Filing identity and reporting period
Important discrepancy: The request identifies TENAX THERAPEUTICS, INC. and 2011 Q3, but the supplied filing is for Oxygen Biotherapeutics, Inc., for the quarter ended January 31, 2013 (fiscal 2013 third quarter), filed March 18, 2013. The summary below reflects the supplied filing, not the company or period in the request metadata.
Oxygen Biotherapeutics describes itself as a development-stage biomedical company developing oxygen-carrying products, including Oxycyte, and selling the Dermacyte topical cosmetic line. The financial statements are unaudited and cover the three and nine months ended January 31, 2013.
Financial results and liquidity
| Metric | Three months ended Jan. 31, 2013 | Three months ended Jan. 31, 2012 | Nine months ended Jan. 31, 2013 | Nine months ended Jan. 31, 2012 |
|---|---|---|---|---|
| Total net revenue | $222,388 | $148,262 | $1,009,356 | $268,294 |
| Product revenue | $2,871 | $4,673 | $28,899 | $91,565 |
| Government grant revenue | $221,051 | $146,101 | $997,035 | $224,345 |
| Operating loss | $1,591,500 | $1,873,776 | $3,949,785 | $6,356,082 |
| Net loss | $2,412,954 | $7,298,614 | $7,556,774 | $13,097,606 |
| Net loss per share, basic | $(0.07) | $(0.26) | $(0.24) | $(0.53) |
- Dermacyte gross profit was $1,337 for the quarter and $12,321 for the nine-month period; the filing reports no consolidated gross margin measure. Product sales were a small portion of total revenue, which was primarily grant-funded.
- Cash and cash equivalents were $828,811 at January 31, 2013, down from $1,879,872 at April 30, 2012. Nine-month operating cash use was $3,480,825; investing cash use was $105,935; financing provided $2,535,699.
- Working capital deficit was $339,536. Total assets were $3.04 million, total liabilities $4.64 million, and stockholders’ deficit $1.60 million.
- Notes payable were reported at $2.68 million net of discount, including $2.59 million long-term and $98,657 current. The underlying convertible notes have $4.9 million principal and bear 15% annual interest.
Material changes and management commentary
- Quarterly total revenue increased as Army grant revenue rose, while product revenue declined 39%. For the nine months, grant revenue increased substantially as study milestones were achieved, but product revenue fell 68%, reflecting reduced sales and marketing, fewer sales staff, and the absence of prior-year distributor sales.
- Nine-month net loss narrowed year over year, primarily alongside lower interest expense and lower general and administrative costs. Interest expense fell to $3.62 million from $6.65 million for the nine-month period; the prior-year period included interest on debt repaid in November 2011.
- In May 2012, the company consolidated operations, closed its California R&D facility, moved R&D to North Carolina, and shifted manufacturing to contract manufacturers. It recorded $220,715 of restructuring expense for the nine months.
- Management said it expected to fund operations through July 31, 2013, based on January cash and a subsequent financing. It also stated that substantial additional capital is required and that the company needs financing or licensing income to continue operating. The filing says these conditions raise substantial doubt about the company’s ability to continue as a going concern.
Outlook, risks, contingencies, and subsequent events
- Management’s focus was to resume enrollment in the Phase II-B Oxycyte traumatic brain injury trial, complete preclinical safety work, and pursue partnerships and licensing. The filing reports ethics committee approval in Israel for the next trial cohort; enrollment was expected to resume in the fourth fiscal quarter. No financial guidance beyond the stated cash runway is provided.
- In February 2013, the company closed a Series B preferred-stock financing for approximately $1.9 million net proceeds. The securities were convertible into common shares and included warrants, creating potential dilution.
- A February 2013 Dermacyte license granted Valor exclusive worldwide commercialization rights for five years. Terms include a $140,000 annual license fee, bulk product purchases at 125% of manufacturing cost, and a 5% royalty after specified sales thresholds.
- The Tenor lawsuit, in which the court had found the company breached a right-of-first-offer agreement, was settled after the reporting date. The settlement requires $600,000 plus 15% interest, payable in six quarterly installments, with possible acceleration following certain financings. The company had accrued $600,000 at January 31, 2013.
- The company disclosed NASDAQ deficiencies relating to minimum bid price and market capitalization, with compliance deadlines in March and April 2013. Failure to regain compliance could result in delisting and impair liquidity and access to capital.
- The company had accumulated losses of $115.2 million and stated that development, clinical trials, and regulatory approval will require substantial further funding. Clinical, regulatory, financing, dilution, and listing risks remain material.
Most important facts for investors to verify
- Confirm the filing identity and period: the supplied document is Oxygen Biotherapeutics’ 2013 Q3 10-Q, not a Tenax Therapeutics 2011 Q3 filing.
- Verify actual cash runway, cash burn, and subsequent financing proceeds; management’s stated runway extended only through July 31, 2013.
- Review the terms and dilution potential of the Series B preferred stock and warrants, alongside the company’s outstanding convertible notes.
- Track Oxycyte trial resumption, enrollment, preclinical safety results, and the additional funding and regulatory steps required.
- Confirm settlement payments to Tenor and the company’s compliance with NASDAQ continued-listing requirements.