EXHIBIT 99(3)
OXIS International, Inc. and Therox Pharmaceuticals, Inc.
Unaudited Pro Forma Financial Information
On July 19, 1995, OXIS International, Inc. ("OXIS") consummated the acquisition
of Therox pursuant to a transaction wherein Therox was merged with and into a
wholly-owned subsidiary of OXIS. The unaudited pro forma financial information
presented below combines the balance sheets of OXIS and Therox as of December
31, 1994 and March 31, 1995 and the statements of operations for the year ended
December 31, 1994, and the three months ended March 31, 1995 on a pro forma
basis. This pro forma combination gives effect to the following assumptions.
. That the acquisition of Therox by OXIS occurred as of the beginning of each of
the periods presented.
. That the Therox acquisition would be accounted for as a purchase.
. That the purchase price paid by OXIS to acquire Therox will be $3,353,313,
consisting of 1,440,736 shares of OXIS Common Stock valued at 2.3275 per
share. This valuation is based on the average of the closing price of OXIS
Common Stock from July 14, 1995 through July 20, 1995, the day after the
consummation of the acquisition, discounted 30% for certain trading
restrictions and the number of shares of OXIS Common Stock being issued in the
transaction, as compared to the average trading volume of OXIS Common Stock.
. That holders of Therox stock options would exercise their options, resulting
in additional equity for Therox of $68,850, prior to the acquisition.
. That, simultaneous to the acquisition, the two major Therox shareholders would
purchase 642,583 shares of OXIS Series B Preferred Stock for an aggregate
purchase price of $1,500,000.
. That the excess of the purchase price paid over the shareholders' equity of
Therox would be allocated entirely to technology for in-process products and
charged to expense in the first statement of operations for the combined
companies.
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.
19
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 June 30,
1995 are included in the Company's second quarter Form 10-Q report filed with
the Securities and Exchange Commission. Financial statements of Therox as of
December 31, 1994 and March 31, 1995 are included in this report on Form 8-K/A.
20
Unaudited Pro Forma Balance Sheet of
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined as of December 31, 1994
Pro forma Pro forma
ASSETS OXIS Therox adjustments combined
---- ------ ----------- ---------
Current assets:
Cash and cash equivalents $ 936,000 $471,000 $ 69,000 (1) $ 2,976,000
1,500,000 (4)
Certificates of deposit 496,000 496,000
Accounts receivable 740,000 740,000
Inventories 673,000 673,000
Prepaid and other 228,000 5,000 233,000
----------- -------- ----------- -----------
Total current assets 3,073,000 476,000 1,569,000 5,118,000
Property and equipment, net 1,298,000 18,000 1,316,000
Assets under capital leases, net 1,340,000 1,340,000
Technology for in-process products 2,902,000 (2) 0
(2,902,000) (3)
Technology for developed products and
custom assays, net 5,215,000 5,215,000
Other assets 268,000 13,000 281,000
----------- -------- ----------- -----------
Total assets $11,194,000 $507,000 $ 1,569,000 $13,270,000
=========== ======== =========== ===========
21
Unaudited Pro Forma Balance Sheet of
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined as of December 31, 1994
LIABILITIES AND SHAREHOLDERS' EQUITY
Pro forma Pro forma
OXIS Therox adjustments combined
---- ------ ----------- ---------
Current liabilities:
Note payable to bank $ 340,000 $ 340,000
Accounts payable 1,562,000 $ 123,000 1,685,000
Customer deposits 1,116,000 1,116,000
Accrued liabilities 628,000 2,000 $ 133,000 (5) 763,000
Current portion of capital lease obligations 473,000 473,000
----------- --------- ----------- ------------
Total current liabilities 4,119,000 125,000 133,000 4,377,000
Capital lease obligations 297,000 297,000
Other liabilities 79,000 79,000
Shareholders' equity:
Preferred stock:
OXIS 0 6,000 (4) 6,000
Therox 1,000 (1,000) (2) 0
Common stock:
OXIS 4,661,000 720,000 (2) 5,381,000
Therox 0
Additional paid-in capital:
OXIS 20,230,000 2,633,000 (2) 24,224,000
1,494,000 (4)
(133,000) (5)
Therox 979,000 69,000 (1) 0
(1,048,000) (2)
Accumulated deficit:
OXIS (18,139,000) (2,902,000) (3) (21,041,000)
Therox (598,000) 598,000 (2) 0
Accumulated translation adjustments (53,000) (53,000)
----------- --------- ----------- ------------
Total shareholders' equity 6,699,000 382,000 1,436,000 8,517,000
----------- --------- ----------- ------------
Total liabilities and shareholders'
equity $11,194,000 $ 507,000 $ 1,569,000 $ 13,270,000
=========== ========= =========== ============
22
Notes to Unaudited Pro Forma Balance Sheet
December 31, 1994
1. To reflect cash paid for exercise of Therox stock options prior to the
acquisition of Therox by OXIS.
2. To reflect the pro forma purchase price, $3,353,313, paid to acquire Therox,
consisting of 1,440,736 shares of OXIS Common Stock at $2.3275 per share.
This valuation is based on the average of the closing price of OXIS Common
Stock from July 14, 1995 through July 20, 1995, the day after the
consummation of the acquisition, discounted 30% for certain trading
restrictions and the number of shares of OXIS Common Stock being issued in
the transaction, as compared to the average trading volume of OXIS Common
Stock. The excess of the pro forma purchase price over the shareholders'
equity of Therox has been allocated entirely to technology for in-process
products.
Stock issued in connection with the acquisition has been recorded in
shareholders' equity as follows:
Common Stock, 1,440,736 shares at $.50 par $ 720,000
Additional paid-in capital 2,633,000
----------
Stock issued - 1,440,736 shares at $2.3275 per share $3,353,000
==========
3. The amount allocated to technology on in-process products will be charged to
expense in the first statement of operations for the combined companies
inasmuch as these amounts relate to research and development for which there
is no alternative future use. Consequently, the unaudited pro forma balance
sheet has been prepared to present the total assets and shareholders' equity
immediately following this write off.
4. To reflect $1,500,000 cash paid by the two major Therox shareholders for
642,583 shares of OXIS Series B Preferred Stock. The Series B preferred
Stock is presented as:
642,583 shares at .01 par $ 6,000
Additional paid in capital 1,494,000
----------
Cash paid $1,500,000
==========
5. To reflect a liability for costs directly attributable to issuance of stock.
6. In addition to the OXIS shares issued, the stockholders of Therox may receive
up to $2,000,000 based on the successful commercialization of the Therox
technologies. No effect has been given in the pro forma balance sheet for
this matter.
23
Unaudited Pro Forma Statement of Operations
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined for the year ended December 31, 1994
Pro forma Pro forma
OXIS Therox adjustments combined
---- ------ ----------- ---------
Revenues:
Sales $ 3,325,000 $ 3,325,000
Royalties 145,000 145,000
------------ ---------- ----------- ------------
Total revenues 3,470,000 0 3,470,000
Costs and expenses:
Cost of sales 2,074,000 2,074,000
Research and development 1,670,000 $ 526,000 2,196,000
Sales, general and administrative 1,652,000 11,000 1,663,000
Purchased in-process technology 3,675,000 3,675,000
------------ ---------- ----------- ------------
Total costs and expenses 9,071,000 537,000 0 9,608,000
------------ ---------- ----------- ------------
Operating loss (5,601,000) (537,000) 0 (6,138,000)
Interest income 82,000 16,000 98,000
Interest expense (48,000) (48,000)
------------ ---------- ----------- ------------
Net loss ($5,567,000) ($521,000) $0 ($6,088,000)
============ ========== =========== ============
Net loss per OXIS share ($0.88) ($0.50)
============ ============
24
Notes to Unaudited Pro Forma Statement of Operations
for the Year Ended December 31, 1994
1. The write off of the pro forma purchase price amount allocated to technology
on in-process products is not reflected in the unaudited pro forma statement
of operations. This amount relates to research and development in process
for which there is no alternative future use and is expected to approximate
$2,902,000. This amount will be written off in the initial period of
operations of the combined companies.
2. Net loss per OXIS share in the unaudited pro forma statement of operations
has been computed based upon 12,124,423 Common Shares outstanding upon
consummation of the acquisition.
25
Unaudited Pro Forma Balance Sheet of
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined as of March 31, 1995
Pro forma Pro forma
ASSETS OXIS Therox adjustments combined
---- ------ ----------- ---------
Current assets:
Cash and cash equivalents $ 724,000 $344,000 $ 69,000 (1) $ 2,637,000
1,500,000 (4)
Certificates of deposit 198,000 198,000
Accounts receivable 1,002,000 1,002,000
Inventories 653,000 653,000
Prepaid and other 313,000 313,000
----------- -------- ----------- -----------
Total current assets 2,890,000 344,000 1,569,000 4,803,000
Property and equipment, net 1,286,000 18,000 1,304,000
Assets under capital leases, net 1,422,000 1,422,000
Technology for in-process products 3,081,000 (2) 0
(3,081,000) (3)
Technology for developed products and
custom assays, net 5,189,000 5,189,000
Other assets 300,000 12,000 312,000
----------- -------- ----------- -----------
Total assets $11,087,000 $374,000 $ 1,569,000 $13,030,000
=========== ======== =========== ===========
26
Unaudited Pro Forma Balance Sheet of
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined as of March 31, 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
Pro forma Pro forma
OXIS Therox adjustments combined
---- ------ ----------- ---------
Current liabilities:
Note payable to bank $ 198,000 $ 198,000
Other notes payable 766,000 766,000
Accounts payable 2,066,000 $ 167,000 2,233,000
Customer deposits 250,000 250,000
Accrued liabilities 661,000 4,000 $ 133,000 (5) 798,000
Current portion of capital lease
obligations 431,000 431,000
------------ -------- ----------- ------------
Total current liabilities 4,372,000 171,000 133,000 4,676,000
Capital lease obligations 267,000 267,000
Other liabilities 76,000 76,000
Shareholders' equity:
Preferred stock:
OXIS 6,000 (4) 6,000
Therox 1,000 (1,000) (2) 0
Common stock:
OXIS 4,708,000 720,000 (2) 5,428,000
Therox 0
Additional paid-in capital:
OXIS 20,338,000 2,633,000 (2) 24,332,000
1,494,000 (4)
(133,000) (5)
Therox 979,000 69,000 (1) 0
(1,048,000) (2)
Accumulated deficit:
OXIS (18,896,000) (3,081,000) (3) (21,977,000)
Therox (777,000) 777,000 (2) 0
Accumulated translation adjustments 222,000 222,000
------------ -------- ----------- ------------
Total shareholders' equity 6,372,000 203,000 1,436,000 8,011,000
------------ -------- ----------- ------------
Total liabilities and
shareholders' equity $ 11,087,000 $374,000 $ 1,569,000 $ 13,030,000
============ ======== =========== ============
27
Notes to Unaudited Pro Forma Balance Sheet
March 31, 1995
1. To reflect cash paid for exercise of Therox stock options prior to the
acquisition of Therox by OXIS.
2. To reflect the pro forma purchase price, $3,353,313, paid to acquire Therox,
consisting of 1,440,736 shares of OXIS Common Stock at $2.3275 per share.
This valuation is based on the average of the closing price of OXIS Common
Stock from July 14, 1995 through July 20, 1995, the day after the
consummation of the acquisition, discounted 30% for certain trading
restrictions and the number of shares of OXIS Common Stock being issued in
the transaction, as compared to the average trading volume of OXIS Common
Stock. The excess of the pro forma purchase price over the shareholders'
equity of Therox has been allocated entirely to technology for in-process
products.
Stock issued in connection with the acquisition has been recorded in
shareholders' equity as follows:
Common Stock, 1,440,736 shares at $.50 par $ 720,000
Additional paid-in capital 2,633,000
----------
Stock issued - 1,440,736 shares at $2.3275 per share $3,353,000
==========
3. The amount allocated to technology on in-process products will be charged to
expense in the first statement of operations for the combined companies
inasmuch as these amounts relate to research and development for which there
is no alternative future use. Consequently, the unaudited pro forma balance
sheet has been prepared to present the total assets and shareholders' equity
immediately following this write off.
4. To reflect $1,500,000 cash paid by the two major Therox shareholders for
642,583 shares of OXIS Series B Preferred Stock. The Series B preferred
Stock is presented as:
642,583 shares at .01 par $ 6,000
Additional paid in capital 1,494,000
----------
Cash paid $1,500,000
==========
5. To reflect a liability for costs directly attributable to issuance of stock.
6. In addition to the OXIS shares issued, the stockholders of Therox may receive
up to $2,000,000 based on the successful commercialization of the Therox
technologies. No effect has been given in the pro forma balance sheet for
this matter.
28
Unaudited Pro Forma Statement of Operations
OXIS International, Inc.
(OXIS International, Inc., and Therox Pharmaceuticals, Inc.)
Combined for the three months ended March 31, 1995
Pro forma Pro forma
OXIS Therox adjustments combined
---- ------ ----------- ---------
Revenues:
Sales $2,075,000 $2,075,000
Royalties 51,000 51,000
---------- ---------- ----------- ----------
Total revenues 2,126,000 2,126,000
Costs and expenses:
Cost of sales 1,177,000 1,177,000
Research and development 1,029,000 $ 177,000 1,206,000
Sales, general and administrative 645,000 5,000 650,000
Purchased in-process technology 0
---------- ---------- ----------- ----------
Total costs and expenses 2,851,000 182,000 3,033,000
---------- ---------- ----------- ----------
Operating loss (725,000) (182,000) (907,000)
Interest income 6,000 2,000 8,000
Interest expense (38,000) (38,000)
---------- ---------- ----------- ----------
Net loss ($757,000) ($180,000) $0 ($937,000)
========== ========== =========== ==========
Net loss per OXIS share ($0.08) ($0.08)
========== ==========
29
Notes to Unaudited Pro Forma Statement of Operations
for the Three Months Ended March 31, 1995
1. The write off of the pro forma purchase price amount allocated to technology
on in-process products is not reflected in the unaudited pro forma statement
of operations. This amount relates to research and development in process
for which there is no alternative future use and is expected to approximate
$3,081,000. This amount will be written off in the initial period of
operations of the combined companies.
2. Net loss per OXIS share in the unaudited pro forma statement of operations
has been computed based upon 12,124,423 Common Shares outstanding upon
consummation of the acquisition.
30