Oculus Innovative Sciences Reports Revenues of $3.4 Million and Net Loss of $70,000 for First Quarter of Fiscal 2015 Net loss of $70,000, reduced $1.6 million from same period last year Oculus owns

Oculus Innovative Sciences Reports Revenues

of $3.4 Million and Net Loss of $70,000 for First Quarter of Fiscal 2015

Conference Call Begins at 4:30 p.m.

PETALUMA, Calif.--(August 7, 2014)--Oculus

Innovative Sciences, Inc. (NASDAQ: OCLS) today announced financial results for the first quarter of fiscal year 2015, ended June

30, 2014. Total revenue was $3.4 million for the first quarter, up 1%, as compared to the same period in the prior year. Total

product revenue was up 1%, with increases in Europe, Mexico, the Middle East, India and Singapore, offset by decreases in the United

"We are disappointed with a mere one percent increase in revenues

over the previous year,"

said Jim Schutz, Oculus' CEO. "To accelerate our growth

this year and beyond, the team is preparing to launch five new products in the United States and an additional four new

products in Mexico, Europe and the rest of the world. In addition, we are in active discussions with multiple animal

healthcare companies that are interested in taking our best-in-class Microcyn-based animal healthcare products forward."

Results for the Three Months Ended June 30, 2014

Revenue in Mexico for the three months ended June 30, 2014 increased

$46,000, or 3%, when compared to the same period in the prior year, with a 9% increase in units sold. Additionally, for the three

months ended June 30, 2014 and 2013, $375,000 was recognized in each quarter related to the amortization of upfront license fees

paid by More Pharma, Oculus' Latin American sales partner.

Revenue in Europe and the Rest of World' for the three

months ended June 30, 2014, increased $265,000, or 65%, as compared to the same period in the prior year, with increases in Europe,

the Middle East and Singapore, partially offset by slight declines in China and India. The increases are largely the result of

multiple new advanced wound care products, including Oculus' first European gel product, as well as the addition of new European

Product revenue in the United States for the three months ended

June 30, 2014, was down 22% from the same period last year, with lower sales in animal healthcare and dermatology, partially offset

by increased sales of advanced wound care products used in hospitals. Oculus recorded revenue in the amounts of $528,000 and $741,000,

for the three months ended June 30, 2014 and 2013, respectively, from Oculus' animal healthcare partner, Innovacyn. The decrease

was caused by a reduction in average selling price and unit volume, the result of increased competition and the partial transition

to a new supplier. The sales in the dermatology market were lower than the same period last year due to the discontinuance of a

distributor, while sales to Oculus' primary distributor were up from the same period last year.

Oculus reported gross profit related to product sales of $1.8 million,

or 58% of product revenues, during the three months ended June 30, 2014, as compared to a gross profit of $2.1 million, or 68%

of product revenues, for the same period in the prior year. Gross margins were down due to the decline of margins in the United

States related to decreases in U.S. sales related to animal healthcare and human dermatology.

Total operating expenses increased by $94,000, or 3%, to $3.4 million

for the three months ended June 30, 2014, as compared to the same period in the prior year. Operating expenses minus non-cash expenses

during the first quarter of fiscal 2015 were $3.0 million, up $46,000, when compared to the same period in the prior year. The

increase in operating expenses, minus non-cash expenses, was due to higher sales, marketing and administrative expenses in U.S.,

Mexico and Europe, partially offset by lower expenses related to the company's subsidiary, Ruthigen.

Research and development expenses were $439,000 for the three months

ended June 30, 2014, down $68,000 from the same period last year, due to lower expenses of $175,000 incurred by Ruthigen. Selling,

general and administrative expense of $3.0 million for the three months ended June 30, 2014 increased $162,000 over the same period

last year, or 6%, largely related to an increase in sales, marketing and administrative expenses in the U.S, Mexico and Europe.

Loss from operations minus non-cash expenses of $1.0 million for

the three months ended June 30, 2014, increased by $286,000, as compared to the same period in the prior year, which was mostly

due to the aforementioned higher operating expenses

Net loss for the three months ended June 30, 2014, was $70,000,

a reduction of $1.6 million, as compared to the net loss of $1.7 million for the same period in the prior year. The decrease in

net loss from the prior year is due to the mark-to-market adjustment of derivative liabilities related to outstanding common stock

purchase warrants. Stock-based compensation charges were $451,000 and $347,000 for the quarters ended June 30, 2014, and 2013,

As of June 30, 2014, Oculus had unrestricted cash and cash equivalents

of $5.0 million, as compared with $5.5 million at March 31, 2014.

Oculus' management will hold a conference call today to discuss

first quarter fiscal 2015 results and to answer questions, beginning at 4:30 p.m. EDT. 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 69819047. 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 markets prescription and non-prescription products in 33 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 of patient 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 at www.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 future financial performance

of Oculus Innovative Sciences, Inc. and its subsidiaries (the "Company"). These forward-looking statements are identified

by the use of words such as "accelerate," "preparing," and "launch," 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, including such risks that regulatory 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 by the Company's patents and patent

applications may be challenged, invalidated or circumvented by its competitors, the available market for the Company's products

will not be as large as expected, the Company's products 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 its future 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, 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 the year ended March 31, 2014. The Company disclaims any obligation to update these forward-looking statements, except

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.

Media and Investor Contact:

Oculus Innovative Sciences, Inc.

VP of Public and Investor Relations

OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE

(In thousands, except per share amounts)

OCULUS INNOVATIVE SCIENCES, INC. AND SUBSIDIARIES

Reconciliation of GAAP Measures to Non-GAAP