Selling, general and administrative ("SG&A") expenses decreased 13% to $2.3 million in the third quarter of fiscal 2013, largely driven by lower stock-based compensation expense and lower vacation pay expense. SG&A expenses decreased to 58% of net sales for the third quarter of fiscal 2013 compared to 62% of net sales reported during the same period last year.

Research and development ("R&D") expenses decreased 52% to $0.3 million in the third quarter of fiscal 2013. The decrease was primarily attributable to lower product development costs associated with the Company's next generation digital processing unit and a reduction in the amount allocated from manufacturing to support R&D efforts. R&D expenses decreased to 9% of net sales compared to 17% of net sales during the same period last year.

The Company's operating loss in the third quarter of fiscal 2013 was $1.5 million, a decrease of $0.5 million, or 25%, compared to the third quarter of fiscal 2012. Lower operating expenses of $0.7 million contributed to the improvement in operating loss during the period. 

At December 31, 2012, the Company had cash and cash equivalents of $1.3 million and working capital of $6.6 million, compared to cash and cash equivalents of $2.7 million and working capital of $6.0 million at March 31, 2012. The Company also has $5.0 million of capital available under a $20.0 million convertible note with Lewis C. Pell, the Company's Chairman.

Conference Call

Cynthia Ansari, President and Chief Executive Officer, and Keith Darragh, VP, Finance and Principal Financial and Accounting Officer, will host a conference call to discuss the third quarter fiscal 2013 financial results at 8:30 a.m. ET on Tuesday, January 29, 2013.
Conference dial-in:  (877) 303-1595
International dial-in:  (970) 315-0449
Conference ID:  91828937
Webcast:  http://ir.visionsciences.com/

An audio replay of the conference call will be available from 11:30 a.m. ET on Tuesday, January 29, 2013, through 11:30 p.m. ET on Tuesday, February 5, 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 .

Use of Non-GAAP Financial Measures

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 net loss and net loss per share are included in a table accompanying this press release after the unaudited condensed consolidated financial statements.

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