Item 3.02 Unregistered Sales of Equity Securities.
CytoDyn Inc. (the “Company”) is providing this disclosure because, as of August 11, 2023, its unregistered sales of equity securities that had not been reported previously, in the aggregate, exceeded 5% of the shares of its common stock outstanding as of March 31, 2023.
Issuances of Shares in Convertible Note Exchange Transactions
In each of April, May, July and August 2023, the Company and the holder of its secured convertible promissory note issued April 2, 2021, in partial satisfaction of the holder’s redemption rights, entered into exchange agreements pursuant to which the original note was partitioned and a new note was issued, resulting in an aggregate principal reduction of $2.0 million. The new notes were exchanged concurrently with issuance for a total of approximately 9.8 million newly issued shares of common stock. The Company relied on the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), in connection with the exchange transactions.
Private Placements of Common Stock and Warrants through Placement Agent
In April 2023, the Company sold a total of approximately 0.5 million units consisting of common stock and warrants in exchange for proceeds totaling approximately $0.1 million, net of offering costs, as part of a follow-on offering with the same terms as an offering earlier in 2023. The offering was made through a placement agent exclusively to accredited investors. Each unit sold included a fixed combination of one share of common stock and one warrant to purchase one share of common stock. The purchase price per unit was $0.23. The warrants issued to investors were fully exercisable and have a five-year term and an exercise price of $0.50 per share. In connection with the offering, the Company paid the placement agent a total cash fee of approximately $13.8 thousand and issued warrants to purchase a total of approximately 75.0 thousand shares of common stock with an exercise price of $0.23 per share and a ten-year term to the placement agent and its designees.
In June 2023, the Company commenced a new private placement (the “Mid-2023 Offering”) to accredited investors of units through a placement agent. Each unit consisted of one share of common stock and one warrant to purchase one share of common stock. The purchase price per unit will be equal to 90% of the lower of (i) the intraday volume weighted average price (“VWAP”) of the common stock as of the first closing on July 31, 2023, and (ii) the intraday VWAP on the date of the final closing in the Mid-2023 Offering, which has not yet occurred. As of August 11, 2023, the Company had received binding subscription agreements to purchase an estimated total of approximately 5.4 million units at a total purchase price of approximately $1.1 million, based on a price of $0.20 per unit.
The warrants to be issued to investors in the Mid-2023 Offering will be fully exercisable and will have a five-year term and an exercise price of $0.50 per share. The warrants will be exercisable in full when issued. Other than as described above, the terms of the warrants will be substantially similar to the form of warrant filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2021.
As a fee to the placement agent in the Mid-2023 Offering, the Company has agreed to pay a cash fee equal to 12% of the gross proceeds received from qualified investors. The Company has also agreed to issue to the placement agent or its designees warrants with a 10-year term to purchase 15% of the total number of shares of common stock sold to qualified investors in the Mid-2023 Offering.
The Company has agreed to use commercially reasonable efforts to prepare and file with the Securities and Exchange Commission (the “SEC”), and cause the SEC to declare effective, a registration statement under the Securities Act covering the resale of the shares and shares covered by warrants to purchase shares of common stock issued in the private placements described above.
The Company relied on the exemption provided by Rule 506 of Regulation D and Section 4(a)(2) of the Securities Act in the sale and issuance of shares and warrants in the private placements described above.
Placement Agent Notes
During the period from April 28, 2023 through June 23, 2023, the Company issued secured promissory notes with an 18-month term to accredited investors with an aggregate principal amount of approximately $2.3 million through a