Oculus Innovative Sciences Reports Revenues of $3.3 Million for Third Quarter of Fiscal 2014

Oculus Innovative Sciences Reports Revenues of $3.3 Million for Third Quarter
of Fiscal 2014

  *Microcyn® Scar Management HydroGel Approved by FDA in U.S. and Ministry of
    Health in Mexico During Quarter
  *Reduced $3.0 Million Debt-Related Liability During Quarter to $50,000
  *Signed Internal Agreements with Ruthigen, Enabling IPO and Capping
    Reimbursable IPO-Related Expenses

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

PETALUMA, Calif., Feb. 13, 2014 (GLOBE NEWSWIRE) -- Oculus Innovative
Sciences, Inc. (Nasdaq:OCLS) today announced financial results for the third
quarter of fiscal year 2014, ended December 31, 2013. Total revenues were $3.3
million for the third quarter, down $247,000 as compared to $3.5 million for
the same period in the prior year. Product revenue was down $278,000, or 8%,
with decreases in United States, Mexico and China, partially offset by revenue
growth in Europe, Middle East and Singapore.

"All eyes are focused on reigniting our revenue growth via six new product
introductions this year including planned upcoming launches in the scar
management and oral care markets," said Jim Schutz, Oculus CEO. "European
growth should be healthy this year in light of our recent acne, dermatology
procedures and oral care approvals, as well as expected new approvals for
atopic dermatitis and scar management. Also, looking forward, we remain
confident that the Ruthigen IPO process is moving forward."

Product revenue in the United States for the three months ended December 31,
2013, was down 19% from the same period last year, with lower sales of animal
healthcare and dermatology products, partially offset by increases in wound
care and human OTC products. The company recorded revenue in the amounts of
$652,000 and $883,000 from Oculus' partner Innovacyn for the three months
ended December 31, 2013 and 2012 respectively. The impact of the weather on
the sales of animal healthcare products makes it difficult to compare
quarterly sales to that of the same period last year.

Revenue in Mexico for the three months ended December 31, 2013, decreased
$119,000, or 9%, when compared to the same period in the prior year as a
result of the lower sales of the hydrogel product. In the same quarter last
year, sales in Mexico were higher due to the filling of the distribution
pipeline as More Pharma launched its inaugural Microcyn-based products. Also,
sales that were deferred prior to the close of the More Pharma transaction
were recognized on a collection basis during the three months ended December
31, 2012. During the three months ended December 31, 2013 and 2012, $379,000
was recognized related to the amortization of upfront license fees paid by
More Pharma.

Revenue in Europe and "Rest of World" for the three months ended December 31,
2013, increased $163,000, or 47%, as compared to the same period in the prior
year, with increases in sales in Europe, Middle East and Singapore, partially
offset by a decrease in China.

Oculus reported gross profit related to the company's products of $2.1
million, or 67% of product revenues, during the three months ended December
31, 2013, compared to a gross profit of $2.5 million or 73% of product
revenues, for the same period in the prior year. Licensing revenues are
included in the calculation of product revenues and gross profit for the
quarters ended December 31, 2013 and 2012. Gross margins were down due to the
decline of margins in Mexico due to lower unit volume and deferred sales last
year, partially offset by higher gross margins in Europe.

Total operating expenses increased by $504,000, or 16%, to $3.7 million for
the three months ended December 31, 2013, as compared to the same period in
the prior year. Operating expenses minus non-cash expenses during the third
quarter of fiscal 2014 were $3.2 million, up $507,000 when compared to $2.7
million for the same period in the prior year. The increase in operating
expenses minus non-cash expenses was due to higher expenses of $658,000
related to the company's subsidiary, Ruthigen, partially offset by lower U.S.
operating expenses incurred by Oculus of $283,000.

Research and development expenses were $775,000 for the three months ended
December 31, 2013, up $266,000 from the same period last year, due to higher
preclinical expenses of $395,000 incurred by Ruthigen. Selling, general and
administrative expense increased $238,000, or 9%, to $2.9 million during the
three months ended December 31, 2013, with expenses related to Ruthigen of
$263,000.

Loss from operations minus non-cash expenses for the three months ended
December 31, 2013, increased by $860,000, to $1 million, as compared to the
same period in the prior year, mostly due to $658,000 of expenses incurred
related to Ruthigen, compared to $163,000 for the same period in the prior
year.

Net loss for the three months ended December 31, 2013, was $611,000, a
decrease of $1.3 million, as compared to a net loss of $1.9 million for the
same period in the prior year. Stock-based compensation charges were $448,000
and $456,000 for the quarters ended December 31, 2013, and 2012, respectively.
Most of the difference between the net loss and the loss from operations
relates to a gain of $1.6 million on the sale of Oculus shares by the
company's lender, which resulted in the elimination of a $3 million debt
liability to the lender.

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

Results for Nine Months Ending December 31, 2013

Total revenues were $10.8 million for the nine months ended December 31, 2013,
as compared to $12.1 million for the same period in the prior year. Product
revenues, including product licensing fees received, for the nine months ended
December 31, 2013, decreased $1.4 million, or 12%, to $10.1 million, as
compared to $11.4 million for the same period in the prior year, with
decreases in sales in the United States, Mexico and China, partially offset by
increases in Europe, Middle East, India and Singapore.

Oculus reported gross profit related to sales of Microcyn®-based products of
$6.8 million, or 68% of product revenues, for the nine months ended December
31, 2013, as compared to a gross profit of $8.5 million, or 74% of product
revenues, for the same period in the prior year. Total operating expenses
minus non-cash expenses increased $691,000, for the nine months compared to
the same period in the prior year, primarily due to Ruthigen-related expenses
of $2.1 million, partially offset by lower expenses incurred in Mexico of $1
million. Operating loss minus non-cash expenses (EBITDAS) for the nine months
ended December 31, 2013, was $2.6 million, which included $2.1 million of
Ruthigen expenses.

Conference Call

Oculus management will hold a conference call today to discuss third quarter
fiscal 2014 results and to answer questions, beginning at 4:30 p.m. ET.
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 51346784. 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 31
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 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, 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)
                                                                   
                                                       December 31, March 31,
                                                       2013         2013
                                                       (Unaudited)  
ASSETS                                                              
Current assets:                                                     
Cash and cash equivalents                               $3,437     $7,900
Accounts receivable, net                                2,603        1,707
Inventories, net                                        970          992
Prepaid expenses and other current assets               483          935
Total current assets                                    7,493        11,534
Property and equipment, net                             1,046        800
Deferred offering costs                                 1,160        44
Other assets                                            144          187
Total assets                                            $9,843     $12,565
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Current liabilities:                                                
Accounts payable                                        $1,638     $808
Accrued expenses and other current liabilities          588          703
Current portion of cash settlement liability            --           37
Deferred revenue                                        2,657        2,320
Current portion of long-term debt, net of debt discount 37           1,259
of $521 at March 31, 2013
Total current liabilities                               4,920        5,127
Deferred revenue                                        1,514        2,619
Long-term debt, net of debt discount of $248 at March   12           676
31, 2013, less current portion
Cash settlement liability, less current portion         --           62
Total liabilities                                       6,446        8,484
Commitments and Contingencies                                       
Stockholders' Equity                                                
Convertible preferred stock, $0.0001par value;
5,000,000shares authorized, none issued and            --           --
outstanding at December 31, 2013 (unaudited) and March
31, 2013,respectively
Common stock, $0.0001par value; 14,285,715shares
authorized, 7,239,131 and 6,583,150shares issued and   1            1
outstanding at December 31, 2013 (unaudited) and March
31, 2013, respectively
Additional paid-in capital                              147,932      144,816
Accumulated other comprehensive loss                    (3,069)      (2,991)
Accumulated deficit                                     (141,467)    (137,745)
Total stockholders' equity                              3,397        4,081
Total liabilities and stockholders' equity              $9,843     $12,565


OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
                                                                
                                   Three Months Ended   Nine Months Ended
                                   December 31,         December 31,
                                   2013      2012       2013       2012
Revenues                                                         
Product                             $2,450  $2,655   $8,627   $10,312
Product licensing fees              629       702        1,459      1,125
Service                             214       183        668        680
Total revenues                      3,293     3,540      10,754     12,117
Cost of revenues                                                 
Product                             1,023     906        3,247      2,986
Service                             161       163        493        576
Total cost of revenues              1,184     1,069      3,740      3,562
Gross profit                        2,109     2,471      7,014      8,555
Operating expenses                                               
Research and development            775       509        2,165      1,554
Selling, general and administrative 2,880     2,642      8,792      8,993
Total operating expenses            3,655     3,151      10,957     10,547
Loss from operations                (1,546)   (680)      (3,943)    (1,992)
Interest expense                    (618)     (275)      (1,056)    (843)
Interest income                     --        1          1          3
Gain (loss) due to change in fair   1,567     (864)      1,357      (864)
value of common stock
(Loss) gain due to change in fair   --        (84)       --         766
value of derivative instruments
Other expense, net                  (14)      (10)       (81)       (56)
Net loss                            (611)     (1,912)    (3,722)    (2,986)
Preferred stock deemed dividend     --        --         --         (1,062)
Net loss available to common        $(611)  $(1,912) $(3,722) $(4,048)
shareholders
Net loss per common share: basic    $(0.09) $(0.37)  $(0.56)  $(0.85)
and diluted
Weighted-average number of shares
used in per common share                                         
calculations:
Basic and diluted                   6,810     5,126      6,687      4,767
Other comprehensive loss, net of                                 
tax
Net loss                            $(611)  $(1,912) $(3,722) $(2,986)
Foreign currency translation        8         (16)       (78)       (17)
adjustments
Other comprehensive loss            $(603)  $(1,928) $(3,800) $(3,003)


OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES
Reconciliation of GAAP Measures to Non-GAAP Measures
(In thousands)
(Unaudited)
                                                                
                                   Three Months Ended   Six Months Ended
                                   December 31,         September 31,
                                   2013       2012      2013       2012
(1) Loss from operations minus                                  
non-cash expenses (EBITDAS):
GAAP loss from operations as        $(1,546) $(680)  $(3,943) $(1,992)
reported
Non-cash adjustments:                                            
Stock-based compensation            448        456       1,114      1,397
Depreciation and amortization       75         61        211        197
Non-GAAP loss from operations minus $(1,023) $(163)  $(2,618) $(398)
non-cash expenses (EBITDAS)
                                                                
(2) Net loss minus non-cash                                     
expenses:
GAAP net loss as reported           $ (611)    $ (1,912) $ (3,722)  $ (2,986)
Non-cash adjustments:                                            
Stock-based compensation            448        456       1,114      1,397
Depreciation and amortization       75         61        211        197
(Gain) loss due to change in fair   (1,567)    864       (1,357)    864
value of common stock
Loss (gain) due to change in fair   --         84        --         (766)
value of derivative instruments
Non-cash interest expense           569        158       863        461
Non-GAAP net loss minus non-cash    $(1,086) $(289)  $(2,891) $(833)
expenses
                                                                
(3) Operating expenses minus                                    
non-cash expenses
GAAP operating expenses as reported $ 3,655    $ 3,151   $ 10,957   $ 10,547
Non-cash adjustments:                                            
Stock-based compensation            (420)      (419)     (1,030)    (1,294)
Depreciation and amortization       (24)       (28)      (82)       (99)
Non-GAAP operating expenses minus   $3,211   $2,704  $9,845   $9,154
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 loss minus non-cash expenses is a non-GAAP financial measure. The
Company defines net loss minus non-cash expenses as GAAP reported net loss
minus depreciation and amortization, stock-based compensation, a change in
fair value of common stock, a change in the fair value of derivative
instruments, and non-cash interest expense.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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