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Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

As filed with the Securities and Exchange Commission on July 3, 2006

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

OCULUS INNOVATIVE SCIENCES, INC.

(Exact name of registrant as specified in its charter)


California (prior to reincorporation) Delaware (after reincorporation) (State or other jurisdiction of incorporation or organization)		3841 (Primary Standard Industrial Classification Code Number)		68-0423298 (I.R.S. Employer Identification No.)

1129 N. McDowell Blvd.

Petaluma, CA 94954

(707) 782-0792

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Hojabr Alimi

Chief Executive Officer and President

1129 N. McDowell Blvd.

Petaluma, CA 94954

(707) 782-0792

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Sylvia K. Burks, Esq. Gabriella A. Lombardi, Esq. Pillsbury Winthrop Shaw Pittman LLP 2475 Hanover Street Palo Alto, CA 94304-1114 (650) 233-4500 (650) 233-4545 facsimile		Michael W. Hall, Esq. William C. Davisson III, Esq. Latham & Watkins LLP 140 Scott Drive Menlo Park, CA 94025 (650) 328-4600 (650) 463-2600 facsimile

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. o _ _

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o _ _

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o _ _

CALCULATION OF REGISTRATION FEE


(1)		Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)		Includes shares of common stock issuable upon the exercise of the underwriters’ over-allotment option.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting any offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JULY 3, 2006

PRELIMINARY PROSPECTUS

Shares

Oculus Innovative Sciences, Inc.

Common Stock

We are offering shares of our common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $ and $ per share. We have applied for quotation of our common stock on the Nasdaq National Market under the symbol “OCLS.”

Investing in our common stock involves a high degree of risk. Before buying any shares, you should carefully consider the risk factors described in “Risk Factors” beginning on page 7 of this prospectus.


	Per Share	Total

Public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to Oculus Innovative Sciences, Inc.	$	$

The underwriters may also purchase up to an additional shares from us at the public offering price, less the underwriting discount, within 30 days after the date of this prospectus to cover over-allotments.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares on or about , 2006.


A.G. Edwards	Jefferies & Company


First Albany Capital	C.E. Unterberg, Towbin

The date of this prospectus is , 2006

TABLE OF CONTENTS


	Page

Prospectus Summary		1
Risk Factors		7
Information Regarding Forward-Looking Statements		22
Use of Proceeds		24
Dividend Policy		24
Capitalization		25
Dilution		27
Selected Consolidated Financial Data		29
Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Business		44
Management		67
Related Party Transactions		81
Principal Stockholders		82
Description of Capital Stock		84
Shares Eligible for Future Sale		88
Underwriting		90
Legal Matters		92
Experts		92
Change in Independent Registered Public Accounting Firm		93
Where You Can Find Additional Information		93
Index to Consolidated Financial Statements		F-1
EXHIBIT 3.1
EXHIBIT 3.2
EXHIBIT 3.3
EXHIBIT 3.6
EXHIBIT 4.2
EXHIBIT 4.3
EXHIBIT 4.4
EXHIBIT 4.5
EXHIBIT 4.6
EXHIBIT 4.7
EXHIBIT 4,8
EXHIBIT 4.9
EXHIBIT 4.10
EXHIBIT 4.11
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.7
EXHIBIT 10.8
EXHIBIT 10.9
EXHIBIT 10.10
EXHIBIT 10.11
EXHIBIT 10.12
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.16
EXHIBIT 10.17
EXHIBIT 10.18
EXHIBIT 10.19
EXHIBIT 10.20
EXHIBIT 10.21
EXHIBIT 10.22
EXHIBIT 21.1
EXHIBIT 23.1

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making an offer to sell these securities in any jurisdiction where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the respective dates as of which the information is given.

PROSPECTUS SUMMARY

Before you decide whether to invest in our common stock, you should carefully read this entire prospectus, including “Risk Factors” and the consolidated financial statements and related notes. In this prospectus, “we,” “us,” “our” and “Oculus” refer to Oculus Innovative Sciences, Inc. and its consolidated subsidiaries unless the context requires otherwise.

Oculus Innovative Sciences, Inc.

We develop, manufacture and market a family of products intended to prevent and eliminate infection in chronic and acute wounds. Infection is a serious potential complication in both chronic and acute wounds, and controlling infection is a critical step in wound healing. Our platform technology, called Microcyn, is a non-toxic, super-oxidized water-based solution that is designed to eliminate a wide range of pathogens including viruses, fungi, spores and antibiotic resistant strains of bacteria such as Methicillin-resistant Staphylococcus aureus, or MRSA, and Vancomycin-resistant Enterococcus, or VRE. In clinical testing, our products eliminated a wide range of pathogens and were found to be safe, easy to use and complementary with most existing treatment methods in wound care. Our experience and clinical data indicate that the use of Microcyn may shorten hospital stays, lower aggregate patient care costs and, in certain cases, reduce the need for systemic antibiotics. Microcyn also has applications in several other large consumer and professional markets, including hard surface disinfectant, respiratory, dermatology, mold and atmospheric remediation and dental.

We believe Microcyn provides significant advantages over current methods of care in the treatment of a wide range of chronic and acute wounds throughout all stages of treatment. We believe that Microcyn is the first topical product that eliminates a broad range of bacteria and other infectious microbes without causing toxic side effects on, or irritation of, healthy tissue. Unlike most antibiotics, Microcyn does not target specific strains of bacteria, a practice which has been shown to promote the development of resistant bacteria. Because our products are shelf stable and require no special preparation, they can be used in hospitals, clinics, burn centers, extended care facilities and in the home.

Our products have received CE Mark approval for wound cleaning and reduction of infection, three U.S. Food and Drug Administration, or FDA, 510(k) clearances for use of Microcyn as a medical device in wound debridement, lubricating, moistening and dressing and have been granted approval for use as an antiseptic, disinfectant and sterilant in Mexico. Physicians in several countries have conducted studies in which Microcyn eliminated infection in a variety of wounds, including hard-to-treat wounds such as diabetic ulcers and burns, and, in some cases, reduced the need for systemic antibiotics. We expect to complete our pivotal clinical trial for pre-operative skin preparation in the third quarter of 2006 and intend to file a New Drug Application, or NDA, for the use of Microcyn as a pre-operative skin preparation in late 2006. In addition, we intend to seek FDA approval for the use of Microcyn to eliminate infection and accelerate healing in wounds. We have established a protocol, based on comments from the FDA, for a Phase IIb clinical trial to be conducted in patients with diabetic foot ulcers and other open wounds comparing clinical cure rates and the rate of wound healing.

We began selling our Microcyn product in July 2004 in Mexico, where we sell through a dedicated 75-person contract sales force, and in October 2004 in Europe, where we have an eight-person direct sales force and exclusive distribution agreements with four distributors experienced in supplying the wound care market, with an aggregate combined sales force of over 25 full-time equivalent salespeople. We began selling our products in the United States in June 2005 and have established a network of one national and five regional distributors supported by four direct salespeople.

Market Opportunity

According to Medtech Insight, a Division of Windhover Information, there were over 90 million incidents of wounds in the United States during 2004. Of these, over 6 million were chronic wounds, including arterial, diabetic, pressure and venous ulcers. The remaining 84 million incidents were acute wounds, which follow the normal process of healing and commonly include burns, traumatic wounds and approximately 67 million surgical incisions. Key trends in wound care include a large and increasing at-risk population,

primarily of elderly, diabetic and obese people, increased emphasis on controlling the cost of patient care, technological product and treatment innovation, increased focus on improving the patient experience and advancements in combination treatment methods.

When infection is present in a wound, standard treatments include cleansing, debridement and systemic antibiotics. Although there are a number of topical antiseptics and antibiotics currently used to treat acute and chronic wounds, their overall effectiveness is limited. For example:


	•	many antiseptics, including Betadine, hydrogen peroxide and Dakin’s solution, are toxic, can destroy human cells and tissue, may cause allergic reactions and can impede the wound healing process;

	•	silver-based products are expensive and require precise dosage and close monitoring by trained medical staff to minimize the potential for allergic reactions and bacterial resistance; and

	•	the increase in antibiotic resistant bacterial strains, such as MRSA and VRE, have compromised the efficacy of some widely used topical antibiotics, including Neosporin or Bacitracin.

Our Solution

Our products have the following key features:


	•	*Effective.* In physician clinical studies, our products eliminated a wide range of pathogens that cause infection in a variety of acute and chronic wounds without promoting the development of resistant bacteria.

	•	*Safe.* Clinical data shows that our products are non-toxic, do not cause skin irritation and do not inhibit wound healing. Throughout our clinical trials and physician clinical studies to date and since commercialization in 2004, we have received no reports of adverse events related to the use of Microcyn.

	•	*Easy to Use.* Our products require no preparation before use or at time of disposal, and caregivers can use our products without significant training. In addition, Microcyn has a shelf life ranging from one to two years depending on the size and type of packaging, can be stored at room temperature and does not require any specific handling procedures.

	•	*Cost Effective.* Treatment of many wounds requires extended hospitalization and care, including the use of systemic antibiotics. Infection of wounds prolongs the healing time and increases the use of systemic antibiotics. Our clinical trials and physician clinical studies to date indicate that Microcyn eliminates infection, accelerates healing time and reduces the use of systemic antibiotics, thereby lowering overall patient cost.

Our Strategy

Our goal is to become a worldwide leader in wound care by establishing Microcyn as the standard of care for controlling infection in chronic and acute wounds throughout all stages of treatment. We also intend to leverage our expertise in wound care into additional market opportunities. The key elements of our strategy include the following:


	•	drive adoption of Microcyn as the standard of care in the wound care market to prevent and eliminate infection;

	•	obtain additional regulatory approvals in the United States;

	•	expand our direct sales force and distribution networks;

	•	pursue opportunities to combine Microcyn with other treatments;

	•	develop strategic collaborations in the wound care market; and

	•	leverage our Microcyn platform to address additional markets.

Principal Risks

There are significant risks and challenges relating to our business and industry that may materially and adversely affect our ability to execute our strategy and achieve our objectives. We have a history of losses, expect to continue to incur losses and may never achieve profitability. All of our products are based on our Microcyn platform technology, and we do not have the necessary regulatory approvals to market Microcyn as a drug in the United States. We will be required to conduct clinical trials that will be lengthy and expensive. These trials may not be successful or lead to additional regulatory approvals.

Corporate Information

We were incorporated in California in 1999 as Micromed Laboratories, Inc. In August 2001, we changed our name to Oculus Innovative Sciences, Inc. In connection with this offering, we intend to reincorporate in Delaware. Our principal executive offices are located at 1129 N. McDowell Blvd., Petaluma, California, 94954, and our telephone number is (707) 782-0792. We have two principal subsidiaries: Oculus Technologies of Mexico, S.A. de C.V., organized in Mexico, and Oculus Innovative Sciences Netherlands, B.V., organized in The Netherlands. Our website is www.oculusis.com. Information that is included on our website is not a part of this prospectus.

We currently use Microcyn, Dermacyn and Vetericyn, which are registered trademarks, and our Oculus Innovative Sciences logo as trademarks in the United States and other countries. We have applied to the U.S. Patent and Trademark Office to register our Oculus Innovative Sciences logo. We are also seeking U.S. trademark registrations for Cidalcyn and Dentricyn. All other trademarks, trade names or services marks appearing in this prospectus are the property of their respective holders.

Our human wound treatment product is marketed under the name Dermacyn in the United States and the European Union and under the name Microyn60 in Mexico. All references in this prospectus to Microcyn as a product are to the products marketed under their respective names. Other references to Microcyn are to our platform technology used in producing our products for wound care and for other markets.

The Offering


Common stock to be offered by us		shares

Common stock to be outstanding after the offering		shares

Initial public offering price per share		$

Use of proceeds		We intend to use the net proceeds from this offering to expand our sales and marketing capabilities, to fund clinical trials and related research, to expand our manufacturing capabilities and for general corporate purposes, including working capital. See “Use of Proceeds.”

Proposed Nasdaq National Market symbol		OCLS

The number of shares of common stock that will be outstanding immediately after this offering is based upon 16,875,928 shares of common stock outstanding as of March 31, 2006 and does not include:


	•	8,116,174 shares of our common stock issuable upon the exercise of outstanding stock options and options granted in connection with this offering, at a weighted-average exercise price of $1.05 per share;

	•	3,782,396 shares of our common stock issuable upon the exercise of outstanding warrants, at a weighted average exercise price of $2,61 per share; and

	•	up to 2,201,643 additional shares of our common stock reserved for issuance under our equity plans.

Unless we indicate otherwise, all information in this prospectus:


	•	gives effect to the conversion of all outstanding shares of our preferred stock into 15,934,718 shares of our common stock upon the completion of this offering;

	•	does not reflect the exercise of outstanding warrants or options to purchase shares of our common stock;

	•	assumes that the underwriters do not exercise their over-allotment option to purchase additional shares in this offering;

	•	reflects a -for-one split of our common stock to be effected before completion of this offering;

	•	reflects our reincorporation in Delaware from California; and

	•	reflects the amendment of our certificate of incorporation in connection with this offering to, among other things, change the number of shares authorized for issuance.

Summary Consolidated Financial Data
(In thousands, except per share data)

The following tables present our summary consolidated financial data. Our historical results are not necessarily indicative of the results that may be expected in the future. You should read this information together with our audited consolidated financial statements and related notes and the information under “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

The following tables present our summary financial data as of March 31, 2006:


	•	on an actual basis;

	•	on a pro forma basis to give effect to the automatic conversion of all outstanding shares of our convertible preferred stock into 15,934,718 shares of our common stock upon the closing of this offering; and

	•	on a pro forma as adjusted basis to further give effect to the sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, after deducting the underwriting discount and our estimated offering expenses.


	Year Ended March 31,
	2004			2005			2006

Consolidated Statements of Operations Data:
Revenues
Product	$	95		$	473		$	1,966
Service		807			883			618

Total revenues		902			1,356			2,584

Cost of revenues
Product⁽¹⁾		1,403			2,211			3,899
Service⁽¹⁾		1,265			1,311			1,003

Total cost of revenues		2,668			3,522			4,902

Gross loss		(1,766	)		(2,166	)		(2,318	)
Operating expenses:
Research and development⁽¹⁾		1,413			1,654			2,600
Selling, general and administrative⁽¹⁾		3,918			12,492			15,933

Total operating expenses		5,331			14,146			18,533

Loss from operations		(7,097	)		(16,312	)		(20,851	)
Interest expense		(178	)		(372	)		(172	)
Interest income		3			8			282
Other income (expense), net		(26	)		146			(377	)

Net loss from continuing operations		(7,298	)		(16,530	)		(21,118	)
Loss on discontinued operations		—			—			(1,981	)

Net loss		(7,298	)		(16,530	)		(23,099	)
Preferred stock dividends		—			—			(121	)

Net loss available to common stockholders	$	(7,298	)	$	(16,530	)	$	(23,220	)

Net loss per common share: basic and diluted	$	(0.47	)	$	(1.06	)	$	(1.40	)

Weighted-average shares outstanding: basic and diluted		15,647			15,659			16,602


Pro forma net loss per common share: basic and diluted							$	(0.75	)

Pro forma weighted-average shares outstanding: basic and diluted								30,728


(1)		Includes the following stock-based compensation charges:


	Year Ended March 31,
	2004		2005		2006

Cost of revenues
Product	$	—	$	2	$	2
Service		10		3		1
Operating expenses
Research and development		56		5		52
Selling, general and administrative		358		2,339		542

Total	$	424	$	2,349	$	597


	As of March 31, 2006
			Pro Forma
	Actual		As Adjusted
			(unaudited)

Consolidated Balance Sheet Data:
Cash and cash equivalents⁽¹⁾	$	7,448
Working capital⁽¹⁾		5,127
Total assets⁽¹⁾		12,689
Total liabilities		5,351
Total stockholders’ equity⁽¹⁾		7,338

Proposed Maximum

Title of Each Class of

Aggregate

Amount of

Securities to be Registered

Offering Price(1)(2)

Registration Fee

Common Stock, $0.0001 par value

$80,500,000