<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
-----
Exchange Act of 1934 for the quarterly period ended
September 30, 1998.
Transition report pursuant to Section 13 or 15(d) of the
-----
Securities Exchange Act of 1934 for the transition period
from ______________ to _____________.
Commission File Number O-8092
OXIS INTERNATIONAL, INC.
A Delaware corporation
I.R.S. Employer Identification No. 94-1620407
6040 N. Cutter Circle, Suite 317
Portland, OR 97217
Telephone: (503) 283-3911
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- ------
At September 30, 1998, the issuer had outstanding the indicated number of shares
of common stock: 39,226,759
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------- --------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 1,039,000 $ 1,293,000 $ 3,770,000 $ 3,137,000
Royalties and license fees -- 150,000 71,000 209,000
----------- ----------- ----------- -----------
Total revenues 1,039,000 1,443,000 3,841,000 3,346,000
Costs and expenses:
Cost of sales 996,000 904,000 3,308,000 2,148,000
Research and development 1,109,000 1,210,000 2,799,000 3,199,000
Selling, general and administrative 1,078,000 717,000 2,732,000 2,049,000
----------- ----------- ----------- -----------
Total costs and expenses 3,183,000 2,831,000 8,839,000 7,396,000
----------- ----------- ----------- -----------
Operating loss (2,144,000) (1,388,000) (4,998,000) (4,050,000)
Interest income 84,000 30,000 129,000 53,000
Interest expense (67,000) (40,000) (239,000) (112,000)
----------- ----------- ----------- -----------
Net loss $(2,127,000) $(1,398,000) $(5,108,000) $(4,109,000)
=========== =========== =========== ===========
Net loss per share - basic
and diluted $(.27) $(.27) $(.76) $(1.02)
=========== =========== =========== ===========
Weighted average number of
shares used in computation 7,747,778 5,261,368 6,695,998 4,028,909
=========== =========== =========== ===========
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
September 30, December 31,
1998 1997
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 4,065,000 $ 1,290,000
Accounts receivable 873,000 2,011,000
Inventories 1,788,000 1,828,000
Prepaid and other 197,000 79,000
----------- -----------
Total current assets 6,923,000 5,208,000
Property and equipment, net 3,522,000 3,968,000
Technology for developed products
and custom assays, net 2,528,000 3,065,000
Other assets 420,000 334,000
----------- -----------
Total assets $13,393,000 $12,575,000
=========== ===========
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
September 30, December 31,
1998 1997
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 724,000 $ 1,423,000
Accounts payable 898,000 1,553,000
Accrued payroll, payroll taxes and other 796,000 1,181,000
Current portion of long-term debt 91,000 93,000
------------ ------------
Total current liabilities 2,509,000 4,250,000
Long-term debt due after one year 1,649,000 1,570,000
Shareholders' equity:
Preferred stock - $.01 par value; 15,000,000 shares
authorized:
Series B - 428,389 shares issued and outstanding
at September 30, 1998 (liquidation
preference of $1,500,000) 4,000 6,000
Series C - 807,878 shares issued and outstanding
at September 30, 1998 8,000 11,000
Common stock - $.001 par value; 95,000,000 shares
authorized; 7,845,351 shares issued and outstanding
at September 30, 1998 (Note 3) 39,000 14,298,000
Additional paid in capital 52,712,000 30,868,000
Accumulated deficit (43,275,000) (38,174,000)
Accumulated translation adjustments (253,000) (254,000)
------------ ------------
Total shareholders' equity 9,235,000 6,755,000
------------ ------------
Total liabilities and shareholders' equity $ 13,393,000 $ 12,575,000
============ ============
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
--------------------------------
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $(5,108,000) $(4,109,000)
Adjustments to reconcile net loss to cash provided
by (used for) operating activities:
Depreciation and amortization 1,168,000 949,000
Changes in assets and liabilities:
Accounts receivable 994,000 (39,000)
Inventories 45,000 (148,000)
Other current assets (117,000) (183,000)
Accounts payable (665,000) 9,000
Customer deposits -- (16,000)
Accrued liabilities (118,000) (41,000)
----------- -----------
Net cash used for operating activities (3,801,000) (3,578,000)
Cash flows from investing activities:
Purchases of equipment (72,000) (85,000)
Other, net (130,000) (14,000)
----------- -----------
Net cash used for investing activities (202,000) (99,000)
Cash flows from financing activities:
Proceeds from issuance of notes 555,000 872,000
Proceeds from issuance of stock, net of related cost 7,492,000 6,215,000
Repayment of short-term borrowings (443,000) (946,000)
Repayment of long-term debt and capital lease obligations (74,000) (63,000)
Effective redemption of Series D Preferred Stock (700,000) --
----------- -----------
Net cash provided by financing activities 6,830,000 6,078,000
Effect of exchange rate changes on cash (52,000) (71,000)
----------- -----------
Net increase in cash and cash equivalents 2,775,000 2,330,000
Cash and cash equivalents - beginning of period 1,290,000 422,000
----------- -----------
Cash and cash equivalents - end of period $ 4,065,000 $ 2,752,000
=========== ===========
Non-cash transaction - issuance of common stock
in exchange for cancellation of notes and
accrued interest $ 778,000 $ --
=========== ===========
</TABLE>
4
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS AND CONDENSED NOTES
The unaudited consolidated financial statements, which have been prepared in
accordance with the instructions to Form 10-Q, do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements. All adjustments considered necessary by
management for a fair presentation have been included. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the full year.
An annual report (Form 10-K) has been filed with the Securities and Exchange
Commission ("Commission") for the year ended December 31, 1997. That report
contains, among other information, a description of the Company's business,
audited financial statements, notes to the financial statements, the report
of the independent auditors and management's discussion and analysis of
results of operations and financial condition. Readers of this report are
presumed to be familiar with that annual report.
2. INVENTORIES
Inventories are stated at the lower of cost or market. Cost has been
determined by using the first-in, first-out and specific identification
methods. Inventories at September 30, 1998 and December 31, 1997, consisted
of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
<S> <C> <C>
Raw materials $1,110,000 $1,319,000
Work in process 483,000 344,000
Finished goods 195,000 165,000
---------- ----------
Total $1,788,000 $1,828,000
========== ==========
</TABLE>
3. SHAREHOLDERS' EQUITY
In the second and third quarters of 1998 the Company completed a private
placement of its common stock together with warrants to a series of
institutional investors ("units"). The units, consisting of one share of
common stock plus a warrant to purchase one share of common stock, were
priced at the NASDAQ closing price the day prior to the signing of the
subscription agreements. A total of 1,985,678 common shares (9,928,391
common shares on a pre-reverse split basis) and warrants to purchase an
equal number of common shares were issued in exchange for gross proceeds of
$8,181,000 in cash and conversion of $778,000 of short-term notes and
accrued interest payable. The exercise price of each warrant is equal to
120% of the price paid per unit.
5
<PAGE>
At the Company's Annual Meeting of Stockholders held on July 13, 1998, the
stockholders approved proposals to increase the authorized number of common
shares to 95,000,000 and reduce the par value of the Company's common stock
to $.001. Following the Meeting, the number of authorized shares of common
stock was increased and the par value was reduced, accordingly. The
stockholders also approved a proposal authorizing the Company's Board of
Directors at its discretion to effect a one-for-five reverse stock split at
any time prior to the Company's 1999 Annual Meeting of Stockholders. In
September 1998 the Company's Board of Directors approved the reverse split,
which became effective October 21, 1998. All common shares and per common
share data has been changed to reflect this split.
The Company was notified by Nasdaq in a letter dated May 28, 1998 that,
because the bid price of its Common Stock was less than USD $1.00, its
Common Stock was not in compliance with the NASD Marketplace Rule 4450(a)(5)
("Rule 4450"). Trading commenced on October 21, 1998 following the reverse
split at an initial price of $1.875. Pursuant to Rule 4450, the closing bid
price was required to remain at or above $1.00 per share for ten consecutive
trading days to satisfy the maintenance criteria regarding bid price, and
this requirement was met on November 3, 1998. The Company received a letter
from Nasdaq on November 3, 1998 informing it that the Company has been found
to be in compliance with the bid price requirement and all requirements for
continued listing on The Nasdaq National Market. Furthermore, Nasdaq
informed the Company that the hearing file has been closed.
During the first three quarters of 1998, 214,194 shares of Series B
Preferred Stock were converted into 42,838 shares of common stock, 213,819
shares of Series C Preferred Stock were converted into 61,770 shares of
common stock and 50 shares of Series D Preferred Stock were converted into
35,800 shares of common stock. Also during the second quarter of 1998 the
Company entered into a settlement agreement with the holder of the remaining
700 outstanding shares of Series D Preferred Stock whereby such holder and
the Company released any and all claims either may have against the other
with respect to such Series D Preferred Stock, and the Company paid the
holder $700,000 cash. The holder has subsequently returned the Series D
Preferred Stock to the Company, and the stock certificate has been
cancelled.
4. COMPREHENSIVE LOSS
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income". The Company's
consolidated comprehensive loss was $2,069,000 and $1,332,000 for the three
months ended September 30, 1998 and 1997, respectively and $5,107,000 and
$4,272,000 for the nine months ended September 30, 1998 and 1997,
respectively. The differences between the net loss reported in the
consolidated statement of operations and consolidated comprehensive net loss
for the periods consisted of changes in foreign currency translation
adjustments.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased during the first nine months of 1998
from $958,000 at December 31, 1997 to $4,414,000 at September 30, 1998. This
increase in the Company's working capital resulted primarily from the
issuance of common stock (net proceeds of $8,270,000), offset by the effect
of the net loss for the first nine months of 1998 ($5,108,000 less non-cash
charges of $1,168,000) and a $700,000 payment for effective redemption of
the remaining Series D Preferred Stock.
Cash and cash equivalents increased from $1,290,000 at December 31, 1997 to
$4,065,000 at September 30, 1998.
The Company expects to continue to report losses in 1998 as the level of
expenses is expected to continue to exceed revenues. To continue operations
in accordance with its current plans, the Company must raise additional
capital or begin to receive revenues from new sources before the end of
1999. Although the Company has raised additional funds through private
placements and a public offering in the past, it cannot predict the sources,
terms, amount, form, and/or availability of additional capital to fund its
operations to the end of 1999. No assurances can be given that sufficient
additional capital will be available to the Company, or if such capital is
available to the Company, that it will be available on reasonably favorable
terms. Failure to raise additional capital or generate revenues from new
sources would cause the Company to severely curtail or cease operations.
The Company can give no assurances as to when and if its revenues will
exceed its expenses. While the Company believes that its new products and
technologies show considerable promise, its ability to realize significant
revenues therefrom is dependent upon the Company's success in developing
business alliances with biotechnology and/or pharmaceutical companies that
have the required resources to develop and market certain of these products.
There is no assurance that the Company's effort to develop such business
alliances will be successful.
INFORMATION SYSTEMS AND THE YEAR 2000
As is the case with most other companies using computers in their
operations, the Company is in the process of addressing the Year 2000
problem. The Company is currently engaged in a project to review computer
hardware and software to determine whether they will consistently and
properly recognize the Year 2000. Certain of the Company's systems include
hardware and packaged software recently purchased from vendors who have
represented that these systems are already Year 2000 compliant.
Other hardware and software currently being used by the Company has been
identified by the Company as not being Year 2000 compliant, particularly
certain packaged software used in the Company's accounting systems. The
Company expects that upgrades to the
7
<PAGE>
software packages being used in its accounting and manufacturing systems
will be available from the vendors of those packages. The cost of such
upgrades, or replacement of certain software packages and certain older
hardware used in those systems has not yet been determined, but is not
expected to be material. Most of the hardware and software replacements for
accounting and manufacturing systems expected to be required are
replacements that would have been made regardless of the Year 2000 issue.
The Company expects to complete its review of all of its systems, including
embedded technology in non-information technology systems, which might be
affected by the Year 2000 issue by the second quarter of 1999. The Company
is reviewing communications, security, and environmental monitoring and
control systems as well as certain laboratory and manufacturing equipment
and equipment manufactured for customers. The Company believes that, in the
worst likely case, such systems or components thereof can be replaced to
make such systems Year 2000 compliant, and that the cost for such
replacements will not be material.
The Company relies on a number of vendors and suppliers including banks,
telecommunications providers, transportation companies and other providers
of goods and services. The inability of certain of these third parties to
conduct their business for a significant period of time due to the Year 2000
issue could have a material impact on the Company's operations. The Company
does not have the resources to determine whether all such vendors and
suppliers are Year 2000 compliant. However, the Company expects that it
could find other vendors and suppliers if any of its current vendors or
suppliers are unable to continue to provide goods or services to the
Company, but no assurances can be given as to how long it will take to find
substitute vendors and suppliers.
8
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 1997
REVENUES
The Company's revenues for the quarters ended September 30, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Instrument sales and development $ 505,000 $ --
Diagnostic and research assays 491,000 557,000
Bovine superoxide dismutase (bSOD)
for research and human use 5,000 582,000
Palosein/(R)/ (bSOD for veterinary use) 35,000 84,000
Fine chemicals and other 3,000 70,000
Royalties and license fees --- 150,000
---------- ----------
$1,039,000 $1,443,000
========== ==========
</TABLE>
Instrument sales and development revenues are generated by the Company's
wholly-owned subsidiary, OXIS Instruments, Inc., (formerly Innovative
Medical Systems Corp.), acquired by the Company on December 31, 1997.
Because the acquisition was recorded as a purchase, the revenues and
expenses of OXIS Instruments, Inc. are not included in the Company's
consolidated results of operations prior to 1998.
The decrease in diagnostic and research assay sales in the third quarter of
1998 as compared to the third quarter of 1997 resulted primarily from lower
sales volumes to foreign distributors of the Company's research assays.
Sales of bSOD in the third quarter of 1997 ware almost entirely to one
European customer and no shipments were made to this customer in the first
nine months of 1998. Future sales of bulk bSOD continue to be largely
dependent on the needs of this one customer. The Company does not expect to
make any significant sales of bulk bSOD during the remainder of 1998.
The volume of Palosein/(R)/ sales declined reflecting a reduction in the
Company's marketing efforts for this product.
9
<PAGE>
The Company realized license fee revenue of $150,000 in the third quarter of
1997 from an agreement to license its patented polyethylene glycol
technology to Enzon, Inc. A minimum annual fee of $50,000 was received in
the first quarter of 1998.
COSTS AND EXPENSES
Including amortization of purchase adjustments, cost of sales was 70% of
product sales for the third quarter of 1997 and increased to 96% of product
sales for the third quarter of 1998. This increase in the cost of sales as a
percentage of sales is due primarily to the effect of fixed manufacturing
costs being spread over manufacturing and sales volume for the third quarter
of 1998 that is substantially less than the manufacturing capacity of the
Company's facilities since the acquisition of the Company's instrument
manufacturing subsidiary. Although management has taken certain steps to
reduce personnel and occupancy costs of Oxis Instruments, Inc., no
assurances can be given that such efforts will result in any significant
improvements in profit margins. Cost of sales as a percentage of sales was
also higher in the third quarter of 1998 as compared to the third quarter of
1997 due to the reductions in sales of bSOD and Palosein/(R)/, which
contributed approximately $150,000 more in profit margins in the third
quarter of 1997 than in 1998.
Cost of sales in the third quarter of 1997 includes approximately $174,000
in amortization of purchase adjustments relating to 1994 business
acquisitions. Costs of sales in the third quarter of 1998 includes
approximately $215,000 in amortization of purchase adjustments relating to
1994 and 1997 business acquisitions. Excluding such amortization the cost of
product sales for the third quarter of 1997 was approximately 56% of sales
and the cost of sales for the third quarter of 1998 was approximately 75% of
product sales.
Research and development expenses decreased from $1,210,000 in the third
quarter of 1997 to $1,109,000 in the third quarter of 1998. This decrease of
$101,000 in research and development expenses resulted primarily from staff
reductions in the U.S. in the fourth quarter of 1997 and first quarter of
1998.
Selling, general and administrative expenses increased from $717,000 in the
third quarter of 1997 to $1,078,000 in the third quarter of 1998. The
increase was primarily due the selling, general and administrative expenses
of the Company's instrument manufacturing subsidiary, OXIS Instruments,
Inc., in 1998 which was acquired by the Company on December 31, 1997.
INTEREST INCOME AND EXPENSE
Interest income increased by $54,000 in the third quarter of 1998 as
compared with the third quarter of 1997, primarily due to an increase in
funds available for short-term investments following the receipt of proceeds
from the private placement of units of common stock and warrants in May and
July 1998.
Interest expense increased by $27,000 in the third quarter of 1998 as
compared with the third quarter of 1997, due to interest on notes payable by
OXIS Instruments, Inc.
10
<PAGE>
NET LOSS
The Company continued to experience losses in the third quarter of 1998. The
third quarter 1998 loss of $2,127,000 ($0.27 per share) was $729,000 more
than the $1,398,000 ($0.27 per share) loss for the third quarter of 1997.
The increase in the net loss is primarily due to a decline in sales and
gross margin from product sales and an increase in selling, general and
administrative expenses following the acquisition of OXIS Instruments, Inc.
The Company plans to continue to invest in research and development
activities and incur marketing, sales and administrative expenses in amounts
greater than its anticipated near-term product margins, and, as a result,
expects to incur a substantial net loss for 1998.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE
MONTHS ENDED SEPTEMBER 30, 1997
REVENUES
The Company's product sales for the nine-month periods ended September 30,
1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Instrument sales and development $1,998,000 $ --
Diagnostic and research assays 1,511,000 1,735,000
Bovine superoxide dismutase (bSOD)
for research and human use 6,000 997,000
Palosein/(R)/ (bSOD for veterinary use) 128,000 314,000
Fine chemicals and other 127,000 91,000
Royalties and license fees 71,000 209,000
---------- ----------
$3,841,000 $3,346,000
========== ==========
</TABLE>
Instrument sales and development revenues are generated by OXIS Instruments,
Inc., the Company's instrument manufacturing subsidiary, acquired on
December 31, 1997.
11
<PAGE>
Sales of bSOD in 1997 were almost entirely to one European customer and no
shipments were made to this customer during the first nine months of 1998.
Future sales of bulk bSOD continue to be largely dependent on the needs of
this one customer. The Company does not expect to make any significant sales
of bulk bSOD during the remainder of 1998. The Company has received an order
from its customer for delivery of bulk bSOD in the first half of 1999.
However, the Company expects its revenues from sales of bulk bSOD in 1999 to
be less than in 1997. The Company's sales of bulk bSOD beyond 1999 are
uncertain and difficult to predict and no assurances can be given with
respect thereto.
Palosein/(R)/ sales in the first nine months of 1997 included a substantial
sale to a distributor in Germany, which has not been repeated in 1998.
COSTS AND EXPENSES
Including amortization of purchase adjustments, cost of sales was 68% of
product sales for the first nine months of 1997 and increased to 88% of
product sales for the first nine months of 1998. This increase in the cost
of sales as a percentage of sales is due primarily to the effect of fixed
manufacturing costs being spread over manufacturing and sales volume for the
first nine months of 1998 that is substantially less than the manufacturing
capacity of the Company's facilities since the acquisition of the Company's
instrument manufacturing subsidiary. Cost of sales as a percentage of sales
was also higher in the first nine months of 1998 as compared to the first
nine months of 1997 due to the reductions in sales of bSOD and
Palosein/(R)/, which contributed approximately $360,000 more in profit
margins in the first nine months of 1997 than in 1998.
Cost of sales in the first nine months of 1997 includes approximately
$530,000 in amortization of purchase adjustments relating to 1994 business
acquisitions. Costs of sales in the first nine months of 1998 includes
approximately $641,000 in amortization of purchase adjustments relating to
1994 and 1997 business acquisitions. Excluding such amortization the cost of
product sales for the first nine months of 1997 was approximately 52% of
sales and the cost of sales for the first nine months of 1998 was
approximately 71% of product sales.
Research and development expenses decreased by $400,000 from $3,199,000 for
the first nine months of 1997 to $2,799,000 for the first nine months of
1998. The decrease in research and development expenses resulted primarily
from cost reductions in the first nine months of 1998 compared to the first
nine months of 1997 relating to the Company's French subsidiary.
Selling, general and administrative expenses increased by $683,000, from
$2,049,000 for the first nine months of 1997 to $2,732,000 for the first
nine months of 1998. The increase was primarily due to the selling, general
and administrative expenses of the Company's instrument manufacturing
subsidiary, OXIS Instruments, Inc., in 1998.
12
<PAGE>
INTEREST INCOME
Interest income increased by $76,000 in the first nine months of 1998 as
compared to the first nine months of 1997, due to an increase in funds
available for investments following the receipt of proceeds from the private
placement of units of common stock and warrants in May and July 1998.
NET LOSS
The Company's loss for the first nine months of 1998 was $5,108,000 ($0.76
per share) compared to a loss of $4,109,000 ($1.02 per share) for the first
nine months of 1997. The increase in the net loss is primarily due to
increased selling general and administrative expenses ($683,000) and reduced
profit margins on product sales ($527,000), offset by a reduction in
research and development costs ($400,000). The decrease in net loss per
share is due to the increase in the weighted average number of shares
outstanding.
----------------------------------
Certain of the matters discussed in this Report such as management's future
sales expectations, possible progress with respect to the Company's clinical
trials, possible development of business alliances and raising additional
capital are forward-looking statements that involve risks and uncertainties,
including the timely development and market acceptance of new products, the
impact of competitive products and pricing, economic conditions, and other
risks. These factors could cause actual results to differ materially from
those described in any forward-looking statements.
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1998 Annual Meeting of Stockholders held on July 13, 1998
("1998 Stockholders Meeting"), the Company's stockholders elected the following
persons to the Company's Board of Directors:
<TABLE>
<CAPTION>
Common Series B Series B Series C Series C Series C
Common shares Preferred Preferred Preferred Preferred Preferred
Name shares FOR WITHHELD FOR* WITHHELD* FOR* WITHHELD*
<S> <C> <C> <C> <C> <C> <C>
Anna D. Barker, Ph.D. 26,540,709 327,999 642,583 0 555,296 0
Timothy G. Biro 26,009,959 858,749 642,583 0 555,296 0
Richard A. Davis 26,603,972 264,736 642,583 0 555,296 0
Brenda D. Gavin, D.V.M. 26,578,077 290,631 642,583 0 555,296 0
Stuart S. Lang 26,559,508 309,200 642,583 0 555,296 0
James D. McCamant 26,578,842 289,866 642,583 0 555,296 0
David A. Needham, Ph.D. 26,517,908 350,800 642,583 0 555,296 0
Ray R. Rogers 26,479,205 389,503 642,583 0 555,296 0
A.R. Sitaraman 26,558,147 310,561 642,583 0 555,296 0
</TABLE>
*In equivalent common votes.
Subsequent to the 1998 Stockholders Meeting, Dr. Anna D. Barker has resigned
from the Company's Board of Directors.
At the 1998 Stockholders Meeting, the stockholders also approved (1) an
amendment of the Company's Second Restated Certificate of Incorporation to
increase the authorized number of shares of OXIS common stock from 50,000,000
shares to 95,000,000 shares (25,683,399 common shares, Series B Preferred shares
with 428,389 equivalent common votes and Series C Preferred with 555,296
equivalent common votes voting for; 1,145,384 common shares and Series B
Preferred shares with 214,194 equivalent common votes voting against; and 39,925
common shares abstaining), (2) an amendment of the Company's Second Restated
Certificate of Incorporation to reduce the par value of OXIS common stock from
fifty cents ($.50) to one-tenth of one cent ($.001) (25,594,507 common shares,
Series B Preferred shares with 642,583 equivalent common votes and Series C
Preferred with 555,296 equivalent common votes voting for; 1,224,987 common
shares voting against; and 49,214 common shares abstaining), and (3) a proposal
authorizing the Company's Board of Directors to amend the Company's Second
Restated Certificate of Incorporation to effect a one-for-five reverse stock
split of the Company's common stock (24,784,501 common shares, Series B
Preferred shares with 642,583 equivalent common votes and Series C Preferred
with 555,296 equivalent common votes voting for; 2,030,215 common shares voting
against; and 53,992 common shares abstaining). Since the 1998 Stockholders
Meeting, the Company's Second Restated Certificate of Incorporation has been
amended to effect the three proposals approved by the Stockholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - See Exhibit Index on page 16.
(b) Reports on Form 8-K.
The Company filed with the Commission on July 6, 1998, a Report on Form 8-K
which reported matters relating to the sale of the Company's units of common
stock and warrants
14
<PAGE>
in a private placement. On September 21, 1998, the Company filed another
Report on Form 8-K which reported the amendment of the Company's Certificate
of Incorporation to increase the authorized number of shares of common stock
and to reduce its par value.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OXIS International, Inc.
November 10, 1998 By s/Ray R. Rogers
-----------------
Ray R. Rogers
Chairman and Chief Executive Officer
November 10, 1998 By s/Jon S. Pitcher
------------------
Jon S. Pitcher
Chief Financial Officer
15
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Description of Document Number
3(a) Second Restated Certificate of Incorporation (1)
27(a) Financial Data Schedule
----------------
(1) Incorporated by reference to the Company's Form 8-K Current Report filed
September 21, 1998.
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 SEP-30-1998
<CASH> 4,065,000 4,065,000
<SECURITIES> 0 0
<RECEIVABLES> 873,000 873,000
<ALLOWANCES> 0 0
<INVENTORY> 1,788,000 1,788,000
<CURRENT-ASSETS> 6,923,000 6,923,000
<PP&E> 3,522,000 3,522,000
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 13,393,000 13,393,000
<CURRENT-LIABILITIES> 2,509,000 2,509,000
<BONDS> 0 0
0 0
12,000 12,000
<COMMON> 39,000 39,000
<OTHER-SE> (253,000) (253,000)
<TOTAL-LIABILITY-AND-EQUITY> 13,393,000 13,393,000
<SALES> 1,039,000 3,770,000
<TOTAL-REVENUES> 1,039,000 3,841,000
<CGS> 996,000 3,308,000
<TOTAL-COSTS> 3,183,000 8,839,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 67,000 239,000
<INCOME-PRETAX> (2,127,000) (5,108,000)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (2,127,000) (5,108,000)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,127,000) (5,108,000)
<EPS-PRIMARY> (.27) (.76)
<EPS-DILUTED> 0 0
</TABLE>
