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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 29, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1933

For the transition period from                  to                 

Commission File Number: 000-49908

CYTODYN INC.

(Exact name of registrant as specified in its charter)

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)

(360) 980-8524

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class 

    

Trading
Symbol(s)

    

Name of Each Exchange
on Which Registered

None

None

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

 

 

 

 

Non-accelerated Filer

Smaller Reporting Company

 

 

 

 

 

 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):    Yes      No  

On March 31, 2024, there were 993,366 thousand shares outstanding of the registrant’s $0.001 par value common stock.

PART I. Financial Information

Item 1. Consolidated Financial Statements

CytoDyn Inc.

Consolidated Balance Sheets

(Unaudited, in thousands, except par value)

February 29, 2024

    

May 31, 2023

Assets

 

Current assets:

 

 

  

Cash

$

1,404

$

2,541

Restricted cash

 

6,619

 

6,507

Prepaid expenses

 

1,349

 

1,167

Prepaid service fees

 

538

 

590

Total current assets

 

9,910

 

10,805

Other non-current assets

 

360

 

487

Total assets

$

10,270

$

11,292

Liabilities and Stockholders’ Deficit

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

62,078

$

62,725

Accrued liabilities and compensation

 

10,559

 

6,669

Accrued interest on convertible notes

 

14,080

 

10,598

Accrued dividends on convertible preferred stock

 

6,418

 

5,308

Convertible notes payable, net

 

30,169

 

34,417

Derivative liability - equity instruments

3,493

79

Private placement of shares and warrants

 

2,679

 

Total current liabilities

 

129,476

 

119,796

Notes payable, net

714

Operating leases

 

176

 

283

Total liabilities

 

129,652

 

120,793

Commitments and Contingencies (Note 8)

 

  

 

  

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 February 29, 2024 and May 31, 2023

 

 

Series C convertible preferred stock, $0.001 par value; 8 authorized; 6 issued and outstanding at February 29, 2024 and May 31, 2023

 

 

Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at February 29, 2024 and May 31, 2023

 

 

Common stock, $0.001 par value; 1,750,000 shares authorized; 990,368 and 919,053 issued, and 989,925 and 918,610 outstanding at February 29, 2024 and May 31, 2023, respectively

 

990

 

919

Treasury stock, $0.001 par value; 443 shares at February 29, 2024 and May 31, 2023

Additional paid-in capital

 

754,372

 

731,270

Accumulated deficit

 

(874,744)

 

(841,690)

Total stockholders’ deficit

 

(119,382)

 

(109,501)

Total liabilities and stockholders' deficit

$

10,270

$

11,292

See accompanying notes to consolidated financial statements.

3

CytoDyn Inc.

Consolidated Statements of Operations

(Unaudited, in thousands, except per share data)

Three months ended February 29,

Nine months ended February 29,

    

2024

    

2023

    

2024

    

2023

Operating expenses:

 

  

 

  

 

  

 

  

 

General and administrative

$

2,757

$

2,971

$

7,756

$

14,347

Research and development

 

650

 

938

 

3,643

 

1,651

Amortization and depreciation

 

7

 

12

 

25

 

165

Inventory charge

20,633

Total operating expenses

 

3,414

 

3,921

 

11,424

 

36,796

Operating loss

 

(3,414)

 

(3,921)

 

(11,424)

 

(36,796)

Interest and other expenses:

Interest on convertible notes

 

(1,151)

 

(1,142)

 

(3,512)

 

(3,447)

Amortization of discount on convertible notes

(409)

(565)

(951)

(1,721)

Amortization of debt issuance costs

 

(203)

 

(17)

 

(572)

 

(51)

Issuance costs for private placement of shares and warrants through placement agent (Note 5)

(906)

Loss on induced conversion

 

(3,353)

(2,018)

(5,993)

(2,656)

Finance charges

 

(882)

 

(5,884)

 

(2,685)

 

(7,761)

Loss on note extinguishment

 

(1,550)

 

 

(6,040)

 

Loss on derivatives

(958)

(155)

(971)

(8,756)

Total interest and other expenses

 

(8,506)

 

(9,781)

 

(21,630)

 

(24,392)

Loss before income taxes

 

(11,920)

 

(13,702)

 

(33,054)

 

(61,188)

Income tax benefit

 

 

 

 

Net loss

$

(11,920)

$

(13,702)

$

(33,054)

$

(61,188)

Basic and diluted:

Weighted average common shares outstanding

982,209

832,215

954,814

810,986

Loss per share

$

(0.01)

$

(0.02)

$

(0.04)

$

(0.08)

See accompanying notes to consolidated financial statements.

4

CytoDyn Inc.

Consolidated Statement of Changes in Stockholders’ Deficit

(Unaudited, in thousands)

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, 2023

34

$

919,053

$

919

443

$

$

731,270

$

(841,690)

$

(109,501)

Issuance of stock for convertible note repayment

8,661

8

 

1,492

 

 

1,500

Loss on induced conversion

 

2,004

 

 

2,004

Warrants issued in note offering

 

170

 

 

170

Stock issued for compensation

686

1

 

154

 

 

155

Warrant exercises

3,000

3

 

297

 

 

300

Dividends accrued on Series C and D convertible preferred stock

 

(373)

 

 

(373)

Reclassification of warrants from liability to equity classified

79

79

Stock-based compensation

 

348

 

 

348

Net loss

 

 

(11,571)

 

(11,571)

Balance at August 31, 2023

34

931,400

931

443

735,441

(853,261)

(116,889)

Issuance of stock for convertible note repayment

3,535

4

496

 

500

Loss on induced conversion

636

636

Warrants issued in note offering

10

10

Note conversion

14,339

14

4,379

4,393

Stock issued for compensation

559

1

97

98

Stock issued for private offering

21,453

21

6,307

 

6,328

Dividends accrued on Series C and D convertible preferred stock

(368)

 

(368)

Stock-based compensation

474

 

474

Net loss

(9,563)

 

(9,563)

Balance at November 30, 2023

34

971,286

971

443

747,472

(862,824)

(114,381)

Issuance of stock for convertible note repayment

18,674

19

2,731

2,750

Loss on induced conversion

3,353

3,353

Warrants issued in note offering

179

179

Discount related to private offering modification

137

 

137

Stock issued for compensation

408

75

 

75

Dividends accrued on Series C and D preferred stock

(369)

 

(369)

Stock-based compensation

794

 

794

Net loss

(11,920)

 

(11,920)

Balance at February 29, 2024

34

$

990,368

$

990

443

$

$

754,372

$

(874,744)

$

(119,382)

5

CytoDyn Inc.

Consolidated Statement of Changes in Stockholders’ Deficit

(Unaudited, in thousands)

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)

 

 

Accrued preferred stock dividends

 

(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 issuance 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)

Issuance of stock for convertible note repayment

 

7,150

 

7

 

1,493

 

 

1,500

Loss on induced conversion

2,018

2,018

Stock issued for compensation

626

1

181

182

Stock to be issued for private offerings

18,045

18,045

Issuance costs related to stock issued for private offerings

(4,699)

(4,699)

Exercise of warrants, net of issuance costs

3,442

3

679

682

Deemed dividend paid in common stock due to down round provision, recorded in additional paid-in capital

534

1

(1)

Dividends accrued on Series C and D convertible preferred stock

(364)

(364)

Reclassification of warrants from liability to equity classified

155

155

Finance charges related to warrant issuance for surety bond backstop agreement

4,885

4,885

Stock-based compensation

 

 

 

 

257

 

 

257

Net loss

 

 

 

 

 

(13,702)

 

(13,702)

Balance at February 28, 2023

34

$

837,031

$

837

443

$

$

715,207

$

(823,054)

$

(107,010)

See accompanying notes to consolidated financial statements.

6

CytoDyn Inc.

Consolidated Statements of Cash Flows

(Unaudited, in thousands)

Nine months ended February 29,

    

2024

    

2023

Cash flows from operating activities:

 

  

 

Net loss

$

(33,054)

$

(61,188)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Amortization and depreciation

 

25

 

165

Amortization of debt issuance costs

 

572

 

51

Issuance costs for private placement of shares and warrants through placement agent

906

Amortization of discount on convertible notes

 

951

 

1,721

Loss on derivatives

971

8,756

Loss on induced conversion

5,993

2,656

Non-cash finance charges

4,885

Loss on note extinguishment

 

6,040

 

Inventory charge

20,633

Stock-based compensation

 

1,944

 

3,557

Changes in operating assets and liabilities:

 

 

  

(Increase) decrease in prepaid expenses and other assets

(28)

624

(Decrease) increase in accounts payable and accrued expenses

 

6,348

 

(3,558)

Net cash used in operating activities

 

(9,332)

 

(21,698)

Cash flows from investing activities:

 

  

 

  

Net cash Provided by/used in investing activities

 

 

Cash flows from financing activities:

 

  

 

  

Proceeds from warrant transactions, net of offering costs

2,815

Proceeds from sale of common stock and warrants, net of issuance costs

 

5,696

 

24,601

Proceeds from warrant exercises

 

300

 

264

Proceeds held in trust

 

300

 

897

Proceeds from convertible note and warrant issuances, net of issuance costs

2,011

Net cash provided by financing activities

 

8,307

 

28,577

Net change in cash and restricted cash

 

(1,025)

 

6,879

Cash and restricted cash at beginning of period

 

9,048

 

4,231

Cash and restricted cash at end of period

$

8,023

$

11,110

Cash and restricted cash consisted of the following:

Cash

$

1,404

$

5,112

Restricted cash

6,619

5,998

Total cash and restricted cash

$

8,023

$

11,110

Supplemental disclosure: