Oxygen Biotherapeutics Enters into Definitive Agreements for Financing for up to $2.1 Million in Gross Proceeds

  Oxygen Biotherapeutics Enters into Definitive Agreements for Financing for
  up to $2.1 Million in Gross Proceeds

Business Wire

MORRISVILLE, N.C. -- February 22, 2013

Oxygen Biotherapeutics, Inc. (NASDAQ: OXBT) today announced that it has
entered into definitive agreements with an institutional investor for a
financing of up to $2.1 million in gross proceeds. Under the terms of the
agreements, Oxygen will issue registered shares of Series B-1 convertible
preferred stock (the “Series B-1 Stock”) for $1.6 million in gross proceeds
and unregistered shares of Series B-2 convertible preferred stock (the “Series
B-2 Stock” and, together with the Series B-1 Stock, the “Preferred Stock”) for
$0.5 million in gross proceeds, which are convertible into common stock of the
Company at $0.25 per share. The transaction also provides for the issuance by
the Company of unregistered warrants to purchase up to 12,600,000 shares of
common stock of the Company with an initial exercise price of $0.50.

The offering is expected to close on or about Wednesday, February 27, 2013,
subject to the satisfaction of customary closing conditions. A more complete
description of the terms and conditions of the financing will be available in
the Form 8-K to be filed by the Company with the Securities and Exchange
Commission (the “SEC”).

Ladenburg Thalmann & Co. Inc., a subsidiary of Ladenburg Thalmann Financial
Services Inc. (NYSEMKT: LTS), is serving as the exclusive placement agent on
the transaction.

Oxygen plans to use the proceeds from the transaction to further its clinical
trials and efforts to obtain regulatory approval of Oxycyte^®, develop its
product candidates, including dermatologic indications using its topical gel,
support manufacturing of Oxycyte, for research and development and for general
corporate purposes, including working capital and potential acquisitions.

“The proceeds from this transaction, along with our continued initiatives to
reduce our cash burn rate, should provide us with the liquidity necessary to
fund our projected operating requirements through July 31, 2013,” said Michael
B. Jebsen, Chief Financial Officer, President and Interim Chief Executive
Officer of Oxygen.

In connection with this offering, the Company has also agreed to exchange
outstanding warrants to purchase an aggregate of 1,351,354 shares of common
stock held by certain existing institutional investors for an aggregate of
400,000 shares of common stock (which are subject to transfer restrictions for
a 3-month period) and $380,000 in cash pursuant to Section 3(a)(9) under the
Securities Act of 1933, as amended.

The Series B-1 Stock described above is being offered by the Company pursuant
to a registration statement on Form S-3 previously filed and declared
effective by the SEC. A prospectus supplement related to the offering will be
filed with the SEC. The securities may be offered only by means of a
prospectus, including a prospectus supplement, forming a part of the effective
registration statement. Pursuant to a Registration Rights Agreement, the
Company has agreed to file one or more registration statements with the SEC
covering the resale of the shares of common stock issuable upon conversion of
the Series B-2 Stock and upon exercise of the warrants.

Copies of the final prospectus supplement and accompanying base prospectus may
be obtained at the SEC's website at www.sec.gov, or by mail from Ladenburg
Thalmann & Co. Inc., 4400 Biscayne Blvd., 14^th Floor, Miami, Florida 33137.

This press release is neither an offer to sell nor a solicitation of an offer
to buy any of the Company's securities. No offer, solicitation, or sale will
be made in any jurisdiction in which such offer, solicitation, or sale is
unlawful. The terms and conditions of the transactions described in this press
release are qualified in their entirety by reference to the transaction
documents, which will be filed with the SEC on Form 8-K.

About Oxygen Biotherapeutics, Inc.

Headquartered in Morrisville, NC, Oxygen Biotherapeutics, Inc. is developing
medical and cosmetic products that efficiently deliver oxygen to tissues in
the body. The Company has developed a proprietary perfluorocarbon (PFC)
therapeutic oxygen carrier called Oxycyte® that is currently in clinical and
preclinical studies for intravenous delivery for indications such as traumatic
brain injury, decompression sickness and stroke. The company is also
developing PFC-based creams and gels for topical delivery to the skin for
dermatologic conditions and potentially wound care. In addition, the Company
has commercialized its Dermacyte® line of skin care cosmetics for the
anti-aging market, which has been sublicensed to a third-party. See
www.oxybiomed.com for more information.

Caution Regarding Forward-Looking Statements

This news release contains certain forward-looking statements by the Company
that involve risks and uncertainties and reflect the Company’s judgment as of
the date of this release. These statements include those regarding shareholder
approval of the financing and the registration of the Series B-2 Stock and
warrants, all as described above. The forward-looking statements are subject
to a number of risks and uncertainties, including those described herein and
in our filings with the Securities and Exchange Commission, including in the
current Form 10-Q filed on December 14, 2012, and our annual report on Form
10-K filed on July 24, 2012, as well as other filings with the SEC. The
Company disclaims any intent or obligation to update these forward-looking
statements beyond the date of this release. This caution is made under the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995.

Contact:

Oxygen Biotherapeutics, Inc.
Ellen Corliss, 919-855-2112
Corporate Communications & Investor Relations
 
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