Edgar Filing: CYTODYN INC

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM SB-2/A
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

CYTODYN, INC.
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(Name of Small Business Issuer in its Charter)

Commission Registration File Number 333-116049

COLORADO 75-3056237
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

200 West De Vargas St., Suite 1
Santa Fe, NM 87501
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(Address of principal executive offices) (Zip code)

(505) 988-5520
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(Registrant's telephone number, including area code)

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(Former name, former address and former fiscal year, if changed since last
report.)

(Name, Address and Telephone Number of Agent for Service)

Copies to:

Ronald J. Tropp
20222 Oxnard Street
Woodland Hills, CA 91367
Telephone No. (818) 999-3623
Facsimile No. (818) 348-1367

Approximate Date of Proposed Sale to the Public: As soon as practicable after
this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

CYTODYN, INC.

CROSS REFERENCE SHEET

Form SB-2 Item Nos. and Caption Prospectus Caption
------------------------------- ------------------

1. Front of Registration Statement and Outside Front Cover
of Prospectus ............................ Outside Front Cover Page

2. Inside Front and Outside Back Cover Pages of
Prospectus ...................................... Inside Front and Outside Back Cover Pages
3. Summary Information and Risk Factors ............ Prospectus Summary; Risk Factors
4. Use of Proceeds ................................. Use of Proceeds
5. Determination of Offering Price ................. Underwriting
6. Dilution ........................................ Dilution
7. Selling Security-Holders ........................ *
8. Plan of Distribution ............................ Outside Front Cover Page; Underwriting
9. Legal Proceedings ............................... *
10. Directors, Executive Officers, Promoters and Control
Persons ......................................... Management
11. Security Ownership of Certain Beneficial Owners and
Management ....................................... Principal Shareholders
12. Description of Securities ....................... Description of Common Stock; Shares
Eligible for Future Sale
13. Interest of Named Experts and Counsel ........... Legal Matters; Experts
14. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities .................. *
15. Organization Within Last Five Years ............. *
16. Description of Business ......................... Prospectus Summary; Business
17. Management's Discussion and Analysis or Plan of
Operation ........................................ Management's Discussion and Analysis of
Financial Condition and Results of
Operations
18. Description of Property ......................... Business
19. Certain Relationships and Related Transactions .. Certain Transactions
20. Market for Common Equity and Related Stockholder
Matters *
21. Executive Compensation .......................... Management
22. Financial Statements ............................ Financial statements
23. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ............ *

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* Not applicable.

THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY
BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

CALCULATION OF REGISTRATION FEE
-------------------------------

PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (2) PER SHARE (4) PRICE FEE (5)
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No par value (c)
Common Stock 1,561,000 $.75 $1,170,750 $147

Total
(1) This fee is calculated pursuant to Rule 457(o).
(2) The shares of Common Stock that may be offered pursuant to this
Registration Statement consist of 250,000 to be offered by the
Registrant, 885,000 shares issued to certain selling stockholders in
previous private placements and 426,000 shares issuable upon exercise
of certain outstanding warrants.
(3) This registration statement covers an additional indeterminate number
of shares of the Registrant's common stock which may be issued in
accordance with Rule 416.
(4) For Purposes of computing the registration fee in accordance with Rule
457(c), the price which is based upon the price of $.75 per share,
which is the price at which the selling stockholders will sell their
shares until the Registrant's shares are quoted on the OTC Bulletin
Board. The Registrant's common stock is not currently listed or quoted
on any quotation medium.

(5) $ 23.75 was previously paid upon the initial filing of this
Registration Statement. $125 was previously paid October 21, 2004.

PROSPECTUS
CYTODYN, INC.

250,000 SHARES OF COMMON STOCK
885,000 SHARES OF COMMON STOCK
426,000 SHARES OF COMMON STOCK

$0.75 PER SHARE

We intend to sell up to 250,000 of the shares of our common stock. This is our
initial public offering. There is no minimum amount of shares that must be sold
and no escrow or trust or deposit account for investor funds, and the proceeds
may be utilized by us in our discretion. Our common stock is not currently
listed or quoted on any quotation medium. This offering will terminate 12 months
from the date of this prospectus.

We are also registering 885,000 shares and 426,000 shares of our common stock,
all of which are being offered by the selling stockholders listed under the
heading "Selling Security Holders." We will not receive any of the proceeds from
the sales of the 885,000 shares of common stock by the selling stockholders. The
426,000 shares are common shares issuable upon exercise of warrants issued to
our financial representative. We will receive the exercise price of the shares
when our financial representative exercises their warrants. The warrants were
issued at an exercise price of $.30 per share and can be immediately exercised.
The warrants expire in five years.

The selling stockholders will all sell of their shares at the stated price of
$.75 per share.

------------------------------------

The common stock offered is speculative and involves a high degree of risk. SEE
RISK FACTORS ON PAGE 3.

------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Shares are offered at $0.75 per share. Since there is no minimum amount of
shares that must be sold, the proceeds of the offering may be $0 up to $187,500.
The offering is being self-underwritten through our officers and directors.

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Offering Price Commissions Proceeds to Company
-------------- ----------- -------------------
Per Share: $ .75 $ 0 $ 0.75
Total: $ 187,500 $ 0 $ 187,500

The date of this Prospectus is January 2005

------------------------------------

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety.

CYTODYN, Inc.

CytoDyn,Inc was organized under the laws of the state of Colorado on May, 2,
2002 as Rexray Corporation. The original sole officer and director of Rexray
Corporation was James B. Wiegand. Mr. Wiegand organized the corporation for the
sole purpose of attempting to locate and negotiate with a business entity for
the merger of that target company. The company had no other operating business.

In October, 2003, we acquired the trademarks, CytoDyn, Cytolin, a trademark
symbol, from CytoDyn of New Mexico, Inc and was assigned a patent license
agreement dated July 1, 1994 by and between Allen D. Allen and CytoDyn of New
Mexico, Inc., which covers U.S. Patent No. 5424066, Patent No. 5651970Patent No.
6534057The license agreement acquired gives the company the worldwide, exclusive
right to develop the technology covered under the U.S. and foreign patents until
the patents expiration. The first is set to expire in 2013. In Consideration for
the transaction, we changed our name from Rexray Corporation to CytoDyn, Inc.,
effected a one-for two reverse split of our outstanding common stock, issued
5,362,640 post-split shares of our common stock to CytoDyn of New Mexico and
assumed $161,578 in liabilities related to the assigned assets. In conjunction
with this acquisition, James Wiegand, sole officer and director, resigned and
Allen D. Allen was appointed President and CEO, Corinne Allen (daughter of Allen
D. Allen) was appointed Secretary and Treasurer and Brian J. McMahon was
appointed Executive Vice President. At this time, Allen D. Allen, Ronald J.
Tropp, Corinne Allen, Daniel M. Strickland and Peggy C. Pence were all appointed
to the Board of Directors. Some of these directors and officers were also
directors and officers of CytoDyn of New Mexico.

CytoDyn of New Mexico, the predecessor company, was organized under the laws of
the state of New Mexico in June 1994. CytoDyn of New Mexico had developed
certain technology for the treatment of the Human Immunodeficiency Virus (HIV)
and spent approximately $1.3 million since its inception to get an
Investigational New Drug (IND) application approved for clinical trials by the
FDA of its product "Cytolin." The $1.3 million in research and development spent
was incurred by the predecessor New Mexico company from its incorporation in
1994 until 1998. From 1998 until 2003 the research and development expenses were
incurred by the previous licensee, Amerimmune, Inc., a company which no longer
exists. Included in our financial statements is the accumulated deficit of the
New Mexico company but not that of Amerimmune, Inc. The New Mexico company sold
some of its assets to us and is in the process of dissolving. The two companies
were not merged. However, for accounting purposes the financial statements
include the accumulated deficit of the New Mexico company and the equity section
is reported as a recapitalization of the New Mexico company.

Mr. Allen, the inventor, will remain the registered owner of the patents that
are exclusively licensed to the Company. The original license agreement was
between Allen D. Allen and the predecessor New Mexico company, CytoDyn of New
Mexico, Inc. This license (but not the patents) was assigned to us in October
2003 pursuant to an Acquisition Agreement. The original license agreement was
amended as of August 23, 2004 to consent to the assignment of the license
agreement to us . In exchange for the assignment of the license, the predecessor
CytoDyn of New Mexico was issued 5,362,640 shares of our common stock. The
Patent License agreement gives us the worldwide exclusive right to develop the
patents, technology and know how for an HIV immunotherapy invented by Mr. Allen.

In November 2003, CytoDyn of New Mexico(the predecessor company) began the
process of liquidating and dissolving. In connection therewith, CytoDyn of New
Mexico distributed the 5,362,640 shares of our common stock to the shareholders
of CytoDyn of New Mexico pro-rata with their stock ownership percentage of the
New Mexico Corporation.

We are the surviving biotechnology research company pursuing the discovery and
development of a treatment for HIV. The technology that we licensed is a
patented and novel treatment for HIV. Instead of the traditional focus of
attacking the virus, our treatment bolsters the human immune system by an
injection of monoclonal antibodies.

A phase I/a/b clinical trial using this treatment method, sponsored by
Amerimmune, Inc, the previous licensee of CytoDyn of New Mexico's Cytolin
technology, was completed in 2002. The data collected from the clinical trials
became the property of Symbion Research International in 2004 because of
non-payment by Amerimmune (See Legal Proceedings). Pursuant to a buy-sell
agreement with Symbion Research International, the Phase I a/b clinical data
will be purchased by CytoDyn, Inc for $362,000 with $25,000 to be paid from
proceeds of this offering and the balance to be paid with 83,122 stock options
and $275,000 in cash once our secondary financing is secured. (See Exhibit
10.5.2 for agreement). The results from these clinical trials showed treatment
with Cytolin was followed by a reduction in viral burden of up to one log with
no severe adverse reactions. The logarithm or "log" is the standard way of
measuring the reduction in the amount of virus in the blood of HIV patients. A
reduction of one log, while from a preliminary study, is competitive with the
approved AIDS drugs currently on the market.. We anticipate conducting a Phase
II/III pivotal study, which if successfully completed would allow the submission
of a marketing application (Biologics Licensing Application; BLA.) If the BLA
were issued, we would then be able to market Cytolin to HIV patients in the
United States. The time frame to be able to market Cytolin in the United States
is expected to be a total of 32 to 49 months. The total estimated amount of
capital required to get the drug marketed in the U.S. and fund our other
overhead and continuing expenses is approximately $3,000,000 to $5,000,000.

Our principal executive offices are located at 200 West De Vargas St., Suite 1,
Santa Fe, NM 87501 and our telephone number is 1-877-988-5520.

We are in the development stage and currently have no potential drugs approved
for commercial use. Our long-term viability, profitability and growth will
depend upon successful commercialization of potential drugs resulting from our
research and product development activities. To date, we, as well as both
predecessor companies, have generated no revenues.

THE OFFERING
------------

Common Stock offered........................ 250,000 shares

Selling Security Holders ................... 885,000 shares
426,000 shares
Common Stock to be outstanding
after the offering ......................... 8,319,307 shares

Use of Proceeds............................. CytoDyn intends to use all of the
net proceeds of this offering for
working capital and general
corporate compliance purposes.

Risk Factors................................ The securities offered hereby are
speculative and involve a high
degree of risk and immediate
substantial dilution and should
not be purchased by investors who
cannot afford the loss of their
entire investment. See "Risk
Factors."

SUMMARY FINANCIAL INFORMATION

The summary financial information set forth below is derived from the financial
statements appearing elsewhere in this Prospectus. Such information should be
read in conjunction with such financial statements, including the notes thereto.

CYTODYN, INC.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)

August 31, 2004

Assets

Current Assets:
Cash ...................................................... $ 76,435
Prepaid expenses .......................................... 9,854
-----------
Total current assets ........................ 86,289

Property and equipment, less accumulated
depreciation of $496 ...................................... 6,006
Deposit ....................................................... 495
-----------

$ 92,790
===========

Liabilities and Shareholders' Deficit

Current Liabilities:
Accounts payable .......................................... $ 70,799
Accrued liabilities ....................................... 9,327
Indebtedness to related parties (Note 2) .................. 132,979
-----------
Total current liabilities ................... 213,105
-----------

Commitments and contingencies (Note 6) ........................ --

Shareholders' deficit (Note 4):
Preferred stock, no par value; 5,000,000 shares authorized,
-0- shares issued and outstanding ...................... --
Common stock, no par value; 25,000,000 shares authorized,
8,069,307 shares issued and outstanding ................ 1,916,334
Additional paid-in capital ................................ 24,014
Accumulated deficit ....................................... (1,601,912)
Deficit accumulated during development stage .............. (458,751)
-----------
Total shareholders' deficit ................. (120,315)
-----------

$ 92,790
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CYTODYN, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)

For The Three Months Ended
August 31,
--------------------------
2004 2003
----------- -----------
Operating expenses:
General and administrative (Note 8) .... $ 120,409 $ 3,935
Depreciation ........................... 292 --
----------- -----------
Total operating expenses 120,701 3,935
----------- -----------
Operating loss ......... (120,701) (3,935)

Interest income ............................ 176 --
Interest expense ........................... (182) --
----------- -----------
Loss before income taxes (120,707) (3,935)

Income tax provision (Note 5) .............. -- --
----------- -----------

Net loss ............... $ (120,707) $ (3,935)
=========== ===========

Basic and diluted loss per share ........... $ (0.01) (0.00)
=========== ===========

Basic and diluted weighted average
common shares outstanding .............. 8,069,307 5,362,640
=========== ===========

RISK FACTORS

RISKS RELATED TO OUR FINANCIAL CONDITION
----------------------------------------

OUR ACCOUNTANT HAS EXPRESSED A SUBSTANTIAL DOUBT THAT WE CAN CONTINUE AS A GOING
CONCERN. IF WE DO NOT CONTINUE AS A GOING CONCERN, INVESTORS COULD LOSE THEIR
ENTIRE INVESTMENT.

We have accumulated losses since our inception, and our independent accountant
has expressed that there is a substantial doubt that we may continue as a going
concern. If we do not continue as a going concern, there will be no way for
investors to recoup their investments.

WE ARE A NEW BUSINESS WITH A LIMITED OPERATING HISTORY AND NO REVENUES TO DATE
AND CANNOT COMMENCE OPERATIONS UNLESS WE CAN OVERCOME THE MANY OBSTACLES WE
FACE.

We are a development-stage company with no prior business operations and no
revenues. We are presently engaged in the early stage development of certain
potential drugs. Unless we are able to secure adequate funding, we may not be
able to successfully develop and market our potential drugs and our business
will most likely fail. Because of our limited operating history, you may not
have adequate information on which you can base an evaluation of our business
and prospects. To date, our efforts have been allocated primarily to the
following: aggressively patenting our technology; organizational activities;
developing a business plan; obtaining interim funding; and conducting research
and working toward the ultimate successful development of our potential drugs.
In order to establish ourselves in the bio pharmaceutical market, we are
dependent upon funding by sales of our securities and the successful development
and marketing of our potential drugs. As a research and development company, we
face increased risks, uncertainties, difficulties and expenses such that an
investment in our common stock may be worthless if our business fails. We have a
history of losses and a large accumulated deficit and we expect future losses
that may cause our stock price to lose its value.

For the fiscal years ended May 31, 2003 and May 31, 2004, we incurred net losses
of $30,229 and $345,914 , respectively, losses for August 31, 2004 were $120,707
for a total cumulative net loss since inception of the company $ 496,850 . The
predecessor CytoDyn of New Mexico incurred approximately $1.3 in net losses
before it assigned its license to us. We expect to lose more money as we spend
additional capital to develop and market our technologies and establish our
infrastructure and organization to support anticipated operations. We cannot be
certain whether we will ever earn a significant amount of revenues or profit,
or, if we do, that we will be able to continue earning such revenues or profit.
Also, the current economic weakness may limit our ability to develop and
ultimately market our technologies. Any of these factors could cause our stock
price to decline and result in you losing a portion or all of your investment.

RISKS RELATED TO OUR BUSINESS
-----------------------------

OUR INABILITY TO RETAIN AND ATTRACT KEY PERSONNEL COULD CAUSE OUR BUSINESS TO
FAIL.

We believe that our future success will depend on the abilities and continued
service of certain of our senior management and executive officers, particularly
our president and CEO and those persons involved in the research and development
of our potential drugs. If we are unable to retain the services of these
persons, or if we are unable to attract additional qualified employees,
researchers and consultants, we may be unable to successfully finalize and
eventually market our drugs being developed, which would have a material adverse
effect on our business.

OUR RESEARCH AND DEVELOPMENT EFFORTS MAY NOT RESULT IN COMMERCIALLY VIABLE
POTENTIAL DRUGS WHICH COULD RESULT IN A LOSS OF INVESTMENT.

Our technologies are in the development stage. Further research and development
efforts will be required to develop these technologies to the point where they
can be incorporated into commercially viable or salable potential drugs. We have
set forth in this report our proposed research and development program as it is
currently conceived. We cannot assure you, however, that this program will be
accomplished in the order or in the time frame set forth. We reserve the right
to modify the research and development program. We may not succeed in developing
commercially viable potential drugs from our technologies. If not, our ability
to generate revenues from our technologies will be severely limited. This would
result in the loss of all or part of your investment.

OUR POTENTIAL DRUGS HAVE NOT YET BEEN EXTENSIVELY TESTED ON HUMANS, AND THEIR
EFFICACY IS NOT YET KNOWN. IF WE CANNOT DEVELOP EFFECTIVE POTENTIAL DRUGS, OUR
BUSINESS WILL FAIL.

There are numerous legal, scientific and regulatory risks that may prevent us
from carrying out its project to develop the proposed antibody therapy to treat
HIV disease and AIDS. Investment in CytoDyn must be considered highly
speculative because, among other reasons, only limited testing on humans has
been conducted. It is possible that proposed therapies will not be effective for
treating HIV disease or AIDS or that they will have adverse side effects on
human subjects which will prohibit or undermine their intended use.
Consequently, investment in our securities involves a high degree of risk and
only those persons of adequate financial means, who have no need for liquidity
with respect to the investment, and can bear the risk of losing all or part of
the investment, are suitable for such investment.

IN ORDER TO CREATE OUR POTENTIAL DRUGS, WE WILL NEED TO LICENSE OR PURCHASE
CLONES. IF WE ARE UNABLE TO DO SO, WE MAY NOT BE ABLE TO CONTINUE DEVELOPMENT OF
OUR POTENTIAL DRUGS.

The patents licensed by us cover the use of certain antibodies to treat HIV
disease. Antibodies are produced in a process similar to that of making wine. A
seed or "clone" is planted to grow a cellbank. The cell bank is then used to
grow a crop of cells. Cells are harvested from the cell bank and then fermented
or otherwise processed to make raw antibodies. Finally, the raw antibodies are
purified and vialed using an FDA approved method. CytoDyn does not currently own
or license the clones used to produce antibodies. We have not yet commenced
negotiations with the owners of the needed clones, and there can be no assurance
that we will be able to obtain such an agreement. In the event we are unable to
obtain a clone license, our use of the antibody will be restricted to research
only. In order to protect our potential drugs, we must be able to license the
clones, and no such license has yet been negotiated.

WE ARE DEPENDENT UPON PATENTS LICENSED FROM ALLEN D. ALLEN. THE FAILURE TO
MAINTAIN THESE LICENSES MAY CAUSE OUR BUSINESS TO FAIL.

We currently have the right to use patent and proprietary rights which are
material to the development of our HIV treatments, by assignment of a license
from Allen D. Allen, the owner of the patents. The license requires us to defend
the licensed patents from infringement. If we were to fail to defend or maintain
patents or other protections of the licensed patents and proprietary technology,
it may have a materially adverse effect on our ability to develop our potential
drugs.

WE MAY NOT HAVE OPPORTUNITIES TO ENTER INTO STRATEGIC PARTNERSHIPS FOR THE
COMMERCIALIZATION OF OUR TECHNOLOGIES WHICH COULD HAVE A SEVERE NEGATIVE IMPACT
ON OUR ABILITY TO MARKET OUR POTENTIAL DRUGS.

We intend to enter into strategic partnerships or other relationships with
established biomedical, pharmaceutical and biopharmaceutical companies to obtain
the necessary regulatory approvals and to undertake the manufacturing and
marketing efforts required for commercializing our potential drugs. However, we
do not have commitments at this time from any potential partners. If we are
unable to enter into any new partnerships, then we may be unable to commence the
commercialization of our potential drugs.

A MARKET FOR OUR POTENTIAL DRUGS MAY NOT DEVELOP, CAUSING A FAILURE OF OUR
BUSINESS.

Our future success will depend, in part, on the market acceptance, and the
timing of such acceptance, of new potential drugs or technologies that may be
developed or acquired. To achieve market acceptance, we must make substantial
marketing efforts and spend significant funds to inform potential customers and
the public of the perceived benefits of these potential drugs. We currently have
limited evidence on which to evaluate the market reaction to potential drugs
that may be developed, and there can be no assurance that any potential drugs
will obtain market acceptance and fill the market need that is perceived to
exist.

OUR BUSINESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY. IF WE
CANNOT PROTECT IT, OUR BUSINESS MAY FAIL.

We have entered, and will continue to enter, into confidentiality agreements
with our employees, consultants, advisors and collaborators. Corinne Allen our
Vice President of Business Development and Wellington Ewen our Chief Financial
Officer, have entered into Proprietary Information and Inventions Agreements in
order to protect our proprietary information. Allen D. Allen as the Inventor of
the technology is bound under the Patent License Agreement licensed to CytoDyn.
However, these parties may not honor these agreements and we may not be able to
successfully protect our rights to unpatented trade secrets and know-how. Others
may independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets and know-how. Although
we encourage and expect all of our employees to abide by any confidentiality
agreement with a prior employer, competing companies may allege trade secret
violations and similar claims against us. We may collaborate with universities
and governmental research organizations which, as a result, may acquire part of
the rights to any inventions or technical information derived from collaboration
with them. To facilitate development and commercialization of a proprietary
technology base, we may need to obtain licenses to patents or other proprietary
rights from other parties. Obtaining and maintaining such licenses may require
the payment of substantial amounts. In addition, if we are unable to obtain
these types of licenses, our product development and commercialization efforts
may be delayed or precluded. We may incur substantial costs and be required to
expend substantial resources in asserting or protecting our intellectual
property rights, or in defending suits against us related to intellectual
property rights. Disputes regarding intellectual property rights could
substantially delay product development or commercialization activities.
Disputes regarding intellectual property rights might include state, federal or
foreign court litigation as well as patent interference, patent reexamination,
patent reissue, or trademark opposition proceedings in the United States Patent
and Trademark Office. Opposition or revocation proceedings could be instituted
in a foreign patent office. An adverse decision in any proceeding regarding
intellectual property rights could result in the loss or limitation of our
rights to a patent, an invention or trademark.

WE WILL ENGAGE CONTRACT MANUFACTURERS TO PRODUCE OUR POTENTIAL DRUGS, INCLUDING
OUR POTENTIAL HIV DRUGS..

Our dependence on third party manufacturers creates a risk that the manufacturer
will become unable to perform work for us, or perform it properly, or the
manufacturer may go out of business. This would create a substantial delay in
the development of our products, which would have a materially adverse effect on
our business.

AS A PRODUCER OF POTENTIAL DRUGS, WE MAY BE EXPOSED TO PRODUCT LIABILITY AND
RECALL RISKS FOR WHICH INSURANCE COVERAGE IS EXPENSIVE, LIMITED AND POTENTIALLY
INADEQUATE.

We produce potential drugs, which, if approved for use by humans, subjects us to
risks of product liability claims or product recalls, particularly in the event
of false positive or false negative reports. The drug platform we are developing
is also subject to product liability claims with respect to safety of the
product, especially with regard to potential side effects. At the moment we have
no product liability insurance, but even if we are successful in obtaining
insurance for our potential drugs, a product recall or a successful product
liability claim or claims that exceed our insurance coverage could have a
material adverse effect on us. Product liability insurance is expensive. In the
future we may not be able to obtain coverage on acceptable terms, if at all.
Moreover, our insurance coverage may not adequately protect us from liability
that we incur in connection with clinical trials or sales of our potential
drugs.

OUR MANAGEMENT HAS SUBSTANTIAL VOTING CONTROL OVER ALL MATTERS

As of August 31, 2004, Allen D. Allen our president holds 2,118,515 and Corinne
Allen, our Secretary and Vice President, holds 1,736,335 of our 8,069,307 shares
of common stock outstanding. This gives them 47% voting control over all matters
submitted to a vote of the shareholders. .

TECHNOLOGICAL CHANGES MAY RENDER OUR POTENTIAL DRUGS OBSOLETE.

The biopharmaceutical industry is subject to rapid and significant technological
change, and the ability of CytoDyn to compete is dependent in large part on its
ability continually to enhance and improve its potential drugs and technologies.
In order to do so, CytoDyn must effectively utilize and expand its research and
development capabilities, and, once developed, expeditiously convert new
technology into potential drugs and processes which can be commercialized. Our
competitors may succeed in developing technologies, potential drugs and
processes that render our processes and potential drugs obsolete. Certain
companies have filed applications for or have been issued patents and may obtain
additional patents and proprietary rights relating to potential drugs or
processes competitive with or otherwise related to those of CytoDyn. The scope
and viability of these patents, the extent to which CytoDyn may be required to
obtain licenses under these patents or under other proprietary rights and the
cost and availability of licenses are unknown, but these factors may limit our
ability to market potential drugs.

IT IS UNCERTAIN IF HEALTHCARE FACILITIES, PROVIDERS AND INSURANCE COMPANIES WILL
APPROVE BENEFITS OR REIMBURSEMENT FOR THEIR MEMBERS FOR OUR POTENTIAL DRUGS,
THUS RENDERING THEM MORE EXPENSIVE AND MORE DIFFICULT TO MARKET.

The industry is subject to changing political, economic and regulatory
influences that may affect the procurement practices and operations of
healthcare industry participants. During the past several years, state and
federal government regulation of reimbursement rates and capital expenditures in
the United States has increased. Lawmakers continue to propose programs to
reform the United States healthcare system, which may contain programs to
increase governmental involvement in healthcare, lower Medicare and Medicaid
reimbursement rates or otherwise change the operating environment in the
healthcare industry. Healthcare industry participants may react to these
proposals by curtailing or deferring use of new treatments for disease,
including treatments utilizing the biologics that CytoDyn is developing.

WE NEED TO RAISE AT LEAST $3,000,000 to $5,000,000 IN THE NEXT 12 MONTHS OR WE
WILL NOT BE ABLE TO CONTINUE OUR BUSINESS.

We need to raise at least $75,000 in this offering. If we fail to do so, and are
unable to raise at least $3,000,000 to $5,000,000 in the next 12 months by
continuing to obtain capital or by borrowing funds, we will not be able to
operate our business.

RISKS RELATED TO LEGAL PROCEEDINGS
----------------------------------

MANAGEMENT'S RESPONSIBILITY IS TO PROTECT THE PATENTS, TRADEMARKS AND
TECHNOLOGY. THIS INCLUDES LEGAL EXPENSES TO OPPOSE ATTEMPTS TO STEAL, CONVERT OR
MISAPPROPRIATE OUR PROPERTY.

We have been targeted in the past and have had to spend significant legal fees
to recover our property. Please see disclosures on page 29 and 30 under "Legal
Proceedings." If we are unsuccessful in opposing efforts to steal, convert or
misappropriate our property, this could have a materially adverse effect on our
business.

RISKS RELATED TO REGULATORY APPROVALS AND CLEARANCES
----------------------------------------------------

THE TIME NEEDED TO OBTAIN REGULATORY APPROVALS AND RESPOND TO CHANGES IN
REGULATORY REQUIREMENTS COULD CAUSE OUR BUSINESS TO FAIL.

On October 1, 2003, the Food and Drug Administration (FDA) transferred certain
product oversight responsibilities from the Center for Biologics Evaluation and
Research (CBER) to the Center for Drug Evaluation and Research (CDER). The
review and approval of Cytolin(R) is now under the jurisdiction of the Division
of Monoclonal Antibodies (DMA; Steven Kozlowski, MD, acting director, Patrick
Swann, Ph.D., acting deputy director) in the CDER Office of Pharmaceutical
Science: Office of Biotechnology Products (Keith O. Webber, Ph.D., Acting
Director).

Under current law, all new drugs and biologic products need clinical proof that
they are safe and effective before they can be approved for marketing in the
United States. The approval of Cytolin will be subject to submission of a
Biologics Licensing Application (BLA), submitted to CDER. The BLA is the vehicle
through which CytoDyn will formally propose that the FDA approve Cytolin for
sale in the United States. To obtain this authorization, CytoDyn will submit for
review, as contained in the BLA, nonclinical (in vitro and animal) and clinical
(human) test data and analyses, drug information, and descriptions of
manufacturing procedures.

The submission of a BLA to the FDA does not guarantee that an approval or
clearance to market a product will be received.

This process could be costly and lengthy. There may be delays that
increases our costs to develop new potential drugs as well as the risk that we
will not succeed in introducing or selling them in the United States or other
countries.

Newly promulgated or changed regulations could also require us to undergo
additional trials or procedures, or could make it impractical or impossible for
us to market our potential drugs for certain uses, in certain markets, or at
all.

Failure to comply with FDA or similar international regulatory bodies or other
requirements may require us to suspend production of our potential drugs which
could result in further losses or inability to produce revenues.

RISKS RELATED TO OUR COMMON STOCK
---------------------------------

A PUBLIC MARKET FOR OUR SHARES MAY NEVER DEVELOP, MAKING THE SHARES ILLIQUID.

A public market for our shares may never develop. This may make it difficult or
impossible for investors in our shares to sell them. If our shares are approved
for a quotation on the over-the-counter market, they may be thinly traded and
highly volatile.

IF A TRADING MARKET DEVELOPS IN OUR SECURITIES, IT WILL BE LIMITED, WHICH MAKES
TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT
IN OUR STOCK.

There is no current market for our common stock, but, if one develops, shares of
our common stock are "penny stocks" as defined in the Exchange Act, which are
traded in the over-the-counter market on the over-the-counter bulletin board. As
a result, investors may find it more difficult to dispose of or obtain accurate
quotations as to the price of the shares of the common stock being registered
hereby. In addition, the "penny stock" rules adopted by the Securities Exchange
Commission under the Exchange Act subject the sale of the shares of our common
stock to certain regulations which impose sales practice requirements on
broker/dealers. For example, brokers/dealers selling such securities must, prior
to effecting the transaction, provide their customers with a document that
discloses the risks of investing in such securities. Included in these documents
are the following:

- the bid and offer price quotes in and for the "penny stock", and the
number of shares to which the quoted prices apply.
- the brokerage firm's compensation for the trade.
- the compensation received by the brokerage firm's sales person for the
trade.

In addition, the brokerage firm must send the investor:
- a monthly account statement that gives an estimate of the value of each
"penny stock" in the investor's account.
- a written statement of the investor's financial situation and investment
goals. Legal remedies, which may be available to you as an investor in "penny
stocks", are as follows:
- if "penny stock" is sold to you in violation of your rights listed above,
or other federal or state securities laws, you may be able to cancel your
purchase and get your money back.
- if the stocks are sold in a fraudulent manner, you may be able to sue the
persons and firms that committed the fraud for damages.

- if you have signed an arbitration agreement, however, you may have to
pursue your claim through arbitration. If the person purchasing the securities
is someone other than an accredited investor or an established customer of the
broker/dealer, the broker/dealer must also approve the potential customer's
account by obtaining information concerning the customer's financial situation,
investment experience and investment objectives. The broker/dealer must also
make a determination whether the transaction is suitable for the customer and
whether the customer has sufficient knowledge and experience in financial
matters to be reasonably expected to be capable of evaluating the risk of
transactions in such securities. Accordingly, the Securities and Exchange
Commission's rules may limit the number of potential purchasers of the shares of
our common stock. Resale restrictions on transferring "penny stocks" are
sometimes imposed by some states, which may make transaction in our stock more
difficult and may reduce the value of the investment. Various state securities
laws pose restrictions on transferring "penny stocks" and as a result, investors
in our common stock may have the ability to sell their shares of our common
stock impaired.

FORWARD LOOKING STATEMENTS

Some of the statements contained in this prospectus or incorporated by
reference into this prospectus are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, or the Securities Act,
and Section 21E of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, and are subject to the safe harbor created by the Securities
Litigation Reform Act of 1995. We have based these forward-looking statements
largely on our expectations and projections about future events and financial
trends affecting the financial condition and/or operating results of our
business. Forward-looking statements involve risks and uncertainties. There are
important factors that could cause actual results to be substantially different
from the results expressed or implied by these forward-looking statements,
including, among other things:

o our ability to complete and achieve positive results in clinical
trials;

o our ability to develop safe and efficacious products;

o our ability to comply with existing and future regulations affecting
our business and obtain regulatory approvals for our products that are
under development;

o our ability to commercialize our products that are under development;

o the extent to which the costs of any products that we are able to
commercialize will be reimbursable by third-party payors;

o the extent to which any products that we are able to commercialize
will be accepted by the market;

o our ability to protect our proprietary rights and operate our business
without conflicting with the rights of others;

o the effect that any intellectual property litigation or product
liability claims may have on our business and operating and financial
performance;

o our expectations and estimates concerning our future operating and
financial performance, ability to finance our business, and financing
plans;

o our dependence on third party suppliers and manufacturers to produce
products that we develop;

o the impact of competition and technological change on our business;

o our ability to recruit and retain key personnel;

o our ability to enter into future collaboration agreements;

o anticipated trends in our business; and

o other factors set forth in greater detail under "RISK FACTORS" above
and in our future filings made with the Securities and Exchange
Commission, which are incorporated by reference in this prospectus,
and any risk factors set forth in the accompanying prospectus
supplement.

In addition, in this prospectus and the documents incorporated by reference
into this prospectus, the words "believe," "may," "estimate," "continue,"
"anticipate," "intend," "plan," "expect," "potential," "continue," or
"opportunity," the negative of these words or similar expressions, as they
relate to us, our business, future financial or operating performance or our
management, are intended to identify forward-looking statements.. Past financial
or operating performance is not necessarily a reliable indicator of future
performance and you should not use our historical performance to anticipate
results or future period trends.

USE OF PROCEEDS
---------------

The proceeds to CytoDyn from the sale of the 250,000 shares of common stock
offered hereby are estimated to be approximately $187,500. CytoDyn expects to
use such net proceeds approximately as follows:

Percentage of 1/3 2/3 Total
Application of Proceeds Amount Amount Amount
--------- --------- ---------
Proceeds $ 62,500 $ 125,000 $ 187,500
Offering Expenses (40,524) (40,524) (40,524)

*Net proceeds 21,976 84,476 $ 146,976

*Rent and Office $ 2,176 $ 12,000 $ 12,000
D&O Insurance $ 19,800 $ 19,800 $ 19,800
Executives salaries $ 40,000 $ 78,000
Legal and Accounting $ 12,676 $ 12,176
FDA Meeting expense $ 25,000
--------- --------- ---------
Total net proceeds $ 21,976 $ 84,476 $ 146,976 100%

Proceeds from this offering will NOT BE sufficient to pay our expenses after 6
months. In order to fund our operations through Phase II/III pivotal trials in
the next 32 to 49 months, we will need to raise an estimated $3,000,000 to
$5,000,000.

The proceeds of $146,976 will be used for corporate administrative expenditures
related to FDA and SEC compliance including our overhead for six months, legal
fees, accounting fees and other filing fees. The purpose of this offering is to
establish a public market for our stock. Once a market has been established, our
officers will then attempt to locate and negotiate financing from additional
equity offerings with the goal of raising approximately $3 to $5 million. We
believe that $3 to $5 million should be sufficient to fund the company's
overhead expenses and Phase II/III pivotal clinical trials. We anticipate this
will take at least six months to raise this additional capital. We have no
current arrangements with respect to, or sources of, additional financing and it
is not anticipated that any of our officers, directors or shareholders will
provide any portion of our financing requirements. There can be no assurance
that, when needed, any additional financing will be available to us on
commercially reasonable terms, or at all. In the event our plans change, or our
assumptions change or prove to be inaccurate, or if the net proceeds of this
offering, together with other capital resources, otherwise prove to be
insufficient to fund operations, we could be required to seek additional
financing sooner than currently anticipated.

The allocation of the net proceeds of this offering set forth above represents
our best estimates based upon its current plans and certain assumptions
regarding our future revenues and expenditures. If any of these factors change,
CytoDyn may find it necessary or advisable to reallocate some of the proceeds
within the above-described categories or to use portions thereof for other
purposes.

Proceeds not immediately required for the purposes described above will be
invested principally in United States Government securities, bank certificates
of deposit, money market funds or other short-term interest-bearing investments.

DIVIDEND POLICY

To date, we have not declared or paid any cash dividends on our Common Stock and
do not expect to declare or pay any dividends in the foreseeable future.
Instead, we intends to retain all earnings, if any, for use in our business
operations.

DILUTION

The difference between the public offering price per share of the common stock
and the pro forma net tangible book value per share of the common stock after
completion of this offering constitutes the dilution to investors in this
offering. Net tangible book value per share on any given date is determined by
dividing our net tangible book value (total tangible assets less total
liabilities) on such date by the number of outstanding shares of Common Stock.

At August 31, 2004, the net tangible book value of CytoDyn was ($.01) per share
of Common Stock. After giving effect to the sale by CytoDyn of one third of the
250,000 shares of Common Stock offered hereby or 83,333 shares, the pro forma
net tangible book value of CytoDyn at August 31, 2004 would have been $(58,207),
or approximately ($.007)per share of common stock. This represents an immediate
increase in net tangible book value of $.008 per share to the existing
shareholders and an immediate dilution of $0.74 per share to new investors. The
following table illustrates this dilution to new investors on a per share basis:

Public offering price per share of common stock............... $0.75

Net tangible book value per share before offering............. ($0.01)
Increase per share attributable to new investors.............. ($0.008)
Net tangible book value per share after offering.............. ($0.007)
Dilution per share to new investors........................... $0.74
Percentage dilution........................................... 74%

The following table is a comparison of the number of shares purchased, the
percentage of shares purchased, the total consideration paid, the percentage of
total consideration paid, and the average price per share paid by the existing
stockholders and by new investors, assuming the sale of one third of the 250,000
shares in this offering or 83,333 shares.

Number of Purchase Percentage Percentage of Average price
Shares Price of Shares Consideration per share
--------- --------- ---------- ------------- -------------

New Investors 83,333 $ 62,500 1% 10% 0.75
Existing Investors 8,069,307 $ 573,664 99% 90% 0.07

At August 31,, 2004, the net tangible book value of CytoDyn was ($.01) per share
of Common Stock. After giving effect to the sale by CytoDyn of two thirds of the
250,000 shares of Common Stock offered hereby or 166,666 shares, the pro forma
net tangible book value of CytoDyn at August 31, 2004 would have been $4,293 or
approximately $.0005 per share of common stock. This represents an immediate
increase in net tangible book value of $.015 per share to the existing
shareholders and an immediate dilution of $.73 per share to new investors. The
following table illustrates this dilution to new investors on a per share basis:

Public offering price per share of common stock.................. $0.75
Net tangible book value per share before offering................ ($0.01)
Increase per share attributable to new investors................. $0.0005
Net tangible book value per share after offering................. $0.015
Dilution per share to new investors.............................. $0.73
Percentage dilution.............................................. 73%

The following table is a comparison of the number of shares purchased, the
percentage of shares purchased, the total consideration paid, the percentage of
total consideration paid, and the average price per share paid by the existing
stockholders and by new investors, assuming the sale of two thirds of the
250,000 shares in this offering or 166,666 shares.

Number of Purchase Percentage Percentage of Average price
Shares Price of Shares Consideration per share
--------- --------- ---------- ------------- -------------

New Investors 166,666 $ 125,000 2% 18% 0.75
Existing Investors 8,069,307 $ 573,664 97% 82% 0.07

Public offering price per share of common stock.

At August 31, 2004 the net tangible book value of CytoDyn was ($.01) per share
of Common Stock. After giving effect to the sale by CytoDyn of all 250,000
shares of Common Stock offered hereby, the pro forma net tangible book value of
CytoDyn at August 31, 2004 would have been $66,793 or approximately $.008 per
share of common stock. This represents an immediate increase in net tangible
book value of $.02 per share to the existing shareholders and an immediate
dilution of $0.73 per share to new investors. The following table illustrates
this dilution to new investors on a per share basis:

Public offering price per share of common stock................ $0.75
Net tangible book value per share before offering.............. ($0.01)
Increase per share attributable to new investors............... $0.008
Net tangible book value per share after offering............... $0.02
Dilution per share to new investors............................ $0.73
Percentage dilution............................................ 73%

Number of Purchase Percentage Percentage of Average price
Shares Price of Shares Consideration per share
--------- --------- ---------- ------------- -------------
New Investors 250,000 $ 187,500 3% 25% 0.75
Existing Investors 8,069,307 $ 573,664 97% 75% 0.07

BUSINESS

Organization

In October 2003 we entered into an Acquisition Agreement with CytoDyn of New
Mexico, Inc, pursuant to which we effected a two for one reverse split of our
common stock, and amended our articles of incorporation to change our name from
Rexray Corporation to CytoDyn, Inc. Pursuant to the acquisition agreement, we
were assigned the patent license agreement dated July 1, 1994 between CytoDyn of
New Mexico and Allen D. Allen covering three United States patents along with
foreign counterpart patents which describe a method for treating HIV disease
with the use of monoclonal antibodies. We also acquired the trademarks, CytoDyn
and Cytolin, and a related trademark symbol. The license acquired gives the
Company the worldwide, exclusive right to develop, market and sell the HIV
therapies from the patents, technology and know-how invented by Mr. Allen. The
term of the agreement is for the life of the patents of which the first shall
expire in 2013. See Exhibit 10.6 for Patent License Agreement and Amendment No.
1. As consideration for the intellectual property and trademarks we paid CytoDyn
of New Mexico $10,000 in cash and issued 5,362,640 post-split shares of common
stock to CytoDyn of New Mexico (the predecessor company).

We believe that sufficient private capital is not readily available for
development stage biotechnology companies until Phase II clinical trials have
been announced or completed. Consequently, emerging biotechnology companies
often fund their clinical trials by creating a public market for their shares
and selling equity securities in public transactions.

As a result, we are seeking to fund drug development through offerings of public
securities while minimizing administrative and legal costs. We desire to
minimize costs and expenses that do not advance drug development, especially
since legal and administrative costs are significant in the biotechnology
sector.

The company has two full time employees, Allen D. Allen, CEO and Corinne Allen
Vice President of Business Development, and one part time employee, Wellington
Ewen, CFO.

In the last two fiscal years, there have not been any research and/or
development expenditures by this or the predecessor companies.

The company and all of its predecessors had not been operating businesses. The
New Mexico company previously licensed the technology out for development and
had not been an operating business since 1998. We were only incorporated in May
2002 and this was not an operating entity until the acquisition of the license
in October 2003. We expect to incur significant research and development
expenses in the near future. However, the company's expenditures in the last two
fiscal years have been for general and administrative purposes, legal fees, and
patent protection, not research and development expenses.

The Biotechnology Industry

We estimate that approximately 4,000 biotech companies are operating around the
world today, about 1,500 of which are in the United States. According to
Biotechnology Industry Organization: Biotechnology Industry Statistics, 2003,
revenues of U.S. biotech companies increased from about $8 billion in 1992 to
about $34.8 billion in 2001. In 1990, the market capitalization of public
companies in the biotechnology industry was less than $50 billion. By April of
2003, the market capitalization was estimated to be $206 billion. More than 370
biotechnology drug products and vaccines are currently in human trials in the
U.S., and we estimate that there are hundreds more in development. The number of
U.S. patents issues annually to biotechnology companies has climbed from about
2,500 in 1992 to about 7,760 in 2002.

Background on HIV and AIDS

UNAIDS, the Joint United Nations Programme on HIV/AIDS, estimates that 40
million people were living with HIV/AIDS in 2003, reflecting a steady increase
since 1999, especially in sub-Saharan Africa, as well as in Asia and the
Pacific, Eastern Europe and Central Asia. According to the AIDS epidemic update,
December 2003, in 2003, about 3 million people died from HIV/AIDS, and another 5
million contracted the disease. In the United States, the Centers for Disease
Control and Prevention estimates that as of the end of 2002, about 530,000
people were living with HIV, of whom about 384,900 were living with AIDS, the
full-blown Acquired Immune Deficiency Syndrome that develops from HIV. During
2002, over 35,000 new cases of HIV were reported in the United States. No cure
is currently known for HIV.

The human immune system is the body's primary defense against disease. It
consists of a vast number of specialized cells and proteins that assist in
detecting and destroying foreign organisms and eliminating disease cells.
Normally, the body's immune system can distinguish between normal cells and
those that appear to be foreign by recognizing proteins, or antigens. CD4 "watch
dog" cells identify foreign cells, and the immune system launches an antibody
response against the foreign organisms or cells.

HIV triggers a flaw in the human immune system that leads to its destruction.
Patients with HIV proliferate CD8 "killer" cells, which kill off CD4 watch dog
cells, whether healthy or not, leading to the loss of immune function. But for
this flaw, HIV infection in humans might be similar in character to the
infection in other primates, which can be infected with HIV without the
destruction of their immune systems because their CD8 killer cells do not
destroy their CD4 cells. The destruction of CD4 cells in humans leaves those
persons susceptible to certain cancers and other infections that would normally
not be fatal to a person with a normal number of CD4 cells. When AIDS first

surfaced in the United States, no medicines were available to combat the
underlying immune deficiency, and few treatments were available to combat the
diseases that resulted. Since then, the FDA has approved a number of drugs in
two groups, both antivirals, for treating HIV infection. These groups are:

o Drugs that interrupt an early stage of the virus making copies of
itself; and
o Drugs that treat HIV infection by interrupting virus replication at a
later step in the virus' life cycle.

Frequently, these two groups of drugs are used in combinations for treatment.
Treatment with these drugs, whether alone or in combination, has two primary
drawbacks: the virus can mutate to avoid the attack, rendering the drugs
ineffective, and the side effects can be severe. Some of the first group of
drugs can cause a decrease of red or white blood cells, especially when taken in
later stages of the disease. Some may also cause inflammation of the pancreas
and painful nerve damage, in addition to other severe reactions. The most common
side effects in the second group of drugs include nausea, diarrhea, and other
gastrointestinal symptoms. This second group can also interact with other drugs
to produce severe side effects. Current research and development for HIV is
focused on therapies to reduce the side effects of the antiviral drugs so as to
enhance the efficacy of existing treatments and delay the progression of the HIV
virus.

Potential drugs
Cytolin

Our president, Allen D. Allen, has been researching treatments for HIV and AIDS
since 1987. He identified a family of monoclonal antibodies that protect the CD4
watchdog cells from the CD8 killer cells of the immune systems of people
infected with HIV. He received three U.S. patents and additional foreign
counterpart patents, now licensed to us, covering the use of these antibodies
for treating patients with HIV. Our leading drug candidate, Cytolin, is based on
a monoclonal antibody that protects CD4 cells from CD8 cells, thus preventing
the weakening of the immune system.

In 1993, a small group of scientists and doctors treated six HIV-infected
patients with Cytolin. Blood and skin tests of these patients demonstrated that
the antibody was producing improvements in the immune function of each patient.

In 1995, subacute and acute toxicology studies found Cytolin safe to administer
to humans.

A relatively small number of physicians in the United States administered
Cytolin to their HIV-infected patients over two years. As results from this
initial use became available, other physicians obtained and administered Cytolin
to their patients as well. Four of the doctors using Cytolin allowed CytoDyn's
predecessor to send in an independent Institutional Review Board to inspect the
medical records of 188 patients treated with Cytolin once or twice a month over
18 months. Data were recorded and summarized and formed part of the material
presented to the FDA as an early indication of the safety and potential efficacy
of Cytolin.

In 1996, the FDA approved a drug master file, designated BB-DMF#6836, for the
manufacture of Cytolin at Vista Biologicals Corporation. CytoDyn of New Mexico
and Vista Biologicals Corporation worked cooperatively to develop the drug
master file. In accord with the practice of the FDA, the drug master file was
issued to and became the property of the entity with the capacity to manufacture
the drug, in this case Vista Biologicals Corporation. By contract with Vista
Biologicals Corporation, CytoDyn of New Mexico had the exclusive right to
reference the drug master file, that is, to authorize Vista Biologicals
Corporation to manufacture Cytolin in accordance with the terms of the drug
master file.

In 1996, the FDA also designated our investigational new drug application for
Cytolin as BB-IND #6845, and subsequently approved a clinical trial.

In 2002, Symbion Research International, a contract research organization,
completed a Phase I a/b clinical trial of Cytolin. The trial was sponsored by
Amerimmune, Inc, the previous licensee of CytoDyn of New Mexico but Symbion was
never paid for its work. As a result, its work product became Symbion's. See
"Legal Proceedings." CytoDyn, Inc. has entered into a buy-sell agreement with
Symbion to purchase the Phase Ia study data (See exhibit 10.5.2). The Phase Ia
study, conducted in 13 subjects suffering from HIV/AIDS, found Cytolin to be
safe and well tolerated. The initial safety study affirmed the safety and
tolerability of the drug in these dose groups, as well as preliminary efficacy
in lowering the concentration of HIV by up to one log (measurement of efficacy)
and increasing T-cell counts in the study's patient population with no severe
adverse events reported. Some of the data were presented as an abstract and
poster session, entitled `Phase I Study of Anti-LFA-1 Monoclonal Antibody
(Cytolin(R)) in Adults with HIV Infection" at the 9th Conference on Retroviruses
and Opportunistic Infections held in Seattle, Washington on February 24-28,
2002.

We intend to develop Cytolin and other antibodies covered by the licensed
patents as a treatment for HIV/AIDS in the U.S. and other countries. However, we
must raise sufficient capital in order to pursue these objectives.

Other Potential Drugs

We have entered into a confidential letter of intent with another biotech
company for a joint development of a new drug to treat Biopolar Disorder. There
is no guaranty that this effort will be made or will result in a successful new
treatment for Bipolar Disorder.

Product Liability Insurance

The testing, marketing and sale of therapeutic products for use in humans entail
an inherent risk of allegations of product liability, and there can be no
assurance that product liability claims will not be asserted against us. We have
not obtained product liability insurance, and there can be no assurance that we
will be able to obtain insurance coverage in the future on acceptable terms or
that any claims against us will not exceed the amount of such coverage.

Government Regulation

The estimated cost and length and stage of each process of FDA approval is
outlined as followed:

Purchase of Phase I data $362,000
--------------------------------------------------------------------------------
End of Phase 1/Pre Phase 11 FDA 6 mos $ 50,000 - $100,000

Phase II/III Pivotal Study BLA 24-36 mos $1,250,000 - $1,750,000
Cost to Investigators $ 750,000 - $1,500,000
Manufacturing for Clinical Trials 3-6 mos $ 350,000 - $400,000

Total time and cost estimated to get FDA approval for Cytolin is approximately
29-42 months and at an estimated $2,700,000 to $4,100,000.

Regulatory Approval Process - Summary

The BLA must provide sufficient information, data, and analyses to permit FDA
reviewers to reach several key decisions, including: o Whether Cytolin is safe
and effective for its proposed use(s), and whether the benefits of Cytolin
outweigh its risks. o Whether the proposed labeling for Cytolin is appropriate,
and, if not, what the labeling should contain. o Whether the methods used in
manufacturing Cytolin and the controls used to maintain quality are adequate to
preserve the identity, strength, quality, and purity of Cytolin.

In order to initiate clinical testing of a new drug or therapeutic biologic
product, an Investigational New Drug Application (IND) must be submitted to FDA.
In most cases, the IND summarizes preclinical studies. The purpose of
preclinical studies - animal pharmacology/toxicology testing - is to develop
adequate data to support a decision that it is reasonably safe to proceed with
human trials of the drug.

If an IND is considered `allowable' by FDA, the sponsor may begin clinical
trials in humans. The standard procedure for clinical testing involves studies
from Phase I to Phase III.

Clinical Trials Process
Phase I
Phase 1 includes the initial introduction of an investigational new drug or
biologic into humans. These studies are closely monitored and may be conducted
in patients, but are usually conducted in a small number of healthy volunteer
subjects. These studies are designed to determine the metabolic and
pharmacologic actions of the investigational product in humans, the side effects
associated with increasing doses, and, if possible, to gain early evidence on
effectiveness. During Phase 1, sufficient information about the investigational
product's pharmacokinetics and pharmacological effects are obtained to permit
the design of well-controlled, scientifically valid, Phase 2 studies.

Phase II
Phase 2 includes the early controlled clinical studies conducted to obtain some
preliminary data on the effectiveness of the drug for a particular indication or
indications in patients with the disease or condition. This phase of testing
also helps determine the common short-term side effects and risks associated
with the drug. Phase 2 studies are typically well-controlled, closely monitored,
and conducted in a relatively small number of patients, usually involving
several hundred people.

Phase III
Phase 3 studies are expanded controlled clinical studies. They are performed
after preliminary evidence suggesting effectiveness of the drug has been
obtained in Phase 2, and are intended to gather the additional information about
effectiveness and safety that is needed to evaluate the overall benefit/risk
relationship of the drug. Phase 3 studies also provide an adequate basis for
extrapolating the results to the general population and transmitting that
information in the physician labeling. Phase 3 studies usually include several
hundred to several thousand people.

Cytolin - Clinical Development and Regulatory Approval
To date an allowable IND has been submitted for Cytolin and Cytolin has been
studied in two Phase I controlled clinical studies (Phase Ia and Phase Ib/II).
Data has also been collected from four physicians who treated patients with
Cytolin in an uncontrolled clinical setting from 1983 to 1995.

Once adequate clinical testing of Cytolin is complete, the BLA must be submitted
to FDA containing full reports of the studies such that CDER can evaluate the
data. Data from the controlled clinical trials are especially important because
they provide the only basis, under law, for demonstrating safety and
effectiveness. The clinical trials answer the questions: "Does this drug work
for the proposed use?" and "Is the drug safe?" From analyses of the data, CDER
reviewers assess the benefit-to-risk relationship and based on CDER's
assessment, the BLA for Cytolin will either be considered approvable, approvable
with minor changes, or not approvable. Once considered approvable, the sale and
marketing of Cytolin may legally proceed in the United States.

In order to obtain approval for the sale and marketing of Cytolin in the United
States, the clinical development strategy described below has been devised.

1. Safety and efficacy data have been assembled into an abbreviated
clinical study report for the Phase Ia study and a clinical report
synopsis for the Phase Ib/II study. The data demonstrate that in these
studies Cytolin was safe and well tolerated in HIV positive
individuals. In addition, the Phase Ib/II study provided some initial
evidence of efficacy for multiple infusions of high dose Cytolin (2.0
mg/kg) for maintaining a reduction in viral load and a correlated
increase in CD4+ T-lymphocytes. These data will be submitted to the
CDER for review.
2. A Pre-Phase II meeting will be requested with CDER. CDER encourages
these meetings before conducting large-scale controlled clinical
trials in order to obtain CDER advice about the design of the study
plan and to ensure that planned studies will be acceptable. At this
meeting safety and efficacy data from the two completed studies (Phase
Ia and Phase Ib/II) will be presented to CDER. In addition, the
clinical study design for the planned study (Phase II/III) will also
be presented. In addition to obtaining FDA agreement on study design,
the goal of this meeting will also be to discuss the possibility for
considering the Phase II/III study suitable as the primary basis for
obtaining regulatory approval for Cytolin.

3. Following FDA review, discussion, and feedback, the Phase II/III study
will be conducted. As currently drafted, this is a double-blind,
placebo-controlled, multicenter, 2-part study of 2.0 mg/kg Cytolin to
be conducted in approximately 150 subjects. Part 1 is designed to
determine dose-regimen and Part 2 is designed to study the safety and
efficacy of long-term administration of Cytolin of the most
efficacious dose regimen as determined from Part 1. The target
population for the study is HIV seropositive adults (= 18 years of
age) who are receiving a standard course of three- or four-drug HAART
after failing their first HAART regimen. Duration of treatment in the
study will be approximately 48 weeks.
4. Data for this study will be compiled into a clinical study report and
submitted to the FDA. Endpoints will include, but are not limited to:
a. Proportion of responders after 12 weeks (A responder will be
defined by a = 0.5 log reduction in HIV-1 viral load or
reduction in viral load below the level of detection.);
b. Safety;
c. Change from baseline in CD4+ T-cell count after 12 and 24
weeks (Part 1 and Part 2, respectively);
d. Pharmacokinetics (percent Cytolin binding);
e. Time to treatment with additional HAART drugs or other HIV
therapies.
5. An End-of-Phase II meeting will be requested with the FDA to present
safety and efficacy data from the Phase II/III study, as well as to
summarize safety and efficacy across all studies. The possibility of
submitting the BLA with the data from the three controlled clinical
studies will be discussed.

Cytolin is a good candidate for obtaining regulatory approval after
Phase II, provided the safety and efficacy data are compelling. FDA
has established that a sustained reduction (e.g., 24 weeks) in HIV-1
viral load is highly predictive of meaningful clinical benefit and is
a sufficient surrogate endpoint for obtaining approval for drugs
intended to treat HIV. The Phase II/II study has been designed to
evaluate safety and efficacy in a subject population that has very few
treatment options and will evaluate efficacy in maintaining a reduced
HIV-1 viral load. A strong argument will be presented to FDA to
consider the Phase II/III data sufficient for the basis of approval,
with the provision that additional efficacy data be collected
post-marketing.
6. Depending on meeting outcome, the BLA will be submitted on the basis
of the Phase II/III data, or development will continue with the
initiation of additional Phase II and/or Phase III clinical studies.

We may encounter significant difficulties or costs in our efforts to obtain FDA
approvals, which could delay or preclude us from marketing any potential drugs
that we may develop.

Noncompliance with applicable requirements can result in criminal prosecution
and fines, recall or seizure of potential drugs, total or partial suspension of
production, refusal of the government to approve Biological License
Applications, BLAs, Product License Applications, PLAs, New Drug Applications,
NDAs, or refusal to allow us to enter into supply contracts. The FDA also has
the authority to revoke product licenses and establishment licenses previously
granted.

Sales of biological and pharmaceutical potential products outside the United
States are subject to foreign regulatory requirements that vary widely from
country to country. Whether or not FDA approval has been obtained, approval of a
product by a comparable regulatory authority of a foreign country must generally
be obtained prior to the commencement of marketing in that country.

Our contract manufacturers will also subject to regulation by the Occupational
Safety and Health Administration ("OSHA") and the Environmental Protection
Agency ("EPA") and to regulation under the Toxic Substances Control Act, the
Resource Conservation and Recovery Act and other regulatory statutes, and may in
the future be subject to other federal, state or local regulations.
Properties

We signed a consulting contract with Symbion Research International Inc, the
contract research organization that prepared the Phase Ia/b clinical trials of
Cytolin. We have also entered into a buy- sell agreement with Symbion to
purchase the Phase Ia/b clinical data and the Phase II/III study protocol. Peggy
C. Pence, Phd, Symbion Research International's founder, is also on the Board of
Directors of CytoDyn, Inc. We will be attempting to obtain permission to advance
to a Phase II/III pivotal study on Cytolin.

We will not know for sure if certain studies will be required and what the total
costs of such studies until we have a meeting with the FDA which we expect to
take place within the next six months. We estimate that the cost for the "End of
Phase I/Pre- Phase II" meeting with the FDA will be $50,000 to $100,000. We also
estimate costs for the Phase II/III Pivotal Study will be $1,250,000 to
$1,750,000 for the Contract Research Organization. We expect the Phase II/III
Pivotal Study to take 24 to 42 months to complete at a cost estimated to be
$2,050,000 to $3,350,000. In addition to these estimated costs, we believe the
manufacturing and supply costs to be an additional $350,000 to $450,000.
Therefore we expect the total cost of the Phase II/III study to be $2,400,000 to
$3,800,000 plus $362,000 for the purchase of the Phase Ia/b clinical data and
Phase II/III protocol design f a total of $2,700,000 to $4,100,000.

We have recently relocated our principal offices to 200 West De Vargas St.,
Suite 1, Santa Fe, NM 87501. Management believes the office space is adequate
for our needs and it is adequately insured. The telephone number is
1-877-988-5520 and the fax number is 1-800-417-7252.

Patents

We have licensed the following patents from Mr. Allen D. Allen, the Inventor and
Registered Owner:

U.S. Patent Nos. 5424066 5651970) and6534057, and foreign counterpart patents.

We have also licensed the following foreign patents: Canada, Australia, United
Kingdom, Germany, Switzerland, France, Italy, Netherlands, Portugal, Spain and
Sweden. These patents are the equivalent of the U.S. Patent No. 5424066. There
is also a European patent pending which would be the equivalent of U.S. Patents
No. 5651970.

The patents are registered to Allen D. Allen, the inventor and are licensed
exclusively to us until they expire, the first of which is to occur in 2013. We
will develop, market and sell the technology contained in the patents in
accordance with the license agreement (See Exhibit 10.6 for Patent License
Agreement).

CytoDyn owns the registered trademarks, CytoDyn and Cytolin, and a related
trademark symbol.

Competition

The pharmaceutical industry is an expanding and rapidly changing industry
characterized by intense competition. CytoDyn will compete with other more
established biotechnology companies with greater financial resources than us.
Our potential competitors include entities that develop and produce therapeutic
agents for treatment of human and animal disease. These include numerous public
and private academic and research organizations and pharmaceutical and
biotechnology companies pursuing production of, among other things, biologics
from cell cultures, genetically engineered drugs and natural and chemically
synthesized drugs. Almost all of these potential competitors have substantially
greater capital resources, research and development capabilities, manufacturing
and marketing resources and experience than CytoDyn. Our competitors may succeed
in developing potential drugs or processes that are more effective or less
costly than any that may be developed by CytoDyn, or that gain regulatory
approval prior to our potential drugs. Worldwide, there are many antiviral drugs
for treating HIV and AIDS. In seeking to manufacture, distribute and market the
various potential drugs we intend to develop, we face competition from
established pharmaceutical companies. All of our potential competitors in this
field have considerably greater financial and personnel resources than we
possess. Also, based on the premise that HIV patients lose their CD4 cells
because of the way some white blood cells stick together in people infected with
the virus, Johns Hopkins Medical School owns patents on specific antibodies
which are believed to prevent the clumping of white blood cells, which is known
as syncytia. It is possible that these antibodies may be licensed by Johns
Hopkins and marketed in competition with Cytolin. CytoDyn also expects that the
number of its competitors and potential competitors will increase as more
potential drugs receive commercial marketing approvals from the FDA or analogous
foreign regulatory agencies. Any of these competitors may be more successful
than CytoDyn in manufacturing, marketing and distributing its potential drugs.
There can be no assurance that CytoDyn will be able to compete successfully.

Employees

We have two full time and employees and one part time employee, engaged in
management and product development. CytoDyn is severely understaffed and will
expand its employee force upon completion of this offering. There can be no
assurance we will be able to locate or secure suit able employees upon
acceptable terms in the future. Corinne Allen, Allen Allen and Wellington Ewen
have entered into Personal Services Agreement with the Company to provide
professional services to us for two years.

Legal Proceedings

Los Angeles Superior Court Case No. BC 290154.
---------------------------------------------
Allen D. Allen and CytoDyn of New Mexico had previously licensed the CytoDyn
patents, trademarks and technology to Amerimmune Inc, a Colorado Corporation, a
wholly owned subsidiary of Amerimmune Pharmaceuticals, Inc. (API) a publicly
traded Colorado Corporation. According to certified records from the Secretary
of State of Colorado, API was dissolved on June 1, 2001. There was a failed
attempt by API to create a Bankruptcy Chapter 7 estate in the state of Nevada in
April 2004 (Case No. BK-S-03-13919 - LBR). The U.S. Trustee dismissed the
bankruptcy petition filed by API after Rex Lewis, the former CEO, was denied a
motion to purchase all of the assets of API, if any, from the bankruptcy trustee
for $10,000.

Furthermore on page 12 of API's Form 10QSB for the quarter ending June 30, 2001,
API denied that Allen had the right to inspect API's manufacturing process,
despite the clear granting of this right in the licensing agreement See Exhibit
10.4. In light of these facts federal case law imposed an affirmative duty on
CytoDyn of New Mexico, as the registered owner of the trademark "Cytolin" to sue
API's officers and directors, to prevent the fraudulent use of the trademark. We
had filed suit against the former officers and directors of API in Los Angeles
Superior Court Case No. BC 290154. We were seeking treble damages of the
research and development costs that we spent to get approval for clinical trials
from the FDA.

The judge dismissed our case stating that our attorney did not provide the
evidence in an orderly logical fashion. We may appeal this case if it is cost
effective given our other remedies available to us.

Mr. Lewis retaliated with a cross complaint against the officers and directors
of CytoDyn of New Mexico, some of whom are also our officers and directors. The
officers and directors will continue to defend the cross complaint. Management
believes that the cross complaint is without merit and that chances for an
unfavorable outcome are remote.

CytoDyn, Inc., et al. v. Amerimmune, Inc. et al., Case number SC039250,
California Superior Court in and for the County of Ventura.

The Declaratory Relief Sought and Attorneys' Fees Were Awarded.

The action was filed on April 21, 2004. CytoDyn and Allen D. Allen were the
plaintiffs. The defendants were Amerimmune Inc., its parent Amerimmune
Pharmaceuticals, Inc., and unknown others designated as "Does 1-100".

The action concerned a Conditional License Agreement, dated February
24, 2000, between Allen D. Allen and CytoDyn of New Mexico, on one hand, and
Amerimmune, Inc., on the other. The complaint alleged that the Conditional
License Agreement licensed to the defendants technology and patents related to
Cytolin and assigned to defendants an FDA approved investigational new drug
application related to Cytolin. Further, it alleged that the defendants breached
the Conditional License Agreement, resulting in its termination.

The principal relief sought was a declaration that the license granted
and the assignment of the technology, patents and drug application made pursuant
to the Conditional License Agreement were terminated no later than September 12,
2001, and that Allen and we are the owners of the technology, patents and
investigational new drug application, free of any claims of the defendants.
Costs, attorney's fees, and other "just and proper" relief also were sought.

This case was decided in favor of the plantiffs, CytoDyn and Allen
October 4, 2004

Symbion Research International, Inc., v. Amerimmune, Inc. et al., Case
number SC035668, California Superior Court in and for the County of Ventura. The
complaint was filed on March 14, 2003. Symbion Research International, Inc was
the plaintiff. Amerimmune, Inc. was the remaining defendant. We were not a party
to this action, however the action affects intellectual property which is
important to us.

A default judgement was entered on December 18, 2003. A judgement was
entered in favor of Symbion International on September 17, 2004 granting the
declarative relief sought by Symbion International.

The action concerned intellectual property generated in connection with
services provided by Symbion with respect to early phase FDA clinical trials of
Cytolin, including research data and a patent application filed in 2002. The
complaint alleged that Symbion performed early phase FDA trials (designated in
the Complaint as "Phase Ia" and "Phase Ib/II", on behalf of Amerimmune pursuant
to an oral agreement, and that Amerimmune failed to pay Symbion for its
services, and otherwise breached its obligations under the agreement.

The complaint asserted causes of action for breach of oral contract,
account stated, work and labor done, fraud, and declaratory and injunctive
relief. The relief sought included a declaration that Symbion is the owner of
the intellectual property resulting from the services provided by Symbion.

The intellectual property generated in the early phase FDA clinical
trials is necessary to obtain approval for, and to conduct, further FDA clinical
tests of Cytolin. Because a satisfactory result was obtained in this action,
have negotiated an agreement with Symbion that will allow the use in subsequent
phases of clinical test of Cytolin of the research data generated in the early
phases. CytoDyn, Inc. has agreed to pay $362,000 for this clinical data under
the following terms:

- $25,000 to be paid out of this offering's proceed
- 83,122 non-qualified stock options will be granted and vest
immediately with an exercise price of $.75 per share
- the remainder of $275,000 to be paid in cash when our
secondary round of financing has been secured.

If the above terms are not met by December 30, 2005, the property will revert to
Symbion.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

GENERAL

Overview

We incorporated as Rexray Corporation in Colorado in May 2002. We were
originally a blank check company created to target companies for merger or
acquisition. We issued to our founder, James B. Wiegand 800,000 shares of our
common stock in exchange for services valued at $8,000, and thereafter $3,400
for administrative purposes through a private placement equity offering of
340,000 shares in 2002.

In October 2003, we entered into an acquisition agreement with CytoDyn of New
Mexico, Inc., the purpose of which was to acquire the license to three patents
and foreign counterpart patents. These patents cover the use of monoclonal
antibodies to treat patients with Human Immunodeficiency Virus (HIV) by
protecting crucial cells of the body's immune system that are otherwise killed
by the disease, permitting the immune system to inhibit the disease and protect
against the collateral illnesses that commonly accompany the disease.

We are a development stage company. We have not commenced any significant
product commercialization and, until we do, we will not generate any significant
product revenues. Most of the efforts and resources commenced by the predecessor
New Mexico company, (CytoDyn of New Mexico, Inc, incorporated in New Mexico in
June of 1994) have been directed to research and development of Cytolin and
related technologies. Since inception of the company and the accumulated losses
of the predecessor CytoDyn of New Mexico, we have incurred total research and
development expenses of $1.3 million. As a result of these research and
development costs, we have combined, since inception, incurred operating losses
generating an accumulated deficit of approximately $1.5 million as of May 31,
2004 our fiscal year end. Since October 2003, when we entered into the
acquisition agreement with Rexray Corporation through August 31, 2004, our
accumulated net losses have been approximately $458,751 We have had not research
and development expenses during the last two fiscal years, as we seek to be able
to conduct further trials. We expect to continue to incur operating losses and
we expect the accumulated deficit to increase until we are able to market a
product and have sales sufficient to support our operations.

The Acquisition Agreement with CytoDyn of New Mexico. Under the October 28, 2003
acquisition agreement with CytoDyn of New Mexico, we:

o Effected a one-for-two reverse split of our common stock,
o Issued to CytoDyn of New Mexico 5,362,640 post-split shares, and
o Amended our articles of incorporation to change our name to CytoDyn,
Inc.
o Assumed $161,578 in liabilities related to assigned assets

As consideration for the issuance of our shares to it, CytoDyn of New Mexico:

o Assigned a Patent License Agreement dated July 1, 1994 between CytoDyn
of New Mexico and Allen D. Allen, covering United States patent
numbers 5424066, 5651970, and 6534057, and related foreign patents and
patents pending, for a method of treating HIV disease with the use of
monoclonal antibodies,
o Assigned its trademarks, CytoDyn and Cytolin, and related trademark
symbol, and
o Paid $10,000 in cash.

We accounted for the acquisition as a recapitalization of CytoDyn of New Mexico,
with Rexray Corporation as the legal surviving entity. For accounting purposes,
the acquisition has been treated as a recapitalization of CytoDyn of New Mexico,
with Rexray as the legal surviving entity. Since Rexray had minimal assets and
no operations, the recapitalization has been accounted for as the sale of
890,000 shares of CytoDyn of New Mexico common stock for the net assets of
Rexray. Therefore, the historical financial information prior to the date of the
reverse business acquisition is the financial information of CytoDyn of New
Mexico.

History of CytoDyn of New Mexico, Inc.

CytoDyn of New Mexico has been, since its incorporation in New Mexico in 1994, a
research and development company focused on developing a treatment for diseases
associated with HIV/AIDS. It has never had operating revenues and has never been
profitable. It is in the process of dissolving and has distributed the 5,362,640
shares of common stock that it received from us in the acquisition to its
shareholders, pro rata.

Summary of Critical Accounting Policies

Going Concern
-------------

The 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
financial statements, we are currently in the development stage with losses for
all periods presented. These factors, among others, raise substantial doubt
about our ability to continue as a going concern.

The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
we be unable to continue as a going concern. Our continuation as a going concern
is dependent upon our ability to obtain additional operating capital, complete
development of its medical treatment, obtain FDA approval, outsource
manufacturing of the treatment, and ultimately to attain profitability. We
intend to seek additional funding through equity offerings to fund our business
plan. There is no assurance that we will be successful.

Use of Estimates

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Cash and Cash Equivalents

We consider all highly liquid debt instruments with original maturities of three
months or less when acquired, to be cash equivalents. We had no cash equivalents
at August 31, 2004. We will need to complete this entire offering in order to
pay for company expenditures through May 31, 2005. We will have to raise
additional funds within the next twelve months. We have not commenced any
negotiations for additional funding but we expect to need approximately $3 t $5
million dollars to accomplish our plan of operation for the development of
Cytolin. We may raise capital through debt or equity offerings. Capital may be
raised in tiers and at different prices as the market price for our shares
fluctuates.

Furniture, Equipment and Depreciation

Furniture and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the related assets,
generally 3 to 7 years. Maintenance and repairs are charged to expense as
incurred and major improvements or betterments are capitalized. Gains or losses
on sales or retirements are included in the statement of operations in the year
of disposition.

Impairment of Long-Lived Assets

We evaluate the carrying value of any long-lived assets under the provisions of
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
SFAS 144 requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted future
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. If such assets are impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying value or fair value, less costs to sell.

Income Taxes

We account for income taxes under the provisions of SFAS No. 109, Accounting for
Income Taxes (SFAS 109). SFAS 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Earnings (Loss) per Common Share

Basic earnings per share is computed by dividing income available to common
shareholders (the numerator) by the weighted-average number of common shares
(the denominator) for the period. The computation of diluted earnings per share
is similar to basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if potentially dilutive common shares had been issued.

At there was no variance between basic and diluted loss per share as there were
no potentially dilutive common shares outstanding.

Plan of Operation

During the next 12 months, our objectives are:

o to continue our clinical trials of Cytolin;
o to continue our efforts to protect our technology by obtaining
additional patents in The United Kingdom, the European Union and Hong
Kong;
o to develop an established market for our shares,
o to raise funds to support our research and development efforts, the
clinical trials relating to Cytolin, and our general and
administrative expenses; and
o to explore joint venture arrangements for other possible
pharmaceutical products.

Continuing Clinical Trials:

As we discuss in Item 1, Business, Phase I clinical trials were conducted by
Symbion Research International under the sponsorship of Amerimmune, Inc. during
2002. We believe that the data from these trials support approval by the FDA of
Phase II trials.

Projected costs to complete our research and development and to obtain FDA
--------------------------------------------------------------------------------
approval of a BLA:
------------------

We have negotiated with Symbion International for the right to use the Phase 1
data for $362,000 and to seek approval for the Phase II trials from the FDA.
Please see Exhibit 10.5.2 for buy-sell agreement with Symbion. If the Phase
II/III study is approved by the FDA, we expect it, together with the pre-Phase
II/III efforts, to cost an estimated $2,050,000 to $3,350,000 for Symbion to
conduct the clinical trials, plus estimated manufacturing and supply costs of
$350,000 to $400,000 and $362,000 for the Phase Ia/b data for a total of
$2,700,000 to $ 4,100,000.

Timing and anticipated completion dates for research and development.
---------------------------------------------------------------------

These trials can take anywhere from 29 to 42 months. Until we have met with the
FDA, which we plan to do within the next six months, we cannot be certain what
additional studies, assuming that Phase II/III study supports the efficacy and
safety of Cytolin, will be required to receive marketing approval The completion
of a Phase II/III Pivotal Study would allow the submission of a marketing
application and if approved, would allow us to market Cytolin in the United
States.

Date we expect to begin benefiting from the product:
----------------------------------------------------

We expect to complete our research and development of all Cytolin clinical
trials needed for approval of a marketing application if at all by December
2008.

Risks and uncertainties associated with completing development within reasonable
--------------------------------------------------------------------------------
period of time and if products are not completed on a timely basis:
-------------------------------------------------------------------

Even if we are able to complete the development within a reasonable period of
time our competitors could still come out with something competitive to our
product. Toxicity in the product could go undetected until Phase IV Safety
Surveillance after drug approval. We may have to continue to litigate to protect
technology, or challenges to patents that have not yet expired, etc. The medical
community may lack of acceptance of our product. There may be an inability to
secure 3rd party payees such as if medicare would cover costs. Post registration
manufacturing problems or downturn of economy or industry could also be risks.

If we are unable to complete clinical trials on a timely basis, with favorable
results, our costs will increase significantly and we may not have enough
capital to support further research and development and continue in business.
Also, if we incur significant delays in being able to market our product, even
if we are ultimately able to do so, we will be delayed in earning revenues and
probably will require additional financing to continue in business. Please see
the section entitled "Risk Factors."

Patents

During fiscal year 2004, several European patents were granted.. The new patents
are covered by our License Agreement with Allen D. Allen, our president that
gives us the exclusive right to develop his technology worldwide. These patents
are designated European Patent No. 94 912826.8, for the United Kingdom, Germany,
France, Switzerland, Italy, the Netherlands, Portugal, Spain, and Sweden, and
are the counterparts to our United States Patent No. 5424066. Patents are
pending in those same countries which, if granted, will be the equivalent of our
United States Patent No. 5651970. We estimate the costs associated with these
pending patents to be approximately $65,000, including amounts we have already
spent. We may file additional patents during the current fiscal year if our
research and development efforts warrant them, but we do not have any such
potential patents identified at this time. The license acquired gives us the
right to develop Mr. Allen's worldwide. Patents. Please see Exhibit 10.6 for
Patent License Agreement.

Litigation

For a thorough discussion of our pending litigation, please see the section
entitled "Legal Proceedings."

Establishing a Market and Obtaining Funding

We will require funding during the 2005 fiscal year in order to continue with
research and development efforts and to stay in business. If we are able to
complete this offering we will be able to pay company expenses for 6 months.
Additional funding will have to occur within the next twelve months in order to
continue operations. The amount of that funding is directly related to the
clinical trials we are able to conduct and the amounts we will need to continue
operations.

In addition to operating funds, we will need from approximately $2,700,000 to
$4,100,000 for research and development, including clinical trials, and
manufacturing and supply costs, depending upon whether we are approved by the
FDA to conduct a Phase II/III pivotal study.

We do not have any of this funding arranged or secured, and we do not yet have
plans for raising the funding we require. We anticipate that we will seek the
funding through further equity offerings, either by private placement or by
registered offering, or by possible joint venture arrangements with other
parties. If we are unable to secure the necessary funding, we will not be able
to conduct our research and development activities or to continue in business.

Exploring Joint Ventures

While we continue to pursue FDA approval of our Cytolin product, we are also
considering entering into joint ventures to develop other types of products. We
have, for instance, entered into a nondisclosure agreement with another
development stage biotech company to discuss the possibility of the joint
development of drugs to treat neuropsychiatric diseases or disorders. These
discussions are in the early stages and we do not know if we will enter into a
joint venture or other arrangement with this company or if any products might
ensue from our efforts.

We may also pursue joint ventures or other arrangements to obtain funding for
our Cytolin-related endeavors, but we have not pursued this possibility and do
not have any prospects at this time.

Other Matters

We do not expect, in the next 12 months, to make any significant expenditures
for equipment. We will continue to staff the company as funds become available.
However, currently, we have no plans for significant changes in number of
employees.

During the fiscal year ended May 31, 2004, we expended $235,455 in professional
fees, consisting of $45,000 in consulting fees paid to our former president and
founder, $190,747 in legal fees and professional fees incurred in connection
with our private placement of 1,800,000 common shares, our additional patent
protection filings, and litigating our pending lawsuits, and $5,208 in
accounting and auditing fees. For the year ended May 31, 2004, $61,285 in legal
fees was owed to our director, Ronald Tropp. We expect to incur similar fees in
the current fiscal year, based on our research and development efforts, our need
for additional capital, and continuing litigation.

CONTROLS EVALUATION BY MANAGEMENT

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, we carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures over financial reporting. This evaluation was carried out under the
supervision and with the participation of our management, including our
President, Chief Executive Officer and Chief Financial Officer. Based upon that
evaluation, our President, Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective.

There have been no significant changes in our internal controls or in other
factors, which could significantly affect internal controls subsequent to the
date we carried out our evaluation.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including our Chief Executive
Officer and Chief Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.

MANAGEMENT

The members of the Board of directors of CytoDyn serve until the next annual
meeting of stockholders, or until their successors have been elected.

The officers serve at the pleasure of the Board of directors. Directors serve a
term of one year, or until the following annual meeting of the shareholders,
whichever period is longer.

The current executive officers, key employees and directors of CytoDyn are as
follows:

Name Age Position
-------------- ------- ----------------
Allen D. Allen 68 Chief Executive
Officer,
Chairman, Board of Directors

Wellington A. Ewen 65 Chief Financial Officer

Corinne Allen 37 Secretary/Treasurer, Vice President

Ronald J. Tropp, Esq. 60 Director

Daniel M. Strickland, MD 59 Director

Peggy J. Pence, PhD. 54 Director

Allen D. Allen. Mr. Allen is the Chief Executive Officer and Chairman of the
Board of Directors, since October 2003. Prior to that, he was the Chairman of
the Board of Directors and Chief Executive Officer of CytoDyn of New Mexico,
Inc., since its inception in 1994. Mr. Allen began his career as a theoretical
physicist and used his knowledge of science to contribute to the field of
neuroimmunology at its very inception during the Korean War. Over the past
thirty years, he has published numerous papers in the peer review science and
medical journals, and received a national award (the ARS Student Award) in
aeronautics from the American Rocket Society (now the Institute of Aeronautics
and Astronautics) in 1953. He has also served as an investigator on clinical
research sponsored by major pharmaceutical companies, such as Ortho Biotech
(Johnson & Johnson, and Sanofi-Winthrop. Mr. Allen invented and patented the
family of HIV/AIDS therapies licensed to CytoDyn. During our start-up phase of
operations, he also serves as President and Chief Executive Officer. He is a
member of the American Physical Society and the American Federation of
Scientists, a life member of the Institute of Electrical and Electronics
Engineers, and a founding member of the Editorial Board of Physics Essays.

Wellington A. Ewen, CPA, MBA, Chief Financial Officer, received his BS and MBA
from Cornell University. Over the past 10 years, Mr. Ewen has served and
consulted as a financial and accounting officer for several development stage
pharmaceutical companies including Entropin, Inc. where is served as CFO from
April 1998 until 2000. Mr. Ewen was also the former CFO of Amerimmune, Inc, from
1999 until his resignation in 2000. He has also served as a manager at
PriceWaterHouseCoopers in Los Angeles, California. Mr. Ewen is currently
licensed as a CPA in Oregon.

Corinne E. Allen. Ms. Allen, a graduate of California State University
Northridge is the Secretary, Treasurer, Director , of the company since October,
2003 and Vice President of Business Development as of May 2004. Prior to that,
she served as Secretary, Treasurer, of CytoDyn of New Mexico, Inc., since April,
1995 and as Director since July, 1994. Ms. Allen was recently employed as a
senior manager at Deloitte & Touche from 1999 until 2003, and has 17 years
experience in the accounting industry. Ms. Allen received a B.S. in Business
Administration with a specialty in Accounting Theory and Practice from
California State University Northridge in 1992. She has been a certified public
accountant since January 1997. Ms. Allen is the daughter of Allen D. Allen.

Ronald J. Tropp, Esq. Mr. Tropp is an attorney admitted to practice in New York
and California. He is a graduate of Swarthmore College and the University of
Wisconsin at Madison Law School. He has been a Director of the company since
October, 2003, and, prior to that time, served as Director for CytoDyn of New
Mexico, Inc. He is an attorney, admitted to practice in New York and California.
He has practiced entertainment and transactional law for over 25 years and has
been representing CytoDyn of New Mexico, Inc. since the Fall of 1999.
Previously, he served as corporate counsel and director for Pacific Coast
Medical Enterprises, which owned five acute care hospitals in Southern
California

Daniel M. Strickland, MD. Dr. Strickland has been a Director of the company
since October, 2003, and, prior to that time, served as a Director of CytoDyn of
New Mexico, Inc. Dr. Strickland served as a nuclear engineer for the U.S. Air
Force before he became a physician. He received his BS degree in physics from
the University of Georgia, his MS in Nuclear Engineering from the Air Force
Institute of Technology, and his MD from the Medical College of Georgia. From
1986 through 1989, Dr. Strickland served as Clinical Associate Professor at the
University of Texas Health Science Center in San Antonio, Texas. He also served
as Flight Surgeon at the School of Aerospace Medicine at Brooks Air Force Base,
Texas in 1977. Dr. Strickland is board certified by the National Board of
Medical Examiners. He received training designations from the American College
of Surgeons, and the American Heart Association for Advanced Trauma Life Support
and Advanced Cardiac Life Support. In 1988 and 1989 he served on the Membership
Committee of the Alamo Chapter of Sigma Xi, the Scientific Research Society. Dr.
Strickland also belongs to Sigma Delta Chi, the Society of Professional
Journalists. He holds U.S. patent No. 3,909,624 for a Split-Ring Marx Generator
Grading.

Peggy C. Pence, PhD. Dr. Pence, a graduate of Louisiana Tech and Indiana
University, has been a Director of the company since October, 2003. Dr. Pence
has 30 years of experience in the research and development of traditional
pharmaceutical and biotechnology-derived potential drugs and medical devices,
and served 13 years of this time in the employ of Eli Lilly and Company. Dr.
Pence has served in management positions at emerging biotechnology companies,
including Serono Laboratories, Triton Biosciences (acquired by Berlex
Laboratories, Inc.), and Amgen. In 1992 Dr. Pence founded Symbion Research
International, the CRO (Contract Research Organization) that conducted the
successful phase Ia/b study of Cytolin.

Due to health reasons, Brian McMahon, our former Executive Vice President was
removed by the board of directors by unanimous written consent in May 2004. He
may remain a consultant of the company.

EXECUTIVE COMPENSATION

The following table sets forth for the period ended May 29, 2004 compensation
paid or agreed to be paid by CytoDyn to its Chairman of the Board, and Chief
Executive Officer and our Secretary/Chief Financial Officer.

Annual Compensation Long-term Compensation
-------------------- ------------------------------------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All other
Principal Position Salary Bonus Compensation Awards Options/SAR's Payouts compensation
-------------------------- -------- -------- ------------ ---------- ------------- ------- ------------

Allen D. Allen (2004)
Chief Executive Officer
and Chairman $98,000 0 0 0 0 0

Corinne Allen (2004)
Secretary/Treasurer
Vice President $50,000 0 0 0 0 0
(Daughter of Allen D. Allen)

Wellington A Ewen (2004)
Chief Financial Officer 150,000

* Mr Allen and Ms. Allen are under contract for the above stated salaries.
However, due to cash constraints, they have been paid less then the amount of
salary stated in their contracts.

STOCK PLANS

We have a stock option plan for our Chief Financial Officer, Wellington Ewen, on
an earned basis. His options will vest over three years. He will earn 50,000
shares with an exercise price of .$50 per share after the first year of service,
50,000 shares with an exercise price of $1.00 after the second year of service
and 50,000 shares with an exercise price of $1.50 after the third year of
service. This plan was approved by the Board of Directors. We do not have any
other stock option or stock compensation plans in force at this time. We do
anticipate adopting an additional stock option incentive plan in the near future
in order to attract and retain key people as our directors, employees or
consultants.

Our common stock had no traded market value on the date of grant of stock
options to Wellington Ewen. The market value of the stock was determined to be
$.30 per share base on contemporaneous sales of common stock to unrelated third
party investors. The weighted average exercise price and weighted average fair
value of these options as of August 31, 2004 were $1.00 and $.-0-, respectively.
50,000 options vest on May 10, 2005, an additional 50,000 options vest on May 1,
2006, and the final 50,000 options vest on May 1, 2007.

Pro forma information regarding net income and earnings per share is required by
SFAS 123 as if we had accounted for its granted stock options under the fair
value method of that Statement. The fair value for the options granted during
the fiscal year ended May 31, 2004 was estimated at the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate..................... 3.00%
Dividend yield.............................. 0.00%
Volatility factor........................... 0.00%
Weighted average expected life.............. 3 years

The Black-Scholes options valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because our stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of our stock options. Although the above options were determined to have
$-0- fair value, we have presented the pro forma net loss and pro forma basic
and diluted loss per common share using the assumptions noted above.

For the Period June 1 , 2003
Through May 31, 2004
(a development stage company)
-----------------------------

Net loss, as reported ....................... $ (345,914)
===========

Pro forma net loss .......................... $ (345,914)
===========
Basic and diluted net loss per common
share, as reported ....................... $ (0.05)
===========

Pro forma basic and diluted net loss
per common share ......................... $ (0.05)
===========

The following schedule summarizes the changes in our outstanding stock options:

Options Outstanding and Exercisable
----------------------------------- Weighted Average
Number of Exercise Price Exercise Price
Shares Per Share Per Share
------------- ------------------ ----------------

Balance at October 28, 2003...... - $0.00 $ -
Options granted............... 150,000 $0.50.to $1.50 $ 1.00
Options exercised............. - $0.00 $ -
Options expired............... - $0.00 $ -
------------- ----------------

Balance at May 31, 2004.......... 150,000 $0.50.to $1.50 $ 1.00
=============

The company has no other option plan other than the 150,000 common shares
already granted.

PRINCIPAL SHAREHOLDERS

The following table sets forth information as of the date of this Prospectus and
as adjusted to reflect the sale of 250,000 shares offered hereby, based upon
information obtained from the persons named below, relating to the beneficial
ownership of shares of Common Stock by each person known to CytoDyn to own five
percent or more of the outstanding Common Stock, each director of CytoDyn and
all officers and directors of CytoDyn as a group.

Shares Percent Percent
Name and Address Beneficially Before After
of Beneficial Owner Owned Offering Offering
------------------- ------------ -------- --------

*Allen D. Allen 2,118,515 26.2% 25.4%
4236 Longridge Ave. #302
Studio City, CA 91604

*Corinne Allen 1,736,335 21.5% 20.8%
200 W. Devargas Street
Suite 1
Santa Fe, NM 87501

*Daniel M. Strickland, MD. 8,476 .001% .001%
P.O. Box 10
Lansing, NC 28643

*Peggy C. Pence, PhD. 0 0% 0%
29219 Canwood Street, Suite 100
Agoura Hills, CA 91301

*Ronald J. Tropp 0 0% 0%
20222 Oxnard St.
Woodland Hills, CA 91367

James B. Wiegand 400,000 5% 4.7%
16200 WCR 18E
Loveland, CO 80531

***J.P Turner & Company 426,000 5% 4.8%

*All officers and directors 3,863,326 47.8% 46%
as a group

--------

*** A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Prospectus upon the
exercise of options or warrants. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not those
held by any other person) and that are exercisable within 60 days from the date
of this Prospectus have been exercised. Except as otherwise indicated, CytoDyn
believes that each of the persons named has sole voting and investment power
with respect to the shares shown as beneficially owned. Max O. Gould, our
financial representative, individually owns 320,000 of the 426,000 warrants
granted and the remaining 126,000 warrants are controlled by the managing
partner of J.P Turner, Patrick Power.

CERTAIN TRANSACTIONS

Related Party Transactions, Actual or Proposed, In Last 2 Years. We
propose to be, or during the last two years were, party to certain transactions
involving amounts in excess of $60,000, in which our directors, executive
officers, others hold more than 5% of any class of our securities, or their
immediate family members, had or will have a material interest. The interested
parties and transactions are described below.

Agreement to Issue Warrants to J.P. Turner & Company, LLC. J.P. Turner
& Company, LLC, is a beneficial owner of 5.02% of our common stock, by virtue of
a common stock warrants which it is entitled to receive pursuant to a "Financial
Representative Agreement" dated November 25, 2003. Pursuant to the terms of that
agreement:

o J.P. Turner acted as our agent in connection with a private offering of
our securities;
o We paid the sum of $54,000 to J.P. Turner;
o We are to issue to J.P. Turner warrants for the purchase of 426,000
shares of our common stock, at an exercise price of $0.30 per share;
o When issued, the warrants will:
o Vest immediately in favor of J.P. Turner;
o Be exercisable immediately and thereafter for 5
years;
o Contain customary anti-dilution provisions for stock
dividends, splits, mergers and sales of substantially
all assets; and
o Contain a "cashless exercise" provision;
o We have granted J.P. Turner "piggyback" registration rights, at our
expense, with respect to the shares underlying the warrants;
o We are to indemnify J.P. Turner and others against certain losses
arising in connection with our material misrepresentations or
omissions, the performance by J.P. Turner of the agreement, or breach
of representations or warranties by an investor; and
o The term of the agreement is 12 months, subject to termination upon 45
days written notice.

Agreement with Symbion Research International, Inc. Our director, Peggy
C. Pence, PhD., is the President and Chief Executive Officer of Symbion Research
International, Inc. On October 1, 2003, we entered into a "Master Agreement for
Professional Services" with Symbion. The agreement describes general terms and
conditions intended to apply to services which Symbion may provide for us, most
likely in connection with the conduct of future FDA clinical trials of Cytolin.
That agreement requires an advance payment of $25,000 to Symbion, of which
$5,000 is to serve as a retainer and the remaining $20,000 is to be applied
against billing for services that may be rendered. We have made the advance
payment. We also have had discussions with Symbion regarding the possible
conduct of Phase II and III trials, and these discussions have resulted in
Symbion providing us with a cost estimate:

o based on the assumption that the FDA will approve the currently
designed Phase II/III pivotal study;
o that services related to the end of Phase I and the Pre-Phase II
meeting will cost between $50,000 and $100,000;
o that services related to the Phase II/Phase III pivotal study will cost
between $1,250,000 and $1,750,000; and
o that the cost to the Investigators will be between $750,000 and
$1,500,000, plus the costs of materials, investigational product
manufacturing or supplies.

Buy-Sell Agreement with Symbion Research International. Effective
January 5, 2005.

Our director, Peggy C. Pence, PhD., is the President and Chief Executive Officer
of Symbion Research International, Inc. On January 5, 2005, we entered into a
buy-sell agreement to purchase intellectual property owned by Symbion. The
agreement describes the intellectual property which will be purchased in detail
which summarized, is the Phase 1 clinical data and the protocol for the Phase II
study.

Under the terms of this agreement:

- CytoDyn, Inc may use Symbion's Phase I clinical data in connection with
obtaining approval from the FDA to conduct the Phase II/Phase III
stud(ies) for Cytolin.

- CytoDyn, Inc will grant 83,122 non-qualified stock options with an
exercise price of $.75 per share that will vest immediately and be
exercisable over 5 years.

- CytoDyn, Inc will pay $25,000 to Symbion out of the proceeds of the
SB-2 offering

- CytoDyn, Inc will pay $275,000 to Symbion once our secondary financing
is received.

In the event the shareholders do not approve the company's option plan by
December 31, 2005, CytoDyn, Inc will pay Symbion $62,341.50 in U.S. dollars.

The results of the Phase II/III stud(ies) for Cytolin shall be the sole property
of CytoDyn, Inc upon Symbion's receipt of the final payment called for by this
agreement. If all payments are not received, the property shall revert to
Symbion.

Acquisition of the Assets of CytoDyn of New Mexico. Allen D. Allen, our
president, chief executive officer and the chairman of the board of directors,
Corinne E. Allen, our vice president of business development, secretary,
treasurer and director, Ronald J. Tropp and Daniel M. Strickland, M.D., our
directors, and Brian J. McMahon, our former executive vice president, formerly
also served as executive officers or directors of CytoDyn of New Mexico, Inc. In
October 2003, we acquired the assets of CytoDyn of New Mexico, Inc. and changed
our name to CytoDyn, Inc. Please see "The Acquisition Agreement with CytoDyn of
New Mexico" under "Description of Business" at Part I, Item 1. In connection
with that transaction:

o we issued to CytoDyn of New Mexico 5,362,640 post reverse- split shares
of our common stock;
o Allen D. Allen, who is our president, chief executive officer and the
chairman of our board of directors, ultimately received 2,118,515
shares of our post reverse-split common stock 1 and indirectly
benefited from our assumption of debts in the amount of $71,694 owed to
him and Corinne E. Allen by CytoDyn of New Mexico;

o Corinne E. Allen, who is our vice president of business development,
secretary and treasurer, ultimately received 1,736,335 shares of our
post reverse-split common stock 1 and indirectly benefited from our
assumption of debts in the amount of $71,694 owed to her and Allen D.
Allen by CytoDyn of New Mexico;

o Daniel M. Strickland, MD, who is a member of our board of directors,
ultimately received 8,476 shares of our post reverse-split common stock
1; and

o James B. Wiegand, who until this transaction had been our president,
retained 400,000 shares of our post reverse-split common stock.

Services Provided by Ronald J. Tropp. Our director, Ronald J. Tropp,
Esq., has provided legal services to us, and to CytoDyn of New Mexico, for a
number of years. Currently, we owe him the sum of $61,285 for these services. No
arrangements have been made for the payment of this obligation. These fees are
due on demand and do not carry interest. We anticipate that Mr. Tropp will
provide additional legal services to us in the future.

Indemnification, Legal Costs and Fees Incurred by Directors and
Officers. Allen D. Allen, our president, chief executive officer and the
chairman of the board of directors, Corinne E. Allen, our vice president of
business development, secretary, treasurer and director, Ronald J. Tropp and
Daniel M. Strickland, M.D., our directors, and Brian J. McMahon, our former
executive vice president, are named as Cross-Defendants in a Cross-Complaint
filed in the California Superior Court in and for Los Angeles County in an
action originally captioned CytoDyn of New Mexico, Inc. et al., v. Amerimmune
Pharmaceuticals, Inc. et al., Case number BC 290154. The Cross-Complaint is
based upon alleged acts and omissions of these individuals occurring before we
entered into the Acquisition Agreement with CytoDyn of New Mexico. In a separate
proceeding, in Ventura County, California, captioned CytoDyn, Inc., et al. v.
Amerimmune, Inc. et al., Case number SC039250, Allen D. Allen is our
co-plaintiff. Please see the discussion entitled "Legal Proceedings" in Part I,
Item 3. Our Articles of Incorporation and by-laws provide that we will indemnify
directors, officers, and enumerated others against certain liabilities and
expenses arising because of the indemnitee's corporate status or relationship.
We have not determined whether we have an obligation to indemnify Messrs. Allen,
McMahon, Tropp and Strickland and Ms. Allen with respect to any liability that
may arise under the Cross-Complaint. Allen, McMahon, Tropp and Strickland and
Ms. Allen in the Los Angeles County proceeding. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

Note Given and Debt Owed to Allen D. Allen. In January 2004 we issued
to Allen D. Allen, our president, chief executive officer and the chairman of
our board of directors, a non interest bearing promissory note, payable on
demand, in the original principal amount of $22,788. The note reflects advances
made to us by Mr. Allen during the years ending on May 31, 2003 and May 31,
2004. In addition, we owe the sum of $10,000 to Mr. Allen, who advanced that
amount to CytoDyn of New Mexico for further payment to Rexray Corporation in
connection with the acquisition of the assets of CytoDyn of New Mexico. The sum
owed does not bear interest and is payable on demand.

Notes Given to Corinne Allen. In January 2004, we issued to Corinne E.
Allen, our vice president of business development, secretary, treasurer and
director, two non interest bearing promissory notes, each payable on demand, in
the original principal amounts of $50,000 and $38,906. The notes reflected
advances made to us by Ms. Allen during the years ending on May 31, 2003 and May
31, 2004. The $50,000 note was paid in full in February, 2004. The $38,906 note
remains outstanding and does not bear interest.

Transactions With Promoters. James B. Wiegand was the promoter of
Rexray Corporation and served as its president from the time of incorporation
until its acquisition of the assets of CytoDyn of New Mexico. Rexray was
incorporated on May 2, 2002, under the laws of Colorado as a "blank check"
company. 800,000 shares of its common stock were issued to Mr. Wiegand in
exchange for organizational services provided and valued by him at $8,000 or
$.01 per share By virtue of a one-for-two reverse stock split effected in
October, 2003, Mr. Wiegand's common stock ownership was reduced to 400,000
shares. We were party to the following additional direct or indirect
transactions with Mr. Wiegand:

o Compensation for Services. In October 2003, we paid $15,000 and gave a
promissory note in the original principal amount of $30,000 to Mr.
Wiegand. Interest accrued on the unpaid principal amount of the note at
the rate of 5% per annum. The note was paid in full in February 2004.
The cash payment and note were given in consideration of services
provided to us by Mr. Wiegand, principally in connection with the
acquisition of the assets of CytoDyn of New Mexico. Mr. Wiegand
determined the value of his services.

o Rent of Office Space. From May 2, 2002 through September 30, 2002, we
rented office space located in Mr. Wiegand's home from Amery Coast
Corporation at the rate of $100.00 per month. The rental rate was
based, according to him, upon then current comparable rents. Amery
Coast Corporation was controlled by Mr.Wiegand.

o Contributions of Office Space. From October 1, 2002 through May 31,
2003, Amery Coast Corporation contributed office space to us. The
rental value of the office space was deemed to be $100 per month, based
on the previous rental rate determined by Mr. Wiegand.

o Contributions of Time, Fee and Cash. Mr. Wiegand contributed services
during the year ended May 31, 2003, which he valued at $2,970. In
addition, during the year ended May 31, 2003, he paid, on our behalf,
$1,645 for professional services rendered to us, and during the 6 month
period ending November 30, 2003, he contributed $2,500 to us. The
contribution of services and the payments were treated as contributions
to capital.

DESCRIPTION OF COMMON STOCK

CytoDyn is authorized to issue 25,000,000 shares of Common Stock, no par value,
and 5,000,000 shares of preferred stock at no par value. As of the date of this
Prospectus, there are 8,069,307 shares of common stock outstanding which are
held by approximately 133 holders of record.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the shares voting for the election of directors can
elect all of the directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors in its discretion,
out of funds legally available therefore. In the event of liquidation,
dissolution or winding up of CytoDyn, the holders of Common Stock are entitled
to share ratably in the assets of CytoDyn, if any, legally available for
distribution to them after payment of debts and liabilities of CytoDyn and after
provision has been made for each class of stock, if any, having liquidation
preference over the Common Stock. Holders of shares of Common Stock have no
conversion, preemptive or other subscription rights, and there are no redemption
or sinking fund provisions applicable to the Common Stock.

TRANSFER AGENT AND REGISTRAR

Standard Registrar and Transfer of 673 Bluebird Lane NE, Albuquerque, New Mexico
87122, acts as our transfer agent.

REPORTS TO SHAREHOLDERS

CytoDyn is a reporting company, pursuant to Section 12(g) of the Exchange Act,
and is required to comply with periodic reporting, proxy solicitation and
certain other requirements of the Exchange Act.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the consummation of this offering, CytoDyn will have 8,069,307 shares of
common stock outstanding of which 885,000 are being registered for resale
pursuant to the registration statement of which this prospectus is a part. The
885,000 shares and 426,00 shares being registered for resale hereunder will be
freely tradable without restriction or further registration under the Securities
Act to the extent that a market develops for our securities. Of the 8,069,307
shares of common stock outstanding as of the date of this Prospectus , 8,069,307
are deemed to be "restricted securities," as that term is defined under Rule 144
promulgated under the Securities Act, in that such shares were acquired by the
shareholders of CytoDyn in transactions not involving a public offering, and, as
such, may only be sold pursuant to a registration statement under the Securities
Act, in compliance with the exemption provisions of Rule 144, or pursuant to
another exemption under the Securities Act. Of such 8,069,307 restricted shares
of Common Stock no shares are immediately eligible for sale, without
registration, under Rule 144.

In general, under Rule 144 as currently in effect, any person or persons whose
shares are aggregated who has beneficially owned restricted shares for at least
two years is entitled to sell, within any three-month period, a number of shares
that does not exceed the greater of 1% of the then outstanding shares of the
issuer's common stock or the average weekly trading volume during the four
calendar weeks preceding such sale, provided that certain public information
about the issuer as required by Rule 144 is then available and the seller
complies with certain other requirements. Affiliates will be subject to the
provisions of Rule 144, except that the holding period requirement does not
apply to sales by affiliates of shares which are not restricted securities. A
person who is not an affiliate, has not been an affiliate within three months
prior to sale, and has beneficially owned the restricted shares for at least
three years is entitled to sell such shares under Rule 144 without regard to any
of the limitations described above.

Prior to this offering, there has been no market for the common stock and no
prediction can be made as to the effect, if any, that market sales of common
stock or the availability of such shares for sale will have on the market price
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of common stock may be sold in the public market may adversely affect
prevailing market prices for the Common Stock and could impair our ability to
raise capital through the sale of its equity securities.

PLAN OF DISTRIBUTION

The 250,000 Shares shall be offered on a self underwritten basis in states in
the States of California, New Mexico and Colorado. The offering is self
underwritten by CytoDyn, and will be offered by officers and directors Corinne
Allen and Allen D. Allen, directly to investors. , Corinne Allen and Allen Allen
will offer the Shares by prospectus, to friends, former business associates and
contacts, and by direct mail to investors who have indicated an interest in us.
The offering is a self underwritten offering, which means that it does not
involve the participation of an underwriter or broker. The officers and
directors are not an "associated person" of a broker or a dealer. These officers
and directors have relied on the exemptions in Rule 3a4-1 to determine that they
are not considered brokers because (i) neither is subject to a statutory
disqualification, (ii) neither will be compensated or receive any fees in
connection with the shares offered, (iii) neither is an associated person of a
broker or dealer and (iv) each indicates that they will satisfy the conditions
of Rule 3a4-1(a)(4)(ii) of the Securities Exchange Act.

The offering of the Shares shall terminate 12 months after the date of this
prospectus, when all shares have been sold, or upon the order of the board of
directors.

We reserve the right to reject any subscription in whole or in part, or to allot
to any prospective investor less than the number of Shares subscribed for by
such investor.

We are paying the costs, expenses and fees of registering the common stock
estimated to be approximately $40,000 including amounts already spent. The
selling security holders will pay any underwriting or brokerage commissions and
similar selling expenses relating to the sale of the shares of common stock.

The selling security holders may sell, from time to time, any or all of their
shares of our common stock on any stock exchange, market, or trading facility on
which our shares are then traded or in private transactions, at a price of $.75
per share until our shares are quoted on the OTC Bulletin Board and thereafter
at prevailing market prices or privately negotiated prices. When we are
notified, if ever, we will promptly send a letter to all selling security
holders advising them of this fact.

The selling security holders may sell some or all of their common stock through:

- ordinary brokers' transactions which may include long or short sales
- transactions involving cross or block trades or otherwise;
- purchases by brokers, dealers or underwriters as principal and resale
by those purchasers for their own accounts under this prospectus
- market makers or into an existing market for our common stock;
- other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
- transactions in options, swaps or other derivatives; or
- any combination of the selling options described in this prospectus, or
by any other legally available means.

The selling security holders may enter into hedging transactions with
broker-dealers who may engage in short sales of our common stock in the course
of hedging the positions they assume. The selling security holders also may
enter into option or other transactions with broker-dealers that require the
delivery by those broker-dealers of the common stock. Thereafter the shares may
be resold under this prospectus.

The selling security holders and any broker-dealers involved in the sale or
resale of our common stock may qualify as "underwriters" within the meaning of
Section 2(a) (11) of the Securities Act of 1933. In addition, the
broker-dealers' commissions discounts or concessions may qualify as
underwriters' compensation under the Securities Act. If any selling security
holders or any broker-dealer qualifies as an "underwriter," they will be subject
to the prospectus delivery requirements of Section 153 of the Securities Act,
which may include delivery through the facilities of the NASD.

In the event any selling security holder sells any of his common stock to a
broker, dealer or underwriter as principal, such shares may be resold by the
broker, dealer or underwriter only under an amended prospectus that discloses
the selling securities holder's arrangements with the broker/dealer/underwriter
participating in the offering and identifies the participating
broker/dealer/underwriter. Any participating brokers/dealers will be considered
as an "underwriter" and will be identified in the amended prospectus as such.

In conjunction with the sales to or through brokers dealers or agents, the
selling security holders may agree to indemnify them, against liabilities
arising under the Securities Act. We know of no existing arrangements between
the selling security holders, any other shareholder, broker, dealer underwriter
or agent relating to the sale or distribution of our common stock.

In addition to selling their shares of common stock under this prospectus, the
selling security holders may:

- transfer their common stock in other ways not involving market makers
or established trading markets, including by gift, distribution, or
other transfer; or
- sell their common stock under Rule 144 of the Securities Act, if the
transaction meets the requirements of Rule 144.

We will amend or supplement this prospectus as required by the Securities Act.

SELLING STOCKHOLDERS

The following table shows for each selling security holder:

- the number of shares of common stock beneficially owned by him or her
as of August 31, 2004
- the number of shares of common stock covered by this prospectus and
- the number of shares of common stock to be retained after this
offering, if any, assuming the selling security holder sells the
maximum, number of shares ( and percentage of outstanding shares of
common stock owned after this offering, if more than 1%)

The selling security holders are not required, and may choose not, to sell any
of their shares of common stock. Other than as set forth in the footnotes to the
table below, none of the selling security holders have or during the past three
years has had any position, office or other material relationship with us or any
of our predecessors or affiliates.

Shares of Common
Stock Beneficially Shares Issuable Shares of Common
Owned Before Upon Exercise Stock to Be Sold Shares Owned
Name Offering of Warrants in Offering After the Offering
------ ------------------ --------------- ---------------- ------------------

JP Turner & Company LLC 426,000 426,000 0
James B. Wiegand (1) 400,000 400,000 0
Daniel Hannaway 5,000 5,000 0
Chris Crouch 5,000 5,000 0
Jared St.Aubyn 5,000 5,000 0
Zachary St.Aubyn 5,000 5,000 0
Lauren Prothe 5,000 5,000 0
Ashley Prothe 5,000 5,000 0
Lea Prothe 5,000 5,000 0
Todd Vacha 5,000 5,000 0
Craig Olsen 5,000 5,000 0
CK Enterprises (2) 5,000 5,000 0
Rudy Martinez 5,000 5,000 0
Kirk Wilford 5,000 5,000 0
Craig Kimball 5,000 5,000 0
Charles Cruz 5,000 5,000 0
Westco Mortgage LLC (3) 5,000 5,000 0
Stan Norfleet 5,000 5,000 0
Dustin Sandoval 5,000 5,000 0
Michael Nestor 5,000 5,000 0
James McCarron 5,000 5,000 0
Jane McCarron 5,000 5,000 0
F. Michael Johnston 5,000 5,000 0
F. Michael Johnston Co (4) 5,000 5,000 0
Dylan T. Webber 5,000 5,000 0
Mark Webber 5,000 5,000 0
Craig Olson 5,000 5,000 0
Joe Gomez 5,000 5,000 0
Chad Cordova 5,000 5,000 0
Beau Brooks 5,000 5,000 0
Susie Sandoval 5,000 5,000 0
Greg Gould 5,000 5,000 0
Rose Thomas 5,000 5,000 0
William Gofigan 5,000 5,000 0
Delos Elmer 5,000 5,000 0
Brian Gould 5,000 5,000 0
Don Lawson 5,000 5,000 0
Sonja Gouak 10,000 10,000 0
Mike Underwood 100,000 100,000 0
Dick Monfort 100,000 100,000 0
Barry A. Bates 100,000 100,000 0

Total 885,000 426,000 1,311,000 0

(1) James B. Wiegand is our former President, CEO and Director. Currently
Mr. Wiegand's beneficial ownership interest is 5% of our outstanding
shares.
(2) The principal of CK Enterprises is, Craig Kimball, President
(3) The principal of Westco Mortgage LLC is Charles Cruz, President
(4) The principal of F. Michael Johnston Co is F. Michael Johnston,
President

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for CytoDyn
by Ronald J. Tropp, Esq., of Woodland Hills, CA.

EXPERTS

The financial statements of CytoDyn inception on May 2, 2002 up to and including
May 31, 2004, appearing in this Prospectus and Registration Statement have been
audited by Cordovano and Honeck, P.C., independent auditors, as set forth in
their report thereon appearing elsewhere herein, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.

ADDITIONAL INFORMATION

CytoDyn has filed with the Commission a Registration Statement under the
Securities Act with respect to the Common Stock offered by this Prospectus. This
Prospectus, filed as a part of such Registration Statement, does not contain all
of the information set forth in, or annexed as exhibits to, the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to CytoDyn
and this offering, reference is made to the Registration Statement, including
the exhibits filed therewith, which may be inspected without charge at the
Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, at the Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60601-2511, and at the New York Regional Office, 7 World Trade
Center, New York, New York 10048. Copies of the Registration Statement may be
obtained from the Commission's Public Reference Section upon payment of
prescribed fees. Electronic registration statements made through the Electronic
Data Gathering, Analysis, and Retrieval system are publicly available through
the Commission's Web site at http://www.sec.gov.

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Index to Financial Statements

Page
----

Report of Independent Auditors............................................ F-2

Balance Sheet at May 31, 2004............................................. F-3

Statements of Operations for the years ended May 31, 2004 and 2003........ F-4

Statement of Changes in Shareholders' Deficit for the years ended
May 31, 2004 and 2003................................................ F-5

Statements of Cash Flows for the years ended May 31, 2004 and 2003........ F-6

Notes to Financial Statements............................................. F-7

F-1

Report of Independent Auditors

To the Board of Directors and Shareholders
CytoDyn, Inc.:

We have audited the accompanying balance sheet of CytoDyn, Inc. (formerly
CytoDyn of New Mexico, Inc.) (a development stage company) as of May 31, 2004,
and the related statements of operations, changes in shareholders' deficit, and
cash flows for the years ended May 31, 2004 and 2003. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CytoDyn, Inc. as of May 31,
2004, and the results of its operations and its cash flows for the years ended
May 31, 2004 and 2003 in conformity with accounting principles generally
accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered significant operating losses since
inception, which raises a substantial doubt about its ability to continue as a
going concern. Management's plans in regard to this matter are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Cordovano and Honeck, P.C.
Denver, Colorado
August 20, 2004

F-2

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Balance Sheet

May 31, 2004

Assets

Current Assets:
Cash ...................................................... $ 186,964
Prepaid expenses .......................................... 16,302
-----------
Total current assets ........................ 203,266

Furniture and equipment, less accumulated
depreciation of $204 ...................................... 3,131
Deposit ....................................................... 495
-----------

$ 206,892
===========

Liabilities and Shareholders' Deficit

Current Liabilities:
Accounts payable .......................................... $ 57,401
Accrued liabilities ....................................... 16,632
Indebtedness to related parties (Note 2) .................. 132,979
-----------
Total current liabilities ................... 207,012
-----------

Commitments and contingencies (Note 6) ........................ --

Shareholders' deficit (Note 4):
Preferred stock, no par value; 5,000,000 shares authorized,
-0- shares issued and outstanding ...................... --
Common stock, no par value; 20,000,000 shares authorized,
8,069,307 shares issued and outstanding ................ 1,916,334
Additional paid-in capital ................................ 23,502
Accumulated deficit ....................................... (1,601,912)
Deficit accumulated during development stage (Note 8) ..... (338,044)
-----------
Total shareholders' deficit ................. (120)
-----------

$ 206,892
===========

See accompanying notes to financial statements
F-3

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Statement of Operations

For The Years Ended
May 31,
--------------------------
2004 2003
----------- -----------
Operating expenses:
General and administrative (Note 9) .... $ 325,550 $ 30,229
Legal fees, related party (Note 2) ..... 20,050 --
Depreciation ........................... 204 --
----------- -----------
Total operating expenses 345,804 30,229
----------- -----------

Operating loss ......... (345,804) (30,229)

Interest income ............................ 343 --
Interest expense ........................... (453) --
----------- -----------
Loss before income taxes (345,914) (30,229)

Income tax provision (Note 5) .............. -- --
----------- -----------

Net loss ............... $ (345,914) $ (30,229)
=========== ===========

Basic and diluted loss per share ........... $ (0.05) $ (0.01)
----------- -----------

Basic and diluted weighted average
common shares outstanding .............. 6,335,973 5,362,640
=========== ===========

See accompanying notes to financial statements
F-4

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Statement of Changes in Shareholders' Deficit

Preferred Stock Common Stock Additional
------------------------- ------------------------- Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit
----------- ----------- ----------- ----------- ----------- -----------

Balance at June 1, 2002 ...................... -- $ -- 5,362,640 $ 1,417,792 $ 9,002 $(1,563,813)

Capital contribution by president (Note 2) ... -- -- -- -- 14,500 --
Net loss, year ended May 31, 2003 ............ -- -- -- -- -- (30,229)
----------- ----------- ----------- ----------- ----------- -----------

Balance at May 31, 2003 ...................... -- -- 5,362,640 1,417,792 23,502 (1,594,042)

October 28, 2003, stock issued to acquire the
net assets of Rexray Corporation (Note 1) -- -- 890,000 7,542 -- --
----------- ----------- ----------- ----------- ----------- -----------

Balance at October 28, 2003, following
recapitalization ......................... -- -- 6,252,640 1,425,334 23,502 (1,594,042)

February through April 2004, sale of
common stock less offering costs of
$54,000 ($.30/share) (Note 4) ............ -- -- 1,800,000 486,000 -- --
February 2004, shares issued to former officer
as payment for working capital advance
($.30/share) (Note 2) .................... -- -- 16,667. 5,000 -- --
Net loss, period ended May 31, 2004 .......... -- -- -- -- -- (7,870)
----------- ----------- ----------- ----------- ----------- -----------

Balance at May 31, 2004 ...................... -- $ -- 8,069,307 $ 1,916,334 $ 23,502 $ 1,601,912)
=========== =========== =========== =========== =========== ===========

Deficit
Accumulated
During
Development
Stage Total
----------- -----------

Balance at June 1, 2002 ...................... $ -- $ (137,019)

Capital contribution by president (Note 2) ... -- 14,500
Net loss, year ended May 31, 2003 ............ -- (30,229)
----------- -----------

Balance at May 31, 2003 ...................... -- (152,748)

October 28, 2003, stock issued to acquire the
net assets of Rexray Corporation (Note 1) -- 7,542
----------- -----------

Balance at October 28, 2003, following
recapitalization ......................... -- (145,206)

February through April 2004, sale of
common stock less offering costs of
$54,000 ($.30/share) (Note 4) ............ -- 486,000
February 2004, shares issued to former officer
as payment for working capital advance
($.30/share) (Note 2) .................... -- 5,000
Net loss, period ended May 31, 2004 .......... (338,044) (345,914)
----------- -----------

Balance at May 31, 2004 ...................... (338,044) $ (120)
=========== ===========

See accompanying notes to financial statements
F-5

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Statements of Cash Flows

For The Years Ended
May 31,
----------------------
2004 2003
--------- ---------
Cash flows from operating activities:
Net loss ....................................... $(345,914) $ (30,229)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation ............................. 204 --
Changes in current assets and liabilities:
Increase in prepaid expenses ........... (16,302) --
Increase in deposits ................... (495) --
Increase in accounts payable and
accrued liabilities ................. (2,258) --
--------- ---------
Net cash used in
operating activities ....... (364,765) (30,229)
--------- ---------

Cash flows from investing activities:
Equipment purchases ............................ (3,335) --
--------- ---------
Net cash used in
investing activities ....... (3,335) --
--------- ---------

Cash flows from financing activities:
Capital contributions by president (Note 2) .... -- 14,500
Proceeds from notes payable issued to
related parties (Note 2) .................... 115,826 10,500
Repayment of notes payable to related
parties (Note 2) ............................ (50,000) --
Proceeds from the sale of common stock (Note 4) 540,000 --
Payment of offering costs (Note 4) ............. (54,000) --
--------- ---------
Net cash provided by
financing activities ....... 551,826 25,000
--------- ---------

Net change in cash ......... 183,726 (5,229)

Cash, beginning of period .......................... 3,238 8,467
--------- ---------

Cash, end of period ................................ $ 186,964 $ 3,238
========= =========

Supplemental disclosure of cash flow information:
Income taxes ................................... $ -- $ --
========= =========
Interest ....................................... $ 453 $ --
========= =========

Non-cash investing and financing transactions:
Net assets acquired in exchange for common
stock in CytoDyn/Rexray business
combination (Note 1) ..................... $ 7,542 $ --
========= =========
Common stock issued to former officer to
repay working capital advance (Note 2) ... $ 5,000 $ --
========= =========

See accompanying notes to financial statements
F-6

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

(1) Summary of Significant Accounting Policies

Organization and Basis of Presentation

CytoDyn, Inc. (the "Company") was incorporated under the laws of New Mexico on
June 4, 1994 under the name CytoDyn of New Mexico, Inc. ("CytoDyn NM"). The
Company has devoted substantially all of its efforts to developing certain
technology for the treatment of the Human Immunodeficiency Virus (HIV) and to
have an Investigational New Drug application approved for clinical trials by the
FDA of its product, Cytolin. Due to a combination of poor business relationships
and a lack of funding, the Company was unable to successfully complete its
business plan. Effective October 28, 2003, following a recapitalization (see
below - Acquisition Agreement), the Company entered the development stage and
follows Statements of Financial Accounting Standards ("SFAS") No. 7 "Accounting
and Reporting by Development Stage Enterprises" (see Note 8).

On October 27, 2003, the Company changed its name to CytoDyn, Inc.

The Company plans to develop therapeutic agents for use against the disease
associated with Human Immunodeficiency Virus ("HIV"). The Company intends to
develop and obtain FDA approval for the use of monoclonal antibodies to treat
patients with HIV by protecting the cells of the body's immune system that are
otherwise killed by the disease. The Company is continuing the research and
development of a treatment for HIV, using technology licensed to it by the
Company's president, and may either repeat Phase I trials, if necessary for
non-clinical reasons, or with FDA approval, conduct a Phase II/III pivotal
study. The Company has not derived any revenues from the licensed technology,
but the Company is planning to pursue further clinical trials.

Acquisition Agreement
---------------------
On October 28, 2003, Rexray Corporation ("Rexray"), a company incorporated under
the laws of Colorado on May 2, 2002 and the former Securities and Exchange
Commission ("SEC") Registrant, entered into an Acquisition Agreement (the
"Agreement") with CytoDyn NM. Under the terms of the Agreement, Rexray agreed to
acquire some of the assets of CytoDyn NM in exchange for 5,362,640 shares of its
common stock. Following the acquisition, the former shareholders of CytoDyn NM
held approximately 85.8 percent of the Company's outstanding common stock,
resulting in a change in control. However, for accounting purposes, the
acquisition has been treated as a recapitalization of CytoDyn NM, with Rexray
the legal surviving entity. Since Rexray had minimal assets and no operations,
the recapitalization has been accounted for as the sale of 890,000 shares of
CytoDyn NM common stock for the net assets of Rexray. Therefore, the historical
financial information prior to the date of the reverse business acquisition is
the financial information of CytoDyn NM.

Prior to the Agreement, both Rexray and CytoDyn NM had insignificant operations
and were not devoting efforts to establishing a business. Following the
Agreement, the Company began devoting substantially all efforts to establishing
a new business, but planned principal operations have not yet commenced. As a
result, the Company's inception into the development stage has been established
at October 28, 2003 and, in accordance with SFAS No. 7, the Company has reported
cumulative financial information from the date of its inception into the
development stage (see Note 8).

Under the terms of the Agreement, CytoDyn NM:

o Assigned the patent license agreement between CytoDyn NM and Allen D.
Allen covering United States patent numbers 5424066, 5651970, and
6534057, and related foreign patents and patents pending, for a method
of treating HIV disease with the use of monoclonal antibodies;

F-7

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

o Assigned its trademarks, CytoDyn and Cytolin, and related trademark
symbol; and
o Paid $10,000 in cash

In consideration for the above, the Registrant:

o Effected a one-for-two reverse split of its common stock;
o Issued 5,362,640 shares of its common stock to CytoDyn NM;
o Amended its Articles of Incorporation to change its name to CytoDyn,
Inc.; and
o Accepted $161,578 in liabilities related to the assigned assets

Going Concern
-------------
The 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
financial statements, the Company is currently in the development stage with
losses for all periods presented. These factors, among others, raise substantial
doubt about the Company's ability to continue as a going concern.

The financial statements do not include any adjustments relating to the
recoverability 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 medical treatment, obtain FDA approval,
outsource manufacturing of the treatment, and ultimately to attain
profitability. The Company intends to seek additional funding through equity
offerings to fund its business plan. There is no assurance that the Company will
be successful.

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with original
maturities of three months or less when acquired, to be cash equivalents. The
Company had no cash equivalents at May 31, 2004.

Furniture, Equipment and Depreciation

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

Impairment of Long-Lived Assets

The Company evaluates the carrying value of any long-lived assets under the
provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". SFAS 144 requires impairment losses to be recorded on
long-lived assets used in operations when indicators of impairment are present
and the undiscounted future cash flows estimated to be generated by those assets
are less than the assets' carrying amount. If such assets are impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying value or fair value, less costs to
sell.

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109,
Accounting for Income Taxes (SFAS 109). SFAS 109 requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

Earnings (Loss) per Common Share

At May 31, 2004, there was no variance between basic and diluted loss per share
as there were no potentially dilutive common shares outstanding.

Financial Instruments

At May 31, 2004, the fair value of the Company's financial instruments
approximate fair value due to the short-term maturity of the instruments.

Recently Issued Accounting Pronouncements

Financial Accounting Standards Board Interpretations ("FIN") No. 46
"Consolidation of Variable Interest Entities" was effective immediately upon its
issuance during fiscal 2003 for all enterprises with interests in variable
interest entities created after January 31, 2003. In December 2003, FASB issued
FIN No. 46 (R) that changes the effective dates for the recording of interests
in variable interest entities created before February 1, 2003 beginning with the
first interim reporting period ending after March 15, 2004. If an entity is
determined to be a variable interest entity, it must be consolidated by the
enterprise that absorbs the majority of the entity's expected losses if they
occur, or receives a majority of the entity's expected residual returns if they
occur, or both. Where it is reasonably possible that the enterprise will
consolidate or disclose information about a variable interest entity, the
enterprise must disclose the nature, purpose, size and activity of the variable
interest entity and the enterprise's maximum exposure to loss as a result of its
involvement with the variable interest entity in all financial statements issued
after January 31, 2003. The adoption of this interpretation in 2004 is not
expected to have an effect on the Company's financial statements.

F-9

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

In December 2003, the staff of the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," which
supersedes SAB No. 101, "Revenue Recognition in Financial Statements." SAB No.
104's primary purpose is to rescind the accounting guidance contained in SAB No.
101 related to multiple-element revenue arrangements that was superseded as a
result of the issuance of Emerging Issues Task Force ("EITF") Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables." Additionally,
SAB No. 104 rescinds the SEC's related Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers issued with SAB No. 101 that
had been codified in SEC Topic 13, "Revenue Recognition." While the wording of
SAB No. 104 has changed to reflect the issuance of EITF Issue No. 00-21, the
revenue recognition principles of SAB No. 101 remain largely unchanged by the
issuance of SAB No. 104, which was effective upon issuance. The Company's
adoption of SAB No. 104 did not have a material effect on its financial position
or results of operations.

(2) Related Party Transactions

During February 2004, the Company issued 16,667 shares of its common stock as
payment for a $5,000 advance from a former officer ($.30 per share). There was
no interest on the note.

During the period ended May 31, 2004, two officers advanced the Company a total
of $111,194. During January 2004, the Company issued the officers promissory
notes for the balances owed. The notes are due on demand and carry no interest
rate. During February 2004, the Company repaid one officer $50,000. The
remaining balance due of $71,694 is included in the accompanying financial
statements as Indebtedness to related parties.

A director has provided legal services to the Company and CytoDyn NM over the
past several years. During the period ended May 31, 2004, the value of services
totaled $20,050. As of May 31, 2004, the Company owed the director $61,285 for
legal services, which is included in the accompanying financial statements as
Indebtedness to related parties. As of May 31, 2004, no arrangements had been
made for the Company to repay this obligation. This amount is due on demand and
there is no interest on the loan. The Company anticipates that the director will
continue to provide legal services in the future.

During the year ended May 31, 2003, the Company's president contributed $14,500
for working capital. This amount is included in the accompanying financial
statements as Additional paid-in capital.

(3) Note Payable

On October 28, 2003, the Company issued a $30,000 promissory note to its former
president as payment for services related to the CytoDyn NM Acquisition
Agreement. The note carried a five percent interest rate and was due on January
27, 2004. The Company repaid the $30,000 note, and $442 in accrued interest, in
February 2004.

(4) Shareholders' Equity

Preferred Stock

The Board of Directors is authorized to issue shares of preferred stock in
series and to fix the number of shares in such series as well as the
designation, relative rights, powers, preferences, restrictions, and limitations
of all such series. The Company had no preferred shares issued and outstanding
at May 31, 2004.

F-10

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

Common Stock Sales

From February 2004 through April 2004, the Company sold 1,800,000 shares of its
common stock at $.30 per share for net proceeds totaling $486,000, after
deducting offering costs of $54,000. The Company relied upon exemptions from
registration believed by it to be available under federal and state securities
laws in connection with the sales.

The Company has filed a Registration Statement on Form SB-2 with the SEC to
offer for sale 250,000 common shares at a price of $.75 per share. To date, the
SEC has not declared the Form SB-2 effective.

Stock Options - Employees

During May 2004, the Company granted 150,000 common stock options to an officer
with exercise prices ranging form $.50 to $1.50 per share. The Company's common
stock had no traded market value on the date of grant. The market value of the
stock was determined to be $.30 per share base on contemporaneous sales of
common stock to unrelated third party investors. The weighted average exercise
price and weighted average fair value of these options as of May 31, 2004 were
$1.00 and $.-0-, respectively. 50,000 options vest on May 10, 2005, an
additional 50,000 options vest on May 1, 2006, and the final 50,000 options vest
on May 1, 2007.

The Company has no other formal plan to grant stock options.

Pro forma information regarding net income and earnings per share is required by
SFAS 123 as if the Company had accounted for its granted stock options under the
fair value method of that Statement. The fair value for the options granted
during the fiscal year ended May 31, 2004 was estimated at the date of grant
using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate......................... 3.00%
Dividend yield.................................. 0.00%
Volatility factor............................... 0.00%
Weighted average expected life.................. 3.years

The Black-Scholes options valuation model was developed for use in estimating
the fair value of traded options, which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock options. Although the above options were
determined to have $-0- fair value, the Company has presented the pro forma net
loss and pro forma basic and diluted loss per common share using the assumptions
noted above.

F-11

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

October 28,
For The Years Ended 2003
May 31, Through
------------------------- May 31,
2004 2003 2004
----------- ----------- -----------
Net loss, as reported ............... $ (345,914) $ (30,229) $ (338,044)
=========== =========== ===========

Pro forma net loss .................. $ (345,914) $ (30,229) $ (338,044)
=========== =========== ===========

Basic and diluted net loss per common
share, as reported ............... $ (0.05) $ (0.01) $ (0.05)
=========== =========== ===========

Pro forma basic and diluted net loss
per common share ................. $ (0.05) $ (0.01) $ (0.05)
=========== =========== ===========

The following schedule summarizes the changes in the Company's outstanding stock
options:

Balance at May 31, 2004.......... 150,000 $0.50.to $1.50 $ 1.00
=============

(5) Income Taxes

A reconciliation of the U.S. statutory federal income tax rate to the effective
tax rate is as follows:

October 28,
For The Years Ended 2003
May 31, Through
------------------------- May 31,
2004 2003 2004
----------- ----------- -----------
U.S. Federal statutory graduated rate... 34.00% 15.00% 34.00%
State income tax rate,
net of federal benefit................ 3.17% 4.08% 3.17%
Net operating loss for which no tax
benefit is currently available........ (37.17%) (19.08%) (37.17%)
----------- ----------- -----------
0.00% 0.00% 0.00%
=========== =========== ===========

F-12

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

At May 31, 2004, federal and state deferred tax assets consisted of a net tax
asset of $141,840, which was fully allowed for in the valuation allowance of
$141,840. The valuation allowance offsets the net deferred tax asset for which
there is no assurance of recovery. The change in the valuation allowance for the
years ended May 31, 2004 and 2003 totaled $141,840 and $5,768. The current tax
benefits also totaled $141,840 and $5,768 for the years ended May 31, 2004 and
2003. The net operating loss carryforward expires through the year 2024.

The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the deferred tax asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax assets is no longer
impaired and the allowance is no longer required.

Should the Company undergo an ownership change, as defined in Section 382 of the
Internal Revenue Code, the net tax operating loss carryforwards generated prior
to the ownership change will be subject to an annual limitation which could
reduce or defer the utilization of those losses.

(6) Commitments and Contingencies

The Company entered into a noncancellable operating lease for office space that
commenced November 14, 2003 and expired November 30, 2004but is renewable.
Payments required under the operating lease are $495 per month.

The Company has committed to grant a financial representative warrants to
purchase 426,000 shares of the Company's common stock. The warrants will carry
an exercise price of $.30 per share and will expire after five years from the
date of grant. The warrants were subsequently granted on November 25, 2004. To
date, none of the warrants have been exercised.

The Company has signed Personal Service Agreements with three officers that
cover the two years ended May 31, 2005 and 2006. Under the terms of the
agreements, if an officer is terminated by the Company without cause or
terminates service for good cause within three months of a change in control,
the Company is required to pay the officer the balance of the base salary for
the term of the agreement and for an additional 12 months after the expiration
of the term.

(7) Concentrations of Credit Risk

The Company has concentrated its credit risk for cash by maintaining deposits in
financial institutions, which may at times exceed the amounts covered by
insurance provided by the United States Federal Deposit Insurance Corporation
("FDIC"). The loss that would have resulted from that risk totaled $85,954 at
May 31, 2004, for the excess of the deposit liabilities reported by the
financial institutions over the amount that would have been covered by FDIC. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant credit risk to cash.

(8) Financial Information - Development Stage

Following is the Statement of Operations for the period in which the Company has
been in the development stage as required by SFAS No. 7.

F-13

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

Operating expenses:
General and administrative (Note 9) $ 317,680
Legal fees, related party (Note 2) 20,050
Depreciation ...................... 204
-----------
Total operating expenses ........ 337,934
-----------
Operating loss .................. (337,934)

Interest income ...................... 343
Interest expense ..................... (453)
-----------
Loss before income taxes ........ (338,044)

Income tax provision (Note 5) ........ --
-----------

Net loss ....................... $ (338,044)
===========

Basic and diluted loss per share ..... $ (0.05)
===========

Basic and diluted weighted average
common shares outstanding ........... 7,290,735
===========

Following is the Statement of Cash Flows for the period in which the Company has
been in the development stage as required by SFAS No. 7.

F-14

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

October 28, 2003 Through May 31, 2004

Cash flows from operating activities:
Net loss ....................................... $(338,044)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation ............................. 204
Changes in current assets and liabilities:
Increase in prepaid expenses ......... (16,302)
Increase in deposits ................. (495)
Increase in accounts payable and
accrued liabilities ................ (2,258)
---------
Net cash used in
operating activities ....... (356,895)
---------

Cash flows from investing activities:
Equipment purchases ............................ (3,335)
---------
Net cash used in
investing activities ....... (3,335)
---------

Cash flows from financing activities:
Proceeds from notes payable issued to
related parties (Note 2) .................... 111,194
Repayment of notes payable to related
parties (Note 2) ............................ (50,000)
Proceeds from the sale of common stock (Note 4) 540,000
Payment of offering costs (Note 4) ............. (54,000)
---------
Net cash provided by
financing activities ....... 547,194
---------

Net change in cash ......... 186,964

Cash, beginning of period ............................ --
---------

Cash, end of period .................................. $ 186,964
=========

Supplemental disclosure of cash flow information:
Income taxes ................................... $ --
=========
Interest ....................................... $ 453
=========

Non-cash investing and financing transactions:
Net assets acquired in exchange for common
stock in CytoDyn/Rexray business
combination (Note 1) ..................... $ 7,542
=========
Common stock issued to former officer to
repay working capital advance (Note 2) ... $ 5,000
=========

F-15

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

(9) General and Administrative Expenses

General and administrative expenses consist of the following:

October 28,
For The Years Ended 2003
May 31, Through
------------------------- May 31,
2004 2003 2004
----------- ----------- -----------
Salaries and payroll taxes $ 96,102 $ -- $ 96,102
Legal .................... 137,731 13,213 132,922
Consulting ............... 25,000 -- 25,000
Other professional fees .. 16,059 -- 16,059
Patent fees .............. 20,919 -- 20,919
Office, travel, and other 29,739 17,016 26,678
----------- ----------- -----------
$ 325,550 $ 30,229 $ 317,680
=========== =========== ===========

(10) Litigation

CytoDyn of New Mexico, Inc. et al., v. Amerimmune Pharmaceuticals, Inc.
et al., Case number BC 290154, California Superior Court in and for the County
of Los Angeles The First Amended and Supplemental Complaint alleged causes of
action for unfair business competition, inducement of breach of contract, fraud
and unjust enrichment, and declaratory and equitable relief.

This case was dismissed due to the attorney's lack of attention to the case. The
judge stated that the evidence was not presented in an orderly and logical
fashion. The Company may appeal this case given the costs associated with it and
the relief awarded to us in the case below.

Rex H. Lewis, a Defendant and former director and C.E.O. of Amerimmune
Pharmaceuticals, Inc. has filed a First Amended Cross-Complaint against CytoDyn
of New Mexico, Inc., Allen D. Allen, Corinne E. Allen, Ronald J. Tropp, Brian J.
McMahon , Daniel M. Stickland, M.D. and unknown others designated as "Does
101-150". Most of these people are also directors of CytoDyn, Inc.

Mr. Lewis alleges, among other things, misrepresentations or failure to
make disclosures related to Cytolin and its development, approval and marketing;
interference with Amerimmune's attempt to complete clinical research related to
Cytolin and Mr. Lewis' actual or prospective business relationships; and libel
and slander of Mr. Lewis.

Currently the Cross-Complaint asserts causes of action for fraud,
interference with prospective business interests, libel and slander. The
requested relief includes damages (alleged to range from $3 million to $20
million or more), punitive damages, costs and other "just and proper" relief.

The outcome of litigation is uncertain. Management believes that an
unfavorable result is unlikely with respect to the claims raised by the
Complaint, and that the claims raised by the Cross-Complaint are without merit.
The defendants have retained new counsel, which are the same attorney's that
represented us in the following case that was decided in our favor.

F-16

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Notes to Financial Statements

Discovery is continuing. Trial is scheduled for June 2005.

CytoDyn, Inc., et al. v. Amerimmune, Inc. et al., Case number SC039250,
--------------------------------------------------------------------------------
California Superior Court in and for the County of Ventura.
-----------------------------------------------------------

The Declaratory Relief Sought and Attorneys' Fees Were Awarded.

The principal relief sought was a declaration that the license granted
and the assignment of the technology, patents and drug application made pursuant
to the Conditional License Agreement were terminated no later than September 12,
2001, and that Allen and CytoDyn are the owners of the technology, patents and
investigational new drug application, free of any claims of the defendants.
Costs, attorney's fees, and other "just and proper" relief also were sought.

This case was decided in favor of the plaintiffs, CytoDyn and Allen
October 4, 2004.

Symbion Research International, Inc., v. Amerimmune, Inc. et al., Case
-----------------------------------------------------------------------
number SC035668, California Superior Court in and for the County of Ventura.
----------------------------------------------------------------------------

The complaint was filed on March 14, 2003. Symbion Research International, Inc
was the plaintiff. Amerimmune, Inc. was the remaining defendant. CytoDyn was not
a party to this action, however the action affects intellectual property which
is important to CytoDyn.

A default judgment was entered on December 18, 2003. A judgment was
entered in favor of Symbion Research International ("Symbion") on September 17,
2004 granting the declarative relief sought by Symbion.

The action concerned intellectual property generated in connection with services
provided by Symbion with respect to early phase FDA clinical trials of Cytolin,
including research data and a patent application filed in 2002. The complaint
alleged that Symbion performed early phase FDA trials (designated in the
Complaint as "Phase Ia" and "Phase Ib/II") on behalf of Amerimmune pursuant to
an oral agreement, and that Amerimmune failed to pay Symbion for its services,
and otherwise breached its obligations under the agreement.

The intellectual property generated in the early phase FDA clinical
trials is necessary to obtain approval for, and to conduct, further FDA clinical
tests of Cytolin. Because a satisfactory result was obtained in this action,
CytoDyn has negotiated an agreement with Symbion that will allow the use in
subsequent phases of clinical test of Cytolin of the research data generated in
the early phases.

F-17

CYTODYN, INC.
(Formerly CytoDyn of New Mexico, Inc.)
(A Development Stage Company)
Index to Financial Statments

Page
--------
PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed balance sheet, August 31, 2004 (unaudited)................. F-19
Condensed statements of operations, three months ended
August 31, 2004 (unaudited) and 2003 (unaudited).................. F-20
Condensed statements of cash flows, three months ended
August 31, 2004 (unaudited) and 2003 (unaudited).................. F-21
Notes to condensed financial statements (unaudited).................. F-22

F-18

CYTODYN, INC.
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)

August 31, 2004

Assets

Property and equipment, less accumulated
depreciation of $496 ...................................... 6,006
Deposit ....................................................... 495
-----------

$ 92,790
===========

Liabilities and Shareholders' Deficit

Commitments and contingencies (Note 6) ........................ --

$ 92,790
===========

See accompanying notes to condensed financial statements

F-19

CYTODYN, INC.
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)

Interest income ............................ 176 --
Interest expense ........................... (182) --
----------- -----------
Loss before income taxes (120,707) (3,935)

Income tax provision (Note 5) .............. -- --
----------- -----------

Net loss ............... $ (120,707) $ (3,935)
=========== ===========

Basic and diluted loss per share ........... $ (0.01) (0.00)
=========== ===========

Basic and diluted weighted average
common shares outstanding .............. 8,069,307 5,362,640
=========== ===========

See accompanying notes to condensed financial statements

F-20

CYTODYN, INC.
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
For The Three Months Ended
August 31,
--------------------------
2004 2003
----------- -----------

Net cash used in
operating activities ..... $ (107,874) $ (3,995)
----------- -----------

Cash flows from investing activities:
Property and equipment purchases .............. (3,167 --
----------- -----------
Net cash used in
investing activities ..... (3,167) --
----------- -----------

Cash flows from financing activities:
Capital contributions by president (Note 2) ... 512 --
Proceeds from notes payable issued to
related parties (Note 2) ................... -- 3,452
Repayment of notes payable to related
parties (Note 2) ........................... -- --
Proceeds from the sale of common stock (Note 4) -- --
Payment of offering costs (Note 4) ............ -- --
----------- -----------
Net cash provided by
financing activities ..... 512 3,452
----------- -----------

Net change in cash ....... (110,529) (543)

Cash, beginning of period ......................... 186,964 3,238
----------- -----------

Cash, end of period ............................... $ 76,435 $ 2,695
=========== ===========

Supplemental disclosure of cash flow information:
Income taxes .................................. $ -- $ --
=========== ===========
Interest ...................................... $ 182 $ --
=========== ===========

See accompanying notes to condensed financial statements

F-21

CYTODYN, INC.
(A Development Stage Company)

Notes to Condensed Financial Statements
(Unaudited)

Note 1: Basis of Presentation

The condensed financial statements presented herein have been prepared by the
Company in accordance with the instructions for Form 10-QSB and the accounting
policies in its Form 10-KSB filed for the year ended May 31, 2004 and should be
read in conjunction with the notes thereto.

In the opinion of management, the accompanying condensed financial statements
contain all adjustments (consisting only of normal recurring adjustments) which
are necessary to provide a fair presentation of operating results for the
interim periods presented. The results of operations presented for the three
months ended August 31, 2004 are not necessarily indicative of the results to be
expected for the year.

The Company is in the development stage in accordance with Statements of
Financial Accounting Standards (SFAS) No. 7 "Accounting and Reporting by
Development Stage Enterprises".

Financial data presented herein are unaudited.

Note 2: Related Party Transactions

During the three months ended August 31, 2004, the Company's president paid
administrative expenses on behalf of the Company totaling $512. The payment has
been recorded as contributed capital and is included in the accompanying
condensed financial statements as "Additional paid-in capital".

As of May 31, 2004, the Company owed two officers promissory notes totaling of
$71,694. The notes are due on demand and carry no interest rate. The balance due
of $71,694 remained unpaid at August 31, 2004 and is included in the
accompanying condensed financial statements as Indebtedness to related parties.

As of May 31, 2004, the Company owed a director $61,285 for legal services
provided to the Company. As of August 31, 2004, no arrangements had been made
for the Company to repay this obligation. There is no interest due on the note
and the note is due on demand. Company anticipates that the director will
continue to provide legal services in the future. The balance due of $61,285 is
included in the accompanying condensed financial statements as Indebtedness to
related parties.

Note 3: Income taxes

The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses for all
periods presented resulting in a deferred tax asset, which was fully allowed for
by a valuation allowance; therefore, the net benefit and expense resulted in
$-0- income taxes.

Note 4: Commitments and Contingencies

The Company entered into a noncancellable operating lease for office space that
commenced November 14, 2003 and expires November 30, 2004. Payments required
under the operating lease are $495 per month.

F-22

The Company has committed to grant a financial representative warrants to
purchase 426,000 shares of the Company's common stock. The warrants will carry
an exercise price of $.30 per share and will expire after five years from the
date of grant. The warrants were subsequently granted on November 25, 2004 and
included in the registration for the public offering under our SB-2 filing. No
warrants have yet been exercised.

Note 5: Financial Information - Development Stage

Following is the Statement of Operations for the period in which the Company has
been in the development stage as required by SFAS No. 7.

October 28, 2003 Through August 31, 2004

Operating expenses:
General and administrative............... $ 438,089
Legal fees, related party ............... 20,050
Depreciation ............................ 496
----------
Total operating expenses.............. 458,635
----------
Operating loss ....................... (458,635)

Interest income ............................. 519
Interest expense ............................ (635)
----------
Loss before income taxes.............. (458,751)

Income tax provision (Note 5) ............... --
----------

Net loss ............................. $ (458,751)
==========

Following is the Statement of Cash Flows for the period in which the Company has
been in the development stage as required by SFAS No. 7.

F-23

October 28, 2003 Through August 31, 2004

Net cash used in
operating activities ........... $(464,769)
---------

Cash flows from investing activities:
Equipment purchases ............................... (6,502)
---------
Net cash used in
investing activities ........... (6,502)
---------

Cash flows from financing activities:
Capital contributions by president ................ 512
Proceeds from notes payable issued to
related parties (Note 2) ....................... 111,194
Repayment of notes payable to related
parties (Note 2) ............................... (50,000)
Proceeds from the sale of common stock (Note 4).... 540,000
Payment of offering costs (Note 4) ................ (54,000)
---------
Net cash provided by
financing activities ........... 547,706
---------

Net change in cash ............. 76,435

Cash, beginning of period ............................. --
---------

Cash, end of period ................................... $ 76,435
=========

Supplemental disclosure of cash flow information:
Income taxes ...................................... $ --
=========
Interest .......................................... $ 635
=========

Note 6: Litigation

CytoDyn of New Mexico, Inc. et al., v. Amerimmune Pharmaceuticals, Inc. et al.,
--------------------------------------------------------------------------------
Case number BC 290154, California Superior Court in and for the County of Los
--------------------------------------------------------------------------------
Angeles.
--------

The First Amended and Supplemental Complaint alleged causes of action for unfair
business competition, inducement of breach of contract, fraud and unjust
enrichment, and declaratory and equitable relief. This case was dismissed due to
the attorney's lack of attention to the case. The judge stated that the evidence
was not presented in an orderly and logical fashion.

Mr. Lewis alleges, among other things, misrepresentations or failure to make
disclosures related to Cytolin and its development, approval and marketing;
interference with Amerimmune's attempt to complete clinical research related to
Cytolin and Mr. Lewis' actual or prospective business relationships; and libel
and slander of Mr. Lewis.

F-24

Currently the Cross-Complaint asserts causes of action for fraud, interference
with prospective business interests, libel and slander. The requested relief
includes damages (alleged to range from $3 million to $20 million or more),
punitive damages, costs and other "just and proper" relief.

The outcome of litigation is uncertain. Management believes that an unfavorable
result is unlikely with respect to the claims raised by the Complaint, and that
the claims raised by the Cross-Complaint are without merit. The defendants have
retained new counsel which are the same attorney's that represented us in the
following case that was decided in our favor.

Discovery is continuing. Trial is scheduled for June 2005.

The Declaratory Relief Sought and Attorneys' Fees Were Awarded.

The action concerned a Conditional License Agreement, dated February 24, 2000,
between Allen D. Allen and CytoDyn of New Mexico, on one hand, and Amerimmune,
Inc., on the other. The complaint alleged that the Conditional License Agreement
licensed to the defendants technology and patents related to Cytolin and
assigned to defendants an FDA approved investigational new drug application
related to Cytolin. Further, it alleged that the defendants breached the
Conditional License Agreement, resulting in its termination.

The principal relief sought was a declaration that the license granted and the
assignment of the technology, patents and drug application made pursuant to the
Conditional License Agreement were terminated no later than September 12, 2001,
and that Allen and we are the owners of the technology, patents and
investigational new drug application, free of any claims of the defendants.
Costs, attorney's fees, and other "just and proper" relief also were sought.

This case was decided in favor of the plaintiffs, CytoDyn and Allen October 4,
2004.

Symbion Research International, Inc., v. Amerimmune, Inc. et al., Case number
--------------------------------------------------------------------------------
SC035668, California Superior Court in and for the County of Ventura.
---------------------------------------------------------------------

The complaint was filed on March 14, 2003. Symbion Research International, Inc
was the plaintiff. Amerimmune, Inc. was the remaining defendant. We were not a
party to this action, however the action affects intellectual property which is
important to us.

A default judgment was entered on December 18, 2003. A judgment was entered in
favor of Symbion Research International ("Symbion") on September 17, 2004
granting the declarative relief sought by Symbion .

The action concerned intellectual property generated in connection with services
provided by Symbion with respect to early phase FDA clinical trials of Cytolin,
including research data and a patent application filed in 2002. The complaint
alleged that Symbion performed early phase FDA trials (designated in the
Complaint as "Phase Ia" and "Phase Ib/II", on behalf of Amerimmune pursuant to
an oral agreement, and that Amerimmune failed to pay Symbion for its services,
and otherwise breached its obligations under the agreement.

The complaint asserted causes of action for breach of oral contract, account
stated, work and labor done, fraud, and declaratory and injunctive relief. The
relief sought included a declaration that Symbion is the owner of the
intellectual property resulting from the services provided by Symbion.

The intellectual property generated in the early phase FDA clinical trials is
necessary to obtain approval for, and to conduct, further FDA clinical tests of
Cytolin. Because a satisfactory result was obtained in this action, we have
negotiated an agreement with Symbion that will allow the use in subsequent
phases of clinical test of Cytolin of the research data generated in the early
phases. CytoDyn will purchase this data from Symbion in order to apply for FDA
registration of Cytolin.

F-25

No dealer, salesperson or any other individual has been authorized to give any
information or to make any representation not contained in this Prospectus in
connection with the offer made by this Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by CytoDyn. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities other than the securities
offered by this Prospectus, or an offer to sell or a solicitation of an offer to
buy any security by any person in any jurisdiction in which such offer or
solicitation is unlawful.

CYTODYN, INC.
----------------------------------
PROSPECTUS

250,000 SHARES
885,000 SHARES
426,000 SHARES

TABLE OF CONTENTS Page
----------------- ----

Prospectus Summary ........................ 5
Risk Factors .............................. 10
Use of Proceeds ........................... 20
Dividend Policy ........................... 21
Dilution .................................. 21
Business .................................. 24
Capitalization ............................
Selected Financial Data ...................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations Business ...................... 36
Management ................................ 44
Executive Compensation .................... 46
Principal Shareholders .................... 48
Certain Transactions ...................... 49
Description of Common Stock ............... 53
Shares Eligible for Future Sale ........... 54
Underwriting ..............................
Legal Matters ............................. 59
Experts ................................... 59
Additional Information .................... 59
Index to Financial Statements ............. F-1

Until ( 90 days after the CYTODYN, INC. date
of this Prospectus), all dealers effecting
transactions in the registered securities,
whether or not participating in this 200 West De Vargas St. Suite 1,
distribution, may be required to deliver a Santa Fe, New Mexico 87501
Prospectus. This is in addition to the 505-988-5520
obligation of dealers to delivering a
Prospectus when acting as underwriters and
with respect to their unsold allotments or
subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Article 101-117 of Colorado Corporate Statutes provides for the indemnification
of our officers, directors, employees and agents under certain circumstances,
for any threatened, pending or completed action or proceeding, whether civil,
criminal, administrative or investigative; and "expenses" includes without
limitation attorneys' fees and any expenses, against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with the proceeding if that person acted in good faith and in a manner the
person reasonably believed to be in the best interests of the corporation and,
in the case of a criminal proceeding, had no reasonable cause to believe the
conduct of the person was unlawful.

Our articles of incorporation contain a provision for the indemnification of
CytoDyn's directors in Article Eight , which provides that we shall indemnify to
the maximum extent permitted by law, any director, officer, agent, fiduciary or
employee against any claim or expense incurred by reason of being a party to any
legal proceeding, except for acts or omissions involving intentional misconduct,
fraud or a knowing violation of law. Article VI of our bylaws contain similar
provisions.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of CytoDyn, pursuant to the foregoing provisions, or otherwise, CytoDyn has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemized statement of all expenses in
connection with the issuance and distribution of the securities being
Registered, all of which are estimated.

Securities and Exchange Commission filing fee ........... $ 147.00
Printing and engraving expenses ......................... $ 1,000.00
Legal Fees and expenses ................................. $ 25,000.00
Registrar and transfer agent fees ....................... $ 1,000.00
Accounting fees and expenses ............................ $ 10,000.00
Blue sky fees and expenses .............................. $ 3,500.00
-----------
Total ............................................ $ 40,647.00

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

On May 3, 2002, we issued 800,000 shares of common stock to our former
president, James B. Wiegand, at .01 per share, in exchange for services valued
at $8,000. Mr. Wiegand is a sophisticated person who had superior access to all
corporate and financial information. The issuance was done in reliance upon
Section 4(2) of the Securities Act.

From May 17, 2002 through May 21, 2002, we issued 340,000 shares to 34
shareholders at .01 per share, for a total of $3,400 cash. All investors were
sophisticated and received access to corporate and financial information. The
issuance was made in reliance upon Rule 506 of Regulation D of the Securities
Exchange Commission. We relied upon exemptions from registration believed by it
to be available under federal and state securities laws in connection with the
offering. The shares were sold through our officer and director James B.
Wiegand.

Stock for Services

During October 2002, we issued 20,000 shares of its common stock to a vendor in
exchange for financial printing services. The transaction was valued at the cost
of the services rendered. The number of shares issued was based on the
contemporaneous sale of common stock to unrelated third parties and other
analysis, or $.01 per share ($200).

In October 2003, pursuant to the Acquisition Agreement between CytoDyn and
CytoDyn of New Mexico, Inc., we issued a total of 5,362,640 post-reverse split
shares to CytoDyn of New Mexico, Inc., a corporation whose shareholders include
Allen D. Allen and Corinne Allen, in exchange for $10,000 cash and the
trademarks, CytoDyn and Cytolin, as well as a related registered trademark
symbol, and the assignment of that certain patent license agreement dated July
1, 1994 by and between Allen D. Allen and CytoDyn of New Mexico, Inc., which
license covers U.S. Patent No.s 5424066) 5651970 and 6534057 "). The license
gives the company the exclusive worldwide right to develop the technology under
the patents until their expiration of which the first to expire is 2013. The
issuance was made to sophisticated persons who had access to all corporate and
financial information, in reliance upon Section 4(2) of the Securities Act. As
part of the Acquisition Agreement, we also assumed $161,578 in liabilities,
including $61,694 owed to Allen D. Allen and Corinne Allen.

In September 2003, we issued a total of 600,000 shares of common stock at $0.05
per share, for a total of $30,000, to three accredited investors, one, in
Montana and 2 in Colorado, with access to all corporate and financial
information, in a private offering, in reliance upon Section 4(2) of the
Securities Act. The shares were sold through our officer and director. There was
no general solicitation for these securities.

In April 2004, we issued a total of 1,800,000 shares of common stock at $.30 per
share for a total of $540,000. These shares were sold to accredited investors
only. The issuance was made in reliance upon Rule 505 of Regulation D of the
Securities Exchange Commission.

During the period from October 2002 through October 27, 2003, Amery Coast
Corporation ("ACC"), at that time an affiliate under common control contributed
office space to us. The office space was valued at $100 per month based on the
market rate in the local area and is included in the accompanying financial
statements as "Contributed rent, related party" expense with a corresponding
credit to "Additional paid-in capital".

In October 2003, Allen D. Allen advanced us the sum of $10,000. The advance does
not bear interest and is payable on demand.

On October 28, 2003 we issued a promissory note to our former president, James
B. Wiegand in the principal amount of $30,000, to compensate Mr. Wiegand for
services rendered. The note bears interest at the rate of 5% per annum and was
paid in February 2004.

On December 26, 2003, Corinne Allen advanced us the sum of $50,000 for working
capital. The advance does not bear interest and is payable on demand. We repaid
in the advance in February 2004.

In February 2004, we issued 16,667 shares to our Executive Vice President, Brian
McMahon, valued at $0.30 per share, for a total of $5,000, for repayment of
debt.

In the second quarter of 2004, we issued warrants to J.P. Turner, the financial
representative in our private placement, to purchase 426,000 common shares over
five years at an exercise price of $0.30 per share. These warrants were granted
November 25, 2004. None have been exercised to date.

ITEM 27. EXHIBITS

Number Description
------------ -----------------------------------------------------------------

* 3.1 Articles of Incorporation of CytoDyn.
** 3.2 Certificate of Amendment to Articles of Incorporation of
CytoDyn.
* 3.3 Bylaws of CytoDyn.
**** 4.1 Specimen Common Stock Certificate.
**** 5.1 Opinion of Kenneth G. Eade, Attorney at Law.
*** 10.1 Acquisition agreement dated September 30, 2003 between Rexray
Corporation and CytoDyn of New Mexico, Inc.

******* 10.2 Amendment No. 1 to agreement dated September 30, 2003 between
Rexray Corporation and CytoDyn of New Mexico, Inc.

***** 10.3 Office Lease Agreement
***** 10.4 Conditional License Agreement and court order for its
termination.
**** 10.5 Master Agreement for Professional Services with Symbion

******* 10.5.2 Buy-Sell Agreement with Symbion Research International

***** 10.6 Patent License Agreement from CytoDyn of New Mexico. Inc and
Amendment
**** 10.7 Personal Services Agreements for Executives
**** 10.8 Change of Control Agreements for Executives
**** 10.9 Proprietary Information and Inventions Agreements for
employees
**** 23.1 Consent of Kenneth Eade (included in Exhibit 5.1).
**** 23.2 Consent of Cordovano and Honeck
**** 23.3 Consent of Cordovano and Honeck for Amendment
**** 23.4 Consent of Cordovano and Honeck December 2004

******* 23.5 Consent and opinion of Ronald J. Tropp
******* 23.6 Consent of Cordovano & Honeck for January 2005

**** 99.1 Subscription Agreement

* Incorporated by reference to Registration Statement on Form 10KSB,
filed July 11, 2002;

** Incorporated by reference to Current Report on Form 8K, filed November
12, 2003

*** Incorporated by reference to Amended Current Report on Form 8K/A, filed
January 12, 2004

**** Incorporated by reference to Registration Statement of Form 10KSB filed
September 14, 2004.

***** Incorporated by reference to Registration Statement of Form 10QSB filed
October 13, 2004

****** Incorporated by reference to Registration Statement of Form 10QSB
Amendment No. 1 filed January 12, 2005.

******* Filed herewith

ITEM 28. UNDERTAKINGS.

The undersigned Company undertakes to:

(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:

(I) Include any prospectus required by Section 10(a)(3) of the Securities Act;
ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

(iii) Include any additional or changed material information on the plan of
distribution. (2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering. (3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

(e) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of CytoDyn, pursuant to the provisions referred to under Item 24 of this
Registration Statement, or otherwise, CytoDyn has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore unenforceable.

In the event that a claim for indemnification against such liabilities (other
than the payment by CytoDyn of expenses incurred or paid by a director, officer
or a controlling person of CytoDyn in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, CytoDyn will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of competent jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.

(f)(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by CytoDyn under Rule 424(b)(1), or (4), or 497(h) under the
Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.

(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.

SIGNATURES
----------
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Studio City, State of California, on October ___,
2004.

CYTODYN, INC.

By: /s/ Allen D. Allen
-----------------------------------
Allen D. Allen,
Chairman of the Board and President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Allen D. Allen and Corinne Allen, and
each of them, his attorneys-in-fact, each with the power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto in all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every Act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.

Signature Title Date
------------------------- ----------------------- -----------------

/s/ Allen D. Allen Chairman of the Board, January --, 2005
------------------------- President, and Director
Allen D. Allen

/s/ Corinne Allen Secretary/Treasurer, January --, 2005
------------------------- Director
Corinne Allen

/s/ Wellington A. Ewen Chief Financial Officer January --, 2005
-------------------------
Wellington A. Ewen

/s/ Ronald J. Tropp Director January --, 2005
-------------------------
Ronald J. Tropp

/s/ Daniel M. Strickland Director January --, 2005
-------------------------
Daniel M. Strickland

/s/ Peggy J. Pence Director January --, 2005
-------------------------
Peggy J. Pence