NOTE 1 — The Company

Organization

Oculus Innovative Sciences, Inc. (the “Company”) was incorporated under the laws of the State of California in April 1999 and was reincorporated under the laws of the State of Delaware in December 2006. The Company’s principal office is located in Petaluma, California. The Company is a global healthcare company that designs, produces, and markets prescription and non-prescription products in over 20 countries. It is pioneering innovative products for the dermatology, surgical, advanced wound and skin care, and animal healthcare markets. The Company’s primary focus is on its proprietary technology platform called Microcyn® Technology. This technology is based on electrically charged oxychlorine small molecules designed to target a wide range of organisms that cause disease (pathogens). Several Microcyn® Technology tissue care products are designed to treat infections and enhance healing while reducing the need for antibiotics.

Reverse Stock Split

On January 23, 2013, the Company’s board of directors adopted a resolution recommending the submission of a proposal to the Company’s stockholders to amend the Company’s Restated Certificate of Incorporation, as amended to reflect a reverse stock split at a whole number ratio in the range of 1:3 to 1:9, such ratio to be determined in the sole discretion of the board of directors, and to proportionally decrease the total number of shares that the Company is authorized to issue by a factor of 1:3 to 1:9, such ratio to be determined in the sole discretion of board of directors, in conjunction with the proposed reverse stock split, and calling a special meeting of the Company’s stockholders for consideration thereof. The reverse stock split ratio was later ratified by the Company’s board of directors to be in the range of 1:3 to 1:7 at a meeting of the board of directors held on March 22, 2013.

On March 22, 2013, at a special meeting of the stockholders of the Company held on March 22, 2013, a majority of the Company’s stockholders entitled to vote thereon voted to approve the board’s proposal to decrease the number of issued and outstanding shares of common stock of the Company by effecting a reverse stock split at a whole number ratio in the range of 1:3 to 1:7, such ratio to be determined in the sole discretion of the board of directors, and to proportionally decrease the total number of shares that the Company is authorized to issue by a factor of 1:3 to 1:7, such ratio to be determined in the sole discretion of the board of directors, in conjunction with the proposed reverse stock split.

At a special meeting of the board of directors of the Company, the Company’s board of directors determined, in their judgment, that it was in the best interests of the Company and its stockholders to decrease the number of issued and outstanding shares of common stock of the Company by effecting a reverse stock split of the Company’s outstanding common stock, $0.0001 par value per share, in the ratio of 1:7 of the common stock and to proportionally decrease the total number of shares that the Company is authorized to issue by the ratio of 1:7 of the issued common stock in conjunction with the proposed reverse stock split, and adopted a resolution to effectuate the reverse stock split with a ratio of 1:7 of the issued common stock of the Company.

On March 22, 2013, pursuant to board and stockholder approval, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation, as amended with the State of Delaware to effectuate the reverse stock split in a ratio of 1:7 of the issued common stock of the Company, with a legal effective date of March 29, 2013 and a marketplace effective date of April 1, 2013. The total number of authorized common stock which the Company shall have the authority to issue as set forth in the Company’s Restated Certificate of Incorporation, as amended was also proportionally decreased in conjunction with the reverse stock split.

Effective April 1, 2013, the Company effected a reverse stock split of its common stock, par value $0.0001 per share. Every 7 shares of common stock were reclassified and combined into one share of common stock. No fractional shares were issued as a result of the reverse stock split. Instead, each resulting fractional share of common stock was rounded up to one whole share. The reverse stock split reduced the number of shares of common stock outstanding from 46,080,513 to 6,583,150. The total number of authorized shares of common stock was also proportionally decreased by a ratio of 1:7 and the par value per share of the Company’s common stock continued to be $0.0001.

All common shares and per share amounts contained in the consolidated financial statements have been retroactively adjusted to reflect a 1 for 7 reverse stock split, effective April 1, 2013.