Vision-Sciences Announces Record Revenues of $5.0 Million for Fourth Quarter and $17.1 Million for Full Year Fiscal 2014

Vision-Sciences Announces Record Revenues of $5.0 Million for Fourth Quarter
and $17.1 Million for Full Year Fiscal 2014

ORANGEBURG, N.Y., April 28, 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 fourth quarter and full year fiscal 2014,
ended March 31, 2014.

Fourth Quarter Fiscal Year 2014 Highlights

  *Net sales increased by 19% to $5.0 million compared with $4.2 million in
    the fourth quarter of fiscal 2013. On a sequential basis, net sales
    increased by 11% compared with $4.5 million in the third quarter of fiscal
    2014.
  *Recorded an inventory charge of $0.5 million as a result of the Company
    rendering older products obsolete and reducing excess inventory in
    preparation for launch of its latest generation products in fiscal 2015.
    This non-cash charge had a direct impact on the gross profit and gross
    margin, operating loss, and net loss for the fourth quarter and full year
    fiscal 2014.
  *Operating loss increased by 13% to $2.3 million compared to the same
    quarter of last fiscal year.
  *Net loss increased by 16% to $2.4 million, or ($0.05) per basic and
    diluted share, compared to the same quarter last fiscal year.
  *Peer reviewed article published in The BMJ (formerly The British Medical
    Journal) identified the Company's sterile, disposable EndoSheath
    technology as a safe, cost-effective alternative to conventional flexible
    endoscopes.

Full Year Fiscal Year 2014 Highlights

  *Net sales increased by 12% to $17.1 million compared with $15.3 million in
    fiscal 2013.
  *Operating loss improved by 12% to $7.4 million compared to $8.5 million in
    the last fiscal year.
  *Net loss improved by 27% to $7.7 million, or ($0.17) per basic and diluted
    share, compared to $10.6 million, or ($0.23) per basic and diluted share,
    in the last fiscal year.

Please refer to the attached Non-GAAP Financial Measures and Reconciliation
table for more detail.

"We are pleased with our impressive financial results for both the fourth
quarter and fiscal year 2014. This can attributed to the solid execution of
our strategy, which is to focus on growth in those areas where we have had
historical success, ENT and TNE in the office and ambulatory setting and
critical care/pulmonology in the ICU setting," commented Howard Zauberman,
President and Chief Executive Officer of Vision-Sciences, Inc.

"We believe that the market for our patented EndoSheath technology will
continue to grow as medical professionals search for a sterile and reliable
product to safeguard patients. As we look ahead, we remain focused on our
mission: to provide innovative technologies that improve patient care and
reduce costs to the healthcare system, with a focus on increasing operating
efficiency and further margin improvement," concluded Mr. Zauberman.

Results of Operations

Fourth Quarter Fiscal Year 2014 versus Fourth Quarter Fiscal Year 2013

Net sales in the fourth quarter of fiscal 2014 increased by 19% to $5.0
million as compared with $4.2 million in the same period a year ago,
attributable to higher sales of our endoscopes and EndoSheath technology in
all markets. Sequentially, net sales in the fourth quarter increased by 11%
from $4.5 million in the third quarter of fiscal 2014.

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

                                     Three Months Ended      
                                     March 31,               
Market/Category                       2014        2013        %
                                     (unaudited) (unaudited) 
Urology                               $2,373    $2,074    14%
ENT                                   609        479        27%
TNE                                   245        124        98%
Pulmonology                           350        264        33%
Repairs, peripherals, and accessories 542        499        9%
Total net medical sales               4,119      3,440      20%
Total net industrial sales            862        760        13%
Net sales                             $4,981    $4,200    19%

Gross profit was $0.8 million in the fourth quarter of fiscal 2014, a decrease
of $0.4 million, or 31%, compared to the same period last fiscal year. Gross
margin decreased by 1,220 basis points to 17.0% in the fourth quarter of
fiscal 2014 from 29.2% in the fourth quarter of fiscal 2013. The
year-over-year decline in gross margin was primarily attributable to an
inventory charge of $0.5 million to write-off slow moving and obsolete
materials, an impact of 1,070 basis points. Also contributing to the decrease
was unfavorable product sales mix as the Company shipped more endoscopes to
Stryker, a lower margin business segment, during the fourth quarter of fiscal
2014.

Selling, general and administrative ("SG&A") expenses were $2.4 million in the
fourth quarter of fiscal 2014, a decrease of $0.4 million, or 13%, compared to
the same period last fiscal year. The decrease was primarily attributable to
lower expenses related to sales compensation, stock-based compensation, and
professional education. As a percentage of net sales, SG&A decreased to 49% in
the fourth quarter of fiscal 2014 from 67% reported in the same period last
fiscal year.

Research and development ("R&D") expenses were $0.7 million in the fourth
quarter of fiscal 2014, an increase of $0.2 million, or 53%, over the same
period last year. The increase was primarily attributable to higher product
development costs. As a percentage of net sales, R&D increased to 14% in the
fourth quarter of fiscal 2014 from 11% reported during the same period last
fiscal year.

The Company's operating loss increased by 13% to $2.3 million during the
fourth quarter of fiscal 2014, primarily due to the lower gross profit
realized during the quarter.

Full Year Fiscal 2014 versus Full Year Fiscal 2013

Net sales for fiscal 2014 increased by 12% to $17.1 million from $15.2 million
reported during fiscal 2013. The year-over-year sales growth was primarily
attributable to higher sales of our endoscopes and EndoSheath technology in
the urology and pulmonology markets.

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

                                     Fiscal Year Ended       
                                     March 31,               
Market/Category                       2014        2013        %
                                     (unaudited) (unaudited) 
Urology                               $7,988    $5,439    47%
ENT                                   1,737      1,896      -8%
TNE                                   1,189      1,019      17%
Pulmonology                           1,107      789        40%
Spine                                 36         440        -92%
Repairs, peripherals, and accessories 2,076      2,047      1%
Total net medical sales               14,133     11,630     22%
Total net industrial sales            2,975      3,657      -19%
Net sales                             $ 17,108   $15,287   12%

Gross profit was $4.5 million in fiscal 2014, an increase of $0.2 million, or
4%, over last fiscal year. Gross margin decreased by 210 basis points to 26.3%
in fiscal 2014 from 28.4% in fiscal 2013. The year-over-year decline in gross
margin was primarily attributable to the inventory charge noted above, which
had a 310 basis point impact on the full fiscal year results.

SG&A expenses were $9.8 million in fiscal 2014, a decrease of $1.2 million, or
11%, compared to last fiscal year. The decrease was primarily attributable to
lower expenses related to stock-based compensation and corporate and sales
compensation. As a percentage of net sales, SG&A decreased to 58% in fiscal
2014 from 72% as reported in fiscal 2013.

R&D expenses were $2.1 million in fiscal 2014, an increase of $0.3 million, or
15%, compared to last fiscal year. The increase was primarily attributable to
higher product development costs. As a percentage of net sales, R&D was 12%
for fiscal years 2014 and 2013.

The Company's operating loss improved by 12% to $7.4 million in fiscal 2014
from $8.5 million last fiscal year, primarily attributable to a $0.9 million
reduction in operating expenses.

At March 31, 2014, the Company had cash and cash equivalents of $1.2 million
and working capital of $6.9 million, as compared to cash and cash equivalents
of $0.8 million and working capital of $7.0 million at March 31, 2013.
Pursuant to a letter agreement dated June 21, 2013 with Lewis C. Pell, the
Company's Chairman, Mr. Pell has agreed to provide financial assistance to the
Company in the amount of up to $5.0 million, if necessary to support the
operations, for a period ending on the earlier of (i) July 1, 2014 or (ii) the
Company raising debt or equity capital in the amount of $5.0 million or more.
As of March 31, 2014, the Company had not utilized the financial assistance
agreement.

Conference Call

Howard Zauberman, President and Chief Executive Officer, and Keith Darragh,
VP, Finance, will host a conference call to discuss the fourth quarter and
full year fiscal 2014 financial results at 8:30 a.m. EDT, on Tuesday, April
29, 2014.

Conference dial-in:     (877) 303-1595
International dial-in: (970) 315-0449
Conference ID:          32940309
Webcast:                http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. EDT
on Tuesday, April 29, 2014, through 11:59 p.m. EDT on Tuesday, May 6, 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.

Use of Non-GAAP Financial Measures

Non-GAAP gross profit, non-GAAP operating loss, non-GAAP net loss, and
non-GAAP net loss per share excludes non-cash or non-operational activities.
As a result, the Company uses these measures to assess and analyze its
operational results and trends and to make financial and operations decisions.
The Company also believes these non-GAAP financial measures are useful to
investors, because they provide greater transparency regarding the Company's
operating performance. These non-GAAP financial measures should not be
considered measures of the Company's liquidity. In addition, these non-GAAP
financial measures are unlikely to be comparable with non-GAAP information
provided by other companies. Reconciliations between non-GAAP financial
measures and GAAP financial measures for gross profit, operating loss, net
loss, and net loss per share are included in a table accompanying this press
release after the unaudited condensed consolidated financial statements.

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 registered trademarks Vision Sciences^®,
EndoSheath^®, EndoWipe^®, Slide-On^®, 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.

                          (Financial tables follow)



Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
                                                               
                              Three Months Ended      Fiscal Year Ended
                              March 31,               March 31,
                              2014        2013        2014        2013
                              (unaudited) (unaudited) (unaudited) (unaudited)
Net sales                     $4,981    $4,200    $17,108   $15,287
Cost of sales                 4,136      2,972      12,610     10,945
Gross profit                  845        1,228      4,498      4,342
                                                               
Selling, general, and          2,437      2,794      9,841      10,999
administrative expenses
Research and development       702        459        2,101      1,820
expenses
Operating loss                 (2,294)    (2,025)    (7,444)    (8,477)
                                                               
Interest income               --        --        1          4
Interest expense              (55)       (36)       (192)      (503)
Other, net                     (8)        (6)        (24)       (53)
Debt cost expense              (37)       --        (43)       (272)
Loss on extinguishment of debt --        --        --        (1,244)
                              (100)      (42)       (258)      (2,068)
Loss before provision for      (2,394)    (2,067)    (7,702)    (10,545)
income taxes
Income tax provision           1          2          12         12
Net loss                       $(2,395)  $(2,069)  $(7,714)  $(10,557)
                                                               
Net loss per common share -    $(0.05)   $(0.04)   $(0.17)   $(0.23)
basic and diluted
                                                               
Weighted average number of
shares outstanding - basic and 46,204     46,076     46,155     45,945
diluted



Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
                                                                  
                                                       March 31,
                                                       2014        2013
ASSETS                                                  (unaudited) (audited)
Current assets:                                                    
Cash and cash equivalents                               $1,237    $788
Accounts receivable, net                                3,818      3,624
Inventories, net                                        4,194      5,158
Prepaid expenses and other current assets               455        276
Total current assets                                    9,704      9,846
                                                                  
Property and equipment, net                             1,062      1,454
Other assets, net                                       67         77
Total assets                                            $10,833   $11,377
                                                                  
LIABILITIES AND STOCKHOLDERS' DEFICIT                              
Current liabilities:                                               
Accounts payable                                        $1,217    $1,300
Accrued expenses                                        918        728
Accrued compensation                                    474        656
Deferred revenue                                        210        130
Capital lease obligations                               22         75
Total current liabilities                               2,841      2,889
                                                                  
Convertible debt—related party, net of discount of      22,414     17,000
$1,086 and $0
Deferred revenue, net of current portion                93         62
Capital lease obligations, net of current portion       --        22
Total liabilities                                       25,348     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 46,249 shares, respectively    476        463
Additional paid-in capital                              102,629    100,819
Treasury stock at cost, 59 shares and 34 shares of      (78)       (50)
common stock, respectively
Accumulated deficit                                     (117,542)  (109,828)
Total stockholders' deficit                             (14,515)   (8,596)
Total liabilities and stockholders' deficit             $10,833   $11,377



Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except per share amounts)
                                                               
                                                  Fiscal Year Ended March 31,
                                                  2014          2013
Cash flows from operating activities:              (unaudited)   (audited)
Net loss                                           $(7,714)    $(10,557)
Adjustments to reconcile net loss to net cash used              
in operating activities:
Depreciation and amortization                      695          795
Stock-based compensation expense                   694          1,469
Debt cost expense                                  43           272
Provision for bad debt expenses                    21           5
Loss on disposal of fixed assets                   5            58
Loss on extinguishment of debt                     --          1,244
Changes in assets and liabilities:                              
Accounts receivable                                (215)        (1,497)
Inventories                                        689          (1,372)
Prepaid expenses and other current assets          (179)        (79)
Other assets                                       10           --
Accounts payable                                   (83)         713
Accrued expenses                                   190          (216)
Accrued compensation                               (182)        (1)
Deferred revenue                                   111          (86)
Advances from customers                            --          (394)
Net cash used in operating activities              (5,915)      (9,646)
Cash flows from investing activities:                           
Purchases of property and equipment                (53)         (95)
Proceeds from disposal of fixed assets             3            5
Net cash used in investing activities              (50)         (90)
Cash flows from financing activities:                           
Proceeds from issuance of convertible debt—related 6,500        2,000
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                         (58)         (91)
Net cash provided by financing activities          6,414        7,850
Net increase (decrease) in cash and cash           449          (1,886)
equivalents
Cash and cash equivalents at beginning of period   $788        $2,674
Cash and cash equivalents at end of period         $1,237      $788



Vision-Sciences, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliation
(In thousands, except per share amounts)
                                                                    
              Three Months Ended                Fiscal Year Ended       
              March 31,                         March 31,               
Non-GAAP
Financial      2014        2013        Difference 2014        2013        Difference
Measures and
Reconciliation
              (unaudited) (unaudited)           (unaudited) (audited)   
GAAP gross     $845      $1,228    $(383)   $4,498    $4,342    $156
profit
Add: inventory 537        --        537       537        --        537
charge
Non-GAAP gross $1,382    $1,228    $154     $5,035    $4,342    $693
profit
Non-GAAP gross 27.7%       29.2%       -1.5%      29.4%       28.4%       1.0%
margin

                                                                    
              Three Months Ended                Fiscal Year Ended       
              March 31,                         March 31,               
Non-GAAP
Financial      2014        2013        Difference 2014        2013        Difference
Measures and
Reconciliation
              (unaudited) (unaudited)           (unaudited) (audited)   
GAAP operating $(2,294)  $(2,025)  $(269)   $(7,444)  $(8,477)  $1,033
loss
Add: inventory 537        --        537       537        --        537
charge
Non-GAAP       $(1,757)  $(2,025)  $268     $(6,907)  $(8,477)  $1,570
operating loss

                                                                    
              Three Months Ended                Fiscal Year Ended       
              March 31,                         March 31,               
Non-GAAP
Financial      2014        2013        Difference 2014        2013        Difference
Measures and
Reconciliation
              (unaudited) (unaudited)           (unaudited) (audited)   
GAAP net loss  $(2,395)  $(2,069)  $(326)   $(7,714)  $(10,557) $2,843
Add: inventory 537        --        537       537        --        537
charge
Non-GAAP net   $(1,858)  $(2,069)  $211     $(7,177)  $(10,557) $3,380
loss
                                                                    
Non-GAAP net
loss per
common share - $(0.04)   $(0.04)             $(0.16)   $(0.23)   
basic and
diluted
                                                                    
Weighted
average number
of shares      46,204     46,076               46,155     45,945     
outstanding -
basic and
diluted

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

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