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 November 30, 2021

☐	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 December 31, 2021, there were 690,233,504 shares outstanding of the registrant’s $0.001 par value common stock.

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TABLE OF CONTENTS


		PAGE
PART I		3
	ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS	3
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
	ITEM 4. CONTROLS AND PROCEDURES	47
PART II		49
	ITEM 1. LEGAL PROCEEDINGS	49
	ITEM 1A. RISK FACTORS	49
	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES	51
	ITEM 4. MINE SAFETY DISCLOSURES	51
	ITEM 5. OTHER INFORMATION	51
	ITEM 6. EXHIBITS	52

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PART I. Financial Information

Item 1. Consolidated Financial Statements

CytoDyn Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value)


	November 30, 2021		May 31, 2021
			(Revised) ⁽¹⁾
Assets
Current assets:
Cash	$	8,875	$	33,943
Accounts receivable		225		—
Inventories, net		88,557		93,479
Prepaid expenses		2,979		616
Prepaid service fees		1,174		1,543
Total current assets		101,810		129,581
Operating leases right-of-use asset		617		712
Property and equipment, net		119		134
Intangibles, net		1,153		1,653
Total assets	$	103,699	$	132,080
Liabilities and Stockholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	58,008	$	65,897
Accrued liabilities and compensation		6,654		19,073
Accrued interest on convertible notes		3,670		2,007
Accrued dividends on convertible preferred stock		3,481		2,647
Operating leases liabilities		149		175
Convertible notes payable, net		43,947		62,747
Total current liabilities		115,909		152,546
Long-term liabilities:
Operating leases liabilities		486		552
Total long-term liabilities		486		552
Total liabilities		116,395		153,098
Commitments and Contingencies (Note 10)
Stockholders’ (deficit) equity:
Preferred Stock, $0.001 par value; 5,000 shares authorized
Series D convertible preferred stock, $0.001 par value; 12 authorized; 9 issued and outstanding at November 30, 2021 and May 31, 2021		—		—
Series C convertible preferred stock, $0.001 par value; 8 authorized; 8 issued and outstanding at November 30, 2021 and May 31, 2021		—		—
Series B convertible preferred stock, $0.001 par value; 400 shares authorized, 19 and 79 shares issued and outstanding at November 30, 2021 and May 31, 2021, respectively		—		—
Common stock, $0.001 par value; 1,000,000 shares authorized, 685,861 and 626,123 issued and 685,418 and 625,680 outstanding at November 30, 2021 and May 31, 2021, respectively		686		626
Additional paid-in capital		589,971		512,796
Accumulated (deficit)		(603,353)		(534,440)
Treasury stock, $0.001 par value; 443 at November 30, 2021 and May 31, 2021		—		—
Total stockholders’ (deficit) equity		(12,696)		(21,018)
Total liabilities and stockholders' (deficit) equity	$	103,699	$	132,080

(1)	See Note 2, “—Correction of Immaterial Misstatements in Prior Period Financial Statements”.

See accompanying notes to consolidated financial statements.

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CytoDyn Inc.

Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)


	Three months ended November 30,				Six months ended November 30,
	2021		2020		2021		2020
			(Revised) ⁽¹⁾				(Revised) ⁽¹⁾
Revenue:
Product revenue	$	225	$	—	$	266	$	—
Total revenue		225		—		266		—
Cost of goods sold:
Cost of goods sold		52		—		53		—
Total cost of goods sold		52		—		53		—
Gross margin		173		—		213		—
Operating expenses:
General and administrative		16,203		7,551		23,820		17,426
Research and development		9,040		16,446		22,824		31,738
Amortization and depreciation		252		506		528		1,011
Total operating expenses		25,495		24,503		47,172		50,175
Operating loss		(25,322)		(24,503)		(46,959)		(50,175)
Other income (expense):
Loss on extinguishment of convertible notes		(3,312)		(4,169)		(7,963)		(4,169)
Legal settlement		—		—		(1,941)		—
Interest expense:
Finance charges		(1,024)		(231)		(1,059)		(137)
Amortization of discount on convertible notes		(793)		(1,243)		(1,745)		(2,582)
Amortization of debt issuance costs		(23)		(15)		(51)		(19)
Inducement interest expense		(4,704)		(4,217)		(5,232)		(7,562)
Interest on convertible notes payable		(1,426)		(1,047)		(3,112)		(1,613)
Total interest expense		(7,970)		(6,753)		(11,199)		(11,913)
Loss before income taxes		(36,604)		(35,425)		(68,062)		(66,257)
Income tax benefit		—		—		—		—
Net loss	$	(36,604)	$	(35,425)	$	(68,062)	$	(66,257)
Basic and diluted loss per share	$	(0.06)	$	(0.06)	$	(0.11)	$	(0.12)
Basic and diluted weighted average common shares outstanding		662,600		577,945		647,517		566,677

(1)	See Note 2, “—Correction of Immaterial Misstatements in Prior Period Financial Statements”.

See accompanying notes to consolidated financial statements.

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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 May 31, 2021	96	$	—	626,123	$	626	443	$	—	$	512,796	$	(534,440)	$	(21,018)
First Quarter Fiscal Year Ended May 31, 2022
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 August 31, 2021	—		—	—		—	—		—		—		(31,458)		(31,458)
Balance August 31, 2021	96		—	644,120		644	443		—		540,481		(566,318)		(25,193)
Second Quarter Fiscal Year Ended May 31, 2022
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 November 30, 2021	—		—	—		—	—		—		—		(36,604)		(36,604)
Balance November 30, 2021	36	$	—	685,861	$	686	443	$	—	$	589,971	$	(603,353)	$	(12,696)

(1)	See Note 2, “—Correction of Immaterial Misstatements in Prior Period Financial Statements”.

See accompanying notes to consolidated financial statements.

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	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 May 31, 2020	109	$	—	519,261	$	519	286	$	—	$	372,301	$	(375,301)	$	(2,481)
First Quarter Fiscal Year Ended May 31, 2021
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	—		—		13,441		—		13,469
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	—		—	—		—	—		—		2,086		—		2,086
Net Loss August 31, 2020	—		—	—		—	—		—		—		(30,832)		(30,832)
Balance August 31, 2020	104		—	570,325		570	442		—		408,994		(406,796)		2,768
Second Quarter Fiscal Year Ended May 31, 2021
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 November 30, 2020	—		—	—		—	—		—		—		(35,425)		(35,425)
Balance November 30, 2020	104	$	—	590,279	$	590	442	$	—	$	435,512	$	(442,636)	$	(6,534)

(1)	See Note 2, “—Correction of Immaterial Misstatements in Prior Period Financial Statements”.

See accompanying notes to consolidated financial statements.

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CytoDyn Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six months ended November 30,
	2021		2020
			(Revised) ⁽¹⁾
Cash flows from operating activities:
Net loss	$	(68,062)	$	(66,257)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation		528		1,011
Amortization of debt issuance costs		51		19
Amortization of discount on convertible notes		1,745		2,582
Non-cash warrant issuance cost for legal settlement		1,744		—
Inducement interest expense		5,232		7,562
Inventory reserve and write-offs		3,357		4,835
Stock-based compensation		4,657		7,115
Loss on extinguishment of convertible notes		7,963		4,169
Changes in operating assets and liabilities:
(Increase) in accounts receivable		(225)		—
Decrease (increase) in inventories, net		1,565		(84,759)
(Increase) decrease in prepaid expenses		(1,994)		1,072
(Decrease) increase in accounts payable and accrued expenses		(17,193)		61,532
Net cash used in operating activities		(60,632)		(61,119)
Cash flows from investing activities:
Furniture and equipment purchases		(13)		(77)
Net cash used in investing activities		(13)		(77)
Cash flows from financing activities:
Proceeds from warrant transactions, net of offering costs		5,390		12,035
Proceeds from sale of common stock and warrants, net of issuance costs		28,761		1,000
Proceeds from warrant exercises		1,036		15,209
Payment on convertible notes		—		(950)
Release of restricted cash held in trust for warrant tender offer		—		(10)
Proceeds from stock option exercises		390		48
Payment of payroll withholdings related to tender of common stock for income tax withholding		—		(778)
Proceeds from convertible notes payable, net		—		50,000
Dividend declared and paid on Series B preferred stock		—		(243)
Net cash provided by financing activities		35,577		76,311
Net change in cash		(25,068)		15,115
Cash and restricted cash, beginning of period		33,943		14,292
Cash and restricted cash, end of period	$	8,875	$	29,407
Cash and restricted cash consisted of the following:
Cash	$	8,875	$	29,407
Restricted cash		—		—
Total cash and restricted cash	$	8,875	$	29,407
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	57	$	138
Non-cash investing and financing transactions:
Issuance of common stock for principal and interest of convertible notes	$	22,045	$	16,922
Accrued dividends on convertible Series C and D preferred stock	$	834	$	835
Dividend declared and paid in common stock on Series B preferred stock	$	17	$	—

(1)	See Note 2, “—Correction of Immaterial Misstatements in Prior Period Financial Statements”.

See accompanying notes to consolidated financial statements.

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CYTODYN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF NOVEMBER 30, 2021

(UNAUDITED)

Note 1. Organization

CytoDyn Inc. (the “Company”) was originally incorporated under the laws of Colorado on May 2, 2002 under the name RexRay Corporation and, effective August 27, 2015, reincorporated under the laws of Delaware. The Company is a late-stage biotechnology company developing innovative treatments for multiple therapeutic indications based on leronlimab, a novel humanized monoclonal antibody targeting the CCR5 receptor. Leronlimab is in a class of therapeutic monoclonal antibodies designed to address unmet medical needs for which the Company is focused on developing treatments in the areas of human immunodeficiency virus (“HIV”), cancer, immunology, and novel coronavirus disease (“COVID-19”).

Leronlimab belongs to a class of HIV therapies known as entry inhibitors which block HIV from entering and infecting specific cells. For cancer and immunology, the CCR5 receptor also appears to be implicated in human metastasis and in immune-mediated illnesses such as triple-negative breast cancer, other metastatic solid tumor cancers, and non-alcoholic steatohepatitis (“NASH”). For COVID-19, the Company believes leronlimab may be shown to provide therapeutic benefit by enhancing the immune response and also mitigating the “cytokine storm” that leads to morbidity and mortality in patients experiencing this syndrome.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiary, CytoDyn Operations Inc., and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and should be read in conjunction with the financial statements, summary of significant accounting policies and footnotes included in the Annual Report on Form 10-K, as amended by Amendment No. 1 filed with the SEC on September 28, 2021, for the year ended May 31, 2021 (the “2021 Form 10-K”). Accordingly, certain disclosures required by U.S. GAAP and normally included in Annual Reports on Form 10-K have been condensed or omitted from this report; however, except as disclosed herein, there has been no material change in the information disclosed in the notes to Consolidated Financial Statements included in the 2021 Form 10-K. All intercompany transactions and balances have been eliminated.

It is the opinion of management that all adjustments, consisting of normal recurring adjustments considered necessary for a fair presentation of interim financial information, have been included. The Company has no items of other comprehensive income or loss; therefore, its net income or loss is identical to its comprehensive income or loss. Operating results for the periods presented are not necessarily indicative of expected results for the full year.

Reclassifications

Certain prior year and prior quarter amounts shown in the accompanying Consolidated Financial Statements have been reclassified to conform to the current period presentation. These reclassifications did not have any effect on the Company’s financial position, results of operations, stockholders’ (deficit) equity, or net cash flows as previously reported.

Going Concern

The consolidated accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying Consolidated Financial Statements, the Company had losses for all periods presented. The Company

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incurred a net loss of approximately $68.1 million for the six months ended November 30, 2021 and has an accumulated deficit of approximately $603.4 million as of November 30, 2021. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

The Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to obtain additional operating capital, complete development of its product candidate, leronlimab, obtain approval to commercialize leronlimab from regulatory agencies, continue to outsource manufacturing of leronlimab, and ultimately achieve substantial revenues and attain profitability. The Company continues to engage in significant research and development activities related to leronlimab for multiple indications and expects to incur significant research and development expenses in the future primarily related to its clinical trials. These research and development activities are subject to significant risks and uncertainties. The Company intends to finance its future development activities and its working capital needs largely from the sale of equity and debt securities, combined with additional funding from other traditional sources. There can be no assurance, however, that the Company will be successful in these endeavors.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of Consolidated Financial Statements, and the reported amounts of revenue and expenses during the reporting period. Estimates are assessed each period and updated to reflect current information, such as the economic considerations related to the impact that the recent coronavirus disease could have on our significant accounting estimates and assumptions. The Company’s estimates are based on historical e