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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/20000814/0001032210-00-001682/0001032210-00-001682.txt : 20000921
<SEC-HEADER>0001032210-00-001682.hdr.sgml : 20000921
ACCESSION NUMBER:		0001032210-00-001682
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20000630
FILED AS OF DATE:		20000814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			OXIS INTERNATIONAL INC
		CENTRAL INDEX KEY:			0000109657
		STANDARD INDUSTRIAL CLASSIFICATION:	 [2834
]		IRS NUMBER:				941620407
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	000-08092
			FILM NUMBER:		699768
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		6040 N CUTTER CIRCLE STE 317
				CITY:			PORTLAND
				STATE:			OR
				ZIP:			97217
				BUSINESS PHONE:		5032833911
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		6040 N CUTTER CIRCLE STE 317
					CITY:			PORTLAND
					STATE:			OR
					ZIP:			97217
</MAIL-ADDRESS>

					FORMER COMPANY:	
						FORMER CONFORMED NAME:	DDI PHARMACEUTICALS INC
						DATE OF NAME CHANGE:	19920703
</FORMER-COMPANY>

						FORMER COMPANY:	
							FORMER CONFORMED NAME:	DIAGNOSTIC DATA INC /DE/
							DATE OF NAME CHANGE:	19850312
</FORMER-COMPANY>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-Q
<TEXT>

<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                   FORM 10-Q


 X  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- ---
    Act of 1934 for the quarterly period ended June 30, 2000.

                                      or

___ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ___ to _______.



                         Commission File Number O-8092



                           OXIS INTERNATIONAL, INC.

            (Exact name of registrant as specified in its charter)

                 Delaware                               94-1620407
- ---------------------------------------        ------------------------------
     (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization)               Identification No.)

      6040 N. Cutter Circle, Suite 317, Portland, Oregon           97217
- -----------------------------------------------------------------------------
      (Address of principal executive offices)                  (Zip Code)

                                (503) 283-3911
    ----------------------------------------------------------------------------
             (Registrant's telephone number, including area code)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                                YES  X  NO ___
                                    ---


At June 30, 2000, the issuer had outstanding the indicated number of shares of
                            common stock: 9,370,677
<PAGE>

                        PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements.

<TABLE>
<CAPTION>
                       Consolidated Statements of Operations (Unaudited)

                                              Three Months Ended           Six Months Ended
                                                   June 30                     June 30
                                          -------------------------   -------------------------
                                              2000          1999          2000          1999
<S>                                       <C>           <C>           <C>           <C>
Revenues                                  $   779,000   $ 2,701,000   $ 1,722,000   $ 4,157,000

Costs and expenses:
  Cost of product sales                       833,000     1,406,000     1,685,000     2,413,000
  Cost of technology sold                          --     1,279,000            --     1,279,000
  Research and development                    447,000       952,000       785,000     1,722,000
  Selling, general and administrative         642,000       830,000     1,364,000     1,688,000
                                          -----------   -----------   -----------   -----------
     Total costs and expenses               1,922,000     4,467,000     3,834,000     7,102,000
                                          -----------   -----------   -----------   -----------
Operating loss                             (1,143,000)   (1,766,000)   (2,112,000)   (2,945,000)
Interest income                                65,000         7,000        87,000        25,000
Interest expense                              (23,000)      (23,000)      (44,000)      (53,000)
                                          -----------   -----------   -----------   -----------
Net loss                                   (1,101,000)   (1,782,000)   (2,069,000)   (2,973,000)
Other comprehensive income
  (loss) - foreign currency
  translation adjustments                       6,000       (43,000)      (20,000)      (31,000)
                                          -----------   -----------   -----------   -----------
Comprehensive loss                        $(1,095,000)  $(1,825,000)  $(2,089,000)  $(3,004,000)
                                          ===========   ===========   ===========   ===========

Net loss per share - basic and diluted    $      (.12)  $      (.23)  $      (.24)  $      (.38)
                                          ===========   ===========   ===========   ===========

Weighted average number of
 shares used in computation -
 basic and diluted                          9,324,735     7,871,196     8,794,943     7,858,631
                                          ===========   ===========   ===========   ===========
</TABLE>

                                       2
<PAGE>

                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)


                                      June 30,    December 31,
                                        2000          1999
ASSETS

Current assets:
  Cash and cash equivalents          $4,564,000    $  789,000
  Accounts receivable                   665,000     1,072,000
  Inventories                         1,245,000     1,327,000
  Prepaid and other                      81,000        37,000
                                     ----------    ----------

     Total current assets             6,555,000     3,225,000

Furniture and equipment, net            689,000       808,000

Technology for developed products       773,000       864,000

Other assets                            321,000       287,000
                                     ----------    ----------

     Total assets                    $8,338,000    $5,184,000
                                     ==========    ==========

                                       3
<PAGE>

                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                            June 30,     December 31,
                                                              2000           1999
<S>                                                       <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Notes payable                                           $    446,000   $    681,000
  Accounts payable                                             479,000      1,131,000
  Accrued payroll, payroll taxes and other                     482,000        395,000
  Current portion of long-term debt                             95,000         94,000
                                                          ------------   ------------
     Total current liabilities                               1,502,000      2,301,000

Long-term debt due after one year                              168,000        194,000

Shareholders' equity:
  Preferred stock - $.01 par value; 15,000,000 shares
   authorized:
     Series B - 428,389 shares issued and outstanding
     at June 30, 2000  (liquidation preference of
     $1,000,000)                                                 4,000          4,000
     Series C - 608,536 shares issued and outstanding
     at June 30, 2000                                            6,000          6,000
  Common stock - $.001 par value; 95,000,000 shares
   authorized; 9,370,677 shares issued and outstanding
   at June 30, 2000 (7,928,784 at December 31, 1999)             9,000          8,000
  Additional paid in capital                                58,823,000     52,756,000
  Accumulated deficit                                      (51,819,000)   (49,750,000)
  Accumulated other comprehensive loss -
     foreign currency translation adjustment                  (355,000)      (335,000)
                                                          ------------   ------------

     Total shareholders' equity                              6,668,000      2,689,000
                                                          ------------   ------------

Total liabilities and shareholders' equity                $  8,338,000   $  5,184,000
                                                          ============   ============
</TABLE>

                                       4
<PAGE>

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                  Six Months Ended
                                                                      June 30,
                                                             -------------------------
                                                                 2000          1999
<S>                                                          <C>           <C>
Cash flows from operating activities:
 Net loss                                                    $(2,069,000)  $(2,973,000)
 Adjustments to reconcile net loss to cash
  used for operating activities:
  Depreciation and amortization                                  276,000       550,000
  Gain on sale of land and building                                   --       (16,000)
  Loss on sale of technology                                          --       368,000
  Cash proceeds from sale of technology                               --       342,000
  Changes in assets and liabilities:
   Accounts receivable                                           405,000        80,000
   Inventories                                                    82,000       124,000
   Other current assets                                          (45,000)      163,000
   Accounts payable                                             (651,000)     (111,000)
   Customer deposits                                                  --      (120,000)
   Accrued payroll, payroll taxes and other                      119,000      (127,000)
                                                             -----------   -----------

     Net cash used for operating activities                   (1,883,000)   (1,720,000)

Cash flows from investing activities:
 Proceeds from sale of land and building                              --     1,959,000
 Purchases of equipment                                          (55,000)     (142,000)
 Additions to other assets                                       (65,000)      (59,000)
 Other, net                                                        5,000        (4,000)
                                                             -----------   -----------

     Net cash provided by (used for) investing activities       (115,000)    1,754,000

Cash flows from financing activities:
 Proceeds from issuance of stock, net of related costs         5,868,000            --
 Repayment of short-term borrowings                              (75,000)           --
 Repayment of long-term debt                                     (26,000)   (1,517,000)
                                                             -----------   -----------

     Net cash provided by (used for) financing activities      5,767,000    (1,517,000)

Effect of exchange rate changes on cash                            6,000        17,000
                                                             -----------   -----------

Net increase (decrease) in cash and cash equivalents           3,775,000    (1,466,000)

Cash and cash equivalents - beginning of period                  789,000     2,575,000
                                                             -----------   -----------

Cash and cash equivalents - end of period                    $ 4,564,000   $ 1,109,000
                                                             ===========   ===========

Non-cash transactions:
  Issuance of common stock in exchange
     for cancellation of notes and accrued interest          $   202,000   $        --
  Note received as part of proceeds from sale
     of technology                                                    --       569,000
</TABLE>

                                       5
<PAGE>

             CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. FINANCIAL STATEMENTS AND CONDENSED NOTES

   The unaudited consolidated financial statements, which have been prepared in
   accordance with the instructions to Form 10-Q, do not include all of the
   information and notes required by accounting principles generally accepted in
   the United States of America for complete financial statements. All
   adjustments considered necessary by management for a fair presentation have
   been included. Operating results for interim periods are not necessarily
   indicative of the results that may be expected for the full year.

   An annual report (Form 10-K) has been filed with the Securities and Exchange
   Commission ("Commission") for the year ended December 31, 1999. That report
   contains, among other information, a description of the Company's business,
   audited financial statements, notes to the financial statements, the report
   of the independent auditors and management's discussion and analysis of
   results of operations and financial condition. Readers of this report are
   presumed to be familiar with that annual report.


2. INVENTORIES

   Inventories are stated at the lower of cost or market. Cost has been
   determined by using the first-in, first-out method. Inventories at June 30,
   2000 and December 31, 1999, consisted of the following:

                              June 30,    December 31,
                                2000          1999

          Raw materials      $  682,000    $  492,000
          Work in process       364,000       438,000
          Finished goods        199,000       397,000
                             ----------    ----------

          Total              $1,245,000    $1,327,000
                             ==========    ==========

3. SHAREHOLDERS' EQUITY

   In April 2000 the Company completed a private placement of units, consisting
   of one share of the Company's common stock plus warrants to purchase two
   shares of the Company's common stock (the "Units"), primarily to a series of
   institutional investors. The Units were priced at the Nasdaq closing price
   for the Company's common stock the day prior to the signing of the
   subscription agreements relating to the purchase of such Units. The price per
   Unit ranged from $3.94 to $4.75. A total of 1,376,950 common shares and
   warrants to purchase 2,753,000 common shares were issued in exchange for
   gross proceeds of $6,050,000 in cash and conversion of $202,000 of short-term
   notes and accrued interest payable. The exercise price of one-half of the
   warrants issued in the private placement is

                                       6
<PAGE>

   equal to 125% of the price paid per Unit. The exercise price of the other
   half of the warrants is equal to 150% of the price paid per Unit.

   The Company has agreed to issue additional warrants to its placement agents
   giving the agents the right to acquire 155,000 common shares at an exercise
   price of $5.94 per share.

   The Company has filed a preliminary registration statement with the
   Commission registering the common shares, and the common shares issuable upon
   exercise of the warrants, issued in the private placement.


4. STOCK OPTIONS

   The Company has a stock incentive plan under which 1,365,000 shares of the
   Company's common stock are reserved for issuance (the "Plan"). The Plan
   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. During the six months ended June 30, 2000, options
   to purchase 225,000 shares at an exercise price of $1.9125 have been issued
   under the Plan. Options to purchase an additional 400,000 common shares at an
   exercise price of $1.9125 have also been issued, subject to shareholder
   approval of an amendment to the Plan.

   The Company's board of directors has also approved an additional option grant
   to purchase 400,000 common shares at an exercise price of $1.5625. This
   option grant is not issued pursuant to the Plan.


5. OPERATING SEGMENTS

   The following table presents information about the Company's two operating
   segments:

                                    Health     Therapeutic
                                   Products    Development      Total
                                  -----------  ------------  ------------
   Quarter ended June 30, 2000:
     Revenues from external
      customers                   $  779,000    $       --   $   779,000
     Intersegment revenues                --            --            --
     Net loss                       (736,000)     (365,000)   (1,101,000)
     As of June 30, 2000 -
      Total assets                 2,970,000     5,368,000     8,338,000

                                       7
<PAGE>

                                        Health     Therapeutic
                                       Products    Development      Total
                                     ------------  ------------  ------------
   Quarter ended June 30, 1999:
      Revenues from external
       customers                     $ 2,655,000   $    46,000   $ 2,701,000
      Intersegment revenues                   --       279,000       279,000
      Net loss                          (834,000)     (948,000)   (1,782,000)
      As of June 30, 1999 -
        Total assets                   5,067,000     1,220,000     6,287,000

   Six months ended June 30, 2000:
      Revenues from external
       customers                     $ 1,722,000   $        --   $ 1,722,000
      Intersegment revenues                   --            --            --
      Net loss                        (1,365,000)     (704,000)   (2,069,000)

   Six months ended June 30, 1999:
      Revenues from external
       customers                     $ 4,083,000   $    74,000   $ 4,157,000
      Intersegment revenues                   --       303,000       303,000
      Net loss                        (1,243,000)   (1,730,000)   (2,973,000)


6. SUBSEQUENT EVENT

   At a meeting held August 1, 2000, the Company's board of directors decided to
   develop additional information as to the value of the Company's Health
   Products segment, for the purpose of reaching a final decision on whether to
   continue operations or develop a formal plan for disposal of this business
   segment. To this end, the board has received a nonexclusive offer from two
   employees to purchase the Health Products assets. As a result, a special
   committee of the board has been charged with the responsibility of completing
   a full due diligence investigation of this offer, as well as other avenues of
   sale and reporting back to the full board with its recommendation. At the
   present time, the specter of a sale as well as specific terms are not defined
   sufficiently to quantify the financial results of any agreed upon disposition
   or whether continuing operations is a preferable alternative. The Company
   believes that it is reasonable for the special committee to complete its work
   and to issue its recommendation during the balance of calendar 2000, at which
   time it is expected to be clearer as to whether a sale of this business
   segment is appropriate.

                                       8
<PAGE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.

CERTAIN STATEMENTS SET FORTH BELOW CONSTITUTE "FORWARD-LOOKING STATEMENTS"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
STATEMENTS THAT EXPRESSLY OR BY IMPLICATION PREDICT FUTURE RESULTS, PERFORMANCE
OR EVENTS ARE FORWARD-LOOKING. THE WORDS "BELIEVES," "PLANS," "EXPECTS,"
"ANTICIPATES," "ESTIMATES," AND SIMILAR EXPRESSIONS ALSO IDENTIFY FORWARD-
LOOKING STATEMENTS.  THE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY OR INDUSTRY RESULTS TO BE MATERIALLY
DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR
IMPLIED BY THE FORWARD-LOOKING STATEMENTS.  WITH RESPECT TO THE COMPANY, THESE
FACTORS INCLUDE UNCERTAINTY OF ADDITIONAL FUNDING; LOSS OR IMPAIRMENT OF SOURCES
OF CAPITAL; DEPENDENCE ON STRATEGIC PARTNERS; UNCERTAINTIES RELATING TO PATENTS
AND PROPRIETARY INFORMATION; DEPENDENCE ON KEY PERSONNEL; TECHNOLOGICAL CHANGE
AND COMPETITION AND CHANGES IN LAWS OR REGULATIONS.  GIVEN THESE UNCERTAINTIES
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FORWARD-LOOKING
STATEMENTS.  THE COMPANY DOES NOT INTEND TO UPDATE ANY FORWARD-LOOKING
STATEMENTS.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

   The Company's working capital increased during the first half of 2000 by
   $4,129,000, from $924,000 at December 31, 1999 to $5,053,000 at June 30,
   2000. The increase in working capital resulted primarily from the net
   proceeds from issuance of common stock of $5,868,000, offset in part by the
   effect of the net loss for the period ($2,069,000 less non-cash charges of
   $276,000).

   Cash and cash equivalents increased from $789,000 at December 31, 1999 to
   $4,564,000 at June 30, 2000.

   While the Company believes that its new therapeutic products and technologies
   show considerable promise, its ability to realize significant revenues
   therefrom is dependent upon the Company's success in developing business
   alliances with biotechnology and/or pharmaceutical companies that have the
   required resources to develop and market certain of these products. There is
   no assurance that the Company's effort to develop such business alliances
   will be successful.

   The Company expects to continue to report losses in 2000 as the level of
   expenses is expected to continue to exceed revenues. The Company can give no
   assurances as to when and if its revenues will exceed its expenses.

                                       9
<PAGE>

           RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 2000
                COMPARED WITH THREE MONTHS ENDED JUNE 30, 1999


Possible Divestiture of Assets

   At a meeting held August 1, 2000, the Company's board of directors decided to
   develop additional information as to the value of the Company's Health
   Products segment, for the purpose of reaching a final decision on whether to
   continue operations or develop a formal plan for disposal of this business
   segment. To this end, the board has received a nonexclusive offer from two
   employees to purchase the Health Products assets. As a result, a special
   committee of the board has been charged with the responsibility of completing
   a full due diligence investigation of this offer, as well as other avenues of
   sale and reporting back to the full board with its recommendation. At the
   present time, the specter of a sale as well as specific terms are not defined
   sufficiently to quantify the financial results of any agreed upon disposition
   or whether continuing operations is a preferable alternative. The Company
   believes that it is reasonable for the special committee to complete its work
   and to issue its recommendation during the balance of calendar 2000, at which
   time it is expected to be clearer as to whether a sale of this business
   segment is appropriate. Although a formal plan for this possible divestiture
   has not been put in place, it is anticipated that all of the assets that are
   currently generating revenues for the Company may either be sold to a third
   party or spun off to the Company's shareholders. Upon completion of such a
   restructuring, the Company would no longer have a source of current revenues
   and the Company's continued operations would be wholly dependent upon
   additional capital financing until such time as revenues can be generated
   from its therapeutic development programs.


Revenues

   The Company's revenues for the quarters ended June 30, 2000 and 1999 were as
   follows:

                                              2000         1999

     Research assays and fine chemicals    $  293,000   $  330,000
     Therapeutic drug monitoring assays       174,000      599,000
     Instruments                              292,000      308,000
     Bovine superoxide dismutase (bSOD)
      for research and human use                   --      456,000
     Sale of rights to therapeutic drug
      monitoring assays                            --      911,000
     Other                                     20,000       97,000
                                           ----------   ----------
                                           $  779,000   $2,701,000
                                           ==========   ==========

   Sales of research assays and fine chemicals declined by $37,000 from $330,000
   in the second quarter of 1999 to $293,000 in the second quarter of 2000 due
   to a decline in sales volumes.

                                       10
<PAGE>

   Revenues from sales of therapeutic drug monitoring assays declined in the
   second quarter of 2000 as compared to the second quarter of 1999 resulting in
   a decrease in sales of $425,000. Effective June 28, 1999, the Company sold
   the intellectual property, contract rights and finished goods inventory
   relating to its therapeutic drug monitoring assays. Sales of therapeutic drug
   monitoring assays for the second quarter of 1999 include $158,000 for the
   sale of the therapeutic drug monitoring finished goods inventory. Therapeutic
   drug monitoring assay revenues in the second quarter of 2000 represent
   contract sales of assays and services to the purchaser of the rights to this
   technology. Such revenues are expected to continue to be less than the level
   prior to July 1999. Revenues from therapeutic drug monitoring assay sales and
   related services may terminate at the end of the third quarter of 2000, when
   the contract to manufacture product for the purchaser of the technology
   expires.

   Revenue from instrument sales and development declined by $16,000, from
   $308,000 in the second quarter of 1999 to $292,000 in the second quarter of
   2000. This decrease resulted from reduced orders from customers. Since early
   1999, the Company has not invested in any significant marketing efforts to
   replace lost instrument customers.

   Sales of bSOD in the second quarter of 1999 were primarily the result of one
   shipment of bulk bSOD which has not been repeated in 2000.


Costs and Expenses

   Cost of sales was 99% of revenues for the second quarter 1999 and increased
   to 107% of revenues for the second quarter of 2000. Revenues for the second
   quarter of 1999 include $911,000 for the sale of rights to the Company's
   therapeutic drug monitoring assays, and expenses include $1,279,000 for the
   cost of that technology. Excluding the sale of the therapeutic drug
   monitoring technology and related cost, cost of sales for the second quarter
   of 1999 was approximately 79% of revenues. The increase in the cost of sales
   as a percentage of sales in the second quarter of 2000 is due primarily to
   the effect of the fixed manufacturing costs for the Company's products being
   spread over a lower manufacturing and sales volume. Cost of product sales
   declined from $1,406,000 in the second quarter of 1999 to $833,000 in the
   second quarter of 2000, but this decrease was not in proportion to the
   decrease in sales volumes.

   Research and development expenses decreased from $952,000 in the second
   quarter of 1999 to $447,000 in the second quarter of 2000. The decrease in
   research and development expenses resulted primarily from the closure of the
   Company's French research laboratory in the second quarter of 1999.

   Selling, general and administrative expenses decreased from $830,000 in the
   second quarter of 1999 to $642,000 in the second quarter of 2000. A reduction
   in personnel costs contributed approximately $128,000 to this decrease.

                                       11
<PAGE>

Interest Income

   Interest income for the second quarter of 2000 was more than for the second
   quarter of 1999 because the Company had more cash available for investment
   during 2000.


Net Loss

   The Company continued to experience losses in the second quarter of 2000. The
   second quarter 2000 net loss of $1,101,000 ($.12 per share-basic and diluted)
   was $681,000 less than the $1,782,000 ($.23 per share-basic and diluted) net
   loss for the second quarter of 1999. The decrease in the net loss is
   primarily due to the decreases in research and development and selling,
   general and administrative costs.

   The Company expects to incur a substantial net loss for 2000. If the Company
   develops substantial new revenue sources or if substantial additional capital
   is raised through further sales of securities, the Company plans to continue
   to invest in research and development activities and incur sales, general and
   administrative expenses in amounts greater than its anticipated near-term
   product margins. If the Company is unable to raise sufficient additional
   capital or to develop new revenue sources, it will have to cease, or severely
   curtail, its operations. In this event, while expenses will be reduced,
   expense levels, and the potential write down of various assets, would still
   be in amounts greater than anticipated revenues. The Company expects that
   additional capital will be required in 2001.

                                       12
<PAGE>

            RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2000
                 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999


Revenues

   The Company's revenues for the six-month periods ended June 30, 2000 and 1999
   were as follows:

                                                           2000        1999
Sales
  Research assays and fine chemicals                    $  609,000  $  736,000

  Therapeutic drug monitoring assays                       464,000   1,083,000

  Instruments                                              625,000     795,000

  Bovine superoxide dismutase (bSOD)
   for research and human use                                   --     460,000

Sale of rights to therapeutic drug monitoring assays            --     911,000

Other                                                       24,000     172,000
                                                        ----------  ----------

                                                        $1,722,000  $4,157,000
                                                        ==========  ==========

   Sales of research assays and fine chemicals declined by $127,000, from
   $736,000 in the first half of 1999 to $609,000 in the first half of 2000.
   This decrease was due primarily to the sale of certain products that became
   surplus when the Company's French laboratory was closed in early 1999.

   Effective June 28, 1999, the Company sold the intellectual property, contract
   rights and finished goods inventory relating to its therapeutic drug
   monitoring assays. The Company recognized $911,000 as compensation for the
   intellectual property and contract rights. Sales of the Company's therapeutic
   drug monitoring assays decreased by $619,000, from $1,083,000 in the first
   six months of 1999 to $464,000 in the first six months of 2000. Sales of
   therapeutic drug monitoring assays for the six months ended June 30, 1999
   include $158,000 for the sale of the therapeutic drug monitoring finished
   goods inventory. Therapeutic drug monitoring assay revenues in the first six
   months of 2000 represent contract sales of assays and services to the
   purchaser of the rights to this technology. Such revenues are expected to
   continue to be less than the level prior to July 1999. Revenues from
   therapeutic drug monitoring assay sales and related services may terminate at
   the end of the third quarter of 2000, when the contract to manufacture
   product for the purchaser of the technology expires.

                                       13
<PAGE>

   Revenue from instrument sales and development declined by $170,000, from
   $795,000 in the first half of 1999 to $625,000 in the first half of 2000.
   This decrease resulted from reduced orders from customers. Since early 1999,
   the Company has not invested in any significant marketing efforts to replace
   lost instrument customers.

   Sales of bSOD in the first half of 1999 were primarily the result of one
   shipment of bulk bSOD to the Company's Spanish licensee. No significant sales
   of bulk bSOD were made during 2000.

   Other revenues in the first half of 1999 included a $50,000 royalty payment
   that did not recur in the first half of 2000.


Costs and Expenses

   Cost of sales was 89% of revenues for the first half of 1999 and increased to
   98% of product sales for the first half of 2000. Revenues for 1999 include
   $911,000 for the sale of rights to the Company's therapeutic drug monitoring
   assays, and expenses include $1,279,000 for the cost of that technology.
   Excluding the sale of the therapeutic drug monitoring technology and related
   cost, cost of sales for the first half of 1999 was approximately 74% of
   revenues. The increase in the cost of sales as a percentage of sales in 2000
   is due primarily to the effect of the fixed manufacturing costs for the
   Company's products being spread over a lower manufacturing and sales volume.
   Excluding the technology sale, sales volume for the first half of 2000 was
   approximately 47% less than that of the first half of 1999. Cost of product
   sales declined from $2,413,000 in the first half of 1999 to $1,685,000 in the
   first half of 2000, but this decrease was not in proportion to the decrease
   in sales volumes.

   Research and development expenses decreased from $1,722,000 in the first half
   of 1999 to $785,000 in the first half of 2000. The decrease in research and
   development expenses resulted primarily from costs in the first half of 1999
   relating to the closure of the Company's French research facility and
   termination of its employees.

   Selling, general and administrative expenses decreased by $324,000, from
   $1,688,000 in the first half of 1999 to $1,364,000 in the first half of 2000.
   Personnel reductions accounted for approximately $145,000 of the decrease.
   Reduced advertising expense contributed an additional $42,000 to the
   reduction.


Interest Income

   Interest income for the first half of 2000 was more than for the first half
   of 1999 because the Company had more cash available for investment during
   2000.

                                       14
<PAGE>

Net Loss

   The Company continued to experience losses in the first six months of 2000.
   The first half 2000 net loss of $2,069,000 ($.24 per share-basic and diluted)
   was $904,000 less than the $2,973,000 ($.38 per share-basic and diluted) net
   loss for the first half of 1999. The decrease in the net loss is primarily
   due to reductions in research and development and selling, general and
   administrative expenses, partially offset by reduced margins on product
   sales.




                          PART II.  OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds.

   In March 2000 the Company issued 1,010,868 shares of its common stock and
   warrants to purchase 2,021,736 shares of its common stock to eight accredited
   investors. Gross proceeds from the sale of these securities were $4,802,000,
   including $4,600,000 in cash and $202,000 in exchange for a note and accrued
   interest. The securities were sold in a private placement pursuant to
   Regulation D of the rules of the Securities and Exchange Commission.

   In April 2000 the Company completed the second and final closing of its
   private placement pursuant to Regulation D by issuing an additional 366,081
   shares of its common stock and warrants to purchase 732,162 shares of its
   common stock to three accredited investors, two of which also acquired shares
   and warrants in the March closing. Gross proceeds from the April closing were
   $1,450,000.

   In total, warrants to purchase 2,753,898 shares of common stock were issued
   to investors in the private placement. The number of shares subject to the
   warrants by exercise price is as follows:

               Exercise             Shares subject
                 Price                to warrants
                 -----                -----------
                 $7.13                 1,021,394
                 $5.94                 1,021,394
                 $5.91                   355,555
                 $4.92                   355,555

   The $5.94 and $4.92 warrants expire one year from issuance.  The $7.13 and
   $5.91 warrants expire two years from issuance.

   In connection with this sale of securities the Company has paid or will pay
   to its placement agents $219,000 in cash commissions together with warrants
   to purchase 155,000 shares of the Company's common stock at an exercise price
   of $5.94 per share.

Item 6. Exhibits and Reports on Form 8-K.

                                       15
<PAGE>

(a) Exhibits - See Exhibit Index on page 16.

(b) Reports on Form 8-K


    On April 12, 2000, the Company filed a report on Form 8-K demonstrating
    compliance with a minimum net tangible asset requirement that had been
    required by a Nasdaq Listing Qualifications Panel.


                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        OXIS International, Inc.


August 10, 2000                         By /s/ Paul C. Sharpe
                                           ------------------------------
                                           Paul C. Sharpe
                                           Chief Executive Officer



August 10, 2000                         By /s/ Jon S. Pitcher
                                           ------------------------------
                                           Jon S. Pitcher
                                           Chief Financial Officer

                                       16
<PAGE>

                                 EXHIBIT INDEX

Exhibit                                                   Page
Number        Description of Document                    Number


 10(a)        Executive Employment Agreement dated
              April 3, 2000, between the Company and
              Jon S. Pitcher

 10(b)        Executive Employment Agreement dated
              April 3, 2000, between the Company and
              Humberto V. Reyes

 27(a)        Financial data schedule
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(A)
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT FOR JON S. PITCHER
<TEXT>

<PAGE>

                                 Exhibit 10(a)

                        Executive Employment Agreement


This Executive Employment Agreement ("Agreement"), is entered into as of April
                                      ---------
3, 2000, by and between OXIS International, Inc., its affiliated, related,
parent or subsidiary corporations (the "Company") located at 6040 N. Cutter
                                        -------
Circle, Suite 317, Portland, OR 97217-3935, and Jon S. Pitcher ("Executive")
                                                                 ---------
residing in Clackamas County, Oregon (collectively, the "parties").

                                   RECITALS

Executive and the Company desire that Executive continue as its Chief Financial
Officer for the Period of Employment (as defined below), upon the following
terms and conditions.

                                   AGREEMENT

ACCORDINGLY, the parties hereto agree as follows:
1.   General Release of Claims. In exchange for the consideration set forth in
     this Agreement, the parties agree to execute a release agreement with terms
     modeled on the General Release of Claims I, attached hereto as Exhibit A
                                                                    ---------
     and agreed to by the parties ("Release I"), in accordance with the terms
                                    ---------
     thereof.

2.   Period of Employment

          a.   Initial Term. Effective March 31, 2000, the Company shall employ
               ------------
     Executive to render Services (as defined below) to the Company in the
     position and with the duties and responsibilities described in Section 3
     for a term of twelve (12) months (the "Period of Employment"), unless the
                                            --------------------
     Period of Employment is terminated sooner in accordance with Section 8
     below.

          b.   Renewal. This Agreement will be automatically renewed one time
               -------
     for an additional one (1) year period (without any action taken by either
     party) on the last day of the Period of Employment, unless either party
     gives the other written notice of termination at least sixty (60) days
     before the last day of the Period of Employment.

          c.   Non-Renewal. If either party gives notice of termination in
               -----------
     accordance with Section 2 (b), and Executive signs a release agreement with
     terms modeled on the General Release of Claims II, attached hereto as
     Exhibit B, Executive shall receive a continuation of his then-current
     ---------
     salary for six (6) months after the Period of Employment; and,
     notwithstanding any vesting or termination provisions contained in
     Executive's applicable Stock Option Grants with the Company, Executive's
     unvested Options (as defined in Section 4 below) shall immediately vest
     eighteen (18) months after the effective date of this Agreement and
     Executive shall be able to exercise his vested Options at any time
     subsequent to the period of employment until a date one year after the
     eighteen (18) month anniversary of the effective date of this Agreement,
     and otherwise in accordance with and subject to Executive's applicable
     Stock Option Grants with the Company (collectively, "Non-Renewal
                                                          -----------
     Benefits").
     ---------

3.   Position, Duties, Responsibilities

          a.   Position. During the Period of Employment, the Company agrees to
               --------
     continue to employ Executive and Executive agrees to continue in the
     Company's employ as its Chief Financial Officer. Executive shall perform
     all duties appropriate to that position, as well as such other
     responsibilities as may reasonably be assigned by the Company including,
     but not limited to,

                                       1
<PAGE>

assisting the Company's Special Advisor with the divestiture of OXIS Health
Products and other non-related technology ("Divestiture") (collectively,
                                            -----------
"Services"). Executive shall report to the Company's Chief Executive Officer.
 --------
     b.   Other Activities. During the Period of Employment, Executive will not,
          ----------------
     except upon the prior written consent of the Company's CEO, which consent
     shall not be unreasonably withheld: (i) accept any other full-time
     employment, or (ii) engage, directly or indirectly, in any other business
     activity (whether or not pursued for pecuniary advantage) in the field of
     ethical pharmaceuticals that is or may be in direct competition with the
     business of the Company.

4.   Compensation. In exchange for Services and the other consideration he
     provides under this Agreement, Executive shall be entitled to an annual
     base salary of one hundred and thirty-five thousand dollars ($135,000.00)
     payable in accordance with the Company's regular payroll practices. In
     addition, the Board of Directors has awarded Executive options to purchase
     shares of the Company's Common Stock under, in accordance with, and subject
     to Executive's applicable Stock Option Grants (certain of the options under
     the 2000 Stock Option Agreement are subject to shareholder approval) with
     the Company (collectively, "Options"). Executive will not be entitled to
                                 -------
     any cash or other bonus for 1999. In addition, Executive's entitlement to
     shares under the 2000 Stock Option Grant may be accelerated in accordance
     with the terms thereof, as set forth in the Board of Directors' consent
     document dated January 31, 2000. Executive will be eligible to participate
     in the Company's benefit plans (including vacation and health insurance) as
     stated in the Company's employment policies (and as may be amended from
     time to time in the Company's sole discretion), provided that Executive
     shall receive such benefits at the same level provided from time to time to
     other senior executives of Company.

5.   Proprietary Information

          a.   Company Information. Executive agrees during his employment with
               -------------------
     the Company and for a period of three years thereafter, to hold in
     strictest confidence, and not to use or disclose to any person, firm or
     corporation any Proprietary Information of the Company. "Proprietary
                     -----------------------
     Information" means any Company proprietary or confidential information,
     technical data, trade secrets or know-how. This includes, but is not
     limited to, research, product plans, products, services, customer lists,
     customers, markets, software, developments, inventions, processes,
     formulas, technology, designs, drawings, engineering, hardware
     configuration information, marketing, finances or other Company business
     information. This information shall remain confidential whether it was
     disclosed to Executive either directly or indirectly in writing, orally or
     by drawings or observation. Proprietary Information does not include any of
     the foregoing items which has become publicly known and made generally
     available through no wrongful act of Executive or others who were under
     confidentiality obligations as to the items involved.
          b.   Former Employer Information. Executive agrees that he will not,
               ---------------------------
     during his employment with the Company, improperly use or disclose any
     proprietary information or trade secrets, or bring onto the premises of the
     Company any proprietary information belonging to any former or concurrent
     employer or other person or entity.
          c.   Third Party Information. Executive recognizes that the Company
               -----------------------
     has received and in the future will receive confidential or proprietary
     information from third parties. Executive agrees to hold all such
     confidential or proprietary information in the strictest confidence and not
     to disclose it to any person, firm or corporation or to use it except as
     necessary in carrying out his work for the Company consistent with the
     Company's agreement with such third party.
          d.   No Conflict. Executive represents and warrants that Executive's
               -----------
     execution of this Agreement, his employment with the Company, and the
     performance of his proposed duties under this Agreement shall not violate
     any obligations he may have to any former employer (or

                                       2
<PAGE>

other person or entity), including any obligations with respect to proprietary
or confidential information of any other person or entity.

6.   Inventions

          a.   Inventions Retained and Licensed. Executive has attached, as
               --------------------------------
Exhibit C, a list describing all inventions, original works of authorship,
- ---------
developments, improvements, and trade secrets which were made by Executive prior
to Executive's employment with the Company ("Prior Inventions"), which belong to
                                             ----------------
Executive, and which relate to the Company's actual and/or proposed business,
products or research and development.  If, in the course of his employment with
the Company, Executive incorporates into a Company product, process or machine a
Prior Invention owned by Executive or in which Executive has an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.
          b.   Assignment of Inventions.  Except as provided in Section 6.e
               ------------------------
below, Executive agrees that he will promptly make full written disclosure to
the Company, will hold in trust for the sole right and benefit of the Company,
and hereby assign to the Company, or its designee, all Executive's right, title,
and interest in and to any and all inventions, original works of authorship,
developments, concepts, improvements, designs, discoveries, ideas, trademarks or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Executive may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to practice
("Inventions"), while Executive is employed by the Company and within the course
  ----------
and scope of employment.  Executive further acknowledges that all original works
of authorship which are made by Executive (solely or jointly with others) within
the course and scope of and during his employment with the Company and which are
protectible by copyright are "works made for hire", as that term is defined in
the United States Copyright Act.  Executive understands and agrees that the
decision whether or not to commercialize or market any invention developed by
Executive solely or jointly with others is within the Company's sole discretion
and for the Company's sole benefit and that no royalty will be due to Executive
as a result of the Company's efforts to commercialize or market any such
invention.
          c.   Maintenance of Records. Executive agrees to keep and maintain
               ----------------------
adequate and current written records of all Inventions made by Executive (solely
or jointly with others) during Executive's employment with the Company and
subject to license or assignment under Section 6.a or 6.b. The records will be
in the form of notes, sketches, drawings, and any other format that may be
specified by the Company. The records will be available to and remain the sole
property of the Company at all times.
          d.   Patent and Copyright Registrations. Executive agrees to assist
               ----------------------------------
the Company, or its designee, at the Company's expense, in every proper way, to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries. Executive will disclose to the Company all pertinent information
and data which is necessary for the execution of all applications,
specifications, oaths, assignments and all other instruments necessary to apply
for and obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such Inventions, and any copyrights, patents, mask work
rights, or other intellectual property rights relating thereto. Executive
further agrees that Executive's obligation to execute or cause to be executed,
when it is in Executive's power to do so, any such instrument or papers shall
continue after the termination of this Agreement for a

                                       3
<PAGE>

reasonable duration. If the Company is unable, because of Executive's mental or
physical incapacity or for any other reason, to secure Executive's signature to
apply for or to pursue any application for any United States or foreign patents
or copyright registrations covering Inventions or original works of authorship
assigned to the company as above, then Executive hereby irrevocably designates
and appoints the Company and its duly authorized officers and agents as
Executive's agent and attorney in fact, to act for and in Executive's behalf and
stead to execute and file any such applications and to do all other lawfully
permitted acts to further the prosecution and issuance of letters-patent or
copyright registrations thereon with the same legal force and effect as if
executed by Executive.
          e.   Exception to Assignments. The provisions of this Agreement
               ------------------------
requiring assignment of Inventions to the Company do not apply to any invention
which qualifies for protection or different treatment under the provisions of
any applicable state law. Executive will advise the Company promptly in writing
of any inventions that Executive believes meet the criteria of any applicable
state law which affects ownership of Inventions.

7.   Post-Termination Activity

          a.   Executive acknowledges that the pursuit of the activities
forbidden by this subsection would necessarily involve the use or disclosure of
Proprietary Information in breach of this Agreement, but that proof of such a
breach would be extremely difficult. To forestall this use or disclosure,
Executive agrees that, during the Severance Period (if any) or for a period of
one year after the Period of Employment, whichever is longer, Executive shall
not, without the Company's prior written consent (i) divert or attempt to divert
from the Company any business of any kind in which the Company is then engaged;
(ii) employ, solicit for employment, or recommend for employment any person
employed by the Company (except where providing such job related references as
are common in the industry); or (iii) except as otherwise addressed in this
Agreement, accept employment with another company directly involved in
developing the technology then in development for the Company at the time of
Executive's termination in any state in which the Company conducts its business.
          b.   In addition, because Executive acknowledges the difficulty of
establishing when any intellectual property, invention, or proprietary
information was first conceived or developed by Executive, or whether it
resulted from access to Proprietary Information or Company equipment, supplies,
facilities, or data, Executive agrees that any intellectual property, invention,
or proprietary information related to the development of ethical pharmaceuticals
shall be rebuttably presumed to be an Invention, if reduced to practice by
Executive or with the aid of Executive within one (1) year after termination of
the Period of Employment.  Executive may rebut such presumption by producing
evidence which establishes to a preponderance that such intellectual property,
invention, or proprietary information was first conceived or developed by
Executive after the termination of the Period of Employment, or did not
otherwise result from access to Proprietary Information or Company equipment,
supplies, facilities, or data.

8.   Termination of Employment

          a.   Termination by Company not for Cause. At any time, the Company
               ------------------------------------
may terminate the Period of Employment for any reason other than for Cause (as
defined below) by providing Executive fourteen (14) days' advance written
notice.  The Company shall pay to Executive all compensation due and owing
through the last day actually worked and Executive shall be entitled to
Severance in accordance with Section 9 below, subject to the conditions therein.
In the event Company terminates the Period of Employment not for Cause,
Executive shall be released from the obligations of Section 7 .a (iii) above.
In addition, the Company may decline to allow the

                                       4
<PAGE>

renewal of the Agreement in accordance with Section 2 .b. above, regardless of
the existence of Cause, but in such case shall be obligated to provide only the
benefits set forth in Section 2 .c above.
          b.   Termination by Company for Cause.  At any time, and without
               --------------------------------
prior notice, the Company may terminate the Period of Employment for Cause (as
defined below). The Company shall pay Executive all compensation then due and
owing through the last day actually worked. Executive will not be entitled to
Severance. "Cause" shall mean Executive's: (i) Commission of a felony involving
            -----
moral turpitude; (ii) Repeated failure to perform services in accordance with
the reasonable requests of superiors within the course and scope of Executive's
duties; (iii) Commission of a material fraud, misappropriation, embezzlement or
other act of gross dishonesty which resulted in material loss, damage or injury
to the Company; or (iv) Death. Notwithstanding anything herein, however, if the
Period of Employment is terminated by reason of the death of Executive, all
unvested Options shall immediately vest and shall be exercisable by Executive's
estate or heirs for two years thereafter, otherwise in accordance with the terms
of his applicable Stock Option Grants with the Company.
          c.   By Executive Not for Good Reason. At any time, Executive may
               --------------------------------
terminate the Period of Employment for any reason other than Good Reason (as
defined below) by providing the Company fourteen (14) days' advance written
notice. The Company shall have the option, in its complete discretion, to make
termination of the Period of Employment effective at any time prior to the end
of such notice period, provided the Company pays Executive all compensation due
and owing through the last day actually worked. Thereafter, all of the Company's
obligations under this Agreement shall immediately and forever cease, except for
those required by law, except for those which expressly survive termination of
this Agreement and except that notwithstanding any vesting or termination
provisions contained in Executive's applicable Stock Option Grants with the
Company, Executive's unvested Options shall immediately vest upon such
termination and Executive shall be able to exercise his vested Options for one
year thereafter, otherwise in accordance with the terms of his applicable Stock
Option Agreements with the Company. Executive, however, will not be entitled to
Severance.
          d.   By Executive for Good Reason. At any time, and without prior
               ----------------------------
notice, Executive may terminate the Period of Employment for Good Reason (as
defined below). The Company shall pay Executive all compensation due and owing
through the last day actually worked, and Executive shall be entitled to
Severance in accordance with Section 9 below, subject to the conditions therein.
Thereafter, all obligations of the Company and Executive under this Agreement
shall terminate, except for those which expressly survive termination of this
Agreement. Neither the Company's giving of notice of termination in accordance
with Section 2.b nor its termination of the Period of Employment for Cause shall
constitute "Good Reason" for Executive to terminate the Period of Employment.
"Good Reason" only shall exist if the Company undertakes any of the following
 -----------
without Executive's prior consent:  (i) The assignment to Executive of any
duties or responsibilities which result in any material diminution or material
adverse change of Executive's position, status or circumstances of employment; a
change in Executive's titles or offices that results in any material diminution
or material adverse change of Executive's position, status or circumstances of
employment; or any removal of Executive from or any failure to re-elect
Executive to any of such positions, except in connection with the termination of
his employment for Cause, retirement, or any other voluntary termination of
employment by Executive other than a termination of employment by Executive for
Good Reason; (ii) A reduction by the Company in Executive's base salary by
greater than ten (10)

                                       5
<PAGE>

percent; (iii) Any failure by the Company to continue in effect any benefit plan
or arrangement, including incentive plans or plans to receive securities of the
Company, in which Executive is participating as of the date hereof (hereinafter
referred to as "Benefit Plans"), or the taking of any action by the Company
which would materially adversely affect Executive's participation in or reduce
Executive's benefits under the Benefit Plans or deprive Executive of any fringe
benefit enjoyed by Executive as in effect on the date hereof; provided, however,
that no termination of employment by Executive for Good Reason shall be deemed
to occur based upon this subsection 8.d (iii) if the Company offers a range of
benefit plans and programs which, taken as a whole, are comparable to the
Benefit Plans offered Executive before the action; (iv) A relocation of the
Executive, or the Company's principal offices if Executive's principal office is
at such offices, to a location more than fifty (50) miles from the location at
which Executive was performing his duties as of the date hereof, except for
required travel by Executive on the Company's business to an extent
substantially consistent with Executive's business travel obligations as of the
date hereof; (v) Any material breach by the Company of any provision of this
Agreement; (vi) Any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company; (vii) Any directive to
Executive to perform any act which would expose him to personal legal liability
or which, viewed objectively, is likely to constitute an unethical act; or
(viii) Any conduct directed to Executive by Company or any condition under which
Executive works which constitutes constructive discharge under the principles of
the governing law.

9.   Severance

          a.   In the event that the Period of Employment is terminated in
accordance with Sections 8.a or 8.d hereof and Executive signs a waiver
agreement with terms modeled on the General Waiver of Claims, attached hereto as
Exhibit D and agreed to by the parties (the "Waiver"), the Company shall
- ---------                                    ------
continue Executive's then current base salary and COBRA premiums in accordance
with the Company's normal payroll procedures for a period of twelve (12) months
(the "Severance Period"), and notwithstanding any vesting or termination
      ----------------
provisions contained in Executive's applicable Stock Option Grants with the
Company Executive's unvested Options shall immediately vest and Executive shall
have two years from the date of Executive's termination of employment to
exercise his vested options otherwise in accordance with the terms of his
applicable Stock Option Grants with the Company (collectively, "Severance"). In
the event the then current base salary is less than the compensation set out in
Section 4 of this Agreement, Executive shall be entitled to severance calculated
on the basis of the compensation set out in Section 4 of this Agreement.

          b.   Notwithstanding any other provision of this Agreement, Release I
or II, or the Waiver, at any time should Executive engage in or pursue any of
the activities described in Section 7 (except where advance consent has been
granted, or except where released from Section 7 .a (iii) by virtue of a
Termination by Company not for Cause or by virtue of a Termination by Executive
for Good Reason) or should Executive not fulfill his obligations in Section 10
below, the Company's obligation to pay and Executive's entitlement to any
Severance or Non-Renewal Benefits shall immediately and forever cease.

10.  Termination Obligations.

          Executive agrees that his obligations under Sections 5 and 6 of this
Agreement survive the expiration of this Agreement.

                                       6
<PAGE>

11.  Alternative Dispute Resolution

          a.   The Company and Executive mutually agree that any controversy or
claim arising out of or relating to this Agreement or the breach thereof, or any
other dispute between the parties, shall be submitted to mediation before a
mutually agreeable mediator, which cost is to be borne equally by the parties
hereto. In the event the parties are unable to agree upon a mediator, the
mediator shall be Douglass Hamilton or such person as Hamilton Mediation Inc.
designates. In the event mediation is unsuccessful in resolving the claim or
controversy, such claim or controversy shall be resolved by arbitration as
described below. The claims covered by this Agreement ("Arbitrable Claims")
                                                        -----------------
include, but are not limited to, claims for wages or other compensation due;
claims for breach of any contract (including this Agreement) or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to, race, sex, religion, national origin, age, marital status, medical
condition, or disability); claims for benefits (except where an Executive
benefit or pension plan specifies that its claims procedure shall culminate in
an arbitration procedure different from this one), and claims for violation of
any federal, state, or other law, statute, regulation, or ordinance, except
claims excluded in the following paragraph. The parties hereto hereby waive any
rights they may have to trial by jury in regard to Arbitrable Claims.
          b.   Claims Executive may have for workers' compensation or
unemployment compensation benefits are not covered by this Agreement. Also not
covered is either party's right to obtain provisional remedies or interim relief
from a court of competent jurisdiction for any claim or controversy arising out
of or related to the unauthorized use, disclosure, or misappropriation of the
confidential and/or proprietary information of either party. Notwithstanding
anything in this Agreement to the contrary, however, should either party
initiate litigation in any court as authorized by this section, the other party
may assert any claims he or it may have as counterclaims or separate claims in
such court and shall not be obligated to resolve them by mediation and/or
arbitration.
          c.   Except as provided in Section 11.b, mediation and arbitration
under this Agreement shall be the exclusive remedy for all Arbitrable Claims.
The Company and Executive agree that arbitration shall be held in or near
Multnomah County, Oregon, or such location as the parties mutually agree upon,
and shall be in accordance with the then current Employment Dispute Resolution
Rules of the American Arbitration Association, before an arbitrator licensed to
practice law in the State of Oregon or such other forum as the parties have
agreed upon. The arbitrator shall have authority to award or grant legal,
equitable, and declaratory relief. Such arbitration shall be final and binding
on the parties. The Federal Arbitration Act shall govern the interpretation and
enforcement of this section pertaining to Alternative Dispute Resolution. The
parties shall use their best efforts to agree upon an Arbitrator. If the parties
are unable to agree upon an Arbitrator within 14 days of either party requesting
arbitration of a dispute, the Arbitrator shall be designated by Douglass
Hamilton or Hamilton Mediation Inc.
          d.   This Agreement to mediate and arbitrate survives termination of
the Period of Employment.

12.  Miscellaneous

          a.   Legal Fees. If any action at law or in equity or arbitration is
               ----------
necessary to enforce or interpret the terms of this Agreement, to the extent
permitted by law, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements, in addition to any other
relief to which the prevailing party may be entitled.

                                       7
<PAGE>

          b.   Entire Agreement. This Agreement (inclusive of exhibits and
               ----------------
attachments and incorporated documents) represents the entire agreement and
understanding between the parties regarding its subject matter, supersedes and
replaces any and all prior agreements and understandings regarding its subject
matter.
          c.   Amendments, Waivers. This Agreement may only be modified by a
               -------------------
subsequent written agreement executed by the Chief Executive Officer of the
Company (after approval of the Company's Board of Directors) and Executive.
Failure to exercise any right under this Agreement shall not constitute a waiver
of such right.
          d.   Assignment; Successors and Assigns. This Agreement shall not be
               ----------------------------------
assignable by either party without the express written consent of the other.
          e.   Notices. All notices required or given herewith shall be
               -------
addressed to the parties at the addresses designated above by registered mail,
special delivery, or by certified courier service. Executive shall notify
Company in writing of any change of address. Notice of change of address shall
be effective only when done in accordance with this Section.
          f.   Severability; Governing Law. If any provision of this Agreement,
               ---------------------------
or its application to any person, place, or circumstance, is held by an
arbitrator or a court of competent jurisdiction to be invalid, unenforceable, or
void, such provision shall be enforced (by blue-penciling or otherwise) to the
greatest extent permitted by law, and the remainder of this Agreement and such
provision as applied to other persons, places, or circumstances shall remain in
full force and effect. This Agreement will be governed by the laws of the State
of Oregon.
          g.   Acknowledgment. Company and Executive acknowledge that they have
               --------------
been afforded every opportunity to and have read this Agreement, are fully aware
of its contents and legal effect, and have chosen to enter into this Agreement
freely, without coercion, and based upon their own judgment. The parties have
duly executed this Agreement as of the date first written above.

                                        EXECUTIVE

                                        /s/ Jon S. Pitcher
                                        ---------------------------
                                        Jon S. Pitcher


                                        COMPANY

                                        OXIS International, Inc.


                                        By: /s/ Ray R. Rogers
                                           ------------------------
                                        Name:  Ray R. Rogers
                                        Title: Chairman

                                        By: /s/ Stuart Lang
                                           ------------------------
                                        Name:  Stuart Lang
                                        Title: Chairman, Audit and
                                               Compensation Committee

                                       8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.(B)
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT FOR HUMBERTO V. REYES
<TEXT>

<PAGE>

                                 Exhibit 10(b)

                        Executive Employment Agreement


   This Executive Employment Agreement ("Agreement"), is entered into as of
                                         ---------
   April 3, 2000, by and between OXIS International, Inc., its affiliated,
   related, parent or subsidiary corporations (the "Company") located at 6040 N.
                                                    -------
   Cutter Circle, Suite 317, Portland, OR 97217-3935, and Humberto V. Reyes
   ("Executive") residing in Portland, OR (collectively, the "parties").
     ---------

                                   RECITALS

   Executive and the Company desire that Company employ Executive as the
   President and Chief Executive Officer of OXIS Health Products for the Period
   of Employment (as defined below), upon the following terms and conditions.

                                   AGREEMENT

   ACCORDINGLY, the parties hereto agree as follows:

1. General Release of Claims. In exchange for the consideration set forth in
   this Agreement, the parties agree to execute a release agreement with terms
   modeled on the General Release of Claims I, attached hereto as Exhibit A and
                                                                  ---------
   agreed to by the parties ("Release I"), in accordance with the terms thereof.
                              ---------

2. Period of Employment

    a. Initial Term. Effective March 31, 2000, the Company shall employ
       ------------
Executive to render Services (as defined below) to the Company in the position
and with the duties and responsibilities described in Section 3 for a term of
twelve (12) months (the "Period of Employment"), unless the Period of Employment
                         --------------------
is terminated sooner in accordance with Section 8 below.
    b. Renewal. This Agreement will be automatically renewed one time for an
       -------
additional one (1) year period (without any action taken by either party) on the
last day of the Period of Employment, unless either party gives the other
written notice of termination at least sixty (60) days before the last day of
the Period of Employment.
    c. Non-Renewal. If either party gives notice of termination in accordance
       -----------
with Section 2 (b), and Executive signs a release agreement with terms modeled
on the General Release of Claims II, attached hereto as Exhibit B, Executive
                                                        ----------
shall receive a continuation of his then-current salary for six (6) months after
the Period of Employment; and, notwithstanding any vesting or termination
provisions contained in Executive's applicable Stock Option Grants with the
Company, Executive's unvested Options (as defined in Section 4 below) shall
immediately vest eighteen (18) months after the effective date of this Agreement
and Executive shall be able to exercise his vested Options at any time
subsequent to the period of employment until a date one year after the eighteen
(18) month anniversary of the effective date of this Agreement, and otherwise in
accordance with and subject to Executive's applicable Stock Option Grants with
the Company (collectively, "Non-Renewal Benefits").
                            --------------------

3. Position, Duties, Responsibilities

    a. Position. During the Period of Employment, the Company will employ
       --------
Executive in the position of President and Chief Executive Officer of the
Company's subsidiary, OXIS Health Products, Inc.  Executive shall be responsible
for the daily operations of OXIS Health Products,

                                       1
<PAGE>

   assist with the divestiture of OXIS Health Products and other non-related
   technology ("Divestiture"), and shall perform any other duties that may be
                -----------
   reasonably assigned by the Company (collectively, "Services"). Executive
                                                      --------
   shall report to the Company's Board of Directors, who have assigned Special
   Advisor Ray R. Rogers as its designee to interface with Executive on a daily
   basis.
     b. Other Activities. During the Period of Employment, Executive will not,
        ----------------
except upon the prior written consent of the Company's Board of Directors or
designee, which consent shall not be unreasonably withheld:  (i) accept any
other full-time employment, or (ii) engage, directly or indirectly, in any other
business activity (whether or not pursued for pecuniary advantage) in the field
of ethical pharmaceuticals that is or may be in direct competition with the
business of the Company.

4. Compensation. In exchange for Services and the other consideration he
   provides under this Agreement, Executive shall be entitled to an annual base
   salary of one hundred and eighty-two thousand dollars ($182,000.00) payable
   in accordance with the Company's regular payroll practices. In addition, the
   Board of Directors has awarded Executive options to purchase shares of the
   Company's Common Stock under, in accordance with, and subject to Executive's
   applicable Stock Option Grants (certain of the options under the 2000 Stock
   Option Agreement are subject to shareholder approval) with the Company
   (collectively, "Options"). Executive will not be entitled to any cash or
                   -------
   other bonus for 1999.

   In addition, Executive's entitlement to shares under the 2000 Stock Option
   Grant may be accelerated in accordance with the terms thereof, as set forth
   in the Board of Directors' consent document dated January 31, 2000. Executive
   will be eligible to participate in the Company's benefit plans (including
   vacation and health insurance) as stated in the Company's employment policies
   (and as may be amended from time to time in the Company's sole discretion),
   provided that Executive shall receive such benefits at the same level
   provided from time to time to other senior executives of Company.

5. Proprietary Information

     a. Company Information. Executive agrees during his employment with the
        -------------------
Company and for a period of three years thereafter, to hold in strictest
confidence, and not to use or disclose to any person, firm or corporation any
Proprietary Information of the Company.  "Proprietary Information" means any
                                          -----------------------
Company proprietary or confidential information, technical data, trade secrets
or know-how.  This includes, but is not limited to, research, product plans,
products, services, customer lists, customers, markets, software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances or other Company
business information.  This information shall remain confidential whether it was
disclosed to Executive either directly or indirectly in writing, orally or by
drawings or observation.  Proprietary Information does not include any of the
foregoing items which has become publicly known and made generally available
through no wrongful act of Executive or others who were under confidentiality
obligations as to the items involved.
     b. Former Employer Information. Executive agrees that he will not, during
        ---------------------------
his employment with the Company, improperly use or disclose any proprietary
information or trade secrets, or bring onto the premises of the Company any
proprietary information belonging to any former or concurrent employer or other
person or entity.
     c. Third Party Information. Executive recognizes that the Company has
        -----------------------
received and in the future will receive confidential or proprietary information
from third parties. Executive agrees to hold all such confidential or
proprietary information in the strictest confidence and not to disclose it to
any person, firm or corporation or to use it except as necessary in carrying out
his work for the Company consistent with the Company's agreement with such third
party.

                                       2
<PAGE>

     d. No Conflict. Executive represents and warrants that Executive's
        -----------
execution of this Agreement, his employment with the Company, and the
performance of his proposed duties under this Agreement shall not violate any
obligations he may have to any former employer (or other person or entity),
including any obligations with respect to proprietary or confidential
information of any other person or entity.

6. Inventions

     a. Inventions Retained and Licensed. Executive has attached, as Exhibit C,
        --------------------------------
a list describing all inventions, original works of authorship, developments,
improvements, and trade secrets which were made by Executive prior to
Executive's employment with the Company ("Prior Inventions"), which belong to
                                          ----------------
Executive, and which relate to the Company's actual and/or proposed business,
products or research and development.  If, in the course of his employment with
the Company, Executive incorporates into a Company product, process or machine a
Prior Invention owned by Executive or in which Executive has an interest, the
Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license to make, have made, modify, use and
sell such Prior Invention as part of or in connection with such product, process
or machine.
     b. Assignment of Inventions. Except as provided in Section 6.e below,
        ------------------------
Executive agrees that he will promptly make full written disclosure to the
Company, will hold in trust for the sole right and benefit of the Company, and
hereby assign to the Company, or its designee, all Executive's right, title, and
interest in and to any and all inventions, original works of authorship,
developments, concepts, improvements, designs, discoveries, ideas, trademarks or
trade secrets, whether or not patentable or registrable under copyright or
similar laws, which Executive may solely or jointly conceive or develop or
reduce to practice, or cause to be conceived or developed or reduced to practice
("Inventions"), while Executive is employed by the Company and within the course
  ----------
and scope of employment.  Executive further acknowledges that all original works
of authorship which are made by Executive (solely or jointly with others) within
the course and scope of and during his employment with the Company and which are
protectible by copyright are "works made for hire", as that term is defined in
the United States Copyright Act.  Executive understands and agrees that the
decision whether or not to commercialize or market any invention developed by
Executive solely or jointly with others is within the Company's sole discretion
and for the Company's sole benefit and that no royalty will be due to Executive
as a result of the Company's efforts to commercialize or market any such
invention.
     c. Maintenance of Records. Executive agrees to keep and maintain adequate
        ----------------------
and current written records of all Inventions made by Executive (solely or
jointly with others) during Executive's employment with the Company and subject
to license or assignment under Section 6.a or 6.b. The records will be in the
form of notes, sketches, drawings, and any other format that may be specified by
the Company. The records will be available to and remain the sole property of
the Company at all times.
     d. Patent and Copyright Registrations. Executive agrees to assist the
        ----------------------------------
Company, or its designee, at the Company's expense, in every proper way, to
secure the Company's rights in the Inventions and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto in any and
all countries. Executive will disclose to the Company all pertinent information
and data which is necessary for the execution of all applications,
specifications, oaths, assignments and all other instruments necessary to apply
for and obtain such rights and in order to assign and convey to the Company, its
successors, assigns, and nominees the sole and exclusive rights, title and
interest in and to such Inventions, and any copyrights, patents, mask
                                       3
<PAGE>

work rights, or other intellectual property rights relating thereto. Executive
further agrees that Executive's obligation to execute or cause to be executed,
when it is in Executive's power to do so, any such instrument or papers shall
continue after the termination of this Agreement for a reasonable duration. If
the Company is unable, because of Executive's mental or physical incapacity or
for any other reason, to secure Executive's signature to apply for or to pursue
any application for any United States or foreign patents or copyright
registrations covering Inventions or original works of authorship assigned to
the company as above, then Executive hereby irrevocably designates and appoints
the Company and its duly authorized officers and agents as Executive's agent and
attorney in fact, to act for and in Executive's behalf and stead to execute and
file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters- patent or copyright
registrations thereon with the same legal force and effect as if executed by
Executive.
     e. Exception to Assignments. The provisions of this Agreement requiring
        ------------------------
assignment of Inventions to the Company do not apply to any invention which
qualifies for protection or different treatment under the provisions of any
applicable state law.  Executive will advise the Company promptly in writing of
any inventions that Executive believes meet the criteria of any applicable state
law which affects ownership of Inventions.

7.   Post-Termination Activity

     a. Executive acknowledges that the pursuit of the activities forbidden by
this subsection would necessarily involve the use or disclosure of Proprietary
Information in breach of this Agreement, but that proof of such a breach would
be extremely difficult.  To forestall this use or disclosure, Executive agrees
that, during the Severance Period (if any) or for a period of one year after the
Period of Employment, whichever is longer, Executive shall not, without the
Company's prior written consent (i) divert or attempt to divert from the Company
any business of any kind in which the Company is then engaged; (ii) employ,
solicit for employment, or recommend for employment any person employed by the
Company (except where providing such job related references as are common in the
industry); or (iii) except as otherwise addressed in this Agreement, accept
employment with another company directly involved in developing the technology
then in development for the Company at the time of Executive's termination in
any state in which the Company conducts its business.
     b. In addition, because Executive acknowledges the difficulty of
establishing when any intellectual property, invention, or proprietary
information was first conceived or developed by Executive, or whether it
resulted from access to Proprietary Information or Company equipment, supplies,
facilities, or data, Executive agrees that any intellectual property, invention,
or proprietary information related to the development of ethical pharmaceuticals
shall be rebuttably presumed to be an Invention, if reduced to practice by
Executive or with the aid of Executive within one (1) year after termination of
the Period of Employment. Executive may rebut such presumption by producing
evidence which establishes to a preponderance that such intellectual property,
invention, or proprietary information was first conceived or developed by
Executive after the termination of the Period of Employment, or did not
otherwise result from access to Proprietary Information or Company equipment,
supplies, facilities, or data.

8.   Termination of Employment

     a. Termination by Company not for Cause. At any time, the Company may
        ------------------------------------
terminate the Period of Employment for any reason other than for Cause (as
defined below) by providing Executive fourteen (14) days' advance written
notice.  The Company shall pay to Executive all compensation due and owing
through the last day actually worked and Executive shall be entitled

                                       4
<PAGE>

to Severance in accordance with Section 9 below, subject to the conditions
therein. In the event Company terminates the Period of Employment not for Cause,
Executive shall be released from the obligations of Section 7 .a (iii) above. In
addition, the Company may decline to allow the renewal of the Agreement in
accordance with Section 2 .b. above, regardless of the existence of Cause, but
in such case shall be obligated to provide only the benefits set forth in
Section 2 .c above.
     b. Termination by Company for Cause. At any time, and without prior notice,
        --------------------------------
the Company may terminate the Period of Employment for Cause (as defined below).
The Company shall pay Executive all compensation then due and owing through the
last day actually worked.  Executive will not be entitled to Severance.  "Cause"
                                                                          -----
shall mean Executive's:  (i) Commission of a felony involving moral turpitude;
(ii) Repeated failure to perform services in accordance with the reasonable
requests of superiors within the course and scope of Executive's duties; (iii)
Commission of a material fraud, misappropriation, embezzlement or other act of
gross dishonesty which resulted in material loss, damage or injury to the
Company; or (iv) Death. Notwithstanding anything herein, however, if the Period
of Employment is terminated by reason of the death of Executive, all unvested
Options shall immediately vest and shall be exercisable by Executive's estate or
heirs for two years thereafter, otherwise in accordance with the terms of his
applicable Stock Option Grants with the Company.
     c. By Executive Not for Good Reason. At any time, Executive may terminate
        --------------------------------
the Period of Employment for any reason other than Good Reason (as defined
below) by providing the Company fourteen (14) days' advance written notice. The
Company shall have the option, in its complete discretion, to make termination
of the Period of Employment effective at any time prior to the end of such
notice period, provided the Company pays Executive all compensation due and
owing through the last day actually worked. Thereafter, all of the Company's
obligations under this Agreement shall immediately and forever cease, except for
those required by law, except for those which expressly survive termination of
this Agreement and except that notwithstanding any vesting or termination
provisions contained in Executive's applicable Stock Option Grants with the
Company, Executive's unvested Options shall immediately vest upon such
termination and Executive shall be able to exercise his vested Options for one
year thereafter, otherwise in accordance with the terms of his applicable Stock
Option Agreements with the Company. Executive, however, will not be entitled to
Severance.
     d. By Executive for Good Reason. At any time, and without prior notice,
        ----------------------------
Executive may terminate the Period of Employment for Good Reason (as defined
below).  The Company shall pay Executive all compensation due and owing through
the last day actually worked, and Executive shall be entitled to Severance in
accordance with Section 9 below, subject to the conditions therein.  Thereafter,
all obligations of the Company and Executive under this Agreement shall
terminate, except for those which expressly survive termination of this
Agreement.  Neither the Company's giving of notice of termination in accordance
with Section 2.b nor its termination of the Period of Employment for Cause shall
constitute "Good Reason" for Executive to terminate the Period of Employment.
"Good Reason" only shall exist if the Company undertakes any of the following
- ------------
without Executive's prior consent: (i) The assignment to Executive of any duties
or responsibilities which result in any material diminution or material adverse
change of Executive's position, status or circumstances of employment; a change
in Executive's titles or offices that results in any material diminution or
material adverse change of Executive's position, status or circumstances of
employment; or any removal of Executive from or any failure to re-elect
Executive to any of such positions, except in connection with the

                                       5
<PAGE>

termination of his employment for Cause, retirement, or any other voluntary
termination of employment by Executive other than a termination of employment by
Executive for Good Reason; (ii) A reduction by the Company in Executive's base
salary by greater than ten (10) percent; (iii) Any failure by the Company to
continue in effect any benefit plan or arrangement, including incentive plans or
plans to receive securities of the Company, in which Executive is participating
as of the date hereof (hereinafter referred to as "Benefit Plans"), or the
taking of any action by the Company which would materially adversely affect
Executive's participation in or reduce Executive's benefits under the Benefit
Plans or deprive Executive of any fringe benefit enjoyed by Executive as in
effect on the date hereof; provided, however, that no termination of employment
by Executive for Good Reason shall be deemed to occur based upon this subsection
8.d (iii) if the Company offers a range of benefit plans and programs which,
taken as a whole, are comparable to the Benefit Plans offered Executive before
the action; (iv) A relocation of the Executive, or the Company's principal
offices if Executive's principal office is at such offices, to a location more
than fifty (50) miles from the location at which Executive was performing his
duties as of the date hereof, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations as of the date hereof; (v) Any material breach by
the Company of any provision of this Agreement; (vi) Any failure by the Company
to obtain the assumption of this Agreement by any successor or assign of the
Company; or (vii) Any directive to Executive to perform any act which would
expose him to personal legal liability or which, viewed objectively, is likely
to constitute an unethical act ; or (viii) Any conduct directed to Executive by
Company or any condition under which Executive works which constitutes
constructive discharge under the principles of the governing law.

9.   Severance

     a.  In the event that the Period of Employment is terminated in accordance
with Sections 8.a or 8.d hereof and Executive signs a waiver agreement with
terms modeled on the General Waiver of Claims, attached hereto as Exhibit D and
                                                                  ---------
agreed to by the parties (the "Waiver"), the Company shall continue Executive's
                               ------
then current base salary and COBRA premiums in accordance with the Company's
normal payroll procedures for a period of twelve (12) months (the "Severance
                                                                   ---------
Period"), and notwithstanding any vesting or termination provisions contained in
- ------
Executive's applicable stock option Grants with the Company Executive's unvested
Options shall immediately vest and Executive shall have two years from the date
of Executive's termination of employment to exercise his vested options
otherwise in accordance with the terms of his applicable Stock Option Agreements
with the Company.  In the event the then current base salary is less than the
compensation set out in Section 4 of this Agreement, Executive shall be entitled
to severance calculated on the basis of the compensation set out in Section 4 of
this Agreement.
     b.  Notwithstanding any other provision of this Agreement, Release I or II,
or the Waiver, at any time should Executive engage in or pursue any of the
activities described in Section 7 (except where advance consent has been
granted, or except where released from Section 7 .a (iii) by virtue of a
Termination by Company not for Cause or by virtue of a Termination by Executive
for Good Reason) or should Executive not fulfill his obligations in Section 10
below, the Company's obligation to pay and Executive's entitlement to any
Severance or Non-Renewal Benefits shall immediately and forever cease.

     10. Termination Obligations.

   Executive agrees that his obligations under Sections 5 and 6 of this
Agreement survive the expiration of this Agreement.

                                       6
<PAGE>

11.  Alternative Dispute Resolution

     a.  The Company and Executive mutually agree that any controversy or claim
arising out of or relating to this Agreement or the breach thereof, or any other
dispute between the parties, shall be submitted to mediation before a mutually
agreeable mediator, which cost is to be borne equally by the parties hereto.  In
the event the parties are unable to agree upon a mediator, the mediator shall be
Douglass Hamilton or such person as Hamilton Mediation Inc. designates.  In the
event mediation is unsuccessful in resolving the claim or controversy, such
claim or controversy shall be resolved by arbitration as described below.  The
claims covered by this Agreement ("Arbitrable Claims") include, but are not
                                   -----------------
limited to, claims for wages or other compensation due; claims for breach of any
contract (including this Agreement) or covenant (express or implied); tort
claims; claims for discrimination (including, but not limited to, race, sex,
religion, national origin, age, marital status, medical condition, or
disability); claims for benefits (except where an Executive benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure different from this one), and claims for violation of any federal,
state, or other law, statute, regulation, or ordinance, except claims excluded
in the following paragraph.  The parties hereto hereby waive any rights they may
have to trial by jury in regard to Arbitrable Claims.
     b.  Claims Executive may have for workers' compensation or unemployment
compensation benefits are not covered by this Agreement.  Also not covered is
either party's right to obtain provisional remedies or interim relief from a
court of competent jurisdiction for any claim or controversy arising out of or
related to the unauthorized use, disclosure, or misappropriation of the
confidential and/or proprietary information of either party. Notwithstanding
anything in this Agreement to the contrary, however, should either party
initiate litigation in any court as authorized by this section, the other party
may assert any claims he or it may have as counterclaims or separate claims in
such court and shall not be obligated to resolve them by mediation and/or
arbitration.
     c.  Except as provided in Section 11.b, mediation and arbitration under
this Agreement shall be the exclusive remedy for all Arbitrable Claims. The
Company and Executive agree that arbitration shall be held in or near Multnomah
County, Oregon, or such location as the parties mutually agree upon, and shall
be in accordance with the then current Employment Dispute Resolution Rules of
the American Arbitration Association, before an arbitrator licensed to practice
law in the State of Oregon or such other forum as the parties have agreed upon.
The arbitrator shall have authority to award or grant legal, equitable, and
declaratory relief. Such arbitration shall be final and binding on the parties.
The Federal Arbitration Act shall govern the interpretation and enforcement of
this section pertaining to Alternative Dispute Resolution. The parties shall use
their best efforts to agree upon an Arbitrator. If the parties are unable to
agree upon an Arbitrator within 14 days of either party requesting arbitration
of a dispute, the Arbitrator shall be designated by Douglass Hamilton or
Hamilton Mediation Inc.
     d.  This Agreement to mediate and arbitrate survives termination of the
Period of Employment.

12.  Miscellaneous

     a.  Legal Fees. If any action at law or in equity or arbitration is
         ----------
necessary to enforce or interpret the terms of this Agreement, to the extent
permitted by law, the prevailing party shall be entitled to reasonable
attorneys' fees, costs, and necessary disbursements, in addition to any other
relief to which the prevailing party may be entitled.

                                       7
<PAGE>

     b.  Entire Agreement. This Agreement (inclusive of exhibits and attachments
         ----------------
and incorporated documents) represents the entire agreement and understanding
between the parties regarding its subject matter, supersedes and replaces any
and all prior agreements and understandings regarding its subject matter.
     c.  Amendments, Waivers. This Agreement may only be modified by a
         -------------------
subsequent written agreement executed by the Chief Executive Officer of the
Company (after approval of the Company's Board of Directors) and Executive.
Failure to exercise any right under this Agreement shall not constitute a waiver
of such right.
     d.  Assignment; Successors and Assigns. This Agreement shall not be
         ----------------------------------
assignable by either party without the express written consent of the other.
     e.  Notices. All notices required or given herewith shall be addressed to
         -------
the parties at the addresses designated above by registered mail, special
delivery, or by certified courier service. Executive shall notify Company in
writing of any change of address. Notice of change of address shall be effective
only when done in accordance with this Section.
     f.  Severability; Governing Law. If any provision of this Agreement, or its
         ---------------------------
application to any person, place, or circumstance, is held by an arbitrator or a
court of competent jurisdiction to be invalid, unenforceable, or void, such
provision shall be enforced (by blue-penciling or otherwise) to the greatest
extent permitted by law, and the remainder of this Agreement and such provision
as applied to other persons, places, or circumstances shall remain in full force
and effect.  This Agreement will be governed by the laws of the State of Oregon.
     g.  Acknowledgment. Company and Executive acknowledge that they have been
         --------------
afforded every opportunity to and have read this Agreement, are fully aware of
its contents and legal effect, and  have chosen to enter into this Agreement
freely, without coercion, and based upon their own judgment.
The parties have duly executed this Agreement as of the date first written
above.

                                        EXECUTIVE

                                        /s/ Humberto V. Reyes
                                        --------------------------
                                        Humberto V. Reyes


                                        COMPANY

                                        OXIS International, Inc.

                                        By: /s/ Ray R. Rogers
                                            ----------------------
                                        Name:  Ray R. Rogers
                                        Title: Chairman

                                        By: /s/ Stuart Lang
                                            ----------------------
                                        Name:  Stuart Lang
                                        Title: Chairman, Audit and
                                               Compensation Committee

                                       8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.(A)
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>

<ARTICLE> 5

<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   6-MOS
<FISCAL-YEAR-END>                          DEC-31-2000             DEC-31-2000
<PERIOD-START>                             APR-01-2000             JAN-01-2000
<PERIOD-END>                               JUN-30-2000             JUN-30-2000
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<PP&E>                                         689,000                 689,000
<DEPRECIATION>                                       0                       0
<TOTAL-ASSETS>                               8,338,000               8,338,000
<CURRENT-LIABILITIES>                        1,502,000               1,502,000
<BONDS>                                              0                       0
<PREFERRED-MANDATORY>                                0                       0
<PREFERRED>                                     10,000                  10,000
<COMMON>                                         9,000                   9,000
<OTHER-SE>                                   6,649,000               6,649,000
<TOTAL-LIABILITY-AND-EQUITY>                 8,338,000               8,338,000
<SALES>                                        779,000               1,722,000
<TOTAL-REVENUES>                               779,000               1,722,000
<CGS>                                          833,000               1,685,000
<TOTAL-COSTS>                                  833,000               1,685,000
<OTHER-EXPENSES>                               447,000                 785,000
<LOSS-PROVISION>                                     0                       0
<INTEREST-EXPENSE>                              23,000                  44,000
<INCOME-PRETAX>                            (1,101,000)             (2,069,000)
<INCOME-TAX>                                         0                       0
<INCOME-CONTINUING>                        (1,101,000)             (2,069,000)
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                               (1,101,000)             (2,069,000)
<EPS-BASIC>                                      (.12)                   (.24)
<EPS-DILUTED>                                    (.12)                   (.24)


</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
