Vision-Sciences (VSCI), Uroplasty (UPI) Enter Merger Agreement

Uroplasty, Inc. (Nasdaq: UPI) and Vision-Sciences, Inc. (Nasdaq: VSCI) entered into a definitive merger agreement under which the two companies will combine in an all-stock transaction to create a new company expected to generate revenue of approximately $50 million for the fiscal year beginning April 1, 2015.

Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, each outstanding share of Uroplasty's common stock will be exchanged for 3.6331 shares of Vision-Sciences' common stock. Upon completion of the merger, Uroplasty shareholders will own 62.5% of the shares of the combined company on a fully-diluted basis, and Vision-Sciences shareholders will own 37.5%.1

Following the closing of the transaction, which is expected to occur during the first half of 2015, the combined company will conduct business as Cogentix Medical, Inc. (Nasdaq: CGNT). The combined company will have its U.S. headquarters in Minnetonka, MN, where Uroplasty's current headquarters is located. Cogentix Medical will be led by Rob Kill, who will become President and Chief Executive Officer; Brett Reynolds, who will become Chief Financial Officer; and Darin Hammers, who will become Senior Vice President of Global Sales and Marketing. Cogentix Medical's board of directors will be comprised of the five representatives from Uroplasty's existing board and three representatives from Vision-Sciences' existing board.

The merger of Uroplasty and Vision-Sciences will create a medical device company positioned for growth with proprietary, innovative technologies serving the urology market. In addition to the minimally-invasive Urgent PC and Macroplastique product lines, Uroplasty's 44 person U.S. sales organization, along with Vision-Sciences' 12 person U.S. sales organization, will aggressively market Vision-Sciences' proprietary EndoSheath technology platform. Internationally, the combined company's products will be sold through Uroplasty's eight direct sales representatives as well as the current distributors of both companies.

EndoSheath Endoscopy, which combines state-of-the-art endoscopic technology with a sterile, disposable microbial barrier, provides practitioners and healthcare facilities with a solution to meet the growing need for safe, efficient, and cost-effective flexible endoscopy. In addition to the combined company's increased presence in urology, the combination of the two companies will provide a platform for growth in other specialties that currently perform endoscopic procedures in hospitals and physician offices, which represents an addressable market opportunity of over $1.3 billion.

"We believe that the combination of Uroplasty and Vision-Sciences will increase our sales team's effectiveness in the urology market and accelerate the growth of the combined company," said Rob Kill, President and CEO of Uroplasty. "We are confident that offering Vision-Sciences' urology product lines to our core urology customer base will also make us more meaningful and valuable to those customers. At the same time, we expect that the increased focus by care providers on endoscopic efficiency and prevention of cross-contamination creates significant growth opportunity for Vision-Sciences' EndoSheath technology in adjacent markets such as ENT and pulmonology. With more than five million units sold and zero reported cases of cross contamination, we believe that EndoSheath products will be the standard of care for endoscopic applications, and our team fully intends to turn this efficacy leadership into market leadership. We look forward to working with the Vision-Sciences' team to enhance shareholder value through this combination."

Lewis C. Pell, Chairman of Vision-Sciences, commented, "During the past several months as we have evaluated the combination of our two companies, we have been thoroughly impressed by Uroplasty's senior management team and distribution platform. They achieved notable growth with the Urgent PC system, and we believe under Uroplasty's leadership, that our shareholders have the best opportunity to generate value through maximizing the global market potential for the combined company's product lines and proprietary technology."

Financial Highlights

Cogentix Medical expects revenue growth between 11% - 14% in its first fiscal year beginning on April 1, 2015. Once the existing Uroplasty sales team is fully trained on the Vision-Sciences' product line, the new company is expected to achieve sustainable annual revenue growth of 15% beginning with its second fiscal year.

Structure

The transaction is expected to qualify as a tax free reorganization under the Internal Revenue Code. The transaction is subject to customary closing conditions, including approval of the shareholders of each of Uroplasty and Vision-Sciences. In connection with this transaction, the convertible promissory notes held by Mr. Pell will be amended. The maturity date of the amended notes will be five years from the date of the closing the merger, and interest accrued under the notes shall be calculated quarterly and payable on the maturity date or upon repayment or conversion of all or any portion of the principal. In addition, the notes will not be convertible until the third anniversary of the closing, except in a change in control or if the Company decides to prepay the notes. Vision-Sciences and Mr. Pell also agreed to extend the period during which he may exercise his warrants, which will be exercisable starting on the third anniversary of the closing and ending on the later of the maturity date of the convertible promissory notes or the date on which the notes are converted or paid in full. The warrants would also be exercisable in the event of a change in control.

The named executive officers and directors of each company, representing approximately 4.2% and 39.1% of Uroplasty's and Vision-Sciences' outstanding common stock respectively, evidenced their support by entering into voting agreements to vote in favor of the transaction.

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