Item 1.01. Entry into a Material Definitive Agreement.
Registered Direct Offering
On August 29, 2019, CytoDyn
Inc. (the Company) entered into Subscription Agreements (the Registered Direct Subscription Agreements) with certain investors (the Investors) for the sale by the Company of 5,639,500 shares (the Common
Shares) of the Companys common stock, par value $0.001 per share (the Common Stock), in a registered direct offering (the Registered Direct Offering). The Investors in the Registered Direct Offering also received
warrants to purchase 2,819,750 shares of Common Stock (the Registered Direct Warrants). Each share of Common Stock was sold together with one half of one Registered Direct 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 Registered Direct Warrants will be approximately
$2.3 million. Subject to certain ownership limitations, the Registered Direct 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 Registered Direct Warrants. The Registered Direct Warrants are exercisable for five years from the date of issuance. The closing of the sales of these securities under the Registered Direct Subscription Agreements is expected to
occur on or about August 29, 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 Registered Direct Warrants, are expected to be
approximately $2.0 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 Registered Direct 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 Registered Direct Subscription Agreements were made solely for
the benefit of the parties to the Registered Direct Subscription Agreements. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Registered Direct 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
Registered Direct 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 Registered Direct Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Pursuant to the Placement Agent Agreement, dated as of August 12, 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 investors first introduced to the Company in the Registered Direct 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 Registered Direct Offering. 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 investors in the Registered Direct Offering at an exercise price of $0.40 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 is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.