The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(Unaudited)
|
|
For
the Three Months Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Other Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Par
value
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income
|
|
|
Deficit
|
|
Balance at April 1, 2019
|
|
|
537,091
|
|
|
|
537
|
|
|
|
780,478
|
|
|
|
(10
|
)
|
|
|
(840,557
|
)
|
|
|
1,056
|
|
|
|
(58,496
|
)
|
Warrants exercised for cash
|
|
|
6,546
|
|
|
|
6
|
|
|
|
1,525
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,531
|
|
Reclassification of warrant liabilities related to warrants exercised for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
1,250
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,250
|
|
Issuance of common stock and warrants for conversion of debt and accrued interest
|
|
|
6,625
|
|
|
|
7
|
|
|
|
1,969
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,976
|
|
Stock-based compensation
|
|
|
200
|
|
|
|
0
|
|
|
|
438
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
438
|
|
Issuance of common shares in connection with a settlement agreement
|
|
|
12,000
|
|
|
|
12
|
|
|
|
(12
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
219
|
|
|
|
-
|
|
|
|
219
|
|
Cumulative translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75
|
|
|
|
75
|
|
Balance at June 30, 2019
|
|
|
562,462
|
|
|
$
|
562
|
|
|
$
|
785,648
|
|
|
$
|
(10
|
)
|
|
$
|
(840,338
|
)
|
|
$
|
1,131
|
|
|
$
|
(53,007
|
)
|
|
|
For
the Six Months Ended June 30, 2019
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Other
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Par
value
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Income
|
|
|
Deficit
|
|
Balance at January 1, 2019
|
|
|
523,232
|
|
|
|
523
|
|
|
|
775,741
|
|
|
|
(10
|
)
|
|
|
(824,413
|
)
|
|
|
1,000
|
|
|
|
(47,159
|
)
|
Warrants exercised for cash
|
|
|
9,532
|
|
|
|
9
|
|
|
|
2,210
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,219
|
|
Reclassification of warrant liabilities related
to warrants exercised for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
1,759
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,759
|
|
Issuance of common stock and warrants for conversion
of debt and accrued interest
|
|
|
17,498
|
|
|
|
18
|
|
|
|
4,959
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,977
|
|
Stock-based compensation
|
|
|
200
|
|
|
|
-
|
|
|
|
991
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
991
|
|
Cumulative effect of adopting new accounting standard
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,802
|
|
|
|
-
|
|
|
|
4,802
|
|
Issuance of common shares in connection with a
settlement agreement
|
|
|
12,000
|
|
|
|
12
|
|
|
|
(12
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(20,727
|
)
|
|
|
-
|
|
|
|
(20,727
|
)
|
Cumulative translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
131
|
|
|
|
131
|
|
Balance at June 30, 2019
|
|
|
562,462
|
|
|
$
|
562
|
|
|
$
|
785,648
|
|
|
$
|
(10
|
)
|
|
$
|
(840,338
|
)
|
|
$
|
1,131
|
|
|
$
|
(53,007
|
)
|
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY (DEFICIT) - CONTINUED
(in thousands)
(Unaudited)
|
|
For
the Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Accumulated
|
|
|
Other
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Par
value
|
|
|
Capital
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Loss
|
|
|
Equity
(Deficit)
|
|
Balance
at April 1, 2018
|
|
|
414,665
|
|
|
$
|
415
|
|
|
$
|
730,502
|
|
|
$
|
(109
|
)
|
|
$
|
(810,164
|
)
|
|
$
|
(1,467
|
)
|
|
$
|
(80,823
|
)
|
Issuance of common stock
and warrants for cash in a registered direct offering
|
|
|
4,000
|
|
|
|
4
|
|
|
|
696
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
700
|
|
Issuance of common stock
for conversion of Series A convertible preferred stock
|
|
|
2,677
|
|
|
|
3
|
|
|
|
452
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
455
|
|
Deemed dividend on conversion
of Series A convertible preferred stock to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(419
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(419
|
)
|
Beneficial conversion
feature of Series B convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
1,698
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,698
|
|
Deemed dividend related
to immediate accretion of beneficial conversion feature of Series B convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,698
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,698
|
)
|
Issuance of common stock
for conversion of Series B convertible preferred stock
|
|
|
5,117
|
|
|
|
5
|
|
|
|
1,172
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,177
|
|
Deemed dividend on conversion
of Series B convertible preferred stock to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,417
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,417
|
)
|
Warrants exercised for
cash
|
|
|
2,161
|
|
|
|
2
|
|
|
|
506
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
508
|
|
Reclassification of
warrant liabilities related to warrants exercised for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
430
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
430
|
|
Conversion of share
settled debt into common stock
|
|
|
6,500
|
|
|
|
6
|
|
|
|
666
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
672
|
|
Issuance of common stock
and warrants for conversion of debt and accrued interest
|
|
|
9,463
|
|
|
|
9
|
|
|
|
2,352
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,361
|
|
Reclass between accrued
interest and subscription receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
Proceeds from investor
to offset subscription receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
11,569
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,569
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(21,177
|
)
|
|
|
-
|
|
|
|
(21,177
|
)
|
Cumulative
translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,551
|
|
|
|
1,551
|
|
Balance
at June 30, 2018
|
|
|
444,583
|
|
|
$
|
444
|
|
|
$
|
746,509
|
|
|
$
|
-
|
|
|
$
|
(831,341
|
)
|
|
$
|
84
|
|
|
$
|
(84,304
|
)
|
|
|
For
the Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
Common
Stock
|
|
|
Paid-in
|
|
|
Subscription
|
|
|
Deficit
|
|
|
Other
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Par
value
|
|
|
Capital
|
|
|
Receivable
|
|
|
Accumulated
|
|
|
Loss
|
|
|
Equity
(Deficit)
|
|
Balance
at January 1, 2018
|
|
|
328,857
|
|
|
$
|
329
|
|
|
$
|
721,554
|
|
|
$
|
-
|
|
|
$
|
(788,619
|
)
|
|
$
|
(597
|
)
|
|
$
|
(67,333
|
)
|
Issuance of common stock
and warrants for cash in a registered direct offering
|
|
|
4,000
|
|
|
|
4
|
|
|
|
696
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
700
|
|
Issuance of common stock
for conversion of Series A convertible preferred stock
|
|
|
67,955
|
|
|
|
68
|
|
|
|
11,807
|
|
|
|
(109
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
11,766
|
|
Deemed dividend on conversion
of Series A convertible preferred stock to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,910
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(9,910
|
)
|
Beneficial conversion
feature of Series B convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
2,086
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,086
|
|
Deemed dividend related
to immediate accretion of beneficial conversion feature of Series B convertible preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,086
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,086
|
)
|
Issuance of common stock
for conversion of Series B convertible preferred stock
|
|
|
9,441
|
|
|
|
9
|
|
|
|
2,162
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,171
|
|
Deemed dividend on conversion
of Series B convertible preferred stock to common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,594
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,594
|
)
|
Warrants exercised for
cash
|
|
|
8,957
|
|
|
|
9
|
|
|
|
2,110
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,119
|
|
Reclassification of
warrant liabilities related to warrants exercised for cash
|
|
|
-
|
|
|
|
-
|
|
|
|
2,177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,177
|
|
Conversion of share
settled debt into common stock
|
|
|
10,800
|
|
|
|
11
|
|
|
|
1,735
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,746
|
|
Issuance of common stock
and warrants for conversion of debt and accrued interest
|
|
|
14,473
|
|
|
|
14
|
|
|
|
3,899
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,913
|
|
Reclass between accrued
interest and subscription receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
Proceeds from investor
to offset subscription receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100
|
|
Stock-based compensation
|
|
|
100
|
|
|
|
-
|
|
|
|
11,873
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,873
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(42,722
|
)
|
|
|
-
|
|
|
|
(42,722
|
)
|
Cumulative
translation adjustment
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
681
|
|
|
|
681
|
|
Balance
at June 30, 2018
|
|
|
444,583
|
|
|
$
|
444
|
|
|
|
746,509
|
|
|
$
|
-
|
|
|
$
|
(831,341
|
)
|
|
$
|
84
|
|
|
$
|
(84,304
|
)
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(20,727
|
)
|
|
$
|
(42,722
|
)
|
Reconciliation of net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
8
|
|
|
|
722
|
|
Amortization of debt discount
|
|
|
663
|
|
|
|
5,082
|
|
Amortization of debt premium
|
|
|
-
|
|
|
|
(240
|
)
|
Change in fair value of derivatives
|
|
|
4,820
|
|
|
|
5,138
|
|
Loss from extinguishment of debt
|
|
|
4
|
|
|
|
601
|
|
Amortization of operating lease right-of-use asset
|
|
|
222
|
|
|
|
-
|
|
Stock-based compensation related to warrants modification
|
|
|
-
|
|
|
|
141
|
|
Stock-based compensation for services
|
|
|
991
|
|
|
|
11,873
|
|
Subtotal of non-cash charges
|
|
|
6,708
|
|
|
|
23,317
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(664
|
)
|
|
|
453
|
|
Other non-current assets
|
|
|
(44
|
)
|
|
|
857
|
|
Accounts payable and accrued expenses
|
|
|
(742
|
)
|
|
|
1,782
|
|
Related party accounts payable and accrued expenses
|
|
|
(4,040
|
)
|
|
|
(42
|
)
|
Lease liabilities
|
|
|
80
|
|
|
|
-
|
|
Net cash used in operating activities
|
|
|
(19,429
|
)
|
|
|
(16,355
|
)
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(225
|
)
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(225
|
)
|
|
|
-
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance of Series A convertible preferred stock and warrants
|
|
|
-
|
|
|
|
527
|
|
Proceeds from issuance of Series B convertible preferred stock and warrants, net
|
|
|
-
|
|
|
|
6,594
|
|
Proceeds from issuance of common stock and warrants in a registered direct offering, net
|
|
|
-
|
|
|
|
1,000
|
|
Proceeds from private offering (shares payable)
|
|
|
-
|
|
|
|
138
|
|
Proceeds from investor to offset subscription receivable
|
|
|
-
|
|
|
|
100
|
|
Proceeds from exercise of warrants
|
|
|
2,219
|
|
|
|
2,119
|
|
Proceeds from issuance of notes payable, net
|
|
|
6,500
|
|
|
|
3,701
|
|
Proceeds from issuance of notes payable to related party
|
|
|
-
|
|
|
|
30
|
|
Proceeds from issuance of convertible notes payable to related party
|
|
|
-
|
|
|
|
5,400
|
|
Repayment of notes payable
|
|
|
(420
|
)
|
|
|
(2,200
|
)
|
Repayment of notes payable to related parties
|
|
|
(329
|
)
|
|
|
(782
|
)
|
Repayment of convertible notes payable to related parties
|
|
|
(4,002
|
)
|
|
|
-
|
|
Net cash provided by financing activities
|
|
|
3,968
|
|
|
|
16,627
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
138
|
|
|
|
1,208
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(15,548
|
)
|
|
|
1,480
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of the period
|
|
|
22,224
|
|
|
|
117
|
|
Cash and cash equivalents, end of the period
|
|
$
|
6,676
|
|
|
$
|
1,597
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
|
|
|
|
|
|
Interest payments on mortgage loan
|
|
$
|
-
|
|
|
$
|
(633
|
)
|
Interest payments on notes payable
|
|
$
|
(43
|
)
|
|
$
|
-
|
|
Interest payments on notes payable to related party
|
|
$
|
(177
|
)
|
|
$
|
(27
|
)
|
Interest payments on convertible notes payable to related party
|
|
$
|
(748
|
)
|
|
$
|
-
|
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(Unaudited)
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
|
Issuance of common stock for conversion of Series A convertible preferred stock
|
|
$
|
-
|
|
|
$
|
11,766
|
|
Deemed dividend on conversion of Series A convertible preferred stock to common stock
|
|
$
|
-
|
|
|
$
|
9,910
|
|
Beneficial conversion feature of Series B convertible preferred stock
|
|
$
|
-
|
|
|
$
|
2,086
|
|
Deemed dividend related to immediate accretion of beneficial conversion feature of Series B convertible preferred stock
|
|
$
|
-
|
|
|
$
|
2,086
|
|
Issuance of common stock for conversion of Series B convertible preferred stock
|
|
$
|
-
|
|
|
$
|
2,171
|
|
Deemed dividend on conversion of Series B convertible preferred stock to common stock
|
|
$
|
-
|
|
|
$
|
1,594
|
|
Reclassification of warrant liabilities related to warrants exercised for cash
|
|
$
|
1,759
|
|
|
$
|
2,177
|
|
Conversion of share settled debt into common stock
|
|
$
|
-
|
|
|
$
|
1,746
|
|
Issuance of common stock and warrants for conversion of debt and accrued interest
|
|
$
|
3,994
|
|
|
$
|
3,312
|
|
Conversion of outstanding accounts payables to note payable and contingent payable
|
|
$
|
8,560
|
|
|
$
|
-
|
|
Issuance of common shares in connection with a settlement agreement
|
|
$
|
12
|
|
|
$
|
-
|
|
Warrants and contingently issuable warrants associated with convertible notes payable to related party
|
|
$
|
-
|
|
|
$
|
4,217
|
|
Conversion of note payable to offset Series A convertible preferred stock subscription receivable
|
|
$
|
-
|
|
|
$
|
500
|
|
Conversion of interest payable to offset Series A convertible preferred stock subscription receivable
|
|
$
|
-
|
|
|
$
|
71
|
|
Reclass between accrued interest and subscription receivable
|
|
$
|
-
|
|
|
$
|
9
|
|
The accompanying notes are an integral part
of these unaudited condensed consolidated financial statements.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
1. Organization and Description of Business
Northwest Biotherapeutics, Inc. and its
wholly owned subsidiaries 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. On April 25, 2019, the Company established a new wholly owned subsidiary Northwest Biotherapeutics
B.V. in the Netherlands, where the European Medicines Agency is relocating.
The Company is developing experimental
dendritic cell vaccines using its platform technology known as DCVax®. DCVax is being tested in clinical trials for use in
the treatment of certain types of cancers.
The Company currently 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. The companies are Cognate
BioServices in the U.S. and Advent BioServices (a related party) in the U.K. Both of these companies specialize in the production
of living cell products. Although there are many contract manufacturers for small molecule drugs and for biologics, there are only
a few contract manufacturers in the U.S. and in Europe that specialize in producing living cell products. The manufacturing of
such products is highly specialized and entirely different than production of biologics: the physical facilities and equipment
are different, the types of personnel and skill sets are different, and the processes are different. The regulatory requirements
relating to manufacturing of cellular products are especially challenging and are one of the most frequent reasons for the development
of a company’s cellular products to be put on clinical hold (i.e., stopped by regulatory authorities).
In addition, the Company’s programs
require dedicated capacity in these specialized manufacturing facilities. The Company’s products are fully personalized and
not made in standardized batches: the Company’s products are made on demand, patient by patient, on an as needed basis.
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 $20.7 million for the six months ended June 30, 2019.
The Company used approximately $19.4 million of cash in its operating activities for the six months ended June 30, 2019.
The Company has not yet generated any material
revenue from the sale of its 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 R&D and clinical trials and do not yet have commercial products.
The Company expects to continue incurring 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,
net operating cash flow deficits, and an accumulated deficit, 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.
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.
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 June 30, 2019, condensed
consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2019 and 2018, condensed
consolidated statement of stockholders’ deficit for the three and six months ended June 30, 2019 and 2018, and the condensed
consolidated statements of cash flows for the six months ended June 30, 2019 and 2018 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 and six months ended June 30, 2019
are not necessarily indicative of results to be expected for the year ending December 31, 2019 or for any future interim period.
The condensed consolidated balance sheet at December 31, 2018 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, 2018 and notes thereto included in the Company’s annual report on Form 10-K, which was filed with the
SEC on April 2, 2019.
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 assumptions. These estimates and assumptions include 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, and the fair value of environmental remediation liabilities.
Significant Accounting Policies
Leases
Effective January 1, 2019, the Company
accounts for its leases under ASC 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified
as operating or financing leases and are recorded on the condensed consolidated balance sheet as both a right of use asset and
lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s
incremental borrowing rate. Lease liabilities are increased by interest and reduced by payments each period, and the right of use
asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right
of use asset result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and
the amortization of the right of use asset results in front-loaded expense over the lease term. Variable lease expenses are recorded
when incurred.
In calculating the right of use asset and
lease liability, the Company elects to combine lease and non-lease components. The Company excludes short-term leases having initial
terms of 12 months or less from the new guidance as an accounting policy election and instead recognizes rent expense on a straight-line
basis over the lease term.
The Company continues to account for leases
in the prior period financial statements under ASC Topic 840.
Other than above, there have been no material
changes in the Company’s significant accounting policies to those previously disclosed in the 2018 Annual Report.
Adoption of Recent Accounting Standards
Leases
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842) in order to increase transparency and comparability among organizations by, among other provisions, recognizing
lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous GAAP. For
public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within
those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect
a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless
the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination
of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under
previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides entities
an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period
presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as
of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described
above. Based on the analysis, on January 1, 2019, the Company recorded right of use assets and lease liabilities of approximately
$4.3 million, which represented operating lease entered prior to January 1, 2019. Additionally, the Company recorded an adjustment
to opening accumulated deficit of $4.8 million related to the derecognition of deferred profit related to the U.K facility sales
leaseback transaction.
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 June 30, 2019 and December 31, 2018
(in thousands):
|
|
Fair value measured at June 30, 2019
|
|
|
|
|
|
|
Quoted prices in active
|
|
|
Significant other
|
|
|
Significant
|
|
|
|
Fair value at
|
|
|
markets
|
|
|
observable inputs
|
|
|
unobservable inputs
|
|
|
|
June 30, 2019
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Warrant liability
|
|
$
|
33,299
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
33,299
|
|
Contingent payable derivative liability
|
|
|
6,713
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,713
|
|
Total fair value
|
|
$
|
40,012
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
40,012
|
|
|
|
Fair value measured at December 31, 2018
|
|
|
|
|
|
|
Quoted prices in active
|
|
|
Significant other
|
|
|
Significant
|
|
|
|
Fair value at
|
|
|
markets
|
|
|
observable inputs
|
|
|
unobservable inputs
|
|
|
|
December 31, 2018
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Warrant liability
|
|
$
|
29,995
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
29,995
|
|
Embedded conversion feature
|
|
|
357
|
|
|
|
-
|
|
|
|
-
|
|
|
|
357
|
|
Total fair value
|
|
$
|
30,352
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
30,352
|
|
There were no transfers between Level 1,
2 or 3 during the six-month period ended June 30, 2019.
The following table presents changes in
Level 3 liabilities measured at fair value for the six-month period ended June 30, 2019. 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).
|
|
|
|
|
|
|
|
Embedded
|
|
|
|
|
|
|
Warrant
|
|
|
Contingent Payable
|
|
|
Conversion
|
|
|
|
|
|
|
Liability
|
|
|
Derivative Liability
|
|
|
Feature
|
|
|
Total
|
|
Balance – January 1, 2019
|
|
$
|
29,995
|
|
|
$
|
-
|
|
|
$
|
357
|
|
|
$
|
30,352
|
|
Additional contingent liability in connection with a settlement agreement
|
|
|
-
|
|
|
|
6,602
|
|
|
|
|
|
|
|
6,602
|
|
Extinguishment of derivative liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Extinguishment of warrant liabilities related to warrants exercised for cash
|
|
|
(1,759
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,759
|
)
|
Change in fair value
|
|
|
5,063
|
|
|
|
111
|
|
|
|
(354
|
)
|
|
|
4,820
|
|
Balance – June 30, 2019
|
|
$
|
33,299
|
|
|
$
|
6,713
|
|
|
$
|
-
|
|
|
$
|
40,012
|
|
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 June 30, 2019 and December 31, 2018 is as follows:
|
|
As of June 30, 2019
|
|
|
As of December 31, 2018
|
|
|
|
Warrant
|
|
|
Contingent Payable
|
|
|
Warrant
|
|
|
Embedded
|
|
|
|
Liability
|
|
|
Derivative Liability
|
|
|
Liability
|
|
|
Conversion Feature
|
|
Strike price
|
|
$
|
0.29
|
|
|
$
|
0.26
|
*
|
|
$
|
0.29
|
|
|
$
|
0.44
|
|
Contractual term (years)
|
|
|
1.5
|
|
|
|
0.8
|
|
|
|
2.2
|
|
|
|
1.5
|
|
Volatility (annual)
|
|
|
78
|
%
|
|
|
64
|
%
|
|
|
85
|
%
|
|
|
85
|
%
|
Risk-free rate
|
|
|
2
|
%
|
|
|
2
|
%
|
|
|
3
|
%
|
|
|
3
|
%
|
Dividend yield (per share)
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
* The strike price related to the derivative
liability associated with contingent payable as of June 30, 2019 is contingent based on the market price.
5. Stock-based Compensation
During the six months ended June 30, 2019,
the Company issued 200,000 shares of common stock to David Innes, the Company’s vice president investor relations pursuant
to his employment agreement in February 2019. The Company recorded $48,000 stock-based compensation expense based on fair value
on February 18, 2019, which was the effective date of his employment.
The following table summarizes stock-based
compensation expense for the three and six months ended June 30, 2019 and 2018 (in thousands):
|
|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
June 30
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Research and development
|
|
$
|
69
|
|
|
$
|
854
|
|
|
$
|
173
|
|
|
$
|
1,124
|
|
General and administrative
(1)
|
|
|
369
|
|
|
|
10,715
|
|
|
|
818
|
|
|
|
10,749
|
|
Total stock-based compensation expense
|
|
$
|
438
|
|
|
$
|
11,569
|
|
|
$
|
991
|
|
|
$
|
11,873
|
|
|
(1)
|
The general and administrative expense during the three months and six months ended June 30, 2019 is related to applicable vesting portion of stock options awards made in the past to directors and employees.
|
The total unrecognized compensation cost
was approximately $0.5 million as of June 30, 2019, and will be recognized over the next 1.3 years.
6. Property & Equipment
Property and equipment consist of the following
at June 30, 2019 and December 31, 2018 (in thousands):
|
|
June 30,
|
|
|
December 31,
|
|
|
Estimated
|
|
|
2019
|
|
|
2018
|
|
|
Useful Life
|
Leasehold improvements
|
|
$
|
81
|
|
|
$
|
81
|
|
|
Lesser of lease term or estimated useful life
|
Office furniture and equipment
|
|
|
58
|
|
|
|
25
|
|
|
3 years
|
Computer equipment and software
|
|
|
790
|
|
|
|
599
|
|
|
3 years
|
Land in the United Kingdom
|
|
|
86
|
|
|
|
86
|
|
|
NA
|
|
|
|
1,015
|
|
|
|
791
|
|
|
|
Less: accumulated depreciation
|
|
|
(660
|
)
|
|
|
(683
|
)
|
|
|
Total property, plant and equipment, net
|
|
$
|
355
|
|
|
$
|
108
|
|
|
|
Depreciation expenses were approximately
$6,000 and $357,000 for the three months ended June 30, 2019 and 2018 and were approximately $8,000 and $722,000 for the six months
ended June 30, 2019 and 2018.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
7. Leases
The Company adopted ASC Topic 842 - Leases
as of January 1, 2019, using the transition method per ASU No. 2018-11 issued on July 2018 wherein entities were allowed to initially
apply the new leases standard at adoption date and recognize a cumulative-effect adjustment to the opening balance of retained
earnings in the period of adoption. Accordingly, all periods prior to January 1, 2019 were presented in accordance with the previous
ASC Topic 840, Leases, and no retrospective adjustments were made to the comparative periods presented. Adoption of ASC 842
resulted in an increase to total assets and liabilities due to the recording of operating lease right-of-use assets ("ROU")
and operating lease liabilities of approximately $4.3 million, as of January 1, 2019. On March 4, 2019, the
Company recognized additional $0.6 million ROU and lease liabilities to its amended office lease in the U.S. The adoption did not
materially impact the Company’s Condensed Consolidated Statements of Operations or Cash Flows.
The Company has operating leases for corporate
offices in the U.S., U.K. and Germany, and manufacturing facilities in the U.K. Leases with an initial term of 12 months or less
are not recorded in the balance sheet. The Company has elected the practical expedient to account for each separate lease component
of a contract and its associated non-lease components as a single lease component, thus causing all fixed payments
to be capitalized. The Company also elected the package of practical expedients permitted within the new standard, which among
other things, allows the Company to carry forward historical lease classification. The renewal options have not been
included in the calculation of the lease liabilities and ROU as the Company is not reasonably certain to exercise the options.
Variable lease payment amounts that cannot be determined at the commencement of the lease such as increases
in lease payments based on changes in index rates or usage, are not included in the ROU assets or liabilities. These
are expensed as incurred and recorded as variable lease expense.
At June 30, 2019, the Company had operating
lease liabilities of approximately $5.0 million for both the 20-year lease of the building for the manufacturing facility in Sawston,
U.K., and the current office lease in the U.S. and ROU of approximately $4.7 million for the Sawston lease and US office lease,
which were included in the condensed consolidated balance sheet.
The following summarizes quantitative
information about the Company’s operating leases:
|
|
For the Six Months Ended
|
|
|
|
June 30, 2019
|
|
|
|
U.K
|
|
|
U.S
|
|
|
Total
|
|
Lease cost
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease cost
|
|
$
|
307
|
|
|
$
|
82
|
|
|
$
|
389
|
|
Short-term lease cost
|
|
|
27
|
|
|
|
81
|
|
|
|
108
|
|
Variable lease cost
|
|
|
-
|
|
|
|
4
|
|
|
|
4
|
|
Total
|
|
$
|
334
|
|
|
$
|
167
|
|
|
$
|
501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information as of adoption date
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
-
|
|
|
$
|
(81)
|
|
|
$
|
(81)
|
|
Weighted-average remaining lease term – operating leases
|
|
|
10.5
|
|
|
|
1.3
|
|
|
|
|
|
Weighted-average discount rate – operating leases
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
|
Maturities of our operating leases, excluding short-term leases,
are as follows:
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
|
|
U.K
|
|
|
U.S
|
|
|
Total
|
|
Six months ended December 31, 2019
|
|
$
|
-
|
|
|
$
|
162
|
|
|
$
|
162
|
|
Year ended December 31, 2020
|
|
|
635
|
|
|
|
332
|
|
|
|
967
|
|
Year ended December 31, 2021
|
|
|
635
|
|
|
|
84
|
|
|
|
719
|
|
Year ended December 31, 2022
|
|
|
635
|
|
|
|
-
|
|
|
|
635
|
|
Year ended December 31, 2023
|
|
|
635
|
|
|
|
-
|
|
|
|
635
|
|
Year ended December 31, 2024
|
|
|
635
|
|
|
|
-
|
|
|
|
635
|
|
Thereafter
|
|
|
8,883
|
|
|
|
-
|
|
|
|
8,883
|
|
Total
|
|
|
12,058
|
|
|
|
578
|
|
|
|
12,636
|
|
Less present value discount
|
|
|
(7,607
|
)
|
|
|
(59
|
)
|
|
|
(7,666
|
)
|
Operating lease liabilities included in the Consolidated Balance Sheet at June 30, 2019
|
|
$
|
4,451
|
|
|
$
|
519
|
|
|
$
|
4,970
|
|
8. Outstanding Debt
The following two tables summarize outstanding
debt as of June 30, 2019 and December 31, 2018, respectively (amount in thousands):
|
|
|
|
Stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
Conversion
|
|
|
|
|
|
Remaining
|
|
|
Carrying
|
|
|
|
Maturity Date
|
|
Rate
|
|
|
Price
|
|
|
Face Value
|
|
|
Debt Discount
|
|
|
Value
|
|
Short term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6% unsecured (1)
|
|
Due
|
|
|
6
|
%
|
|
$
|
3.09
|
|
|
$
|
135
|
|
|
$
|
-
|
|
|
$
|
135
|
|
10% unsecured (2)
|
|
10/18/2019
|
|
|
10
|
%
|
|
$
|
0.22
|
|
|
|
500
|
|
|
|
(16
|
)
|
|
|
484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
635
|
|
|
|
(16
|
)
|
|
|
619
|
|
Short term convertible notes payable - related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18% unsecured (4)
|
|
In default
|
|
|
18
|
%
|
|
$
|
0.23
|
|
|
|
1,398
|
|
|
|
-
|
|
|
|
1,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,398
|
|
|
|
-
|
|
|
|
1,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8% unsecured (5)
|
|
Various
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
2,210
|
|
|
|
(193
|
)
|
|
|
2,017
|
|
10% unsecured (6)
|
|
Various
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
4,238
|
|
|
|
(176
|
)
|
|
|
4,062
|
|
12% unsecured (7)
|
|
On Demand
|
|
|
12
|
%
|
|
|
N/A
|
|
|
|
440
|
|
|
|
-
|
|
|
|
440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,888
|
|
|
|
(369
|
)
|
|
|
6,519
|
|
Short term notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% unsecured - Related Parties (8)
|
|
On Demand
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
63
|
|
|
|
-
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
-
|
|
|
|
63
|
|
Long term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0% unsecured (9)
|
|
8/1/2020
|
|
|
0
|
%
|
|
|
N/A
|
|
|
|
1,156
|
|
|
|
(158
|
)
|
|
|
998
|
|
8% unsecured (10)
|
|
Various
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
7,165
|
|
|
|
(606
|
)
|
|
|
6,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,321
|
|
|
|
(764
|
)
|
|
|
7,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance as of June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,305
|
|
|
$
|
(1,149
|
)
|
|
$
|
16,156
|
|
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
|
|
|
|
Stated
|
|
|
|
|
|
|
|
|
|
|
|
Fair
Value of
|
|
|
|
|
|
|
|
|
Interest
|
|
|
Conversion
|
|
|
|
|
|
Remaining
|
|
|
Embedded
|
|
|
Carrying
|
|
|
|
Maturity
Date
|
|
Rate
|
|
|
Price
|
|
|
Face
Value
|
|
|
Debt
Discount
|
|
|
Conversion
Option
|
|
|
Value
|
|
Short
term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6% unsecured (1)
|
|
Due
|
|
|
6
|
%
|
|
$
|
3.09
|
|
|
$
|
135
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
135
|
|
10% unsecured (2)
|
|
10/18/2019
|
|
|
10
|
%
|
|
$
|
0.22
|
|
|
|
500
|
|
|
|
(43
|
)
|
|
|
-
|
|
|
|
457
|
|
18% unsecured (3)
|
|
In
Default
|
|
|
18
|
%
|
|
$
|
0.21
|
|
|
|
914
|
|
|
|
-
|
|
|
|
357
|
|
|
|
1,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,549
|
|
|
|
(43
|
)
|
|
|
357
|
|
|
|
1,863
|
|
Short
term convertible notes payable - related party
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% unsecured (4)
|
|
On Demand
|
|
|
10
|
%
|
|
$
|
0.23
|
|
|
|
5,400
|
|
|
|
-
|
|
|
|
-
|
|
|
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short
term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8% unsecured (5)
|
|
6/20/2019 and 12/12/2019
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
3,840
|
|
|
|
(383
|
)
|
|
|
-
|
|
|
|
3,457
|
|
10% unsecured (6)
|
|
Various
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
3,658
|
|
|
|
(400
|
)
|
|
|
|
|
|
|
3,258
|
|
12% unsecured (7)
|
|
On
Demand
|
|
|
12
|
%
|
|
|
N/A
|
|
|
|
440
|
|
|
|
-
|
|
|
|
-
|
|
|
|
440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,938
|
|
|
|
(783
|
)
|
|
|
-
|
|
|
|
7,155
|
|
Short
term notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10% unsecured - Related
Parties (8)
|
|
On Demand
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
324
|
|
|
|
-
|
|
|
|
-
|
|
|
|
324
|
|
12%
unsecured - Related Parties (8)
|
|
On
Demand
|
|
|
12
|
%
|
|
|
N/A
|
|
|
|
69
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
393
|
|
|
|
-
|
|
|
|
-
|
|
|
|
393
|
|
Long
term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8% unsecured (5)
|
|
2/13/2020
|
|
|
8
|
%
|
|
|
N/A
|
|
|
|
1,155
|
|
|
|
(119
|
)
|
|
|
-
|
|
|
|
1,036
|
|
5% unsecured (6)
|
|
1/13/2020
|
|
|
10
|
%
|
|
|
N/A
|
|
|
|
1,000
|
|
|
|
(50
|
)
|
|
|
-
|
|
|
|
950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,155
|
|
|
|
(169
|
)
|
|
|
-
|
|
|
|
1,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending
balance as of December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,435
|
|
|
$
|
(995
|
)
|
|
$
|
357
|
|
|
$
|
16,797
|
|
(1)
|
|
This $135,000 note as of June 30, 2019 and December 31, 2018 consists of two separate
6% notes in the amounts of $110,000 and $25,000. In regard to the $110,000 note, the Company has made ongoing attempts to locate
the creditor to repay or convert this note, but has been unable to locate the creditor to date. In regard to the $25,000 note,
the holder has elected to convert these notes into equity, the Company has delivered the applicable conversion documents to the
holder, and the Company is waiting for the holder to execute and return the documents.
|
(2)
|
|
On October 18, 2018, the Company entered into an Unsecured Convertible Promissory
Note Agreement Plus Warrant (the “Note”) with an individual investor (the “Holder”) for an aggregate principal
amount of $500,000. No payment was made during the six months ended June 30, 2019.
|
The accrued interest associated
with the Note was approximately $35,000 as of June 30, 2019.
(3)
|
|
On May 1, 2018, the Company entered into a Convertible Redeemable Note Agreement
(the “Redeemable Note”) of $1.4 million with an existing investor. The Redeemable Note was in default on August 25,
2018.
|
Due to the events of default,
the holder is entitled to convert all or any amount of the outstanding principal amount and interest into shares of the common
stock of the Company without restrictive legend of any nature. The conversion price is equal to 90% of the average of the 5 lowest
daily VWAP of the Company’s common stock during the 15 consecutive trading days immediately preceding the conversion date.
During the six months ended
June 30, 2019, the Company converted approximately $0.9 million principal and $0.1 million accrued interest into approximately
4.9 million shares of common stock at fair value of $1.4 million. The Company recorded an approximate $0.4 million debt extinguishment
loss from this conversion.
The Redeemable Note was converted
as of June 30, 2019.
(4)
|
|
Between February 2018 and April 2018, the Company’s Chief Executive Officer,
Linda Powers, loaned the Company aggregate funding of $5.4 million, and the Company entered into convertible Note agreements for
this amount (the “Convertible Notes”). The Notes were 15-day demand notes, intended as temporary bridge loans. However,
they remained unpaid and outstanding throughout the year.
|
On November 11, 2018, the Company
and Ms. Powers agreed to further extend the forbearance on the notes to a maturity of one year following the respective funding
dates. In consideration of the continuing forbearance, the Company agreed to issue warrants representing 50% of the repayment
amounts of the Notes. The warrants were anticipated have exercise price at $0.35 per share, and have an exercise period of 2 years. However,
the Company has not finalized the terms of the warrant agreement.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
During the six months ended
June 30, 2019, the Company made an aggregate payment of $4.7 million to the Convertible Notes, including $0.7 million interest
payment.
As of June 30, 2019, $1.4 million
of the $5.4 million principal amount of the February through April 2018 Notes remained unpaid and were past the end of the further
forbearance period agreed last November. As such, the Notes were again in default, and the Company started to accrue interest using
18% annual rate from the default dates. The accrued unpaid interest associated with the Convertible Notes was approximately $12,000
as of June 30, 2019.
(5)
|
|
This $2.2 million note as of June 30, 2019 consists of two separate 8% notes in the
amounts of $1.4 million and $0.8 million.
|
During the six months ended
June 30, 2019, the Company converted approximately $2.8 million principal and $0.2 million accrued interest into approximately
12.6 million shares of common stock at fair value of $3.6 million. The Company recorded an approximate $0.6 million debt extinguishment
loss from this conversion.
(6)
|
|
Between October 1, 2018 and November 7, 2018, the Company entered into multiple one-year
promissory notes (the “Notes”) with multiple holders (the “Holders”) for an aggregate principal amount
of $3.7 million. The notes included approximately $0.2 million OID. The Notes bore interest at 10% per annum.
|
During the six months ended
June 30, 2019, the Company made principal payment of approximately $420,000, and interest payment of approximately $43,000 which
included $27,000 premium pursuant to the prepayment option. During the six months ended June 30, 2019, the Company wrote off $22,000
unamortized debt discount from debt extinguishment, which was recognized as part of debt extinguishment loss.
During the six months ended
June 30, 2019, the Company recognized interest expense of approximately $252,000 resulting from amortization of debt discount for
the Notes. The remaining debt discount as of June 30, 2019 was approximately $176,000.
The accrued interest associated
with the Note was approximately $292,000 as of June 30, 2019.
(7)
|
|
This $440,000 note as of June 30, 2019 consists of two separate 12% demand notes
(the “Notes”) in the amounts of $300,000 and $140,000.
|
The accrued interest associated
with the Notes was approximately $105,000 as of June 30, 2019.
Goldman Notes
In 2017, Leslie J. Goldman,
an officer of the Company, loaned the Company an aggregate amount of $1.3 million pursuant to certain Demand Promissory Note Agreements.
On January 3, 2018, Mr. Goldman loaned the Company an additional $30,000 (collectively the “Goldman Notes”). Approximately
$0.5 million of the Goldman Notes bear interest at the rate of 12% per annum, and $0.8 million of the Goldman Notes bear interest
at the rate of 10% per annum.
During the six months ended
June 30, 2019, the Company made an aggregate payment of $148,000 to the Goldman Notes, including $79,000 interest payment.
As of June 30, 2019, there were
no outstanding notes or interest owed to Mr. Goldman.
Toucan Notes
In 2017, Toucan Capital Fund
III loaned the Company an aggregate amount of $1.2 million pursuant to multiple Demand Promissory Notes (the “Toucan Notes”).
The Toucan Notes bear interest at 10% per annum, and are payable upon demand, with 7 days’ prior written notice to the Company.
During the six months ended
June 30, 2019, the Company made $46,000 interest payment.
As of June 30, 2019, there were
no outstanding notes or interest owed to Toucan Capital Fund III.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
Board of Directors Notes
As of June 30, 2019, there were
no outstanding notes or interest owed to the Company’s Board of Directors.
Advent BioServices Note
On September 26, 2018, Advent
BioServices, a related party which was formerly part of Cognate BioServices and was spun off separately as part of an institutional
financing of Cognate, provided a short-term loan to the Company in the amount of $65,000. The loan bears interest at 10% per annum,
and is payable upon demand, with 7 days’ prior written notice to the Company.
This Note remains outstanding
and unpaid. The principal and interest amount owed to Advent under this Note at June 30, 2019 was $63,000 and $5,000 based on the
current exchange rate, respectively.
(9)
|
|
On
May 28, 2019, the Company entered into a settlement agreement (the “Settlement”) with Cognate BioServices, resolving
past matters and providing for restart of DCVax®-Direct Production.
Cognate
agreed to reduce outstanding accounts payable by approximately $10 million, with some amounts related to periods of
inactivity being cancelled and with $1.1 million being deferred until 2020 (the “Deferred Note”). As
part of this overall settlement, the Company also provided a contingent note payable (the “Contingent
Payable Derivative”) of $10 million, which is only payable upon the Company’s first financing
after DCVax product approval in or outside the U.S. If such product approval has not been obtained by the seventh
anniversary of the Contingent Payable Derivative, such Contingent Payable Derivative will expire without becoming payable.
The Contingent Payable Derivative may be satisfied in whole or in part through conversion to equity if Cognate so elects on a
Determination Date during the period from the date of the first application for product approval until 120 days after such
application date. The Contingent Payable Derivative may also become payable in the event of an uncured event of default. The
Contingent Payable Derivative bears interest rate at 6% per
annum.
The
following table summarizes the Settlement transaction which resulted $1.0 million gain from debt extinguishment (amount in thousands):
|
Accounts payable (in dispute)
|
|
$
|
9,894
|
|
Upfront cash payment
|
|
|
(1,334
|
)
|
Deferred installment note (net of $175 discount)
|
|
|
(981
|
)
|
Contingent payable derivative *
|
|
|
(6,602
|
)
|
Gain from debt extinguishment
|
|
$
|
977
|
|
*see
Note 4 for valuation details
|
|
|
|
|
(10)
|
|
On March 29, 2019, the Company entered
into two 22-month notes (the “Notes”), with two different institutional investors, for a total of $4.4 million with
an interest rate of 8% and a maturity date of January 29, 2021. The Notes carried an OID of 10%. Net funding to the Company is
$4.0 million. The Note allows for optional prepayment by the Company, in the Company’s discretion. If the Company elects
to prepay the Notes, there will be a prepayment premium of 15%. Monthly amortization payments of 1/14
th
of
the total are payable from month 9 through 22, with a 10% premium.
In June 2019, the Company entered into
two 21-month notes (the “Notes”), with two different institutional investors, for a total of $2.8 million with an interest
rate of 8% and a maturity date in March 2021. The Notes carried an OID of 10%. Net funding to the Company is $2.5 million. The
Note allows for optional prepayment by the Company, in the Company’s discretion. If the Company elects to prepay the
Notes, there will be a prepayment premium of 15%. Monthly amortization payments of 1/14
th
of the total are payable
from month 7 through 21, with a 10% premium.
|
The outstanding interest for the above
long-term notes was approximately $95,000 as of June 30, 2019.
The following table summarizes total interest
expenses related to outstanding notes and mortgage loan for the three and six months ended June 30, 2019 and 2018, respectively
(in thousands):
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
|
|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
June 30
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Interest expenses related to outstanding notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
$
|
283
|
|
|
$
|
358
|
|
|
$
|
551
|
|
|
$
|
743
|
|
Amortization on debt premium
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
-
|
|
|
|
(240
|
)
|
Amortization of debt discount
|
|
|
367
|
|
|
|
307
|
|
|
|
663
|
|
|
|
584
|
|
Total interest expenses related to outstanding notes
|
|
|
650
|
|
|
|
575
|
|
|
|
1,214
|
|
|
|
1,087
|
|
Interest expenses related to outstanding notes to related parties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
|
137
|
|
|
|
193
|
|
|
|
328
|
|
|
|
331
|
|
Amortization of debt discount
|
|
|
-
|
|
|
|
2,018
|
|
|
|
-
|
|
|
|
4,235
|
|
Total interest expenses related to outstanding notes to related parties
|
|
|
137
|
|
|
|
2,211
|
|
|
|
328
|
|
|
|
4,566
|
|
Interest expenses related to mortgage loan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual interest
|
|
|
-
|
|
|
|
316
|
|
|
|
-
|
|
|
|
639
|
|
Amortization of debt issuance costs
|
|
|
-
|
|
|
|
130
|
|
|
|
-
|
|
|
|
263
|
|
Total interest expenses on the mortgage loan
|
|
|
-
|
|
|
|
446
|
|
|
|
-
|
|
|
|
902
|
|
Interest expenses related to Series A convertible preferred stock
|
|
|
-
|
|
|
|
68
|
|
|
|
|
|
|
|
68
|
|
Other interest expenses
|
|
|
-
|
|
|
|
2
|
|
|
|
1
|
|
|
|
3
|
|
Total interest expense
|
|
$
|
787
|
|
|
$
|
3,302
|
|
|
$
|
1,543
|
|
|
$
|
6,626
|
|
The following table summarizes the Company’s
contractual obligations on debt principal as of June 30, 2019 (amount in thousands):
|
|
Payment Due by Period
|
|
|
|
|
|
|
Less than
|
|
|
1 to 2
|
|
|
|
Total
|
|
|
1 Year
|
|
|
Years
|
|
Short term convertible notes payable - related party
|
|
|
|
|
|
|
|
|
|
|
|
|
18% unsecured (in default)
|
|
$
|
1,398
|
|
|
$
|
1,398
|
|
|
$
|
-
|
|
Short term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
6% unsecured
|
|
|
135
|
|
|
|
135
|
|
|
|
-
|
|
10% unsecured
|
|
|
500
|
|
|
|
500
|
|
|
|
-
|
|
Short term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
8% unsecured
|
|
|
2,210
|
|
|
|
2,210
|
|
|
|
-
|
|
10% unsecured
|
|
|
4,238
|
|
|
|
4,238
|
|
|
|
|
|
12% unsecured
|
|
|
440
|
|
|
|
440
|
|
|
|
-
|
|
Short term notes payable - related parties
|
|
|
|
|
|
|
|
|
|
|
|
|
10% unsecured - (on demand)
|
|
|
63
|
|
|
|
63
|
|
|
|
-
|
|
Long term notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
0% unsecured
|
|
|
1,156
|
|
|
|
-
|
|
|
|
1,156
|
|
8% unsecured
|
|
|
7,165
|
|
|
|
-
|
|
|
|
7,165
|
|
Total
|
|
$
|
17,305
|
|
|
$
|
8,984
|
|
|
$
|
8,321
|
|
9. Net Earnings (Loss) per Share Applicable
to Common Stockholders
Basic earnings (loss) per common share
is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted
earnings (loss) per common share is computed similar to basic earnings (loss) per common share except that it reflects the potential
dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common
stock. Diluted weighted average common shares include common stock potentially issuable under the Company’s convertible notes,
warrants and vested and unvested stock options.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
The following table sets forth the computation
of earnings (loss) per share (amounts in thousands except per share data):
|
|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
June 30
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Net earnings (loss) - basic
|
|
$
|
219
|
|
|
$
|
(24,712
|
)
|
|
$
|
(20,727
|
)
|
|
$
|
(56,311
|
)
|
Interest on convertible senior notes
|
|
|
125
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net earnings (loss) - diluted
|
|
$
|
344
|
|
|
$
|
(24,712
|
)
|
|
$
|
(20,727
|
)
|
|
$
|
(56,311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - basic
|
|
|
550,214
|
|
|
|
424,992
|
|
|
|
539,732
|
|
|
|
390,732
|
|
Warrants
|
|
|
27,854
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Stock options
|
|
|
10,676
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Convertible notes and accrued interest
|
|
|
8,631
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Weighted average shares outstanding - diluted
|
|
|
597,375
|
|
|
|
424,992
|
|
|
|
539,732
|
|
|
|
390,732
|
|
The following securities were not included
in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented (in thousands):
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Series A convertible preferred stock
|
|
|
-
|
|
|
|
32,187
|
|
Series B convertible preferred stock
|
|
|
-
|
|
|
|
75,059
|
|
Common stock options
|
|
|
100,159
|
|
|
|
97,192
|
|
Common stock warrants
|
|
|
349,991
|
|
|
|
356,844
|
|
Contingently issuable warrants
|
|
|
11,739
|
|
|
|
11,739
|
|
Share-settled debt and accrued interest, at fair value
|
|
|
-
|
|
|
|
11,046
|
|
Convertible notes and accrued interest
|
|
|
8,632
|
|
|
|
40,923
|
|
Potentially dilutive securities
|
|
|
470,521
|
|
|
|
624,990
|
|
10. Related Party Transactions
Advent BioServices Agreement
On May 14, 2018, the Company entered into a DCVax®-L Manufacturing
and Services Agreement with Advent BioServices, a related party which was formerly part of Cognate BioServices and was spun off
separately as part of an institutional financing of Cognate. The Advent Agreement provides for manufacturing of DCVax-L products
for the European region. The Advent Agreement provides for a program initiation payment of approximately $1.0 million (£0.7
million), in connection with technology transfer and operations transfer from Germany to the U.K., to an existing facility in London,
development of new Standard Operating Procedures (SOPs), training of new personnel, selection of new suppliers and auditing for
GMP compliance, and other preparatory activities. Such initiation payment was fully paid by the Company as of December 31, 2018.
The Advent Agreement provides for certain payments for achievement of milestones and, as is the case under the existing agreements
with Cognate BioServices, the Company is required to pay certain fees for dedicated production capacity reserved exclusively for
DCVax production, and pay for a certain minimum number of patients, whether or not the Company fully utilizes the dedicated capacity
and number of patients. Either party may terminate the Advent Agreement at any time for any reason on twelve months’ notice.
The notice period is designed to enable an effective transition and minimize or avoid interruption of product supply. During the
twelve-month period, the Company will continue to pay the minimum fees and the applicable fees for any DCVax products beyond the
minimums, and Advent will continue to produce the DCVax products. The parties are in discussions for an agreement relating to the
design, engineering, equipment, SOPs, staff recruitment and training, specialized information technology systems, regulatory requirements
and other aspects of the development of the manufacturing facility in Sawston, U.K.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
Advent Expenses and Accounts Payable
The following table summarizes expenses
incurred to related parties (i.e., amounts invoiced) during the three and six months ended June 30, 2019 and 2018 (amount in thousands)
(some of which remain unpaid as noted in the second table below):
|
|
For the three months ended
|
|
|
For the six months ended
|
|
|
|
June 30,
|
|
|
June, 30
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Cognate BioServices, Inc. (related party until February 2018)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
873
|
|
Cognate BioServices GmbH
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
66
|
|
Cognate Israel
|
|
|
N/A
|
|
|
|
70
|
|
|
|
N/A
|
|
|
|
98
|
|
Advent BioServices
|
|
|
1,263
|
|
|
|
1,747
|
|
|
|
2,713
|
|
|
|
3,666
|
|
Total
|
|
$
|
1,263
|
|
|
$
|
1,817
|
|
|
$
|
2,713
|
|
|
$
|
4,703
|
|
The following table summarizes outstanding
unpaid accounts payable held by related parties as of June 30, 2019 and December 31, 2018 (amount in thousands).
These
unpaid amounts include part of the expenses reported in the table above and also certain expenses incurred in prior periods.
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Accounts payable:
|
|
|
|
|
|
|
Advent BioServices
|
|
$
|
536
|
|
|
$
|
3,967
|
|
Other Related Parties
Linda F. Powers - Demand Loans
Between February 2018 and April 2018, the
Company’s Chief Executive Officer, Linda Powers, loaned the Company aggregate funding of $5.4 million pursuant to convertible
Notes.
The Company issued 23.5 million Class D-2
Warrants with an exercise price of $0.30, including 11.7 million contingently issuable warrants. The fair value of the warrants
were approximately $4.2 million, which were recorded as debt discount at the issuance date.
The Notes entered into in February through
April 2018 were 15-day demand notes, and were intended as temporary bridge notes. However, the Notes remained unpaid and outstanding
throughout the year. On November 11, 2018, the Company and Ms. Powers agreed to further extend forbearance on the notes to a maturity
of one year following the respective funding dates. In consideration of the continuing forbearance, the Company agreed to issue
warrants representing 50% of the repayment amounts of the Notes. The warrants were anticipated to have an exercise price of $0.35
per share, and have an exercise period of 2 years. However, the Company has not yet finalized the terms of the warrant agreement.
During the six months ended June 30, 2019,
the Company made an aggregate payment of $4.7 million to the Convertible Notes, including $0.7 million interest payment.
As of June 30, 2019, $1.4 million of the
$5.4 million principal amount of the February through April 2018 Notes remained unpaid and were past the end of the further forbearance
period agreed last November. As such, the Notes were again in default, and the Company started to accrue interest using 18% annual
rate from the default dates. The accrued unpaid interest associated with the Convertible Notes was approximately $12,000 as of
June 30, 2019.
Leslie J. Goldman - Demand Loans
In 2017, Leslie J. Goldman, an officer
of the Company, loaned the Company an aggregate amount of $1.3 million pursuant to certain Demand Promissory Note Agreements. On
January 3, 2018, Mr. Goldman loaned the Company an additional $30,000 (collectively the “Goldman Notes”). Approximately
$0.5 million of the Goldman Notes bore interest at the rate of 12% per annum, and $0.8 million of the Goldman Notes bore interest
at the rate of 10% per annum.
During the six months ended June 30, 2019,
the Company made an aggregate payment of $148,000 on the Goldman Notes, including $79,000 interest payment.
As of June 30, 2019, there were no outstanding
notes or interest owed to Mr. Goldman.
Toucan Capital III Fund - Demand Loans
In 2017, Toucan Capital Fund III loaned
the Company an aggregate amount of $1.2 million pursuant to multiple Demand Promissory Notes (the “Toucan Notes”).
The Toucan Notes bear interest at 10% per annum, and are payable upon demand, with 7 days’ prior written notice to the Company.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
During the six months ended June 30, 2019,
the Company made $46,000 interest payment.
As of June 30, 2019, there were no outstanding
notes or interest owed to Toucan Capital Fund III.
Board of Directors - Demand Loans
As of June 30, 2019, there was no outstanding
notes or interest owed to the Company’s Board of Directors.
Advent BioServices Note
On September 26, 2018, Advent BioServices,
a related party which was formerly part of Cognate BioServices and was spun off separately as part of an institutional financing
of Cognate, provided a short-term loan to the Company in the amount of $65,000. The loan bears interest at 10% per annum, and is
payable upon demand, with 7 days’ prior written notice to the Company.
This Note remains outstanding and unpaid.
The principal amount and accrued interest owed to Advent under this Note at June 30, 2019 was $63,000 and $5,000, respectively,
based on the current exchange rate.
Interest expense for the six-month period
ended June 30, 2019 and 2018 associated with related party loans was approximately $0.3 million and $4.6 million, respectively.
11. Stockholders’ Deficit
Debt Conversion
During the six months ended June 30, 2019,
the Company converted debt of approximately $3.7 million principal and $0.3 million accrued interest into approximately 17.5 million
shares of common stock at fair value of $5.0 million. The Company recorded an approximate $1.0 million debt extinguishment loss
from the conversion.
Warrants Exercised for Cash
During the six months ended June 30, 2019,
the Company issued 9.5 million shares of common stock from warrants exercised for cash. The Company received $2.2 million cash.
Shares Settlement
On May 28, 2019, the Company entered into a settlement agreement
with Cognate BioServices, resolving past matters and providing for restart of DCVax®-Direct Production (see Note 8).
As part of the settlement agreement, the
number of shares of the Company’s stock which the Company was to issue to Cognate was substantially reduced: 52 million shares
of the Company’s stock which the Company had previously agreed to issue to Cognate were reduced to 12 million shares. The
Company considers the reduction in shares owed to Cognate a modification. Because the 52 million shares were never issued and the
modification, which resulted in a decrease in fair value, is not a forfeiture, previously recognized expense related to services
performed by Cognate is not reversed in connection with this modification. The Company recorded $12,000 in common par and reduced
same amount in additional paid in capital.
Stock-based Compensation
During the six months ended June 30, 2019,
the Company issued 200,000 shares of common stock to David Innes, the Company’s vice president investor relations pursuant
to his employment agreement in February 2019. The Company recorded $48,000 stock-based compensation expense based on fair value
on February 18, 2019, which was the effective date of his employment.
NORTHWEST BIOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
Common Stock Purchase Warrants
The following is a summary of warrant
activity for the six months ended June 30, 2019 (in thousands, except per share data):
|
|
Number of
|
|
|
Weighted Average
|
|
|
Remaining
|
|
|
|
Warrants
|
|
|
Exercise Price
|
|
|
Contractual Term
|
|
Outstanding as of January 1, 2019
|
|
|
372,153
|
|
|
$
|
0.29
|
|
|
|
1.97
|
|
Warrants exercised for cash
|
|
|
(9,532
|
)
|
|
|
0.23
|
|
|
|
|
|
Warrants expired and cancellation
|
|
|
(891
|
)
|
|
|
0.19
|
|
|
|
|
|
Outstanding as of June 30, 2019
|
|
|
361,730
|
|
|
$
|
0.29
|
|
|
|
1.47
|
|
12. Commitments and Contingencies
U.S. Securities and Exchange Commission
As previously reported, the Company has
received a number of formal information requests (subpoenas) from the SEC regarding several broad topics that have been previously
disclosed, including the Company’s membership on Nasdaq and delisting, related party matters, the Company’s programs,
internal controls, the Company’s Special Litigation Committee, disclosures and the publication of interim clinical trial
data. Testimony of certain officers and third parties has been taken as well. The Company has been cooperating with the SEC investigation.
As hoped, the investigation is winding to a conclusion. After investigation of a broad array of issues over the past two-plus
years, the SEC Staff has informed us preliminarily that they have concerns in regard to two issues, relating to the Company’s
internal controls over financial reporting and the adequacy of certain disclosures made in the past. We have previously disclosed
material weaknesses in our internal controls. As for disclosures, we believe our disclosures complied with applicable law.
Despite our belief that the Staff should close the investigation, there can be no assurance that the Staff will not recommend some
action involving the Company and/or individuals. The Company is in discussions with the Staff about resolving the issue concerning internal
controls weaknesses. Despite this potentially positive outcome, the Company cannot yet assure any particular outcome
or any ultimate liability resulting from this investigation.
13. Subsequent Events
On July 15, 2019, the Company issued an
aggregate of 11,782,609 shares of our common stock at a purchase price of $0.23 per share to certain institutional investors in
a registered direct offering (the “Offering”). 1,333,043 shares of the total 11,782,609 shares were
issued from conversion of an existing loan and related accrued interest for the amount of $306,000. The net proceeds of the Offering were
approximately $2.2 million, after deducting offering expenses payable by the Company.
Between July 2019 and August 2019, the
Company converted debt of approximately $0.7 million principal and $25,000 accrued interest into approximately 3.6 million shares
of common stock at fair value of $0.9 million. The Company recorded an approximate $0.2 million debt extinguishment loss from the
conversion.
On August 1, 2019, the Company issued 640,000
shares of common stock at fair value of $141,000 to an external consultant for services provided to research and development.