PROSPECTUS
SUPPLEMENT NO. 5
Filed
Pursuant to Rule 424(b)(3)
Registration
File No. 333-123008
OXIS
INTERNATIONAL
PROSPECTUS
SUPPLEMENT NO. 5 DATED December 8, 2005
TO
THE
PROSPECTUS DATED MAY 27, 2005
This
Prospectus Supplement No. 5 supplements our Prospectus dated May 27,
2005 with the following attached document:
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A. |
Form
8-K Current Report dated December 8, 2005
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The
attached information modifies and supersedes, in part, the information in
the
prospectus. Any information that is modified or superseded in the prospectus
shall not be deemed to constitute a part of the Prospectus except as modified
or
superseded by this Prospectus Supplement.
This
Prospectus Supplement No. 5 should be read in conjunction with the Prospectus
Supplement No. 1, Prospectus Supplement No. 2, Prospectus Supplement No.
3,
Prospectus Supplement No. 4 and the Prospectus, each of which are required
to be
delivered with this Prospectus Supplement.
INVESTING
IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
SEE
“RISK
FACTORS” BEGINNING ON PAGE 3 OF THE PROSPECTUS, AS
SUPPLEMENTED
BY THIS PROSPECTUS SUPPLEMENT.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES
OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT IS
TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL
OFFENSE.
The
date
of this prospectus supplement is December 8, 2005
INDEX
TO
FILINGS
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Annex
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Form
8-K
Current Report of
the registrant filed with the Securities and
Exchange Commission on December 8, 2005
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A
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Annex A
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): December 2, 2005
OXIS
INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction of incorporation)
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0-8092
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94-1620407
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(Commission
File Number)
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(I.R.S.
employer identification No.)
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6040
N.
Cutter Circle, Suite 317
Portland,
OR 97217-3935
(Address
of Principal Executive Office, Including Zip Code)
(503)
283-3911
(Registrant’s
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange
Act(17CFR240.14a-12)
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| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act(17CFR240.14d-2(b))
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| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act(17CFR240.13e-4(c))
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Item
1.01. Entry
into a Material Definitive Agreement.
On
December 6, 2005, OXIS International, Inc. (the “Company”) completed the
initial closing (the “Initial Closing”) of the purchase of shares of BioCheck,
Inc. (“BioCheck”). BioCheck is a privately held California corporation engaged
in the development of immunoassays, with a number of clinical diagnostic tests
that have been approved by the United States Food and Drug Administration.
As
previously reported, on or about September 19, 2005, the Company entered
into a Stock Purchase Agreement with BioCheck and the shareholders of BioCheck
(the “Agreement”), pursuant to which the Company had the right to purchase up to
all of the outstanding shares of common stock of BioCheck for an aggregate
purchase price of $6 million in cash. Pursuant to the terms of the Agreement,
at
the Initial Closing, the Company purchased an aggregate of fifty-one percent
(51%) of the outstanding shares of common stock of BioCheck from each of the
shareholders of BioCheck on a pro rata basis, for an aggregate of $3,060,000
in
cash. After the Initial Closing, Executive, as defined below, and Steven Guillen
shall be the only members of the Board of Directors of BioCheck and there shall
be one (1) vacancy to be filled by a designee of the Company.
On
December 6, 2005, immediately prior to the Initial Closing, the Company
obligated itself to KeyBank National Association (“KeyBank”) under the terms of
a non-revolving one-year loan agreement dated December 2, 2005 (the
“Loan
Agreement”) and received funds from KeyBank (the “Loan”) in the amount of
$3,060,000, for the purpose of completing the Initial Closing. As security
for
the Company’s repayment obligations under the Loan Agreement, the Company has
granted a security interest to KeyBank in a $3,060,000 Certificate of Deposit
that is owned by the Company. The Loan will bear interest at an annual rate
that
is 2.0% greater than the annual rate of interest on the Certificate of Deposit
held as collateral.
In
connection with the Initial Closing, the Company and BioCheck have entered
into
a sublease agreement dated December 6, 2005, under the terms of which
the
Company shall have the right for a term of one year to occupy a small portion
(expected to be 500 square feet or less) of BioCheck’s current facilities,
located at 323 Vintage Park Drive, Suite A, Foster City, California 94404.
The
Company shall pay as rent an amount per month equal to the base rent that
BioCheck is currently obligated to pay for such space (currently $1.06 per
square foot), plus any additional rent that BioCheck may become obligated to
pay
relating to such space.
Also
effective December 6, 2005, the Company, BioCheck and John Chen
(“Executive”), BioCheck’s President immediately prior to the Initial Closing,
have entered into an Executive Employment Agreement, under which Executive
shall
be employed as President of BioCheck. Executive has agreed to devote not less
than ninety percent (90%) of his business time and efforts to the primary
business of BioCheck. In the event that BioCheck terminates the employment
of
Executive at any time (other than for cause as defined in the agreement),
Executive will be eligible to receive an amount equal to twelve (12) months
of
his then-current base salary. For so long as the Company owns less than all
of
the outstanding shares of BioCheck, BioCheck will not terminate Executive’s
employment without cause unless unanimously approved by the Board of Directors
of BioCheck. In consideration of services Executive is to render under the
Executive Employment Agreement, BioCheck has agreed to pay Executive a salary
of
$240,000 per year. Further, the Board of Directors of the Company has granted
to
Executive an option to purchase 500,000 shares of the common stock of the
Company under the Company’s 2003 Stock Incentive Plan, at an exercise price
equal to $0.26 per share. In addition, Executive will be eligible for an
additional grant of options equal to 250,000 shares of the common stock of
the
Company at the conclusion of each of the twelve (12) month and twenty-four
(24)
month periods following the Initial Closing, so long as at the conclusion of
the
applicable twelve (12) month and twenty-four (24) month period, BioCheck’s net
sales for the then most recently completed fiscal year exceed the net sales
of
the fiscal year which immediately precedes such most recently completed fiscal
year. All stock options described hereunder are to vest, if at all, at a rate
of
25% per annum subject to continued employment, and all options shall be
exercisable for ten (10) years from the date of grant. Executive shall have
a
period of twelve (12) months following any termination of employment by the
Company or BioCheck to exercise vested options.
Further,
BioCheck and EverNew Biotech, Inc., a California corporation (“EverNew”), have
entered into a Services Agreement dated December 6, 2005 (the “Services
Agreement”). The holders of the shares of capital stock of EverNew immediately
prior to the Initial Closing are substantially the same set of individuals
and
entities who held BioCheck’s common stock immediately prior to the Initial
Closing, including Executive as a significant shareholder. EverNew is an
emerging point-of-care diagnostics company, with a number of products in
development. EverNew currently has no revenues, and an annual operating budget
of at least $250,000. Under the terms of the Services Agreement, EverNew shall
render certain services to BioCheck, including assay research and development
work, and BioCheck shall render certain administrative services to EverNew.
The
specific nature and scope of the work to be performed by EverNew shall be
determined in good faith from time to time by BioCheck and EverNew. In
consideration of services to be provided by EverNew, BioCheck shall pay to
EverNew (the “EverNew Compensation”) $12,000 per month, provided, however, if
the sum of EverNew’s gross revenues for a consecutive three (3) month period
during the term of the Services Agreement equals or exceeds $100,000, then
BioCheck shall no longer be obligated to pay EverNew any amounts for the
remainder of the term of the Services Agreement. Further, in such event, EverNew
shall pay BioCheck an amount equal to the EverNew Service Cost per month for
the
remainder of the term of the Services Agreement, and the EverNew Service Cost
for such month shall be reduced by the amount of the BioCheck compensation
paid
to BioCheck for such month. As used in the Services Agreement, EverNew Service
Cost means the cost of all BioCheck Services provided by BioCheck each month
under the Services Agreement, as incurred and determined in good faith by
BioCheck. The Services Agreement is described in this Report so that readers
can
better understand the disclosure concerning the Option Agreement described
below. The Company is not implying that the Services Agreement is a “material
definitive agreement” of the Company within the meaning of Item 1.01 of Form
8-K.
In
addition, the Company, BioCheck and EverNew have entered into an Option and
Reimbursement Agreement dated December 6, 2005 (the “Option Agreement”).
Pursuant to the terms of the Option Agreement, EverNew and its shareholders
have
granted to the Company a call option and a right of first refusal to purchase
all of the assets or equity securities of EverNew. Under the Option Agreement,
EverNew has agreed to reduce the purchase price under the call option or right
of first refusal, as applicable, by an amount equal to the Accumulated EverNew
Amounts. The Option Agreement defines the “Accumulated EverNew Amounts” as of a
particular date as the sum of Monthly EverNew Amounts accrued as of such date.
The Option Agreement defines the “Monthly EverNew Amounts” as the product of (i)
the percentage of all of the issued and outstanding shares of BioCheck held
by
the Company as of the last day of each such month (the “Monthly Percentage”) and
(ii) the sum of (A) the cost of all EverNew Services provided by BioCheck each
month under the Services Agreement, as incurred and determined in good faith
by
BioCheck (“EverNew Service Costs”) and (B) the amount of EverNew
Compensation. In the event that the Company has not exercised its call option
or
right of first refusal, as applicable, prior to December 31, 2007, then
(i)
EverNew shall pay to BioCheck prior to March 31, 2008 an amount equal to the
aggregate EverNew Service Costs and EverNew Compensation accumulated prior
to
March 31, 2008, and (ii) the amount actually paid to BioCheck, multiplied by
the
applicable Monthly Percentage for each monthly period in which the EverNew
Service Cost and EverNew Compensation is determined, shall be deducted from
the
balance of the Accumulated EverNew Amount for periods after such payment is
made.
Item
2.01. Completion
of Acquisition or Disposition of Assets.
On
December 6, 2005, the Company completed the Initial Closing of the purchase
of shares of BioCheck. As previously reported, on September 19, 2005,
the
Company entered into the Agreement, pursuant to which the Company had the right
to purchase up to all of the outstanding shares of common stock of BioCheck
for
an aggregate purchase price of $6 million in cash. Pursuant to the terms of
the
Agreement, at the Initial Closing, the Company purchased an aggregate of
fifty-one percent of the outstanding shares of common stock of BioCheck from
each of the shareholders of BioCheck on a pro rata basis, for an aggregate
of
$3,060,000 in cash.
On
December 8, 2005, the Company issued a press release, a copy of which
is
furnished as an exhibit to this Report, announcing the Initial Closing.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
Please
see disclosure under Item 1.01 of this Report regarding the Loan
Agreement.
Item
2.05. Costs
Associated with Exit or Disposal Activities.
On
December 6, 2005, the Company committed itself to a plan to cease
operations in Portland, Oregon and relocate operations to Foster City,
California (the “Relocation”), effective February 15, 2006. The Company decided
to effect the Relocation after reviewing and evaluating all aspects of the
Company’s operations to determine the profitability and viability of continuing
in the Portland, Oregon location.
As
part
of the Relocation, the Company has announced that it will terminate all of
its
employees other than Chief Executive Officer Steven Guillen. All
regular/full-time employees of the Company (other than Mr. Guillen) who have
committed to continue to work for the Company until February 15, 2006,
or
who are “laid-off” by the Company effective prior to February 15, 2006 will
receive severance benefits under an Employee Incentive Package. The provisions
of the Employee Incentive Package will not apply to an employee who is
terminated at any time for disciplinary reasons.
The
Company estimates that the total amount expected to be incurred in connection
with the Relocation shall be approximately $100,000 for relocating operations,
and approximately $140,000 for payments under the Employee Incentive Package.
The Company’s estimates are based upon certain assumptions relating to, among
other things, the effect of the Relocation on costs of goods sold and
manufacturing expenses. No assurances can be given that the Company’s estimates
will prove accurate.
Also
related to the Relocation, the Company has signed a term sheet with Westcore
Peninsula Vintage LLC, a Delaware limited liability company (“Landlord”), that
contemplates the Company and Landlord entering into a Lease Agreement (the
“Lease Agreement”). Under the terms of the Lease Agreement, the Company would
have the right to occupy approximately 3,371 square feet of space located at
323
Vintage Park Drive, Suite B, Foster City, California 94404 for 39 months. The
monthly lease rate would be $1.00 per square foot, plus property taxes, property
insurance and a common area expenses (approximately $0.46 per square foot in
the
aggregate). No assurances can be given that a Lease Agreement will be
executed.
After
the
Company has completed its Relocation to Foster City, California, it plans to
provide for operations by entering into services agreements and employing new
personnel, including a Chief Financial Officer, a sales and marketing executive,
a controller, and two administrative support employees. The Company has
commenced its executive searches through recruiting services, and expects to
use
a local agency to assist in filling other positions. The Company is in
discussions with BioCheck with the aim of entering into a services agreement
between the two companies, with each company providing specific expertise.
Item
9.01. Financial
Statements, Pro Forma Financial Information and Exhibits.
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99.1
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Press
Release, dated December 8,
2005.
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SIGNATURES
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 hereunto
duly authorized.
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OXIS
INTERNATIONAL, INC.
(Registrant)
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| Date:
December 8, 2005 |
By: |
/s/
Steven T. Guillen |
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Steven
T. Guillen |
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President
and Chief Executive
Officer
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Exhibit
99.1
OXIS
INTERNATIONAL ACQUIRES MAJORITY STAKE IN BIOCHECK, A LEADING MANUFACTURER OF
IMMUNOASSAY KITS
Acquisition
Expands Product Portfolio and Drives Growth Opportunities for New Products
in
Cardiac Risk Assessment and Custom Assay Development
PORTLAND,
Ore. - December
8, 2005 - OXIS International, Inc. (OTCBB: OXIS.OB) (Nouveau Marché: OXIS) (FWB:
OXI), specialists in developing technologies for the diagnosis of diseases
resulting from oxidative stress, announced today the initial closing of its
acquisition of BioCheck, Inc., a leading producer of enzyme immunoassay
kits.
As
previously announced, OXIS has agreed to acquire up to all of the outstanding
shares of BioCheck for an aggregate purchase price of $6 million in cash. In
this initial closing, OXIS has purchased fifty-one percent (51%) of the
outstanding shares of BioCheck for $3,060,000 in cash.
In
addition, the two companies plan to enter into a services agreement whereby
OXIS
would deliver primarily operating, sales, marketing and business development
functions while BioCheck would provide manufacturing and research and
development expertise.
“We
are
excited about the potential synergies resulting from the combination of the
core
competencies of OXIS and BioCheck,” stated OXIS CEO Steve Guillen. “The expanded
product portfolio will allow us to strengthen our position in the growing
clinical diagnostics market, and the manufacturing and sales efficiencies
derived from the consolidation of operations should help drive future margin
expansion for the combined entity.”
The
potential synergies that may increase BioCheck's contribution to OXIS’ efforts
towards achieving margin expansion include:
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Highly
complementary and experienced management team combining the successful
emerging biotechnology commercialization track record of OXIS CEO
Steve
Guillen and the scientific and operational management experience
of
BioCheck CEO Dr. John Chen;
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Complementary
technologies in promising area of cardiac risk assessment: BioCheck
manufactures ELISA (Enzyme-Linked Immunosorbent Assay) tests using
Troponin I, Myoglobin, and C-Reactive Protein biomarkers for the
evaluation of acute myocardial infarction (AMI) while OXIS is developing
a
series of ELISA cardiac tests involving Myeloperoxidase (MPO) &
Glutathione Peroxidase (GPx) used to help predict early cardiac risk;
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BioCheck’s
extensive experience in the growing contract services sector, including
custom immunoassay development, antibody purification and conjugation,
and
contract assembly;
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Increased
production capacity, primarily for the ELISA kits, allowing for reduced
dependence on third party manufacturing and reduced production costs;
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Operating
and cost efficiencies deriving from the consolidation of several
aspects
of the companies’ respective manufacturing and commercial distribution
bases, such as promotional and marketing costs;
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BioCheck’s
current Good Manufacturing Practices (cGMP) and ISO quality certification
for the combined companies’ manufacturing facilities;
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“We
believe that growth opportunities in the market segments that our companies
jointly serve are substantial,”stated
BioCheck CEO Dr. John Chen. “By combining
our resources and expertise we expect to be able to lead a new generation of
breakthrough
assays, particularly in the area of cardiac predictors, as well as custom
immunoassay development and other contract services.”
BioCheck
currently offers over 45 enzyme immunoassays as well as research and
manufacturing services focused on the immunoassay products. At year-end 2005,
BioCheck expects to be profitable with revenues in excess of $4.5 million.
In
addition, the company has the commercialization rights for several promising
new
cancer/tumor biomarkers.
As
part
of the acquisition’s successful first closing, OXIS has initiated plans to close
its non-core facility in Portland, OR and merge its core operations with
BioCheck's GMP and ISO quality certified facilities in Northern California.
About
OXIS
OXIS
International, Inc., headquartered in Portland, Oregon, focuses on developing
technologies and products to research, diagnose, treat and prevent diseases
associated with damage from free radical and reactive oxygen species - diseases
of oxidative stress. The company holds the rights to three therapeutic classes
of compounds in the area of oxidative stress, and develops, manufactures and
markets products and technologies to diagnose and treat diseases caused by
oxidative stress. More
information about OXIS and its products and services, as well as current SEC
filings, may be obtained by visiting the Company's Web site at
http://www.oxis.com.
About
BioCheck
BioCheck,
Inc. operates a 15,000 square-foot, U.S. Food and Drug Administration (FDA)
certified cGMP device-manufacturing facility in Foster City, California. The
company is a leading producer of high quality enzyme immunoassay research
services and products offering immunoassay kits for a wide variety of
classifications including cardiac markers, tumor markers, infectious diseases,
thyroid function, steroids, and fertility hormones
(http://www.biocheckinc.com).
Statements
in this release that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section
21E
of the Securities Exchange Act of 1934, including, without limitation, any
statements regarding beliefs, plans, estimates, projections, expectations,
goals
or intentions regarding the future. Forward-looking statements in this release
include statements regarding (i) the acquisition expanding OXIS’ product
portfolio and offering growth opportunities in cardiac risk assessment and
custom assay development; (ii) potential synergies of the combined company;
(iii) the consummation of the merger of OXIS and Bio Check; (iv) BioCheck
revenues exceeding $4.5 million and BioCheck being profitable for the year
ending December 31, 2005; (v) the combined company’s management team providing
extensive experience in the commercialization of emerging technologies and
scientific and operational management; (vi) the expanded product portfolio
strengthening the combined company’s position in the growing clinical
diagnostics market; (vii) the manufacturing and sales efficiencies derived
from
the consolidation of operations driving margin expansion; (viii) the
complementary technologies in the area of cardiac risk assessment; (ix)
operating and cost efficiencies derived from the consolidation of several
aspects of the combined company’s manufacturing and commercial distribution
bases;(x) increased production capacity, primarily for the ELISA tests, allowing
for reduced dependence on third party manufacturing and reduced production
costs; (xi) growth opportunities in the market segments that the companies
jointly serve; (xii) by combining resources and expertise the combined company
leading a new generation of breakthrough assays, particularly in the area of
cardiac predictors, as well as custom immunoassay development and other contract
services; and (xiii) OXIS plans to close its non-core facility in Portland,
OR
and merge its core operations with BioCheck's GMP and ISO quality certified
facilities in Northern California. Factors that could cause actual results
to
differ materially from the forward-looking statements include risks and
uncertainties such as the acquisition of the remaining 49% of the BioCheck
shares by OXIS not closing due to, among other reasons, the inability of OXIS
to
close a financing transaction; the risks inherent in integrating an acquired
business; risks inherent in owning a majority interest in a company; unforeseen
difficulties in achieving synergies following an acquisition; unforeseen
difficulties related to the company’s oxidative stress and other diagnostic
products; the development by the company’s competitors of new competing
products; and other risks indicated in the company’s filings with the Securities
and Exchange Commission. It is important to note that actual outcomes could
differ materially from those in such forward-looking statements. Readers should
also refer to the documents filed by the company with the Securities and
Exchange Commission, specifically the annual report on Form 10-KSB for the
year
ended December 31, 2004, filed with the Securities and Exchange Commission
on
February 25, 2005, and the company’s quarterly report on Form 10-QSB filed with
the Securities and Exchange Commission on November 14, 2005.
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Investor
Contact:
Steve
Guillen
President
& CEO
OXIS
International
Tel:
(503)247-2370
sguillen@oxis.com
Media
Contacts:
Anna
Gralinska
Deliberate
Co.
Tel:
(877)879-2994
annag@deliberatecompany.com
Carol
Ruth
The
Ruth
Group
Tel:
(646)536-7004
cruth@theruthgroup.com