Quarterly report pursuant to Section 13 or 15(d)

Stock Options and Warrants

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Stock Options and Warrants
 3 Months Ended
Aug. 31, 2016
Stock Options and Warrants

Note 6 – Stock Options and Warrants

The Company has one active stock-based equity plan at August 31, 2016, the CytoDyn Inc. 2012 Equity Incentive Plan (the “2012 Plan”) and one stock-based equity plan that is no longer active, but under which certain prior awards remain outstanding, the CytoDyn Inc. 2004 Stock Incentive Plan (the “2004 Plan” and, together with the 2012 Plan, the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. As of August 31, 2016, the Company had 650,930 shares available for future stock-based grants under the 2012 Plan.

Stock Options

During the three months ended August 31, 2016, the Company granted annual stock option awards to directors to purchase a total of 300,000 shares of common stock to directors with an exercise price of $1.09 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 was $0.78 per share.

 

During the three months ended August 31, 2016, the Company granted options, covering an aggregate of 1,050,000 shares of common stock, to executive management and employees with exercise prices of $1.09 and $1.10 per share. The options vest annually over three years, have a ten-year term and grant date fair values of $0.75 and $0.76 per share, respectively.

Warrants

During the three months ended August 31, 2016, in connection with private equity offerings, as fully described in Note 10, the Company issued common stock warrants, covering 182,375 shares of common stock to investors. The warrants have a five-year term and an exercise price of $1.35 per share. During the three months ended August 31, 2016, holders of warrants covering 774,097 shares of common stock exercised the right to purchase such shares at either $0.50 or $0.75 per share and the Company received proceeds of approximately $398,000. Additionally, warrants covering 122,362 shares with an exercise price of $0.75 per share were exercised pursuant to a cashless exercise provision.

Compensation expense related to stock options and warrants was approximately $335,000 and $352,000 for the three months ended August 31, 2016 and August 31, 2015, respectively. The grant date fair value of options and warrants vested during the three month periods ended August 31, 2016 and August 31, 2015 was approximately $252,000 and $337,000, respectively. As of August 31, 2016, there was approximately $1,404,000 of unrecognized compensation expense related to share-based payments for unvested options, which is expected to be recognized over a weighted average period of 1.87 years.

The following table represents stock option and warrant activity as of and for the three-months ended August 31, 2016:

 

     Number of
Shares		      Weighted
Average
Exercise Price		      Weighted
Average
Remaining
Contractual Life
in Years		      Aggregate
Intrinsic Value		  

Options and warrants outstanding – May 31, 2016

      63,307,150       $ 0.83         3.20       $ 9,863,492   

Granted

      1,532,375         1.12         —           —     

Exercised

      (896,459 )       0.55         —           —     

Forfeited/expired/cancelled

      (1,354,901 )       1.67         —           —     
  

 

 

           

Options and warrants outstanding – August 31, 2016

      62,588,165         0.83         3.73         14,738,579   
  

 

 

           

Outstanding exercisable – August 31, 2016

      59,097,832       $ 0.82         3.47       $ 14,427,145