Entry into a Material Definitive Agreement.
On December 9, 2019, CytoDyn Inc. (the Company) entered into Subscription Agreements (the Subscription Agreements) with certain
investors (the Investors) for the sale by the Company of 2,568,330 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 1,926,248 shares of Common Stock (the Warrants). Each share of Common Stock was sold together with three quarters of one Warrant to purchase one
share of Common Stock for a combined purchase price of $0.30. The Company did not engage any placement agent in the Offering.
The aggregate gross
proceeds for the sale of the Common Shares and Warrants will be approximately $0.77 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 December 9, 2019.
The net proceeds to the Company from the transactions, after deducting the Companys estimated
offering expenses (including a cash fee to Paulson Investment Company, LLC (Paulson), as described below), and excluding the proceeds, if any, from the exercise of the Warrants, are expected to be approximately $0.75 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 Paulson a cash fee of approximately $24,750, or 9% of the gross proceeds received from Investors in the Offering who were first introduced to the Company by Paulson.
The form of Warrant was filed as Exhibit 4.1 to the Current Report on Form 8-K filed on August 29, 2019. The form
of Subscription Agreement was filed as Exhibit 10.1 to the Current Report on Form 8-K filed on November 7, 2019. 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.