Item 1.01.
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Entry into a Material Definitive Agreement.
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On January 31, 2018, CytoDyn Inc. (the
Company
) entered into Subscription Agreements (the
Subscription Agreements
) with certain investors who owned convertible promissory notes of the Company (the
Convertible Notes
) for the sale by
the Company of 12,062,728 shares (the
Common Shares
) of the Companys common stock, par value $0.001 per share (the
Common Stock
) in a registered direct offering (the
Offering
). The
investors in the Offering also received warrants to purchase 7,718,010 shares of Common Stock (the
Warrants
). The securities were sold at a combined purchase price of $0.50 per share of Common Stock and related Warrants, allocated
as described below, for aggregate gross proceeds to the Company of approximately $6.0 million.
The Convertible Notes matured on January 31,
2018, upon which date the Company became obligated to pay the principal amount of approximately $6.0 million on the Convertible Notes, plus accrued but unpaid interest of approximately $0.3 million, for aggregate payment obligations at maturity
of approximately $6.3 million. The Common Shares and Warrants were issued in full satisfaction of approximately $6.0 million of such payment obligations, with one holder of an aggregate of approximately $0.3 million electing to be
repaid in cash instead of participating in the Offering. As a result, all of the proceeds from the Offering were used to satisfy the Companys payment obligations pursuant to the Convertible Notes.
The Warrants will be exercisable for a period of five years commencing on their issuance date, at an exercise price equal to $0.75 per share of Common Stock,
subject to certain ownership limitations and adjustments as provided under the terms of the Warrants.
The number of shares of Common Stock underlying the
Warrant issued to each investor was calculated as the difference between (x) the number of shares of Common Stock issued to each investor in this Offering in respect of the payment obligations relating solely to principal amounts on the
Convertible Notes and (y) the number of shares of Common Stock underlying certain warrants originally issued to such investor in the original Convertible Notes offering. The effect was to bring each investor from 50% warrant coverage in the
original offering of Convertible Notes, assuming conversion of the principal amount thereof at an original conversion price of $0.75 per share, to 100% warrant coverage after this Offering, assuming reinvestment of the principal amount on the
Convertible Notes at $0.50 per share.
The Company is delivering the securities under the Subscription Agreements on or about January 31, 2018. The
securities sold in the Offering were offered pursuant to an effective shelf registration statement on
Form S-3,
which was initially filed with the Securities and Exchange Commission (the
SEC
) on August 26, 2016 and was subsequently declared effective on September 9, 2016 (File
No. 333-213349)
(the
Registration Statement
), and the base
prospectus dated as of September 9, 2016 contained therein. The Company is filing a prospectus supplement with the SEC in connection with the sale of the securities.
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 Company. Accordingly, the forms of the Subscription Agreements are included with this filing only to provide investors with
information regarding the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the
Subscription Agreements, which subsequent information may or may not be fully reflected in public disclosures.
Paulson Investment Company, LLC (the
Placement Agent
) was engaged as a placement agent in the Offering, in exchange for a cash fee of approximately $164,000, in respect of investors purchasing an aggregate of 6,840,192 shares of Common Stock and related Warrants in
this Offering whose participation was induced by the Placement Agent and not the Company.
The form of the Subscription Agreement is filed as Exhibit 10.1
to this Current Report
on Form 8-K. The
form of Warrant is filed as Exhibit 4.1 to this Current Report on
Form 8-K. The
foregoing summaries of
the terms of these documents are subject to, and qualified in their entirety by, such documents, which are incorporated herein by reference.
The legal opinion and consent of Lowenstein Sandler LLP relating to the securities are filed as Exhibit 5.1
to this Current Report on
Form 8-K.