Item 1.01. Entry into a Material Definitive Agreement.
On April 16, 2019, CytoDyn Inc. (the Company) entered into Subscription Agreements (the Subscription Agreements) with certain
investors (the Investors) for the sale by the Company of 2,201,000 shares (the Common Shares) of the Companys common stock, par value $0.001 per share (the Common Stock), in a registered direct offering (the
Offering). The Investors in the Offering also received warrants to purchase 1,100,500 shares of Common Stock (the Warrants). Each share of Common Stock was sold together with one half of one Warrant to purchase one share of
Common Stock for a combined purchase price of $0.50.
The aggregate gross proceeds for the sale of the Common Shares and Warrants will be approximately
$1.1 million. Subject to certain ownership limitations, the Warrants will be exercisable commencing on the issuance date at an exercise price equal to $0.50 per share of Common Stock, subject to adjustments as provided under the terms of the
Warrants. The Warrants are exercisable for five years from the date of issuance. The closing of the sales of these securities under the Subscription Agreements is expected to occur on or about April 16, 2019.
The net proceeds to the Company from the transactions, after deducting the fees and expenses of the Placement Agent, as defined below (not including the
Placement Agent Warrants, as defined below), the Companys estimated offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants, are expected to be approximately $1.0 million. The Company intends to use the
net proceeds from the transactions to fund clinical trials for its lead product candidate and for general corporate purposes.
The securities sold in the
Offering were offered and sold by the Company pursuant to an effective shelf registration statement on
Form S-3,
which was initially filed with the Securities and Exchange Commission (the SEC)
on February 23, 2018 and subsequently declared effective on March 7, 2018 (File
No. 333-223195)
(the Registration Statement), and the base prospectus dated as of March 7, 2018
contained therein. The Company will file a prospectus supplement with the SEC in connection with the sale of the securities.
The representations,
warranties and covenants contained in the Subscription Agreements were made solely for the benefit of the parties to the Subscription Agreements. In addition, such representations, warranties and covenants (i) are intended as a way of
allocating the risk between the parties to the Subscription Agreements and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other
investors in, the Company. Accordingly, the forms of the Subscription Agreements are included with this filing only to provide investors with information regarding the terms of transaction, and not to provide investors with any other factual
information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or
affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Pursuant to the Placement Agent Agreement, dated as of March 18, 2019 (the Placement Agent Agreement) with Paulson Investment Company,
LLC (the Placement Agent), the Company has agreed to pay the Placement Agent a cash fee equal to 9% of the gross proceeds received by the Company from qualified investors first introduced to the Company in the Offering by the Placement
Agent, as well as a
one-time
non-accountable
expense fee of $35,000 for aggregate expenses incurred collectively in the Offering (which was previously paid in connection
with a prior closing). Pursuant to the Placement Agent Agreement, the Company also agreed to grant to the Placement Agent or its designees warrants to purchase up to 9% of the aggregate number of shares sold to qualified investors in the Offering at
an exercise price of $0.50 per share (the Placement Agent Warrants). The Placement Agent Warrants provide for cashless exercise. The Placement Agent Agreement has indemnity and other customary provisions for transactions of this nature.
The Placement Agent Warrants and the shares issuable upon exercise of the Placement Agent Warrants will be issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act as transactions not
involving a public offering and in reliance on similar exemptions under applicable state laws. The Placement Agent Agreement was filed as Exhibit 10.2 to the Current Report on Form
8-K
filed on April 5,
2019 and is incorporated herein by reference.