Stock Options and Warrants |
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| Stock Options and Warrants |
Note 6 – Stock Options and Warrants The Company has one active stock-based equity plan at May 31, 2019, the CytoDyn Inc. 2012 Equity Incentive Plan (the “2012 Plan”) and one stock-based equity plan that is no longer active, but under which certain prior awards remain outstanding, the CytoDyn Inc. 2004 Stock Incentive Plan (the “2004 Plan” and, together with the 2012 Plan, the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”). The 2012 Plan was approved by stockholders at the Company’s 2012 annual meeting to replace the 2004 Plan. The 2012 Plan was amended by stockholder approval in February 2015 to increase the number of shares available for issuance from 3,000,000 to 5,000,000 shares of common stock and in March 2016 to increase the number of shares available for issuance from 5,000,000 to 7,000,000 shares of common stock. At the annual meeting of stockholders held on August 24, 2017, the stockholders approved an amendment to the 2012 Plan to increase the number of shares available for issuance from 7,000,000 to 15,000,000 shares of common stock. At a special meeting of stockholders held on May 22, 2019, the stockholders approved an amendment to the 2012 Plan to increase the number of shares available for issuance from 15,000,000 to 25,000,000 shares of common stock. As of May 31, 2019, the Company had 10,374,144 shares available for future stock-based grants under the 2012 Plan, as amended. Stock Options During the year ended May 31, 2019, the Company granted annual stock option awards to directors to purchase a total of 1,219,726 shares of common stock with an exercise prices ranging between $0.49 and $0.57 per share. These option awards vest quarterly over one year and have a
ten-year term. The grant date fair value related to these options ranged from $0.29 per share to $0.31 per share.During the year ended May 31, 2019, the Company granted, to executive management and employees, stock options covering an aggregate of 3,715,000 shares of common stock, with exercise prices ranging between $0.48 and $0.57 per share. The option awards vest annually over three years, except for one award covering
950,000 shares, which vests ratably by month over 24 months. All awards have a ten-year term and grant date fair values ranging from $0.26 per share to $0.41 per share.On January 4, 2019, in connection with the resignation of a director, the Company’s Board of Directors approved the acceleration of all outstanding
unvested stock options held by the director, to vest immediately upon the effectiveness of his resignation and to retain the stock options’ exercise period through their respective expiration date. Stock options covering 1,145,834 shares of common stock were subject to acceleration. The other terms of the accelerated stock options remained otherwise unchanged. In addition, the expiration terms of certain other previously awarded stock options covering an aggregate of 150,000 shares common stock were extended from five years to 10 years. The other terms of the extended stock options remained otherwise unchanged.
Warrants On June 15, 2018, in connection with a registered direct equity offering, as fully described in Note 11, the Company issued warrants covering 1,970,000 shares of common stock to investors. The investor warrants have a five-year term and an exercise price of $0.75 per share. In connection with the registered direct offering, the Company also issued warrants covering 133,600 shares of common stock to the placement agent. The placement agent warrants have a five-year term and an exercise price of $0.55 per share. During the year ended May 31, 2019, in connection with a private equity offering, as fully described in Note 10, the Company issued warrants covering a total of 23,487,585 shares of common stock to investors. The investor warrants have a five-year term and an exercise price of $0.75 per share. In connection with this offering, the Company also issued warrants covering 4,446,917 shares of common stock to the placement agent. The placement agent warrants have a five-year term, an exercise price of $0.50 per share and a cashless exercise provision. During the year ended May 31, 2019 the Company issued compensable warrants covering an aggregate of 300,000 shares of common stock to consultants. The warrants have a five-year term, an exercise price of $0.56 per share and a grant date fair value of $0.30 per share. In addition the Company issued a warrant covering 500,000 shares of common stock to a director. The warrant has a
ten-year term, an exercise price of $0.51 per share and a grant date fair value of $0.28 per share.During the year ended May 31, 2019 in connection with the offering of 2019 Short-term Convertible Notes, as fully described in Note 4, the Company issued warrants covering a total of 5,460,000 shares of common stock to investors. The investor warrants have a five-year term and an exercise price of $0.30 per share. In connection with this offering, the Company also issued warrants covering 972,000 shares of common stock to the placement agent. The placement agent warrants have a five-year term, an exercise price of $0.50 per share and a cashless exercise provision. On January 31, February 7 and February 13, 2019, in connection with a registered direct equity offering, the Company issued warrants covering a total of 5,364,240 shares of common stock to investors. The investor warrants have a
five -year term and an exercise price of $0.50 per share. In connection with this offering, the Company also issued warrants covering 965,563 shares of common stock to the placement agent. The placement agent warrants have a five -year term, an exercise price of $0.50 per share and a cashless exercise provision.During the year ended May 31, 2019, in connection with a Secured Convertible Promissory Note, the Company issued warrants covering a total of 5,000,000 shares of common stock to an investor. The investor warrants have a five-year term and an exercise price of $0.30 per share. During the year ended May 31, 2019, in connection with the issuance of Series C Convertible Preferred Stock, the Company issued warrants covering a total of 3,895,000 shares of common stock to investors. The investor warrants have a five-year term and an exercise price of $0.50 per share. In connection with this offering, the Company issued warrants to two lead investors covering an aggregate of 1,000,000 shares of common stock. The lead investor warrants have a five-year term, and an exercise price of $0.50 per share. On April 5, 2019 and April 15, 2019, in connection with a registered direct equity offering, as fully described in Note 11, the Company issued warrants covering 5,465,500 shares of common stock to investors. The investor warrants have a five-year term and an exercise price of $0.50 per share. In connection with the registered direct offering, the Company also issued warrants covering 938,790 shares of common stock to the placement agent. The placement agent warrants have a five-year term and an exercise price of $0.50 per share. Compensation expense related to stock options and warrants for the fiscal years ended May 31, 2019, May 31, 2018 and May 31, 2017 was approximately $3.4 million, $1.3 million and $1.2 million, respectively. The grant date fair value of options and warrants vested during the fiscal years ended May 31, 2019, May 31, 2018 and May 31, 2017 was approximately $2.1 million, $1.4 million and $0.9 million, respectively. As of May 31, 2019, there was approximately $4.3 million of unrecognized compensation expense related to share-based payments for unvested options, with is expected to be recognized over a weighted-average period of approximately 2.41 years.
The following table represents stock option and warrant activity for the year ended May 31, 2019:
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