Exhibit 99(b)
OXIS International, Inc. and Innovative Medical Systems Corp.
Unaudited Pro Forma Financial Information
On December 31, 1997, OXIS International, Inc. ("OXIS") consummated the
acquisition of Innovative Medical Systems Corp. ("IMS") pursuant to a
transaction whereby OXIS acquired all of the outstanding stock of IMS. The
unaudited pro forma financial information presented below combines the balance
sheets of OXIS as of September 30, 1997, with the balance sheet of IMS as of
July 31, 1997, and the statements of operations of OXIS for the year ended
December 31, 1996, and nine months ended September 30, 1997 with the statements
of operations of IMS for the year ended October 31, 1996 and the nine months
ended July 31, 1997, respectively. This pro forma combination gives effect to
the following assumptions.
* That the acquisition of IMS by OXIS occurred at the beginning of each of the
periods presented.
* That the acquisition of IMS would be accounted for as a purchase.
* That the purchase price paid by OXIS to acquire IMS would be $1,559,000,
consisting of: (1) 1,000,000 shares of OXIS common stock issued and (2) the
present value of expected minimum future payments aggregating $1,250,000. The
shares of common stock issued have been valued at the average per share
closing price of OXIS' common stock for the three trading days before and
after November 1, 1997, the date on which the two companies reached agreement
on the purchase price.
It should be noted that the unaudited pro forma financial information:
* does not give effect to any costs of combining the companies or to any
efficiencies in operations that could be achieved by combining the companies,
* does not purport to be indicative either of the results of operations that
would have occurred had the acquisition been consummated at the date
indicated, or of future combined results of operations of the companies.
The unaudited pro forma financial information presented below should be read in
conjunction with the notes hereto and the separate financial statements of the
two companies. Unaudited financial statements of the Company as of September
30, 1997 are included in the Company's third quarter Form 10-Q report filed with
the Securities and Exchange Commission. Financial statements of IMS as of and
for the years ended October 31, 1996 and 1997 are included in this report on
Form 8-K/A.
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Unaudited Pro Forma Balance Sheet of
OXIS International, Inc.
(OXIS International, Inc. and Innovative Medical Systems Corp.)
Combined as of September 30, 1997
Pro forma Pro forma
ASSETS OXIS IMS adjustments combined
Current assets:
Cash and cash equivalents $2,752,000 $ 0 $ 2,752,000
Accounts receivable 882,000 459,000 1,341,000
Inventories 733,000 1,050,000 1,783,000
Prepaid and other 373,000 38,000 411,000
---------- ---------- -----------
Total current assets 4,740,000 1,547,000 6,287,000
Property and equipment, net 1,214,000 1,857,000 $770,000 (1) 3,841,000
Technology for developed products
and custom assays, net 3,244,000 0 3,244,000
Other assets 255,000 72,000 327,000
---------- ---------- -------- -----------
Total assets $9,453,000 $3,476,000 $770,000 $13,699,000
========== ========== ======== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $1,148,000 $ 407,000 $ 1,555,000
Accounts payable 1,348,000 399,000 1,747,000
Customer deposits 116,000 0 116,000
Accrued liabilities 579,000 207,000 786,000
Current portion of
long-term debt 9,000 219,000 228,000
---------- ----------- -----------
Total current liabilities 3,200,000 1,232,000 0 4,432,000
Long-term debt after one year 1,455,000 1,455,000
Shareholders' equity:
Preferred stock 16,000 0 16,000
Common stock
OXIS 13,287,000 500,000 (1) 13,787,000
IMS 21,000 (21 ,000)(1) 0
Additional paid in capital
OXIS 30,321,000 1,059,000 (1) 31,380,000
IMS 718,000 (718,000)(1) 0
Retained Earnings
OXIS (37,132,000) (37,132,000)
IMS 1,550,000 (1,550,000)(1)
Treasury stock (1,500,000) 1,500,000 (1)
Accumulated translation adjustments (239,000) 0 (239,000)
---------- ---------- ---------- -----------
Total shareholders' equity 6,253,000 789,000 770,000 7,812,000
---------- ---------- -------- -----------
Total liabilities and shareholders' equity $9,453,000 $3,476,000 $770,000 $13,699,000
========== ========== ======== ===========
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NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1997
1. To reflect the pro forma purchase price, $1,559,000, paid to acquire IMS,
consisting of: (1) 1,000,000 shares of OXIS common stock issued and (2) the
present value of expected minimum future payments (to be paid in shares of
OXIS common stock) aggregating $1,250,000. The shares of common stock issued
have been valued at the average per share closing price of OXIS' common stock
for the three trading days before and after November 1, 997, the date on
which the two companies reached agreement on the purchase price. The excess
of the pro forma purchase price over the shareholders' equity of IMS has been
allocated to property and equipment.
Stock issued in connection with the acquisition has been recorded in
shareholders' equity as follows:
Common stock, 1,000,000 shares at
$.50 par value $ 500,000
Additional paid-in capital 1,059,000
-----------
$ 1,559,000
===========
2. In addition to the minimum payments of $1,250,000, the stockholders of IMS
may receive additional payments (in OXIS common stock) of up to $2,250,000
depending on future revenues of IMS through 2002. No effect has been given
in the pro forma balance sheet to the potential additional payments.
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Unaudited Pro Forma Statement of Operations
OXIS International, Inc.
(OXIS International, Inc. and Innovative Medical Systems Corp.)
Combined for the year ended December 31, 1996
Pro forma Pro forma
OXIS IMS adjustments combined
Revenues:
Sales $ 4,802,000 $3,446,000 $ 8,248,000
Royalties 65,000 65,000
----------- ---------- -----------
Total revenues 4,867,000 3,446,000 8,313,000
Costs and expenses:
Cost of sales 3,009,000 2,904,000 $ 124,000 (1) 6,037,000
Research and development 4,908,000 4,908,000
Sales, general and administrative 2,841,000 748,000 31,000 (1) 3,620,000
----------- ---------- --------- -----------
Total costs and expenses 10,758,000 3,652,000 155,000 14,565,000
----------- ---------- --------- -----------
Operating loss (5,891,000) (206,000) (155,000) (6,252,000)
Interest income and finance charges 37,000 74,000 111,000
Interest expense (138,000) (232,000) (370,000)
----------- ---------- --------- -----------
Net loss before income tax credits (5,992,000) (364,000) (155,000) (6,511,000)
Credit for income taxes 0 161,000 161,000
----------- ---------- --------- -----------
Net Loss $(5,992,000) $ (203,000) $(155,000) $(6,350,000)
=========== ========== ========= ===========
Net loss per OXIS share $ (.21) $ (.22)
=========== ===========
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NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
1. To reflect amortization, on a straight-line basis over 7 years, of the pro
forma purchase price adjustment of $1,084,000 which was allocated to
property, plant and equipment.
The pro forma amortization has been allocated 80% to cost of sales and 20% to
sales, general and administrative expense.
2. The net loss per OXIS share in the unaudited pro forma statement of
operations has been computed based on 28,596,320 common shares outstanding
upon consummation of the acquisition.
3. The unaudited pro forma statement of operations includes the revenues and
expenses of OXIS International, Inc. for the year ended December 31, 1996,
and the revenues and expenses of IMS for the year ended October 31, 1996.
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Unaudited Pro Forma Statement of Operations
OXIS International, Inc.
(OXIS International, Inc. and Innovative Medical Systems Corp.)
Combined for the nine months ended September 30, 1997
Pro forma Pro forma
OXIS IMS adjustments combined
Revenues:
Sales $ 3,137,000 $1,522,000 $ 4,659,000
Royalties 209,000 209,000
----------- ---------- -----------
Total revenues 3,346,000 1,522,000 4,868,000
Costs and expenses:
Cost of sales 2,148,000 1,399,000 $ 93,000 (1) 3,640,000
Research and development 3,199,000 3,199,000
Sales, general and administrative 2,049,000 614,000 23,000 (1) 2,686,000
----------- ---------- ---------- -----------
Total costs and expenses 7,396,000 2,013,000 116,000 9,525,000
----------- ---------- ---------- -----------
Operating loss (4,050,000) (491,000) (116,000) (4,657,000)
Interest income and finance charges 53,000 53,000
Interest expense (112,000) (149,000) (261,000)
----------- --------- -----------
Net loss before income tax credits (4,109,000) (640,000) (116,000) (4,865,000)
Credit for income taxes 0 0 0 0
----------- --------- --------- -----------
Net Loss $(4,109,000) $(640,000) $(116,000) $(4,865,000)
=========== ========= ========= ===========
Net loss per OXIS share $ (.14) $ (.17)
=========== ===========
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NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
1. To reflect amortization, on a straight-line basis over 7 years, of the pro
forma purchase price adjustment of $1,084,000 which was allocated to
property, plant and equipment.
The pro forma amortization has been allocated 80% to cost of sales and 20% to
sales, general and administrative expense.
2. The net loss per OXIS share in the unaudited pro forma statement of
operations has been computed based on 28,596,320 common shares outstanding
upon consummation of the acquisition.
3. The unaudited pro forma statement of operations includes the revenues and
expenses of OXIS International, Inc. for the nine months ended September 30,
1997, and the revenues and expenses of IMS for the nine months ended July 31,
1997.
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