Vision-Sciences Reports First Quarter Fiscal 2015 Results

Vision-Sciences Reports First Quarter Fiscal 2015 Results

ORANGEBURG, N.Y., Aug. 4, 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 first quarter of fiscal 2015, ended June
30, 2014.

First Quarter Fiscal Year 2015 Highlights

  *Net sales increased 3% to $3.8 million as compared with $3.7 million in
    first quarter of fiscal 2014;
  *Operating loss improved 21% to $(1.9) million;
  *Net loss improved by 19% to $(2.0) million, or ($0.04) per basic and
    diluted share; and
  *Vision-Sciences chose not to renew an agreement with Stryker Corporation
    for the marketing, distribution and sale of cystoscopes and their related
    EndoSheath disposables, peripherals and accessories during the quarter.

"We are pleased with our financial results for the first quarter of fiscal
year 2015. We had excellent growth in our pulmonology line during the quarter,
including our launch of the new BRS-5100 video bronchoscope. Regarding our
cystoscopy line, our decision to bring the sales responsibility in-house is
consistent with the focus of our domestic team on the outpatient environment,
doctor's offices or other ambulatory settings, where over 85% of these
procedures are routinely performed. We feel confident that we are now better
positioned to take advantage of this opportunity. To date, the transition is
going well, and we've seen a strong conversion of former Stryker customers who
are now buying EndoSheaths directly from Vision Sciences.We expect this to
continue to increase through our salesforce's efforts, which should further
enable us to move toward accelerated sales growth and profitability for this
product line," commented Howard Zauberman, President and Chief Executive
Officer of Vision-Sciences, Inc.

Results of Operations

First Quarter Fiscal Year 2015 versus First Quarter Fiscal Year 2014

Net sales in the first quarter of fiscal 2015 increased by 3% to $3.8 million
as compared with $3.7 million in the same period a year ago, attributable to
higher sales in the critical care/pulmonology market of our endoscopes and
EndoSheath technology.Sequentially, net sales in the first quarter fell by
25% from our traditionally strong fourth quarter of fiscal 2014.

Net sales detail (in thousands, except for percentages) for the first quarter
of fiscal years 2015 and 2014 were as follows:

                                                           
                                    Three Months Ended      
                                     June 30,
Market/Category                      2014        2013        %
                                    (unaudited) (unaudited) 
Urology                              $1,773      $1,862      -5%
ENT                                  251         339         -26%
TNE                                  181         203         -11%
Pulmonology                          365         87          320%
Repairs, peripherals and accessories 490         538         -9%
Total net medical sales              $3,060      $3,029      1%
Total net industrial sales           692         623         11%
Net Sales                            $3,752      $3,652      3%
                                                          

Gross profit increased 6% to $1.1 million for the first quarter of fiscal
2015. Gross profit as a percent of net sales increased to 30.6% for the first
quarter of fiscal 2015, an increase from 29.6% in the prior-year period. The
increases in gross profit and gross profit as a percent of net sales are
attributable to a favorable product mix and to our cost-savings measures.

Selling, general and administrative ("SG&A") expenses were $2.5 million in the
first quarter of fiscal 2015, a decrease of $0.6 million, or 18%, compared to
the prior-year period. The decline was attributable to the prior-year period
including higher stock-based compensation expense and the recognition of a
one-time severance charge of $0.2 million related to the resignation of our
former chief executive officer. In addition, lower compensation expenses
resulted due to vacancies that we intend to fill before the end of this year.
As a percentage of net sales, SG&A decreased to 66% in the first quarter of
fiscal 2015 from 84% reported in the same period last fiscal year.

Research and development ("R&D") expenses were $0.5 million in the first
quarter of fiscal 2015, an increase of $0.1 million, or 28%, 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 2015 from 11% reported during the same period last
fiscal year.

The Company's operating loss of $(1.9) million in the first quarter of fiscal
2015 improved by $0.5 million or 21% compared to the prior-year period,
primarily due to lower SG&A expenses.

The Company's net loss of $(2.0) million and net loss per basic and diluted
share of $(0.04) both improved from the prior-year period net loss of $(2.4)
million and net loss per basic and diluted share of $(0.05).

At June 30, 2014, the Company had cash and cash equivalents of $1.3 million
and working capital of $6.2 million, compared to cash and cash equivalents of
$1.2 million and working capital of $6.9 million at March 31, 2014. On June
16, 2014, we issued a convertible promissory note to Lewis C. Pell, our
Chairman that allowed us to borrow up to $5.0 million. The note was issued in
accordance with a letter agreement dated May 29, 2014 from Mr. Pell that
provided for up to $5.0 million of capital to be made available to us, subject
to certain conditions and an expiration date of July 1, 2015. The letter
agreement was then terminated. As of June 30, 2014, we had $1.0 million in
principal outstanding under the note.

Conference Call

Howard Zauberman, President and Chief Executive Officer, and Gary Siegel, Vice
President, Finance, will host a conference call to discuss the first quarter
fiscal 2015 financial results at 8:30 a.m. EDT, on Tuesday, August 5, 2014.

Conference dial-in:    (877) 303-1595
International dial-in: (970) 315-0449
Conference ID:         78074382
Webcast:               http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. EDT
on Tuesday, August 5, 2014, through 11:59 p.m. EDT on Tuesday, September 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.

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)
(Unaudited)
                                                                 
                                                                 
                                                       Three Months Ended
                                                       June 30,
                                                       2014       2013
                                                                 
Net sales                                               $3,752   $3,652
Cost of sales                                           2,603     2,572
Gross profit                                            1,149     1,080
                                                                 
Selling, general, and administrative expenses           2,491     3,050
Research and development expenses                       536       419
Operating loss                                          (1,878)   (2,389)
                                                                 
Interest expense                                        (83)      (41)
Other, net                                              (16)      (4)
Loss before provision for income taxes                  (1,977)   (2,434)
                                                                 
Income tax provision                                    --        --
Net loss                                                $(1,977) $(2,434)
                                                                 
Net loss per common share - basic and diluted           $(0.04)  $(0.05)
                                                                 
Weighted average shares used in computing net loss per  46,260     46,109
common share - basic and diluted


Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
                                                                  
                                                       June 30,    March 31,
                                                       2014        2014
ASSETS                                                  (unaudited) (audited)
Current assets:                                                    
Cash and cash equivalents                               $1,270    $1,237
Accounts receivable, net                                3,316      3,818
Inventories, net                                        4,192      4,194
Prepaid expenses and other current assets               438        455
Total current assets                                    9,216      9,704
                                                                  
Property and equipment, net                             1,095      1,062
Other assets, net                                       67         67
Total assets                                            $10,378   $10,833
                                                                  
LIABILITIES AND STOCKHOLDERS' DEFICIT                              
Current liabilities:                                               
Accounts payable                                        $1,145    $1,217
Accrued expenses                                        921        918
Accrued compensation                                    679        474
Deferred revenue                                        303        210
Capital lease obligations                               9          22
Total current liabilities                               3,057      2,841
                                                                  
Convertible debt—related party                          23,440     22,414
Deferred revenue, net of current portion                203        93
Total liabilities                                       26,700     25,348
                                                                  
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—47,620 476        476
shares and 47,614 shares, respectively
Additional paid-in capital                              102,806    102,629
Treasury stock at cost, 65 and 59 shares of common      (85)       (78)
stock, respectively
Accumulated deficit                                     (119,519)  (117,542)
Total stockholders' deficit                             (16,322)   (14,515)
Total liabilities and stockholders' deficit             $10,378   $10,833


Vision-Sciences, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
                                                        Three Months Ended
                                                        June 30,
                                                        2014       2013
Cash flows from operating activities:                              
Net loss                                                 $(1,977) $(2,434)
Adjustments to reconcile net loss to net cash used in              
operating activities:
Depreciation and amortization                            166       188
Stock-based compensation expense                         154       555
Provision for bad debt expenses                          44        8
Amortization of debt discount                            26        --
Loss on disposal of fixed assets                         6         3
Changes in assets and liabilities:                                 
Accounts receivable                                      458       931
Inventories                                              (178)     (191)
Prepaid expenses and other current assets                17        (85)
Accounts payable                                         (72)      (483)
Accrued expenses                                         3         (133)
Accrued compensation                                     205       210
Deferred revenue                                         203       12
Net cash used in operating activities                    (945)     (1,419)
Cash flows from investing activities:                              
Purchases of property and equipment                      (25)      --
Net cash used in investing activities                    (25)      --
Cash flows from financing activities:                              
Proceeds from issuance of convertible debt - related     1,000     2,000
party
Proceeds from exercise of stock options                  23        --
Common stock repurchased                                 (7)       (18)
Payments of capital leases                               (13)      (19)
Net cash provided by financing activities                1,003     1,963
Net increase in cash and cash equivalents                33        544
Cash and cash equivalents at beginning of period         $1,237   $788
Cash and cash equivalents at end of period               $1,270   $1,332

CONTACT: Gary Siegel
         Vice President, 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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