Oculus Innovative Sciences Reports Revenues of $15.5 Million for Fiscal Year 2013, Product Revenue Up 23 Percent

Oculus Innovative Sciences Reports Revenues of $15.5 Million for Fiscal Year
2013, Product Revenue Up 23 Percent

  *EBITDAS for Fiscal 2013 Improved by $1.8 Million to ($1.5) Million
    Including $410,000 of One-Time Severance Costs Related to the More Pharma
    Transaction and $457,000 Expenses Related to Ruthigen
  *Cash Position of $7.9 Million at March 31, 2013, Up $3.2 Million From
    March 31, 2012
  *Revenue for Fourth Quarter of Fiscal 2013 of $3.3 Million
  *Oculus' Wholly Owned Subsidiary, Ruthigen, Files Confidential Registration
    Statement on Form S-1 on May 24, 2013

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

PETALUMA, Calif., June 13, 2013 (GLOBE NEWSWIRE) -- Oculus Innovative
Sciences, Inc. (Nasdaq:OCLS) today announced financial results for the fourth
quarter of fiscal year 2013, ended March 31, 2013. Total revenues were $3.3
million for the fourth quarter ended March 31, 2013, compared to $3.4 million
for the same period in the prior year. Product revenues, including product
licensing fees, were flat for the fourth quarter ended March 31, 2013, as
compared to the same period in the prior year, with increases inEurope,
China, India and Singapore offset by declines in the United States and Mexico.
The flat quarterly revenue growth was the result of two factors: 1) the More
Pharma transaction reduced Oculus' short-term revenue growth despite a 49%
increase in unit volume sales, while improving operating profitability and
long-term revenue growth prospects, and 2) the delayed seasonal purchasing in
the ranch and farm animal market of the Vetericyn™ animal healthcare products
due to late winter storms.

"Our most important near term goal is to support our wholly owned subsidiary,
Ruthigen, in its intended initial public offering. We believe Ruthigen will
enable us to develop our next-generation technology as a drug designed for use
in the surgical suite," said Jim Schutz, Oculus CEO. "Further, we believe the
separation of Ruthigen from our company will create additional value for our
respective shareholders – ours and theirs – while offering healthcare
providers a new tool in the fight to reduce infection and enabling Oculus to
reduce its operating expenses while targeting EBITDASbreakeven. Specific to
Oculus' continued growth, we anticipateour More Pharma partnership south of
the border will continue to increase our operating profitability while
providing strong long-term growthprospects with continued highunitgrowth,
although initially reducing short-term top line growth.We predict additional
growth for Oculus will also be generated by new products, newpartners and new
territories in the United States and abroad."

Product revenue in the United States for the three months ended March 31,
2013, decreased $167,000, or 12%, due to a decline in sales of Oculus' animal
healthcare products, partially offset by increases in sales of dermatology and
wound care products. The company recorded revenue in the amounts of $658,000
and $957,000, for the three months ended March 31, 2013, and 2012,
respectively, from Oculus' animal healthcare partner, Innovacyn. Late winter
storms in the East and Midwest delayed spring sales in the farm and ranch
animal sectors.Revenue growth attributed to Oculus' dermatology partners
reflected strong unit growth as three new product lines were launched over the
past year.

Revenue in Mexico for the three months ended March 31, 2013, decreased
$48,000, or 4%, when compared to the same period in the prior year caused by
the lower sales price per unit sold to Oculus' partner, More Pharma. The
number of units sold by More Pharma increased 49% compared to the same period
last year. In addition, Oculus recognized $370,000 related to the amortization
of upfront product licensing fees paid by More Pharma, Oculus' new exclusive
distributor in Mexico and Latin America. The increase in units sold and the
amortization was offset by about a 54% reduction in the overall average sales
price per unit. Also, due to the transfer of the sales function of Oculus'
products in Mexico to More Pharma, Oculus reduced or transferred the cost of
the salespeople and promotions thereby eliminating those operating costs, thus
improving the company's operating profitability in Mexico.

Revenue in Europe and Rest of World for the three months ended March 31, 2013,
increased $205,000, or 52%, as compared to the same period in the prior year,
primarily as the result of increases in sales in Europe, China, India and
Singapore.

Oculus reported gross profit related to sales of Microcyn®-based products of
approximately $2.2 million, or 69% of product revenues, during the three
months ended March 31, 2013, compared to a gross profit of $2.1 million, or
67% of product revenues, for the same period in the prior year. The slightly
higher gross profitability is primarily the result of improved product mix in
the United States, partially offset by lowergross margins in Mexico as a
result of the reduction in the unit pricing in connection with the More Pharma
transaction.

Total operating expenses decreased by $30,000, or 1%, to $3.6 million for the
three months ended March 31, 2013. Operating expenses minus non-cash expenses
during the three months ended March 31, 2013 were $3.4 million, up from $3.1
million for the same period in the prior year.Research and development
expenses were $669,000 for the three months ended March 31, 2013, up $193,000
due to higher preclinical expenses related to Ruthigen.Selling, general and
administrative expense decreased $223,000, or 7%, to $2.9 million during the
three months ended March 31, 2013, as compared to $3.1 million for the same
period in the prior year. The decrease for the three months ended March 31,
2013 was primarily due to lower selling expenses in Mexico, partially offset
by higher expenses related to Ruthigen, compensation and investor-related
costs in the United States.

Loss from operations minus non-cash expenses for the three months ended March
31, 2013, was $1.1 million, compared to $924,000 for the same period in the
prior year.

Net loss for the three months ended March 31, 2013, was $2.4 million, an
increase of $677,000 from a net loss of $1.8 million for the same period in
the prior year. Stock-based compensation charges were $204,000 and $460,000
for the quarters ended March 31, 2013, and 2012, respectively.

As of March 31, 2013, Oculus had unrestricted cash and cash equivalents of
$7.9 million, compared with $3.4 million as of March 31, 2012.

Results for Fiscal Year 2013

Total revenue was $15.5 million for the twelve months ended March 31, 2013,
compared to $12.7 million for the same period in the prior year. Product
revenues, including product licensing fees received, for the twelve months
ended March 31, 2013, increased $2.7 million, or 23%, to $14.6 million, as
compared to $11.9 million for the same period in the prior year, with revenue
increases in the United States, Mexico, China and Singapore, partially offset
by a decline in Europe, Middle East and India.

Oculus reported gross profit related to sales of Microcyn®-based products of
$10.6 million, or 73% of product revenues, for the twelve months ended March
31, 2013, compared to a gross profit of $8.6 million, or 73% of product
revenues, for the same period in the prior year. Total operating expenses
minus non-cash expenses increased $236,000, for the twelve months compared to
the same period in the prior year. Operating loss minus non-cash expenses
(EBITDAS) for the twelve months was $1.5 million, including $410,000 of
one-time severance charges related to the More Pharma transaction in Mexico,
down $1.8 million, compared to $3.3 million in the same period in the prior
year.

Conference Call

Oculus management will hold a conference call today to discuss fourth quarter
fiscal 2013 results and to answer questions, beginning at 4:30 p.m. EDT.
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 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 74134211. 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 Science is a global healthcare company that designs,
manufactures and marketsprescription and non-prescription products in over 20
countries. The company's products are used to treat patients in
surgical/advanced wound management, dermatology, women's health and animal
health markets; addressing the unmet medical needs of these markets, while
raising the standard ofpatient care and lowering overall healthcare costs.
The company's headquarters are in Petaluma, California, with manufacturing
operations in the United States and Latin America. More information can be
found atwww.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 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," and "will," 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, the
Company may not be able 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 an initial public offering of a separate public
company, and the discretion of the Company's 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
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited, except for the Year Ended March 31, 2012)
                                                                   
                                                          March31,
                                                          2013      2012
                                                                   
ASSETS
                                                                   
Current assets:                                                     
Cash and cash equivalents                                  $7,900  $3,351
Accounts receivable, net                                   1,707     2,151
Inventories, net                                           992       953
Prepaid expenses and other current assets                  935       505
Total current assets                                       11,534    6,960
Property and equipment, net                                800       806
Deferred offering costs                                    44        —
Other assets                                               187       72
Total assets                                               $12,565 $7,838
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:                                                
Accounts payable                                           $808    $816
Accrued expenses and other current liabilities             703       844
Current portion of cash settlement liability               37        —
Deferred revenue                                           2,320     1,619
Current portion of long-term debt, net of debt discount of
$521 and $624 at March 31, 2013 and March 31, 2012,        1,259     1,415
respectively
Derivative liability                                       —         55
Total current liabilities                                  5,127     4,749
Deferred revenue, less current portion                     2,619     133
Long-term debt, net of debt discount of $248 and $769 at
March 31, 2013 and March 31, 2012, respectively, less      676       1,824
current portion
Cash settlement liability, less current portion            62        2,000
Total liabilities                                          8,484     8,706
Commitments and Contingencies:                                      
Stockholders' Equity (Deficiency)                                   
Convertible preferred stock, $0.0001par value;
5,000,000shares authorized, none issued and outstanding            —
at March 31, 2013 and 2012,respectively
Common stock, $0.0001par value; 14,285,715shares
authorized, 6,583,150 and 4,144,206shares issued and      1         —
outstanding at March 31, 2013 and 2012, respectively
Additional paid-in capital                                 144,816   134,499
Accumulated other comprehensive loss                       (2,991)   (3,053)
Accumulated deficit                                        (137,745) (132,314)
Total stockholders' equity (deficiency)                    4,081     (868)
Total liabilities and stockholders' equity (deficiency)    $12,565 $7,838



OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited, except for the Year Ended March 31, 2012)
                                                                 
                                      ThreeMonthsEnded  YearEnded
                                       March 31,           March 31,
                                      2013      2012      2013      2012
Revenues                                                          
Product                                $2,571  $3,116  $12,897 $11,494
Product licensing fees                 575       40        1,686     359
Service                                189       195       869       891
Total revenues                         3,335     3,351     15,452    12,744
Cost of revenues                                                  
Product                                990       1,039     3,976     3,254
Service                                157       177       733       776
Total cost of revenues                 1,147     1,216     4,709     4,030
Gross profit                           2,188     2,135     10,743    8,714
Operating expenses                                                
Research and development               669       476       2,223     1,981
Selling, general and administrative    2,901     3,124     11,894    13,200
Total operating expenses               3,570     3,600     14,117    15,181
Loss from operations                   (1,382)   (1,465)   (3,374)   (6,467)
Interest expense                       (264)     (279)     (1,107)   (931)
Interest income                        4         1         7         4
Loss due to change in fair value of    (735)     –         (1,599)   –
common stock
(Loss) gain due to change in fair      –         (22)      767       282
value of derivative liabilities
Other expense, net                     (68)      (3)       (125)     (217)
Net loss                               (2,445)   (1,768)   (5,431)   (7,329)
Preferred stock deemed dividend        –         –         (1,062)   –
Net loss available to common           $(2,445) $(1,768) $(6,493) $(7,329)
shareholders
Net loss per common share: basic and   $(0.44)  $(0.43)  $(1.30)  $(1.85)
diluted
Weighted-average number of shares used                            
in per common share calculations:
Basic and diluted                      5,604     4,134     4,977     3,912
Other comprehensive loss, net of tax                              
Net loss                               $(2,445) $(1,768) $(5,431) $(7,329)
Foreign currency translation           79        109       62        (152)
adjustments
Other comprehensive loss               $(2,366) $(1,659) $(5,369) $(7,481)



OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands)
(Unaudited)
                                                             
                      Three Months Ended          Year Ended
                       March 31,                   March 31,
                      2013          2012          2013          2012
(1) Loss from
operations minus                                              
non-cash expenses
(EBITDAS):
                                                             
GAAP loss from         $(1,382)    $(1,465)    $(3,374)    $(6,467)
operations as reported
Non-cash adjustments:                                         
Stock-based            204           460           1,601         2,799
compensation
Depreciation and       71            81            268           326
amortization
Non-GAAP loss from
operations minus       $(1,107)     $(924)       $(1,505)     $(3,342)
non-cash expenses
(EBITDAS)
                                                             
(2) Net loss minus                                            
non-cash expenses:
                                                             
GAAP net loss as       (2,445)       (1,768)       (5,431)       (7,329)
reported
Non-cash adjustments:                                         
Stock-based            204           460           1,601         2,799
compensation
Depreciation and       71            81            268           326
amortization
Loss due to change in
fair value of common   734           –             1,599         –
stock
Loss (gain) due to
change in fair value   –             22            (767)         (282)
of derivative
instruments
Non-cash interest      163           145           624           448
expense
Non-GAAP net loss
minus non-cash         $(1,273)     $(1,060)     $(2,106)     $(4,038)
expenses
                                                             
(3) Operating expenses
minus non-cash                                                
expenses:
                                                             
GAAP operating         $3,570      $3,600      $14,117     $15,181
expenses as reported
Non-cash adjustments:                                         
Stock-based            (175)         (426)         (1,469)       (2,686)
compensation
Depreciation and       (28)          (43)          (127)         (175)
amortization
Non-GAAP operating
expenses minus         $3,367      $3,131      $12,521     $12,320
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: Media and Investor Contact:
         Oculus Innovative Sciences, Inc.
         Dan McFadden
         VP of Public and Investor Relations
         (425) 753-2105
         dmcfadden@oculusis.com
 
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