CytoDyn Inc 10-Q for FY2023 Q2

CytoDyn Inc. (CYDY)

10-Q 2023-01-09 For: 2022-11-30

Added on April 12, 2026

About this 10-Q

CytoDyn Inc filed this 10-Q on January 9, 2023, covering the quarter ended November 30, 2022 (FY2023 Q2).

Headline figures

Quarter ended November 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $26.5M; compared with a net loss of $40.08M a year earlier
Diluted EPS: -$0.03; compared with -$0.06 a year earlier


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


		PAGE
PART I Financial Information	3
	ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS	3
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
	ITEM 4. CONTROLS AND PROCEDURES	40
PART II Other Information	42
	ITEM 1. LEGAL PROCEEDINGS	42
	ITEM 1A. RISK FACTORS	42
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	43
	ITEM 6. EXHIBITS	45

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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	☐


		November 30, 2022		May 31, 2022
Assets
Current assets:
Cash	$	2,403	$	4,231
Restricted cash		200		—
Prepaid expenses		2,854		5,198
Prepaid service fees		1,094		1,086
Total current assets		6,551		10,515
Inventories, net		—		17,929
Other non-current assets		523		741
Total assets	$	7,074	$	29,185
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	67,187	$	67,974
Accrued liabilities and compensation		5,722		8,995
Accrued interest on convertible notes		8,279		5,974
Accrued dividends on convertible preferred stock		4,571		3,977
Convertible notes payable, net		36,931		36,241
Total current liabilities		122,690		123,161
Operating leases		353		422
Total liabilities		123,043		123,583
Commitments and Contingencies (Note 9)
Stockholders’ deficit:
Preferred stock, $0.001 par value; 5,000 shares authorized:
Series B convertible preferred stock, $0.001 par value; 400 authorized; 19 issued and outstanding at November 30, 2022 and May 31, 2022, respectively		—		—
Series C convertible preferred stock, $0.001 par value; 8 authorized; 6 and 7 issued and outstanding at November 30, 2022 and May 31, 2022, respectively		—		—
Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at November 30, 2022 and May 31, 2022, respectively		—		—
Common stock, $0.001 par value; 1,350,000 shares authorized; 825,279 and 720,028 issued, and 824,836 and 719,585 outstanding at November 30, 2022 and May 31, 2022, respectively		825		720
Treasury stock, $0.001 par value; 443 at November 30, 2022 and May 31, 2022		—		—
Additional paid-in capital		692,558		671,013
Accumulated deficit		(809,352)		(766,131)
Total stockholders’ deficit		(115,969)		(94,398)
Total liabilities and stockholders' deficit	$	7,074	$	29,185


	Three months ended November 30,				Six months ended November 30,
	2022		2021		2022		2021
				(Restated) ⁽¹⁾				(Restated) ⁽¹⁾
Revenue	$	—	$	225	$	—	$	266
Cost of goods sold		—		52		—		53
Gross profit		—		173		—		213
Operating expenses:
General and administrative		5,043		16,203		11,376		23,820
Research and development		137		7,447		713		19,467
Amortization and depreciation		54		252		153		528
Inventory charge		17,929		1,593		20,633		3,357
Total operating expenses		23,163		25,495		32,875		47,172
Operating loss		(23,163)		(25,322)		(32,875)		(46,959)
Interest and other expenses:
Interest on convertible notes		(1,159)		(1,426)		(2,305)		(3,112)
Amortization of discount on convertible notes		(580)		(793)		(1,156)		(1,745)
Amortization of debt issuance costs		(18)		(23)		(34)		(51)
Loss on induced conversion		(638)		(6,785)		(638)		(25,315)
Finance charges		(937)		(1,024)		(1,877)		(1,059)
Inducement interest expense		—		(4,704)		—		(5,232)
Legal settlement		—		—		—		(1,941)
Loss on derivatives		—		—		(8,601)		—
Total interest and other expenses		(3,332)		(14,755)		(14,611)		(38,455)
Loss before income taxes		(26,495)		(40,077)		(47,486)		(85,414)
Income tax benefit		—		—		—		—
Net loss	$	(26,495)	$	(40,077)	$	(47,486)	$	(85,414)
Basic and diluted:
Weighted average common shares outstanding		813,373		662,600	$	800,545		647,517
Loss per share	$	(0.03)	$	(0.06)		(0.07)	$	(0.13)


	Preferred stock			Common stock			Treasury stock			Additional		Accumulated		Total stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		paid-in capital		deficit		deficit
Balance at May 31, 2022	35	$	—	720,028	$	720	443	$	—	$	671,013	$	(766,131)	$	(94,398)
Stock issued for compensation	—		—	879		1	—		—		344		—		345
Stock issued for private offerings	—		—	85,378		85	—		—		17,459		—		17,544
Issuance costs related to stock issued for private offerings	—		—	—		—	—		—		(6,289)		—		(6,289)
Conversion of Series C convertible preferred stock to common stock	(1)		—	1,136		1	—		—		(1)		—		—
Warrant exercises	—		—	657		1	—		—		263		—		264
Deemed dividend paid in common stock due to down round provision, recorded in additional paid-in capital	—		—	4,620		5	—		—		(5)		—		—
Dividends accrued on Series C and D convertible preferred stock	—		—	—		—	—		—		(384)		—		(384)
Reclassification of warrants from liability to equity classified	—		—	—		—	—		—		8,601		—		8,601
Stock-based compensation	—		—	—		—	—		—		996		—		996
Reclassification of prior period preferred stock dividends	—		—	—		—	—		—		(4,265)		4,265		—
Net loss	—		—	—		—	—		—		—		(20,991)		(20,991)
Balance at August 31, 2022	34		—	812,698		813	443		—		687,732		(782,857)		(94,312)
Issuance of stock for convertible note repayment	—		—	1,822		2	—		—		498		—		500
Loss on induced conversion	—		—	—		—	—		—		638		—		638
Stock issued for compensation	—		—	765		—	—		—		310		—		310
Exercise of warrants, net of offering costs	—		—	9,652		10	—		—		2,123		—		2,133
Make-whole shares related to private warrant exchange	—		—	23		—	—		—		—		—		—
Dividend paid in common stock upon conversion of Series C convertible preferred stock ($0.50 per share)	—		—	319		—	—		—		159		—		159
Dividends accrued on Series C and D convertible preferred stock	—		—	—		—	—		—		(369)		—		(369)
Stock-based compensation	—		—	—		—	—		—		1,467		—		1,467
Net loss	—		—	—		—	—		—		—		(26,495)		(26,495)
Balance at November 30, 2022	34	$	—	825,279	$	825	443	$	—	$	692,558	$	(809,352)	$	(115,969)


	November 30, 2022		May 31, 2022
Raw materials	$	—	$	16,264
Work-in-progress		—		1,665
Total inventories, net	$	—	$	17,929


			Raw Materials								Work-in-progress
(in thousands, Expiration period ending November 30,)	Remaining shelf-life (mos)		Specialized		Resins		Other		Total Raw Materials	Bulk drug product		Finished drug product		Total inventories
2023	0 to 12	$	4,764	$	16,264	$	-	$	21,028	$	-	$	-	$	21,028
2024	13 to 24		2,511		-		1,590		4,101		1,661		29,142		34,904
2025	25 to 36		189		-		-		189		-		32,343		32,532
2026	37 to 48		2,115		-		-		2,115		-		-		2,115
Thereafter	49 or more		-		-		-		-		-		-		-
Inventories, gross			9,579		16,264		1,590		27,433		1,661		61,485		90,579
Inventory charge			(9,579)		(16,264)		(1,590)		(27,433)		(1,661)		(61,485)		(90,579)
Inventories, net		$	-	$	-	$	-	$	-	$	-	$	-	$	-


		November 30, 2022		May 31, 2022
Compensation and related expense	$	496	$	1,522
Legal fees and settlement		166		2,006
Clinical expense		1,176		3,727
Accrued inventory charges and expenses		3,155		1,392
License fees		393		150
Lease payable		136		134
Other liabilities		200		64
Total accrued liabilities	$	5,722	$	8,995


	November 30, 2022						May 31, 2022
(in thousands)	Series B		Series C		Series D		Series B		Series C		Series D
Shares of preferred stock		19		6		9		19		7		9
Total shares of common stock if converted		190		12,670		10,565		190		13,806		10,565
Undeclared dividends	$	12	$	-	$	-	$	10	$	-	$	-
Accrued dividends	$	-	$	2,184	$	2,387	$	-	$	2,014	$	1,963
Total shares of common stock if dividends converted		25		4,368		4,774		20		4,028		3,926


(in thousands)	April 2, 2021 Note		April 23, 2021 Note		Total
Outstanding balance at May 31, 2022	$	11,906	$	30,309	$	42,215
Amortization of issuance discount and costs		314		876		1,190
Interest expense		643		1,662		2,305
Fair market value of shares exchanged for repayment		(638)		-		(638)
Difference between market value of common shares and reduction of principal		138		-		138
Outstanding balance at November 30, 2022	$	12,363	$	32,847	$	45,210

(in thousands)		Liability Classified Warrants
Balance at May 31, 2022	$	—
Classified as liability due to lack of shares availability at issuance		14,522
Classified as equity upon increase in availability		(23,123)
Loss on derivative due to change in fair market value		8,601
Balance at August 31, 2022	$	—



	Initial Fair Market Value At Issuance			Fair Market Value at August 31, 2022
	Backstop	Backstop	Placement	Backstop	Backstop	Placement
	Warrant #1	Warrant #2	Agent Warrants	Warrant #1	Warrant #2	Agent Warrants
Fair value of underlying stock	$ 0.44	$ 0.42	$ 0.44	$ 0.52	$ 0.52	$ 0.52
Risk free rate	3.17%	3.06%	3.13%	3.34%	3.31%	3.16%
Expected term (in years)	4.65	5.00	10.00	4.46	4.88	9.82
Stock price volatility	110.20%	109.49%	95.99%	117.29%	113.59%	95.87%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%


				Weighted
				average
		Weighted		remaining	Aggregate
	Number of	average		contractual	intrinsic
(in thousands, except per share data)	shares	exercise price		life in years	value
Options and warrants outstanding at May 31, 2022	90,705	$	0.77	4.06	$	352
Granted	116,439	$	0.29
Exercised	(2,097)	$	0.79
Forfeited, expired, and cancelled	(2,147)	$	1.49
Options and warrants outstanding at November 30, 2022	202,900	$	0.48	4.80	$	9,616
Options and warrants outstanding and exercisable at November 30, 2022	189,085	$	0.47	4.48	$	9,540


	Number of	Weighted-average
(in thousands, except per share data)	RSUs and PSUs (1)	grant date fair value
Unvested RSUs and PSUs at May 31, 2022	300	$	3.12
RSUs and PSUs granted	1,293		0.58
Unvested RSUs and PSUSs forfeited	(67)		3.12
RSUs and PSUs vested	(150)		3.12
Unvested RSUs and PSUs at November 30, 2022	1,376	$	0.73


	Three months ended November 30,				Six months ended November 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
				(Restated) ⁽¹⁾				(Restated) ⁽¹⁾
Net loss	$	(26,495)	$	(40,077)	$	(47,486)	$	(85,414)
Less: Deemed dividends		(1,140)		—		(5,294)		—
Less: Accrued preferred stock dividends		(370)		(417)		(756)		(842)
Net loss applicable to common stockholders	$	(28,005)	$	(40,494)	$	(53,536)	$	(86,256)
Basic and diluted:
Weighted average common shares outstanding		813,373		662,600		800,545		647,517
Loss per share	$	(0.03)	$	(0.06)	$	(0.07)	$	(0.13)


Fiscal Year	Amount
2023 (6 months remaining)	$	89
2024		182
2025		185
2026		169
Total operating lease payments		625
Less: imputed interest		(136)
Present value of operating lease liabilities	$	489


	Three months ended November 30,				Change				Six months ended November 30,				Change
(in thousands)	2022		2021		$		%		2022		2021		$		%
Salaries, benefits, and other compensation	$	979	$	1,850	$	(871)	(47)	%	$	2,257	$	2,235	$	22	1	%
Stock-based compensation		1,777		2,060		(283)	(14)			3,118		4,657		(1,539)	(33)
Legal fees		1,044		9,206		(8,162)	(89)			2,497		11,557		(9,060)	(78)
Other		1,243		3,087		(1,844)	(60)			3,504		5,371		(1,867)	(35)
Total general and administrative	$	5,043	$	16,203	$	(11,160)	(69)	%	$	11,376	$	23,820	$	(12,444)	(52)	%


	Three months ended November 30,				Change				Six months ended November 30,				Change
(in thousands)	2022		2021		$		%		2022		2021		$		%
Clinical	$	(865)	$	5,783	$	(6,648)	(115)	%	$	(845)	$	14,846	$	(15,691)	(106)	%
Non-clinical		26		326		(300)	(92)			26		490		(464)	(95)
CMC		811		1,103		(292)	(26)			1,134		3,662		(2,528)	(69)
License and patent fees		165		235		(70)	(30)			398		469		(71)	(15)
Total research and development	$	137	$	7,447	$	(7,310)	(98)	%	$	713	$	19,467	$	(18,754)	(96)	%


	Six months ended November 30,				Change
(in thousands)	2022		2021		$
Net cash (used in) provided by:
Net cash used in operating activities	$	(15,480)	$	(60,632)	$	45,152
Net cash used in investing activities	$	—	$	(13)	$	13
Net cash provided by financing activities	$	13,852	$	35,577	$	(21,725)


	Three and six months ended November 30,
(in thousands)	2022	2021
Stock options, warrants, and unvested restricted stock units	204,273	73,223
Convertible notes	12,000	12,000
Convertible preferred stock	32,591	34,089


	November 30, 2022
Weighted average remaining lease term	3.4	years
Weighted average discount rate	10.0	%


	As of
(in millions)	November 30, 2022
Issuable upon:
Warrants exercise	175.0
Convertible preferred stock and undeclared dividends conversion	32.6
Outstanding stock options exercise or vesting of outstanding RSUs	29.2
Reserved for issuance pursuant to future stock-based awards under equity incentive plan	14.2
Reserved and issuable upon conversion of outstanding convertible notes	12.0
Total shares reserved for future uses	263.0
Common stock outstanding	824.8


			Incorporated by Reference
Exhibit No	Description	Filed Herewith	Form	Exhibit No.	Filing Date
10.1	Second Amendment to the Surety Backstop Agreement		8-K	10.1	12/7/2022

10.2	Form Stock Option Award Agreement (For Non-Employee Directors)	X

10.3	Form Stock Option Award Agreement (For Executives)	X

10.4	Amended and Restated 2012 Equity Incentive Plan	X

31.1	Rule 13a-14(a) Certification by PEO of Registrant.	X

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

32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.*	X

101.INS	Inline XBRL Instance Document.	X

101.SCH	Inline XBRL Taxonomy Extension Schema Document.	X

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

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

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

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

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


	CYTODYN INC.
	(Registrant)

Dated: January 9, 2023		/s/ Cyrus Arman
		Cyrus Arman
		President
		(Principal Executive Officer)



Dated: January 9, 2023			/s/ Antonio Migliarese
			Antonio Migliarese
			Chief Financial Officer
			(Principal Financial and Accounting Officer)


		Page
	TABLE OF CONTENTS
ARTICLE 1	ESTABLISHMENT AND PURPOSE	1
1.1	Establishment	1
1.2	Purpose	1
ARTICLE 2	DEFINITIONS	1
2.1	Defined Terms	1
2.2	Gender and Number	4
ARTICLE 3	ADMINISTRATION	5
3.1	Administration by Board	5
3.2	Delegation to Committee	5
3.3	Authority of the Committee	5
3.4	Action by the Committee	5
3.5	Further Delegation	6
ARTICLE 4	DURATION; SHARES SUBJECT TO THE PLAN; ELIGIBILITY	6
4.1	Duration of the Plan	6
4.2	Prior Plans	6
4.3	Shares Subject to the Plan	6
4.4	Reversion of Shares to the Plan	6
4.5	Incentive Stock Option Limit	6
4.6	Limitation on Compensation of Non-Employee Directors	7
4.7	Reservation of Shares	7
4.8	Eligibility	7
ARTICLE 5	AWARDS	7
5.1	Types of Awards	7
5.2	General	7
5.3	Nonuniform Determinations	7
5.4	Award Agreements	8
5.5	Provisions Governing All Awards	8
ARTICLE 6	OPTIONS	11
6.1	Types of Options	11
6.2	General	11
6.3	Option Price	11

		Page
6.4	Option Term	11
6.5	Time of Exercise	12
6.6	Special Rules for Incentive Stock Options	12
6.7	Restricted Shares	12
ARTICLE 7	STOCK APPRECIATION RIGHTS	12
7.1	General	12
7.2	Nature of Stock Appreciation Right	12
7.3	Exercise	13
7.4	Form of Payment	13
ARTICLE 8	RESTRICTED AWARDS	13
8.1	Types of Restricted Awards	13
8.2	General	13
8.3	Restriction Period	13
8.4	Forfeiture	14
8.5	Settlement of Restricted Awards	14
8.6	Rights as a Stockholder	14
ARTICLE 9	OTHER STOCK-BASED AND COMBINATION AWARDS	14
9.1	Other Stock-Based Awards	14
9.2	Combination Awards	15
ARTICLE 10	DIVIDEND EQUIVALENTS	15
ARTICLE 11	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.	15
11.1	Plan Does Not Restrict the Corporation	15
11.2	Mandatory Adjustment	15
11.3	Adjustments by the Committee	16
ARTICLE 12	AMENDMENT AND TERMINATION	16
ARTICLE 13	MISCELLANEOUS	16
13.1	Tax Withholding	16
13.2	Unfunded Plan	16
13.3	Fractional Shares	16
13.4	Annulment of Awards	16
13.5	Engaging in Competition With the Corporation	17

		Page
13.6	Other Corporation Benefit and Compensation Programs	17
13.7	Securities Law Restrictions	17
13.8	Continuing Restriction Agreement	17
13.9	Governing Law	18
13.10	Section 409A	18


Date: January 9, 2023		/s/ Cyrus Arman
		Cyrus Arman, Ph.D.
		President