CytoDyn Inc 10-Q for FY2021 Q3

CytoDyn Inc. (CYDY)

10-Q 2021-04-14 For: 2021-02-28

Added on April 12, 2026

About this 10-Q

CytoDyn Inc filed this 10-Q on April 14, 2021, covering the quarter ended February 28, 2021 (FY2021 Q3).

Headline figures

Quarter ended February 28, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $43.99M; compared with a net loss of $35.77M a year earlier


Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
None.		None.		None.


		PAGE
PART I	3
	ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS	3
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49
	ITEM 4. CONTROLS AND PROCEDURES	50
PART II	51
	ITEM 1. LEGAL PROCEEDINGS	51
	ITEM 1A. RISK FACTORS	51
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	53
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	53
	ITEM 4. MINE SAFETY DISCLOSURES	54
	ITEM 5. OTHER INFORMATION	54
	ITEM 6. EXHIBITS	55

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Delaware	83-1887078
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer or Identification No.)

1111 Main Street, Suite 660 Vancouver, Washington	98660
(Address of principal executive offices)	(Zip Code)


Large Accelerated Filer	☐	Accelerated Filer	☐

Non-accelerated Filer	☒	Smaller Reporting Company	☒

		Emerging Growth Company	☐


	February 28, 2021		May 31, 2020
	(unaudited)		(audited)
Assets
Current assets:
Cash	$	14,291	$	14,282
Restricted cash		—		10
Inventories		93,537		19,147
Prepaid expenses		1,208		498
Prepaid service fees		1,819		2,890
Total current assets		110,855		36,827
Operating leases right-of-use asset		760		176
Property and equipment, net		124		55
Intangibles, net		1,915		13,456
Total assets	$	113,654	$	50,514
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	72,509	$	29,479
Accrued liabilities and compensation		13,575		6,879
Accrued interest on convertible notes		2,391		292
Accrued dividends on convertible preferred stock		2,227		981
Operating leases payable		183		115
Convertible notes payable, net		37,976		6,745
Warrant exercise proceeds held in trust		—		10
Total current liabilities		128,861		44,501
Long-term liabilities:
Convertible notes payable, net		—		8,431
Operating leases liability		588		63
Total long-term liabilities		588		8,494
Total liabilities		129,449		52,995
Commitments and Contingencies (Note 10)
Stockholders’ (Deficit) Equity
Preferred Stock, $0.001 par value; 5,000 shares authorized
Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at February 28, 2021 and May 31, 2020, respectively		—		—
Series C convertible preferred stock, $0.001 par value; 8 authorized; 8 issued and outstanding at February 28, 2021 and May 31, 2020, respectively		—		—
Series B convertible preferred stock, $0.001 par value; 400 shares authorized, 79 and 92 shares issued and outstanding at February 28, 2021 and May 31, 2020, respectively		—		—
Common stock, $0.001 par value; 800,000 shares authorized, 609,420 and 519,261 issued and 608,978 and 518,975 outstanding at February 28, 2021 and May 31, 2020, respectively		609		519
Additional paid-in capital		449,579		351,711
Accumulated (deficit)		(465,983)		(354,711)
Less: Treasury stock, $0.001 par value (442 and 286 shares at February 28, 2021 and May 31, 2020, respectively)		—		—
Total stockholders’ (deficit) equity		(15,795)		(2,481)
Total liabilities and stockholders' (deficit) equity	$	113,654	$	50,514


	Three Months Ended				Nine Months Ended
	February 28,		February 29,		February 28,		February 29,
	2021		2020		2021		2020
Operating expenses:
General and administrative	$	7,902	$	6,465	$	25,328	$	12,605
Research and development		12,323		15,109		44,061		32,691
Amortization and depreciation		511		501		1,522		1,532
Intangible asset impairment charge		10,049		—		10,049		—
Total operating expenses		30,785		22,075		80,960		46,828
Operating loss		(30,785)		(22,075)		(80,960)		(46,828)
Other income		—		500		—		500
Interest income		1		3		2		5
Change in fair value of derivative liabilities		—		(2,934)		—		(2,105)
Loss on extinguishment of convertible notes		(7,625)		—		(11,794)		—
Interest expense:
Finance charges		(2)		(61)		(140)		(1,619)
Amortization of discount on convertible notes		(157)		—		(2,739)		(1,470)
Amortization of debt issuance costs		(21)		—		(40)		(404)
Inducement interest expense		(4,139)		(5,163)		(11,242)		(7,876)
Interest on convertible notes payable		(1,257)		(6,038)		(2,870)		(6,995)
Total interest expense		(5,576)		(11,262)		(17,031)		(18,364)
Loss before income taxes		(43,985)		(35,768)		(109,783)		(66,792)
Income tax benefit		—		—		—		—
Net loss	$	(43,985)	$	(35,768)	$	(109,783)	$	(66,792)
Basic and diluted loss per share	$	(0.08)	$	(0.08)	$	(0.18)	$	(0.17)
Basic and diluted weighted average common shares outstanding		577,854		432,112		595,226		396,641


	Preferred Stock			Common Stock			Treasury Stock			Additional		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Paid-In Capital		Deficit		Total
Balance May 31, 2019	95	$	—	329,554	$	330	159	$	—	$	220,120	$	(229,364)	$	(8,914)
First Quarter Fiscal Year Ended May 31, 2020
Issuance of stock for convertible note repayment	—		—	3,014		3	—		—		1,002		—		1,005
Proceeds from registered direct offering ($0.50 per share)	—		—	5,640		6	—		—		2,250		—		2,256
Offering costs related to registered direct offering	—		—	—		—	—		—		(260)		—		(260)
Proceeds from public warrant tender offers	—		—	45,376		45	—		—		11,855		—		11,900
Offering costs related to public warrant tender offers	—		—	—		—	—		—		(1,058)		—		(1,058)
Inducement interest expense - tender offers and debt conversions	—		—	—		—	—		—		2,430		—		2,430
Proceeds from Series C preferred stock offering	2		—	—		—	—		—		1,754		—		1,754
Offering costs related to Series C preferred stock offering	—		—	—		—	—		—		(198)		—		(198)
Dividends on Series C preferred stock	—		—	—		—	—		—		—		(110)		(110)
Legal fees in connection with equity offerings	—		—	—		—	—		—		(16)		—		(16)
Stock-based compensation	—		—	—		—	—		—		581		—		581
Net Loss August 31, 2019	—		—	—		—	—		—		—		(16,164)		(16,164)
Balance August 31, 2019	97	$	—	383,584	$	384	159	$	—	$	238,460	$	(245,638)	$	(6,794)
Second Quarter Fiscal Year Ended May 31, 2020
Issuance of stock for convertible note repayment	—		—	2,270		2	—		—		738		—		740
Note conversion and extension fees	—		—	—		—	—		—		(217)		—		(217)
Proceeds from registered direct offering ($0.50 per share)	—		—	13,461		13	—		—		4,396		—		4,409
Offering costs related to registered direct offering	—		—	—		—	—		—		(74)		—		(74)
Inducement interest expense - debt conversion	—		—	—		—	—		—		283		—		283
Proceeds from Series C preferred stock offering	3		—	—		—	—		—		2,788		—		2,788
Offering costs related to Series C preferred stock offering	—		—	—		—	—		—		(182)		—		(182)
Exercise of option to repurchase common stock	—		—	—		—	—		—		(8)		—		(8)
Dividends on Series C preferred stock	—		—	—		—	—		—		—		(151)		(151)
Stock-based compensation	—		—	—		—	—		—		434		—		434
Net Loss November 30, 2019	—		—	—		—	—		—		—		(14,860)		(14,860)
Balance November 30, 2019	100	$	—	399,315	$	399	159	$	—	$	246,618	$	(260,649)	$	(13,632)
Third Quarter Fiscal Year Ended May 31, 2020
Issuance of stock for convertible note repayment	—		—	17,683		18	—		—		9,059		—		9,077
Proceeds from registered direct offering ($0.50 per share)	—		—	19,756		20	—		—		5,981		—		6,001
Offering costs related to registered direct offering	—		—	—		—	—		—		(44)		—		(44)
Proceeds from warrant exercises	—		—	10,716		11	—		—		5,417		—		5,428
Relative fair market value associated with warrants exercised	—		—	—		—	—		—		2,404		—		2,404
Proceeds from private warrant exchange	—		—	20,441		20	—		—		5,965		—		5,985
Offering costs related to private warrant exchange	—		—	—		—	—		—		(197)		—		(197)
Inducement interest expense - private warrant exchange	—		—	—		—	—		—		5,163		—		5,163
Proceeds from Series C preferred stock offering	—		—	—		—	—		—		415		—		415
Offering costs related to Series C preferred stock offering	—		—	—		—	—		—		(53)		—		(53)
Dividends on Series C preferred stock	—		—	—		—	—		—		—		(204)		(204)
Proceeds from Series D Preferred offering	8		—	—		—	—		—		7,570		—		7,570
Offering costs related to Series D Preferred offering	—		—	—		—	—		—		(5)		—		(5)
Dividends on Series D Preferred shares	—		—	—		—	—		—		—		(62)		(62)
Stock issued for services	—		—	2,620		3	—		—		(3)		—		—
Stock issued for bonuses and tendered for income tax	—		—	380		—	127		—		154		—		154
Exercise of stock options	—		—	181		—	—		—		54		—		54
Stock-based compensation	—		—	—		—	—		—		3,331		—		3,331
Net Loss February 29, 2020	—		—	—		—	—		—		—		(35,768)		(35,768)
Balance February 29, 2020	108	$	—	471,092	$	471	286	$	—	$	291,829	$	(296,683)	$	(4,383)


Investor warrants issued with registered direct equity offering	$	4,360
Placement agent warrants issued with registered direct equity offering		819
Fair value adjustments		(3,855)
Balance at May 31, 2018		1,324
Inception date value of redemption provisions		2,750
Fair value adjustments—convertible notes		(745)
Fair value adjustments—warrants		(922)
Balance at May 31, 2019		2,407
Fair value adjustments—convertible notes		(2,005)
Fair value adjustments—warrants		11,547
Exercise of derivative warrants		(11,949)
Balance at May 31, 2020	$	—


	Three and Nine Months Ended
	February 28,	February 29,
	2021	2020
Stock options, warrants & unvested restricted stock	68,857	173,186
Convertible notes payable	12,000	8,108
Convertible preferred stock	32,159	28,387


	February 28, 2021		May 31, 2020
Raw materials	$	29,004	$	19,147
Work-in-progress		64,533		—
Total	$	93,537	$	19,147


	January 30, 2019
Fair value of redemption provision	$	1,465
Relative fair value of equity classified warrants		858
Beneficial conversion feature		2,677
Net proceeds of January 2019 Note	$	5,000


	Shares Indexed	Derivative Liability
Inception to date September 15, 2016	7,733	$	5,179
Change in fair value of derivative liability	—		(4,777)
Balance May 31, 2019	7,733		402
Change in fair value of derivative liability	—		11,547
Fair value of warrants exercised	7,733		(11,949)
Balance May 31, 2020	—		—
Change in fair value of derivative liability	—		—
Balance February 28, 2021	—	$	—


	September 15,			May 31,			February 29,
	2016			2019			2020
Fair value of underlying stock	$	0.78		$	0.39		$	1.05
Risk free rate		1.20	%		1.94	%		0.93	%
Expected term (in years)		5			2.29			1.55
Stock price volatility		106	%		61	%		87	%
Expected dividend yield		—			—			—
Probability of fundamental transaction		50	%		50	%		50	%
Probability of holder requesting cash payment		50	%		50	%		50	%


							May 31, 2019
	November 15,			January 30,			June 2018			January 2019
	2018			2019			Note			Note
Fair value of underlying stock	$	0.57		$	0.49		$	0.39		$	0.39
Risk free rate		2.78	%		2.52	%		2.21	%		1.95	%
Expected term (in years)		1.61			2			1.07			1.67
Stock price volatility		58.8	%		61	%		62.2	%		62.2	%
Expected dividend yield		—			—			—			—
Discount factor		85	%		85	%		85	%		85	%


			Derivative Liability
	Net Proceeds		Inception date		May 31, 2019
Inception date June 2018 Note, November 15, 2018	$	5,000	$	1,285	$	847
Inception date January 2019 Note, January 30, 2019		5,000		1,465		1,158
					$	2,005


				Weighted
				Average
		Weighted		Remaining	Aggregate
	Number of	Average		Contractual	Intrinsic
	Shares	Exercise Price		Life in Years	Value
Options and warrants outstanding—May 31, 2020	131,361	$	0.65	5.79	$	302,961
Granted	5,836	$	3.72	—		—
Exercised	(73,358)	$	0.58	—		—
Forfeited/expired/cancelled	(648)	$	1.10	—		—
Options and warrants outstanding—February 28, 2021	63,191	$	0.92	4.49	$	227,079
Outstanding exercisable - February 28, 2021	57,042	$	0.75	4.10	$	216,042


	ProstaGene, LLC
CytoDyn Inc. equity	$	11,558
Acquisition expenses		741
Release of deferred tax asset		2,827
Total cost of acquisition	$	15,126
Intangible assets	$	15,126
Other		—
Allocation of acquisition costs	$	15,126


	February 28, 2021		May 31, 2020
Leronlimab (PRO 140) patent	$	3,500	$	3,500
ProstaGene, LLC intangible asset acquisition, net of impairment		2,926		15,126
Website development costs		20		20
Gross carrying value		6,446		18,646
Accumulated amortization, net of impairment		(4,531)		(5,190)
Total amortizable intangible assets, net		1,915		13,456
Patents currently not amortized		—		—
Carrying value of intangibles, net	$	1,915	$	13,456


Fiscal Year	Amount
2021 (3 months remaining)	$	262
2022		720
2023		217
2024		85
2025		85
Thereafter		546
Total	$	1,915


Fiscal Year	Amount
2021 (3 months remaining)	$	9,062
2022		7,288
2023		137,112
2024		51,211
2025		—
Thereafter		—
Total	$	204,673


	Nine Months Ended
	February 28,		February 29,		Change
(in thousands)	2021		2020		$
Net cash (used in) provided by:
Net cash used in operating activities	$	(84,767)	$	(39,492)	$	(45,275)
Net cash used in investing activities	$	(100)	$	(38)	$	(62)
Net cash provided by financing activities	$	84,866	$	43,121	$	41,745


4.1		Secured Convertible Promissory Note dated April 2, 2021 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed April 8, 2021).

10.1		Securities Purchase Agreement between CytoDyn Inc. and Streeterville Capital, LLC, dated April 2, 2021 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 8, 2021).

10.2		Security Agreement between CytoDyn Inc. and Streeterville Capital, LLC dated April 2, 2021 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 8, 2021).

10.3		Form of Warrant Exercise Inducement Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 29, 2021).

10.4+**		Employment Agreement by and between CytoDyn Inc. and Christopher P. Recknor, M.D., dated March 11, 2021.

31.1**		Rule 13a-14(a) Certification by CEO of Registrant.

31.2**		Rule 13a-14(a) Certification by CFO of the Registrant.

32.1**		Certification of CEO of the Registrant pursuant to 18 U.S.C. Section 1350.

32.2**		Certification of CFO of the Registrant pursuant to 18 U.S.C. Section 1350.

101.INS **		Inline XBRL Instance Document.

101.SCH **		Inline XBRL Taxonomy Extension Schema Document.

101.CAL **		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF **		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB **		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE **		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104**		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


	CYTODYN INC.
	(Registrant)

Dated: April 14, 2021		/s/ Nader Z. Pourhassan
		Nader Z. Pourhassan
		President and Chief Executive Officer
		(Principal Executive Officer)

Dated: April 14, 2021		/s/ Michael D. Mulholland
		Michael D. Mulholland
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)