Vision-Sciences Reports Net Sales of $4.0 Million for Third Quarter of Fiscal 2013

Vision-Sciences Reports Net Sales of $4.0 Million for Third Quarter of Fiscal
2013

ORANGEBURG, N.Y., Jan. 28, 2013 (GLOBE NEWSWIRE) -- Vision-Sciences, Inc.
(Nasdaq:VSCI), a leading provider of unique flexible endoscopic products
utilizing its proprietary sterile disposable EndoSheath® technology, today
announced financial results for the three- and nine-month periods ended
December 31, 2012, its third quarter and first nine months of fiscal 2013.

Third Quarter Fiscal Year 2013 Highlights

  * Net sales were $4.0 million, compared with $3.7 million in the second
    quarter of fiscal 2013 and $4.3 million in third quarter of fiscal 2012;
  * Operating loss decreased 25% to $1.5 million versus $2.0 million in the
    same quarter last year; and
  * Net loss improved by 33% to $1.6 million, or ($0.03) per basic and diluted
    share, compared to $2.3 million, or ($0.05) per basic and diluted share,
    in the third quarter of fiscal 2012.

"We continue to execute our strategy to access acute care hospitals and drive
awareness of our EndoSheath technology with our new multi-disciplinary,
medical sales force. This approach provides us with the opportunity to capture
both capital and disposable revenue streams," commented Cynthia Ansari,
President and Chief Executive Officer of Vision-Sciences, Inc.

"During the quarter, there were noteworthy developments on both the SpineView
and Stryker fronts. In particular, the FDA cleared for marketing the FlexLite
Camera System, which incorporates our 2.0mm flexible endoscope with
SpineView's proprietary space creator. Stryker also added our new ureteroscope
to their urology product line, which they began selling through their
dedicated sales specialists. We look forward to the impact of their efforts,"
Ansari concluded.

Results of Operations

Net sales in the third quarter of fiscal 2013 were $4.0 million compared to
$4.3 million for the same period a year ago. The 8% decrease was primarily due
to lower urology sales, including a 13% decline in sales to Stryker, partially
offset by strong industrial sales growth.

Net sales (in thousands, except for percentages) for the three- and nine-month
periods were as follows:

                             Three Months Ended       Nine Months Ended    
                             December 31,             December 31,         
Market/Category              2012      2011     %     2012      2011      %
Urology                       $ 1,421   $ 1,839 -23%   $ 3,365   $ 5,251  -36%
ENT                           398       500     -20%   1,417     1,430    -1%
Surgery / GI                  385       340     13%    895       765      17%
Pulmonology (Critical Care)   238       254     -6%    525       563      -7%
Spine                         --        186     -100%  440       612      -28%
Repairs, peripherals, and     528       449     18%    1,548     1,436    8%
accessories 
Total net medical sales       2,970     3,568   -17%   8,190     10,057   -19%
Total net industrial sales    982       746     32%    2,897     2,038    42%
Net sales                     $ 3,952   $ 4,314 -8%    $ 11,087  $ 12,095 -8%

Gross profit for the third quarter of fiscal 2013 was $1.1 million, as
compared with $1.4 million in the third quarter of fiscal 2012. Gross margin
percentage for the period declined approximately 200 basis points to 29% from
31% in the same period last year. A reduction in the allocation of
manufacturing expenses to support research and development activities was the
primary driver for the year-over-year decline.

Selling, general and administrative ("SG&A") expenses decreased 13% to $2.3
million in the third quarter of fiscal 2013, largely driven by lower
stock-based compensation expense and lower vacation pay expense. SG&A expenses
decreased to 58% of net sales for the third quarter of fiscal 2013 compared to
62% of net sales reported during the same period last year.

Research and development ("R&D") expenses decreased 52% to $0.3 million in the
third quarter of fiscal 2013. The decrease was primarily attributable to lower
product development costs associated with the Company's next generation
digital processing unit and a reduction in the amount allocated from
manufacturing to support R&D efforts. R&D expenses decreased to 9% of net
sales compared to 17% of net sales during the same period last year.

The Company's operating loss in the third quarter of fiscal 2013 was $1.5
million, a decrease of $0.5 million, or 25%, compared to the third quarter of
fiscal 2012. Lower operating expenses of $0.7 million contributed to the
improvement in operating loss during the period. 

At December 31, 2012, the Company had cash and cash equivalents of $1.3
million and working capital of $6.6 million, compared to cash and cash
equivalents of $2.7 million and working capital of $6.0 million at March 31,
2012. The Company also has $5.0 million of capital available under a $20.0
million convertible note with Lewis C. Pell, the Company's Chairman.

Conference Call

Cynthia Ansari, President and Chief Executive Officer, and Keith Darragh, VP,
Finance and Principal Financial and Accounting Officer, will host a conference
call to discuss the third quarter fiscal 2013 financial results at 8:30 a.m.
ET on Tuesday, January 29, 2013.

Conference dial-in:     (877) 303-1595
International dial-in:  (970) 315-0449
Conference ID:          91828937
Webcast:                http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. ET on
Tuesday, January 29, 2013, through 11:30 p.m. ET on Tuesday, February 5, 2013
by dialing (855) 859-2056 from the U.S. or (404) 537-3406 from abroad. The
audio webcast will also be available in the investor section of the Company's
website, www.visionsciences.com.

Use of Non-GAAP Financial Measures

Non-GAAP net loss and non-GAAP net loss per share excludes non-cash or
non-operational activities. As a result, the Company uses these measures to
assess and analyze its operational results and trends and to make financial
and operations decisions. The Company also believes these non-GAAP financial
measures are useful to investors, because they provide greater transparency
regarding the Company's operating performance. These non-GAAP financial
measures should not be considered measures of the Company's liquidity. In
addition, these non-GAAP financial measures are unlikely to be comparable with
non-GAAP information provided by other companies. Reconciliations between
non-GAAP financial measures and GAAP financial measures for net loss and net
loss per share are included in a table accompanying this press release after
the unaudited condensed consolidated financial statements.

About Vision-Sciences, Inc.

Vision-Sciences, Inc. designs, develops, manufactures and markets products for
endoscopy – the science of using an instrument, known as an endoscope, to
provide minimally invasive access to areas not readily available to the human
eye. Vision-Sciences' unique flexible endoscopic products utilize a
streamlined visualization system and proprietary sterile disposable sheaths,
known as EndoSheath technology, to provide users quick, efficient endoscope
turnover while ensuring enhanced patient safety through the use of sterile,
single-use technology. Within its medical segment, Vision-Sciences targets
five main areas for its fiber and video endoscopes and EndoSheath technology:
urology, pulmonology, gastroenterology (GI), ENT (ear, nose and throat) and
spine.  Information about Vision-Sciences' products is available at
www.visionsciences.com.

Vision Sciences^®, Slide-On^®, EndoSheath^®, EndoWipe^® and The Vision
System^® are registered trademarks of Vision-Sciences, Inc.

The Vision-Sciences, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=3876

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: This press release contains forward-looking statements, which are any
statements that are not historical facts. These forward-looking statements are
based on Vision-Sciences' current expectations, and should not be relied upon
as representing its views as of any subsequent date. Forward-looking
statements are subject to a variety of risks and uncertainties that could
cause the Company's actual results to differ materially from the statements
contained herein; risk factors are detailed in the Company's most recent
annual report and other filings with the U.S. Securities and Exchange
Commission. There is no assurance that any future results or events discussed
in these statements will be achieved. The Company does not assume any
obligation to update any forward-looking statements as a result of new
information or future events or developments, except as may be required by
law.

                          (Financial tables follow)

 
Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
                                                                    
                               Three Months Ended      Nine Months Ended
                               December 31,            December 31,
                               2012        2011        2012        2011
                               (unaudited) (unaudited) (unaudited) (unaudited)
                                                                    
Net sales                       $ 3,952     $ 4,314     $ 11,087    $ 12,095
Cost of sales                   2,820       2,957       7,973       8,213
Gross profit                    1,132       1,357       3,114       3,882
                                                                    
Selling, general, and           2,311       2,665       8,205       9,054
administrative expenses 
Research and development        347         730         1,361       2,161
expenses 
Operating loss                  (1,526)     (2,038)     (6,452)     (7,333)
                                                                    
Interest income                 1           2           4           9
Interest expense                (36)        (131)       (467)       (329)
Debt cost expense               --          (145)       (272)       (229)
Loss on extinguishment of debt  --          --          (1,244)     -- 
Other, net                      (6)         (32)        (47)        (43)
                                (41)        (306)       (2,026)     (592)
Loss before provision for       (1,567)     (2,344)     (8,478)     (7,925)
income taxes 
Income tax provision (benefit)  10          (2)         10          -- 
Net loss                        $ (1,577)   $ (2,342)   $ (8,488)   $ (7,925)
                                                                    
Net loss per common share -     $ (0.03)    $ (0.05)    $ (0.18)    $ (0.18)
basic and diluted 
                                                                    
Weighted average number of
shares outstanding - basic and  46,051      44,258      45,902      44,164
diluted

 
 
Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
                                                                      
                                                        December 31, March 31,
                                                        2012         2012
ASSETS                                                  (unaudited)  (audited)
Current assets:                                                       
Cash and cash equivalents                                $ 1,295      $ 2,674
Accounts receivable, net                                 2,820        2,132
Inventories, net                                         4,881        3,970
Prepaid expenses and other current assets                218          197
Total current assets                                     9,214        8,973
                                                                      
Property and equipment, net                              1,618        2,033
Deferred debt cost, net                                  --           1,516
Other assets, net                                        77           77
Total assets                                             $ 10,909     $ 12,599
                                                                      
LIABILITIES AND STOCKHOLDERS' DEFICIT                                 
Current liabilities:                                                  
Accounts payable                                         $ 921        $ 587
Accrued compensation                                     849          657
Accrued expenses                                         619          944
Deferred revenue                                         125          -- 
Capital lease obligations                                76           91
Advances from customers                                  --           672
Total current liabilities                                2,590        2,951
                                                                      
Convertible debt—related party                           15,000       -- 
Line of credit—related party                             --           10,000
Deferred revenue, net of current portion                 67           -- 
Capital lease obligations, net of current portion        39           97
Total liabilities                                        17,696       13,048
                                                                      
Commitments and Contingencies                                         
Stockholders' deficit:                                                
Preferred stock, $0.01 par value                                      
Authorized—5,000 shares; issued and outstanding—none     --           -- 
Common stock, $0.01 par value                                         
Authorized—75,000 shares; issued and outstanding—46,249  462          454
shares and 45,396 shares, respectively
Additional paid-in capital                               100,560      98,382
Treasury stock at cost, 34 shares and 7 shares of        (50)         (14)
common stock, respectively
Accumulated deficit                                      (107,759)    (99,271)
 Total stockholders' deficit                             (6,787)      (449)
 Total liabilities and stockholders' deficit             $ 10,909     $ 12,599

 
 
Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows 
(In thousands, except per share amounts)
                                                                     
                                                         Nine Months Ended
                                                         December 31,
                                                         2012       2011
Cash flows from operating activities:                                
Net loss                                                  $ (8,488)  $ (7,925)
Adjustments to reconcile net loss to net cash used in                
operating activities:
Stock-based compensation expense                          1,209      1,707
Depreciation and amortization                             603        618
(Recovery of) provision for bad debt expenses             (4)        1
Debt cost expense                                         272        229
Loss on extinguishment of debt                            1,244      -- 
Loss on disposal of fixed assets                          51         39
Changes in assets and liabilities:                                   
Accounts receivable                                       (684)      36
Inventories                                               (1,062)    508
Prepaid expenses and other current assets                 (21)       63
Accounts payable                                          334        (518)
Accrued expenses                                          (325)      (48)
Accrued compensation                                      192        (37)
Deferred revenue                                          49         -- 
Advances from customers                                   (529)      (4,034)
Net cash used in operating activities                     (7,159)    (9,361)
Cash flows from investing activities:                                
Purchases of property and equipment                       (93)       (127)
Proceeds from disposal of fixed assets                    5          3
Net cash used in investing activities                     (88)       (124)
Cash flows from financing activities:                                
Proceeds from issuance of long-term debt—related party    5,000      -- 
Advance on line of credit—related party                   --         3,000
Payment of costs related to line of credit—related party  --         (5)
Net proceeds from sale of common stock                    878        -- 
Proceeds from exercise of stock options                   99         399
Common stock repurchased                                  (36)       (11)
Payments of capital leases                                (73)       (61)
Net cash provided by financing activities                 5,868      3,322
Net decrease in cash and cash equivalents                 (1,379)    (6,163)
Cash and cash equivalents at beginning of period          $ 2,674    $ 9,180
Cash and cash equivalents at end of period                $ 1,295    $ 3,017

 
 
Vision-Sciences, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliation
(In thousands, except per share amounts)
                                                                       
               Three Months Ended               Nine Months Ended      
               December 31,                     December 31,           
Non-GAAP
Financial      2012       2011       Difference 2012       2011       Difference
Measures and
Reconciliation
GAAP net loss   $ (1,577)  $ (2,342)  $ 765      $ (8,488)  $ (7,925)  $ (563)
Add: loss on
extinguishment  --         --         --         1,244      --         1,244
of debt
Non-GAAP net    $ (1,577)  $ (2,342)  $ 765      $ (7,244)  $ (7,925)  $ 681
loss
                                                                       
Non-GAAP net
loss per
common share -  $ (0.03)   $ (0.05)              $ (0.16)   $ (0.18)   
basic and
diluted 
                                                                       
Weighted
average number
of shares       46,051     44,258                45,902     44,164     
outstanding -
basic and
diluted

CONTACT: Keith Darragh
         VP, Finance and Principal Financial and Accounting Officer
         Vision-Sciences, Inc.
         (845) 365-0600
         invest@visionsciences.com
        
         Lisa Wilson
         President
         In-Site Communications, Inc.
         (212) 452-2793
         lwilson@insitecony.com

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