ORANGEBURG, N.Y., Aug. 12, 2013 (GLOBE NEWSWIRE) -- Vision-Sciences, Inc. (Nasdaq:VSCI) today announced financial results for the first quarter of fiscal 2014, ended June 30, 2013. Highlights include:
- Net sales increased 8% to $3.7 million, compared with $3.4 million in the first quarter of fiscal 2013;
- Gross profit improved by 18% to $1.1 million, compared with $0.9 million in the first quarter of fiscal 2013;
- Net loss improved by 8% to $2.4 million, or ($0.05) per basic and diluted share, compared to $2.6 million, or ($0.06) per basic and diluted share, in the first quarter of fiscal 2013;
- Launched the 7000 Series Vision System® video processor platform, worldwide; and,
- Appointed Howard I. Zauberman as Interim Chief Executive Officer effective May 13, 2013.
"Since joining Vision Sciences in mid-May, I have been conducting a comprehensive strategic assessment of our business," said Howard Zauberman, Interim Chief Executive Officer. "Thus far, I have realigned the Company's direct sales efforts to focus on those markets and customers where we have primarily had success, strong brand recognition and product loyalty. In particular this has been in the ENT and TNE markets in the office setting, and critical care/pulmonology in the ICU setting."
Mr. Zauberman continued, "With respect to our partnership with Stryker Urology, we are pleased with their ongoing progress. With top-line growth and a reduction of our net loss, this quarter was the first step towards strengthening our foundation and building a long-term plan that rewards shareholders. We will do this by fostering a culture of innovation to fully realize the commercial potential of this Company."
First Quarter Financial Results
Net sales in the first quarter of fiscal 2014 were $3.7 million, an increase of $0.3 million, or 8%, over the first quarter of fiscal 2013.
- Medical segment sales increased 21%, primarily due to a 76% increase in sales to the urology market as compared to the prior year quarter. The increase was primarily attributable to shipments of our flexible ureteroscope to Stryker; and,
- Industrial segment sales decreased 31%, primarily due to an atypically large order that shipped in the first quarter last year; there was no comparable order in the first quarter of fiscal 2014.
Net sales detail (in thousands, except for percentages) for the three-month periods were as follows:
| Three Months Ended | |||
| June 30, | |||
| Market/Category | 2013 | 2012 | Change |
| Urology | $ 1,862 | $ 1,056 | 76% |
| ENT /TNE | 542 | 608 | -11% |
| Pulmonology | 87 | 125 | -30% |
| Spine | -- | 259 | -100% |
| Repairs, peripherals, and accessories | 538 | 448 | 20% |
| Total medical sales | 3,029 | 2,496 | 21% |
| Borescopes | 337 | 631 | -47% |
| Repairs | 286 | 269 | 6% |
| Total industrial sales | 623 | 900 | -31% |
| Net sales | $ 3,652 | $ 3,396 | 8% |
| Product – medical sales | |||
| Endoscopes | $ 1,561 | $ 1,493 | 5% |
| EndoSheath technology | 930 | 555 | 68% |
| Repairs, peripherals, and accessories | 538 | 448 | 20% |
| Total medical sales | $ 3,029 | $ 2,496 | 21% |
Gross profit increased by $0.2 million, or 18%, to $1.1 million in the first quarter of fiscal 2014. Gross margin for the 2014 quarter increased 300 basis points to 30% from 27% in the first quarter of fiscal 2013 due to favorable manufacturing absorption driven by higher production volume in the 2014 fiscal period.
Selling, general and administrative ("SG&A") expenses increased by $0.3 million to $3.1 million in the first quarter of fiscal 2014. The 12% increase was primarily due to higher stock-based compensation and recognition of a one-time severance charge related to the departure of the Company's former chief executive officer. As a percentage of net sales, SG&A was 84% for the first quarter of fiscal 2014, versus 80% for the same period last year. Excluding the one-time severance charge, SG&A, as a percentage of sales, would have been 78%.
Research and development ("R&D") expenses decreased by $0.1 million, or 14%, in the first quarter of fiscal 2014. As a percentage of net sales, R&D decreased to 11% versus 14% for the same period last year.
The Company's operating loss increased by $0.1 million to $2.4 million during the first quarter of fiscal 2014 as compared to $2.3 million during the first quarter of fiscal 2013 primarily due to higher stock-based compensation and one-time severance charge totaling $0.4 million.
At June 30, 2013, the Company had cash and cash equivalents of $1.3 million and working capital of $7.1 million, as compared to cash and cash equivalents of $0.8 million and working capital of $7.0 million at March 31, 2013. We also had $1.0 million of capital available under a $20.0 million convertible debt with Mr. Lewis C. Pell, the Company's Chairman. The Company expects that our cash and cash equivalents at June 30, 2013, together with the $1.0 million of capital available under the convertible debt and the $5.0 million of capital to be made available to us under the letter agreement with Mr. Pell dated June 21, 2013, should be sufficient to fund our operations though at least July 1, 2014.
Conference Call
As previously disclosed, Howard Zauberman, Interim Chief Executive Officer, and John Vittoria, Interim VP Finance, Principal Accounting Officer and Principal Financial Officer, will host a conference call to discuss the results as follows:
| Date: | Tuesday, August 13, 2013 |
| Time: | 8:30 a.m. ET |
| Conference dial-in: | (877) 303-1595 U.S. |
| (970) 315-0449 International | |
| Conference ID: | 27485288 |
| Webcast: | http://ir.visionsciences.com/ |
An audio replay of the conference call will be available from 11:30 a.m. EDT on Tuesday, August 13, 2013, through 11:30 p.m. EDT on Monday, August 19, 2013, 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®, Slide-On®, EndoSheath®, EndoWipe® and The Vision System® are registered trademarks of Vision-Sciences, Inc.
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.
| Vision-Sciences, Inc. and Subsidiaries | ||
| Condensed Consolidated Statements of Operations | ||
| (In thousands, except per share amounts) | ||
| (Unaudited) | ||
| Three Months Ended | ||
| June 30, | ||
| 2013 | 2012 | |
| Net sales | $ 3,652 | $ 3,396 |
| Cost of sales | 2,572 | 2,483 |
| Gross profit | 1,080 | 913 |
| Selling, general, and administrative expenses | 3,050 | 2,730 |
| Research and development expenses | 419 | 487 |
| Operating loss | (2,389) | (2,304) |
| Interest expense | (41) | (194) |
| Debt cost expense | -- | (144) |
| Other, net | (4) | (4) |
| Loss before provision for income taxes | (2,434) | (2,646) |
| Income tax provision | -- | 1 |
| Net loss | $ (2,434) | $ (2,647) |
| Net loss per common share - basic and diluted | $ (0.05) | $ (0.06) |
| Weighted average shares used in computing net loss per common share - basic and diluted | 46,109 | 45,678 |
| Vision-Sciences, Inc. and Subsidiaries | ||
| Condensed Consolidated Balance Sheets | ||
| (In thousands, except per share amounts) | ||
| June 30, | March 31, | |
| 2013 | 2013 | |
| ASSETS | (unaudited) | (audited) |
| Current assets: | ||
| Cash and cash equivalents | $ 1,332 | $ 788 |
| Accounts receivable, less allowances of $89 and $113, respectively | 2,685 | 3,624 |
| Inventories, net | 5,236 | 5,158 |
| Prepaid expenses and other current assets | 361 | 276 |
| Total current assets | 9,614 | 9,846 |
| Machinery and equipment | 3,489 | 3,489 |
| Demo equipment | 1,198 | 1,101 |
| Furniture and fixtures | 225 | 225 |
| Leasehold improvements | 372 | 372 |
| Property and equipment, at cost | 5,284 | 5,182 |
| Less—accumulated depreciation and amortization | 3,905 | 3,733 |
| Total property and equipment, net | 1,379 | 1,454 |
| Other assets, net | 77 | 77 |
| Total assets | $ 11,070 | $ 11,377 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
| Current liabilities: | ||
| Accounts payable | $ 820 | $ 1,300 |
| Accrued expenses | 595 | 728 |
| Accrued compensation | 866 | 656 |
| Deferred revenue | 140 | 130 |
| Capital lease obligations | 69 | 75 |
| Total current liabilities | 2,490 | 2,889 |
| Convertible debt - related party | 19,000 | 17,000 |
| Deferred revenue, net of current portion | 64 | 62 |
| Capital lease obligations, net of current portion | 9 | 22 |
| Total liabilities | 21,563 | 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 and outstanding—46,249 shares and 46,249 shares, respectively | 463 | 463 |
| Additional paid-in capital | 101,374 | 100,819 |
| Treasury stock at cost, 49 and 34 shares of common stock, respectively | (68) | (50) |
| Accumulated deficit | (112,262) | (109,828) |
| Total stockholders' deficit | (10,493) | (8,596) |
| Total liabilities and stockholders' deficit | $ 11,070 | $ 11,377 |
| Vision-Sciences, Inc. and Subsidiaries | ||
| Condensed Consolidated Statements of Cash Flows | ||
| (In thousands) | ||
| (Unaudited) | ||
| Three Months Ended | ||
| June 30, | ||
| 2013 | 2012 | |
| Cash flows from operating activities: | ||
| Net loss | $ (2,434) | $ (2,647) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and amortization | 188 | 204 |
| Stock-based compensation expense | 555 | 443 |
| Provision for (recovery of) bad debt expenses | 8 | (9) |
| Debt cost expense | -- | 144 |
| Loss on disposal of fixed assets | 3 | 6 |
| Changes in assets and liabilities: | ||
| Accounts receivable | 931 | (54) |
| Inventories | (191) | (310) |
| Prepaid expenses and other current assets | (85) | (70) |
| Accounts payable | (483) | 241 |
| Accrued expenses | (133) | (110) |
| Accrued compensation | 210 | 143 |
| Deferred revenue | 12 | 27 |
| Advances from customers | -- | (368) |
| Net cash used in operating activities | (1,419) | (2,360) |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | -- | (36) |
| Proceeds from disposal of fixed assets | -- | 6 |
| Net cash used in investing activities | -- | (30) |
| Cash flows from financing activities: | ||
| Proceeds from exercise of stock options | -- | 6 |
| Net proceeds from sale of common stock | -- | 878 |
| Proceeds from issuance of convertible debt – related party | 2,000 | -- |
| Common stock repurchased | (18) | -- |
| Payments of capital leases | (19) | (24) |
| Net cash provided by financing activities | 1,963 | 860 |
| Net increase (decrease) in cash and cash equivalents | 544 | (1,530) |
| Cash and cash equivalents at beginning of period | $ 788 | $ 2,674 |
| Cash and cash equivalents at end of period | $ 1,332 | $ 1,144 |
| Supplemental disclosure of cash flow information: | ||
| Cash paid during the period for: | ||
| Interest | $ -- | $ 157 |
| Income taxes | $ -- | $ 7 |
| Non-cash financing activities: | ||
| Net transfers of inventory to fixed assets for use as demo equipment | $ 116 | $ 57 |