Vision-Sciences Reports First Quarter 2014 Financial Results

Vision-Sciences Reports First Quarter 2014 Financial Results

ORANGEBURG, N.Y., Aug. 12, 2013 (GLOBE NEWSWIRE) -- Vision-Sciences, Inc.
(Nasdaq:VSCI) today announced financial results for the first quarter of
fiscal 2014, ended June 30, 2013. Highlights include:

  *Net sales increased 8% to $3.7 million, compared with $3.4 million in the
    first quarter of fiscal 2013;
  *Gross profit improved by 18% to $1.1 million, compared with $0.9 million
    in the first quarter of fiscal 2013;
  *Net loss improved by 8% to $2.4 million, or ($0.05) per basic and diluted
    share, compared to $2.6 million, or ($0.06) per basic and diluted share,
    in the first quarter of fiscal 2013;
  *Launched the 7000 Series Vision System^® video processor platform,
    worldwide; and,
  *Appointed Howard I. Zauberman as Interim Chief Executive Officer effective
    May 13, 2013.

"Since joining Vision Sciences in mid-May, I have been conducting a
comprehensive strategic assessment of our business," said Howard Zauberman,
Interim Chief Executive Officer. "Thus far, I have realigned the Company's
direct sales efforts to focus on those markets and customers where we have
primarily had success, strong brand recognition and product loyalty. In
particular this has been in the ENT and TNE markets in the office setting, and
critical care/pulmonology in the ICU setting."

Mr. Zauberman continued, "With respect to our partnership with Stryker
Urology, we are pleased with their ongoing progress. With top-line growth and
a reduction of our net loss, this quarter was the first step towards
strengthening our foundation and building a long-term plan that rewards
shareholders. We will do this by fostering a culture of innovation to fully
realize the commercial potential of this Company."

First Quarter Financial Results 

Net sales in the first quarter of fiscal 2014 were $3.7 million, an increase
of $0.3 million, or 8%, over the first quarter of fiscal 2013.

  *Medical segment sales increased 21%, primarily due to a 76% increase in
    sales to the urology market as compared to the prior year quarter.The
    increase was primarily attributable to shipments of our flexible
    ureteroscope to Stryker; and,
  *Industrial segment sales decreased 31%, primarily due to an atypically
    large order that shipped in the first quarter last year; there was no
    comparable order in the first quarter of fiscal 2014.

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

                                     Three Months Ended 
                                     June 30,           
Market/Category                       2013      2012     Change
Urology                               $1,862  $1,056 76%
ENT /TNE                              542       608      -11%
Pulmonology                           87        125      -30%
Spine                                 --        259      -100%
Repairs, peripherals, and accessories 538       448      20%
Total medical sales                   3,029     2,496    21%
Borescopes                            337       631      -47%
Repairs                               286       269      6%
Total industrial sales                623       900      -31%
Net sales                             $3,652  $3,396 8%
                                                      
Product – medical sales                                
Endoscopes                            $1,561  $1,493 5%
EndoSheath technology                 930       555      68%
Repairs, peripherals, and accessories 538       448      20%
Total medical sales                   $3,029  $2,496 21%

Gross profit increased by $0.2 million, or 18%, to $1.1 million in the first
quarter of fiscal 2014. Gross margin for the 2014 quarter increased 300 basis
points to 30% from 27% in the first quarter of fiscal 2013 due to favorable
manufacturing absorption driven by higher production volume in the 2014 fiscal
period.

Selling, general and administrative ("SG&A") expenses increased by $0.3
million to $3.1 million in the first quarter of fiscal 2014. The 12% increase
was primarily due to higher stock-based compensation and recognition of a
one-time severance charge related to the departure of the Company's former
chief executive officer. As a percentage of net sales, SG&A was 84% for the
first quarter of fiscal 2014, versus 80% for the same period last year.
Excluding the one-time severance charge, SG&A, as a percentage of sales, would
have been 78%.

Research and development ("R&D") expenses decreased by $0.1 million, or 14%,
in the first quarter of fiscal 2014. As a percentage of net sales, R&D
decreased to 11% versus 14% for the same period last year.

The Company's operating loss increased by $0.1 million to $2.4 million during
the first quarter of fiscal 2014 as compared to $2.3 million during the first
quarter of fiscal 2013 primarily due to higher stock-based compensation and
one-time severance charge totaling $0.4 million.

At June 30, 2013, the Company had cash and cash equivalents of $1.3 million
and working capital of $7.1 million, as compared to cash and cash equivalents
of $0.8 million and working capital of $7.0 million at March 31, 2013. We
also had $1.0 million of capital available under a $20.0 million convertible
debt with Mr. Lewis C. Pell, the Company's Chairman.The Company expects that
our cash and cash equivalents at June 30, 2013, together with the $1.0 million
of capital available under the convertible debt and the $5.0 million of
capital to be made available to us under the letter agreement with Mr. Pell
dated June 21, 2013, should be sufficient to fund our operations though at
least July 1, 2014.

Conference Call

As previously disclosed, Howard Zauberman, Interim Chief Executive Officer,
and John Vittoria, Interim VP Finance, Principal Accounting Officer and
Principal Financial Officer, will host a conference call to discuss the
results as follows:

Date:                Tuesday, August 13, 2013
Time:               8:30 a.m. ET
Conference dial-in: (877) 303-1595 U.S.
                    (970) 315-0449 International
Conference ID:      27485288
Webcast:            http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. EDT
on Tuesday, August 13, 2013, through 11:30 p.m. EDT on Monday, August 19,
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.

About Vision-Sciences, Inc.

Vision-Sciences, Inc. designs, develops, manufactures and markets products for
flexible endoscopy. The company's unique product lines feature a streamlined
visualization system and proprietary sterile disposable microbial barrier,
known as EndoSheath^® technology, providing users with efficient and cost
effective endoscope turnover while enhancing patient safety. 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.

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.

Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                                                                  
                                                        Three Months Ended
                                                        June 30,
                                                        2013       2012
                                                                  
Net sales                                                $3,652   $3,396
Cost of sales                                            2,572      2,483
Gross profit                                             1,080      913
                                                                  
Selling, general, and administrative expenses            3,050      2,730
Research and development expenses                        419        487
Operating loss                                           (2,389)    (2,304)
                                                                  
Interest expense                                         (41)       (194)
Debt cost expense                                        --         (144)
Other, net                                               (4)        (4)
Loss before provision for income taxes                   (2,434)    (2,646)
Income tax provision                                     --         1
Net loss                                                 $(2,434) $(2,647)
                                                                  
Net loss per common share - basic and diluted            $(0.05)  $(0.06)
                                                                  
Weighted average shares used in computing net loss per   46,109     45,678
common share - basic and diluted


Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
                                                                   
                                                        June 30,    March 31,
                                                        2013        2013
ASSETS                                                   (unaudited) (audited)
Current assets:                                                     
Cash and cash equivalents                                $1,332    $788
Accounts receivable, less allowances of $89 and $113,    2,685       3,624
respectively
Inventories, net                                         5,236       5,158
Prepaid expenses and other current assets                361         276
Total current assets                                     9,614       9,846
                                                                   
Machinery and equipment                                  3,489       3,489
Demo equipment                                           1,198       1,101
Furniture and fixtures                                   225         225
Leasehold improvements                                   372         372
Property and equipment, at cost                          5,284       5,182
Less—accumulated depreciation and amortization           3,905       3,733
Total property and equipment, net                        1,379       1,454
Other assets, net                                        77          77
Total assets                                             $11,070   $11,377
                                                                   
LIABILITIES AND STOCKHOLDERS' DEFICIT                               
Current liabilities:                                                
Accounts payable                                         $820      $1,300
Accrued expenses                                         595         728
Accrued compensation                                     866         656
Deferred revenue                                         140         130
Capital lease obligations                                69          75
Total current liabilities                                2,490       2,889
                                                                   
Convertible debt - related party                         19,000      17,000
Deferred revenue, net of current portion                 64          62
Capital lease obligations, net of current portion        9           22
Total liabilities                                        21,563      19,973
                                                                   
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 shares and 46,249 shares,  463         463
respectively
Additional paid-in capital                               101,374     100,819
Treasury stock at cost, 49 and 34 shares of common       (68)        (50)
stock, respectively
Accumulated deficit                                      (112,262)   (109,828)
Total stockholders' deficit                              (10,493)    (8,596)
Total liabilities and stockholders' deficit              $11,070   $11,377


Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                  
                                                        Three Months Ended
                                                        June 30,
                                                        2013       2012
Cash flows from operating activities:                              
Net loss                                                 $(2,434) $(2,647)
Adjustments to reconcile net loss to net cash used in              
operating activities:
Depreciation and amortization                            188        204
Stock-based compensation expense                         555        443
Provision for (recovery of) bad debt expenses            8          (9)
Debt cost expense                                        --         144
Loss on disposal of fixed assets                         3          6
Changes in assets and liabilities:                                 
Accounts receivable                                      931        (54)
Inventories                                              (191)      (310)
Prepaid expenses and other current assets                (85)       (70)
Accounts payable                                         (483)      241
Accrued expenses                                         (133)      (110)
Accrued compensation                                     210        143
Deferred revenue                                         12         27
Advances from customers                                  --         (368)
Net cash used in operating activities                    (1,419)    (2,360)
Cash flows from investing activities:                              
Purchases of property and equipment                      --         (36)
Proceeds from disposal of fixed assets                   --         6
Net cash used in investing activities                    --         (30)
Cash flows from financing activities:                              
Proceeds from exercise of stock options                  --         6
Net proceeds from sale of common stock                   --         878
Proceeds from issuance of convertible debt – related     2,000      --
party
Common stock repurchased                                 (18)       --
Payments of capital leases                               (19)       (24)
Net cash provided by financing activities                1,963      860
Net increase (decrease) in cash and cash equivalents     544        (1,530)
Cash and cash equivalents at beginning of period         $788     $2,674
Cash and cash equivalents at end of period               $1,332   $1,144
                                                                  
Supplemental disclosure of cash flow information:                  
Cash paid during the period for:                                   
Interest                                                 $ --       $ 157
Income taxes                                             $ --       $ 7
                                                                  
Non-cash financing activities:                                     
Net transfers of inventory to fixed assets for use as    $116     $57
demo equipment

CONTACT: John Vittoria
         Interim VP Finance, Principal Accounting Officer
         and Principal Financial Officer
         Vision-Sciences, Inc.
         (845) 848-1085
         invest@visionsciences.com
        
         Lisa Wilson
         President
         In-Site Communications, Inc.
         (212) 452-2793
         lwilson@insitecony.com

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