Vision-Sciences Announces Revenue of $4.5 Million for Third Quarter and $12.1 Million for First Nine Months of Fiscal 2014

Vision-Sciences Announces Revenue of $4.5 Million for Third Quarter and $12.1
Million for First Nine Months of Fiscal 2014

ORANGEBURG, N.Y., Feb. 3, 2014 (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 third quarter and first nine months of
fiscal year 2014, ended December 31, 2013.

Third Quarter Fiscal Year 2014 Highlights

  *Net sales increased by 14% to $4.5 million compared with $4.0 million in
    the third quarter of fiscal 2013;
  *On a sequential basis, net sales increased by 14% compared with $4.0
    million in the second quarter of fiscal 2014;
  *Operating loss improved by 3% to $1.5 million compared to the same quarter
    last fiscal year;
  *Net loss improved by 1% to $1.6 million, or ($0.03) per basic and diluted
    share, compared to the same quarter last fiscal year;
  *Positive outcomes of a clinical study that evaluated the durability and
    microbial barrier properties of EndoSheath^® technology in the flexible
    cystoscopy setting were published in the peer-reviewed journal BMC
    Urology;
  *Launched an authorized fiber and video endoscope repair center for Europe;
    and
  *Selected as preferred vendor for endoscopy equipment by 21st Century
    Oncology.

First Nine Months of Fiscal Year 2014 Highlights

  *Net sales increased by 9% to $12.1 million compared with $11.1 million in
    the first nine months of fiscal 2013;
  *Operating loss improved by 20% to $5.2 million compared to $6.5 million in
    the same period last fiscal year; and
  *Net loss improved by 37% to $5.3 million, or ($0.12) per basic and diluted
    share, compared to $8.5 million, or ($0.18) per basic and diluted share,
    in the same period last fiscal year.

"I am pleased with the revenue growth we achieved this quarter on both a
year-over-year and sequential basis," commented Howard Zauberman, President
and Chief Executive Officer of Vision-Sciences, Inc. "Our relationship with
Stryker remains strong and we are pleased with their growth in ureteroscope
placements, which continues to be a key driver of our revenues. We expect
revenue growth in coming quarters will be consistent with the last nine months
as we complete our turnaround, and seek to reduce our operating loss on a
go-forward basis."

"Over the past four weeks, there have been several reported incidents of
improper endoscope reprocessing and sterilization procedures in the U.S. and
Canada. Media coverage of these incidents and the ongoing investigations has
highlighted the public health impact and increased public awareness of this
substantial, ongoing issue. These incidents reinforce the utility of our
"always ready, always sterile" endoscope, employing our EndoSheath technology
to significantly reduce the risk of cross-contamination," concluded Mr.
Zauberman.

Results of Operations

Third Quarter Fiscal Year 2014 versus Third Quarter Fiscal Year 2013

Net sales in the third quarter of fiscal 2014 increased by 14% to $4.5 million
as compared with $4.0 million in the same period a year ago, primarily
attributable to higher sales of our endoscopes and EndoSheath technology in
the urology market. Sequentially, net sales in the third quarter increased by
14% from $4.0 million in the second quarter of fiscal 2014.

Net sales detail (in thousands, except for percentages) for the third quarters
of fiscal years 2014 and 2013 were as follows:

                                      Three Months Ended          
                                       December 31,
Market/Category                        2013        2012        %
                                      (unaudited) (unaudited) 
Urology                               $2,097    $1,421    48%
ENT                                    386        398        -3%
TNE                                    361        385        -6%
Pulmonology                            276        238        16%
Spine                                  --        --        n/a
Repairs, peripherals, and accessories 466        528        -12%
Total net medical sales                3,586      2,970      21%
Total net industrial sales             921        982        -6%
Net sales                              $4,507    $3,952    14%

Gross profit was $1.4 million in the third quarter of fiscal 2014, an increase
of $0.2 million, or 22%, over the same period last year. Gross margin
increased by 200 basis points to 30.6% in the third quarter of fiscal 2014
from 28.6% in the third quarter of fiscal 2013. The year-over-year improvement
in the Company's gross margin was primarily attributable to favorable
manufacturing absorption from higher production of the Company's urology
endoscopes and EndoSheath technology.

Selling, general and administrative ("SG&A") expenses were $2.3 million in the
third quarter of both fiscal years 2014 and 2013. As a percentage of net
sales, SG&A decreased to 51% from 58% reported in the same period last fiscal
year.

Research and development ("R&D") expenses were $0.6 million in the third
quarter of fiscal 2014, an increase of $0.2 million, or 59%, over the same
period last year, primarily due to the timing of development costs. As a
percentage of net sales, R&D increased to 12% in the third quarter of fiscal
2014 from 9% reported during the same period last fiscal year.

The Company's operating loss improved by 3% to $1.5 million during the third
quarter of fiscal 2014.

First Nine Months of Fiscal 2014 versus First Nine Months of Fiscal 2013

Net sales for the first nine months of fiscal 2014 increased by 9% to $12.1
million from $11.1 million reported during the first nine months of fiscal
2013. Similar to the third quarter sales results, the year-over-year growth
was primarily attributable to higher sales of our endoscopes and EndoSheath
technology in the urology market.

Net sales detail (in thousands, except for percentages) for the first nine
months of fiscal years 2014 and 2013 were as follows:

                                      Nine Months Ended            
                                       December 31,
Market/Category                        2013        2012        %
                                      (unaudited) (unaudited) 
Urology                               $5,614    $3,365    67%
ENT                                    1,128      1,417      -20%
TNE                                    944        895        5%
Pulmonology                            757        525        44%
Spine                                  --        440        -100%
Repairs, peripherals, and accessories 1,570      1,548      1%
Total net medical sales                10,013     8,190      22%
Total net industrial sales             2,114      2,897      -27%
Net sales                              $ 12,127   $11,087   9%

Gross profit was $3.7 million in the first nine months of fiscal 2014, an
increase of $0.5 million, or 17%, over the same period last fiscal year. Gross
margin increased by 200 basis points to 30.1% in the first nine months of
fiscal 2014 from 28.1% in the first nine months of fiscal 2013. The
year-over-year improvement in the Company's gross margin was primarily
attributable to favorable manufacturing absorption from higher production of
the Company's urology endoscopes and EndoSheath technology.

SG&A expenses were $7.4 million for the first nine months of fiscal 2014, a
decrease of $0.8 million, or 10%, compared to the same period last fiscal
year. The decrease was primarily attributable to lower stock-based
compensation expense and corporate compensation costs. As a percentage of net
sales, SG&A decreased to 61% in the first nine months of fiscal 2014 from 74%
as reported in the first nine months of fiscal 2013.

R&D expenses were $1.4 million for the first nine months of both fiscal 2014
and 2013. As a percentage of net sales, R&D was 12% for the first nine months
of both fiscal years 2014 and 2013.

The Company's operating loss improved by 20% to $5.2 million in the first nine
months of fiscal 2014 from $6.5 million in the same period last fiscal year,
primarily attributable to a $0.8 million reduction in operating expenses.

At December 31, 2013, the Company had cash and cash equivalents of $1.1
million and working capital of $7.4 million, as compared to cash and cash
equivalents of $0.8 million and working capital of $7.0 million at March 31,
2013. As of December 31, 2013, the Company had $1.5 million of capital
available under a revolving convertible promissory note with Lewis C. Pell,
the Company's Chairman.

Conference Call

Howard Zauberman, President and Chief Executive Officer, and Keith Darragh,
VP, Finance, will host a conference call to discuss the third quarter and
first nine months of fiscal 2014 financial results at 8:30 a.m. EST, on
Tuesday, February 4, 2014.

Conference dial-in:     (877) 303-1595
International dial-in:  (970) 315-0449
Conference ID:          46543979
Webcast:                http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. EST
on Tuesday, February 4, 2014, through 11:59 p.m. EST on Tuesday, February 11,
2014 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 owns the trademarks Vision Sciences™ and Slide-On™ and the
registered trademarks EndoSheath^®, EndoWipe^® and The Vision System^®.

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)
                                                               
                              Three Months Ended      Nine Months Ended
                               December 31,            December 31,
                              2013        2012        2013        2012
                              (unaudited) (unaudited) (unaudited) (unaudited)
Net sales                     $4,507    $3,952    $12,127   $11,087
Cost of sales                 3,129      2,820      8,474      7,973
Gross profit                  1,378      1,132      3,653      3,114
                                                               
Selling, general, and          2,304      2,311      7,404      8,205
administrative expenses
Research and development       552        347        1,399      1,361
expenses
Operating loss                 (1,478)    (1,526)    (5,150)    (6,452)
                                                               
Interest income               --        1          1          4
Interest expense              (58)       (36)       (143)      (467)
Other, net                     (18)       (6)        (16)       (47)
Debt cost expense              --        --        --        (272)
Loss on extinguishment of debt --        --        --        (1,244)
                              (76)       (41)       (158)      (2,026)
Loss before provision for      (1,554)    (1,567)    (5,308)    (8,478)
income taxes
Income tax provision           8          10         11         10
Net loss                       $(1,562)  $(1,577)  $(5,319)  $(8,488)
                                                               
Net loss per common share -    $(0.03)   $(0.03)   $(0.12)   $(0.18)
basic and diluted
                                                               
Weighted average number of
shares outstanding - basic and 46,163     46,051     46,139     45,902
diluted

                                                              
Vision-Sciences, Inc. and Subsidiaries                                      
Condensed Consolidated Balance Sheets                                       
(In thousands, except per share amounts)                                    
                                                              
                                                  December 31, March 31,
                                                   2013         2013
ASSETS                                             (unaudited)  (audited)
Current assets:                                                
Cash and cash equivalents                         $1,122     $788
Accounts receivable, net                           3,410       3,624
Inventories, net                                  5,394       5,158
Prepaid expenses and other current assets         313         276
Total current assets                              10,239      9,846
                                                              
Property and equipment, net                        1,179       1,454
Other assets, net                                  67          77
Total assets                                      $11,485    $11,377
                                                              
LIABILITIES AND STOCKHOLDERS' DEFICIT                          
Current liabilities:                                           
Accounts payable                                  $1,085     $1,300
Accrued expenses                                  897         728
Accrued compensation                               648         656
Deferred revenue                                   183         130
Capital lease obligations                         34          75
Total current liabilities                         2,847       2,889
                                                              
Convertible debt—related party, net                21,804      17,000
Deferred revenue, net of current portion          76          62
Capital lease obligations, net of current portion --         22
Total liabilities                                 24,727      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—47,614 shares and 476         463
46,249 shares, respectively
Additional paid-in capital                        101,507     100,819
Treasury stock at cost, 59 shares and 34 shares of (78)        (50)
common stock, respectively
Accumulated deficit                               (115,147)   (109,828)
Total stockholders' deficit                        (13,242)    (8,596)
Total liabilities and stockholders' deficit       $11,485    $11,377


Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except per share amounts)
                                                                 
                                                      Nine Months Ended
                                                       December 31,
                                                      2013        2012
Cash flows from operating activities:                  (unaudited) (unaudited)
Net loss                                              $(5,319)  $(8,488)
Adjustments to reconcile net loss to net cash used in             
operating activities:
Depreciation and amortization                         532        603
Stock-based compensation expense                       499        1,209
Provision for (recovery of) bad debt expenses          16         (4)
Loss on disposal of fixed assets                       5          51
Non-cash interest expense                              6          --
Debt cost expense                                      --        272
Loss on extinguishment of debt                         --        1,244
Changes in assets and liabilities:                                
Accounts receivable                                   198        (684)
Inventories                                           (465)      (1,062)
Prepaid expenses and other current assets              (37)       (21)
Other assets                                           10         --
Accounts payable                                      (215)      334
Accrued expenses                                      169        (325)
Accrued compensation                                   (8)        192
Deferred revenue                                       67         49
Advances from customers                                --        (529)
Net cash used in operating activities                  (4,542)    (7,159)
Cash flows from investing activities:                             
Purchases of property and equipment                   (53)       (93)
Proceeds from disposal of fixed assets                 3          5
Net cash used in investing activities                 (50)       (88)
Cash flows from financing activities:                             
Proceeds from issuance of convertible debt—related     5,000      --
party
Proceeds from promissory note—related party            --        5,000
Net proceeds from sale of common stock                 --        878
Proceeds from exercise of stock options               --        99
Common stock repurchased                               (28)       (36)
Payments of capital leases                            (46)       (73)
Net cash provided by financing activities             4,926      5,868
Net increase (decrease) in cash and cash equivalents  334        (1,379)
Cash and cash equivalents at beginning of period       $788      $2,674
Cash and cash equivalents at end of period             $1,122    $1,295

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

company logo
 
Press spacebar to pause and continue. Press esc to stop.