Quarterly report pursuant to Section 13 or 15(d)

Stock Options and Warrants

v3.21.1
Stock Options and Warrants
9 Months Ended
Feb. 28, 2021
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options and Warrants

Note 7. Stock Options and Warrants

The Company has one active stock-based equity plan at February 28, 2021, the CytoDyn Inc. Amended and Restated 2012 Equity Incentive Plan (the “2012 Plan”) and one stock-based equity plan that is no longer active, but under which certain prior awards remain outstanding, the CytoDyn Inc. 2004 Stock Incentive Plan (the “2004 Plan” and, together with the 2012 Plan, the “Incentive Plans”). In September 2020, the stockholders approved the CytoDyn Inc. Amended and Restated 2012 Equity Incentive Plan to increase the number of shares available for issuance from 25 million to 50 million shares among other amendments. The total number of shares available to be issued will increase on the first day of each fiscal year in an amount equal to 1% of the total outstanding shares on the last day of the prior fiscal year, and the term of the Plan was extended for an additional 10 years to September 30, 2030. As of February 28, 2021, the Company had approximately 15.4 million shares available for future stock-based grants under the 2012 Plan.

Stock Options and Other Equity Awards

Upon the September 30, 2020 stockholder approval of the 2012 Plan, the Company issued to executives of the Company non-qualified stock options covering 3.35 million shares of common stock, time-vesting restricted stock units (“RSUs”) covering 1.12 million shares of common stock, and performance based RSUs (“PSUs”) covering 4.35 million shares of common stock. The stock options have a per share exercise price of $3.12, grant date fair value of $2.12 per share, and vest equally over three years. The RSUs vest equally over three years and have a grant date fair value of $3.12 per share. The PSUs will vest over the fiscal year ending May 31, 2021 only if certain performance conditions set forth in the awards are met. Concurrent with the stockholder approval, the Company also issued to its non-employee directors stock options covering a total of 506,250 shares of common stock, or 168,750 shares of common stock for each director, which represented the remaining portion of the annual director compensation for the fiscal year beginning June 1, 2020. The

options were issued with a per share exercise price of $6.15, grant date fair value of $4.20 per share, and vest equally over three quarterly installments beginning in the quarter ended November 30, 2020.

During the nine months ended February 28, 2021, the Company granted stock options, covering in aggregate approximately 1.9 million shares of common stock, to non-executive employees and consultants with exercise prices ranging between $2.60 and $6.15 per share. These stock option awards vest annually over three years, with a ten-year term and grant date fair values ranging between $1.84 and $4.46 per share.

During the nine months ended February 28, 2021, the Company issued approximately 2.6 million shares of common stock in connection with the exercise of stock options. The stated exercise price ranged from $0.30 to $1.40 per share which resulted in aggregate gross proceeds of approximately $1.8 million to the Company.

Warrants

During the nine months ended February 28, 2021, the Company issued compensatory warrants covering in aggregate approximately 0.1 million shares of common stock to consultants. The warrants have a five-year term and an exercise price of $3.07. The grant date fair value of these warrants was $2.11 per share.

During the nine months ended February 28, 2021, the Company issued approximately 26.5 million shares of common stock, $0.001 par value, in connection with the exercise of approximately 26.5 million warrants. The stated exercise price ranged from $0.30 to $1.35 per share, which resulted in aggregate gross proceeds of approximately $18.6 million. Additionally, during the nine months ended February 28, 2021, the Company issued approximately 10.6 million shares of common stock, $0.001 par value, in connection with the cashless exercise of approximately 11.7 million warrants with stated exercise prices ranging from $0.40 to $1.35. In connection with the various private warrant exchange agreements during the three months ended February 28, 2021, the Company issued approximately 5.9 million shares of common stock, $0.001 par value, in connection with the exercise of approximately 4.7 million warrants, see Note 11 below for additional information.

Compensation expense related to stock options and warrants for the three and nine months ended February 28, 2021 and February 29, 2020, was approximately $1.9 million and $7.4 million and approximately $3.3 million and $4.3 million, respectively. In addition to compensation expense related to stock options and warrants, during July 2020 the Company incurred $1.6 million in compensation expense for shares awarded to Nader Z. Pourhassan, Ph.D., Chief Executive Officer, as described in Note 12. The grant date fair value of options, warrants, and common stock vested during the nine months ended February 28, 2021 and February 29, 2020 was approximately $4.2 million and $1.9 million, respectively. As of February 28, 2021, there was approximately $13.9 million of unrecognized compensation expense related to share-based payments for unvested options, which is expected to be recognized over a weighted average period of 1.61 years.

The following table represents stock option and warrant activity as of and for the nine months ended February 28, 2021 (in thousands, except per share data):

Weighted 

Average

Weighted

Remaining

Aggregate

Number of

Average

Contractual

Intrinsic

    

Shares

    

Exercise Price

    

Life in Years

    

Value

Options and warrants outstanding—May 31, 2020

 

131,361

$

0.65

 

5.79

$

302,961

Granted

 

5,836

$

3.72

 

 

Exercised

 

(73,358)

$

0.58

 

 

Forfeited/expired/cancelled

 

(648)

$

1.10

 

 

Options and warrants outstanding—February 28, 2021

 

63,191

$

0.92

 

4.49

$

227,079

Outstanding exercisable - February 28, 2021

 

57,042

$

0.75

 

4.10

$

216,042