EANS-Adhoc: Oxygen Biotherapeutics Announces Registered Financing for up to $7.5 million in Gross Proceeds

--------------------------------------------------------------------------------
ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
distribution. The issuer is solely responsible for the content of this
announcement.
--------------------------------------------------------------------------------

09.12.2011

MORRISVILLE, NC, December 9, 2011 - Oxygen Biotherapeutics, Inc.
(NASDAQ & SIX Swiss Exchange: OXBT) today announced that it has
entered into definitive agreements with institutional investors for
up to $7.5 million in gross proceeds. Under the terms of the
agreements, Oxygen will issue registered shares of Series A
Convertible Preferred Stock, par value $0.0001 per share (the
"Preferred Stock"), and registered warrants ("Warrants") to purchase
shares of the Company´s common stock, par value $0.0001 per share.
The transaction provides for 50% Warrant coverage on the Preferred
Stock, based on the number of shares of common stock initially
issuable under the Preferred Stock.

The transaction is scheduled to fund in two installments. Upon the
initial closing, the investors will purchase $3.5 million of newly
issued Preferred Stock and related Warrants. Subject to certain
conditions, there is a second mandatory installment whereby the
Company may issue up to an additional $4.0 million of Preferred Stock
and Warrants. The second installment would fund when the first
installment is fully redeemed by the Company, at approximately the
six month anniversary of the initial closing.

The offering is expected to close on or about Monday, December 12,
2011, subject to the satisfaction of customary closing conditions.

William Blair & Company is serving as the exclusive placement agent
on the transaction.

end of ad-hoc-announcement ==========================================
====================================== Use of Proceeds, Terms and
Conditions

Oxygen plans to use the proceeds from the transaction for Oxycyte®
PFC development, clinical and preclinical trials, product development
and general working capital.

“This significant commitment from two new U.S. institutional
investors is structured to enable the Company to repay the
Convertible Preferred stock in shares of common stock or cash at the
Company’s option thereby providing us significant, permanent equity
capital. The proceeds, along with our recent initiatives to reduce
our cash burn rate, should serve to support our initiatives through
the end of calendar year 2012,” said Michael B. Jebsen, Chief
Financial Officer, President and Interim Chief Executive Officer of
Oxygen.

The general terms of the placement are summarized as follows:

•Up to $7.5 million in gross proceeds with $3.5 million due upon the
closing scheduled for December 12, 2011.

•A second installment for up to $4.0 million is mandatory, provided
the company meets certain conditions.

•The initial conversion price on the Preferred stock is $2.22, and is
subject to certain adjustments.

•The Company will redeem one-sixth of the principal per month in six
installments. The repayment of principal is payable in cash or,
provided that certain conditions are met in each payment period, in
registered common stock, at the Company’s discretion. If paid in
stock, the redemption price will be the lesser of the initial
conversion price and 90% of a calculated market price of the common
stock.

•The dividend rate on the Preferred Stock is 7% per annum, payable
monthly in cash or, provided that certain conditions are met in each
payment period, in registered common stock at a calculated market
price, at the Company’s discretion.

Investors will receive warrants to purchase approximately 1,689,192
shares of common stock, which are exercisable for five years
beginning on the one-year anniversary of the closing date. The
warrants have an initial exercise price of $2.22, subject to
anti-dilution adjustments.

The securities described above are being offered by the Company
pursuant to a registration statement previously filed and declared
effective by the Securities and Exchange Commission (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.

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 William Blair & Company, 222 West Adams Street, Chicago,
Ill, 60606.

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 have
been filed with the Securities and Exchange Commission 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 product
called Oxycyte® that is being formulated for both intravenous and
topical delivery for use in treating traumatic brain injury,
decompression sickness, and dermatological indications. In addition,
the Company has commercialized its DERMACYTE® line of oxygen-rich
skin care products. See www.oxybiomed.com or www.DermacyteUS.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 the management transition, and expansion of research and
development of the Oxycyte product line, including the timing of the
introduction of these new products, and the closing of the second
installment of the financing as described above. The forward-looking
statements are subject to a number of risks and uncertainties
including matters beyond the Company’s control that could lead to
delays in new product introductions and customer acceptance of these
new products, and other risks and uncertainties as described in our
filings with the Securities and Exchange Commission, including in the
current Annual Report on Form 10-K filed on July 15, 2011, and the
Quarterly Report on Form 10-Q filed on September 19, 2011. 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.

Further inquiry note:
Ellen Corliss
Vice President, Corporate Communications
& Investor Relations
Oxygen Biotherapeutics, Inc
One Copley Pkwy, Suite 490
Morrisville, NC 27560
Direct Telephone: +1 919 855 2112
Direct Fax: +1 919 806 4417
Email: e.corliss@oxybiomed.com

end of announcement euro adhoc
--------------------------------------------------------------------------------

issuer: Oxygen Biotherapeutics Inc.
One Copley Parkway, Suite 490
US-27560 Morrisville, NC
phone: +1 (919) 855 21 12
FAX: +1 (919) 806 44 17
mail: e.corliss@oxybiomed.com
WWW: www.oxybiomed.com
sector: Biotechnology
ISIN: US69207P2092
indexes: SSIRT
stockmarkets: Nasdaq: New York, Main Standard: SIX Swiss Exchange
language: English