Oculus Innovative Sciences Reports Revenues of $4.1 Million for Second Quarter of Fiscal 2014, Meeting Guidance of Greater than $3.6 Million EBITDAS for second quarter was ($882,000), including $994

Oculus Innovative Sciences Reports Revenues

of $4.1 Million for Second Quarter of Fiscal 2014, Meeting Guidance of Greater than $3.6 Million

EBITDAS for second quarter was ($882,000),

including $994,000 of Ruthigen-related expenses in the quarter, resulting in a positive EBITDAS of $112,000 on a pro forma basis,

excluding Ruthigen expenses

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

PETALUMA, Calif.--(November 19, 2013)--Oculus

Innovative Sciences, Inc. (Nasdaq: OCLS) today announced financial results for the second quarter of fiscal year 2014, ended September

30, 2013. Total revenues were $4.1 million for the second quarter, down $437,000 as compared to $4.5 million for the same period

The decline in revenue growth, compared to the same quarter

last year, was primarily the result of two factors: 1) the top line impact of the company's August 2012 transaction

with its new Latin America partner, More Pharma Corporation, and 2) the termination of partnerships in the United States

with Union Springs and Onset Pharmaceuticals last year.

quarter and were especially pleased with our EBITDAS results," said Jim Schutz, Oculus CEO. "The

IPO process for our drug subsidiary, Ruthigen, continues and we have commenced our planning for the future,

post-Ruthigen. Our EBITDAS results for the quarter highlight that on a pro forma basis, after Ruthigen

separates, Oculus would immediately be EBITDAS positive. We are excited about the Ruthigen IPO process and life

Product revenue in the United States for the three months ended

September 30, 2013, was equal to the same period in the prior year, with higher sales in the dermatology, wound care and animal

health care segments, offset by declines related to the discontinuation of Oculus' partnerships with Union Springs and Onset

Pharmaceuticals. Oculus recorded revenue in the amounts of $1.3 million and $1.2 million for the three months ended September 30,

2013, and 2012, respectively, from Oculus' partner Innovacyn, with a 5% increase over the same quarter last year.

Revenue in Mexico for the three months ended September 30, 2013,

decreased $510,000, or 27%, as compared to the same period in the prior year as a result of the More Pharma transaction closed

in August 2012. The impact of the transaction resulted in increased sales in the three months ended September 30, 2012, to existing

customers prior to the close of the transaction, as well as sales to More Pharma. Similar sales did not occur in the three months

ended September 30, 2013. Further, the higher unit volume growth of 21%, and the recognition of $378,000 related to the amortization

of upfront fees paid by More Pharma was more than offset by a 52% reduction in the average overall sales price per unit. Finally,

due to the transfer of the sales function in Mexico to More Pharma, related operating expenses in Mexico were $678,000 lower than

reported for the same period in the prior year.

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

months ended September 30, 2013, increased $99,000, or 20%, as compared to the same period in the prior year, with increases in

sales in Europe, Middle East and Singapore, partially offset by decreases in sales in China and India.

Oculus reported gross profit related to the company's

products of $2.7 million, or 69% of product revenues, during the three months ended September 30, 2013, compared to a gross profit

of $3.2 million, or 74% 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 September 30, 2013, and 2012. Gross margins were down due to the

decline of margins in Mexico related to the More Pharma transaction, partially offset by higher gross margins in the United States

Total operating expenses decreased by $41,000, or 1%, to $4.0

million for the three months ended September 30, 2013 as compared to the same period in the prior year. Operating expenses minus

non-cash expenses during the second quarter of fiscal 2014 were $3.7 million, up $178,000 when compared with $3.5 million for the

same period in the prior year. The increase in operating expenses minus non-cash expenses was due to higher expenses of $994,000

related to the company's subsidiary, Ruthigen, partially offset by lower selling expenses in Mexico of $678,000.

Research and development expenses were $883,000 for the three

months ended September 30, 2013, up $370,000, due to higher preclinical expenses of $495,000 incurred by Ruthigen. Selling, general

and administrative expense decreased $411,000, or 12%, to $3.1 million during the three months ended September 30, 2013. The decrease

was primarily due to lower selling expenses in Mexico, partially offset by higher expenses related to Ruthigen.

Loss from operations minus non-cash expenses for the three months

ended September 30, 2013, was $882,000, including $994,000 of expenses related to Ruthigen, compared to $213,000 for the same period

Net loss for the three months ended September 30, 2013, was

$1.4 million, a decrease of $120,000, as compared to a net loss of $1.5 million for the same period in the prior year.

Stock-based compensation charges were $319,000 and $541,000 for the quarters ended September 30, 2013, and 2012, respectively.

As of September 30, 2013, Oculus had unrestricted cash and cash

equivalents of $3.2 million, compared with $7.9 million as of March 31, 2013.

Results for Six Months Ending September 30, 2013

Total revenues were $7.5 million for the six months ended September

30, 2013, as compared to $8.6 million for the same period in the prior year. Product revenues, including product licensing fees

received, for the six months ended September 30, 2013, decreased $1.1 million, or 13%, to $7.0 million, as compared to $8.1 million

for the same period in the prior year, with decreases in sales in the United States, Mexico, Middle East and Singapore, partially

offset by increases in Europe, China, India and Singapore.

Oculus reported gross profit related to sales of Microcyn -based

products of $4.8 million, or 68% of product revenues, for the six months ended September 30, 2013, compared to a gross profit of

$6.0 million, or 74% of product revenues, for the same period in the prior year. Total operating expenses minus non-cash expenses

increased $184,000, for the six months compared to the same period in the prior year. Operating loss minus non-cash expenses (EBITDAS)

for the six months ended September 30, 2013, was $1.6 million, including $1.5 million of Ruthigen expenses.

Oculus management will hold a conference call today to discuss

second 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 75772011. 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 27 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 "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, 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, 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 the year ended March 31, 2013. The Company disclaims any obligation to update these forward-looking statements,

except as required by law.