CytoDyn Inc. (OTCMKTS:CYDY) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On July28, 2017, CytoDyn Inc. (the “Company”) sold $650,000 in aggregate principal amount of unsecured convertible promissory notes (the “Notes”) and related warrants (the “Warrants”) to purchase common stock of the Company (the “Common Stock”), and on July24, 2017 and July26, 2017, the Company sold an aggregate of $350,000 in principal amount of Notes and related Warrants, all in private placements to accredited investors (collectively, the “July 24-28 Placements”), to subscription agreements entered into with each investor (collectively, the “Subscription Agreements”), in exchange for cash in an equal amount. The proceeds of the July24-28 Placements are anticipated to be used for general working capital and to fund clinical trials.

The terms of the July24-28 Placements and of the Notes and the Warrants are identical to those of the private placements that occurred between May31, 2017 and July10, 2017 (together with the July24-28 Placements, the “Private Placements”), as described in the Form 8-Ks filed with the Securities and Exchange Commission on July14, 2017,July7, 2017 and June22, 2017 (the “Prior 8-Ks”) and (solely with respect to the terms of the Notes and not the Warrants) the Form 8-K filed with the Securities and Exchange Commission on June2, 2017, each of which is incorporated herein by reference.

Item 2.03. Unregistered Sales of Equity Securities.

In the July24-28 Placements, the Company sold $1.0 million in aggregate principal amount of Notes and related Warrants to various accredited investors. The principal amount of the Notes plus unpaid accrued interest at an annual rate of 7.0% is convertible at the election of the holders into shares of Common Stock at any time prior to maturity, at an initial conversion price of $0.75 per share, with an aggregate of 1,333,330 shares of the Company’s Common Stock initially underlying the Notes.

As part of the investment in the Notes, the Company also issued Warrants exercisable for 50% of the shares into which the Notes are convertible, with Warrants for an aggregate of 666,664 shares of Common Stock issued in the July24-28 Placements. The Warrants are exercisable at a price of $1.00 per share. The Warrants are currently exercisable in full and will expire five years from the date of issuance.

As described in the Prior 8-Ks, the Subscription Agreements contain certain “piggyback” registration rights relating to resales of shares of Common Stock underlying the Notes and the Warrants. In addition, the Company engaged a placement agent to assist with identifying certain investors to participate in the offering of its Notes and Warrants, the terms of which engagement are also described in the Prior 8-Ks and incorporated herein by reference. In connection with the July24-28 Placements, the placement agent is entitled to Placement Agent Warrants for 63,999 shares of Common Stock and a cash fee of $54,000.

Each of the investors in the July24-28 Placements and the placement agent represented to the Company that it is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Company relied on the exemption from registration afforded by Section4(a)(2) of the Securities Act in connection with the issuance of the Notes, the Warrants and the Placement Agent Warrants.

The foregoing description of the Notes, the Warrants, the Placement Agent Warrants and the July24-28 Placements is qualified in its entirety by reference to the full text of the Notes, the Warrants, the Placement Agent Warrants and the Subscription Agreements, which are included as Exhibits 4.1, 4.2, 4.3 and 10.1, respectively, and are incorporated herein by reference.

Item 2.03. Other Events.

Following the July24-28 Placements, the Company terminated its offering of Notes and Warrants, having raised an aggregate of approximately $6.0 in gross proceeds in the Private Placements. In the Private Placements, in the aggregate, the Company issued approximately $6.0 million in principal amount of Notes, which are initially convertible into 8,051,324 shares of Common Stock (excluding accrued interest through the maturity date), as well as Warrants for 4,025,656 shares of Common Stock. For services rendered in the Private Placements, the placement agent is entitled to Placement Agent Warrants for an aggregate of 350,766 shares of Common Stock, as well as cash fees of approximately $0.3 million, including $20,000 in non-accountable expenses.

Item 2.03. Financial Statements and Exhibits.

About CytoDyn Inc. (OTCMKTS:CYDY)

CytoDyn Inc. is a clinical-stage biotechnology company. The Company is focused on the clinical development and commercialization of humanized monoclonal antibodies to treat Human Immunodeficiency Virus (HIV) infection. The Company’s lead product candidate, PRO 140, belongs to a class of HIV therapies known as entry inhibitors that block HIV from entering into and infecting certain cells. The Company’s product pipeline also includes Cytolin and CytoFeline. Cytolin is a mouse monoclonal antibody developed to identify a specific type of immune cell called a cytotoxic T cell, or cytotoxic T lymphocyte (CTL). CytoFeline is an anti-lymphocyte function-associated antigen-1 (LFA-1) antibody for the treatment of Feline Immunodeficiency Virus (FIV) infection. PRO 140 blocks HIV from entering a cell by binding to a molecule called C-C chemokine receptor type 5 (CCR5). The Company has finished Phase II clinical trials for PRO 140 with demonstrated antiviral activity in man.