OxySure Systems Inc

During the nine months ended September 30, 2014 we issued eight convertible notes with a total principal value of $475,000 for $412,500 in cash. The notes contained original issuance discounts for a total of $62,500, and interest rates of 12%. The maturity dates of the notes range from January 28, 2015 to September 10, 2015. The creditors have the option at any time to convert the principal and any accrued interest into common stock of the Company at a an aggregate discount rate of approximately thirty eight percent off the market price of the Company’s common stock. During the nine months ended September 30, 2014 we repaid two notes with principal values totaling $167,500 for $207,000 in cash and the two notes were extinguished in their entirety pursuant to these transactions. During the nine months ended September 30, 2014 we exchanged a lease with an outstanding amount of $307,662 for a convertible note with a principal value of $150,000 and 75,000 shares of our common stock. The lease was extinguished in its entirety pursuant to the exchange transaction.

During the nine months ended September 30, 2015, we issued warrants associated with notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We recorded the relative fair value of the warrants issued with the notes in the amount of $251,363 as debt discounts upon issuance, and amortized these debt discounts as interest expense over the life of the notes. Additionally, as a result of issuing the warrants with the subordinated convertible promissory notes, a beneficial conversion option for each note was recorded as a debt discount reflecting the incremental conversion option intrinsic value benefit totaling $133,637 at the time of issuance provided to the holders of the notes, which was also amortized as interest expense over the life of the notes. We recorded interest expense in the amounts of $270,361 and $0 for the three months ended September 30, 2015 and 2014, respectively in connection with the notes (issued with warrants) that contained beneficial conversion features. We recorded interest expense in the amounts of $355,101 and $0 for the nine months ended September 30, 2015 and 2014, respectively in connection with all the notes (issued with warrants) that contained beneficial conversion features.

During the nine month period the Company recorded derivatives related to convertible notes of $416,563 of which $251,363 exceed the proceeds of the convertible notes and was recorded as a derivative expense. The Company also converted $28,698 and recorded gains on the change in the fair values of the derivatives of $342,257.

On November 3, 2015, we issued a press release announcing that we have filed a lawsuit in the Texas District Court in Collin County, Texas, against TEGNA Inc., WFAA T.V. Channel 8, Jobin Panicker, a reporter for WFAA T.V., The Redwine Law Firm PLLC (the “Redwine Law Firm”), and Symone Redwine, an attorney at the Redwine Law Firm (“Redwine,” and together with the Redwine Law Firm, the “Redwine Defendants”). We filed the lawsuit seeking declaratory relief against the defendants for publicly making false statements about the OxySure Model 615 in which they falsely and fraudulently attempted to fabricate a link between the product and the December 2013 passing of Meaghan Levy (“Ms. Levy”). The lawsuit further alleges tortious interference against the Redwine Defendants and seeks damages in excess of $1 million. In a separate case, the Redwine Defendants represent Jolandi Nicole Kennedy and Marvin Levy, individually and as representatives of the estate of Ms. Levy, in a lawsuit filed against the Company in the District Court in Collin County, Texas, on October 19, 2015. The lawsuit seeks an unspecified amount of damages for the injuries suffered by Ms. Levy prior to her death and for the alleged wrongful death of Ms. Levy. The plaintiffs in this case allege that the OxySure Model 615 contributed to Ms. Levy’s death in December 2013. The allegation is contrary to the conclusion of the Collin County Medical Examiner’s autopsy report, which stated that Ms. Levy “died as a result of asphyxia resulting from an obstruction of her airway by a push pin.” The allegation also contradicts the findings of two separate investigations conducted by the Frisco Police Department and the school district in which Ms. Levy’s school was located, both concluding that the passing of Ms. Levy was an accident. We believe this lawsuit is misguided, baseless, is contrary to all available factual, medical or scientific evidence and has no merit, and we intend to vigorously defend the Company’s good name and reputation.