OXIS International to raise $2.0 million from sale of Convertible Debentures and Warrants

OXIS INTERNATIONAL, INC. (OXIS:PK) announced today that the Company has entered into and closed agreements with several accredited investors to purchase Convertible Debentures and Warrants representing $2.0 million in gross proceeds.

In connection with the current financing, the Company has issued 0% Convertible Debentures convertible into shares of the Company’s common stock at a per share conversion price equal to $0.05 per share. In addition, the Company has granted the purchasers Series A Warrants and Series B Warrants each with the right to purchase shares equal to 50% of the principal amount invested by each investor (the “Class A and Class B Warrants”) . The Class A and Class B Warrants are exercisable for up to five years from the date of issuance at a per share exercise price of $0.0625 and $0.075, respectively, on a cash or cashless basis. Full exercise of the Class A and Class B Warrants would result in 40,000,000 additional shares being issued. Collectively, the Debentures and Warrants are referred herein as the “October 2009 Securities”.

The Company and its October 2009 Investors have agreed to place the proceeds in escrow with the funds being released monthly, subject to settlement with existing creditors, upon the Company and the October 2009 Investors submitting a joint statement to the escrow agent requesting the release of funds.

Furthermore, in connection with the October 2009 Securities sale by the Company, the Company and Bristol Investment Fund, Ltd. (“Bristol”) entered into a Standstill and Forbearance Agreement whereby Bristol agreed to refrain and forbear from exercising certain rights and remedies with respect to an earlier October 2006 financing and subsequent demand notes (the “Bridge Notes”) issued by the Company in 2008 and 2009. Full details regarding the Bristol Agreement are disclosed in the Form 8K filed on October 9, 2009 and earlier filings with the Securities and Exchange Commission.

The current October 2009 Investors will have full ratchet anti-dilution protection and, if the event of a subsequent financing, the October 2009 Investors may elect, in their own discretion, to exchange all or some of the October 2009 Debentures (but not the Warrants) for any securities or units issued on a dollar-for-dollar basis or to have any particular provisions of the subsequent financing legal documents apply to the documents utilized for the October 2009 Financing.

The October 2009 Investors will have piggyback registration rights in the event that the Company shall determine to prepare and file with the Securities and Exchange Commission a registration statement relating to an offering for its own account or the account of others.

In discussing the financing and outlook for the Company, Chairman and CEO Tony Cataldo stated, “OXIS has long been known for its unique and patented science. We are now beginning our transition from a company with strong Intellectual Property (IP) to a company with multiple products in selective channels. This new financing from strategic investors, led by Theorem Capital, LLC, will allow us to begin our transition into the consumer products marketplace. Our efforts will be focused on high quality products taking advantage of the IP that Oxis has developed during its 45 year life.”