The following table summarizes the fair value of the convertible note redemption provision derivative
liability related to notes which fully converted during January 2020 as of inception dates November 15, 2018 and January 30, 2019 and the fair value as of May 31, 2019:
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Derivative Liability
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Net Proceeds
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Inception date
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May 31, 2019
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Inception date June 2018 Note, November 15, 2018
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$
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5,000,000
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$
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1,284,988
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$
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847,103
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Inception date January 2019 Note, January 30, 2019
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5,000,000
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1,465,008
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1,158,034
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$
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2,005,137
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The Company recognized approximately $2,005,000 and $352,000 of non-cash gain, due to
the changes in the fair value of the liability associated with such classified redemption provision for the nine months ended February 29, 2020 and February 28, 2019, respectively.
Note 7 Stock Options and Warrants
The Company had
one active stock-based equity plan as of February 29, 2020, the CytoDyn Inc. 2012 Equity Incentive Plan, as amended (the 2012 Plan), and one stock-based equity plan that is no longer active, but under which certain prior awards
remain outstanding, the CytoDyn Inc. 2004 Stock Incentive Plan (the 2004 Plan and, together with the 2012 Plan, the Incentive Plans). The 2012 Plan was approved by stockholders at the Companys 2012 annual meeting to
replace the 2004 Plan. The 2012 Plan was amended by stockholder approval in February 2015 to increase the number of shares available for issuance from 3,000,000 to 5,000,000 shares of common stock and in March 2016 to increase the number of shares
available for issuance from 5,000,000 to 7,000,000 shares of common stock. At the annual meeting of stockholders held on August 24, 2017, the stockholders approved an amendment to the 2012 Plan to increase the number of shares available for
issuance from 7,000,000 to 15,000,000 shares of common stock. At a special meeting of stockholders held on May 22, 2019, the stockholders approved an amendment to the 2012 Plan to increase the number of shares available for issuance from
15,000,000 to 25,000,000 shares of common stock. As of February 29, 2020, the Company had 1,578,883 shares available for future stock-based grants under the 2012 Plan, as amended. The Company also sometimes makes awards
of stock-based grants outside of the Incentive Plans.
Stock Options
From June 1, 2019 to November 30, 2019, the Company granted stock option awards to employees and directors to purchase a total of 1,975,000 shares of
common stock under the 2012 Plan, with exercise prices of the stock option awards ranges between $0.385 and $0.52 per share. 1,000,000 stock options vest immediately and the remaining awards vest quarterly over one year and have a ten-year contractual term. The grant date fair value related to these stock options was $413,774.
From
June 1, 2019 to November 30, 2019, the Company granted stock options, covering an aggregate of 1,787,500 shares of common stock to executive management, employees and consultants, of which 1,387,500 were granted under the 2012 Plan and
400,000 were granted outside of the 2012 Plan. Exercise prices range between $0.30 and $0.52 per share, except for one award of 50,000 shares which has an exercise price of $0.90 and represented a supplemental award related to a previous rescission,
and which vested immediately. The awards granted to the consultants totaled 400,000 stock options, 200,000 of which vested immediately, 100,000 of which vested on December 12, 2019 and 100,000 of which will vest on April 7, 2020. Stock
option awards covering an additional 1,112,500 shares granted to executive management and employees vest in 12 equal monthly installments and have a ten-year term. The remaining stock option awards granted to
executive management and employees vest annually over three years, with a ten-year contractual term. The grant date fair value related to these stock options was $331,317.
On December 19, 2019, the Company issued stock options covering 7,300,000 shares of its common stock to directors, executives, and a consultant, of which
7,100,000 were granted under the 2012 Plan and 200,000 were granted outside of the 2012 Plan. The stock option awards have a per share exercise price of $0.63. Stock options covering 6,050,000 shares vested immediately upon issuance and 1,250,000
shares will vest upon filing of the BLA associated with HIV-combination therapy. In addition, the president and chief executive officer received a warrant awarded outside of the 2012 Plan covering 2,000,000
shares with an exercise price of $0.63 per share, which vests upon the Companys filing of the BLA. The grant date fair value related to these stock options was approximately $2.7 million and each has a
ten-year contractual term.
From January 6, 2020 through January 18, 2020, the Company granted stock
option awards covering a new director, a new executive and new employees of the Company totaling 296,986 shares of common stock under the 2012 Plan, with exercise prices ranging between $0.85 to $1.05 per share. The awards have a ten-year contractual term of which 250,000 options vest ratably over three years, 11,986 options vest on March 1, 2020, and 25,000 options vest on June 1, 2020. The grant date fair value related to these
stock options was $174,527.
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