SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM SB-2
                                  Amendment #8
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933


                                  CYTODYN, INC.
                 ----------------------------------------------
                 (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
 --------------------------------------                  ----------
(Address of principal executive offices)                 (Zip code)


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


              ----------------------------------------------------
         (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.


                                        1



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.







                                        2




                                  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  ........................      Selling Security-Holders
 8. Plan of Distribution  ............................      Outside Front Cover Page; Underwriting
 9. Legal Proceedings  ...............................      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  ............      *
-------------
* 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.

                                        3




                         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)
------------------------------------------------------------------------------------
                                                            
No par value
Common Stock            1,761,000            $.75         $1,320,750        $155
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 450,000 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. $8 was paid on March
     18, 2005.

                                   PROSPECTUS
                                  CYTODYN, INC.

                        1,761,000 SHARES OF COMMON STOCK
                                 $0.75 PER SHARE

We intend to sell up to 450,000 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.  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 are also  registering  1,311,000 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

                                        4


1,311,000 shares of common stock by the selling  stockholders.  426,000 of these
shares are common shares  issuable upon exercise of warrants issued to our prior
financial  representatives J.P Turner & Co (106,000) and Max O. Gould,  employee
of J.P. Turner & Co (320,000),registered  broker/dealers with the Securities and
Exchange  Commission.  They are not involved in the  underwriting of this public
offering.  However, JP Turner and or Max Gould may act as agents for some of the
shareholders  listed in the selling  shareholders table. We are only registering
the resale of the underlying warrant shares. The financial  representatives will
need to purchase  the  underlying  shares  first from the company  pursuant to a
private placement that was exempt from registration.

We  will  receive  the  exercise   price  of  the  shares  when  our   financial
representatives  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  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.

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

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 $337,500.
The offering is being self-underwritten through our officers and directors.

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

               Offering Price           Commissions      Proceeds to Company
               --------------           -----------      -------------------
Per Share:     $       .75              $      0            $      0.75
Total:         $   337,500              $      0            $   337,500


                  The date of this Prospectus is June 15, 2005



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


                                        5


                               PROSPECTUS SUMMARY

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.
6534057.  The  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  Human   Immunodeficiency   Virus
(HIV)disease 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." On September 27, 1996 the FDA acknowledged receipt
of the IND submitted by CytoDyn of New Mexico. The FDA's  acknowledgment  letter
specified the date of  submission as September 23, 1996,  the date of receipt as
September 26, 1996, the product name  "Cytolin",  sponsor  CytoDyn of New Mexico
and IND #6845.  The  $1.3 million in research and development spent was incurred

                                        6


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.  On
October 4, 2004 the Superior  Court of California  awarded  ownership of the FDA
application to CytoDyn,  Inc. See Legal Proceedings on pages 34 and 35. 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  immuno-therapy  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.  We paid Symbion $25,000 out of
the loan  proceeds we received in March 2005. . The balance of $337,000  will be
paid with  83,122  stock  options  and  $275,000  in cash after the next  larger
financing  arrangement  is secured.  If all  payments are not paid to Symbion by
December  31, 2005 the  clinical  trial data will  revert  back to  Symbion.(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


                                        7



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 certain HIV patients in
the United  States.  There are a number of HIV patients in the U.S.  that are in
need of a "salvage  therapy"  which means that they have built up  resistance to
the antiviral cocktail therapies and have no other treatment options left to
exercise.  Therefore,  the FDA allows fast track status for salvage therapies to
get drugs approved more quickly.  The time frame to be able to market Cytolin in
the United States for salvage  therapy HIV patients is expected to be a total of
32 to 49 months.  The total estimated amount of capital required to get the drug
marketed as a salvage therapy for certain  patients in the U.S. is approximately
$3,000,000  to  $5,000,000.  If the FDA  approves  only a Phase  II study at our
meeting,  then it would take more time and more capital to conduct first a Phase
II and then a Phase III trial. A BLA would not be submitted  until the Phase III
trial is complete.  This would increase our costs significantly and may preclude
us from  marketing or  developing  this drug at all. The $3 to $5 million  would
fund our FDA  approved  Phase  II/III  registration  study  costs,  overhead and
operating  expenses.  Once we have had our meeting with the FDA, we can estimate
what  additional  capital  will be needed in order to get Cytolin  approved  for
general  sale  in  the  U.S.  If we  obtain  FDA  approval  for a  Phase  II/III
registration  study,  this  would  allow us to apply for a  Biologics  Licensing
Application  (BLA) to sell Cytolin as a salvage  therapy to certain  patients in
the U.S. once the Phase II/III data has been  submitted and approved by the FDA.
Substanitally  more capital or financing  will need to be obtained  prior to FDA
approval of Cytolin for general sale in U.S.


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.............................    450,000 shares

Selling Security Holders ........................  1,311,000 shares


Common Stock to be outstanding
after the offering ..............................  8,519,307 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."


                                        8


SUMMARY FINANCIAL INFORMATION

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

                                February 28, 2005

                                     Assets


Cash ..........................................................   $    84,948
Property and equipment, less accumulated
    depreciation of $1,211 ....................................         5,087
Deposit .......................................................           495
                                                                  -----------

                                                                  $    90,530
                                                                  ===========

                      Liabilities and Shareholders' Deficit

Current liabilities:
    Accounts payable ..........................................   $   463,275
    Accrued liabilities .......................................        83,367
    Indebtedness to related parties (Note 2) ..................       137,979
Long Term Liabilities:
    Notes payable (Note 3) ....................................        85,000
    Accrued interest payable (Note 3) .........................            47
                                                                  -----------
                  Total liabilities ...........................       769,668
                                                                  -----------

Commitments (Note 7) ..........................................          --

Shareholders' deficit:
    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 ................................        40,942
    Accumulated deficit .......................................    (1,601,912)
    Deficit accumulated during development stage ..............    (1,034,502)
                                                                  -----------
                  Total shareholders' deficit .................      (679,138)
                                                                  -----------

                                                                  $    90,530
                                                                  ===========


                                        9


                                  CytoDyn, Inc
                          (a development stage company)
                        Condensed Statement of Operations
                                   (unaudited)

                                                       Nine Months Ended
                                                          February 28,
                                                   --------------------------
                                                       2005           2004
                                                   -----------    -----------
Operating expenses:
    General and administrative .................   $   320,785    $   188,929
    Stock-based compensation (Note 5):
        Financial consulting services ..........        11,928           --
    Legal fees, related party ..................          --             --
    Depreciation ...............................         1,211           --
    Research and development (Note 6) ..........       362,342           --
                                                   -----------    -----------
                  Total operating expenses .....       696,266        188,929
                                                   -----------    -----------
                  Operating loss ...............      (696,266)      (188,929)

Interest income ................................           230             55
Interest expense ...............................          (422)          (441)
                                                   -----------    -----------
                     Loss before income taxes...      (696,458)      (189,315)
Income tax provision (Note 4) ..................          --             --
                                                   -----------    -----------

                   Net loss ....................   $  (696,458)   $  (189,315)
                                                   ===========    ===========

Basic and diluted loss per share ...............   $     (0.09)   $     (0.05)
                                                   ===========    ===========
Basic and diluted weighted average
    common shares outstanding ..................     8,069,307      3,909,985
                                                   ===========    ===========


                                       10


                                  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 the nine  months  ending
February 28,2005 were $ $696,458 for a total cumulative net loss since inception
of the company (May 2, 2002 through February 28, 2005) of $1,072,601. The losses
since the company's  development  stage  (October 23, 2003 through  February 28,
2005)  were  $1,034,502.   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.

                                       11


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.





                                       12


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

                                       13


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 May 31,  2005 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.

                                       14


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  $150,000 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.



                                       15


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.


                                       16


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 n "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

                                       17


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;


                                       18


     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 450,000  shares of common  stock
offered hereby are estimated to be  approximately  $337,500.  CytoDyn expects to
use such net proceeds approximately as follows:


Percentage of                 1/3         2/3         Total
Application of Proceeds      Amount      Amount      Amount
-----------------------     --------    --------    --------

Proceeds                    $112,500    $225,000    $337,500
Offering Expenses            (40,666)    (40,666)    (40,666)

*Net proceeds                 71,834     184,334     296,834


                                       19


Working capital                    -      32,981     119,481
Executive Salaries            18,481      68,000      78,000
D&O Insurance                 35,000      35,000      35,000
Office rent & expense          6,000       6,000      12,000
Patent Fees                   12,353      12,353      12,353
Legal/Accounting/Profess           -      30,000      40,000
--------------------------------------------------------------------------------
     Total net proceeds     $ 71,834    $184,334    $296,834     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 $296,834 will be used for corporate administrative  expenditures
related to FDA and SEC compliance  including our overhead for six months,  legal
fees,  accounting  fees,  executive  salaries,  office  overhead,  Directors and
Officers  insurance  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..  The
total estimated amount of capital required to get the drug marketed as a salvage
therapy  for  certain  patients  in the  U.S.  is  approximately  $3,000,000  to
$5,000,000.  If the FDA approves  only a Phase II study at our meeting,  then it
would take more time and more  capital  to  conduct  first a Phase II and then a
Phase III trial.  A BLA would not be submitted  until the Phase III is complete.
This would increase our costs  significantly  and may preclude us from marketing
or developing this drug at all. The $3 to $5 million would fund our FDA approved
Phase II/III registration study costs,  overhead and operating  expenses.  If we
obtain FDA approval for a Phase II/III  registration  study, this would allow us
to apply  for a  Biologics  Licensing  Application  (BLA) to sell  Cytolin  as a
salvage  therapy to certain  patients in the U.S. once the Phase II/III data has
been submitted and approved by the FDA.  Substantially more capital or financing
will need to be obtained  prior to FDA  approval of Cytolin for general  sale in
U.S. We cannot estimate the additional  capital that will be needed at this time
as we have not yet had our meeting with the FDA. Once the FDA lets us know which
trials to go forward  with,  we can  estimate  what  additional  capital will be
needed.

We  anticipate  this  will take at least six  months  to raise  this  additional
capital of $3 to $5 million. 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.


                                       20


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 February  28,  2005,  the net  tangible  book value of CytoDyn was ($.09) per
share of Common  Stock.  After giving effect to the sale by CytoDyn of one third
of the 450,000 shares of Common Stock offered hereby or 150,000 shares,  the pro
forma net  tangible  book value of CytoDyn at February  28, 2005 would have been
$(583,958), or approximately ($.07)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............... $0.75
Net tangible book value per share before offering............. ($.09)
Increase per share attributable to new investors.............. $0.02
Net tangible book value per share after offering.............. ($.07)
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 one third of the 450,000
shares in this offering or 150,000 shares.

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

New Investors          150,000   $112,500       2%          16%            0.75
Existing Investors   8,069,307   $573,664      98%          84%            0.07


                                       21


At February  28,  2005,  the net  tangible  book value of CytoDyn was ($.09) per
share of Common Stock.  After giving effect to the sale by CytoDyn of two thirds
of the 450,000 shares of Common Stock offered hereby or 300,000 shares,  the pro
forma net  tangible  book  value of CytoDyn  at would  have been  $(471,458)  or
approximately  $ (.06) per share of common stock.  This  represents an immediate
increase  in net  tangible  book  value  of  $.03  per  share  to  the  existing
shareholders and an immediate  dilution of $.72 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....................  $0.75
Net tangible book value per share before offering..................  ($.09)
Increase per share attributable to new investors...................  $0.03
Net tangible book value per share after offering...................  ($.06)
Dilution per share to new investors................................  $0.72
Percentage dilution................................................    72%

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
450,000 shares in this offering or 300,000 shares.

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

New Investors          300,000   $225,000       3%            28%          0.75
Existing Investors   8,069,307   $573,664      97%            72%          0.07

At  February  28,  2005 the net  tangible  book value of CytoDyn was ($..09) per
share of Common Stock. After giving effect to the sale by CytoDyn of all 450,000
shares of Common Stock offered hereby,  the pro forma net tangible book value of
CytoDyn at February 28, 2005 would have been $(358,958) or approximately  $(.04)
per share of common stock. This represents an immediate increase in net tangible

                                       22


book  value of $.05 per  share to the  existing  shareholders  and an  immediate
dilution of $0.70 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................  $(.09)
Increase per share attributable to new investors.................  $0.05
Net tangible book value per share after offering.................  $(.04)
Dilution per share to new investors..............................  $0.70
Percentage dilution..............................................    70%

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 all 450,000 shares in
this offering.

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

New Investors          450,000   $337,500       5%            37%          0.75
Existing Investors   8,069,307   $573,664      95%            63%          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

                                       23


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.


                                       24


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

                                       25


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.

                                       26


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  and  substantial  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

                                       27


Total time and cost  estimated  to get FDA approval for a BLA to sell Cytolin to
certain HIV patients is approximately29-42 months and at an estimated $2,762,000
to $4,1120,000.

Regulatory Approval Process - Summary
-------------------------------------

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 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.

                                       28


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.

                                       29


     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.

                                       30


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" (""PA") 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 29 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  of  approximately  a  total  of  $2,762,000  to
$4,112,000.  Substantially  more  capital  will need to be  obtained  to get FDA
approval for Cytolin's  general use in the U.S. and to conduct  further  studies
that the FDA may require.


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:

                                       31


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.


                                       32


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.

                                       33



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 to Plaintiffs.

This  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.

                                       34


     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
negotiatied  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  by  February  10,  2005,  within  30 days of the
          executed agreement
     -    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.

We paid  Symbion  International  $25,000 on March 15, 2005 from the  proceeds of
loan we received in March 2005. Although the payment was received after February
10, 2005,  Symbion has accepted the payment and our contract is in force. 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

                                       35



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 February 28, 2005 , our
accumulated  net  losses  have been  approximately  $1,034,502.  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.

                                       36


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 February 28, 2005. We will need to complete this entire  offering in order to
pay for company  expenditures  for six months.  We will have to raise additional
funds  within the next  twelve  months.  The total  estimated  amount of capital
required to get the drug marketed as a salvage  therapy for certain  patients in
the U.S. is approximately  $3,000,000 to $5,000,000.  If the FDA approves only a
Phase II study at our meeting,  then it would take more time and more capital to
conduct  first a Phase  II and  then a  Phase  III  trial.  A BLA  would  not be
submitted  until  the Phase  III is  complete.  This  would  increase  our costs
significantly and may preclude us from marketing or developing this drug at all.
The $3 to $5 million would fund our FDA approved Phase II/III registration study
costs,  overhead and operating  expenses.  Once we have had our meeting with the
FDA, we can  estimate  what  additional  capital  will be needed in order to get
Cytolin  approved  for general  sale in the U.S. If we obtain FDA approval for a
Phase II/III  registration  study,  this would allow us to apply for a Biologics
Licensing  Application  (BLA) to sell  Cytolin  as a salvage  therapy to certain
patients in the U.S. once the Phase II/III data has been  submitted and approved
by the FDA.  Substantially  more capital or  financing  will need to be obtained
prior to FDA approval of Cytolin for general sale in U.S.


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

                                       37


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 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,

                                       38


     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 a total of $362,000 and to seek  approval for the Phase II/III  pivotal
trials  from the FDA.  Please see Exhibit  10.5.2 for  buy-sell  agreement  with
Symbion.  If the Phase II/III  pivotal trials are 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  $2,762,000  to $ 4,112,000.  If the FDA approves
only a Phase  II  study  at our  meeting,  then it  would  take  more  time  and
substantially  more  capital  to  conduct  first a Phase II and then a Phase III
trial.

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 to certain HIV patients.


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

                                       39


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  $2,762,000 to
$4,112,000  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. If the FDA approves only a Phase II
study at our  meeting,  then it would  take  more  time and  substantially  more
capital  to  conduct  first a Phase II and then a Phase  III  trial.  We  cannot
estimate what  additional  capital would be needed until we have our FDA meeting
and it is determined what the FDA will require.


                                       40


We borrowed  $121,000  from  certain  individuals  who are friends and  business
acquaintances  of the officers and  directors of the Company in March 2005.  The
company issued  promissory  notes in exchange for the borrowed funds.  The notes
carry 5% interest and are due by March 9, 2006.  In addition to operating  funds
and clinical trial funds the company will need to raise the funds to repay these
notes.

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.

Joint Ventures

     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 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 purchase  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 by  February  10,  2005,  30 days
     after execution of the agreement.
-    CytoDyn,  Inc will pay  $275,000  to  Symbion  once  our  larger  secondary
     financing is received.


We have paid Symbion $25,000 out of the loan proceeds we received in March 2005.
Although  the payment was late,  Symbion has  accepted it and the contract is in
force.

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 remaining payments are not received, the property shall revert
to Symbion.

                                       41


Exploring Other 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.

                                       42


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
(Daughter of Allen D. Allen)                    President

Ronald J. Tropp, Esq.               61          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

                                       43


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

                                       44


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 31, 2005  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.


                                       45




                           SUMMARY COMPENSATION TABLE

                             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  (2005)
Chief Executive Officer
and Chairman                  $98,000       0            0            0             0            0

*Corinne Allen   (2005)
Secretary/Treasurer
Vice President                $50,000       0            0            0             0            0
(Daughter of Allen D. Allen)

Wellington A Ewen (2005)
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. To date no options have yet been issued.

During the year ended May 31, 2004,  the Company  committed  to grant  financial
representatives  JP  Turner  &  Co.  LLP,  a  register  broker/dealer  with  the
Securities and Exchange Commission and Max Gould, an employee of JP Turner and a
broker warrants to purchase  426,000 shares of the Company's  common stock.  The
warrants  carry an exercise  price of $.30 per share,  vest on the date of grant
and expire after five years from the date of grant. The warrants were granted on
November 25, 2004 and were included in the  registration for the public offering
under our SB-2 filing. No warrants have yet been exercised.

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 November 30, 2004 were $0.30 and $0.028, respectively.

                                       46


The fair value for the options  granted during the six months ended November 30,
2004 was estimated at the date of grant using the  Black-Scholes  option-pricing
model with the following assumptions:

               Risk-free interest rate.....................     2.00%
               Dividend yield..............................     0.00%
               Volatility factor...........................     0.00%
               Weighted average expected life..............   5 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 , 2004
                                             Through November 30, 2004
                                           (a development stage company)
                                           -----------------------------

Net loss, as reported .....................         $  (244,132)
                                                    ===========

Pro forma net loss ........................         $  (244,132)
                                                    ===========
Basic and diluted net loss per common
   share, as reported .....................         $     (0.03)
                                                    ===========

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


                                       47




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

                                          Awards Outstanding and Exercisable
                                         ------------------------------------   Weighted Average
                                            Number of         Exercise Price     Exercise Price
                                             Shares              Per Share         Per Share
                                         ---------------     ----------------   ----------------
                                                                       
Balance at May 31, 2004................      150,000          $0.50 to $1.50     $         1.00
   Awards granted......................      426,000               $0.30         $         0.30
   Awards exercised....................         -                  $0.00         $          -
   Awards cancelled/expired............         -                  $0.00         $          -
                                         ---------------                        ----------------
Balance at February 28, 2005...........      576,000          $0.30 to $1.50     $         0.48
                                         ===============



The  company  has no other  option  plan other than the  576,000  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 450,000  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%          24.8%
4236 Longridge Ave. #302
Studio City, CA 91604

*Corinne Allen                       1,736,335        21.5%          20.4%
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


                                       48



*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 & Co.
Patrick Power  GP
1355 So. Colorado Blvd
Denver, CO 80222                       106,000           1%             0%

***Max O. Gould
JP Turner & Co
1355 So.Colorado Blvd.
Denver, CO 80222                       320,000           4%           3.7%

*All officers and directors          3,863,326        47.8%          45.2%
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

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:

                                       49


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

The warrants were issued in November 2004. 320,000 warrants were issued directly
to Max O. Gould,  individually,  employee of J.P.  Turner,  and 106,000 warrants
were  issued  to  J.P  Turner.  Max  Gould  will  retain  the  same  "piggyback"
registration  rights as an employee or agent of J.P.  Turner.  However,  we have
included  the shares in this  registration.  JP Turner is not  involved  in this
public  offering.  However,  J P.  Turner and or Max Gould may act as agents for
some of the shareholders listed in the selling shareholder table.

     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

                                       50


agreement describes the intellectual property 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 purchase  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 by  February  10,  2005,  30 days
     after the execution of the agreement.
-    CytoDyn,  Inc will pay  $275,000  to  Symbion  once  our  larger  secondary
     financing is received.


We have paid Symbion $25,000 out of the loan proceeds we received in March 2005.
Although  the payment was late,  Symbion has  accepted it and the contract is in
force.

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 remaining 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

                                       51


     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.

                                       52


     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.

                                       53


     Promissory Notes entered into March 5, 2005.

     Due  to  emergency  cash  requirements,   the  company  issued  to  certain
     individuals  promissory notes in exchange for $121,000.  These  individuals
     are friends of the officers and  directors of the Company.  The notes carry
     5% simple interest and the principal and accrued  interest are due by March
     9, 2006.

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 426,000 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

                                       54


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 450,000  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.  JP Turner &
Company,  LLC or any other broker/dealer are NOT involved in the underwriting or
offering  of these  shares.  However,  J.P Turner and or Max Gould may act as an
agent of some of the selling  shareholders  listed in the selling  shareholders'
table.  These officers and directors have relied on the exemptions in Rule 3a4-1

                                       55


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

                                       56


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 April 25, 2005
     -    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.

                                       57




                             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 (5)                          106,000              106,000              0
Max O. Gould                                         320,000              320,000              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



                                       58


(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
(5)  The Principal of J.P Turner & Co is Partner, Patrick Power.


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.

                                       59



                                  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)
                            Statements 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)
                 Statements 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

                                       F-7


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


          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

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

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

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

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.

                                       F-8



                                  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

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 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:

                                    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
                                    =============



(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  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 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  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.


                                      F-17


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


         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-18



                                      INDEX

                                                                            Page
                                                                            ----

PART 1 - FINANCIAL INFORMATION

  Item 1.  Financial Statements

  Condensed balance sheet, February 28, 2005 (unaudited)..................  F-20
  Condensed statements of operations, three and nine months ended
     February 28, 2005 (unaudited) and 2004 (unaudited)...................  F-21
  Condensed statements of operations, nine months ended
     February 28, 2005 (unaudited) and 2004 (unaudited)...................  F-22
  Notes to condensed financial statements (unaudited).....................  F-23














                                      F-19


Part I, Item 1. Financial Statements

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

                                February 28, 2005

                                     Assets


Cash ..........................................................   $    84,948
Property and equipment, less accumulated
    depreciation of $1,211 ....................................         5,087
Deposit .......................................................           495
                                                                  -----------

                                                                  $    90,530
                                                                  ===========

                      Liabilities and Shareholders' Deficit

Current liabilities:
    Accounts payable ..........................................   $   463,275
    Accrued liabilities .......................................        83,367
    Indebtedness to related parties (Note 2) ..................       137,979
Long Term Liabilities:
    Notes payable (Note 3) ....................................        85,000
    Accrued interest payable (Note 3) .........................            47
                                                                  -----------
                  Total liabilities ...........................       769,668
                                                                  -----------

Commitments (Note 7) ..........................................          --

Shareholders' deficit:
    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 ................................        40,942
    Accumulated deficit .......................................    (1,601,912)
    Deficit accumulated during development stage ..............    (1,034,502)
                                                                  -----------
                  Total shareholders' deficit .................      (679,138)
                                                                  -----------

                                                                  $    90,530
                                                                  ===========

            See accompanying notes to condensed financial statements

                                      F-20


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


                                                      Nine Months Ended
                                                         February 28,
                                                 --------------------------
                                                     2005           2004
                                                 -----------    -----------
Operating expenses:
    General and administrative ...............   $   320,785    $   188,929
    Stock-based compensation (Note 5):
       Financial consulting services .........        11,928           --
    Legal fees, related party ................          --             --
    Depreciation .............................         1,211           --
    Research and development (Note 6) ........       362,342           --
                                                 -----------    -----------
                   Total operating expenses...       696,266        188,929
                                                 -----------    -----------
                   Operating loss ............      (696,266)      (188,929)

Interest income ..............................           230             55
Interest expense .............................          (422)          (441)
                                                 -----------    -----------
                   Loss before income taxes...      (696,458)      (189,315)

Income tax provision (Note 4) ................          --             --
                                                 -----------    -----------

                   Net loss ..................   $  (696,458)   $  (189,315)
                                                 ===========    ===========

Basic and diluted loss per share .............   $     (0.09)   $     (0.05)
                                                 ===========    ===========

Basic and diluted weighted average
    common shares outstanding ................     8,069,307      3,909,985
                                                 ===========    ===========






            See accompanying notes to condensed financial statements

                                      F-21


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

                                                           Nine Months Ended
                                                              February 28,
                                                        -----------------------
                                                           2005         2004
                                                        ----------   ----------

                      Net cash used in
                         operating activities .......   $ (194,361)  $ (191,741)
                                                        ----------   ----------

Cash flows from investing activities:
    Property and equipment purchases ................       (3,167)      (1,722)
                                                        ----------   ----------
                      Net cash used in
                         investing activities .......       (3,167)      (1,722)
                                                        ----------   ----------

Cash flows from financing activities:
    Capital contributions by president (Note 2) .....        5,512        2,500
    Proceeds from notes payable to
       related parties (Note 2) .....................        5,000       10,000
    Proceeds from notes payable to others (Note 3)...       85,000         --
    Proceeds from the sale of common stock ..........         --        405,000
    Payment of offering costs .......................         --        (49,500)
                                                        ----------   ----------
                      Net cash provided by
                         financing activities .......       95,512      368,000
                                                        ----------   ----------

                         Net change in cash .........     (102,016)     174,537

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

Cash, end of period .................................   $   84,948   $  177,775
                                                        ==========   ==========

Supplemental disclosure of cash flow information:
    Income taxes ....................................   $     --     $     --
                                                        ==========   ==========
    Interest ........................................   $      375   $     --
                                                        ==========   ==========



            See accompanying notes to condensed financial statements

                                      F-22


                                  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 periods
ended  February  28, 2005 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 nine months ended  February 28, 2005,  the Company's  president  paid
administrative  expenses on behalf of the Company totaling $5,512.  The payments
have 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.  On January 18, 2005,  an officer  advanced  the Company an  additional
$5,000 for  working  capital.  The notes are due on demand and carry no interest
rate. Management plans to repay the notes through cash payments, issuance of the
Company's  common stock,  or a combination  thereof.  The balance due of $76,694
remained  unpaid  at  February  28,  2005 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 February 28, 2005 no arrangements  had been made
for the Company to repay this obligation; however, management plans to repay the
balance  through cash  payments,  issuance of the Company's  common stock,  or a
combination  thereof. The 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:  Notes Payable

The Company's  promissory notes payable consist of the following at February 28,
2005:

                                      F-23


Note payable to an individual issued on February 24, 2005,
     matures March 9, 2006, 5% annual interest rate,
     unsecured................................................ $    30,000
Note payable to an individual issued on February 24, 2005,
     matures March 9, 2006, 5% annual interest rate,
     unsecured................................................      25,000
Note payable to an individual issued on February 24, 2005,
     matures March 8, 2006, 5% annual interest rate,
     unsecured................................................      25,000
Note payable to an individual issued on February 24, 2005,
     matures March 9, 2006, 5% annual interest rate,
     unsecured................................................       5,000
                                                               -----------
                                                               $    85,000
                                                               ===========

Accrued interest payable on the above notes totaled $47 at February 28, 2005.

Note 4:  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 5:   Stock Awards

During the year ended May 31, 2004,  the Company  committed to grant a financial
representative  warrants  to purchase  426,000  shares of the  Company's  common
stock. The warrants carry an exercise price of $.30 per share,  vest on the date
of grant and expire after five years from the date of grant.  The warrants  were
granted on November  25,  2004 and were  included  in the  registration  for the
public offering under our SB-2 filing. No warrants have yet been exercised.

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 November 30, 2004 were $0.30 and $0.028, respectively.

The fair value for the options  granted during the six months ended November 30,
2004 was estimated at the date of grant using the  Black-Scholes  option-pricing
model with the following assumptions:

           Risk-free interest rate......................      2.00%
           Dividend yield...............................      0.00%
           Volatility factor............................      0.00%
           Weighted average expected life...............    5 years

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

                                      F-24


                                                                       Exercise
                                  Number of        Exercise Price       Price
                                    Shares            Per Share       Per Share
                                -------------     ----------------   -----------
Balance at May 31, 2004........     150,000        $0.50 to $1.50    $      1.00
   Awards granted..............     426,000             $0.30        $      0.30
   Awards exercised............           -             $0.00        $         -
   Awards cancelled/expired....           -             $0.00        $         -
                                -------------                        -----------
Balance at February 28, 2005...     576,000        $0.30 to $1.50    $      0.48
                                =============

Note 6:   Research and Development

The  Company's  director,  Peggy C.  Pence,  PhD.,  is the  President  and Chief
Executive  Officer of  Symbion  Research  International,  Inc.  ("Symbion").  On
January 5, 2005,  the  Company  entered  into a buy-sell  agreement  to purchase
certain  intellectual  property  owned by Symbion.  The agreement  describes the
intellectual  property in detail which summarized,  is the Phase 1 clinical data
and the protocol for the Phase II study. This intellectual property is necessary
to obtain  approval for, and to conduct,  further FDA clinical tests of Cytolin.
Cytolin is a potential new drug being developed by the Company for the treatment
of Human Immunodeficiency Virus ("HIV").

Under the terms of this agreement:

-    The Company may purchase Symbion's Phase I clinical data in connection with
     obtaining  approval from the FDA to conduct the Phase  II/Phase III studies
     for Cytolin.
-    The Company 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.
-    The Company will pay $25,000 to Symbion by February 10, 2005, 30 days after
     execution of the agreement.
-    The Company  will pay  $275,000  to Symbion  once the  Company's  secondary
     financing is received.

The Company paid Symbion  $25,000 out of loan  proceeds  received in March 2005.
Although  the payment was late,  Symbion has  accepted it and the contract is in
force.  In the event the  Company's  shareholders  do not approve the  company's
option plan by December 31, 2005, the Company will pay Symbion $62,342.

The results of the Phase II/III  studies for Cytolin  shall be the sole property
of the Company upon  Symbion's  receipt of the final payment  called for by this
agreement. If all remaining payments are not received, the property shall revert
to Symbion.

Note 7:   Commitments

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.

                                      F-25

Note 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.

                   October 28, 2003 Through February 28, 2005

            Operating expenses:
               General and administrative .............   $    638,465
               Stock-based compensation:
                  Financial consulting services .......         11,928
               Legal fees, related party ..............         20,050
               Depreciation ...........................          1,415
               Research and development................        362,342
                                                          ------------
                   Total operating expenses ...........      1,034,200
                                                          ------------
                   Operating loss .....................     (1,034,200)

            Interest income ...........................            573
            Interest expense ..........................           (875)
                                                          ------------
                   Loss before income taxes ...........     (1,034,502)

            Income tax provision ......................           --
                                                          ------------

                   Net loss ...........................   $ (1,034,502)
                                                          ============

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-26


                   October 28, 2003 Through February 28, 2005

                      Net cash used in
                       operating activities ................   $ (551,256)
                                                               ----------

       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 ................        5,512
         Proceeds from notes payable issued to
           related parties .................................      116,194
         Repayment of notes payable to related
           parties .........................................      (50,000)
         Proceeds from notes payable issued to others ......       85,000
         Proceeds from the sale of common stock ............      540,000
         Payment of offering costs ........ ................      (54,000)
                                                               ----------
                      Net cash provided by
                       financing activities ................      642,706
                                                               ----------

                      Net change in cash ...................       84,948

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

       Cash, end of period .................................   $   84,948
                                                               ==========

       Supplemental disclosure of cash flow information:
         Income taxes ......................................   $     --
                                                               ==========
         Interest..........................................    $      828
                                                               ==========


Note 9:   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".

                                      F-27


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.

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  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  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.

                                      F-28


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.

Note 10: Subsequent Events

During March 2005, the Company issued  promissory  notes payable for proceeds of
$36,000. The notes carry a 5% interest rate and mature one year from the date of
the note.

During  March  2005,  the  Company  paid  Symbion  $25,000  toward its  Buy-Sell
Agreement (see Note 6).







                                      F-29


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

                             1,761,000 COMMON SHARES


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

Prospectus Summary  ........................                          6
Risk Factors  ..............................                         11
Use of Proceeds  ...........................                         19
Dividend Policy  ...........................                         21
Dilution  ..................................                         21
Business  ..................................                         23
Management's Discussion and Analysis of
 Financial Condition and Results of
 Operations Business  ......................                         35
Management  ................................                         43
Executive Compensation  ....................                         45
Principal Shareholders  ....................                         48
Certain Transactions  ......................                         49
Description of Common Stock  ...............                         54
Shares Eligible for Future Sale  ...........                         54
Selling Stockholders  ......................                         57
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           200 West De Vargas St. Suite 1,
effecting transactions in the registered        Santa Fe, New Mexico 87501
securities, whether or not participating        505-988-5520
in this distribution, may be required to
deliver a Prospectus. This is in addition
to the obligation of dealers to
delivering a Prospectus when acting as
underwriters and with respect to their
unsold allotments or subscriptions.


                                       60


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  ............       $    166.00
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  ...............................................       $ 40,666.00


                                       61


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.

                                       62


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 & Company LLP
and Max O.  Gould,  the  financial  representatives  for their  services  on our
private  placement  pursuant to our agreement,  to purchase  106,000 and 320,000
respectively,  common  shares over five years at an exercise  price of $0.30 per
share.  These  warrants were granted  November 25, 2004. Max Gould and JP Turner
have, to date, not exercised any of their warrants  issued  November 2004.  They
are also not  involved in this public  offering.  However they may act as agents
for some of the shareholders listed in the selling shareholders table.

                                       63


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.
******** 5.2    Opinion of Ronald J. Tropp   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
********10.6.1  Amendment to Patent License Agreement

****    10.7    Personal Services Agreements for Executives
****    10.8    Change of Control Agreements for Executives
****    10.9    Proprietary Information and Inventions Agreements for employees
******* 23.5    Consent and opinion of Ronald J. Tropp, Esq April 2005 (included
                in Exhibit 5.2)
******* 23.7    Consent of Cordovano & Honeck June 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, 2004.

******* Incorporated by reference to Registration  Statement of Form 10QSB filed
January 14, 2005.

******** Filed herewith

                                       64


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.

                                       65


                                   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: 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,           June 15, 2005
-------------------------        President, and Director         
Allen D. Allen                                                   
                                                                 
                                                                 
 /s/ Corinne Allen               Secretary/Treasurer,             June 15, 2005
-------------------------        Director                        
Corinne Allen                                                    
                                                                 
                                                                 
 /s/ Wellington A. Ewen          Chief Financial Officer and      June 15, 2005
-------------------------        Principal Accounting Officer    
Wellington A. Ewen                                               
                                                                 
                                                                 
 /s/ Ronald J. Tropp             Director                         June 15, 2005
-------------------------                                        
Ronald J. Tropp                                                  
                                                                 
                                                                 
 /s/ Daniel M. Strickland        Director                         June 15, 2005
-------------------------                                        
Daniel M. Strickland                                             
                                                                 
                                                                 
 /s/ Peggy J. Pence              Director                          June 9, 2005
-------------------------                                       
Peggy J. Pence

                                       66