Oculus Innovative Sciences Reports Revenues of $3.4 Million for First Quarter of Fiscal 2014

Oculus Innovative Sciences Reports Revenues of $3.4 Million for First Quarter
of Fiscal 2014

  *EBITDAS for first quarter was ($713,000), which includes $477,000 of
    Ruthigen-related expenses in the quarter
  *Oculus' wholly owned subsidiary, Ruthigen, files a registration statement
    on Form S-1A on August 8, 2013
  *Cash position of $5.4 million at June 30, 2013

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

PETALUMA, Calif., Aug. 8, 2013 (GLOBE NEWSWIRE) -- Oculus Innovative Sciences,
Inc. (Nasdaq:OCLS) today announced financial results for the first quarter of
fiscal year 2014, ended June 30, 2013. Total revenues were $3.4 million for
the first quarter were down $679,000 as compared to $4.1 million for the same
period in the prior year.

"This is a year of transition for Oculus, setting the stage to create
long-term value and stronger revenue growth with several exciting near-term
opportunities," said Jim Schutz, Oculus CEO. "First, our drug subsidiary,
Ruthigen, continues to progress towards a planned IPO, which we believe will
add significant short-term value in the form of cash and potential for
increased stock price. Second, Vetericyn's animal healthcare sales are picking
back up after a slow spring with a strong start to the summer. Third, we see
continued strong unit growth in Latin America that has averaged 50% plus over
the last three quarters as compared to the prior years' quarters. Fourth, we
anticipate an FDA clearance for our new scar hydrogel and subsequent launch
before the end of this fiscal year. And finally, international sales,
especially in Europe, should show solid growth before our fiscal year end as a
result of additional product approvals and added partners. We believe the
stage is set for a return to positive year-over-year revenue growth later this
year and next."

The decline in quarterly revenue growth was the result of three factors: 1)
the delayed seasonal purchasing in the ranch and farm animal sector for the
Vetericyn™ animal healthcare products due to late winter storms, which
negatively impacted sales in the months of April and May, 2013; 2) lower
dermatology sales due to the discontinuance of one partner and the launch of
products by a new partner last year, causing a revenue spike in the first
quarter of FY 2013, which was not repeated this quarter; and 3) the structure
of the Latin America-Mexico partnership, completed in August last year,
reduced Oculus' short-term revenue growth despite a 53% increase in unit
volume sales.

Product revenue in the United States for the three months ended June 30, 2013,
decreased $710,000, or 35%, due to a decline in sales in U.S. dermatology and
animal health care products. Oculus recorded revenue in the amounts of
$741,000 and $1.1 million for the three months ended June 30, 2013 and 2012,
respectively, from Innovacyn, the company's animal healthcare partner. The
late winter Eastern and Midwestern storms that occurred through spring have
delayed seasonal sales to the ranch and farm animal sector for Q4 2013 and the
first two months of Q1 2014. The decline in U.S. dermatology revenues was due
to the discontinuation of Oculus' partnership with Onset Dermatologics and
revenue recognition in the launch of the Quinnova Pharmaceuticals'
Microcyn-based Atrapro® dermatology products in the first quarter of 2012,
which was a one-time event and did not repeat in the first quarter of 2013.

Revenue in Mexico for the three months ended June 30, 2013, was $1.4 million,
up $46,000, or 3%, as compared to the same period in the prior year caused by
the higher unit volume growth of 53% and the recognition of $375,000 related
to the amortization of upfront license fees paid by More Pharma, our exclusive
partner in Mexico. The increase in units sold and the amortization was
partially offset by about a 54% reduction in the overall average sales price
per unit. Also, due to the transfer of the sales function in Mexico to More
Pharma, the company's exclusive partner in Mexico, Oculus eliminated nearly
all sales operating costs, thus improving the company's long-term operating
profitability in Mexico.

Revenue in Europe and rest of world for the three months ended June 30, 2013,
increased $2,000 as compared to the same period in the prior year, with
increases in sales in China, India and Singapore, partially offset by
decreases in Europe and Middle East.

Oculus reported gross profit related to Microcyn® products of $2.1 million or
68% of product revenues, during the three months ended June 30, 2013, compared
to a gross profit of $2.8 million, or 74% of product revenues, for the same
period in the prior year. Gross margins were down due to the decline of
margins in Mexico related to the More Pharma transaction, partially offset by
higher gross margins in the United States and Europe.

Total operating expenses decreased by $53,000, or 2%, to $3.3 million for the
three months ended June 30, 2013. Operating expenses minus non-cash expenses
during the first quarter, were $3.0 million, with $3.0 million and remained
flat when compared with $3.0 million for the same period in the prior year.
Research and development expenses were $507,000 for the three months ended
June 30, 2013, down $25,000 due to lower preclinical expenses. Selling,
general and administrative expense decreased $28,000, or 1%, to $2.8 million
during the three months ended June 30, 2013. The slight decrease was primarily
due to lower selling expenses in Mexico, partially offset by higher expenses
related to Ruthigen and investor-related costs in the United States.

Loss from operations minus non-cash expenses for the three months ended June
30, 2013, was $713,000, including $477,000 of expenses related to Ruthigen,
compared to $22,000 for the same period in the prior year.

Net loss for the three months ended June 30, 2013, was $1.7 million, an
increase of $2.2 million from a net income of $445,000 for the same period in
the prior year. Non-operating (expense) income declined $1.5 million from the
same period last year to an expense of $337,000 from an income of $1.2 million
related to two separate non-cash adjustments related to stock issued to the
company's lender and warrants issued to an investor, which are in the table
reconciling GAAP measures to non-GAAP measures below. Stock-based compensation
charges were $347,000 and $400,000 for the quarters ended June 30, 2013, and
2012, respectively.

As of June 30, 2013, Oculus had unrestricted cash and cash equivalents of $5.4
million, compared with $4.4 million as of June 30, 2012, and $7.9 million as
of March 31, 2013.

Conference Call

Oculus management will hold a conference call today to discuss first 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 17450193. 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 markets prescription and non-prescription products in 27
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 of patient 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 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 commercial and technology progress and future financial 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, including such risks that regulatory 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 by the Company's patents and patent applications may be
challenged, invalidated or circumvented by its competitors, the available
market for the Company's products will not be as large as expected, the
Company's products 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 its future 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 the year ended March 31, 2013.
The Company 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.

                                                                   
OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(Unaudited, except for the Year Ended March 31, 2013)
                                                                   
                                                          June 30,  March 31,
                                                          2013      2013
                                                                   
ASSETS                                                              
                                                                   
Current assets:                                                     
Cash and cash equivalents                                  $ 5,380   $ 7,900
Accounts receivable, net                                   2,192     1,707
Inventories, net                                           813       992
Prepaid expenses and other current assets                  566       935
Total current assets                                       8,951     11,534
Property and equipment, net                                908       800
Deferred offering costs                                    553       44
Other assets                                               169       187
Total assets                                               $ 10,581  $ 12,565
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current liabilities:                                                
Accounts payable                                           $ 1,025   $ 808
Accrued expenses and other current liabilities             648       703
Current portion of cash settlement liability (See Note 3)  153       37
Deferred revenue                                           2,277     2,320
Current portion of long-term debt, net of debt discount of
$469 (unaudited) and $521 at June 30, 2013 and March 31,   657       1,259
2013, respectively
Total current liabilities                                  4,760     5,127
Deferred revenue                                           2,253     2,619
Long-term debt, net of debt discount of $133 (unaudited)
and $248 at June 30, 2013 and March 31, 2013,              696       676
respectively, less current portion
Cash settlement liability, less current portion (See Note  255       62
3)
Total liabilities                                          7,964     8,484
Commitments and Contingencies                                       
Stockholders' Equity                                                
Convertible preferred stock, $0.0001par value;
5,000,000shares authorized, none issued and outstanding   —         —
at June 30, 2013 (unaudited) and March 31,
2013,respectively
Common stock, $0.0001par value; 14,285,715shares
authorized, 6,625,555 and 6,583,150shares issued and      1         1
outstanding at June 30, 2013 (unaudited) and March 31,
2013, respectively
Additional paid-in capital                                 145,163   144,816
Accumulated other comprehensive loss                       (3,090)   (2,991)
Accumulated deficit                                        (139,457) (137,745)
Total stockholders' equity                                 2,617     4,081
Total liabilities and stockholders' equity                 $ 10,581  $ 12,565
                                                                   

                                                                
OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss (Income)
(In thousands, except per share amounts)
(Unaudited)
                                                                
                                                  Three MonthsEndedJune30,
                                                  2013           2012
Revenues                                                         
Product                                            $ 2,721        $ 3,804
Product licensing fees                             433            12
Service                                            218            235
Total revenues                                     3,372          4,051
Cost of revenues                                                 
Product                                            1,021          988
Service                                            151            179
Total cost of revenues                             1,172          1,167
Gross profit                                       2,200          2,884
Operating expenses                                               
Research and development                           507            532
Selling, general and administrative                2,819          2,847
Total operating expenses                           3,326          3,379
Loss from operations                               (1,126)        (495)
Interest expense                                   (250)          (288)
Interest income                                    1              1
Loss due to change in fair value of common stock   (309)          —
(See Note 3)
Gain due to change in fair value of derivative     —              1,247
liabilities
Other expense, net                                 (28)           (20)
Net (loss) income                                  $ (1,712)     $ 445
Preferred stock deemed dividend                    —              (1,062)
Net loss available to common shareholders          $(1,712)      $ (617)
Net loss per common share: basic and diluted       $ (0.26)       $ (0.14)
Weighted-average number of shares used in per common share calculations:
Basic and diluted                                  6,619          4,514
Other comprehensive loss                                         
Net (loss) income                                  $ (1,712)      $ 445
Foreign currency translation adjustments           (99)           (120)
Comprehensive (loss) income                        $ (1,811)      $ 325
                                                                

                                                             
OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands)
(Unaudited)
                                                             
                                           Three Months Ended
                                           June 30,
                                           2013               2012
(1) Loss from operations minus non-cash                       
expenses (EBITDAS):
GAAP loss from operations as reported       $ (1,126)          $ (495)
Non-cash adjustments:                                         
Stock-based compensation                    347                400
Depreciation and amortization               66                 73
Non-GAAP loss from operations minus         $ (713)            $ (22)
non-cash expenses (EBITDAS)
                                                             
(2) Net loss minus non-cash expenses:                         
GAAP net loss as reported                   $ (1,712)          $ 445
Non-cash adjustments:                                         
Stock-based compensation                    347                400
Depreciation and amortization               66                 73
Loss due to change in fair value of common  309                –
stock
Loss (gain) due to change in fair value of  –                  (1,247)
derivative instruments
Non-cash interest expense                   167                150
Non-GAAP net loss minus non-cash expenses   $ (823)            $ (179)
                                                             
(3) Operating expenses minus non-cash                         
expenses:
GAAP operating expenses as reported         $ 3,326            $ 3,379
Non-cash adjustments:                                         
Stock-based compensation                    (322)              (368)
Depreciation and amortization               (29)               (42)
Non-GAAP operating expenses minus non-cash  $ 2,975            $ 2,969
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