculusis.com
 
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