Oculus Innovative Sciences Reports Revenues of $3.5 Million for the Third Quarter of Fiscal 2013

Oculus Innovative Sciences Reports Revenues of $3.5 Million for the Third
Quarter of Fiscal 2013

  *Oculus board of directors unanimously approved a plan to spin off the
    company's novel drug RUT58-60 as a separate company to be called Ruthigen,
    Inc. in January 2013
  *Oculus' subsidiary, Ruthigen, to pursue a FDA drug indication for U.S.
    surgical and trauma market (a potential opportunity of over 46 million
    surgeries annually) and seek partnerships in Europe and Japan
  *Revenue for the third quarter of fiscal 2013 of $3.5 million, up 27%
  *EBITDAS for the third quarter of fiscal 2013 of ($163,000)
  *Revenue for nine months of fiscal 2013 of $12.1 million, up 29%
  *EBITDAS for nine months of fiscal 2013 improved by $2.0 million to
    ($398,000) with $410,000 of one-time severance costs related to the More
    Pharma transaction
  *Cash position of $6.6 million at December 31, 2012, up $3.2 million from
    March 31, 2012

               Conference Call Begins at 4:30 p.m. (EST) Today

PETALUMA, Calif., Feb. 13, 2013 (GLOBE NEWSWIRE) -- Oculus Innovative
Sciences, Inc. (Nasdaq:OCLS) today announced financial results for the third
quarter of fiscal year 2013, ended December 31, 2012. Total revenues were $3.5
million for the third quarter ended December 31, 2012 compared to $2.8 million
for the same period in the prior year. Product revenues, including product
licensing fees, increased $760,000, or 29%, for the third quarter ended
December 31, 2012, as compared to the same period in the prior year, with
increases in the United States, Mexico and Singapore; partly offset by
declines in Middle East, India and China.

"Oculus management and the board of directors set forth on a plan in January
to unlock the value of Oculus' drug assets," said Hoji Alimi, CEO of Ruthigen,
Inc., a wholly owned subsidiary of Oculus. "Ruthigen was established to
develop RUT58-60, a novel hypochlorous acid formulation with magnesium and no
sodium hypochlorite, as a drug candidate for surgical and traumatic
indications. We are targeting spinning off Ruthigen from Oculus later this
year and we are also working towards initiation of clinical trials for
RUT58-60 later this year."

Product revenue in the United States for the three months ended December 31,
2012, increased $648,000, or 64%, as compared to the same period in the prior
year due to both unit growth with new product launches into the dermatology
market, as well as higher unit growth in products sold by Oculus' animal
healthcare partner, Innovacyn, Inc. The revenue recorded from Innovacyn for
the three months ended December 31, 2012, was $883,000, up $218,000 from the
same period in the prior year. Revenue growth attributed to Oculus'
dermatology partners reflected strong unit growth as three new products were
launched in the fourth quarter of the fiscal year ended March 31, 2012.

"We have a primary focus on product, growth and profitability," said Jim
Schutz, newly appointed Oculus CEO. "We believe three key elements will
further our growth efforts. First, we will add new products—organically from
our own R&D and through acquisition—for our current commercial partners.
Second, we'll add new partners. And finally, we'll expand territories with
aggressive targets. This is anexcitingtime to be at Oculus."

Revenue in Mexico for the three months ended December 31, 2012, increased
$188,000, or 16%, when compared to the same period the prior year. The
increase was driven by a 97% increase in the number of units sold and the
recognition of $378,000 related to the amortization of upfront fees paid by
More Pharma Corporation, S.de R.L. de C.V., Oculus' new exclusive distributor
in Mexico, partially offset by a 45% reduction in the overall average sales
price per unit received. Due to the transfer of the sales function to More
Pharma, Oculus has eliminated the cost of the sales people and promotions in
Mexico, thus reducing certain operating costs in that country.

Revenue in Europe and Rest of World for the three months ended December 31,
2012, decreased $76,000, or 18%, as compared to the same period in the prior
year, primarily as a result of decreases in sales in India, Middle East and
China, partially offset by increases in Singapore.

Oculus reported gross profit related to sales of Microcyn®-based products of
approximately $2.5 million, or 73% of product revenues, during the three
months ended December 31, 2012, compared to a gross profit of $1.8 million, or
71% of product revenues, for the same period in the prior year. The higher
gross profitability is primarily the result of higher unit volume and improved
product mix in the United States.Gross margins in Mexico were 54% of product
revenues during the three months ended December 31, 2012, as compared to 75%
for the same period in the prior year as a result of the reduction in the unit
pricing in connection with the More Pharma agreement discussed previously.

Total operating expenses decreased by $1.1 million, or 25%, to $3.2 million
for the three months ended December 31, 2012, compared to $4.2 million for the
similar period in the prior year. Operating expenses minus non-cash expenses
during the three months ended December 31, 2012 were $2.7 million, down from
$3.2 million for the same period in the prior year.Research and development
expenses were $509,000 for the three months ended December 31, 2012, and were
the same as in the prior year period.Selling, general and administrative
expense decreased $1.1 million, or 29%, to $2.6 million during the three
months ended December 31, 2012, as compared to $3.7 million for the same
period in the prior year. The decrease for the three months ended December 31,
2012 was primarily due to lower selling expenses in Mexico and higher expenses
related to new products, compensation, and investor-related costs in the
United States.

Loss from operations minus non-cash expenses for the three months ended
December 31, 2012 was at $163,000, compared to $1,264,000 for the same period
in the prior year.

Net loss for the three months ended December 31, 2012 was $1.9 million, a
decrease of $635,000 from a net loss of $2.5 million for the same period in
the prior year. Stock-based compensation charges were $456,000 and $1.0
million for the quarters ended December 31, 2012 and 2011, respectively.

As of December 31, 2012, Oculus had unrestricted cash and cash equivalents of
$6.6 million, compared with $3.4 million as of March 31, 2012.

Nine Months Results

Total revenue was $12.1 million for the nine months ended December 31, 2012,
compared to $9.4 million for the same period in the prior year. Product
revenues, including product licensing fees received, for the nine months ended
December 31, 2012 increased $2,740,000, or, 32%, to $11.4 million as compared
to $8.7 million for the same period in the prior year, with revenue increases
in the United States, Mexico and Singapore, partially offset by a decline in
Europe, Middle East, India and China. Oculus reported gross profit related to
sales of Microcyn®-based products of $8.5 million, or 74%, for the nine months
ended December 31, 2012, compared to a gross profit of $6,482,000, or 75% of
product revenues, for the same period in the prior year, primarily due to
lower profitability in Europe and Mexico. Total operating expenses minus
non-cash expenses decreased $34,000, for the nine months compared to the same
period in the prior year. Operating loss minus non-cash expenses (EBITDAS) for
the nine months was $398,000, including $410,000 of one-time severance charges
related to the More Pharma transaction in Mexico, compared to $2.4 million in
the same period in the prior year.

Conference Call

Oculus management will hold a conference call today to discuss its third
quarter of fiscal 2013 results and to answer questions, beginning at 4:30 p.m.
EST. Individuals interested in participating in the conference call may do so
by dialing 877-303-7607 for domestic callers or 973-638-3203 for international
callers.Those individuals interested in listening to the conference call live
via the Internet may do so at http://ir.oculusis.com/events.cfm.Please log on
approximately 30 minutes prior to the presentation in order to register and
download the appropriate software.

A telephone replay will be available for seven days following the conclusion
of the call by dialing 855-859-2056 for domestic callers, or 404-537-3406 for
international callers, and entering conference code 90051967. A webcast replay
will be available on the site at http://ir.oculusis.com/events.cfm for one
year following the call.

About Oculus Innovative Sciences, Inc.

Oculus Innovative Sciences is a commercial healthcare company that designs,
produces and markets innovative, safe and effective drugs, devices and
nutritional products. Oculus is pioneering innovative solutions in multiple
markets for the dermatology, surgical, wound care, and animal healthcare
markets. The company has commercialized products in the United States, Europe,
India, China, Mexico and select Middle East countries. Oculus' headquarters
are in Petaluma, California, with manufacturing operations in the United
States and Latin America. More information can be found at www.oculusis.com.

About Ruthigen, Inc.

Ruthigen, Inc. is a wholly owned subsidiary of Oculus Innovative Sciences,
Inc. (Nasdaq:OCLS). Ruthigen focuses on the development of RUT58-60, a drug
candidate intended for accelerating patient discharge post-surgery. RUT58-60
is a new and unique chemical formulation containing twice the concentration of
hypochlorous acid as compared to Oculus Innovative Sciences, Inc.'s
proprietary Microcyn® Technology, along with magnesium and no sodium
hypochlorite. It is specifically designed for internal use, targeting organ
exposure.

RUT58-60 has been formulated based on several clinical studies in
international markets including a 2006 retrospective case-controlled study
involving 40 post-surgical peritonitis patients. The 20 patients in the study
group, who were treated with the preliminary RUT58-60 formulation and saline,
were in the hospital on an average of 22.4 days following surgery, whereas the
control group, which was treated with saline alone, demonstrated a longer
hospital stay on average of 31.9 days. Both groups were treated with systemic
antibiotics.

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 commercial and technology progress and futurefinancial performance
of Oculus Innovative Sciences, Inc. and its subsidiaries (the "Company").
These forward-looking statements are identified by the use of words such as
"anticipates," "believes," "expects," "may," "plans," "predicts," "will,"
"launching," "planned," and"expect,"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, the
uncertainties associated with effecting a spinoff and initial public offering
of a separate public company, and the discretion of Oculus' Board of Directors
to delay or cancel the spinoff prior to execution, and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission including its annual report on Form 10-K for theyear ended March
31, 2012. The Company disclaims any obligation to update these forward-looking
statements, except as required by law.

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

OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
                                                                   
                                                       December 31, March31,
                                                       2012         2012
                                                       (Unaudited)  
ASSETS                                                              
Current assets:                                                     
Cash and cash equivalents                               $6,598     $3,351
Accounts receivable, net                                3,070        2,151
Inventories, net                                        901          953
Prepaid expenses and other current assets               331          505
Total current assets                                    10,900       6,960
Property and equipment, net                             729          806
Other assets                                            201          72
Total assets                                            $11,830    $7,838
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)                   
Current liabilities:                                                
Accounts payable                                        $504       $816
Accrued expenses and other current liabilities          793          844
Deferred revenue                                        2,867        1,619
Current portion of long-term debt, net of debt discount
of $572 and $624 at December 31, 2012 (unaudited) and   1,134        1,415
March 31, 2012, respectively, and net of prepayment of
$238 at December 31, 2012
Derivative liability                                    –            55
Total current liabilities                               5,298        4,749
Deferred revenue, less current portion                  2,980        133
Long-term debt, net of debt discount of $359 and $769
at December 31, 2012 (unaudited) and March 31, 2012,    424          1,824
respectively, and net of prepayment of $398 at December
31, 2012, less current portion
Put warrant liability, net                             –            2,000
Total liabilities                                       8,702        8,706
Commitments and Contingencies                                       
Stockholders' Equity (Deficiency):                                  
Convertible preferred stock, $0.0001 par value;
5,000,000 shares authorized, no shares issued and       –            –
outstanding at December 31, 2012 (unaudited) and March
31, 2012
Common stock, $0.0001 par value; 100,000,000 shares
authorized, 37,339,888 and 29,007,903 shares issued and 4            3
outstanding at December 31, 2012 (unaudited) and March
31, 2012, respectively
Additional paid-in capital                              141,494      134,496
Accumulated other comprehensive loss                    (3,070)      (3,053)
Accumulated deficit                                     (135,300)    (132,314)
Total stockholders' equity (deficiency)                 3,128        (868)
Total liabilities and stockholders' equity (deficiency) $11,830    $7,838


OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                                 
                                      ThreeMonthsEnded  Nine MonthsEnded
                                      December 31,        December 31,
                                      2012      2011      2012      2011
Revenues                                                          
Product                                $2,655  $2,503  $10,312 $8,379
Product licensing fees                 702       94        1,125     318
Service                                183       193       680       696
Total revenues                         3,540     2,790     12,117    9,393
Cost of revenues                                                  
Product                                906       757       2,986     2,215
Service                                163       181       576       599
Total cost of revenues                 1,069     938       3,562     2,814
Gross profit                           2,471     1,852     8,555     6,579
Operating expenses                                                
Research and development               509       509       1,554     1,505
Selling, general and administrative    2,642     3,697     8,993     10,076
Total operating expenses               3,151     4,206     10,547    11,581
Loss from operations                   (680)     (2,354)   (1,992)   (5,002)
Interest expense                       (275)     (260)     (843)     (652)
Interest income                        1         1         3         4
Loss due to change in fair value of    (864)     –         (864)     –
common stock
(Loss) gain due to change in fair      (84)      86        766       303
value of derivative instruments
Other expense, net                     (10)      (20)      (56)      (214)
Net loss                               (1,912)   (2,547)   (2,986)   (5,561)
Preferred stock deemed dividend        –         –         (1,062)   –
Net loss available to common           $ (1,912) $ (2,547) $ (4,048) $ (5,561)
shareholders
Net loss per common share: basic and   $ (0.05)  $ (0.09)  $ (0.12)  $ (0.21)
diluted
Weighted-average number of shares used                            
in per common share calculations:
Basic and diluted                      35,879    27,020    33,372    26,872
Other comprehensive loss, net of tax                              
Net loss                               $ (1,912) $ (2,547) $ (2,986) $ (5,561)
Foreign currency translation           (16)      (87)      (17)      (261)
adjustments
Other comprehensive loss               $ (1,928) $ (2,634) $ (3,003) $ (5,822)


OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands)
(Unaudited)
                                                                
                                  Three Months Ended    Nine Months Ended
                                  December 31,          December 31,
                                  2012       2011       2012       2011
(1) Loss from operations minus                                  
non-cash expenses (EBITDAS):
GAAP loss from operations as       $(680)   $(2,354) $(1,992) $(5,002)
reported
Non-cash adjustments:                                            
Stock-based compensation           456        1,011      1,397      2,339
Depreciation and amortization      61         79         197        245
Non-GAAP loss from operations      $(163)   $(1,264) $(398)   $(2,418)
minus non-cash expenses (EBITDAS)
                                                                
(2) Net loss minus non-cash                                     
expenses:
GAAP net loss as reported          $(1,912) $(2,547) $(2,986) $(5,561)
Non-cash adjustments:                                            
Stock-based compensation           456        1,011      1,397      2,339
Depreciation and amortization      61         79         197        245
Loss due to change in fair value   864        –          864        –
of common stock
Loss (gain) due to change in fair  84         (86)       (766)      (303)
value of derivative instruments
Non-cash interest expense          158        128        461        303
Non-GAAP net loss minus non-cash   $(289)   $(1,415) $(833)   $(2,977)
expenses
                                                                
(3) Operating expenses minus                                    
non-cash expenses
GAAP operating expenses as         $3,151    $4,206    $10,547   $11,581
reported
Non-cash adjustments:                                            
Stock-based compensation           (419)     (983)     (1,294)   (2,260)
Depreciation and amortization      (28)      (43)      (99)      (133)
Non-GAAP operating expenses minus  $2,704    $3,180    $9,154    $9,188
non-cash expenses
                                                                

Generally, a non-GAAP financial measure is a numerical measure of a company's
performance, financial position or cash flow that either excludes or includes
amounts that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with GAAP.

(1)Loss from operations minus non-cash expenses (EBITDAS) is a non-GAAP
financial measure. The Company defines operating loss minus non-cash expenses
as GAAP reported operating loss minus operating depreciation and amortization,
and operating stock-based compensation. The Company uses this measure for the
purpose of modifying the operating loss to reflect direct cash related
transactions during the measurement period.

(2)Net income (loss) minus non-cash expenses is a non-GAAP financial measure.
The Company defines net income (loss) minus non-cash expenses as GAAP reported
net loss minus depreciation and amortization, stock-based compensation, a
change in the fair value of derivative instruments, and non-cash interest.The
Company uses this measure for the purpose of modifying the net loss to reflect
only those expenses to reflect direct cash transactions during the measurement
period.

(3)Operating expenses minus non-cash expenses is a non-GAAP financial
measure. The Company defines operating expenses minus non-cash expenses as
GAAP reported operating expenses minus operating depreciation and
amortization, and operating stock-based compensation.The Company uses this
measure for the purpose of identifying total operating expenses involving cash
transactions during the measurement period.

CONTACT: Oculus Innovative Sciences, Inc.
         Dan McFadden
         Director of Marketing/Communications
         (425) 753-2105
         dmcfadden@oculusis.com
 
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