|
|
|
Delaware
|
|
94-1620407
|
(State
of incorporation or organization)
|
|
(I.R.S.
Employer Identification No.)
|
|
|
|
Title
of Securities
|
|
Exchanges
on which Registered
|
Common
Stock, $.001 Par Value
|
|
None
|
Large
accelerated filer☐
|
Accelerated
filer ☐
|
Non-accelerated
filer ☐ (Do not check if a smaller reporting
company)
|
Smaller
reporting company ☑
|
PART
I
|
|
|
|
|
Item
1.
|
|
Business
|
|
3
|
Item
1A.
|
|
Risk
Factors
|
|
10
|
Item
1B.
|
|
Unresolved
Staff Comments
|
|
10
|
Item
2.
|
|
Properties
|
|
10
|
Item
3.
|
|
Legal
Proceedings
|
|
10
|
Item
4.
|
|
Mine
Safety Disclosures
|
|
10
|
|
|
|
|
|
PART
II
|
|
|
|
|
Item
5.
|
|
Market
for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|
|
10
|
Item
6.
|
|
Selected
Financial Data
|
|
12
|
Item
7.
|
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
12
|
Item
7A.
|
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
15
|
Item
8.
|
|
Financial
Statements and Supplementary Data
|
|
15
|
Item
9.
|
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
|
15
|
Item
9A.
|
|
Controls
and Procedures
|
|
16
|
Item
9B.
|
|
Other
Information
|
|
16
|
|
|
|
|
|
PART
III
|
|
|
|
|
Item
10.
|
|
Directors,
Executive Officers and Corporate Governance
|
|
17
|
Item
11.
|
|
Executive
Compensation
|
|
19
|
Item
12.
|
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
|
20
|
Item
13.
|
|
Certain
Relationships and Related Transactions, and Director
Independence
|
|
21
|
Item
14.
|
|
Principal
Accounting Fees and Services
|
|
21
|
|
|
|
|
|
PART
IV
|
|
|
|
|
Item
15.
|
|
Exhibits,
Financial Statement Schedules
|
|
23
|
Pat./Pub. No.
|
Title
|
Country
|
Status
|
U.S. Patent Application USSN 62/237,835
|
Therapeutic compounds and its uses
|
US
|
Pending
|
Pat./Pub. No.
|
Title
|
Country
|
Status
|
U.S. Patent Application USSN 13/256,812
|
Methods and compositions for bi-specific targeting of
cd19/cd22
|
US
|
Issued
|
Pat./Pub. No.
|
Title
|
Country
|
Status
|
U.S. Patent Application USSN 14/237,494
|
P62-zz chemical inhibitor
|
US
|
Issued
|
China Patent Application
CN201280048718
|
P62-zz chemical inhibitor
|
China
|
Pending
|
YEAR
|
|
PERIOD
|
HIGH
|
LOW
|
Fiscal
Year 2015
|
|
First
Quarter
|
13.50
|
5.13
|
|
|
Second
Quarter
|
11.78
|
5.03
|
|
|
Third
Quarter
|
6.23
|
3.50
|
|
|
Fourth
Quarter
|
5.23
|
2.93
|
Fiscal
Year 2016
|
|
First
Quarter
|
3.20
|
0.41
|
|
|
Second
Quarter
|
0.60
|
0.31
|
|
|
Third
Quarter
|
0.35
|
0.17
|
|
|
Fourth
Quarter
|
0.19
|
0.0393
|
Name
|
|
Age
|
|
Position
|
|
Anthony
J. Cataldo
|
|
65
|
|
Chief
Executive Officer and Chairman of the Board
|
|
Steven
Weldon
|
|
41
|
|
Chief
Financial Officer and Director
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
Salary($)
|
Bonus($)
|
Stock
Awards
|
Option
Awards(1)
($)
|
Non-Equity
Incentive Plan Compensation Earnings
($)
|
Nonqualified
Deferred Compensation Earnings
($)
|
All Other
Compensation
($)
|
Total
|
Anthony J.
Cataldo,
|
|
2016
|
$216,000
|
|
$4,417,026
|
$20,707
|
$–––
|
$–––
|
$–––
|
$4,653,733
|
Chairman(2)
|
|
2015
|
$216,000
|
$134,000
|
$----
|
$102,535
|
$–––
|
$–––
|
$–––
|
$452,535
|
|
|
2014
|
$154,000
|
$–––
|
$402,291
|
$139,079
|
$–––
|
$–––
|
$–––
|
$695,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Weldon,
|
|
2016
|
$168,000
|
$–––
|
$752,852
|
$–––
|
$–––
|
$–––
|
$–––
|
$920,852
|
Chief Financial
Officer (Principal Financial Officer) (3)
|
|
2015
|
$168,000
|
$–––
|
$197,845
|
$–––
|
$–––
|
$–––
|
$–––
|
$365,845
|
|
|
2014
|
$25,500
|
$–––
|
$57,945
|
$–––
|
$–––
|
$–––
|
$–––
|
$83,445
|
|
Option
Awards
|
Stock
Awards
|
|||||||
Name
|
Number of
Securities Underlying Unexercised Options (#)
Exercisable
|
Number of
Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
Option Exercise
Price($)
|
Option
Expiration Date
|
Number of Shares
or Units of Stock That Have Not Vested(#)
|
Market Value of
Shares or Units of Stock That Have Not Vested($)
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That
Have Not Vested(#)
|
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested($)
|
|
|
|
|
|
|
|
|
|
|
Anthony
Cataldo
|
107,278
|
-
|
-
|
$2.50
|
07/01/19
|
|
|
|
|
Anthony
Cataldo
|
107,278
|
-
|
-
|
$5.00
|
07/01/19
|
|
|
|
|
Anthony
Cataldo
|
107,279
|
-
|
-
|
$7.50
|
07/01/19
|
|
|
|
|
Steven
Weldon
|
-
|
-
|
-
|
-
|
|
|
|
|
|
Name and Address
of Beneficial Owner
|
Number of Shares
of Common Stock Beneficially Owned
|
Percent of
Shares of Outstanding Common Stock
|
Security
Ownership of Certain Beneficial Owners:
|
|
|
None
|
|
|
Security
Ownership of Management:
|
|
|
Anthony J.
Cataldo
|
4,030,731
|
5.52%
|
Steven
Weldon
|
601,610
|
0.01%
|
|
|
|
Executive officers
and directors as a group — 2 persons
|
4,632,341
|
5.53%
|
Plan
Category
|
Number of
Securities to be Issued Upon Exercise of Outstanding Options,
Warrants and Rights
(a)
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants and
Rights
(b)
|
Number of
Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a))
(c)
|
Equity compensation
plans approved by security holders (1)
|
373,833
|
$4.76
|
-
|
Equity compensation
plans not approved by security holders
|
-
|
-
|
-
|
Total
|
373,833
|
$4.76
|
-
|
|
2016
|
2015
|
Audit Fees
(1)
|
$56,000
|
$50,500
|
Audit-Related Fees
(2)
|
-
|
-
|
Tax Fees
(3)
|
4,000
|
-
|
All Other
Fees
|
-
|
-
|
Total
|
$60,000
|
$50,500
|
|
|
|
|
Incorporated by Reference
|
||||||
ExhibitNumber
|
|
Exhibit Description
|
|
Form
|
|
Date
|
|
Number
|
|
Filed Herewith
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
Restated
Certificate of Incorporation as filed in Delaware September 10,
1996 and as thereafter amended through March 1, 2002
|
|
10-KSB
|
|
04/01/02
|
|
3.A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
Certificate
of Amendment to Amended and Restated Certificate of Incorporation
of Oxis International, Inc.
|
|
10-K
|
|
03/31/11
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.3
|
|
Certificate
of Designation of Preferences, Rights and Limitations of
Series H Convertible Preferred Stock of Oxis International,
Inc., dated February 5, 2010
|
|
8-K
|
|
2/16/10
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.4
|
|
Certificate
of Designation of Preferences, Rights and Limitations of
Series I Convertible Preferred Stock of Oxis International,
Inc., dated March 18, 2011.
|
|
10-K
|
|
03/31/11
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
Bylaws,
as restated effective September 7, 1994 and as amended through
April 29, 2003
|
|
10-QSB
|
|
08/13/03
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.1
|
|
Code of
Ethics
|
|
10-K
|
|
03/31/16
|
|
14.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries
of OXIS International, Inc.
|
|
10-K
|
|
03/31/16
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Certification
of the Principal Executive Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Certification
of the Principal Financial Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification
of the Principal Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
Certification
of the Principal Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
|
|
|
|
|
|
|
|
X
|
101
|
|
Interactive
Data File
|
|
|
|
|
|
|
|
X
|
|
OXIS International,
Inc.
|
|
|
|
|
|
|
Dated: March 31,
2017
|
By:
|
/s/
Anthony
J. Cataldo
|
|
|
|
Anthony J.
Cataldo
|
|
|
|
Chief
Executive Officer and Chairman of the Board
|
|
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
/s/
Anthony J. Cataldo
|
|
Chairman
of the Board, Chief Executive Officer and President of Oxis
Biotech
|
|
March
31, 2017
|
Anthony J.
Cataldo
|
|
|
|
|
/s/
Steven
Weldon
|
|
Chief
Financial Officer (Principal Financial Officer), President and
Director
|
|
March
31, 2017
|
Steven Weldon |
|
|
|
|
|
|
|
|
|
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
|
Seligson
& Giannattasio, LLP
|
F-1
|
Consolidated
Financial Statements
|
|
Balance
Sheets as of December 31, 2016 and 2015
|
F-2
|
Statements
of Operations For Years Ended December 31, 2016 and
2015
|
F-3
|
Statement
of Stockholders’ Deficit For Years Ended December 31, 2016
and 2015
|
F-4
|
Statements
of Cash Flows For Years Ended December 31, 2016 and
2015
|
F-5
|
Notes
To Consolidated Financial Statements
|
F-6
|
OXIS International, Inc. and Subsidiaries
|
||
December 31, 2016 and 2015
|
||
Consolidated Balance Sheets
|
||
|
|
|
|
December 31, 2016
|
December 31, 2015
|
ASSETS
|
|
|
Current
Assets:
|
|
|
Cash
and cash equivalents
|
$19,000
|
$47,000
|
Prepaid
expenses
|
2,000
|
2,000
|
Total
Current Assets
|
21,000
|
49,000
|
Fixed
assets, net
|
4,000
|
5,000
|
Total
Other Assets
|
4,000
|
5,000
|
TOTAL
ASSETS
|
$25,000
|
$54,000
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
Current
Liabilities:
|
|
|
Accounts
payable
|
$2,100,000
|
$893,000
|
Accrued
interest
|
3,800,000
|
2,391,000
|
Accrued
expenses
|
219,000
|
4,326,000
|
Line
of credit
|
31,000
|
31,000
|
Warrant
liability
|
417,000
|
44,531,000
|
Settlement
note payable
|
691,000
|
691,000
|
Demand
notes payable, net of discount of $-0- and $-0-
|
452,000
|
452,000
|
Convertible
debentures, net of discount of $794,000 and $900,000 current
portion
|
10,350,000
|
6,820,000
|
Senior
secured convertible debentures
|
889,000
|
1,039,000
|
Total
Current Liabilities
|
18,949,000
|
61,174,000
|
|
|
|
Long
term liabilities:
|
|
|
Convertible debentures, net of discount of $-0- and
$2,536,000
|
-
|
714,000
|
Total
long term liabilities
|
-
|
714,000
|
Total
liabilities
|
18,949,000
|
61,888,000
|
|
|
|
Stockholders’
Deficit:
|
|
|
Convertible
preferred stock - $0.001 par value; 15,000,000 shares
authorized:
|
|
|
Series
C - 96,230 and 96,230 shares issued and outstanding at December 31,
2016 and December 31, 2015, respectively
|
1,000
|
1,000
|
Series
H – 25,000 and 25,000 shares issued and outstanding at
December 31, 2016 and December 31, 2015, respectively
|
—
|
—
|
Series
I – 1,666,667 shares issued and outstanding at December 31,
2016 and December 31, 2015, respectively
|
2,000
|
2,000
|
Common
stock - $0.001 par value; 150,000,000 shares authorized; and
31,265,475 and 2,400,000 shares issued and outstanding at December
31, 2016 and December 31, 2015, respectively
|
31,000
|
2,000
|
Additional
paid-in capital
|
105,860,000
|
84,012,000
|
Accumulated
deficit
|
(124,649,000)
|
(145,682,000)
|
Noncontrolling
interest
|
(169,000)
|
(169,000)
|
Total
Stockholders’ Deficit
|
(18,924,000)
|
(61,834,000)
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
$25,000
|
$54,000
|
OXIS International, Inc. and Subsidiaries
|
||
December 31, 2016 and 2015
|
||
Statements of Operations
|
||
|
December 31,
|
|
|
2016
|
2016
|
Revenue:
|
|
|
Product
revenues
|
$-
|
$-
|
License
revenues
|
-
|
27,000
|
TOTAL
REVENUE
|
-
|
27,000
|
Cost
of Product Revenue
|
-
|
-
|
Gross
profit
|
-
|
27,000
|
Operating
Expenses:
|
|
|
Research
and development
|
975,000
|
1,000,000
|
Selling,
general and administrative
|
8,399,000
|
7,954,000
|
Total
operating expenses
|
9,374,000
|
8,954,000
|
Loss
from Operations
|
( 9,374,000)
|
( 8,927,000)
|
Other
income (expense)
|
|
|
Change
in value of warrant and derivative liabilities
|
36,962,000
|
( 6,760,000)
|
Interest
expense/income
|
( 6,555,000)
|
( 17,039,000)
|
Total
Other Income (Expense)
|
30,407,000
|
( 23,799,000)
|
Income
(loss) before minority interest and provision for income
taxes
|
21,033,000
|
( 32,726,000)
|
Less:
Net loss attributable to the noncontrolling interests
|
0
|
0
|
Income
(loss) before provision for income taxes
|
21,033,000
|
( 32,726,000)
|
Provision
for income taxes
|
-
|
-
|
Net
income (loss)
|
21,033,000
|
( 32,726,000)
|
|
|
|
Weighted
Average Shares Outstanding
|
|
|
Basic
|
24,427,906
|
2,394,540
|
Diluted
|
24,427,906
|
2,394,540
|
|
|
|
Net
income (loss) per share
|
|
|
Basic
|
$0.86
|
$(13.67)
|
Diluted
|
$0.86
|
$(13.67)
|
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
|
Consolidated Statement of Stockholders’ Deficit
|
For the Years Ended December 31, 2016 and 2015
|
|
Preferred
Stock
|
Common
Stock
|
Additional
Paid-in
|
Accumulated
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Balance
at December 31, 2014
|
1,787,897
|
$3,000
|
2,366,588
|
$2,000
|
$83,546,000
|
$(112,956,000)
|
Issuance of stock
options
|
|
|
|
|
220,000
|
|
Issuance of common
stock for accrued expenses
|
|
|
33,412
|
-
|
246,000
|
|
Net
loss
|
|
|
|
|
|
(32,726,000)
|
Balance
at December 31, 2015
|
1,787,897
|
$3,000
|
2,400,000
|
$2,000
|
$84,012,000
|
$(145,682,000)
|
Issuance of stock
options
|
|
|
|
|
42,000
|
|
Issuance of common
stock for convertible notes and interest
|
|
|
8,450,691
|
8,000
|
2,484,000
|
|
Issuance of common
stock for warrants
|
|
|
12,580,213
|
13,000
|
9,027,000
|
|
Issuance of common
stock for compensation
|
|
|
7,834,571
|
8,000
|
10,295,000
|
|
Net
income
|
|
|
|
|
|
22,033,000
|
Balance
at December 31, 2016
|
1,787,897
|
$3,000
|
31,265,475
|
$31,000
|
$105,860,000
|
$(124,649,000)
|
|
|
|
|
|
|
|
OXIS INTERNATIONAL, INC. AND SUBSIDIARIES
|
||
Consolidated Statements of Cash Flows
|
||
For the Years Ended December 31, 2016 and 2015
|
||
|
|
|
|
2015
|
2016
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
Net
income (loss)
|
$21,033,000
|
$( 32,726,000)
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
|
|
Depreciation
|
1,000
|
2,000
|
Stock
compensation expense for options and warrants issued to
employees and non-employees
|
6,591,000
|
3,761,000
|
Note
Allonges
|
65,000
|
3,667,000
|
Amortization
of debt discounts
|
2,897,000
|
2,494,000
|
Non-cash
interest expense
|
1,632,000
|
9,840,000
|
Change
in value of warrant and derivative liabilities
|
( 36,962,000)
|
7,400,000
|
Changes
in operating assets and liabilities:
|
|
|
Other
assets
|
-
|
25,000
|
Accounts
payable and accrued liabilities
|
2,813,000
|
880,000
|
Net
cash used in operating activities
|
( 1,930,000)
|
( 4,657,000)
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
Acquisition
of fixed assets
|
-
|
( 1,000)
|
Net
cash used by investing activities
|
-
|
( 1,000)
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
Proceeds
from notes payable
|
1,902,000
|
3,850,000
|
Repayment
of note payable
|
-
|
-
|
Net
cash provided by financing activities
|
1,902,000
|
3,850,000
|
Minority
interest
|
-
|
-
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(28,000)
|
(808,000)
|
CASH
AND CASH EQUIVALENTS - Beginning of period
|
47,000
|
855,000
|
CASH
AND CASH EQUIVALENTS - End of period
|
$19,000
|
$47,000
|
Supplemental
disclosures:
|
$-
|
$-
|
Interest
paid
|
$-
|
$-
|
Income
taxes paid
|
|
|
|
|
|
Supplemental
disclosures:
|
|
|
|
$1,944,000
|
$-
|
Issuance
of common stock for interest expense
|
$528,000
|
$247,000
|
Description
|
Level 1
|
Level 2
|
Level 3
|
|
|
|
|
Assets
|
|
|
|
|
$—
|
$—
|
$—
|
Liabilities
|
|
|
|
Warrant
liability
|
—
|
417,000
|
—
|
Note
Agreement
|
Balance at
December 31, 2016
|
Balance at
December 31, 2015
|
|
|
|
2009
Debentures
|
$305,000
|
$305,000
|
June 2011
Debentures
|
64,000
|
89,000
|
November 2011
Debentures
|
125,000
|
225,000
|
March 2012
Debentures
|
140,000
|
140,000
|
May 2012
Debentures
|
225,000
|
275,000
|
December 2012
Debentures
|
425,000
|
425,000
|
November 2013
Debentures
|
172,000
|
261,000
|
July 2014
Debentures
|
3,140,000
|
4,150,000
|
October 2014
Debentures
|
1,250,000
|
1,250,000
|
March 2015
Debentures
|
2,175,000
|
2,350,000
|
July 2015
Debentures
|
500,000
|
550,000
|
October 2015
Debentures
|
330,000
|
500,000
|
November 2015
Debentures
|
190,000
|
250,000
|
December 2015
Debentures
|
200,000
|
200,000
|
January 2016
Debentures
|
150,000
|
-
|
May 2016
Debentures
|
1,503,000
|
-
|
September 2016
Debentures
|
250,000
|
-
|
|
|
-
|
Total convertible
debentures
|
$11,144,000
|
$10,970,000
|
Less:
discount
|
(794,000)
|
(3,436,000)
|
Total convertible
debentures, net of discount
|
$10,350,000
|
$7,534,000
|
|
|
|
Total short term
convertible debentures, net of discount
|
$10,350,000
|
$6,820,000
|
Total long term
convertible debentures, net of discount
|
$-
|
$714,000
|
|
Number of
Warrants
|
Weighted Average
Exercise Price
|
Outstanding,
December 31, 2014:
|
2,652,098
|
$2.50
|
Granted
|
9,874,823
|
1.25
|
Forfeited
|
(1,200)
|
30.00
|
Exercised
|
-
|
|
Outstanding at
December 31, 2015:
|
12,525,721
|
$1.25
|
Granted
|
5,101,500
|
0.45
|
Forfeited
|
(351,837)
|
1.25
|
Exercised
|
(12,610,183)
|
1.25
|
Outstanding at
December 31, 2016
|
4,665,201
|
$0.45
|
|
|
|
Exercisable
warrants:
|
|
|
December 31,
2016
|
4,665,201
|
$0.45
|
December 31,
2015
|
12,525,721
|
$1.25
|
|
Number of
Options
|
Weighted Average
Exercise Price
|
Outstanding,
December 31, 2014
|
326,040
|
$15.00
|
Granted
|
52,000
|
3.29
|
Exercised
|
-
|
|
Expired
|
(3,240)
|
61.00
|
Outstanding,
December 31, 2015
|
374,800
|
$4.88
|
Granted
|
-
|
-
|
Exercised
|
-
|
-
|
Expired
|
(947)
|
56.27
|
Outstanding,
December 31, 2015
|
373,833
|
$4.76
|
|
|
|
Exercisable
Options:
|
|
|
December 31,
2015
|
270,762
|
$4.88
|
December 31,
2016
|
373,833
|
$4.76
|
|
Outstanding
Options
|
Exercisable
Options
|
|||
Range
of
Exercise
Prices
|
Number
of
Options
|
Weighted-Average
Remaining Contractual Life
|
Weighted-Average
Exercise
Price
|
Number
of
Options
|
Weighted-Average
Exercise
Price
|
$2.50
to $7.50
|
373,833
|
2.38
|
$4.76
|
273,833
|
$4.76
|
|
December 31,
|
|
|
2016
|
2015
|
Deferred
tax assets:
|
|
|
Federal
net operating loss carryforward
|
$19,819,000
|
$15,400,000
|
Other
|
1,634,000
|
1,028,000
|
Patent
amortization
|
(11,000)
|
(13,000)
|
Deferred
tax assets before valuation
|
21,442,000
|
16,415,000
|
Valuation
allowance
|
(21,442,000)
|
(16,415,000)
|
Net
deferred income tax assets
|
$—
|
$—
|
|
1.
|
I have
reviewed this report on Form 10-K of OXIS International,
Inc.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
4.
|
I am
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the
registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
|
|
5.
|
I have
disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
|
||||
|
||||||
Date:
March 31, 2017
|
By:
|
/s/
Anthony Cataldo
|
|
|
||
|
|
Name:
Anthony Cataldo
|
|
|
||
|
|
Title:
Chief Executive Officer, Chairman and Director (Principal Executive
Officer)
|
|
|
|
1.
|
I have
reviewed this report on Form 10-K of OXIS International,
Inc.;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
|
4.
|
I am
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the
registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
|
|
5.
|
I have
disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons
performing the equivalent functions):
|
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information; and
|
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s
internal control over financial reporting.
|
||||
|
||||||
Date:
March 31, 2017
|
By:
|
/s/
Steven Weldon
|
|
|
||
|
|
Name:
Steven Weldon
|
|
|
||
|
|
Title:
Chief Financial Officer, President and Director (Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
Date:
March 31, 2017
|
By:
|
/s/ Anthony
Cataldo
|
|
|
|
Name:
Anthony Cataldo
|
|
|
|
Title:
Chief Executive Officer, Chairman and Director (Principal Executive
Officer)
|
|
|
|
|
|
|
|
|
|
Date:
March 31, 2017
|
By:
|
/s/
Steven Weldon
|
|
|
|
Name:
Steven Weldon
|
|
|
|
Title:
Chief Financial Officer, President and Director (Principal
Financial Officer)
|
|
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Mar. 28, 2017 |
Jun. 30, 2016 |
|
Document And Entity Information | |||
Entity Registrant Name | OXIS INTERNATIONAL INC | ||
Entity Central Index Key | 0000109657 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 93,000,000 | ||
Entity Common Stock, Shares Outstanding | 122,912,868 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2016 |
Consolidated Balance Sheets (Parenthetical) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Current Liabilities: | ||
Convertible debentures, discount | $ 794,000 | $ 900,000 |
Demand notes payable, discount | $ 0 | $ 0 |
Stockholders' Deficit: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, Authorized | 15,000,000 | 15,000,000 |
Series C - Preferred stock, issued shares | 96,230 | 96,230 |
Series C - Preferred stock, outstanding shares | 96,230 | 96,230 |
Series H - Preferred stock, issued shares | 25,000 | 25,000 |
Series H - Preferred stock, outstanding shares | 25,000 | 25,000 |
Series I - Preferred stock, issued shares | 1,666,667 | 1,666,667 |
Series I - Preferred stock, outstanding shares | 1,666,667 | 1,666,667 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 2,400,000 | 2,400,000 |
Common stock, Issued | 31,265,475 | 2,400,000 |
Common stock, outstanding | 31,265,475 | 2,400,000 |
Note 1 - The Company and Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 1 - The Company and Summary of Significant Accounting Policies | OXIS International, Inc. (collectively, “OXIS” or the “Company”) is engaged in discovering, developing and commercializing novel therapeutics from our proprietary product platform in a broad range of disease areas. Currently, OXIS develops innovative drugs focused on the treatment of cancer. OXIS' lead drug candidate, OXS-2175, is a small molecule therapeutic candidate targeting the treatment of triple-negative breast cancer. In in vitro and in vivo models of TNBC, OXS-2175 demonstrated the ability to inhibit metastasis. OXIS' lead drug candidate, OXS-4235, also a small molecule therapeutic candidate, targets the treatment of multiple myeloma and associated osteolytic lesions. In in vitro and in vivo models of multiple myeloma, OXS-4235 demonstrated the ability to kill multiple myeloma cells, and decrease osteolytic lesions in bone. OXIS' lead drug candidate, OXS-1550, is a bispecific scFv recombinant fusion protein-drug conjugate composed of the variable regions of the heavy and light chains of anti-CD19 and anti-CD22 antibodies and a modified form of diphtheria toxin as its cytotoxic drug payload. OXS-1550 has demonstrated success in early human clinical trials in patients with relapsed/refractory B-cell lymphoma or leukemia.
In 1965, the corporate predecessor of OXIS, Diagnostic Data, Inc. was incorporated in the State of California. Diagnostic Data changed its incorporation to the State of Delaware in 1972; and changed its name to DDI Pharmaceuticals, Inc. in 1985. In 1994, DDI Pharmaceuticals merged with International BioClinical, Inc. and Bioxytech S.A. and changed its name to OXIS International, Inc.
Going Concern
As shown in the accompanying consolidated financial statements, the Company has incurred an accumulated deficit of $124,649,000 through December 31, 2016. On a consolidated basis, the Company had cash and cash equivalents of $19,000 at December 31, 2016. The Company's plan is to raise additional capital until such time that the Company generates sufficient revenues to cover its cash flow needs and/or it achieves profitability. However, the Company cannot assure that it will accomplish this task and there are many factors that may prevent the Company from reaching its goal of profitability.
The current rate of cash usage raises substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements were issued, absent any sources of significant cash flows. In an effort to mitigate this near-term concern the Company intends to seek additional equity or debt financing to obtain sufficient funds to sustain operations. However, the Company cannot provide assurance that it will successfully obtain equity or debt or other financing, if any, sufficient to finance its goals or that the Company will generate future product related revenues. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue in existence.
Advertising and promotional fees
Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. There were no advertising expenses for the years ended December 31, 2016 and 2015, respectively.
Basis of Consolidation
The accompanying consolidated financial statements include the accounts of OXIS International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. The Company's financial statements are prepared using the accrual method of accounting.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Concentrations of Credit Risk
The Company's cash and cash equivalents, marketable securities and accounts receivable are monitored for exposure to concentrations of credit risk. The Company maintains substantially all of its cash balances in a limited number of financial institutions. The balances are each insured by the Federal Deposit Insurance Corporation up to $250,000. The Company does not have balances in excess of this limit at December 31, 2016.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, inventory, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of debt is based upon current interest rates for debt instruments with comparable maturities and characteristics and approximates the carrying amount.
Stock Based Compensation to Employees
The Company accounts for its stock-based compensation for employees in accordance with Accounting Standards Codification (“ASC”) 718. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees over the related vesting period.
The Company granted stock options to purchase -0- and 52,000 shares of the Company’s common stock to employees and directors during the year ended December 31, 2016 and 2015, respectively. The fair values of employee stock options are estimated for the calculation of the pro forma adjustments at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions during 2015: expected volatility of 90%; average risk-free interest rate of 1.50% initial expected life of 5 years; no expected dividend yield; and amortized over the vesting period of typically one to four years. The Company reported an expense for share-based compensation for its employees and directors of $42,000 and $220,000 for the year ended December 31, 2016 and 2015, respectively.
Impairment of Long Lived Assets
The Company's long-lived assets currently consist of capitalized patents. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any of the Company's long-lived assets are considered to be impaired, the amount of impairment to be recognized is equal to the excess of the carrying amount of the assets over the fair value of the assets.
Income Taxes
The Company accounts for income taxes using the asset and liability approach, whereby deferred income tax assets and liabilities are recognized for the estimated future tax effects, based on current enacted tax laws, of temporary differences between financial and tax reporting for current and prior periods. Deferred tax assets are reduced, if necessary, by a valuation allowance if the corresponding future tax benefits may not be realized.
Net Income (Loss) per Share
Basic net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, plus the potential dilutive effect of common shares issuable upon exercise or conversion of outstanding stock options and warrants during the period. The weighted average number of potentially dilutive common shares excluded from the calculation of net income (loss) per share totaled in 37,843,731 in 2016 and 12,525,721 in 2015.
Patents
Acquired patents are capitalized at their acquisition cost or fair value. The legal costs, patent registration fees and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with patent applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized.
Capitalized cost for pending patents are amortized on a straight-line basis over the remaining twenty year legal life of each patent after the costs have been incurred. Once each patent is issued, capitalized costs are amortized on a straight-line basis over the shorter of the patent's remaining statutory life, estimated economic life or ten years.
Fixed Assets
Fixed assets is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which are 3 to 10 years for machinery and equipment and the shorter of the lease term or estimated economic life for leasehold improvements.
Fair Value
The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follows:
The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at December 31, 2016.
Research and Development
Research and development costs are expensed as incurred and reported as research and development expense. Research and development costs totaling $975,000 and $1,000,000 for the years ended December 31, 2016 and 2015, respectively.
Revenue Recognition
Product Revenue
The Company manufactures, or has manufactured on a contract basis, fine chemicals and nutraceutical products, which are its primary products to be sold to customers. Revenue from the sale of its products, including shipping fees, will be recognized when title to the products is transferred to the customer which usually occurs upon shipment or delivery, depending upon the terms of the sales order and when collectability is reasonably assured. Revenue from sales to distributors of its products will be recognized, net of allowances, upon delivery of product to the distributors. According to the terms of individual distributor contracts, a distributor may return product up to a maximum amount and under certain conditions contained in its contract. Allowances are calculated based upon historical data, current economic conditions and the underlying contractual terms.
License Revenue
License arrangements may consist of non-refundable upfront license fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product royalty payments. Some of these arrangements are multiple element arrangements.
Non-refundable, up-front fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. We defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have continuing involvement through research and development services that are required because our know-how and expertise related to the technology is proprietary to us, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement.
Payments related to substantive, performance-based milestones in a research and development arrangement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreements when they represent the culmination of the earnings process.
Use of Estimates
The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. |
Note 2 - Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2 - Debt | Senior secured convertible debentures
On October 25, 2006, the Company entered into a securities purchase agreement (“2006 Purchase Agreement”) with four accredited investors (the “2006 Purchasers”). In conjunction with the signing of the 2006 Purchase Agreement, the Company issued secured convertible debentures (“2006 Debentures”) and Series A, B, C, D, and E common stock warrants (“2006 Warrants”) to the 2006 Purchasers, and the parties also entered into a security agreement (the “2006 Security Agreement”) pursuant to which the Company agreed to grant the 2006 Purchasers, pari passu, a security interest in substantially all of the Company’s assets.
Pursuant to the terms of the 2006 Purchase Agreement, the Company issued the 2006 Debentures in an aggregate principal amount of $1,694,250 to the 2006 Purchasers. The 2006 Debentures are subject to an original issue discount of 20.318% resulting in proceeds to the Company of $1,350,000 from the transaction. The 2006 Debentures were due on October 25, 2008. The 2006 Debentures are convertible, at the option of the 2006 Purchasers, at any time prior to payment in full, into shares of common stock of the Company. As a result of the full ratchet anti-dilution provision the current conversion price is the lesser of $0.40 or 60% of the average of the lowest three trading prices occurring at any time during the 20 trading days preceding conversion (the “2006 Conversion Price”). Beginning on the first of the month beginning February 1, 2007, the Company was required to amortize the 2006 Debentures in equal installments on a monthly basis resulting in a complete repayment by the maturity date (the “Monthly Redemption Amounts”). The Monthly Redemption Amounts could have been paid in cash or in shares, subject to certain restrictions. If the Company chose to make any Monthly Redemption Amount payment in shares of common stock, the price per share would have been the lesser of the Conversion Price then in effect and 85% of the weighted average price for the 10-trading days prior to the due date of the Monthly Redemption Amount. The Company did not make any of the required monthly redemption payments.
Pursuant to the provisions of the 2006 Debentures, such non-payment was an event of default and penalty interest has accrued on the unpaid redemption balance at an interest rate equal to the lower of 18% per annum and the maximum rate permitted by applicable law. In addition, each of the 2006 Purchasers has the right to accelerate the cash repayment of at least 130% of the outstanding principal amount of the 2006 Debenture (plus accrued but unpaid liquidated damages and interest) and to sell substantially all of the Company’s assets pursuant to the provisions of the 2006 Security Agreement to satisfy any such unpaid balance.
The Company and Bristol entered into a Forbearance Agreement on December 3, 2015, pursuant to which Bristol agreed to refrain and forbear from exercising certain rights and remedies with respect the 2006 Debentures for three months. In exchange for the Forbearance Agreement, the Company issued an allonge in the amount of $350,000 increasing the principal amount of the 2006 Debentures.
During 2016 the Company converted a total of $150,000 of the 2006 Debentures into common stock of the Company. As of December 31, 2016, the balance of the 2006 Debentures is $889,000.
Convertible debentures
From October 2009 to September 2016, the Company has entered into multiple convertible debenture arrangements with several accredited investors (“Convertible Debentures”). Interest on the Convertible Debentures ranges for 0% to 18% with a default rate of 18%. The Convertible Debentures are either two year or six month notes.
The conversion price of the Convertible Debentures is subject to full ratchet anti-dilution adjustment in the event that the Company thereafter issues common stock or common stock equivalents at a price per share less than the conversion price or the exercise price, respectively, and to other normal and customary anti-dilution adjustment upon certain other events. As a result of the full ratchet anti-dilution provision, the current conversion price is $0.40 per share and the default conversion price is 65% of the average of the lowest three trading prices occurring at any time during the 20 trading days preceding conversion .
The holders of the Convertible Debentures have contractually agreed to restrict their ability to convert their Convertible Debentures and receive shares of our common stock such that the number of shares of the Company common stock held by holders and its affiliates after such conversion or exercise does not exceed 4.9% of the Company’s then issued and outstanding shares of common stock.
Outstanding Convertible Debentures issued by the Company are as follows:
Allonges
On August 18, 2015, the Company entered into a settlement agreement with three noteholders. In accordance with the July 24, 2014 Security Purchase Agreements, The Company was required to establish and maintain a reserve of shares of its common stock from its duly authorized shares of Common Stock for issuance in an amount equal to 150% of a required minimum by December 21, 2014 which did not occur. As compensation for the default, the Company issued allonges to the noteholders for a total of $837,500, increasing the principal amount of the convertible notes.
On October 7, 2015, the Company entered into a settlement agreement with two noteholders. In accordance with the July 24, 2014 Security Purchase Agreements, The Company was required to establish and maintain a reserve of shares of its common stock from its duly authorized shares of Common Stock for issuance in an amount equal to 150% of a required minimum by December 21, 2014 which did not occur. As compensation for the default, the Company issued allonges to the noteholders for a total of $537,500, increasing the principal amount of the convertible notes.
On November 5, 2015, the Company entered into a Second Settlement Agreement with three noteholders. On August 18, 2015 the Company entered into a Settlement Agreement that required the Company to increase its authorized shares to not less 8,000,000 shares and reserve 150% of the number of shares of its Common Stock no later than the earlier of (1) two days after Oxis obtaining all corporate and regulatory approvals necessary to increase it authorized shares; or (2) September 30, 2015 which did not occur. As compensation for the default, the Company issued additional allonges to the noteholders for a total of $837,500, increasing the principal amount of the convertible notes.
On Dec 5, 2015, the Company entered into a Second Settlement Agreement with three noteholders. On October 7, 2015 the Company entered into a Settlement Agreement that required the Company to increase its authorized shares to not less than 8,000,000 shares and reserve 150% of the number of shares of its Common Stock no later than the earlier of (1) two days after Oxis obtaining all corporate and regulatory approvals necessary to increase it authorized shares; or (2) September 30, 2015 which did not occur. As compensation for the default, the Company issued additional allonges to the noteholders for a total of $537,500, increasing the principal amount of the convertible notes.
The Company entered into a Forbearance Agreement on December 3, 2015, pursuant to which the remaining 2009 Debenture holder agreed to refrain and forbear from exercising certain rights and remedies with respect the 2009 Debentures for three months. In exchange for the Forbearance Agreement, the Company issued an allonge in the amount of $250,000 increasing the principal amount of the 2009 Debentures.
On July 15, 2016, the Company entered into a settlement agreement with one noteholder. In accordance with a 10% Convertible Debenture Due October 15, 2017, The Company was required pay accrued interest in case upon a conversion of the debt within three business days for the conversion which did not occur. As compensation for the default, the Company issued allonges to the noteholders for a total of $40,000, increasing the principal amount of the convertible notes.
Settlement Note Payable
On August 8, 2012, a Settlement Agreement and Mutual General Release ("Agreement") was made by and between OXIS and Bristol Investment Fund, Ltd., in order to settle certain claims regarding certain convertible debentures held by Bristol.
Pursuant to the Agreement, OXIS shall pay Bristol (half of which payment would redound to Theorem Capital LLC (“Theorem”)) a total of $1,119,778 as payment in full for the losses suffered and all costs incurred by Bristol in connection with the Transaction. Payment of such $1,119,778 shall be made as follows: OXIS shall issue restricted common stock to each of Bristol and Theorem, in an amount such that each Bristol and Theorem shall hold no more than 9.99% of the outstanding shares of OXIS (including any shares that each may hold as of the date of issuance). The shares so issued represent $417,475.65 of the $1,119,778 payment (111,327 shares at $3.75 per share, of which 36,675 will be retained by Bristol and 74,652 will be issued to Theorem). The remaining balance of the payment shall be made in the form of two convertible promissory notes in the respective amounts of $422,357.75 for Bristol and $279,944.60 for Theorem (collectively, the “Notes”) with a maturity of December 1, 2017 having an 8% annual interest rate, with interest only accruing until January 1, 2013, and then level payments of $3,750 each beginning January 1, 2013 until paid in full on December 1, 2017. In the event a default in the monthly payments on the Notes has occurred and is continuing each holder of the Notes shall be permitted to convert the unpaid principal and interest of the Notes into shares of OXIS at $0.40 cents per share. In the absence of such continuing default no conversion of the Notes will be permitted. OXIS will have the right to repay the Notes in full at any time without penalty. This settlement note payable is currently in default and has a balance of $691,000 as of December 31, 2016.
Demand Notes
On February 7, 2011 the Company entered into a convertible demand promissory note with Bristol pursuant to which Bristol purchased an aggregate principal amount of $31,375 of convertible demand promissory notes for an aggregate purchase price of $25,000 (the “February 2011 Bristol Note”). The February 2011 Bristol Note is convertible into shares of common stock of the Company at a price equal to $0.40 per share.
On March 4, 2011 the Company entered into a convertible demand promissory note with Bristol pursuant to which Bristol purchased an aggregate principal amount of $31,375 of convertible demand promissory notes for an aggregate purchase price of $25,000 (the “March 2011 Bristol Note”). The March 2011 Bristol Note is convertible at the option of the holder at any time into shares of common stock, at a price equal to $0.40.
On October 26, 2011 the Company entered into a convertible demand promissory note with Theorem pursuant to which Theorem purchased an aggregate principal amount of $200,000 of convertible demand promissory notes for an aggregate purchase price of $157,217 (the “October 2011 Theorem Note”). The October 2011 Theorem Note is convertible into shares of common stock of the Company, at a price equal to $0.40 per share.
On December 7, 2012, the Company entered into, and made its initial $315,000 borrowing under, a short-term loan agreement with two lenders pursuant to which it is permitted to borrow up to an aggregate of $350,000. The loans made under the loan agreement are evidence by the Company’s notes and secured pursuant to a Security Agreement, that is junior to the Company’s existing security arrangements under the Company’s October 26, 2006 Debentures but cover the same assets of the Company.
Interest on the Notes is at the rate of 18% per annum, payable on the first day of each month until maturity on May 1, 2013. On April 1, 2013, the Company was required to pay 25.7143% of the Loan, with the remaining balance due on May 1, 2013.
The full principal amount of the Loans may be due upon default under the terms of the Loan Agreement, the Notes or the Security Agreement.
In March 2013, the Company entered into, and made an additional $35,000 borrowing under, a short-term loan agreement with two lenders the Company entered into in December 2012, pursuant to which it is permitted to borrow up to an aggregate of $350,000. The loans made under the loan agreement are evidence by the Company’s notes and secured pursuant to a Security Agreement, that is junior to the Company’s existing security arrangements under the Company’s October 2006 Debentures but cover the same assets of the Company.
Effective April, 2013 the Company entered into a securities purchase agreement with one accredited investor to sell 10% convertible debentures with an initial principal balance of $75,000.
In December, 2013, the Company entered into a convertible demand promissory note with an initial principal balance of $189,662 convertible at $0.40 per share.
Financing Agreement
On November 8, 2010, the Company entered into a financing arrangement with Gemini Pharmaceuticals, Inc., a product development and manufacturing partner of the Company, pursuant to which Gemini Pharmaceuticals made a $250,000 strategic equity investment in the Company and agreed to make a $750,000 purchase order line of credit facility available to the Company. The outstanding principal of all Advances under the Line of Credit will bear interest at the rate of interest of prime plus 2 percent per annum. There is $31,000 due on this credit line at December 31, 2016. |
Note 3 - Stockholders' Equity |
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Note 3 - Stockholders' Equity | Common Stock
On May 8, 2015, the Company obtained stockholder consent for the approval of an amendment to our certificate of incorporation to effect a reverse stock split of the Company’s common stock at a ratio to be determined by the Board prior to the effective time of the amendment (the “Effective Time”) of not less than one-for-fifty and not more than one-for-two hundred fifty and the approval of an amendment to our certificate of incorporation to set the number of authorized shares of common stock the Company shall authority to issue following the reverse stock split in an amount to be determined by the Board prior to the Effective Time.
The Company filed the amended certificate of incorporation with the State of Delaware on December 16, 2015. The Company effected a reverse stock split of the Company’s common stock at a ratio of one-for-two hundred fifty and set the number of authorized shares of common stock the Company shall have authority to issue following the reverse stock split in an amount of 150,000,000. The effect of the reverse stock split has been reflected retroactively for all disclosures.
Common Stock
In January 2015, the Company agreed to issue 39,657 shares of common stock as a price protection to a note holder that originally converted notes at a price of $2.50 and continues to hold these shares. These additional shares would have been issued if the conversion shares price was $1.75. As of December 31, 2015, 33,142 shares of common stock have been issued and $247,000 of interest expense was recorded for this issuance. During January 2016 the remaining 6,515 share were issued and $20,000 of interest expense was recorded.
During the year ended December 31, 2016, the Company issued an aggregate of 12,580,183 shares of common stock to a total of 34 persons or entities in exchange of the cancellation of warrants on a cashless basis.
During the year ended December 31, 2016, the Company also issued an aggregate of 2,022,230 shares of common stock to a total of 17 persons as payment for consulting services provided to the Company. The average valuation of these shares was $2.00 per share.
During the year ended December 31, 2016, the Company also issued an aggregate of 4,612,341 shares of common stock to two executive officers of the Company in fulfilment of contractual rights held by the officers pursuant to their employment agreements.
During the year ended December 31, 2016, the Company also issued an aggregate of 5,956,982 shares of common stock to a total of 18 persons as payment for the conversion of certain note and the related accrued interest. The conversion price of these shares was $0.40 per share.
In August 2016, the Company issued 1,115,000 shares of common stock to H.C. Wainwright and Co., LLC as payment for investment banking services provided to the Company.
In October 2016, the Company issued an aggregate of 594,530 shares of common stock to one noteholder as payment for the conversion of a certain note. The conversion price of these shares was $0.0841 per share based on 60% of the average of the lowest three trading prices occurring at any time during the 20 trading days preceding conversion.
In November 2016, the Company issued an aggregate of 975,039 shares of common stock to one noteholder as payment for the conversion of a certain note. The conversion price of these shares was $0.0513 per share based on 60% of the average of the lowest three trading prices occurring at any time during the 20 trading days preceding conversion.
In December 2016, the Company issued an aggregate of 1,024,170 shares of common stock to one noteholder as payment for the conversion of a certain note. The conversion price of these shares was $0.04882 per share based on 60% of the average of the lowest three trading prices occurring at any time during the 20 trading days preceding conversion.
All shares issued during 2016 were exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Act”) pursuant to Section 4(2) of the Act since the shares were issued to persons or entities closely associated with the Company and there was no public offering of the shares.
Preferred Stock
The 96,230 shares of Series C preferred stock are convertible into 111 shares of the Company's common stock at the option of the holders at any time. The conversion ratio is based on the average closing bid price of the common stock for the fifteen consecutive trading days ending on the date immediately preceding the date notice of conversion is given, but cannot be less than .20 or more than ..2889 common shares for each Series C preferred share. The conversion ratio may be adjusted under certain circumstances such as stock splits or stock dividends. The Company has the right to automatically convert the Series C preferred stock into common stock if the Company lists its shares of common stock on the Nasdaq National Market and the average closing bid price of the Company's common stock on the Nasdaq National Market for 15 consecutive trading days exceeds $3,000.00. Each share of Series C preferred stock is entitled to the number of votes equal to .26 divided by the average closing bid price of the Company's common stock during the fifteen consecutive trading days immediately prior to the date such shares of Series C preferred stock were purchased. In the event of liquidation, the holders of the Series C preferred stock shall participate on an equal basis with the holders of the common stock (as if the Series C preferred stock had converted into common stock) in any distribution of any of the assets or surplus funds of the Company. The holders of Series C preferred stock are entitled to noncumulative dividends if and when declared by the Company's board of directors. No dividends to Series C preferred stockholders were issued or unpaid through December 31, 2016.
On December 4, 2008, the Company entered into and closed an Agreement (the “Bristol Agreement”) with Bristol Investment Fund, Ltd. pursuant to which Bristol agreed to cancel the debt payable by the Company to Bristol in the amount of approximately $20,000 in consideration of the Company issuing Bristol 25,000 shares of Series G Convertible Preferred Stock, which such shares carry a stated value equal to $1.00 per share (the “Series G Stock”).
The Series G Stock is convertible, at any time at the option of the holder, into common shares of the Company based on a conversion price equal to the lesser of $2.50 or 60% of the average of the three lowest trading prices occurring at any time during the 20 trading days preceding the conversion. The Series G Stock, as amended, shall have voting rights on an as converted basis multiplied by 100.
In the event of any liquidation or winding up of the Company, the holders of Series G Stock will be entitled to receive, in preference to holders of common stock, an amount equal to the stated value plus interest of 15% per year.
The Series G Stock restricts the ability of the holder to convert the Series G Stock and receive shares of the Company’s common stock such that the number of shares of the Company common stock held by Bristol and its affiliates after such conversion does not exceed 4.9% of the Company’s then issued and outstanding shares of common stock.
On October 13, 2009 the Company was informed by Theorem Group, LLC that it had purchased all of the outstanding Series G Preferred Stock and Theorem gave notice to the Company that it intended to exercise its ability to vote on all shareholder matters utilizing the super voting privileges provided by the Series G Stock.
Effective February 10, 2010, the Company issued 25,000 shares of its new Series H Convertible Preferred Stock (the “Series H Preferred”) to Theorem Group, LLC, a California limited liability company (the “Stockholder”), in exchange for the 25,000 shares of Series G Stock then owned by the Stockholder. The foregoing exchange was effected pursuant to that certain Exchange Agreement, dated February 10, 2010, between the Company and the Stockholder (the “Exchange Agreement”).
The Certificate of Designation of the Series H Preferred is based on, and substantially similar to the form and substance of the Certificate of Designation of the Series G Preferred. Some of the corrections, changes and differences between the Certificate of Designation of the Series G Preferred and the Certificate of Designation of the Series H Preferred include the following:
On November 8, 2010, the Company sold 1,666,667 shares of the Company’s Series I Preferred Stock, $.001 par value, at a price of $0.15 per share ($250,000).
The holder of the Series I Preferred Stock will be entitled to receive, out of funds legally available, dividends in cash at the annual rate of 8.0% of the Preference Amount ($0.15), when, as, and if declared by the Board. No dividends or other distributions shall be made with respect to any shares of junior stock until dividends in the same amount per share on the Series I Preferred Stock shall have been declared and paid or set apart during that fiscal year. Dividends on the Series I Preferred Stock shall not be cumulative and no right shall accrue to the Series I Preferred Stock by reason of the fact that the Company may fail to declare or pay dividends on the Series I Preferred Stock in the amount of the Dividend Rate per share or in any amount in any previous fiscal year of the Company, whether or not the earnings of the Company in that previous fiscal year were sufficient to pay such dividends in whole or in part.
Each share of Series I Preferred Stock shall entitle the holder thereof to such number of votes per share as shall equal the number of shares of Common Stock (rounded to the nearest whole number) into which such share of Series I Preferred Stock is then convertible.
Upon any liquidation of the Company, subject to the rights of any series of Preferred Stock that may from time to time come into existence, before any distribution or payment shall be made to the holders of any Junior Stock, the holders of the shares of Series I Preferred Stock then outstanding shall be entitled to receive and be paid out of the assets of the Company legally available for distribution to its stockholders liquidating distributions in cash or property at its fair market value as determined by the Board in the amount of $0.15 per share (as adjusted for any stock dividends, combinations or splits with respect to such shares).
Shares of Series I Preferred Stock may, at the option of the holder thereof, be converted at any time or from time to time into fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock which a holder of shares of Series I Preferred Stock shall be entitled to receive upon conversion of such shares shall be the product obtained by multiplying the Conversion Rate by the number of shares of Series I Preferred Stock being converted. Initially, the Series I Preferred Stock is convertible into 6,667 shares of common stock.
In the event that the per-share Market Price of the Common Stock over a period of 20 consecutive trading days is equal to at least 130% of the initial conversion price (130% of $0.15), all outstanding shares of Series I Preferred Stock shall be converted automatically into the number of shares of Common Stock into which such shares of Series I Preferred Stock are then convertible without any further action by the holders of such shares and whether or not the certificates representing such shares of Series I Preferred Stock are surrendered to the Company or its transfer agent.
On January 8, 2016 the Company entered into an Exchange Agreement with certain investors together holding 25,000 shares of Series H Preferred Stock and 1,666,667 shares of Series I Preferred Stock have agreed to convert all such shares of Preferred Stock into an aggregate of 4,075,000 shares of Common Stock upon successful completion by the Company of a $6 million financing.
Common Stock Warrants
Warrant transactions for the years ended December 31, 2016 and 2015 are as follows:
Stock Options
The Company reserved 400,000 shares of its common stock at December 31, 2014 for issuance under the 2014 Stock Incentive Plan (the “2014 Plan”). The 2014 Plan, approval by stockholders in May 2015, permits the Company to grant stock options to acquire shares of the Company's common stock, award stock bonuses of the Company's common stock, and grant stock appreciation rights. At December 31, 2016, 133,445 shares of common stock were available for grant and options to purchase 266,555 shares of common stock are outstanding under the 2014 Plan.
The Company has no shares of its common stock at December 31, 2016 to issue under the 2010 Stock Incentive Plan (the “2010 Plan”). The 2010 Plan, approved by stockholders at the 2011 annual meeting, permits the Company to grant stock options to acquire shares of the Company's common stock, award stock bonuses of the Company's common stock, and grant stock appreciation rights. At December 31, 2016, options to purchase 600 shares of common stock are outstanding under the 2010 Plan.
The Company has no shares of its common stock reserved at December 31, 2014 for issuance under the 2003 Stock Incentive Plan (the “2003 Plan”). The 2003 Plan, approved by stockholders at the 2003 annual meeting, permits the Company to grant stock options to acquire shares of the Company's common stock, award stock bonuses of the Company's common stock, and grant stock appreciation rights. At December 31, 2016, options to purchase 967 shares of common stock are outstanding under the 2003 Plan.
In addition, the Company has reserved 2,000 shares of its common stock for issuance outside of its stock incentive plans. At December 31, 2016, options to purchase 2,000 shares of common stock are outstanding outside of its stock incentive plans.
The following table summarizes stock option transactions for the years ended December 31, 2016 and 2015:
The weighted-average fair value of options granted was $1,780,000 and $1,829,000 in 2016 and 2015, respectively.
The following table summarizes information about all outstanding and exercisable stock options at December 31, 2016:
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Note 4 - Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 4 - Income Taxes | Deferred Taxes
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and operating losses and tax credit carryforwards. The significant components of net deferred income tax assets for the Company are:
Generally accepted accounting principles requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's history of operating losses, management has provided a valuation allowance equal to its net deferred tax assets. The valuation allowance increased by $5,027,000 during the year ended December 31, 2016.
Tax Carryforward
At December 31, 2016, the Company had net operating loss carryforwards of approximately $49,900,000 to reduce United States federal taxable income in future years. These carryforwards expire through 2036.
The Company is no longer subject to U.S. and state tax examinations for years ending before the fiscal year ended December 31, 2012. Management does not believe there will be any material changes in our unrecognized tax positions over the next twelve months.
The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There was no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the years ended December 31, 2016 and 2015. |
Note 5 - Subsequent Events |
12 Months Ended |
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Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Note 5 - Subsequent Events | Common Stock
During the first quarter of 2017 the Registrant has issued a total of 91,064,060 shares of common stock to a total of eleven entities or individuals in exchange for the cancellation of debt in the total amount of $1,809,519 and interest in the total amount of $523,800.
The Registrant also issued 583,333 shares of common stock to one entity upon the exercise of warrants on a cashless basis.
Convertible Notes
In January 2017, the Company entered into a securities purchase agreement with eight accredited investors to sell 10% convertible debentures with and an exercise price of the lesser of (i) $0.05 or (ii) the average of the three (3) lowest intra-day trading prices of the Common Stock during the 20 Trading Days immediately prior to the date on which the Notice of Conversion is delivered to the Company, with an initial principal balance of $633,593 and warrants to acquire up to 12,671,860 shares of the Company's common stock at an exercise price of $0.05 per share.
In March 2017, the Company entered into a securities purchase agreement with two accredited investors to sell 10% convertible debentures with and an exercise price of the lesser of (i) $0.05 or (ii) the average of the three (3) lowest intra-day trading prices of the Common Stock during the 20 Trading Days immediately prior to the date on which the Notice of Conversion is delivered to the Company, with an initial principal balance of $232,313 and warrants to acquire up to 4,646,260 shares of the Company's common stock at an exercise price of $0.05 per share.
Agreements In March 2017, we entered a new one-year Sponsored Research Agreement with the University of Minnesota. The purpose of this agreement is to determine toxicities and in vivo behavior in our Trispecific Killer Engager (TriKE) technology licensed by Oxis from the University of Minnesota. |
Note 1 - The Company and Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company And Summary Of Significant Accounting Policies Policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Going Concern |
As shown in the accompanying consolidated financial statements, the Company has incurred an accumulated deficit of $124,649,000 through December 31, 2016. On a consolidated basis, the Company had cash and cash equivalents of $19,000 at December 31, 2016. The Company's plan is to raise additional capital until such time that the Company generates sufficient revenues to cover its cash flow needs and/or it achieves profitability. However, the Company cannot assure that it will accomplish this task and there are many factors that may prevent the Company from reaching its goal of profitability.
The current rate of cash usage raises substantial doubt about the Company’s ability to continue as a going concern for one year after the date the financial statements were issued, absent any sources of significant cash flows. In an effort to mitigate this near-term concern the Company intends to seek additional equity or debt financing to obtain sufficient funds to sustain operations. However, the Company cannot provide assurance that it will successfully obtain equity or debt or other financing, if any, sufficient to finance its goals or that the Company will generate future product related revenues. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue in existence.
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Advertising and Promotional Fees |
Advertising expenses consist primarily of costs incurred in the design, development, and printing of Company literature and marketing materials. The Company expenses all advertising expenditures as incurred. There were no advertising expenses for the years ended December 31, 2016 and 2015, respectively. |
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Basis of Consolidation |
The accompanying consolidated financial statements include the accounts of OXIS International, Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated. The Company's financial statements are prepared using the accrual method of accounting. |
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Cash and Cash Equivalents |
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. |
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Concentrations of Credit Risk | The Company's cash and cash equivalents, marketable securities and accounts receivable are monitored for exposure to concentrations of credit risk. The Company maintains substantially all of its cash balances in a limited number of financial institutions. The balances are each insured by the Federal Deposit Insurance Corporation up to $250,000. The Company does not have balances in excess of this limit at December 31, 2016. |
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Fair Value of Financial Instruments | The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, inventory, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. The fair value of debt is based upon current interest rates for debt instruments with comparable maturities and characteristics and approximates the carrying amount. |
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Stock Based Compensation to Employees | The Company accounts for its stock-based compensation for employees in accordance with Accounting Standards Codification (“ASC”) 718. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees over the related vesting period.
The Company granted stock options to purchase -0- and 52,000 shares of the Company’s common stock to employees and directors during the year ended December 31, 2016 and 2015, respectively. The fair values of employee stock options are estimated for the calculation of the pro forma adjustments at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions during 2015: expected volatility of 90%; average risk-free interest rate of 1.50% initial expected life of 5 years; no expected dividend yield; and amortized over the vesting period of typically one to four years. The Company reported an expense for share-based compensation for its employees and directors of $42,000 and $220,000 for the year ended December 31, 2016 and 2015, respectively. |
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Impairment of Long Lived Assets | The Company's long-lived assets currently consist of capitalized patents. The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If any of the Company's long-lived assets are considered to be impaired, the amount of impairment to be recognized is equal to the excess of the carrying amount of the assets over the fair value of the assets. |
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Income Taxes | The Company accounts for income taxes using the asset and liability approach, whereby deferred income tax assets and liabilities are recognized for the estimated future tax effects, based on current enacted tax laws, of temporary differences between financial and tax reporting for current and prior periods. Deferred tax assets are reduced, if necessary, by a valuation allowance if the corresponding future tax benefits may not be realized. |
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Net Income (Loss) per Share | Basic net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding during the period, plus the potential dilutive effect of common shares issuable upon exercise or conversion of outstanding stock options and warrants during the period. The weighted average number of potentially dilutive common shares excluded from the calculation of net income (loss) per share totaled in 37,843,731 in 2016 and 12,525,721 in 2015. |
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Patents | Acquired patents are capitalized at their acquisition cost or fair value. The legal costs, patent registration fees and models and drawings required for filing patent applications are capitalized if they relate to commercially viable technologies. Commercially viable technologies are those technologies that are projected to generate future positive cash flows in the near term. Legal costs associated with patent applications that are not determined to be commercially viable are expensed as incurred. All research and development costs incurred in developing the patentable idea are expensed as incurred. Legal fees from the costs incurred in successful defense to the extent of an evident increase in the value of the patents are capitalized.
Capitalized cost for pending patents are amortized on a straight-line basis over the remaining twenty year legal life of each patent after the costs have been incurred. Once each patent is issued, capitalized costs are amortized on a straight-line basis over the shorter of the patent's remaining statutory life, estimated economic life or ten years. |
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Fixed Assets | Fixed assets is stated at cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets, which are 3 to 10 years for machinery and equipment and the shorter of the lease term or estimated economic life for leasehold improvements. |
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Fair Value | The carrying amounts reported in the balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels are defined as follows:
The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at December 31, 2016.
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Research and Development | Research and development costs are expensed as incurred and reported as research and development expense. Research and development costs totaling $975,000 and $1,000,000 for the years ended December 31, 2016 and 2015, respectively. |
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Revenue Recognition | Product Revenue
The Company manufactures, or has manufactured on a contract basis, fine chemicals and nutraceutical products, which are its primary products to be sold to customers. Revenue from the sale of its products, including shipping fees, will be recognized when title to the products is transferred to the customer which usually occurs upon shipment or delivery, depending upon the terms of the sales order and when collectability is reasonably assured. Revenue from sales to distributors of its products will be recognized, net of allowances, upon delivery of product to the distributors. According to the terms of individual distributor contracts, a distributor may return product up to a maximum amount and under certain conditions contained in its contract. Allowances are calculated based upon historical data, current economic conditions and the underlying contractual terms.
License Revenue
License arrangements may consist of non-refundable upfront license fees, exclusive licensed rights to patented or patent pending technology, and various performance or sales milestones and future product royalty payments. Some of these arrangements are multiple element arrangements.
Non-refundable, up-front fees that are not contingent on any future performance by us, and require no consequential continuing involvement on our part, are recognized as revenue when the license term commences and the licensed data, technology and/or compound is delivered. We defer recognition of non-refundable upfront fees if we have continuing performance obligations without which the technology, right, product or service conveyed in conjunction with the non-refundable fee has no utility to the licensee that is separate and independent of our performance under the other elements of the arrangement. In addition, if we have continuing involvement through research and development services that are required because our know-how and expertise related to the technology is proprietary to us, or can only be performed by us, then such up-front fees are deferred and recognized over the period of continuing involvement.
Payments related to substantive, performance-based milestones in a research and development arrangement are recognized as revenue upon the achievement of the milestones as specified in the underlying agreements when they represent the culmination of the earnings process. |
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Use of Estimates | The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. |
Note 1 - The Company and Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company And Summary Of Significant Accounting Policies Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company assets and liabilities by level measured at fair value on a recurring basis |
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Note 2 - Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Note 2 - Debt Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Convertible Debentures |
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Note 3 - Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options And Warrants Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the warrant activity |
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Summary of the stock option activity |
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Summary of outstanding and exercisable stock options |
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Note 4 - Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of net deferred income tax assets |
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Note 1 - The Company and Summary of Significant Accounting Policies (Details) |
Dec. 31, 2016
USD ($)
|
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Level 1 | |
Assets | |
Asset | $ 0 |
Liabilities | |
Warrant liability | 0 |
Level 2 | |
Assets | |
Asset | 0 |
Liabilities | |
Warrant liability | 417,000 |
Level 3 | |
Assets | |
Asset | 0 |
Liabilities | |
Warrant liability | $ 0 |
Note 1 - The Company and Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Company And Summary Of Significant Accounting Policies Policies [Default Label] | |||
Accumulated deficit | $ (124,649,000) | $ (145,682,000) | $ (112,956,000) |
Cash and cash equivalent | $ 19,000 | $ 47,000 | $ 855,000 |
Stock options granted | 0 | 52,000 | |
Expected volatility | 90.00% | ||
Risk free interest rate | 1.50% | ||
Expected life | 5 years | ||
Expected dividend yield | $ 0.00 | ||
Share based compensation expense | $ 42,000 | $ 222,000 | |
Diluted shares excluded from calcuation of EPS | 37,843,731 | 12,525,721 | |
Research and development costs | $ 975,000 | $ 1,000,000 |
Note 2 - Debt (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Note 2 - Debt Details | ||
Total convertible debentures | $ 11,144,000 | $ 10,970,000 |
Less: discount | (794,000) | (3,436,000) |
Total convertible debentures, net of discount | 10,350,000 | 7,534,000 |
Total short term convertible debentures, net of discount | 10,350,000 | 6,820,000 |
Total long term convertible debentures, net of discount | $ 0 | $ 714,000 |
Note 3 - Stockholders' Equity (Details) - Warrant - $ / shares |
12 Months Ended | |
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Dec. 31, 2016 |
Dec. 31, 2015 |
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Warrants Outstanding | ||
Outstanding, beginning | 12,525,721 | 2,652,098 |
Granted | 5,101,500 | 9,874,823 |
Forfeited | (351,837) | (1,200) |
Exercised | (12,610,183) | 0 |
Outstanding, ending | 4,665,201 | 12,525,721 |
Exercisable, ending | 4,665,201 | 12,525,721 |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ 1.25 | $ 2.50 |
Granted | 0.45 | 1.25 |
Forfeited | 1.25 | 30.00 |
Exercised | 1.25 | 0 |
Outstanding, ending | 0.45 | 1.25 |
Exercisable, ending | $ 0.45 | $ 1.25 |
Note 3 - Stockholders' Equity (Details 1) - Stock Options - $ / shares |
12 Months Ended | |
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Dec. 31, 2016 |
Dec. 31, 2015 |
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Options Outstanding | ||
Outstanding, beginning | 374,800 | 326,040 |
Granted | 0 | 52,000 |
Exercised | 0 | 0 |
Expired | (947) | (3,240) |
Outstanding, ending | 373,833 | 374,800 |
Exercisable, ending | 373,833 | 270,762 |
Weighted Average Exercise Price | ||
Outstanding, beginning | $ 4.88 | $ 15.00 |
Granted | 0 | 3.29 |
Exercised | 0 | 0 |
Expired | 56.27 | 61.00 |
Outstanding, ending | 4.76 | 4.88 |
Exercisable, ending | $ 4.76 | $ 4.88 |
Note 4 - Income Taxes (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
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Deferred tax assets: | ||
Federal net operating loss carryforward | $ 19,819,000 | $ 15,400,000 |
Other | 1,634,000 | 1,028,000 |
Patent amortization | (11,000) | (13,000) |
Deferred tax assets before valuation | 21,442,000 | 16,415,000 |
Valuation allowance | (21,442,000) | (16,415,000) |
Net deferred income tax assets | $ 0 | $ 0 |
Note 4 - Income Taxes (Details Narrative) |
12 Months Ended |
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Dec. 31, 2016
USD ($)
| |
Note 4 - Income Taxes Details Narrative | |
Net operating loss carryforward | $ 49,900,000 |
Net operating loss carryforward, expiration | These carryforwards expire through 2036. |
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