CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
The Company and Summary of Significant Accounting
Policies
OXIS International, Inc. (collectively, “OXIS” or the
“Company”) is engaged in discovering, developing
and commercializing novel therapeutics from our proprietary product
platform in a broad range of disease
areas. Currently, OXIS develops innovative drugs focused
on the treatment of cancer. OXIS' lead drug candidate,
OXS-2175, is a small molecule therapeutic candidate targeting the
treatment of triple-negative breast cancer.
In
in
vitro
and
in
vivo
models of TNBC,
OXS-2175 demonstrated the ability to inhibit metastasis.
OXIS' lead drug candidate, OXS-4235, also a small molecule
therapeutic candidate, targets the treatment of multiple myeloma
and associated osteolytic lesions.
In
in
vitro
and
in
vivo
models of
multiple myeloma, OXS-4235 demonstrated the ability to kill
multiple myeloma cells, and decrease osteolytic lesions in bone.
OXIS' lead drug candidate, OXS-1550, is a bispecific scFv
recombinant fusion protein-drug conjugate composed of the variable
regions of the heavy and light chains of anti-CD19 and anti-CD22
antibodies and a modified form of diphtheria toxin as its cytotoxic
drug payload. OXS-1550 has demonstrated success in early human
clinical trials in patients with relapsed/refractory B-cell
lymphoma or leukemia.
In 1965, the corporate predecessor of OXIS, Diagnostic Data, Inc.
was incorporated in the State of California. Diagnostic Data
changed its incorporation to the State of Delaware in 1972; and
changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI
Pharmaceuticals merged with International BioClinical, Inc. and
Bioxytech S.A. and changed its name to OXIS International,
Inc.
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”)
and the rules and regulations of the U.S. Securities and Exchange
Commission (“SEC”). Certain information and disclosures
required by U.S. GAAP for complete consolidated financial
statements have been condensed or omitted herein. The interim
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Form 10-K for the year
ended December 31, 2015. The unaudited interim condensed
consolidated financial information presented herein reflects all
normal adjustments that are, in the opinion of management,
necessary for a fair statement of the financial position, results
of operations and cash flows for the periods presented. The Company
is responsible for the unaudited interim consolidated financial
statements included in this report. The results of operations of
any interim period are not necessarily indicative of the results
for the full year.
Going Concern
As
shown in the accompanying consolidated financial statements, the
Company has incurred an accumulated deficit of $121,820,000 through
September 30,
2016
. On a consolidated basis, the Company had
cash and cash equivalents of $154,000 at
September 30, 2016
.
The Company's plan is to raise additional capital
until such time that the Company generates sufficient revenues to
cover its cash flow needs and/or it achieves profitability.
However, the Company cannot assure that it will accomplish this
task and there are many factors that may prevent the Company from
reaching its goal of profitability.
The
current rate of cash usage raises substantial doubt about the
Company’s ability to continue as a going concern, absent any
sources of significant cash flows. In an effort to
mitigate this near-term concern the Company intends to seek
additional equity or debt financing to obtain sufficient funds to
sustain operations. However, the Company cannot provide
assurance that it will successfully obtain equity or debt or other
financing, if any, sufficient to finance its goals or that the
Company will generate future product related
revenues. The Company’s financial statements do
not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event
that the Company cannot continue in existence.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Basis of Consolidation and Comprehensive Income
The accompanying consolidated financial statements include the
accounts of OXIS International, Inc. and its subsidiaries. All
intercompany balances and transactions have been eliminated. The
Company's financial statements are prepared using the accrual
method of accounting.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original
maturities of three months or less to be cash
equivalents.
Concentrations of Credit Risk
The Company's cash and cash equivalents, marketable securities and
accounts receivable are monitored for exposure to concentrations of
credit risk. The Company maintains substantially all of its cash
balances in a limited number of financial institutions. The
balances are each insured by the Federal Deposit Insurance
Corporation up to $250,000. The Company does not have balances in
excess of this limit at September 30, 2016.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash,
accounts receivable, inventory, accounts payable and accrued
expenses approximate fair value because of the short-term nature of
these instruments. The fair value of debt is based upon current
interest rates for debt instruments with comparable maturities and
characteristics and approximates the carrying amount.
Stock Based Compensation to Other than Employees
The Company accounts for equity instruments issued in exchange for
the receipt of goods or services from other than employees in
accordance with ASC 718. Costs are measured at the estimated fair
market value of the consideration received or the estimated fair
value of the equity instruments issued, whichever is more reliably
determinable. The value of equity instruments issued for
consideration other than employee services is determined on the
earlier of a performance commitment or completion of performance by
the provider of goods or services. In the case of equity
instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting
agreement.
Impairment of Long Lived Assets
The Company's long-lived assets currently consist of capitalized
patents. The Company evaluates its long-lived assets for impairment
whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. If any of
the Company's long-lived assets are considered to be impaired, the
amount of impairment to be recognized is equal to the excess of the
carrying amount of the assets over the fair value of the
assets.
Income Taxes
The Company accounts for income taxes using the asset and liability
approach, whereby deferred income tax assets and liabilities are
recognized for the estimated future tax effects, based on current
enacted tax laws, of temporary differences between financial and
tax reporting for current and prior periods. Deferred tax assets
are reduced, if necessary, by a valuation allowance if the
corresponding future tax benefits may not be realized.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing the net
loss for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share
is computed by dividing the net loss for the period by the weighted
average number of common shares outstanding during the period, plus
the potential dilutive effect of common shares issuable upon
exercise or conversion of outstanding stock options and warrants
during the period. The weighted average number of potentially
dilutive common shares excluded from the calculation of net income
(loss) per share totaled
in 38,410,084 and 2,039,480 as of
September 30, 2016 and 2015, respectively.
Patents
Acquired patents are capitalized at their acquisition cost or fair
value. The legal costs, patent registration fees and models and
drawings required for filing patent applications are capitalized if
they relate to commercially viable technologies. Commercially
viable technologies are those technologies that are projected to
generate future positive cash flows in the near term. Legal costs
associated with patent applications that are not determined to be
commercially viable are expensed as incurred. All research and
development costs incurred in developing the patentable idea are
expensed as incurred. Legal fees from the costs incurred in
successful defense to the extent of an evident increase in the
value of the patents are capitalized.
Capitalized cost for pending patents are amortized on a
straight-line basis over the remaining twenty year legal life of
each patent after the costs have been incurred. Once each patent is
issued, capitalized costs are amortized on a straight-line basis
over the shorter of the patent's remaining statutory life,
estimated economic life or ten years.
Fixed Assets
Fixed assets are stated at cost. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets,
which are 3 to 10 years for machinery and equipment and the
shorter of the lease term or estimated economic life for leasehold
improvements.
Fair Value
The carrying amounts reported in the balance sheets for receivables
and current liabilities each qualify as financial instruments and
are a reasonable estimate of fair value because of the short period
of time between the origination of such instruments and their
expected realization and their current market rate of
interest. The three levels are defined as
follows:
●
Level 1 inputs to
the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets. The
Company’s Level 1 assets include cash equivalents, primarily
institutional money market funds, whose carrying value represents
fair value because of their short-term maturities of the
investments held by these funds.
●
Level 2 inputs to
the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable
for the asset or liability, either directly or indirectly, for
substantially the full term of the financial instrument. The
Company’s Level 2 liabilities consist of liabilities arising
from the issuance of convertible securities and in accordance with
ASC 815-40: a warrant liability for detachable warrants, as well as
an accrued derivative liability for the beneficial conversion
feature. These liabilities are remeasured each reporting period.
Fair value is determined using the Black-Scholes valuation model
based on observable market inputs, such as share price data and a
discount rate consistent with that of a government-issued security
of a similar maturity.
●
Level 3 inputs to
the valuation methodology are unobservable and significant to the
fair value measurement.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
The following table represents the Company’s assets and
liabilities by level measured at fair value on a recurring basis at
September 30, 2016.
Description
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
$
—
|
$
—
|
$
—
|
Liabilities
|
|
|
|
Warrant
liability
|
—
|
184,000
|
—
|
Research and Development
Research and development costs are expensed as incurred and
reported as research and development expense. Research and
development costs totaling $725,000 and $475,000 for the nine
months ended September 30, 2016 and 2015,
respectively.
Revenue Recognition
License Revenue
License
arrangements may consist of non-refundable upfront license fees,
exclusive licensed rights to patented or patent pending technology,
and various performance or sales milestones and future product
royalty payments. Some of these arrangements are multiple element
arrangements.
Non-refundable,
up-front fees that are not contingent on any future performance by
us, and require no consequential continuing involvement on our
part, are recognized as revenue when the license term commences and
the licensed data, technology and/or compound is
delivered. We defer recognition of non-refundable
upfront fees if we have continuing performance obligations without
which the technology, right, product or service conveyed in
conjunction with the non-refundable fee has no utility to the
licensee that is separate and independent of our performance under
the other elements of the arrangement. In addition, if we have
continuing involvement through research and development services
that are required because our know-how and expertise related to the
technology is proprietary to us, or can only be performed by us,
then such up-front fees are deferred and recognized over the period
of continuing involvement.
Payments
related to substantive, performance-based milestones in a research
and development arrangement are recognized as revenue upon the
achievement of the milestones as specified in the underlying
agreements when they represent the culmination of the earnings
process.
Use of Estimates
The
financial statements and notes are representations of the Company's
management, which is responsible for their integrity and
objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America, and
have been consistently applied in the preparation of the financial
statements. The preparation of financial statements requires
management to make estimates and assumptions that affect the
reported amounts of assets, liabilities revenues and expenses and
disclosures of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those
estimates.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Convertible debentures
On
October 25, 2006, the Company entered into a securities purchase
agreement (“2006 Purchase Agreement”) with four
accredited investors (the “2006 Purchasers”). In
conjunction with the signing of the 2006 Purchase Agreement, the
Company issued secured convertible debentures (“2006
Debentures”) and Series A, B, C, D, and E common stock
warrants (“2006 Warrants”) to the 2006 Purchasers, and
the parties also entered into a security agreement (the “2006
Security Agreement”) pursuant to which the Company agreed to
grant the 2006 Purchasers, pari passu, a security interest in
substantially all of the Company’s assets.
Pursuant
to the terms of the 2006 Purchase Agreement, the Company issued the
2006 Debentures in an aggregate principal amount of $1,694,250 to
the 2006 Purchasers. The 2006 Debentures are subject to an original
issue discount of 20.318% resulting in proceeds to the Company of
$1,350,000 from the transaction. The 2006 Debentures were due on
October 25, 2008. The 2006 Debentures are convertible, at the
option of the 2006 Purchasers, at any time prior to payment in
full, into shares of common stock of the Company. As a result of
the full ratchet anti-dilution provision the current conversion
price is $2.50 per share (the “2006 Conversion Price”).
Beginning on the first of the month beginning February 1, 2007, the
Company was required to amortize the 2006 Debentures in equal
installments on a monthly basis resulting in a complete repayment
by the maturity date (the “Monthly Redemption
Amounts”). The Monthly Redemption Amounts could have been
paid in cash or in shares, subject to certain restrictions. If the
Company chose to make any Monthly Redemption Amount payment in
shares of common stock, the price per share would have been the
lesser of the Conversion Price then in effect and 85% of the
weighted average price for the 10-trading days prior to the due
date of the Monthly Redemption Amount. The Company did not make any
of the required monthly redemption payments.
Pursuant
to the provisions of the 2006 Debentures, such non-payment was an
event of default and penalty interest has accrued on the unpaid
redemption balance at an interest rate equal to the lower of 18%
per annum and the maximum rate permitted by applicable law. In
addition, each of the 2006 Purchasers has the right to accelerate
the cash repayment of at least 130% of the outstanding principal
amount of the 2006 Debenture (plus accrued but unpaid liquidated
damages and interest) and to sell substantially all of the
Company’s assets pursuant to the provisions of the 2006
Security Agreement to satisfy any such unpaid balance. On June 6,
2008, the Company received notification from Bristol Investment
Fund, Ltd (“Bristol”), that the collateral held under
the 2006 Security Agreement would be sold to the highest qualified
bidder on Thursday, June 19, 2008. On June 19, 2008, the Company
received a Notice of Disposition of Collateral from Bristol in
which Bristol notified the Company that Bristol, acting as the
agent for itself and the three other 2006 Purchasers, purchased
certain assets held as collateral under the 2006 Security
Agreement. Bristol purchased 111,025 shares of common stock of
BioCheck, Inc., the Company’s majority owned subsidiary, on a
credit bid of $50,000, and Bristol also purchased 1,000 shares of
the capital stock of OXIS Therapeutics, Inc., a wholly owned
subsidiary of OXIS, for a credit bid of $10,000. In December 2005,
OXIS purchased the 111,025 shares of common stock of BioCheck, Inc.
for $3,060,000. After crediting the aggregate amount of $60,000 to
the aggregate amount due under the 2006 Debentures, plus fees and
charges due through June 19, 2008, Bristol notified the Company
that the Company remains obligated to the 2006 Purchasers in a
deficiency in an aggregate amount of $2,688,000 as of June 19,
2008. As a result of the disposition of the collateral, the Company
recorded a net loss aggregating $2,978,000.
Under
the 2006 Purchase Agreement, the 2006 Purchasers also have a right
of first refusal to participate in up to 100% of any future
financing undertaken by the Company until the 2006 Debentures are
no longer outstanding. In addition, the Company is also prohibited
from effecting any subsequent financing involving a variable rate
transaction until such time as no 2006 Purchaser holds any of the
2006 Debentures. Furthermore, so long as any 2006 Purchaser holds
any of the securities issued under the 2006 Purchase Agreement, if
the Company issues or sells any common stock or instruments
convertible into common stock which a 2006 Purchaser reasonably
believes is on terms more favorable to such investors than the
terms pursuant to the 2006 Debentures or 2006 Warrants, the Company
is obligated to permit such 2006 Purchaser the benefits of such
better terms.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Of the
2006 Warrants issued by the Company to the 2006 Purchasers, only
the Series A Warrants remain outstanding. The Series A Warrants,
which now expire in July 2019, permit the holders to purchase 9,681
shares of common stock at an original exercise price of $87.50 per
share. Such exercise price is adjustable pursuant to a full ratchet
anti-dilution provision and upon the occurrence of a stock split or
a related event.
During
2009, Bristol converted $177,900 of the principal amount of 2006
Debentures for 71,160 shares of the Company’s common stock.
During 2010, Bristol converted an additional $401,000 of the
principal amount of 2006 Debentures for 160,400 shares of the
Company’s common stock. During 2011, an additional $605,000
of the principal amount of 2006 Debentures was converted into
242,000 shares of the Company’s common stock. During 2012, an
additional $369,625 of the principal amount of 2006 Debentures was
converted into 350,619 shares of the Company’s common
stock.
The
2006 Debentures do not meet the definition of a “conventional
convertible debt instrument” since they are not convertible
into a fixed number of shares. The Monthly Redemption Amounts can
be paid with common stock at a conversion price that is a
percentage of the market price; therefore the number of shares that
could be required to be delivered upon “net-share
settlement” is essentially indeterminate. Therefore, the 2006
Debentures are considered “non-conventional,” which
means that the conversion feature must be bifurcated from the debt
and shown as a separate derivative liability. This beneficial
conversion liability has been calculated to be $690,000 on October
25, 2006. In addition, since the 2006 Debentures are convertible
into an indeterminate number of shares of common stock, it is
assumed that the Company could never have enough authorized and
unissued shares to settle the conversion of the 2006 Warrants
issues in this transaction into common stock. Therefore, the 2006
Warrants have a fair value of $2,334,000 at October 25, 2006. The
value of the 2006 Warrant was calculated using the Black-Scholes
model using the following assumptions: Discount rate of 4.5%,
volatility of 158% and expected term of 1 to 6 years. The fair
value of the beneficial conversion feature and the 2006 Warrant
liability will be adjusted to fair value on each balance sheet date
with the change being shown as a component of net loss. The fair
value of the beneficial conversion feature and the 2006 Warrants at
the inception of the 2006 Debentures were $690,000 and $2,334,000,
respectively. The first $1,350,000 of these discounts was amortized
over the term of the 2006 Debenture and the excess of $1,674,000
was shown as financing costs in statement of
operations.
The
Company and Bristol entered into a Forbearance Agreement on
December 3, 2015, pursuant to which Bristol agreed to refrain and
forbear from exercising certain rights and remedies with respect
the 2006 Debentures for three months. In exchange for the
Forbearance Agreement, the Company issued an allonge in the amount
of $250,000 increasing the principal amount if the 2006
Debentures.
On
October 1, 2009, the Company entered into a financing arrangement
with several accredited investors (the “2009
Investors”), pursuant to which it sold various securities in
consideration of a maximum aggregate purchase price of $2,000,000
(the “2009 Financing”). In connection with the 2009
Financing, the Company issued the following securities to the 2009
Investors:
●
0% Convertible
Debentures in the principal amount of $2,000,000 due 24 months from
the date of issuance (the “ 2009 Debentures”),
convertible into shares of the Company’s common stock at a
per share conversion price equal to $12.50 per share;
●
Series A warrant to
purchase such number of shares of the Company’s common stock
equal to 50% of the principal amount invested by each 2009 Investor
(the “2009 Class A Warrants” ) resulting in the
issuance of Class A Warrants to purchase 80,000 shares of common
stock of the Company.
●
Series B warrant to
purchase such number of shares of the Company’s common stock
equal to 50% of the principal amount invested by each 2009 Investor
(the “2009 Class B Warrants”) resulting in the issuance
of Class B Warrants to purchase 80,000 shares of common stock of
the Company.
The
Class A Warrants and Class B Warrants (collectively, the “
2009 Warrants”) are exercisable for up to five years from the
date of issue at a per share exercise price equal to $15.625 and
$18.75 for the Class A Warrants and the Class B Warrants,
respectively, on a cash or cashless basis. The 2009 Debentures and
the 2009 Warrants are collectively referred to herein as the
“2009 Securities”.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
In
connection with the sale of the 2009 Securities by the Company, the
Company and Bristol entered a Standstill and Forbearance Agreement,
pursuant to which Bristol agreed to refrain and forbear from
exercising certain rights and remedies with respect to (i) the 2006
Debentures and (ii) certain demand notes (the “Bridge
Notes”) issued by the Company on October 8, 2008, March 19,
2009, April 7, 2009, April 28, 2009, May 21, 2009 and June 25, 2009
and discussed under the caption “Demand Notes” below.
In connection with the sale of the 2009 Securities by the Company,
the Company and Bristol have also entered into a waiver agreement
(the “Waiver Agreement”) pursuant to which Bristol
waived certain rights with respect to the 2006 Debentures and
Bridge Notes.
The
conversion price of the 2009 Debentures and the exercise price of
the 2009 Warrants are subject to full ratchet anti-dilution
adjustment in the event that the Company thereafter issues common
stock or common stock equivalents at a price per share less than
the conversion price or the exercise price, respectively, and to
other normal and customary anti-dilution adjustment upon certain
other events. So long as the 2009 Debentures are outstanding, if
the Company effects a subsequent financing, the October 2009
Investors may elect, in their sole discretion, to exchange all or
some of the October 2009 Debentures (but not the 2009 Warrants) for
any securities or units issued in a subsequent financing on a $1.00
for $1.00 basis or to have any particular provisions of the
subsequent financing legal documents apply to the documents
utilized for the October 2009 Financing.
The
Company also agreed that if it determines to prepare and file with
the Commission a registration statement relating to an offering for
its own account or the account of others, then it shall include the
shares of common stock underlying the 2009 Securities on such
registration statement. The 2009 Investors have contractually
agreed to restrict their ability to convert the 2009 Debentures and
exercise the 2009 Warrants and receive shares of our common stock
such that the number of shares of the Company common stock held by
a 2009 Investor and its affiliates after such conversion or
exercise does not exceed 4.9% of the Company’s then issued
and outstanding shares of common stock.
During
2010, 2009 Investors converted $1,335,000 of the principal amount
of 2009 Debentures for 106,800 shares of the Company’s common
stock. During 2011, 2009 Investors converted $610,000 of the
principal amount of 2009 Debentures for 48,800 shares of the
Company’s common stock.
The
Company entered into a Forbearance Agreement on December 3, 2015,
pursuant to which the remaining 2009 Debenture holder agreed to
refrain and forbear from exercising certain rights and remedies
with respect the 2009 Debentures for three months. In exchange for
the Forbearance Agreement, the Company issued an allonge in the
amount of $250,000 increasing the principal amount of the 2009
Debentures to $305,000 as of March 31,2016.
On June
1, 2011, the Company entered into a financing arrangement with
several accredited investors (the “June 2011
Investors”), pursuant to which it sold various securities in
consideration of a maximum aggregate purchase price of $500,000
(the “June 2011 Financing”). In connection with the
June 2011 Financing, the Company issued the following securities to
the June 2011 Investors:
●
12% Convertible
Debentures in the principal amount of $500,000 due April 15, 2012,
convertible into shares of the Company’s common stock at a
per share conversion price equal to $25.00 per share;
and
●
Warrants to
purchase 20,000 of shares of the Company’s common stock. The
warrants are exercisable, on a cash or cashless basis, for up to
two years from the date of issue at a per share exercise price
equal to $37.50. During 2015, the exercise price was adjusted to
$1.25 and the exercise date was extended to June 2019.
In
November, 2011, the Company entered into a financing arrangement
with several accredited investors (the “November 2011
Investors”), pursuant to which it sold various securities in
consideration of a maximum aggregate purchase price of $275,000
(the “November 2011 Financing”). In connection with the
November 2011 Financing, the Company issued the following
securities to the November 2011 Investors:
●
8% Convertible
Debentures in the principal amount of $275,000 due in two years,
convertible into shares of the Company’s common stock at a
per share conversion price equal to $12.50 per share;
and
●
Warrants to
purchase 22,000 of shares of the Company’s common stock. The
Class A Warrants and Class B Warrants (collectively, the
“Warrants”) are exercisable for up to five years from
the date of issue at a per share exercise price equal to $15.625
and $18.75 for the Class A Warrants and the Class B Warrants,
respectively, on a cash or cashless basis.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
In
March, 2012, the Company entered into a financing arrangement with
several accredited investors pursuant to which it sold various
securities in consideration of a maximum aggregate purchase price
of $617,500 (the “March 2012 Financing”). In connection
with the March 2012 Financing, the Company issued the following
securities to the investors:
●
8% Convertible
Debentures in the principal amount of $617,500 due in two years,
convertible into shares of the Company’s common stock at a
per share conversion price equal to $12.50 per share;
and
●
Warrants to
purchase 49,400 of shares of the Company’s common stock. The
Class A Warrants and Class B Warrants (collectively, the “
March 2012 Warrants”) are exercisable for up to five years
from the date of issue at a per share exercise price equal $15.625
and $18.75 for the Class A Warrants and the Class B Warrants,
respectively, on a cash or cashless basis.
In
April 2012, the Company agreed to an adjustment as negotiated to
enable inducement of further financing of the Company. Pursuant to
the anti-dilution provisions in the convertible instruments, the
conversion price of certain
convertible
instruments is now $2.50 (with the exception of the conversion
price of the October 2006 Debenture which is already priced at the
lesser of $2.50 and 60% of the average of the lowest three trading
prices occurring at any time during the 20 trading days preceding
conversion).
In May,
2012, the Company entered into a financing arrangement with several
accredited investors pursuant to which it sold various securities
in consideration of a maximum aggregate purchase price of $275,000
(the “May 2012 Financing”). In connection with the May
2012 Financing, the Company issued the following securities to the
investors:
●
8% Convertible
Debentures in the principal amount of $275,000 due May 2014,
convertible into shares of the Company’s common stock at a
per share conversion price equal to $12.50 per share;
and
●
Warrants to
purchase 22,000 of shares of the Company’s common stock. The
Class A Warrants and Class B Warrants (collectively, the “
May 2012 Warrants”) are exercisable for up to five years from
the date of issue at a per share exercise price equal to $15.625
and $18.75 for the Class A Warrants and the Class B Warrants,
respectively, on a cash or cashless basis.
On
August 8, 2012, a Settlement Agreement and Mutual General Release
("Agreement") was made by and between OXIS and Bristol Investment
Fund, Ltd., in order to settle certain claims regarding certain
convertible debentures held by Bristol.
Pursuant
to the Agreement, OXIS shall pay Bristol (half of which payment
would redound to Theorem Capital LLC (“Theorem”)) a
total of $1,119,778 as payment in full for the losses suffered and
all costs incurred by Bristol in connection with the Transaction.
Payment of such $1,119,778 shall be made as follows: OXIS shall
issue restricted common stock to each of Bristol and Merit, in an
amount such that each Bristol and Theorem shall hold no more than
9.99% of the outstanding shares of OXIS (including any shares that
each may hold as of the date of issuance). The shares so issued
represent $417,475.65 of the $1,119,778 payment (111,327 shares at
$3.75 per share, of which 36,675 will be retained by Bristol and
74,652 will be issued to Theorem). The remaining balance of the
payment shall be made in the form of two convertible promissory
notes in the respective amounts of $422,357.75 for Bristol and
$279,944.60 for Theorem (collectively, the “Notes”)
with a maturity of December 1, 2017 having an 8% annual interest
rate, with interest only accruing until January 1, 2013, and then
level payments of $3,750 each beginning January 1, 2013 until paid
in full on December 1, 2017. In the event a default in the monthly
payments on the Notes has occurred and is continuing each holder of
the Notes shall be permitted to convert the unpaid principal and
interest of the Notes into shares of OXIS at $2.50 cents per share.
In the absence of such continuing default no conversion of the
Notes will be permitted. OXIS will have the right to repay the
Notes in full at any time without penalty.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Effective
April, 2013 the Company entered into a securities purchase
agreement with one accredited investor to sell 10% convertible
debentures with an initial principal balance of
$75,000.
In
October and November, 2013, the Company entered into a securities
purchase agreement with four accredited investors to sell 10%
convertible debentures with an initial principal balance of
$172,000 and warrants to acquire up to 98,286 shares of the
Company’s common stock at an exercise price of $2.50 per
share.
In
December, 2013, the Company entered into a convertible demand
promissory note with an initial principal balance of $189,662
convertible at $1.75 per share and warrants to acquire up to
108,378 shares of the Company’s common stock at an exercise
price of $2.50 per share.
In
January, 2014, the Company entered into a securities purchase
agreement with one accredited investor to sell 10% convertible
debentures with an initial principal balance of $50,000 and
warrants to acquire up to 28,571 shares of the Company’s
common stock at an exercise price of $2.50 per share.
In
April, 2014, the Company entered into a securities purchase
agreement with three accredited investors to sell 10% convertible
debentures with an initial principal balance of $49,000 and
warrants to acquire up to 22,286 shares of the Company’s
common stock at an exercise price of $2.50 per share.
In July
2014, the Company agreed to an adjustment as negotiated to enable
inducement of further financing of the Company. Pursuant to the
anti-dilution provisions in the convertible instruments, the
conversion price of certain
convertible
instruments is now $1.75 (with the exception of the conversion
price of the October 2006 Debenture which is already priced at the
lesser of $1.75 and 60% of the average of the lowest three trading
prices occurring at any time during the 20 trading days preceding
conversion).
On July
24, 2014, the Company entered into a securities purchase agreement
with ten accredited investors to sell 10% convertible debentures,
with an exercise price of $1.75, with an initial principal balance
of $1,250,000 and warrants to acquire up to 714,286 shares of the
Company’s common stock at an exercise price of $2.50 per
share.
Also on
July 24, 2014, the Company sold to Kenneth Eaton, the
Company’s Chief Executive Officer, a $175,000 debenture, with
an exercise price of $1.75, as payment in full for all accrued and
unpaid salary and fees owed to Mr. Eaton. This note was converted
on the second quarter of 2016.
On
October 15, 2014, the Company entered into a securities purchase
agreement with three accredited investors to sell 10% convertible
debentures, with an exercise price of $2.50, with an initial
principal balance of $1,250,000 and warrants to acquire up to
400,000 shares of the Company’s common stock at an exercise
price of $5.00 per share.
On February 23, 2015, the Company entered into a securities
purchase agreement with ten accredited investors to sell 10%
convertible debentures, with an exercise price of $6.25, with an
initial principal balance of $2,350,000 and warrants to acquire up
to 376,000 shares of the Company’s common stock at an
exercise price of $7.50 per share.
Effective July 2015, the Company entered into a securities purchase
agreement with three accredited investors to sell 10% convertible
debentures, with an exercise price of $5.00, with an initial
principal balance of $550,000 and warrants to acquire up to 111,765
shares of the Company’s common stock at an exercise price of
$6.25 per share.
Effective October 2015, the Company entered into a securities
purchase agreement with three accredited investors to sell 10%
convertible debentures, with an exercise price of $2.50, with an
initial principal balance of $500,000 and warrants to acquire up to
200,000 shares of the Company’s common stock at an exercise
price of $2.50 per share.
Effective November 2015, the Company entered into a securities
purchase agreement with two accredited investors to sell 10%
convertible debentures, with an exercise price of $2.50, with an
initial principal balance of $100,000 and warrants to acquire up to
80,000 shares of the Company’s common stock at an exercise
price of $2.50 per share.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Effective December 2015, the Company entered into a securities
purchase agreement with two accredited investors to sell 10%
convertible debentures, with and an exercise price of $1.25, with
an initial principal balance of $350,000 and warrants to acquire up
to 280,000 shares of the Company’s common stock at an
exercise price of $1.25 per share.
In
December 2015, the Company agreed to an adjustment as negotiated to
enable inducement of further financing of the Company. Pursuant to
the anti-dilution provisions in all the convertible instruments,
the conversion price of certain convertible instruments is now
$1.25 (with the exception of the conversion price of the October
2006 Debenture which is already priced at the lesser of $1.25 and
60% of the average of the lowest three trading prices occurring at
any time during the 20 trading days preceding
conversion).
In January 2016, the Company entered into a securities purchase
agreement with one accredited investor to sell 10% convertible
debentures, with and an exercise price of $1.25, with an initial
principal balance of $150,000 and warrants to acquire up to 80,000
shares of the Company’s common stock at an exercise price of
$1.25 per share.
In May
2016, the Company agreed to an adjustment as negotiated to enable
inducement of further financing of the Company. Pursuant to the
anti-dilution provisions in all the convertible instruments, the
conversion price of certain convertible instruments is now $0.40
(with the exception of the conversion price of the October 2006
Debenture which is already priced at the lesser of $0.40 and 60% of
the average of the lowest three trading prices occurring at any
time during the 20 trading days preceding conversion).
In May 2016, the Company entered into a securities purchase
agreement with twenty accredited investors to sell 10% convertible
debentures, with and an exercise price of $0.40, with an initial
principal balance of $1,390,044 and warrants to acquire up to
3,475,111 shares of the Company’s common stock at an exercise
price of $0.45 per share.
In July 2016, the Company entered into a securities purchase
agreement with one accredited investor to sell 10% convertible
debentures, with and an exercise price of $0.40, with an initial
principal balance of $112,135 and warrants to acquire up to 280,338
shares of the Company’s common stock at an exercise price of
$0.45 per share.
In August 2016, the Company entered into a securities purchase
agreement with one accredited investor to sell 10% convertible
debentures up $1,000,000, with and an exercise price of $0.40, with
an initial principal balance of $250,000 and warrants to acquire up
to 2,500,000 shares of the Company’s common stock at an
exercise price of $0.45 per share.
Allonges
On August 18, 2015, the Company entered into a settlement agreement
with three noteholders. In accordance with the July 24,
2014 Security Purchase Agreements, The Company was required to
establish and maintain a reserve of shares of its common stock from
its duly authorized shares of Common Stock for issuance in an
amount equal to 150% of a required minimum by December 21, 2014
which did not occur. As compensation for the default,
the Company issued allonges to the noteholders for a total of
$837,500, increasing the principal amount of the convertible
notes.
On October 7, 2015, the Company entered into a settlement agreement
with two noteholders. In accordance with the July 24,
2014 Security Purchase Agreements, The Company was required to
establish and maintain a reserve of shares of its common stock from
its duly authorized shares of Common Stock for issuance in an
amount equal to 150% of a required minimum by December 21, 2014
which did not occur. As compensation for the default,
the Company issued allonges to the noteholders for a total of
$537,500, increasing the principal amount of the convertible
notes.
On November 5, 2015, the Company entered into a Second Settlement
Agreement with three noteholders. On August 18, 2015 the Company
entered into a Settlement Agreement that required the Company to
increase its authorized shares to not less 8,000,000 shares and
reserve 150% of the number of shares of its Common Stock no later
than the earlier of (1) two days after Oxis obtaining all corporate
and regulatory approvals necessary to increase it authorized
shares; or (2) September 30, 2015 which did not
occur. As compensation for the default, the Company
issued additional allonges to the noteholders for a total of
$837,500, increasing the principal amount of the convertible
notes.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
On Dec 5, 2015, the Company entered into a Second Settlement
Agreement with three noteholders. On October 7, 2015 the Company
entered into a Settlement Agreement that required the Company to
increase its authorized shares to not less than 8,000,000 shares
and reserve 150% of the number of shares of its Common Stock no
later than the earlier of (1) two days after Oxis obtaining all
corporate and regulatory approvals necessary to increase it
authorized shares; or (2) September 30, 2015 which did not
occur. As compensation for the default, the Company
issued additional allonges to the noteholders for a total of
$537,500, increasing the principal amount of the convertible
notes.
On July 15, 2015, the Company entered into a settlement agreement
with one noteholder. In accordance with a 10%
Convertible Debenture Due July 24, 2016, The Company was required
pay accrued interest in case upon a conversion of the debt within
three business days for the conversion which did not
occur. As compensation for the default, the Company
issued allonges to the noteholders for a total of $40,000,
increasing the principal amount of the convertible
notes.
Demand Notes
On May
15, 2009, the Company entered into a convertible demand promissory
note with Bristol Capital, LLC for certain consulting services
totaling $100,000. The note does not provide for any interest and
is due upon demand by the holder. The note has been converted into
common stock of the Company.
On June
22, 2009, the Company entered into a convertible demand promissory
note with Theorem Group (“Theorem”) pursuant to which
Theorem purchased an aggregate principal amount of $31,375 of
convertible demand promissory notes for an aggregate purchase price
of $25,000 (the “ 2009 Theorem Note”). The 2009 Theorem
Note was subsequently sold as described below.
Simultaneously
with the issuance of the 2009 Theorem Note, the Company issued
Theorem a seven-year warrant (the “2009 Theorem
Warrant”) to purchase 12,550 shares of common stock of the
Company at a price equal to the lower of (i) $2.50 and (ii) 60% of
the average of the three (3) lowest trading prices occurring at any
time during the 20 trading days preceding the issue date of the
Theorem Note (the “Exercise Price”). The 2009 Theorem
Warrant may be exercised on a cashless basis if the shares of
common stock underlying the 2009 Theorem Warrant are not then
registered pursuant to an effective registration statement. In the
event the 2009 Theorem Warrant is exercised on a cashless basis, we
will not receive any proceeds.
On
December 1, 2009, Theorem sold the 2009 Theorem Note to Net Capital
Partners, Inc. (“Net Capital”). In December 2009, Net
Capital converted $24,000 of the principal for 9,600 shares of the
Company’s common stock. In January 2010, Net Capital
converted the remaining $7,375 of principal amount for an
additional 2,950 shares of the Company’s common
stock.
On
February 7, 2011 the Company entered into a convertible demand
promissory note with Bristol pursuant to which Bristol purchased an
aggregate principal amount of $31,375 of convertible demand
promissory notes for an aggregate purchase price of $25,000 (the
“February 2011 Bristol Note”). The February 2011
Bristol Note is convertible into shares of common stock of the
Company at a price equal to $12.50 per share.
Simultaneously
with the issuance of the February 2011 Bristol Note, the Company
issued Bristol a Series A Warrant (the “February 2011 Bristol
Series A Warrants”) to purchase 1,255 shares of the
Company’s common stock at a per share exercise price of
$15.625, and a Series B Warrant (the “February 2011 Bristol
Series B Warrants” and, together with the February 2011
Bristol Series A Warrants, the “February 2011 Bristol
Warrants”) to purchase 1,255 shares of the Company’s
common stock at a per share exercise price of $18.75. The February
2011 Warrants are exercisable for up to seven years from the date
of issue. The February 2011 Warrants may be exercised on a cashless
basis if the shares of common stock underlying the February 2011
Warrants are not then registered pursuant to an effective
registration statement. In the event the February 2011 Bristol
Warrants are exercised on a cashless basis, the Company will not
receive any proceeds.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
On
February 7, 2011 the Company entered into a convertible demand
promissory note with Net Capital pursuant to which Net Capital
purchased an aggregate principal amount of $31,375 of convertible
demand promissory notes for an aggregate purchase price of $25,000
(the “February 2011 Net Capital Note”). The February
2011 Net Capital Note is convertible into shares of common stock of
the Company at a price equal to $12.50 per share. As of September,
2012, the February 2011 Net Capital Note had been converted into
shares of the Company’s common stock.
Simultaneously
with the issuance of the February 2011 Net Capital Note, the
Company issued Net Capital a Series A Warrant (the “February
2011 Net Capital Series A Warrants”) to purchase 1,255 shares
of the Company’s common stock at a per share exercise price
of $15.625, and a Series B Warrant (the “February 2011 Net
Capital Series B Warrants” and, together with the February
2011 Net Capital Series A Warrants, the “February 2011 Net
Capital Warrants”) to purchase 1,255 shares of the
Company’s common stock at a per share exercise price of
$18.75. The February 2011 Net Capital Warrants are exercisable for
up to seven years from the date of issue. The February 2011 Net
Capital Warrants may be exercised on a cashless basis if the shares
of common stock underlying the February 2011 Net Capital Warrants
are not then registered pursuant to an effective registration
statement. In the event the February 2011 Net Capital Warrants are
exercised on a cashless basis, the Company will not receive any
proceeds.
On
March 4, 2011 the Company entered into a convertible demand
promissory note with Bristol pursuant to which Bristol purchased an
aggregate principal amount of $31,375 of convertible demand
promissory notes for an aggregate purchase price of $25,000 (the
“March 2011 Bristol Note”). The March 2011 Bristol Note
is convertible at the option of the holder at any time into shares
of common stock, at a price equal to $12.50.
Simultaneously
with the issuance of the March 2011 Bristol Note, the Company
issued Bristol a Series A Warrant (the “March 2011 Bristol
Series A Warrants”) to purchase 1,255 shares of the
Company’s common stock at a per share exercise price of
$15.625, and a Series B Warrant (the “March 2011 Bristol
Series B Warrants” and, together with the March 2011 Bristol
Series A Warrants, (the “March 2011 Bristol Warrants”)
to purchase 1,255 shares of the Company’s common stock at a
per share exercise price of $18.75. The March 2011 Warrants are
exercisable for up to seven years from the date of issue. The March
2011 Warrants may be exercised on a cashless basis if the shares of
common stock underlying the March 2011 Warrants are not then
registered pursuant to an effective registration statement. In the
event the March 2011 Warrants are exercised on a cashless basis,
the Company will not receive any proceeds.
On
April 4, 2011 the Company entered into a convertible demand
promissory note with Net Capital pursuant to which Net Capital
purchased an aggregate principal amount of $31,375 of convertible
demand promissory notes for an aggregate purchase price of $25,000
(the “April 2011 Net Capital Note”). The April 2011 Net
Capital Note is convertible into shares of common stock of the
Company, at a price equal to $12.50 per share. As of September,
2012, the April 2011 Net Capital Note had been converted into
shares of the Company’s common stock.
Simultaneously
with the issuance of the Net Capital Note, the Company issued Net
Capital a Series A Warrant (the “April 2011 Net Capital
Series A Warrants”) to purchase 1,255 shares of common stock
of the Company at a per share exercise price of $15.625, and a
Series B Warrant (the “April 2011 Net Capital Series B
Warrants” and, together with the April 2011 Net Capital
Series A Warrants, the “April 2011 Net Capital
Warrants”) to purchase 1,255 shares of common stock of the
Company at a per share exercise price of $18.75. The April 2011 Net
Capital Warrants are exercisable for up to seven years from the
date of issue. The April 2011 Net Capital Warrants may be exercised
on a cashless basis if the shares of common stock underlying the
April 2011 Net Capital Warrants are not then registered pursuant to
an effective registration statement. In the event the April 2011
Net Capital Warrants are exercised on a cashless basis, we will not
receive any proceeds.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
On
October 26, 2011 the Company entered into a convertible demand
promissory note with Theorem pursuant to which Theorem purchased an
aggregate principal amount of $200,000 of convertible demand
promissory notes for an aggregate purchase price of $157,217 (the
“October 2011 Theorem Note”). The October 2011 Theorem
Note is convertible into shares of common stock of the Company, at
a price equal to $12.50 per share.
Simultaneously
with the issuance of the October 2011 Theorem Note, the Company
issued Theorem a Series A Warrant (the “October 2011 Series A
Warrant”) to purchase 40,000 shares of common stock of the
Company at a per share exercise price of $15.625, and a Series B
Warrant (the “October 2011 Series B Warrants” and,
together with the October 2011 Series A Warrants, the
“October 2011 Warrants”) to purchase 40,000 shares of
common stock of the Company at a per share exercise price of
$18.75. The October 2011 Warrants are exercisable for up
to
seven
years from the date of issue. The October 2011 Warrants may be
exercised on a cashless basis if the shares of common stock
underlying the October 2011 Warrants are not then registered
pursuant to an effective registration statement. In the event the
October 2011 Warrants are exercised on a cashless basis, we will
not receive any proceeds.
All of
the foregoing securities were issued in reliance upon an exemption
from the registration requirements pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
On
December 7, 2012, the Company entered into, and made its initial
$315,000 borrowing under, a short-term loan agreement with two
lenders pursuant to which it is permitted to borrow up to an
aggregate of $350,000. The loans made under the loan agreement are
evidence by the Company’s notes and secured pursuant to a
Security Agreement, that is junior to the Company’s existing
security arrangements under the Company’s October 26, 2006
Debentures but cover the same assets of the Company.
Interest
on the Notes is at the rate of 18% per annum, payable on the first
day of each month until maturity on May 1, 2013. On April 1, 2013,
the Company was required to pay 25.7143% of the Loan, with the
remaining balance due on May 1, 2013.
The
full principal amount of the Loans may be due upon default under
the terms of the Loan Agreement, the Notes or the Security
Agreement.
Under
the Loan Agreement, the Company is required to issue 266.67 shares
of its common stock for each $1,000 of Loans made. Accordingly, on
December 7, 2012, the Company issued 84,000 shares of its common
stock. Assuming the entire amounts of Loans permitted under the
Loan Agreement are borrowed, the Company will issue 93,334 shares
in connection with the Loan Agreement.
In
March 2013, the Company entered into, and made an additional
$35,000 borrowing under, a short-term loan agreement with two
lenders the Company entered into in December 2012, pursuant to
which it is permitted to borrow up to an aggregate of $350,000. The
loans made under the loan agreement are evidence by the
Company’s notes and secured pursuant to a Security Agreement,
that is junior to the Company’s existing security
arrangements under the Company’s October 26, 2006 Debentures
but cover the same assets of the Company.
Financing Agreement
On
November 8, 2010, the Company entered into a financing arrangement
with Gemini Pharmaceuticals, Inc., a product development and
manufacturing partner of the Company, pursuant to which Gemini
Pharmaceuticals made a $250,000 strategic equity investment in the
Company and agreed to make a $750,000 purchase order line of credit
facility available to the Company. The outstanding principal of all
Advances under the Line of Credit will bear interest at the rate of
interest of prime plus 2 percent per annum. There is $31,000 due on
this credit line at September 30, 2016.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
Common Stock
In January 2015, the Company agreed to issue 39,657 shares of
common stock as a price protection to a note holder that originally
converted notes at a price of $2.50 and continues to hold these
shares. These additional shares would have been issued if the
conversion shares price was $1.75. As of December 31,
2015, 33,142 shares of common stock have been issued and
$247,000 of interest expense was recorded for this issuance. During
January 2016 the remaining 6,515 share were issued and $20,000 of
interest expense was recorded.
During the nine months ending September 30, 2016, the Company
issued an
aggregate of
12,580,183 shares of common stock to a total of 34 persons or
entities in exchange of the cancellation of warrants on a cashless
basis. The shares issued were exempt from the
registration requirements of Section 5 of the Securities Act of
1933 (the “Act”) pursuant to Section
4
(2)
of the Act since the shares were issued to persons or entities
closely associated with the Company and there was no public
offering of the shares.
During the nine months ending September 30, 2016, the Company also
issued an
aggregate of
2,022,230 shares of common stock to a total of 17 persons as
payment for consulting services provided to the
Company. The average valuation of these shares was $2.00
per share. These shares were also exempt from the registration
requirements of Section 5 of the Act pursuant to
Section
4(2) of the Act since the shares were also issued to persons
closely associated with the Company and there was no public
offering of the shares.
During the nine months ending September 30, 2016, the Company also
issued an aggregate of 4,612,341 shares of common stock to two
executive officers of the Company in fulfilment of contractual
rights held by the officers pursuant to their employment
agreements. These shares were also exempt from the
registration requirements of Section 5 of the Act pursuant to
Section 4(2) of the Act since the shares were also issued to
persons closely associated with the Company and there was no public
offering of the shares.
During the nine months ending September 30, 2016, the Company also
issued an
aggregate of
5,503,551 shares of common stock to a total of 18 persons as
payment for the conversion of certain note and the related accrued
interest. The conversion price of these shares was $0.40
per share. These shares were also exempt from the registration
requirements of Section 5 of the Act pursuant to
Section
4(2) of the Act since the shares were also issued to persons
closely associated with the Company and there was no public
offering of the shares.
In August 2016, the Company issued 1
,115,000 shares of common stock to H.C. Wainwright
and Co., LLC as payment for investment banking services provided to
the Company.
Preferred Stock
On January 8, 2016 the Company entered into an Exchange Agreement
with certain investors together holding 25,000 shares of Series H
Preferred Stock and 1,666,667 shares of Series I Preferred Stock
have agreed to convert all such shares of Preferred Stock into an
aggregate of 4,075,000 shares of Common Stock upon successful
completion by the Company of a $6 million financing.
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
(UNAUDITED)
4.
Stock Options and Warrants
Stock Options
Following is a summary of the stock option activity:
|
|
Weighted Average
Exercise Price
|
Outstanding as of
December 31, 2015
|
374,800
|
$
4.88
|
Granted
|
-
|
-
|
Forfeited
|
20
|
$
67.5
|
Exercised
|
-
|
-
|
Outstanding as of
September 30, 2016
|
374,780
|
$
4.88
|
Warrants
Following is a summary of the warrant activity:
|
|
Weighted Average
Exercise Price
|
Outstanding as of
December 31, 2015
|
12,525,721
|
$
1.25
|
Granted
|
5,101,500
|
0.45
|
Forfeited
|
(339,932
)
|
1.25
|
Exercised
|
(12,610,183
)
|
1.25
|
Outstanding as of
September 30, 2016
|
4,677,106
|
$
0.45
|
In October 2016 the Company issued an
aggregate of 453,431 shares of common stock to one
noteholder as payment for the conversion of certain accrued
interest. The conversion price of these shares was $0.40
per share. These shares were also exempt from the registration
requirements of Section 5 of the Act pursuant to
Section
4(2) of the Act since the shares were also issued to persons
closely associated with the Company and there was no public
offering of the shares.
In October 2016 the Company issued an
aggregate of 594,530 shares of common stock to one
noteholder as payment for the conversion of a certain
note. The conversion price of these shares was $0.0841
per share based on
60% of the average of the lowest three
trading prices occurring at any time during the 20 trading days
preceding conversion
These shares were
also exempt from the registration requirements of Section 5 of the
Act pursuant to
Section 4(2) of the Act
since the shares were also issued to persons closely associated
with the Company and there was no public offering of the
shares.
In November 2016 the Company issued an aggregate of 975,039 shares
of common stock to one noteholder
as payment for the
conversion of a certain note. The conversion price of these shares
was $0.0513 per share
based on 60% of
the average of the lowest three trading prices occurring at any
time during the 20 trading
days preceding
conversion These shares were also exempt from the registration
requirements of Section 5 of
the Act pursuant
to Section 4(2) of the Act since the shares were also issued to
persons closely associated
with the Company
and there was no public offering of the shares.