Item 3.02 Unregistered Sales of Equity Securities.
CytoDyn Inc., a Delaware corporation (the "Company"), is providing this
disclosure under Item 3.02 because, as of December 29, 2021, its unregistered
sales of equity securities, in the aggregate, exceeded 1% of the shares of its
common stock, par value $0.001 per share (the "Common Stock"), outstanding as of
November 23, 2021, the date of its last report under Item 3.02.
Exchange of Convertible Promissory Note for Shares of Common Stock
On December 7, 2021, the Company and the holder of its secured convertible
promissory note issued April 2, 2021 (the "April 2 Note"), in partial
satisfaction of the December required debt reduction amount, entered into an
exchange agreement pursuant to which the April 2 Note was partitioned into a new
note (the "December 7 Partitioned Note") with a principal amount of
$2.0 million. The outstanding balance of the April 2 Note was reduced by the
December 7 Partitioned Note. The Company and the investor exchanged the
December 7 Partitioned Note for approximately 2.4 million shares of common
stock.
On December 29, 2021, the Company and the holder of the April 2 Note, in partial
satisfaction of the December required debt reduction amount, entered into an
exchange agreement pursuant to which the April 2 Note was partitioned into a new
note (the "December 29 Partitioned Note") with a principal amount of
$2.0 million. The outstanding balance of the April 2 Note was reduced by the
December 29 Partitioned Note. The Company and the investor exchanged the
December 29 Partitioned Note for approximately 2.4 million shares of common
stock.
The Company relied on the exemption from registration afforded by
Section 3(a)(9) of the Securities Act of 1933, as amended (the "Securities Act")
for the exchange transactions described above.
Private Placement of Common Stock and Warrants through Placement Agent
On November 24, 2021, the Company issued in a private placement to accredited
investors an aggregate of approximately 3.0 million shares of common stock,
together with warrants to purchase an aggregate of approximately 0.9 million
shares of common stock at an exercise price of $1.00 per share. On November 30,
2021, the Company issued additional securities in the private placement to
accredited investors totaling approximately 0.3 million shares of common stock,
together with warrants to purchase approximately 0.1 million shares of common
stock, also at an exercise price of $1.00 per share. The securities were issued
at a combined purchase price of $1.00 per fixed combination of one share of
common stock and three-tenths of one warrant to purchase one share of common
stock, for aggregate gross proceeds to the Company of approximately
$3.2 million. The warrants have a five-year term and are immediately
exercisable. Copies of the forms of warrant and subscription agreement used in
the private placement were filed as Exhibits 4.1 and 10.1, respectively, to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on November 23, 2021.
The representations, warranties and covenants contained in the subscription
agreements were made solely for the benefit of the parties to the subscription
agreements. In addition, such representations, warranties and covenants (i) are
intended as a way of allocating the risk between the parties to the subscription
agreements and not as statements of fact and (ii) may apply standards of
materiality in a way that is different from what may be viewed as material by
stockholders of, or other investors in, the
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Company. Stockholders should not rely on the representations, warranties and
covenants in the form of subscription agreement as characterizations of the
actual state of facts or condition of the Company or any of its subsidiaries or
affiliates as of the date of execution of an agreement with an investor or any
previous or subsequent date.
As a fee to the placement agent, the Company agreed to pay a cash fee equal to
12% of the gross proceeds received from qualified investors in the offering, as
well as a one-time non-accountable expense fee of $50,000 in the aggregate for
all closings in the offering. The Company also agreed to grant the placement
agent or its designees warrants with an exercise price of $1.00 per share and a
10-year term to purchase 12% of the total number of shares of common stock sold
to qualified investors in the offering. On January 3, 2022, the Company issued
warrants covering a total of approximately 1.4 million shares of common stock to
the placement agent in full satisfaction of its obligations under the placement
agent agreement through November 30, 2021.
The Company relied on the exemption provided by Rule 506 of Regulation D and
Section 4(a)(2) of the Securities Act in connection with the foregoing
transactions.
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