Item 1.01. Entry into a Material Definitive Agreement.
On September 19, 2019, CytoDyn Inc. (the Company) entered into Subscription Agreements (the Subscription Agreements) with certain
investors (the Investors) for the sale by the Company of 2,330,000 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 1,165,000 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 $0.40.
The aggregate gross proceeds for the sale of the Common Shares and Warrants will be
approximately $0.9 million. Subject to certain ownership limitations, the Warrants will be exercisable commencing on the issuance date at an exercise price equal to $0.45 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 September 19, 2019.
The net proceeds to the Company from the transactions, after deducting the Companys estimated offering expenses (including a cash tail fee
to our placement agent in certain prior offerings, as described below), and excluding the proceeds, if any, from the exercise of the Warrants, are expected to be approximately $0.9 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.
In connection with the Offering, the Company will pay to a prior placement agent (the Prior Placement Agent), pursuant to placement agent
agreements entered into in connection with prior offerings, (i) a cash fee of approximately $66,580, which is based on a percentage of the gross proceeds, as set forth in each placement agent agreement, received from Investors in the Offering
who were first introduced to the Company by the Prior Placement Agent in a prior offering and (ii) warrants to purchase an aggregate of 148,200 shares of Common Stock (the Prior Placement Agent Warrants), which is based on a
percentage of the number of shares of common stock, set forth in each placement agent agreement, issued to Investors in the Offering who were first introduced to the Company by the Prior Placement Agent in a prior offering. Of the aggregate Prior
Placement Agent Warrants to be issued, 65,625 will have an exercise price of $0.50 per share and 82,575 will have an exercise price of $0.40 per share, with the exercise price determined by the prior offering to which each Prior Placement Agent
Warrant relates. The Prior Placement Agent Warrants and the shares issuable upon exercise of the Prior 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 form of Warrant is filed as Exhibit
4.1 to the Current Report on Form 8-K filed on August 29, 2019. The form of Subscription Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K. The
foregoing summaries of the terms of these documents are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.
The legal opinion and consent of Lowenstein Sandler LLP relating to the securities are filed as Exhibit 5.1 to this Current Report on Form 8-K.