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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 28, 2022

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)

(360980-8524

(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, 2022, there were 718,319,606 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 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

(1) See Note 2, Correction of Immaterial Misstatements in Prior Period Financial Statements in Form 10-Q for the period ended November 30, 2021.

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 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

(1) See Note 2, Correction of Immaterial Misstatements in Prior Period Financial Statements in Form 10-Q for the period ended November 30, 2021.

See accompanying notes to consolidated financial statements.

4

CytoDyn Inc.

Consolidated Statement of Changes in Stockholders’ (Deficit) Equity

(Unaudited, in thousands)

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)

(1)See Note 2, Correction of Immaterial Misstatements in Prior Period Financial Statements in Form 10-Q for the period ended November 30, 2021.

See accompanying notes to consolidated financial statements.

5

CytoDyn Inc.

Consolidated Statement of Changes in Stockholders’ (Deficit) Equity

(Unaudited, in thousands)

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, 2020

109

$

519,261

$

519

286

$

$

372,301

$

(375,301)

$

(2,481)

For the three months ended August 31, 2020:

Issuance of stock for convertible note repayment

2,119

2

 

9,535

 

 

9,537

Issuance of legal settlement warrants

4,000

4

 

(4)

 

 

Exercise of stock options

100

 

39

 

 

39

Stock issued for incentive compensation and tendered for income tax

323

156

 

828

 

 

828

Conversion of Series B preferred stock to common stock

(5)

50

 

 

 

Private warrant exchange

16,544

17

 

7,787

 

 

7,804

Exercise of warrants

27,928

28

 

12,662

 

 

12,690

Inducement interest expense related to private warrant exchange

 

3,345

 

 

3,345

Offering costs related to private warrant exchange

 

(364)

 

 

(364)

Dividend declared and paid on Series B preferred stock ($0.25 per share)

 

 

(243)

 

(243)

Dividends accrued on Series C and D preferred stock

 

 

(420)

 

(420)

Stock-based compensation

 

2,865

 

 

2,865

Net loss

 

 

(30,832)

 

(30,832)

Balance at August 31, 2020

104

570,325

570

442

408,994

(406,796)

2,768

For the three months ended November 30, 2020:

Issuance of stock for convertible note repayment

 

4,293

 

4

 

 

11,549

 

 

11,553

Exercise of stock options

 

10

 

 

 

10

 

 

10

Stock issued for private offering ($1.50 per share)

 

667

 

1

 

 

999

 

 

1,000

Private warrant exchange

12,480

13

4,583

4,596

Exercise of warrants

2,504

2

1,737

1,739

Inducement interest expense related to private warrant exchange

 

 

 

 

4,217

 

 

4,217

Dividends accrued on Series C and D preferred stock

 

 

 

 

 

(415)

 

(415)

Stock-based compensation

 

 

 

 

3,423

 

 

3,423

Net loss

 

 

 

 

 

(35,425)

 

(35,425)

Balance at November 30, 2020

104

590,279

590

442

435,512

(442,636)

(6,534)

For the three months ended February 28, 2021:

Issuance of stock for convertible note repayment

 

4,013

 

4

 

 

20,500

 

 

20,504

Exercise of stock options