10-Q 1 nwbo-20220331x10q.htm 10-Q
0001072379--12-312022Q1falseNONE948400000969700000DE0001072379us-gaap:SubsequentEventMember2022-05-012022-05-310001072379nwbo:InvestorsMemberus-gaap:CommonStockMember2022-01-012022-03-310001072379us-gaap:RetainedEarningsMember2022-03-310001072379us-gaap:AdditionalPaidInCapitalMember2022-03-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001072379nwbo:SubscriptionReceivableMember2022-03-310001072379us-gaap:RetainedEarningsMember2021-12-310001072379us-gaap:AdditionalPaidInCapitalMember2021-12-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001072379nwbo:SubscriptionReceivableMember2021-12-310001072379us-gaap:RetainedEarningsMember2021-03-310001072379us-gaap:AdditionalPaidInCapitalMember2021-03-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310001072379nwbo:SubscriptionReceivableMember2021-03-310001072379us-gaap:RetainedEarningsMember2020-12-310001072379us-gaap:AdditionalPaidInCapitalMember2020-12-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001072379nwbo:SubscriptionReceivableMember2020-12-310001072379us-gaap:CommonStockMember2022-03-310001072379us-gaap:CommonStockMember2021-12-310001072379us-gaap:CommonStockMember2021-03-310001072379us-gaap:CommonStockMember2020-12-310001072379nwbo:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Member2022-03-310001072379nwbo:ContingentPayableDerivativeLiabilityMemberus-gaap:FairValueInputsLevel3Member2022-03-310001072379nwbo:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Member2021-12-310001072379nwbo:ContingentPayableDerivativeLiabilityMemberus-gaap:FairValueInputsLevel3Member2021-12-310001072379us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001072379us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001072379us-gaap:RetainedEarningsMember2022-01-012022-03-310001072379us-gaap:RetainedEarningsMember2021-01-012021-03-310001072379us-gaap:StateAndLocalJurisdictionMember2021-11-042021-11-040001072379us-gaap:StateAndLocalJurisdictionMember2022-01-012022-03-310001072379country:US2022-03-310001072379country:GB2022-03-310001072379country:US2021-03-310001072379country:GB2021-03-310001072379country:US2022-01-012022-03-310001072379country:GB2022-01-012022-03-310001072379country:US2021-01-012021-03-310001072379country:GB2021-01-012021-03-310001072379us-gaap:ConvertibleNotesPayableMember2022-01-012022-03-310001072379us-gaap:EmbeddedDerivativeFinancialInstrumentsMember2022-03-310001072379nwbo:WarrantLiabilityMember2022-03-310001072379nwbo:ContingentPayableDerivativeLiabilityMember2022-03-310001072379us-gaap:EmbeddedDerivativeFinancialInstrumentsMember2021-12-310001072379nwbo:WarrantLiabilityMember2021-12-310001072379nwbo:ContingentPayableDerivativeLiabilityMember2021-12-310001072379us-gaap:ShortTermDebtMembernwbo:SixPercentUnsecuredMember2022-01-012022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:TwelvePercentUnsecuredMember2022-01-012022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:NinePercentUnsecuredMember2022-01-012022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:EightPercentUnsecuredMember2022-01-012022-03-310001072379nwbo:LongTermNotesPayableMembernwbo:SixPercentSecuredMember2022-01-012022-03-310001072379nwbo:LongTermNotesPayableMembernwbo:EightPercentUnsecuredMember2022-01-012022-03-310001072379us-gaap:ShortTermDebtMembernwbo:SixPercentUnsecuredMember2021-01-012021-12-310001072379nwbo:ShortTermNotesPayableMembernwbo:TwelvePercentUnsecuredMember2021-01-012021-12-310001072379nwbo:ShortTermNotesPayableMembernwbo:NinePercentUnsecuredMember2021-01-012021-12-310001072379nwbo:ShortTermNotesPayableMembernwbo:EightPercentUnsecuredMember2021-01-012021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:SixPercentSecuredMember2021-01-012021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:OnePercentUnsecuredMember2021-01-012021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:EightPercentUnsecuredMember2021-01-012021-12-310001072379nwbo:ShortTermNotesPayableMembernwbo:TwelvePercentUnsecuredMember2022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:NinePercentUnsecuredMember2022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:EightPercentUnsecuredMember2022-03-310001072379nwbo:LongTermNotesPayableMembernwbo:SixPercentSecuredMember2022-03-310001072379us-gaap:ShortTermDebtMember2022-03-310001072379nwbo:ShortTermNotesPayableMember2022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:TwelvePercentUnsecuredMember2021-12-310001072379nwbo:ShortTermNotesPayableMembernwbo:EightPercentUnsecuredMember2021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:SixPercentSecuredMember2021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:OnePercentUnsecuredMember2021-12-310001072379us-gaap:ShortTermDebtMember2021-12-310001072379us-gaap:ShortTermDebtMembernwbo:SixPercentUnsecuredMember2022-03-310001072379us-gaap:ShortTermDebtMembernwbo:SixPercentUnsecuredMember2021-12-310001072379srt:MinimumMember2022-03-310001072379srt:MaximumMember2022-03-310001072379nwbo:CashlessWarrantsExerciseMember2022-03-3100010723792021-03-3100010723792020-12-310001072379nwbo:ConvertibleNotesAndAccruedInterestMember2022-01-012022-03-310001072379nwbo:CommonStockWarrantsMember2022-01-012022-03-310001072379nwbo:CommonStockOptionsMember2022-01-012022-03-310001072379nwbo:ConvertibleNotesAndAccruedInterestMember2021-01-012021-03-310001072379nwbo:CommonStockWarrantsMember2021-01-012021-03-310001072379nwbo:CommonStockWarrantsLiabilityTreatmentMember2021-01-012021-03-310001072379nwbo:CommonStockOptionsMember2021-01-012021-03-310001072379nwbo:NotesMember2021-01-012021-03-310001072379us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001072379us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001072379us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001072379us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001072379nwbo:AdventBioServicesAgreementMember2022-03-310001072379nwbo:AdventBioScienceAccruedMember2022-03-310001072379nwbo:AdventBioServicesMember2021-12-310001072379nwbo:AdventBioServicesAgreementMember2021-12-310001072379nwbo:AdventBioServicesMember2022-01-012022-03-310001072379us-gaap:SubsequentEventMember2022-05-012022-05-0600010723792021-11-012021-11-3000010723792021-10-012021-10-310001072379us-gaap:ForeignCountryMember2022-01-012022-03-310001072379nwbo:AdventBioServicesMember2018-05-142018-05-140001072379nwbo:NotesMember2022-03-310001072379nwbo:CashlessWarrantsExerciseMember2022-01-012022-03-310001072379us-gaap:SubsequentEventMember2022-04-012022-04-300001072379nwbo:PaycheckProtectionProgramLoanCaresActMember2022-01-012022-03-310001072379nwbo:SubleaseAgreementMember2022-03-310001072379nwbo:LongTermNotesPayableMembernwbo:EightPercentUnsecuredMember2022-03-310001072379nwbo:LongTermNotesPayableMember2022-03-310001072379nwbo:ShortTermNotesPayableMembernwbo:NinePercentUnsecuredMember2021-12-310001072379nwbo:LongTermNotesPayableMembernwbo:EightPercentUnsecuredMember2021-12-310001072379nwbo:ShortTermNotesPayableMember2021-12-310001072379nwbo:LongTermNotesPayableMember2021-12-310001072379us-gaap:EmbeddedDerivativeFinancialInstrumentsMember2022-01-012022-03-310001072379nwbo:WarrantLiabilityMember2022-01-012022-03-310001072379nwbo:ContingentPayableDerivativeLiabilityMember2022-01-012022-03-310001072379nwbo:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Member2022-01-012022-03-310001072379nwbo:ContingentPayableDerivativeLiabilityMemberus-gaap:FairValueInputsLevel3Member2022-01-012022-03-310001072379nwbo:WarrantLiabilityMemberus-gaap:FairValueInputsLevel3Member2021-01-012021-12-310001072379nwbo:ContingentPayableDerivativeLiabilityMemberus-gaap:FairValueInputsLevel3Member2021-01-012021-12-3100010723792022-07-012022-07-3100010723792021-07-012021-07-310001072379srt:MinimumMemberus-gaap:SubsequentEventMember2022-04-012022-09-300001072379srt:MaximumMemberus-gaap:SubsequentEventMember2022-04-012022-09-300001072379nwbo:NotesMember2022-01-012022-03-310001072379us-gaap:FairValueInputsLevel3Member2022-03-310001072379us-gaap:FairValueInputsLevel2Member2022-03-310001072379us-gaap:FairValueInputsLevel1Member2022-03-310001072379us-gaap:FairValueInputsLevel3Member2021-12-310001072379us-gaap:FairValueInputsLevel2Member2021-12-310001072379us-gaap:FairValueInputsLevel1Member2021-12-3100010723792021-01-012021-12-310001072379us-gaap:EmployeeStockOptionMember2022-05-012022-05-010001072379us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001072379nwbo:AdventBioServicesMember2022-03-310001072379nwbo:AncillaryServicesAgreementMember2020-07-012020-07-310001072379us-gaap:CommonStockMember2022-01-012022-03-310001072379us-gaap:CommonStockMember2021-01-012021-03-310001072379us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001072379us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100010723792021-01-012021-03-310001072379srt:MinimumMembernwbo:MultipleNotesMember2022-01-012022-03-310001072379srt:MaximumMembernwbo:MultipleNotesMember2022-01-012022-03-310001072379nwbo:AccountsPayableAndAccruedLiabilitiesRelatedPartiesCurrentMember2022-03-3100010723792022-03-3100010723792021-12-3100010723792022-05-0600010723792022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:pureiso4217:USDxbrli:sharesnwbo:loaniso4217:EURiso4217:GBPnwbo:itemutr:sqft

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to _______

Commission File Number: 001-35737

NORTHWEST BIOTHERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

94-3306718 

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

4800 Montgomery Lane, Suite 800, Bethesda, MD 20814

(Address of principal executive offices) (Zip Code)

(240497-9024

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes       No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes       No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

Emerging growth company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.001 per share

NWBO

OTCQB

As of May 6, 2022, the total number of shares of common stock, par value $0.001 per share, outstanding was 984,247,092.

NORTHWEST BIOTHERAPEUTICS, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

3

Item 1.

Condensed Consolidated Interim Financial Statements (Unaudited)

 

Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021

3

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 and 2021

4

 

Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2022 and 2021

5

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021

6

 

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

 

 

Item 4.

Controls and Procedures

24

PART II - OTHER INFORMATION

25

Item 1.

Legal Proceedings

25

 

 

Item 1A.

Risk Factors

25

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

 

 

Item 3.

Defaults Upon Senior Securities

25

 

 

Item 4.

Mine Safety Disclosures

25

 

Item 5.

Other Information

25

 

 

Item 6.

Exhibits

25

SIGNATURES

27

2

PART I - FINANCIAL INFORMATION

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

    

March 31, 

    

December 31, 

2022

2021

(Unaudited)

ASSETS

 

  

 

Current assets:

 

  

 

  

Cash and cash equivalents

$

6,963

$

15,169

Prepaid expenses and other current assets

 

2,306

 

2,121

Total current assets

 

9,269

 

17,290

Non-current assets:

 

 

Property, plant and equipment, net

 

14,385

 

15,027

Construction in progress

28

-

Right-of-use asset, net

4,709

4,889

Indefinite-lived intangible asset

1,292

1,292

Goodwill

626

626

Other assets

 

349

 

1,036

Total non-current assets

 

21,389

 

22,870

TOTAL ASSETS

$

30,658

$

40,160

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$

7,726

$

6,976

Accounts payable and accrued expenses to related parties and affiliates

 

2,918

 

3,971

Convertible notes, net

 

135

 

135

Notes payable, net

 

11,982

 

7,104

Contingent payable derivative liability

8,308

8,232

Warrant liability

 

98,618

 

106,784

Lease liabilities

325

317

Shares payable

250

Total current liabilities

 

130,012

 

133,769

Non-current liabilities:

 

 

Notes payable, net of current portion, net

 

16,163

 

25,156

Lease liabilities, net of current portion

5,008

5,226

Total non-current liabilities

 

21,171

 

30,382

Total liabilities

 

151,183

 

164,151

COMMITMENTS AND CONTINGENCIES (Note 10)

 

 

Stockholders’ deficit:

 

 

Preferred stock ($0.001 par value); 100,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively

Common stock ($0.001 par value); 1,200,000,000 shares authorized; 969.7 million and 948.4 million shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

 

970

 

948

Additional paid-in capital

 

1,083,723

 

1,066,873

Stock subscription receivable

 

(79)

 

(79)

Accumulated deficit

 

(1,206,304)

 

(1,192,090)

Accumulated other comprehensive income

 

1,165

 

357

Total stockholders’ deficit

 

(120,525)

 

(123,991)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$

30,658

$

40,160

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

3

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share amounts)

(Unaudited)

For the three months ended

March 31, 

    

2022

    

2021

Revenues:

Research and other

$

403

$

239

Total revenues

403

239

Operating costs and expenses:

Research and development

4,820

6,923

General and administrative

7,869

12,886

Total operating costs and expenses

12,689

19,809

Loss from operations

(12,286)

(19,570)

Other income (expense):

Change in fair value of derivative liabilities

540

17,563

Gain (loss) from extinguishment of debt

410

(8)

Interest expense

(1,903)

(1,447)

Foreign currency transaction loss

(975)

(661)

Total other income (loss)

(1,928)

15,447

Net loss

$

(14,214)

$

(4,123)

Other comprehensive income

Foreign currency translation adjustment

808

624

Total comprehensive loss

$

(13,406)

$

(3,499)

Net loss per share applicable to common stockholders

Basic

$

(0.01)

$

(0.00)

Diluted

$

(0.01)

$

(0.00)

Weighted average shares used in computing basic loss per share

959,251

834,605

Weighted average shares used in computing diluted loss per share

959,251

834,605

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(in thousands)

(Unaudited)

For the three months ended March 31, 2022

Accumulated

Additional

Other

Total

Common Stock

Paid-in

Subscription

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Par value

    

Capital

    

Receivable

    

Deficit

    

Income

    

Deficit

Balances at January 1, 2022

 

948,445

$

948

 

$

1,066,873

 

$

(79)

$

(1,192,090)

 

$

357

$

(123,991)

Issuance of common stock for cash

4,553

5

3,359

3,364

Warrants exercised for cash

 

15,256

15

4,170

4,185

Reclassification of warrant liabilities related to warrants exercised for cash

 

7,715

7,715

Cashless warrants exercise

26

Reclassification of warrant liabilities related to cashless warrants exercise

4

4

Issuance of common stock conversion of debt and accrued interest

1,412

2

985

987

Stock-based compensation

5

617

617

Net loss

(14,214)

(14,214)

Cumulative translation adjustment

 

 

 

 

808

808

Balances at March 31, 2022

 

969,697

$

970

$

1,083,723

$

(79)

$

(1,206,304)

$

1,165

$

(120,525)

For the three months ended March 31, 2021

Additional

Other

Total

Common Stock

Paid-in

Subscription

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Par value

    

Capital

    

Receivable

    

Deficit

    

Income (Loss)

    

Deficit

Balance at January 1, 2021

829,631

$

830

$

1,008,665

$

(79)

$

(1,371,216)

$

(1,148)

$

(362,948)

Issuance of common stock for cash

69

16

16

Issuance of common stock and warrants for conversion of debt and accrued interest

 

4,533

4

6,615

6,619

Warrants and stock options exercised for cash

 

2,872

 

3

 

742

 

 

 

 

745

Reclassification of warrant liabilities related to warrants exercised for cash

2,935

2,935

Cashless warrants and stock options exercise

5,205

5

(5)

Reclassification of warrant liabilities related to cashless warrants exercise

146

146

Stock-based compensation

48

9,891

9,891

Reclassification of warrant liabilities related to sequencing policy

(7,105)

(7,105)

Net loss

 

 

 

 

 

(4,123)

 

 

(4,123)

Cumulative translation adjustment

 

 

 

 

 

 

624

 

624

Balance at March 31, 2021

 

842,358

$

842

$

1,021,900

$

(79)

$

(1,375,339)

$

(524)

$

(353,200)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

For the three months ended

March 31, 

    

2022

    

2021

Cash Flows from Operating Activities:

Net loss

$

(14,214)

$

(4,123)

Reconciliation of net loss to net cash used in operating activities:

Depreciation and amortization

100

68

Amortization of debt discount

809

1,126

Change in fair value of derivatives

(540)

(17,563)

(Gain) loss from extinguishment of debt

(410)

8

Amortization of operating lease right-of-use asset

60

93

Stock-based compensation for services

617

9,818

Subtotal of non-cash charges

636

(6,450)

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

(199)

(286)

Other non-current assets

679

(198)

Accounts payable and accrued expenses

795

876

Related party accounts payable and accrued expenses

(694)

(3,128)

Lease liabilities

30

61

Net cash used in operating activities

(12,967)

(13,248)

Cash Flows from Investing Activities:

Purchase of equipment and construction in progress

(58)

(264)

Net cash used in investing activities

(58)

(264)

Cash Flows from Financing Activities:

Proceeds from issuance of common stock, net

3,140

16

Proceeds from exercise of warrants and stock options

4,185

745

Proceeds from issuance of notes payable, net

600

10,000

Repayment of notes payable

(4,005)

Net cash provided by financing activities

3,920

10,761

Effect of exchange rate changes on cash and cash equivalents

899

236

Net decrease in cash and cash equivalents

(8,206)

(2,515)

Cash and cash equivalents, beginning of the period

15,169

9,983

Cash and cash equivalents, end of the period

$

6,963

$

7,468

Supplemental disclosure of cash flow information

Interest payments on notes payable

$

(702)

$

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

NORTHWEST BIOTHERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

For the three months ended

March 31, 

    

2022

    

2021

    

Supplemental schedule of non-cash investing and financing activities:

 

  

 

Cashless warrants and stock options exercise

$

$

5

Reclassification of warrant liabilities related to warrants exercised for cash

$

7,715

$

2,935

Reclassification of warrant liabilities related to cashless warrants exercise

$

4

$

146

Reclassification of warrant liabilities based on authorized shares

$

$

7,105

Issuance of common stock and warrants for conversion of debt and accrued interest

$

987

$

6,742

Reclassification between shares payable and equity

$

250

$

Capital expenditures included in accounts payable

$

86

$

753

Capital expenditures included in accounts payable and accrued expenses to related parties and affiliates

$

11

$

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

1. Organization and Description of Business

Northwest Biotherapeutics, Inc. and its wholly owned subsidiaries Flaskworks L.L.C., NW Bio GmbH, Aracaris Ltd, Aracaris Capital, Ltd, and Northwest Biotherapeutics B.V. (collectively, the “Company”, “we”, “us” and “our”) were organized to discover and develop innovative immunotherapies for cancer. The Company has developed DCVax® platform technologies for both operable and inoperable solid tumor cancers. The Company is headquartered in Bethesda, Maryland and has wholly owned subsidiaries in the U.K., in the Netherlands, and in Boston, Massachusetts.

The Company relies upon contract manufacturers for production of its DCVax products, research and development services, distribution and logistics, and related services, in compliance with the Company’s specifications and the applicable regulatory requirements.

2. Financial Condition, Going Concern and Management Plans

The Company has incurred annual net operating losses since its inception. The Company had a net loss of $14.2 million for the three months ended March 31, 2022. The Company used approximately $13.0 million of cash in its operating activities during the three months ended March 31, 2022.

The Company does not expect to generate material revenue in the near future from the sale of products and is subject to all of the risks and uncertainties that are typically faced by biotechnology companies that devote substantially all of their efforts to research and development (“R&D”) and clinical trials and do not yet have commercial products. The Company expects to continue incurring annual losses for the foreseeable future. The Company’s existing liquidity is not sufficient to fund its operations, anticipated capital expenditures, working capital and other financing requirements until the Company reaches significant revenues. Until that time, the Company will need to obtain additional equity and/or debt financing, especially if the Company experiences downturns in its business that are more severe or longer than anticipated, or if the Company experiences significant increases in expense levels resulting from being a publicly-traded company or from expansion of operations. If the Company attempts to obtain additional equity or debt financing, the Company cannot assume that such financing will be available to the Company on favorable terms, or at all.

Because of recurring operating losses and operating cash flow deficits, there is substantial doubt about the Company’s ability to continue as a going concern within one year from the date of this filing. The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

As previously reported, coronavirus-related difficulties have impacted most aspects of the database lock and the process of analyzing the Phase III trial results, especially with the successive waves of COVID-19 cases in many areas. The independent service firms have had limited capacity, and restrictions on operations. Key experts at certain specialized service providers have been unavailable for periods of time due to illness in their family. Other experts have gone on extended leave due to restrictions on operations. Clinical trial sites have not allowed personnel from the contract research organization managing the trial, or other service providers, to visit the sites for trial matters such as data monitoring and collection activities. Clinical trial site personnel have been unavailable due to being reassigned for COVID-19, and the limited site personnel have had to work under restrictions. Committee processes and regulatory processes have been similarly focused on COVID-19 matters and delayed on other matters. Firms such as the ones storing the Phase III trial tissue samples that are needed for certain analyses, and the firms conducting the analyses have had only limited operations. Even logistical matters such as the shipping of materials have been subjected to substantial restrictions and delays.

3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries. All material intercompany balances and transactions have been eliminated. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.

8

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of March 31, 2022, condensed consolidated statements of operations and comprehensive loss, condensed consolidated statement of stockholders’ deficit for the three months ended March 31, 2022 and 2021, and the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited, but include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the year ending December 31, 2022 or for any future interim period. The condensed consolidated balance sheet at December 31, 2021 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2021 and notes thereto included in the Company’s annual report on Form 10-K (the “2021 Annual Report”), which was filed with the SEC on March 1, 2022.

Use of Estimates

In preparing condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates.

On an ongoing basis, the Company evaluates its estimates and judgments, including valuing equity securities in share-based payment arrangements, estimating the fair value of financial instruments recorded as derivative liabilities, useful lives of depreciable assets and whether impairment charges may apply. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates, particularly given the significant social and economic disruptions and uncertainties associated with the ongoing coronavirus pandemic (“COVID-19”) and the COVID-19 control responses.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2021 Annual Report.

Recently Adopted Accounting Standards

Modifications or Exchanges of Freestanding Equity-Classified Written Call Options

In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. This ASU provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. This ASU will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. On January 1, 2022, the Company adopted this standard without any material impact on the Company’s financial statements or disclosures.

9

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

4. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the outstanding warrants and certain embedded conversion feature associated with convertible debt on a recurring basis to determine the fair value of the liability. ASC 820 also establishes a hierarchy categorizing inputs into three levels used to measure and disclose fair value. The hierarchy gives the highest priority to quoted prices available in active markets and the lowest priority to unobservable inputs. An explanation of each level in the hierarchy is described below:

Level 1 - Unadjusted quoted prices in active markets for identical instruments that are accessible by the Company on the measurement date

Level 2 - Quoted prices in markets that are not active or inputs which are either directly or indirectly observable

Level 3 - Unobservable inputs for the instrument requiring the development of assumptions by the Company

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2022 and December 31, 2021 (in thousands):

Fair value measured at March 31, 2022

    

    

Quoted prices in active

    

Significant other

    

Significant

    

Fair value at

markets

observable inputs

unobservable inputs

March 31, 2022

    

(Level 1)

    

(Level 2)

    

(Level 3)

Warrant liability

$

98,618

$

$

$

98,618

Embedded redemption option

978

978

Contingent payable derivative liability

 

8,308

 

 

 

8,308

Total fair value

$

107,904

$

$

$

107,904

Fair value measured at December 31, 2021

    

    

Quoted prices in active

    

Significant other

    

Significant

Fair value at

markets

observable inputs

unobservable inputs

    

December 31, 2021

    

(Level 1)

    

(Level 2)

    

(Level 3)

Warrant liability

$

106,784

$

$

$

106,784

Embedded conversion option

 

988

 

 

 

988

Contingent payable derivative liability

 

8,232

 

 

 

8,232

Total fair value

$

116,004

$

$

$

116,004

There were no transfers between Level 1, 2 or 3 during the three-month period ended March 31, 2022.

The following table presents changes in Level 3 liabilities measured at fair value for the three-month period ended March 31, 2022. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long- dated volatilities) inputs (in thousands).

Warrant

Embedded

Contingent Payable

    

Liability

    

Conversion Option

    

Derivative Liability

    

Total

Balance - January 1, 2022

$

106,784

$

988

$

8,232

$

116,004

Additional warrant liability

159

159

Reclassification of warrant liabilities

(7,719)

(7,719)

Change in fair value

(606)

(10)

76

(540)

Balance – March 31, 2022

$

98,618

$

978

$

8,308

$

107,904

10

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s warrant liabilities and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of March 31, 2022 and December 31, 2021 is as follows:

As of March 31, 2022

Warrant

Contingent Payable

    

Liability

    

Derivative Liability

    

Strike price

$

0.28

$

0.70

Contractual term (years)

 

0.8

 

1.4

 

Volatility (annual)

 

71

%  

75

%  

Risk-free rate

 

1.1

%  

1.4

%  

Dividend yield (per share)

 

0

%  

0

%  

As of December 31, 2021

 

    

Warrant

    

Contingent Payable

 

    

Liability

    

Derivative Liability

 

Strike price

$

0.30

$

0.70

Contractual term (years)

 

1.0

 

1.6

Volatility (annual)

 

90

%  

 

72

%

Risk-free rate

 

0.1

%  

 

0.6

%

Dividend yield (per share)

 

0

%  

 

0

%

*Contingent based on current stock price as of March 31, 2022 and December 31, 2021.

5. Stock-based Compensation

The following table summarizes total stock-based compensation expense for the three months ended March 31, 2022 and 2021 (in thousands). The stock-based compensation expense during the three months ended March 31, 2022 and 2021 was mostly related to the applicable portion vesting during this period of stock options awards made prior to 2021.

For the three months ended

March 31,

    

    

2022

    

2021

Research and development

$

510

$

3,689

General and administrative

 

107

 

6,129

Total stock-based compensation expense

$

617

$

9,818

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted. The weighted average assumptions used in calculating the fair values of stock options that were granted during the three months ended March 31, 2022 was as follows:

For the three months

 

ended

 

    

March 31, 2022

 

Exercise price

$

0.77

Expected term (years)

 

5.0

Expected stock price volatility

 

95

%

Risk-free rate

 

1.4

%

Dividend yield (per share)

 

0

%

The total unrecognized compensation cost was approximately $1.6 million as of March 31, 2022 and will be recognized over the next 1.8 years.

11

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

Stock Options

The following table summarizes stock option activity for the Company’s option plans during the three months ended March 31, 2022 (amount in thousands, except per share number):

    

    

    

Weighted

    

Average

Weighted

Remaining

Number of

Average Exercise

Contractual Life

Total Intrinsic

Shares

Price

(in years)

Value

Outstanding as of January 1, 2022

 

304,847

$

0.33

8.0

$

114,803

Granted

20

0.77

10.0

Outstanding as of March 31, 2022

 

304,867

$

0.33

7.7

$

114,803

Options vested (1)

 

284,728

$

0.32

7.7

$

108,032

(1)Approximately 237 million options are not exercisable until at least May 31, 2022.

Ms. Linda Powers, the Company’s Chief Executive Officer, and Mr. Leslie Goldman, the Company’s Senior Vice President, are subject to an agreement under which they cannot exercise any options or warrants except upon at least 61 days’ prior notice.

12

Table of Contents

NORTHWEST BIOTHERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

6. Notes Payable

The following two tables summarize outstanding debt as of March 31, 2022 and December 31, 2021, respectively (amount in thousands):

Stated

Embedded

 

Interest

Conversion

Remaining

Redemption

Carrying

    

Maturity Date

    

Rate

    

Price

    

Face Value

    

Debt Discount

    

Option

    

Value

Short term convertible notes payable

6% unsecured

 

Due

 

6

%  

$

3.09

$

135

$

$

$

135

 

135

 

 

135

Short term notes payable

 

  

 

  

 

  

 

  

 

  

 

  

  

8% unsecured

Various

8

N/A

7,861

(448)

7,413

9% unsecured

Various

9

N/A

3,932

(66)

3,866

12% unsecured

On Demand

12

N/A

703

703

 

12,496

 

(514)

 

11,982

Long term notes payable

8% unsecured

9/22/2023

8

N/A

16,505

(2,649)

978

14,834

6% secured

3/25/2025

6

N/A

1,329

1,329

17,834

(2,649)

978

16,163

Ending balance as of March 31, 2022

$

30,465

$

(3,163)

$

978

$

28,280