Chris Stern Blog

On October 19, our shareholders voted to approve a one-for-15 reverse split. As we announced today, it will be effective at the start of trading on Monday, November 9. I’m sure many of our shareholders have questions about the mechanics of the split. So we will be posting a list of the most frequent questions we’ve received so far along with the answers. You will find those FAQ’s below and also on the Investors page of our website.

The reverse split is the last critical step in our efforts to move the listing of our shares, graduating so to speak, from the Over-the-Counter Bulletin Board to one of the major stock exchanges. We filed the application package right after the shareholder meeting at which the reverse split was approved.

I’ve been asked why we have not given more details about filing the application for the listing – especially about which exchange we have applied to.  Well, the answer is that this process is highly regulated and we will be told by the regulators and the listing exchange what and when we are allowed to communicate. There may even be a “quiet period” coming up very soon, where we are not allowed to communicate at all. So, all I can say is that we are progressing on plan with our listing effort. We will make announcements as soon as we are allowed to and hope that this will be sooner rather than later. Believe me, I wish I could say more.

On the operations side, we are waiting for the first patient to be enrolled in the Phase II traumatic brain injury (TBI) trials in Switzerland and Israel. While we cannot predict exactly when, (after all, they are accident victims whose injuries must meet certain criteria, and the sites need next-of-kin consent) we expect that this should happen very soon. The drug is in place, and the sites are instructed.

Also, we are preparing all the regulatory work for the other indications in our clinical, topical and device development programs. A number of new studies are already under way.

As for Dermacyte, we now expect to make a first shipment fulfilling our pre-orders as soon as late next week and have Dermacyte regular production runs ready in early December – just in time for a holiday gift of beautiful skin. Next year, we intend to launch a number of amazing and beautiful products within this superb cosmetic line.

The transition from a research company to an operating revenue company at a major listing exchange is a lot of work and a lot of fun. Without the engagement and dedication of our wonderful staff and the support of our shareholders, this would be a very difficult undertaking. Thank you all!

Frequently Asked Questions about the Reverse Stock Split

Q. What is a reverse stock split?
A. A reverse stock split is a re-capitalization that merely reduces the total number of shares of common stock outstanding by the exchange ratio established for the reverse stock split, including shares underlying outstanding stock options and warrants. Upon completion of a reverse stock split, as a result of the reduction in the number of shares of common stock outstanding, the price per common share increases because there are fewer shares outstanding that represent the market capitalization.

However, the effect of a reverse stock split upon the market price of our common stock cannot be predicted with any certainty, and the history of similar stock splits for companies in like circumstances is varied.  It is possible that the per share price of our common stock after the reverse stock split will not rise in proportion to the reduction in the number of shares of our common stock outstanding resulting from the reverse stock split.  The market price of our common stock may also be based on other factors that may be unrelated to the number of shares outstanding, including our future performance.

Q. When was the reverse stock split approved?
A. At our Annual Meeting of Stockholders held on October 19, 2009.

Q. What is the exchange ratio for the reverse stock split?
A. The reverse stock split exchange ratio is 1-for-15. That means that for every 15 shares of common stock currently held, stockholders will receive one new share of common stock. The percentage ownership of each stockholder will remain unchanged at implementation of the reverse stock split.

Q. What if my number of shares does not divide evenly by 15?
A.  Fractional shares will be rounded up to the next whole number.

Q. When will the reverse stock split become effective?
A. The reverse stock split will become effective at the opening of trading on Monday, November 9, 2009.

Q. Do I need to surrender my existing stock certificate for a new stock certificate?
A. On November 9, 2009, shares of common stock outstanding immediately prior thereto will be combined and converted, automatically and without any action on the part of the stockholders, into new shares of common stock in accordance with the 1:15 reverse stock split ratio and rounding any fractional share up to the nearest whole share, so all pre-split stock certificates will automatically represent the post-split number of shares.  We recommend that you surrender your certificate to the transfer agent to exchange for a new certificate, but you are not required to do so. However, if you choose to do so, the transfer agent will charge you a fee. Any pre-split shares represented by a certificate submitted for transfer, whether pursuant to an exchange, sale, other disposition or otherwise, will automatically be exchanged for new post-split shares.  Stockholders of Record Should Not Destroy Any Pre-split Stock Certificate(s).

For beneficial holders of pre-reverse split shares (i.e., stockholders who hold their shares through a broker), your broker will make the appropriate adjustment to the number of shares held in your account on November 9, 2009.

Q. How does the reverse stock split affect trading of Oxygen Biotherapeutics, Inc. shares?
A. Our common stock will continue to trade on the Over the Counter Bulletin Board under the symbol OXBT.

Q. Will the CUSIP number for Oxygen Biotherapeutics, Inc. common stock change?
A. Yes. The new CUSIP number for our common stock is 69207P209.

Q. Why has Oxygen Biotherapeutics, Inc. implemented a reverse stock split of its common stock?
A. The primary purpose of the reverse stock split is to increase the per share market price of our common stock to meet the share price requirements in connection with management’s plan to move the share listing to a major stock exchange.  The reverse stock split also may enhance the acceptability and marketability of the Company’s common stock to the larger financial community and the investment public.

Q. What is the impact of the reverse stock split on the outstanding shares of common stock?
A. The immediate effect of the reverse stock split will be to reduce the number of outstanding shares of common stock from 293,767,389 to approximately 19,599,676.

Q. What is the impact of the reverse stock split on stock options and warrants?
A. A proportional 1:15 adjustment will be made to the company’s stock options and warrants. Warrant holders do not need to submit their warrants for exchange. The adjustment will be made automatically.

Q. What is the impact of the reverse stock split on the number of authorized shares of common stock?
A. The number of authorized shares of common stock will remain the same.

Q. What are the tax consequences of the reverse stock split to the company’s stockholders?
A. Generally, the reverse stock split itself will not have any tax consequences. A stockholder’s aggregate tax basis for the post-reverse stock split shares of common stock should be the same as the aggregate tax basis for the pre-reverse stock split shares of common stock. However, each stockholder should consult his or her tax advisor to determine their particular tax consequences resulting from the reverse stock split, including any application and effect of federal, state, local and/or foreign income tax and other laws.