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, 1999.
_____ 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, 1999, the issuer had outstanding the indicated number of shares
of common stock: 7,928,784
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------------------
1999 1998 1999 1998
Revenues:
Sales $ 898,000 $ 1,039,000 $ 4,985,000 $ 3,770,000
Royalties and license fees -- -- 70,000 71,000
----------- ----------- ----------- -----------
Total revenues 898,000 1,039,000 5,055,000 3,841,000
Costs and expenses:
Cost of product sales 818,000 996,000 3,231,000 3,308,000
Cost of technology sold -- -- 1,279,000 --
Research and development 323,000 1,109,000 2,045,000 2,799,000
Selling, general and administrative 810,000 1,078,000 2,498,000 2,732,000
----------- ----------- ----------- -----------
Total costs and expenses 1,951,000 3,183,000 9,053,000 8,839,000
----------- ----------- ----------- -----------
Operating loss (1,053,000) (2,144,000) (3,998,000) (4,998,000)
Interest income 14,000 84,000 39,000 129,000
Interest expense (20,000) (67,000) (73,000) (239,000)
----------- ----------- ----------- -----------
Net loss (1,059,000) (2,127,000) (4,032,000) (5,108,000)
Other comprehensive income
(loss) - foreign currency
translation adjustments (2,000) 58,000 (33,000) 1,000
----------- ----------- ----------- -----------
Comprehensive loss $(1,061,000) $(2,069,000) $(4,065,000) $(5,107,000)
=========== =========== =========== ===========
Net loss per share - basic and diluted $ (.13) $ (.27) $ (.51) $ (.76)
=========== =========== =========== ===========
Weighted average number of
shares used in computation 7,906,250 7,747,778 7,874,678 6,695,998
=========== =========== =========== ===========
1
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 245,000 $ 2,575,000
Accounts receivable 869,000 992,000
Note receivable 569,000 --
Inventories 1,398,000 1,576,000
Prepaid and other 91,000 258,000
---------- -----------
Total current assets 3,172,000 5,401,000
Property and equipment, net 878,000 2,817,000
Technology for developed products 913,000 2,570,000
Other assets 276,000 380,000
---------- -----------
Total assets $5,239,000 $11,168,000
========== ===========
2
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1999 1998
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 684,000 $ 724,000
Accounts payable 799,000 716,000
Accrued payroll, payroll taxes and other 432,000 820,000
Current portion of long-term debt 48,000 111,000
------------ ------------
Total current liabilities 1,963,000 2,371,000
Long-term debt due after one year 158,000 1,613,000
Shareholders' equity:
Preferred stock - $.01 par value; 15,000,000 shares
authorized:
Series B - 428,389 shares issued and outstanding
at September 30, 1999 (liquidation
preference of $1,000,000) 4,000 4,000
Series C - 608,536 shares issued and outstanding
at September 30, 1999 6,000 8,000
Common stock - $.001 par value; 95,000,000 shares
authorized; 7,928,784 shares issued and outstanding
at September 30, 1999 8,000 8,000
Additional paid in capital 52,755,000 52,754,000
Accumulated deficit (49,335,000) (45,303,000)
Accumulated translation adjustments (320,000) (287,000)
------------ ------------
Total shareholders' equity 3,118,000 7,184,000
------------ ------------
Total liabilities and shareholders' equity $ 5,239,000 $ 11,168,000
============ ============
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
-----------------------
1999 1998
Cash flows from operating activities:
Net loss $(4,032,000) $(5,108,000)
Adjustments to reconcile net loss to cash
used for operating activities:
Depreciation and amortization 708,000 1,168,000
Gain on sale of land and building (16,000) --
Loss on sale of technology 368,000 --
Cash proceeds from sale of technology 342,000 --
Changes in assets and liabilities:
Accounts receivable 121,000 994,000
Inventories 168,000 45,000
Other current assets 166,000 (117,000)
Accounts payable 49,000 (665,000)
Customer deposits (120,000) --
Accrued payroll, payroll taxes and other (263,000) (118,000)
----------- -----------
Net cash used for operating activities (2,509,000) (3,801,000)
Cash flows from investing activities:
Proceeds from sale of land and building 1,959,000 --
Purchases of equipment (195,000) (72,000)
Other, net (49,000) (130,000)
----------- -----------
Net cash provided by (used for) investing activities 1,715,000 (202,000)
Cash flows from financing activities:
Proceeds from issuance of notes -- 555,000
Proceeds from issuance of stock, net of related costs -- 7,492,000
Repayment of short-term borrowings (40,000) (443,000)
Repayment of long-term debt and capital lease obligations (1,519,000) (74,000)
Redemption of Series D Preferred Stock -- (700,000)
----------- -----------
Net cash provided by (used for) financing activities (1,559,000) 6,830,000
Effect of exchange rate changes on cash 23,000 (52,000)
----------- -----------
Net increase (decrease) in cash and cash equivalents (2,330,000) 2,775,000
Cash and cash equivalents - beginning of period 2,575,000 1,290,000
----------- -----------
Cash and cash equivalents - end of period $ 245,000 $ 4,065,000
=========== ===========
Non-cash transactions:
Issuance of common stock in exchange
for cancellation of notes and accrued interest $ -- $ 778,000
Note received as part of proceeds from sale
of technology 569,000 --
Conversion of 199,342 shares of Series C Preferred
Stock into 57,588 shares of common stock 233,000 --
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, 1998. 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 method. Inventories at September
30, 1999 and December 31, 1998, consisted of the following:
September 30, December 31,
1999 1998
Raw materials $ 564,000 $ 817,000
Work in process 430,000 406,000
Finished goods 404,000 353,000
----------- -----------
Total $ 1,398,000 $ 1,576,000
=========== ===========
3. SALE OF TECHNOLOGY
Effective June 28, 1999, the Company sold the intellectual property,
contract rights and finished goods inventory relating to its therapeutic
drug monitoring assays. Proceeds from the sale consisted of $500,000 cash, a
non-interest bearing note in the amount of $588,000 due November 30, 1999
and a warrant granting the Company the right to acquire an equity interest
in the purchaser of the assets. The note is secured by the assets sold and
the purchaser's accounts receivable, inventories and other personal
property.
The Company recognized $911,000 as compensation for the intellectual
property and contract rights. This amount has been included in sales for the
nine month period ended
5
September 30, 1999. Sales of therapeutic drug monitoring assays for the nine
month period ended September 30, 1999 include $158,000 for the sale of the
therapeutic drug monitoring finished goods inventory. The Company has
entered into an agreement with the purchaser of the therapeutic drug
monitoring assays pursuant to which the Company will continue to manufacture
the products and perform certain other services for the purchaser through
the third quarter of 2000.
4. OPERATING SEGMENTS
The following table presents information about the Company's two operating
segments:
Health Therapeutic
Products Development Total
------------ ------------ ------------
Quarter ended September 30, 1999:
Revenues from external
customers $ 898,000 $ -- $ 898,000
Intersegment revenues -- -- --
Net loss (735,000) (324,000) (1,059,000)
As of September 30, 1999 -
Total assets 4,212,000 1,027,000 5,239,000
Quarter ended September 30, 1998:
Revenues from external
customers $ 1,039,000 $ -- $ 1,039,000
Intersegment revenues -- 6,000 6,000
Net loss (1,016,000) (1,111,000) (2,127,000)
As of September 30, 1998 -
Total assets 8,158,000 5,235,000 13,393,000
Nine months ended September 30, 1999:
Revenues from external
customers $ 4,981,000 $ 74,000 $ 5,055,000
Intersegment revenues -- 301,000 301,000
Net loss (1,978,000) (2,054,000) (4,032,000)
Nine months ended September 30, 1998:
Revenues from external
customers $ 3,841,000 $ -- $ 3,841,000
Intersegment revenues -- 164,000 164,000
Net loss (2,375,000) (2,733,000) (5,108,000)
6
5. NASDAQ LISTING REQUIREMENTS
The Company was notified by NASDAQ in a letter dated October 19, 1999 that,
because the Company's common stock has failed to maintain a bid minimum bid
price greater than or equal to $1.00 over the preceding thirty consecutive
trading days, its common stock was not in compliance with the NASD
Marketplace Rule 4450(a)(5) ("Rule 4450"). The Company has been provided
ninety calendar days, or until January 18, 2000 to either regain compliance
with this Rule or request a hearing to appeal the NASDAQ staff's
determination. If the Company is unable to demonstrate compliance with this
requirement and does not request a hearing on or before January 18, 2000,
NASDAQ has indicated that the Company's common stock will be delisted at the
opening of business on January 20, 2000.
As reported in the accompanying balance sheet, the Company's net tangible
assets as of September 30, 1999 were $3,118,000. Rule 4450 requires a
minimum of $4,000,000 of net tangible assets.
Management is evaluating options available to retain the Company's NASDAQ
listing and the potential impact of delisting. The Company can give no
assurances that it will be able to regain compliance with Rule 4450, or
maintain compliance with other NASDAQ Rules, and continue to be quoted on
the NASDAQ National Market System. If the Company is delisted from the
NASDAQ National Market System, it is unlikely that the Company will qualify
for quotation on NASDAQ'S SmallCap Market or any other exchange. The failure
to be so listed or quoted could have a material adverse impact on the
trading prices of the Company's common stock.
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 decreased during the first nine months of 1999
from $3,030,000 at December 31, 1998 to $1,209,000 at September 30, 1999.
The decrease in the Company's working capital resulted primarily from the
effect of the net loss for the first nine months of 1999 ($4,032,000 less
non-cash charges of $708,000) offset by increases in net working capital of
$543,000 from the sale of land and buildings and payment of related debt and
$911,000 from the sale of technology and contract rights relating to the
Company's therapeutic drug monitoring business. Cash and cash equivalents
decreased from $2,575,000 at December 31, 1998 to $245,000 at September 30,
1999.
The Company is currently restructuring its therapeutic development
operations. In the first half of 1999 the Company closed its French research
laboratory in order to reduce expenses and refocus its resources on its
later stage therapeutic products, particularly BXT-51072. As part of this
restructuring process, the Company is seeking corporate partners and
additional capital funding to support its therapeutic development projects.
While these processes are ongoing, activities and expenditures on
therapeutics projects will be minimal.
7
While the Company believes that its new therapeutic 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 or to raise additional capital will be successful.
The Company expects to continue to report losses in 1999 as the level of
expenses is expected to continue to exceed revenues. The Company can give no
assurances as to when and if its revenues will exceed its expenses. The
Company expects that new revenue sources (which could include the sale of
certain technology or other assets) or additional capital will be required
by the end of the first quarter of 2000 to continue operating the Company's
Health Products segment as well as its Therapeutic Development segment in
accordance with the Company's current plans. Failure to either generate new
revenue sources or to raise additional capital would cause the Company to
severely curtail or cease operations.
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 has reviewed its 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 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 has upgraded
that software to year 2000 compliant versions for its critical accounting
systems. If the Company were unable to replace software or hardware to make
any of its accounting and manufacturing systems Year 2000 compliant, the
Company believes that it could implement manual systems to carry out its
business without significant interruption.
The Company has reviewed all of its systems, including embedded technology
in non-information technology systems, which might be affected by the Year
2000 issue. The Company has reviewed 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 all of its critical systems are Year 2000 compliant.
The total cost for upgrades and replacements of software, older computer
hardware and other systems or components including embedded technology that
might be affected by the Year 2000 issue has been less than $100,000.
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
8
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.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1998
Revenues
The Company's revenues for the quarters ended September 30, 1999 and 1998 were
as follows:
1999 1998
Research assays, fine chemicals and other $ 343,000 $ 148,000
Instrument sales and development 272,000 505,000
Therapeutic drug monitoring assays 228,000 351,000
Palosein(R) (bSOD for veterinary use) 55,000 35,000
--------- ----------
$ 898,000 $1,039,000
========= ==========
The increase in sales of research assays, fine chemicals and other products in
the third quarter of 1999 as compared to the third quarter of 1998 resulted
from increased volumes, primarily of research assays and bulk components of
those assays.
Revenue from instrument sales and development declined by $233,000 from
$505,000 in the third quarter of 1998 to $272,000 in the third quarter of
1999. This decrease resulted from reduced orders from certain customers for
whom the Company acts as an original equipment manufacturer. In the near term
the Company does not expect instrument sales to return to 1998 levels, and no
assurances can be given that instrument sales will return to 1998 levels.
Effective June 28, 1999, the Company sold the intellectual property, contract
rights and finished goods inventory relating to its therapeutic drug
monitoring assays. The Company has entered into an agreement with the
purchaser of the therapeutic drug monitoring assays pursuant to which the
Company will continue to manufacture the products and perform certain other
services for the purchaser through the third quarter of 2000. Therapeutic drug
monitoring assay revenues for the third quarter of 1999 represent sales of
assays and services to the purchaser.
9
The volume of Palosein(R) sales increased reflecting an increase in the
Company's marketing efforts for this product.
Costs and Expenses
Including amortization of purchase adjustments, cost of sales was 96% of
product sales for the third quarter 1998 and decreased to 91% of product sales
for the third quarter of 1999. This decrease in the cost of sales as a
percentage of sales is due primarily to improved gross margins on sales of
assays and fine chemicals. Cost of assay sales in the third quarter of 1998
included $143,000 of amortization of technology relating to the therapeutic
drug monitoring assays. This technology was written off when the rights to it
were sold, and the amortization ceased after the June 1999 sale. An increase
in sales volumes of the Company's research assays and fine chemicals also
contributed to improved gross margins. These improvements were offset by an
increase in the cost of instruments as a percentage of instrument sales, which
resulted from a decline in sales volume in the third quarter of 1999 as
compared to the third quarter of 1998. Although the Company has made
significant reductions in the occupancy and personnel costs of its instrument
manufacturing facility in 1999, the cost reductions have not been in
proportion to the reduction in sales.
Cost of sales includes amortization of purchase adjustments relating to 1994
and 1997 business acquisition of $215,000 in the third quarter of 1998 and
$64,000 in the third quarter of 1999. Excluding such amortization the cost of
product sales for the third quarter of 1998 was approximately 75% of sales and
cost of sales for the third quarter of 1999 was approximately 84% of product
sales.
Research and development expenses decreased from $1,109,000 in the third
quarter of 1998 to $323,000 in the third quarter of 1999. This decrease of
$786,000 in research and development expenses resulted primarily from the
closure of the Company's French research laboratory in the first half of 1999
and further reductions in expenditures on therapeutic development projects
while the Company seeks additional funding for its therapeutic development
program.
Selling, general and administrative expenses decreased from $1,078,000 in the
third quarter of 1998 to $810,000 in the third quarter of 1999. The decrease
was primarily due to $138,000 in reductions in selling, general and
administrative expenses of the Company's instrument manufacturing subsidiary
and a $113,000 reduction in management compensation (primarily bonuses accrued
and paid in the third quarter of 1998).
Interest Income and Expense
Interest income decreased by $70,000 in the third quarter of 1999 as compared
with the third quarter of 1998, due to a decrease in funds available for
short-term investment.
10
Interest expense decreased by $47,000 in the third quarter of 1999 as compared
with the third quarter of 1998 primarily due to the payment of long-term debt
in connection with the sale of property in the first quarter of 1999.
Net Loss
The Company continued to experience losses in the third quarter of 1999. The
third quarter 1999 net loss of $1,059,000 ($.13 per share-basic and diluted)
was $1,068,000 less than the $2,127,000 ($.27 per share-basic and diluted)
loss for the third quarter of 1998. The decrease in the net loss is primarily
due to the reductions in research and development and selling, general and
administrative expenses.
The Company expects to incur a substantial net loss for 1999 and can give
no assurances as to when and if its revenues will exceed its expenses. If the
Company raises substantial additional capital through further sales of
securities or secures a strategic partnership to support its therapeutic
development efforts (See Financial Condition, Liquidity and Capital
Resources), the Company plans to continue to invest in research and
development activities and incur sales, general and administrative expenses in
amounts greater than its anticipated near-term product margins. The Company
expects that new revenue sources (which could include the sale of certain
technology or other assets) or additional capital will be required by the end
of the first quarter of 2000 to continue operating the Company's Health
Products segment as well as its Therapeutic Development segment in accordance
with the Company's current plans. Failure to either generate new revenue
sources or to raise additional capital would cause the Company to severely
curtail or cease operations.
11
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1998
Revenues
The Company's revenues for the nine-month periods ended September 30, 1999 and
1998 were as follows:
1999 1998
Research assays, fine chemicals and other $1,087,000 $ 651,000
Instrument sales and development 1,067,000 1,998,000
Therapeutic drug monitoring assays 1,311,000 993,000
Bulk bovine superoxide dismutase (bSOD) 452,000 --
Palosein(R) (bSOD for veterinary use) 157,000 128,000
Sale of rights to therapeutic drug monitoring assays 911,000 --
Royalties and license fees 70,000 71,000
---------- ----------
$5,055,000 $3,841,000
========== ==========
The increase in sales of research assays, fine chemicals and other products in
the first nine months of 1999 as compared to the first nine months of 1998
resulted from increased volumes, primarily of research assays and bulk
components of those assays.
Revenue from instrument sales and development declined by $931,000, from
$1,998,000 in the first nine months of 1998 to $1,067,000 in the first nine
months of 1999. This decrease resulted from reduced orders from certain
customers for whom the Company acts as an original equipment manufacturer.
Effective June 28, 1999, the Company sold the intellectual property, contract
rights and finished goods inventory relating to its therapeutic drug
monitoring assays. The Company recognized $911,000 as compensation for the
intellectual property and contract rights. Revenues from the Company's
therapeutic drug monitoring assays increased by $318,000, from $993,000 in the
first nine months of 1998 to $1,311,000 in the first nine months of 1999.
Sales of therapeutic drug monitoring assays for the nine months ended
September 30, 1999 include $158,000 for the sale of the therapeutic drug
monitoring finished goods inventory to the purchaser of the rights to this
technology. Increased sales volumes to the Company's distributors in the first
six month of 1999 also contributed to the increase. Therapeutic drug
monitoring assay revenues subsequent to June 28, 1999 represent sales of
assays and services to the purchaser of the
12
rights to this technology. Such revenues in the third quarter of 1999
were less than the therapeutic drug monitoring assay sales in the third
quarter of 1998, and are expected to be lower than in comparable periods of
the prior year for the near-term future. Revenues from therapeutic drug
monitoring assay sales and related services may terminate at the end of the
third quarter of 2000, when the contract to manufacture product for the
purchaser of the technology expires.
Sales of bulk bSOD in the first nine months of 1999 were the result of one
shipment of bulk bSOD to the Company's Spanish licensee. No significant sales
of bulk bSOD were made during 1998. The Company has received one additional
order for bulk bSOD from its Spanish licensee for delivery in the fourth
quarter of 1999. This sale is expected to be slightly larger than the second
quarter bSOD sale. However, future sales of bulk bSOD beyond 1999 are largely
dependent on the needs of the Company's Spanish licensee which are uncertain
and difficult to predict and no assurances can be given that the Company will
continue to sell bulk bSOD to its Spanish licensee.
Costs and Expenses
Including amortization of purchase adjustments, cost of sales was 88% of
product sales for the first nine months of 1998 and increased to 90% of
product sales for the first nine months of 1999. This increase in the cost of
sales as a percentage of sales is due primarily to the excess ($368,000) of
the cost of technology sold over the proceeds from the sale of technology.
Cost of sales as a percentage of sales was also increased by an increase in
instrument manufacturing costs as a percentage of instrument sales, which
resulted from the decline in instrument sales volumes. These factors were
partially offset by improved margins on sales of assays and fine chemicals
resulting from an increase in sales volumes of research assays and fine
chemicals.
Cost of sales includes amortization of purchase adjustments relating to 1994
and 1997 business acquisitions of $641,000 for the first nine months of 1998
and $492,000 for the first nine months of 1999. Excluding such amortization
the cost of product sales for the first nine months of 1998 was approximately
71% of sales and the cost of sales for the first nine months of 1999 was
approximately 81% of product sales.
Research and development expenses decreased by $754,000 from $2,799,000 for
the first nine months of 1998 to $2,045,000 for the first nine months of 1999.
The decrease in research and development expenses resulted primarily from the
closure of the Company's French research laboratory in the first half of 1999
and further reductions in expenditures on therapeutic development projects
while the Company seeks additional funding for its therapeutic development
programs.
Selling, general and administrative expenses decreased by $234,000 from
$2,732,000 for the first nine months of 1998 to $2,498,000 for the first nine
months of 1999. The decrease
13
was primarily due to (1) a $199,000 decrease in the selling and administrative
expenses of the Company's instrument manufacturing subsidiary, OXIS
Instruments, Inc., (2) a $105,000 decrease in legal fees and (3) a $54,000
reduction in compensation. These expense reductions were partially offset by
an increase of $159,000 in selling and administrative expenses relating to the
start-up of the Company's Wellness Testing Services program.
Interest Income and Expense
Interest income decreased by $90,000 in the first nine months of 1999 compared
to the first nine months of 1998, due to a decrease in funds available for
short-term investment.
Interest expense decreased by $166,000, primarily due to the payment of long-
term debt in connection with the sale of property in the first quarter of
1999.
Net Loss
The Company continued to experience losses in the first nine months of 1999.
The net loss of $4,032,000 ($.51 per share-basic and diluted) was $1,076,000
less than the $5,108,000 ($.76 per share-basic and diluted) net loss for the
first nine months of 1998. Reductions in research and development and selling,
general and administrative expenses accounted for most of the decrease in net
loss.
------------------------------
Certain of the matters discussed in this Report such as management's future
sales expectations, possible partnerships and possible sales of securities 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.
14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - See Exhibit Index on page 16.
(b) Reports on Form 8-K
On July 13, 1999, the Company filed a Report on Form 8-K reporting the
sale of intellectual property, contract rights and finished goods
relating to its therapeutic drug monitoring products. The sale was
effective June 28, 1999.
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 12, 1999 By /s/Ray R. Rogers
--------------------------------
Ray R. Rogers
Chairman and Chief Executive Officer
November 12, 1999 By /s/Jon S. Pitcher
--------------------------------
Jon S. Pitcher
Chief Financial Officer
15
EXHIBIT INDEX
Exhibit Page
Number Description of Document Number
27(a) Financial data schedule
16