CytoDyn Inc 10-Q for FY2022 Q3

CytoDyn Inc. (CYDY)

10-Q 2022-04-11 For: 2022-02-28

Added on April 12, 2026

About this 10-Q

CytoDyn Inc filed this 10-Q on April 11, 2022, covering the quarter ended February 28, 2022 (FY2022 Q3).

Headline figures

Quarter ended February 28, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $32.33M; compared with a net loss of $45.21M a year earlier
Diluted EPS: -$0.05; compared with -$0.08 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	30
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
	ITEM 4. CONTROLS AND PROCEDURES	42
PART II	44
	ITEM 1. LEGAL PROCEEDINGS	44
	ITEM 1A. RISK FACTORS	44
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	46
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	46
	ITEM 4. MINE SAFETY DISCLOSURES	46
	ITEM 5. OTHER INFORMATION	46
	ITEM 6. EXHIBITS	47

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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, 2022		May 31, 2021
				(Revised) ⁽¹⁾
Assets
Current assets:
Cash	$	1,363	$	33,943
Restricted cash		1,000		—
Inventories, net		82,668		93,479
Prepaid expenses		6,135		616
Prepaid service fees		1,183		1,543
Total current assets		92,349		129,581
Operating leases - right-of-use asset		570		712
Property and equipment, net		117		134
Intangibles, net		1,043		1,653
Total assets	$	94,079	$	132,080
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	62,393	$	65,897
Accrued liabilities and compensation		9,418		19,073
Accrued interest on convertible notes		4,857		2,007
Accrued dividends on convertible preferred stock		3,635		2,647
Operating leases		136		175
Convertible notes payable, net		35,647		62,747
Total current liabilities		116,086		152,546
Long-term liabilities - operating leases		453		552
Total liabilities		116,539		153,098
Commitments and Contingencies (Note 10)
Stockholders’ (deficit) equity:
Preferred Stock, $0.001 par value; 5,000 shares authorized:
Series B convertible preferred stock, $0.001 par value; 400 shares authorized; 19 and 79 shares issued and outstanding at February 28, 2022 and May 31, 2021, respectively		—		—
Series C convertible preferred stock, $0.001 par value; 8 authorized; 7 and 8 issued and outstanding at February 28, 2022 and May 31, 2021, respectively		—		—
Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at February 28, 2022 and May 31, 2021, respectively		—		—
Common stock, $0.001 par value; 1,000,000 shares authorized; 713,730 and 626,123 issued, and 713,287 and 625,680 outstanding at February 28, 2022 and May 31, 2021, respectively		713		626
Additional paid-in capital		612,905		512,796
Accumulated deficit		(636,078)		(534,440)
Treasury stock, $0.001 par value; 443 at February 28, 2022 and May 31, 2021		—		—
Total stockholders’ deficit		(22,460)		(21,018)
Total liabilities and stockholders' equity	$	94,079	$	132,080


	Three months ended February 28,				Nine months ended February 28,
	2022		2021		2022		2021
				(Revised) ⁽¹⁾				(Revised) ⁽¹⁾
Revenue:
Product revenue	$	—	$	—	$	266	$	—
Total revenue		—		—		266		—
Cost of goods sold:
Cost of goods sold		—		—		53		—
Total cost of goods sold		—		—		53		—
Gross margin		—		—		213		—
Operating expenses:
General and administrative		10,140		7,902		33,960		25,328
Research and development		9,128		12,323		31,952		44,061
Amortization and depreciation		129		511		657		1,522
Intangible asset impairment charge		—		10,049		—		10,049
Total operating expenses		19,397		30,785		66,569		80,960
Operating loss		(19,397)		(30,785)		(66,356)		(80,960)
Interest and other expense:
Interest on convertible notes		(1,187)		(1,257)		(4,299)		(2,870)
Amortization of discount on convertible notes		(637)		(157)		(2,382)		(2,739)
Amortization of debt issuance costs		(19)		(21)		(70)		(40)
Loss on extinguishment of convertible notes		(3,109)		(7,625)		(11,072)		(11,794)
Finance charges		(7,025)		(1)		(8,084)		(138)
Inducement interest expense		(954)		(5,360)		(6,186)		(12,922)
Legal settlement		—		—		(1,941)		—
Total interest and other expense		(12,931)		(14,421)		(34,034)		(30,503)
Loss before income taxes		(32,328)		(45,206)		(100,390)		(111,463)
Income tax benefit		—		—		—		—
Net loss	$	(32,328)	$	(45,206)	$	(100,390)	$	(111,463)

Basic and diluted loss per share	$	(0.05)	$	(0.08)	$	(0.15)	$	(0.19)
Basic and diluted weighted average common shares outstanding		695,614		577,854		663,373		595,226


	Preferred stock			Common stock			Treasury stock			Additional		Accumulated		Total stockholders'
	Shares	Amount		Shares	Amount		Shares	Amount		paid-in capital		deficit		(deficit) equity
											(Revised) ⁽¹⁾		(Revised) ⁽¹⁾		(Revised) ⁽¹⁾
Balance at May 31, 2021	96	$	—	626,123	$	626	443	$	—	$	512,796	$	(534,440)	$	(21,018)
For the three months ended August 31, 2021:
Issuance of stock for convertible note repayment	—		—	11,816		12	—		—		18,483		—		18,495
Issuance of legal settlement warrants	—		—	—		—	—		—		1,744		—		1,744
Exercise of stock options	—		—	300		—	—		—		189		—		189
Stock issued for incentive compensation and tendered for income tax	—		—	1,014		1	—		—		(1)		—		—
Stock issued for private offering ($1.00 per share)	—		—	2,872		3	—		—		2,869		—		2,872
Private warrant exchange	—		—	1,327		1	—		—		774		—		775
Exercise of warrants	—		—	668		1	—		—		502		—		503
Inducement interest expense related to private warrant exchange	—		—	—		—	—		—		528		—		528
Dividends accrued on Series C and D preferred stock	—		—	—		—	—		—		—		(420)		(420)
Stock-based compensation	—		—	—		—	—		—		2,597		—		2,597
Net loss	—		—	—		—	—		—		—		(31,458)		(31,458)
Balance at August 31, 2021	96		—	644,120		644	443		—		540,481		(566,318)		(25,193)
For the three months ended November 30, 2021:
Issuance of stock for convertible note repayment	—		—	8,162		8	—		—		11,505		—		11,513
Exercise of stock options	—		—	210		—	—		—		200		—		200
Private warrant exchange	—		—	6,593		7	—		—		4,608		—		4,615
Stock issued for private offering ($1.00 - $1.80 per share)	—		—	25,178		25	—		—		27,282		—		27,307
Issuance costs related to stock issued for private offering	—		—	—		—	—		—		(1,418)		—		(1,418)
Conversion of Series B convertible preferred stock to common stock	(60)		—	600		1	—		—		—		—		1
Exercise of warrants	—		—	963		1	—		—		532		—		533
Inducement interest expense related to private warrant exchange	—		—	—		—	—		—		4,704		—		4,704
Dividend declared and paid in common stock on Series B preferred stock ($0.25 per share)	—		—	35		—	—		—		17		(17)		—
Dividends accrued on Series C and D preferred stock	—		—	—		—	—		—		—		(414)		(414)
Stock-based compensation	—		—	—		—	—		—		2,060		—		2,060
Net loss	—		—	—		—	—		—		—		(36,604)		(36,604)
Balance at November 30, 2021	36		—	685,861		686	443		—		589,971		(603,353)		(12,696)
For the three months ended February 28, 2022:
Issuance of stock for convertible note repayment	—		—	17,132		17	—	—	—	—	12,048	—	—	—	12,065
Stock issued for private offering ($0.40 - $1.00 per share)	—		—	6,860		7	—		—		3,545		—		3,552
Conversion of Series C convertible preferred stock to common stock	(1)		—	2,200		2	—		—		(2)		—		—
Exercise of warrants	—		—	11		—	—		—		—		—		—
Modification of previously issued equity	—		—	1,179		1	—		—		953		—		954
Dividend declared and paid in common stock upon conversion of Series C preferred stock ($0.50 per share)	—		—	487		—	—		—		243		—		243
Dividends accrued on Series C and D preferred stock	—		—	—		—	—		—		—		(397)		(397)
Finance charges related to warrant issuance for surety bond backstop agreement	—		—	—		—	—		—		6,585		—		6,585
Stock-based compensation	—		—	—		—	—		—		(438)		—		(438)
Net loss	—		—	—		—	—		—		—		(32,328)		(32,328)
Balance at February 28, 2022	35	$	—	713,730	$	713	443	$	—	$	612,905	$	(636,078)	$	(22,460)


(in thousands)	February 28, 2022		May 31, 2021
Raw materials	$	19,517	$	28,085
Work-in-progress		63,151		65,394
Total inventories, net	$	82,668	$	93,479


(in thousands, Expiration period ending February 28,)	Remaining shelf-life	Raw materials		Work-in-progress bulk drug product		Work-in-progress finished drug product in vials		Total inventories
2022	0 to 12 months	$	5,828	$	-	$	-	$	5,828
2023	13 to 24 months		16,263		-		-		16,263
2024	25 to 36 months		2,209		-		29,142		31,351
2025	37 to 48 months		888		-		32,344		33,232
2026	49 to 60 months		-		-		-		-
Thereafter	61 or more months		157		1,665		-		1,822
Total inventories			25,345		1,665		61,486		88,496
Inventories reserved			(5,828)		-		-		(5,828)
Total inventories, net		$	19,517	$	1,665	$	61,486	$	82,668


Fiscal Year (in thousands)	Amount
2022 (3 months remaining)	$	110
2023		217
2024		85
2025		85
Thereafter		546
Total	$	1,043


(in thousands)	November 2020 Note		April 2, 2021 Note		April 23, 2021 Note		Total
Outstanding balance at May 31, 2021	$	13,554	$	25,715	$	25,485	$	64,754
Amortization of issuance discount and costs		98		1,045		1,309		2,452
Interest expense		192		1,839		2,268		4,299
Fair market value of shares exchanged for repayment		(18,495)		(23,578)		-		(42,073)
Debt extinguishment loss		4,651		6,421		-		11,072
Outstanding balance at February 28, 2022	$	-	$	11,442	$	29,062	$	40,504


				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, 2021	61,573	$	0.95	4.40	$	68,756
Granted	40,557	$	0.81	—		—
Exercised	(5,677)	$	0.71	—		—
Forfeited or expired and cancelled	(13,395)	$	1.26	—		—
Options and warrants outstanding February 28, 2022	83,058	$	0.85	4.40	$	4,653
Options and warrants outstanding and exercisable at February 28, 2022	75,770	$	0.76	3.91	$	4,651


	Three and nine months ended February 28,
(in thousands)	2022	2021
Stock options, warrants, and unvested restricted stock units	98,309	68,857
Convertible notes	12,000	12,000
Convertible preferred stock	32,197	32,159


	Three months ended February 28,				Change				Nine months ended February 28,				Change
(in thousands)	2022		2021		$		%		2022		2021		$		%
				(Revised) ⁽¹⁾								(Revised) ⁽¹⁾
Total revenue	$	—	$	—	$	—	—	%	$	266	$	—	$	266	100	%
Total cost of goods sold		—		—		—	—	%		53		—		53	100	%
Gross margin		—		—		—	—	%		213		—		213	100	%
Operating expenses:
General and administrative		10,140		7,902		2,238	28	%		33,960		25,328		8,632	34	%
Research and development		9,128		12,323		(3,195)	(26)	%		31,952		44,061		(12,109)	(27)	%
Amortization and depreciation		129		511		(382)	(75)	%		657		1,522		(865)	(57)	%
Intangible asset impairment charge		—		10,049		(10,049)	(1)	%		—		10,049		(10,049)	(100)	%
Total operating expenses		19,397		30,785		(11,388)	(37)	%		66,569		80,960		(14,391)	(18)	%
Operating loss		(19,397)		(30,785)		11,388	37	%		(66,356)		(80,960)		14,604	18	%
Other income (expense):
Interest and other expense:
Interest on convertible notes		(1,187)		(1,257)		70	6	%		(4,299)		(2,870)		(1,429)	(50)	%
Amortization of discount on convertible notes		(637)		(157)		(480)	(306)	%		(2,382)		(2,739)		357	13	%
Amortization of debt issuance costs		(19)		(21)		2	10	%		(70)		(40)		(30)	(75)	%
Loss on extinguishment of convertible notes		(3,109)		(7,625)		4,516	59	%		(11,072)		(11,794)		722	6	%
Finance charges		(7,025)		(1)		(7,024)	(702,400)	%		(8,084)		(138)		(7,946)	(5,758)	%
Inducement interest expense		(954)		(5,360)		4,406	82	%		(6,186)		(12,922)		6,736	52	%
Legal settlement		—		—		—	—	%		(1,941)		—		(1,941)	(100)	%
Interest and other expense		(12,931)		(14,421)		1,490	10	%		(34,034)		(30,503)		(3,531)	(12)	%
Loss before income taxes		(32,328)		(45,206)		12,878	28	%		(100,390)		(111,463)		11,073	10	%
Income tax benefit		—		—		—	—			—		—		—	—
Net loss	$	(32,328)	$	(45,206)	$	12,878	28	%	$	(100,390)	$	(111,463)	$	11,073	10	%
Basic and diluted loss per share	$	(0.05)	$	(0.08)	$	0.03	36	%	$	(0.15)	$	(0.19)	$	0.04	20	%
Basic and diluted weighted average common shares outstanding		695,614		577,854		117,760	20	%		663,373		595,226		68,147	11	%


			Incorporated by Reference
Exhibit No	Description	Filed Herewith	Form	Exhibit No.	Filing Date
3.1	Amended and Restated Certificate of Incorporation, as corrected April 7, 2022.	X

4.1	Form of Initial Warrant issued under Security Bond Backstop Agreement		8-K	4.1	2/17/2022

4.2	Form of Make-Whole Warrant issued under Security Bond Backstop Agreement		8-K	4.2	2/17/2022

10.1	Surety Bond Backstop Agreement dated February 14, 2022, among the Company and certain parties named therein **	X

10.2	Separation Agreement and Release of Claims Claims with Nader Z. Pourhassan, Ph.D., effective March 8, 2022	X

31.1	Rule 13a-14(a) Certification by CFO and interim President (performing functions of CEO) of Registrant.	X

32.1	Certification of CFO and interim President (performing functions of CEO) of the Registrant 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: April 11, 2022		/s/ Antonio Migliarese
		Antonio Migliarese
		Chief Financial Officer and Interim President
		(Principal Financial and Accounting Officer)

	By:	/s/ Nader Z. Pourhassan
	Name:	Nader Z. Pourhassan, Ph.D.
	Title:	President and Chief Executive Officer


		State of Delaware
		Secretary of State
		Division of Corporations
		Delivered 11:35 AM 03/20/2019
		FILED 11:35 AM 03/20/2019
		SR 20192127945 -File Number 7032132

	/s/ Nader Z. Pourhassan, Ph.D.
	Name: Nader Z. Pourhassan, Ph.D.
	Title: President and Chief Executive Officer


	State of Delaware
	Secretary of State
	Division of Corporations
	Delivered 03:18 PM 05/22/2019
	FILED 03:18 PM 05/22/2019
	SR 20194359045 - File Number 7032132

	CYTODYN INC.

	By:	/s/ Nader Z. Pourhassan, Ph.D.
	Name:	Nader Z. Pourhassan


CYTODYN:		INDEMNITORS:

CytoDyn Inc., a Delaware corporation


By:	/s/ Antonio Migliarese	/s/ David F. Welch
Name: Title:	Antonio Migliarese CFO & Interim President	David Fairbank Welch, both individually and in his capacity as trustee of the David F. and Heidi A. Welch Revocable Trust,


		/s/ Heidi A. Welch
		Heidi A. Welch, both individually and in her capacity as trustee of the David F. and Heidi A. Welch Revocable Trust


		LRFA LLC, a Delaware limited liability company


		By:	/s/ David F. Welch
		Name:	David F. Welch
		Title:	President

Issuance Date	Certificate Number	Number of Shares
10/02/08	CUS 00000684	10,000
10/02/08	CUS 00000685	10,000
03/02/09	CUS 00000776	10,000

EMPLOYEE:		EMPLOYER:

		CytoDyn Inc.

/s/ Nader Pourhassan		/s/ Antonio Migliarese
Nader Pourhassan, Ph.D.		Antonio Migliarese
Date: 3/8/2022		Date: 3/8/2022


Date: April 11, 2022		/s/ Antonio Migliarese
		Antonio Migliarese
		Chief Financial Officer and Interim President