NORTHWEST BIOTHERAPEUTICS INC

1. Organization and Description of Business

Northwest Biotherapeutics, Inc. and its wholly owned subsidiaries Flaskworks, Northwest Biotherapeutics Limited, Northwest Biotherapeutics Capital Limited (formerly known as Aracaris Capital Limited), Northwest Biotherapeutics B.V., and NW Bio GmbH (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 has wholly owned subsidiaries in Boston, the U.K., the Netherlands and Germany. On August 28, 2020, the Company acquired Flaskworks, LLC (“Flaskworks”), a company that has developed a system designed to close and automate the manufacturing of cell therapy products such as DCVax®.

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.

The Company has completed a Phase 3 clinical trial of its DCVax®-L product for glioblastoma brain cancer, has publicly reported the results in a peer reviewed publication in a medical journal as well as at a medical conference, and submitted a Marketing Authorization Application (MAA) for regulatory approval in the U.K. in December 2023. The MAA is in process of their review.

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 $55.6 million for the nine months ended September 30, 2024. The Company used approximately $36.8 million of cash in its operating activities during the nine months ended September 30, 2024.

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 for at least one year from the date of this filing. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, however, they 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 intercompany balances and transactions have been eliminated. Certain immaterial reclassifications have been made to prior period amounts to conform to the current period presentation.

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 uses to prepare its annual audited consolidated financial statements. The condensed consolidated balance sheet as of September 30, 2024, condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023, condensed consolidated statement of stockholders’ deficit for the three and nine months ended September 30, 2024 and 2023, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2024 and 2023 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 nine months ended September 30, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024 or for any future interim period. The condensed consolidated balance sheet at September 30, 2024 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, 2023 and notes thereto included in the Company’s annual report on Form 10-K (the “2023 Annual Report”), which was filed with the SEC on March 5, 2024.

Revision of Prior Period Consolidated Financial Statements

As previously disclosed in the 2023 Annual Report, the Company revised its prior period financial statements to reflect an adjustment related to the fair value of convertible notes that was not material, individually or in the aggregate, to the Company’s previously issued consolidated financial statements. The appropriate revisions to the Company’s historical condensed consolidated financial statements and the notes thereto are reflected herein. See Note 14 to the “Consolidated Financial Statements” in the 2023 Annual Report for additional information.

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.

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies from those previously disclosed in the 2023 Annual Report.

Recently Issued Accounting Standards Not Yet Adopted

Compensation - Stock Compensation

In March 2024, the FASB issued ASU No. 2024-01, Compensation - Stock Compensation (Topic 718) - Scope Application of Profits Interest and Similar Awards, to clarify whether profits interest and similar awards should be accounted for in accordance with Topic 718, Compensation - Stock Compensation. The guidance applies to all business entities that issue profits interest awards as compensation to employees or nonemployees in exchange for goods or services. These amendments are effective for the Company for annual and interim periods in 2025, applied prospectively, with early adoption and retrospective application permitted. As the Company does not issue profit interest awards, the impact of the adoption of the amendments in this update is not expected to be material to the Company’s consolidated financial statements.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Recently Issued Accounting Standards, Adopted

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

In June 2022, the FASB issued ASU 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The FASB is issuing this Update (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company adopted ASU 2022-03 effective January 1, 2024. The adoption of this guidance did not have a material impact on its condensed consolidated financial statements.

4. Fair Value Measurements

In accordance with ASC 820 (Fair Value Measurements and Disclosures), the Company uses various inputs to measure the fair value of liabilities related to certain embedded conversion features associated with convertible debt, share liability (receivable), and the contingent payable to Cognate BioServices on a recurring basis to determine the fair value of these liabilities. The Company also elects the fair value option (“FVO”) for certain eligible financial instruments, such as convertible notes, in order to simplify the accounting treatment.

ASC 820 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 September 30, 2024 and December 31, 2023 (in thousands):

There wereno transfers between Level 1, 2 or 3 during the three-month period ended September 30, 2024.

The following table presents changes in Level 3 liabilities measured at fair value for the nine-month period ended September 30, 2024. 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).

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s share payable and embedded conversion feature that are categorized within Level 3 of the fair value hierarchy as of September 30, 2024 and December 31, 2023 is as follows. The contingent conversion option of the contingent payable expired during the nine months ended

September 30, 2024. The liability relates to the remaining redemption feature which, like the convertible notes at fair value, includes discount factors that are unobservable inputs and proprietary in nature.

5. Stock-based Compensation

The following table summarizes total stock-based compensation expense for the three and nine months ended September 30, 2024 and 2023 (in thousands).

The total unrecognized stock compensation (primarily for consultants) cost was approximately $2.2 million as of September 30, 2024 and will be recognized over the next 1.5 years.

Stock Options

The following table summarizes stock option activity for options during the nine months ended September 30, 2024 (amount in thousands, except per share number):

During the nine months ended September 30, 2024, the Company granted 500,000 stock options (the “Options”) with an exercise price at $0.53 per share to a staff employee. The Options vested immediately on the grant date. In addition, the Company will make an additional payment of $0.30 per option exercised by the employee for a maximum amount of $150,000. The Company has fully accrued this additional payment as of September 30, 2024 on its condensed consolidated balance sheets.

The Black-Scholes option pricing model is used to estimate the fair value of stock options granted. The assumptions used in calculating the fair values of stock options that were granted during the nine months ended September 30, 2024 was as follows:

Restricted Stock Awards

Advent SOW 6

There wasno stock based compensation related to Statement of Work #6 (“SOW 6”) recognized during the three and nine months ended September 30, 2024. As previously reported, Advent previously achieved all of the 10 one-time milestones (i.e., for all six workstreams that were prerequisites for a MAA application for product approval, for obtaining allthree licenses required for the Sawston facility, and for the completion of key portions of the MAA application) pursuant to SOW 6.

As of September 30, 2024,1.5 million shares related to the milestone for completion and submission of the MAA had not been issued and the fair value of the shares of$1.1 million remained accrued in accounts payable and accrued expenses to related parties and affiliates.

6. Property, Plant and Equipment

Property, plant and equipment consist of the following at September 30, 2024 and December 31, 2023 (in thousands):

Depreciation and amortization expense was approximately $1.3 million and $1.1 million for the nine months ended September 30, 2024, and 2023, respectively.

7. Outstanding Debt

The following two tables summarize outstanding debt as of September 30, 2024 and December 31, 2023, respectively (amount in thousands, except per share amounts):

*These convertible notes are convertible into Series C preferred shares at conversion prices of $12.50 per share. Each Series C preferred share is convertible into common shares with 30 days’ restriction period. The conversion price in common share equivalent is at conversion prices of $0.50 per share.

*These convertible notes are convertible into Series C preferred shares at conversion prices ranging from $10.00 - $17.50 per share. The conversion price in common share equivalent is at conversion prices ranging from $0.40 - $0.70 per share.

Notes Payable

On April 26, 2024, the Company entered into a Commercial Loan Agreement (the “April Commercial Loan”) with a commercial lender for an aggregate principal amount of $11.0 million. The April Commercial Loan bears interest at 8% per annum with a 22-month term. There are no principal repayments during the first eight months of the term. The April Commercial Loan is amortized in 14 installments starting on December 26, 2024. The April Commercial Loan carries an original issue discount of $1.0 million.

On September 27, 2024, the Company entered into a promissory note agreement (the “Note”) with an individual investor (the “Holder”) for principal amount of $2.0 million. The Note bears zero interest, and is payable upon demand. The Holder should provide 5 days’ advance written notice to the Company (the “Maturity Date”) for the redemption. In addition, the Company agreed to pay the Holder a service fee of $140,000 at the Maturity Date. The $140,000 service fee was recognized as an additional debt discount to the Note and was amortized to interest expense in 5 days.

During the nine months ended September 30, 2024, the Company issued approximately 29.9 million shares of common stock with a fair value of $13.0 million to certain lenders in lieu of cash payments of $9.7 million of debt, including $0.7 million of accrued interest. In addition, the Company has extinguished certain debt pursuant to exchange agreements executed with various holders pursuant to which the Company issues common stock at a price based on a limited pricing period (the “Share payable”). During the nine months ended September 30, 2024, the Company settled $0.8 million of Share payables and accrued $0.5 million of Share payables. The Company recognized an approximately $3.0 million debt extinguishment loss during the nine months ended September 30, 2024 from the debt redemption.

Convertible Notes

On February 21, 2024, the Company entered into severalone-year convertible notes (the “February Convertible Notes”) with multiple investors (the “Holders”) with an aggregate principal amount of $1.8 million for a purchase price of $1.6 million. The February Convertible Notes bear interest at 8% per annum and are convertible into Series C preferred shares at $12.50 per share at the Holders’ sole option. The Series C preferred shares are convertible into common stock. Each Series C preferred share is convertible into 25 shares of common stock.

As consideration for entering into the package of February Convertible Notes for $1.8 million as described above, the Company amended the Holders’ existing convertible notes and warrants, whereby the maturity date of certain notes and warrants was extended, the conversion price of certain notes was reduced, and the exercise prices of certain warrants were reduced. These amendments in January and February of 2024 involving 16 tranches of warrants and 10 debt instruments were accounted for as both debt modification and debt extinguishment. The Company recognized approximately $1.4 million of debt extinguishment losses during the nine months ended September 30, 2024 from these debt amendments.

During the nine months ended September 30, 2024, the Company modified the terms of existing $1.5 million convertible notes (the “Notes”) by (i) extending the maturity dates; (ii) reducing the conversion price, and (iii) granting the Notes holders the right to convert the Notes into a non-dilutive financial instrument. The modifications were accounted for as a debt extinguishment as the conversion feature of the amended notes were substantially different from the original terms. As a result, the Company recognized approximately $0.1 million of debt extinguishment loss during the nine months ended September 30, 2024 from this debt amendment.

During the nine months ended September 30, 2024, the Company converted $2.7 million convertible notes including $0.2 million accrued interest into 0.5 million Series C preferred shares.

Convertible Notes at Fair Value

During the nine months ended September 30, 2024, the Company entered into severalone-year convertible notes (the “Convertible Notes”) with multiple individual investors (the “Holders”) with an aggregate principal amount of$5.5 million. The Convertible Notes bear interest at 11% per annum and are convertible into Series C preferred shares between$10.00 and$11.50 per share at the Holder’s sole option. The Series C preferred shares are convertible into common stock 30 days after the debt conversion date. Each Series C preferred share is convertible into 25 shares of common stock. In addition, the Holders have an alternative option to convert the Convertible Notes into a non-dilutive financial instrument, which has the same terms at those in the non-dilutive funding agreements as described in Note 12.

During the nine months ended September 30, 2024, the Company entered into severaltwo-year convertible notes (the “Long-term Convertible Notes”) with multiple individual investors (the “Holders”) with an aggregate principal amount of$3.1 million. Of the total$3.1 million,$0.3 million was exchanged from a previously executed non-dilutive financial instrument. The Company received net cash proceeds of$2.8 million. The Long-term Convertible Notes bear interest at 11% per annum and are convertible into common shares between$0.30 and$0.38 per share at the Holder’s sole option. In addition, the Holders have an alternative option to convert the Long-term Convertible Notes into a non-dilutive financial instrument, which has the same terms at those in the non-dilutive funding agreements as described in Note 12.

As consideration for entering the Long-term Convertible Notes, the Company also agreed to amend certain holder’s existing warrants to extend the term of the warrant maturity date for an additional 5 months. As a result of electing the FVO, issuance costs related to the convertible notes are expensed as incurred. Therefore, the incremental change in fair value resulting from the warrant amendment for$0.3 million was recognized as part of interest expenses on the condensed consolidated statement of operations and comprehensive loss.

The Company elected the FVO to fair value the convertible notes described above under the guidance in ASC 825. The convertible notes at fair value are required to be remeasured using level 3 fair value measurements (see Note 4).

During the nine months ended September 30, 2024, the Company modified certain convertible notes that were originally issued in 2023 by (i) extending the maturity dates; (ii) reducing the conversion price, and (iii) granting the notes holders the right to further extend the maturity date of the notes from a period of time not to exceed 24 months. The modifications were accounted for as a debt extinguishment as the conversion feature of the amended notes were substantially different from the original terms. As a result, the Company recognized approximately$5.5 million of debt extinguishment loss during the nine months ended September 30, 2024 from these debt amendments.

For the three months ended September 30, 2024 and 2023, interest expense related to outstanding debt totaled approximately$2.1 million and$1.7 million including amortization of debt discounts totaling$0.6 million and$0.7 million, respectively.

For the nine months ended September 30, 2024 and 2023, interest expense related to outstanding debt totaled approximately$5.3 million and$4.0 million including amortization of debt discounts totaling$1.6 million and$2.0 million, respectively.

8. Net Loss per Share Applicable to Common Stockholders

Basic loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the reporting period. Diluted loss per common share would be computed similar to basic 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. Because of the net loss from operations for each period, inclusion of such securities in the computation of loss per share would be anti-dilutive and thus they are excluded. Potentially dilutive weighted average common shares include common stock potentially issuable under the Company’s convertible notes and preferred stock, warrants and vested and unvested stock options.

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):

9. Related Party Transactions

The Company hasthree operational programs with Advent: (a) an ongoing development and manufacturing program at the GMP facility in London, (b) an ongoing development and manufacturing program at the Sawston GMP facility, and (c) periodic specialized programs such as the program related to the MAA pre-requisites, drafting and submission. The Company has also executed a new SOW #8 covering the work required to establish the DCVax-Direct program in the U.K. and manufacture DCVax-Direct products for global use (see Note 13).

Each of the operational programs is covered by a separate contract. The ongoing manufacturing in the London facility is covered by a Manufacturing Services Agreement (“MSA”) entered into on May 14, 2018. The development and manufacturing program at the Sawston facility is covered by an Ancillary Services Agreement entered into on November 18, 2019. Each periodic specialized program is covered by an SOW that sets forth the role and activities to be undertaken by Advent for that program, and provides for milestone payments upon completion of key elements of the program.

The Ancillary Services Agreement establishes a structure under which the Company and Advent negotiate and agree upon the scope and terms for Statements of Work (“SOWs”) for facility development activities and compassionate use program activities, as well as for the periodic specialized programs. After an SOW is agreed and approved by the Company, Advent will proceed with, or continue, the applicable services and will invoice the Company pursuant to the SOW. Since both the facility development and the compassionate use program involve pioneering and uncertainties in most aspects, the invoicing under the Ancillary Services Agreement is on the basis of costs incurred plus fifteen percent. The SOWs may involve ongoing activities or specialized one-time projects and related one-time milestone payments The Ancillary Services Agreement was to end in July 2023, but the Company extended the term by 12 months to July 2024, and it was further extended for an additional one year until July 2025.

The following table summarizes total research and development costs from Advent for the three and nine months ended September 30, 2024 and 2023, respectively (in thousands).

Advent BioServices Sublease Agreement

On December 31, 2021, the Company entered into a Sub-lease Agreement (the “Agreement”) with Advent. The Agreement permits use by Advent of a portion of the space in the Sawston facility, which is leased by the Company under a separate head lease with a different counterparty (Huawei) that commenced on December 14, 2018. The Company subleased approximately 14,459 square feet of the 88,000 square foot building interior space, plus corresponding support space and parking. The lease payments amount under the Agreement aretwo times the amount payable by the Company under the head lease (which is currently £5.75 or approximately $7.70 per square foot based on exchange rate as of September 30, 2024), but subject to a cap of $10 per square foot. Accordingly, the monthly lease payments under the Sublease are based on $145,000 annually for 2024. The total lease payments paid by the Company to Huawei for the 88,000 square foot facility, exterior spaces andparking under the head lease are £550,000 (approximately $736,000) per year. The term of the Agreement shall end on the same date as the head lease term ends.

During the three months ended September 30, 2024 and 2023, the Company recognized sub-lease income of $36,000 and $36,000, respectively.

During the nine months ended September 30, 2024 and 2023, the Company recognized sub-lease income of $109,000 and $108,000, respectively.

Related Party Accounts Payable

As of September 30, 2024 and December 31, 2023, there were outstanding unpaid accounts payable and accrued expenses owed to Advent as summarized in the following table (in thousands).These unpaid amounts are part of the Related Party expenses reported in the above section.

(1) This includes$1.1 million which is not payable in cash but represents the value of 1.5 million shares that will become issuable to Advent, following final Board approval, for achievement of the one-time milestone for submission of the MAA application to MHRA on December 20, 2023. Such shares were not issued as of September 30, 2024, and the total value, previously recognized as stock compensation expense, was reclassified from Additional Paid-in-Capital to Accounts payable and accrued expenses to related parties and affiliates.

10. Preferred Stock

Series C Convertible Preferred Stock

During the nine months ended September 30, 2024, the Company entered into various Subscription Agreements (the “Series C Subscription Agreements”) with certain investors (the “Series C Investors”). Pursuant to the Series C Subscription Agreements, the Company issued the Series C Investors an aggregate of 0.8 million shares of the Company’s Series C convertible preferred stock, par value $0.001 per share (the “Series C Shares”), at a weighted average purchase price of $10.82 per share for proceeds of approximately $8.2 million.

During the nine months ended September 30, 2024, the Company converted $2.7 million convertible notes including $0.2 million accrued interest into 0.5 million Series C preferred shares.

During the nine months ended September 30, 2024, approximately 1.5 million Series C Shares with a book value of $13.7 million were converted into 37.6 million common shares at a ratio of 1:25.

The Company determined that the Series C Shares contain contingent redemption provisions allowing redemption by the holder upon certain defined events (“deemed liquidation events”). As the event that may trigger the redemption of the Series C Shares is not solely within the Company’s control, the Series C Shares are classified as mezzanine equity (temporary equity) in the Company’s condensed consolidated balance sheets.

11. Stockholders’ Deficit

Common Stock

On June 4, 2024, the Company entered into a Stock Purchase Agreement with SIO Capital Management LLC (SIO), for SIO’s purchase of 8,125,000 shares of the Company’s common stock at $0.40 per share based on certain terms initially negotiated on May 31, 2024 (the “June Offering”). The transaction was closed on June 5, 2024. The June Offering generated gross proceeds of approximately $3.3 million and net proceeds to the Company of approximately $2.9 million. In connection therewith, the placement agent was granted a warrant to purchase up to an aggregate of 0.2 million shares of Common Stock (the “Placement Agent Warrant”) at an exercise price of $0.40 per share, which Placement Agent Warrant is exercisable at any time on or after August 4, 2024 and will expire on June 4, 2026.

During the nine months ended September 30, 2024, the Company received $1.5 million from the exercise of outstanding warrants with a weighted average exercise price of $0.24 per share. The Company issued approximately 6.4 million shares of common stock upon these warrant exercises.

During the nine months ended September 30, 2024, certain options and warrants holders elected to exercise some of their options and warrants pursuant to cashless exercise formulas. The Company issued approximately 3.1 million shares of common stock upon exercise of 4.8 million warrants at exercise prices between $0.20 and $0.34 per share, and 0.7 million options at exercise prices of $0.35 per share.

Stock Purchase Warrants

The following is a summary of warrant activity for the nine months ended September 30, 2024 (dollars in thousands, except per share data):

Warrant Modifications

During the nine months ended September 30, 2024, the Company amended certain warrants whereby the maturity dates were extended for an additional approximately 3 months. The value of these modifications was calculated using the Black-Scholes-Merton option pricing model based on the following weighted average assumptions.

The incremental fair value attributable to the modified awards compared to the original awards immediately prior to the modification was calculated at $2.7 million, of which $1.6 million was associated with debt amendments and was recognized as an additional debt discount under debt modification, debt extinguishment loss and interest expense under debt extinguishment (see Note 7), and the remaining $1.1 million was treated as a deemed dividend and is reflected as “Deemed dividend related to warrant modifications” in the accompanying condensed consolidated statement of operations and comprehensive loss.

12. Commitments and Contingencies

Operating Lease- Lessee Arrangements

The Company has operating leases for corporate offices in the U.S. and U.K., and for 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 thepractical 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 lease renewal options have not been included in the calculation of the lease liabilities and right-of-use (“ROU”) assets as the Company has not yet determined whether 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.

On August 22, 2024, the Company extended its office lease in the U.S for additional 2 years under an amended agreement. The Company recognized additional $0.4 million ROU assets andlease liabilities for its amended office lease in the U.S.

At September 30, 2024, the Company had operating lease liabilities of approximately $5.1 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 assets of approximately $4.5 million for the Sawston lease and U.S. office lease are included in the condensed consolidated balance sheet.

Operating Lease - Lessor Arrangements

On December 31, 2021, the Company entered into a Sub - lease Agreement (the “Agreement”) with Advent. The Agreement permits use by Advent of a portion of the space in the Sawston facility, which is leased by the Company under a separate head lease with a different counterparty (Huawei) that commenced on December 14, 2018. The Company subleased approximately 14,459 square feet of the 88,000 square foot building interior space, plus corresponding support space and parking. The lease payments amount under the Agreement aretwo times the amount payable by the Company under the head lease (which is currently £5.75 or approximately $7.70 per square foot based on exchange rate as of September 30, 2024), but subject to a cap of $10 per square foot. Accordingly, the monthly lease payments under the Sublease are based on $145,000 annually for 2024. The total lease payments paid by the Company to Huawei for the 88,000 square foot facility, exterior spaces andparking under the head lease are £550,000 (approximately $736,000) per year. The term of the Agreement shall end on the same date as the head lease term ends.

The following summarizes quantitative information about the Company’s operating leases (amount in thousands):

The Company recorded lease costs as a component of general and administrative expense during the nine months ended September 30, 2024 and 2023, respectively.

Maturities of our operating leases, excluding short-term leases and sublease agreement, are as follows:

Maturities of our operating leases under the sublease agreement, are as follows:

Advent BioServices Services Agreement

On May 14, 2018, the Company entered into a DCVax®-L Manufacturing and Services Agreement (“MSA”) 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 MSA provides for manufacturing of DCVax-L products at an existing facility in London. The MSA is structured in the same manner as the Company’s prior agreements with Cognate BioServices. The MSA provides for certain payments for achievement of milestones and, as was the case under the prior agreement with Cognate BioServices, the Company is required to pay certain fees for dedicated production capacity reserved exclusively for DCVax production and pay for manufacturing of DCVax-L products for a certain minimum number of patients, whether or not the Company fully utilizes the dedicated capacity and number of patients. The MSA remains in force until five years after the first commercial sales of DCVax-L products pursuant to a marketing authorization, accelerated approval or other commercial approval, unless cancelled. Either party may terminate the MSA ontwelve months’ notice, to allow for transition arrangements by both parties. During the notice period services would still be provided. Minimum required payments for this notice period are anticipated to total approximately £4.6 million ($6.2 million).

German Tax Matter

The German tax authorities have audited our wholly owned subsidiary, NW Bio GmbH, for 2013-2015. The NW Bio GmbH submitted substantial documentation to refute certain aspects of the assessments and the German tax authorities agreed in principle with the Company’s proposed revised approach and settlement offer. A final settlement bill was received from the German Tax Authority confirming that only a portion of the original bill was owed, €277,000 (approximately $329,000), for corporate taxes, interest, and reduced penalty for the period under audit, which the Company paid on September 2, 2021. The Company also received and paid the final settlement bill from the local authority for trade taxes for the audit period in the amount of €231,000 (approximately $272,000). On November 4, 2021, the Company received a letter from the local tax authorities asking for additional late fees of €513,000 (approximately $554,000) on reimbursable withholding taxes that had been waived during the settlement process. On December 8, 2021, the Company appealed the assessment of additional late fees. Additionally, the Company requested that NW Bio GmbH be deregistered from the trade register, as it no longer had current operations. The deregistration was granted effective December 31, 2021. Between January 2022 and July 2022, the Company received tax bills for the corporate and trade taxes for the 2016-2020 tax years that totaled approximately €222,000 (approximately $238,000). On July 27, 2022, the Company was informed that the German Tax Authorities were prepared to waive €135,000 (approximately $145,000) of the penalties. The Company offered to pay this reduced penalty if an extended payment plan was approved. A response was received dated November 14, 2022 indicating that the tax authority would not be able to grant a further deferral of payment of these penalties. In a letter dated December 27, 2022, the Leipzig tax authority sent letters to the former and current managing directors of NW Bio GmbH giving 30 days to respond to a tax liability questionnaire. Based on the responses to the liability questionnaires the tax authorities have currently not directed any further measures against former and current managing directors of NW Bio GmbH with respect to tax liability proceedings. On October 12, 2023 and January 16, 2024, the Company made €189,000 (approximately $201,000) and €189,000 (approximately $207,000) payments, respectively, regarding to the late payment penalty. As of September 30, 2024, the Company accrued for trade tax liability of €155,000 (approximately $173,000) and corporation tax of €99,000 (approximately $110,000). Based on the Company’s current operating state in Germany and the negotiations, the Company believes, based on its evaluation under ASC 740, that the resolution of these tax matters will not likely result in a net material charge to the Company.

Other Contingent Payment Obligation

During the nine months ended September 30, 2024, the Company entered into a non-dilutive funding agreement with an individual investor, pursuant to which the Company received funding of $50,000 related to a gain contingency. In addition, the Company exchanged $0.3 million from a previously executed non - dilutive financial instrument to a new convertible note (see Note 7). These agreements are accounted for under ASC 470 and are recognized as contingent payment obligations on the Company’s condensed consolidated balance sheet. The Company’s payment obligations only apply when such are received by the Company.

13. Subsequent Events

Between October 1, 2024 and November 8, 2024, the Company received $8.4 million in funding from the sale of common shares, proceeds from warrant exercise, and proceeds of debt arrangements.

Between October 1, 2024 and November 8, 2024, the Company issued approximately 3.8 million shares of common stock for proceeds of $1.0 million.

On October 18, 2024, the Company entered into a Commercial Loan Agreement (the “October Commercial Loan”) with a commercial lender for an aggregate principal amount of $2.2 million. The October Commercial Loan bears interest at 8% per annum with a 22-month term. There are no principal repayments during the first eight months of the term. The October Commercial Loan is amortized in 14 installments starting on June 18, 2025. The October Commercial Loan carries an original issue discount of $0.2 million.

Between October 1, 2024 and November 8, 2024, the Company entered into several 2-year convertible notes (the “Convertible Notes”) with multiple individual investors (the “Holders”) with an aggregate principal amount of $5.5 million. The Convertible Notes bear interest at 11% per annum and are convertible into common shares between $0.285 and $0.30 per share at the Holder’s sole option. In addition, the Holders have an alternative option to convert the Convertible Notes into a non-dilutive financial instrument, which has the same terms at those in the non-dilutive funding agreements as described in Note 12.

Between October 1, 2024 and November 8, 2024, the Company issued approximately 6.2 million shares of common stock to certain lenders in lieu of cash payments of $1.6 million of debt. The Company also issued 0.6 million shares of common stock to extinguish $0.2 million outstanding share liability.

On November 8, 2024, the Company entered into a Statement of Work #8 (“SOW 8”) with Advent that will be incorporated into the Ancillary Services Agreement that was originally entered into dated November 8, 2019 and was extended on July 8, 2024. SOW 8 covers the work required to establish the DCVax-Direct program in the U.K and manufacture DCVax-Direct products for global use. Under SOW 8, the compensation consists solely of one-time milestones for each stage of the work and Advent will only receive the compensation when the applicable work is successfully completed. (When the Company previously contracted with a different company for restart of DCVax-Direct manufacturing, the contract required payment for work performed, regardless of whether the work was successful or not, as is typical for such contract services. The other company did not succeed in producing any DCVax-Direct products meeting the specifications.)

SOW 8 includes 5 one-time milestones with corresponding milestone payments:

(a) Basic Technology Transfer, New SOPs & Regulatory Documents.

Review of documents, specifications and data from prior DCVax-Direct program conducted by Cognate BioServices. Development of a new set of SOPs for DCVax-Direct production in Sawston and new regulatory documents for the UK. Initial implementation in Sawston; many engineering runs. Data generation for comparability analyses of both the process and the product. Milestone payment of £0.55 million (approximately $0.7 million) upon completion.

(b) Process Development: TFF System vs. Other Systems.

Evaluation of the TFF system used in the prior DCVax-Direct manufacturing. Evaluation of the remaining TFF equipment from the prior program, parts needed to re-establish functional TFF systems, potential sourcing and timelines. Evaluation of remaining disposables from the prior program, requirements for new molds to enable new production of disposables (which are used for each manufacturing run with the TFF system), production arrangements for new disposables, development of new sealing method for disposables, potential sourcing and timelines for disposables. Identification and evaluation of commercially available systems to

potentially substitute for TFF system. Engineering runs. Data generation for comparability analyses of TFF system vs. others. Milestone payment of £0.45 million (approximately $0.6 million) upon completion.

(c) Process Development: Existing and New Product Composition.

Worldwide search for sourcing of BCG (1 of 2 essential reagents/ingredients required for DCVax-Direct besides the DCs), due to a severe worldwide shortage. Evaluation of the BCG mechanism of action (MoA) in DCVax-Direct, search for other agents that could have similar MoA or effects, with similar safety profile too. Sourcing of other agents, testing and selection of other agents for a new DCVax-Direct product composition. Many engineering runs. Data generation for comparability analyses of new reagents vs BCG and new composition of DCVax-Direct vs prior composition. Milestone payment of £0.60 million (approximately $0.8 million) upon completion.

(d) Technology Transfer: Clean Room Implementation.

After the choice of system (TFF vs commercial) and the choice of product composition are decided, development of new SOPs and transfer of production into the clean rooms. This includes pre-clean room engineering runs, establishment of critical quality attributes, process performance qualifications. For technology transfer into the clean rooms, each operator must pass 3 consecutive and successful aseptic process simulations in the clean room and 3 consecutive and successful PQQ runs at scale in the clean room; microbial analysis (sterility, endotoxin, mycoplasma all need to pass); growth promotion tests; validation of all equipment used after being placed in the clean room; validation of all cell analysis assays used via flow cytometry and validation of the fill and finish protocols. Milestone payment of £0.35 million (approximately $0.5 million) upon completion.

(e) New IMPD and New IND.

Draft a new IMPD (Investigational Medicinal Product Dossier) for the revised DCVax-Direct product composition and production process, containing all changes to the manufacturing system, reagents and product composition, processes, sources and/or Mechanism of Action vs those used in the prior DCVax-Direct program. Also draft a new IND (CMC section), for the first clinical trial with the new manufacturing process and new product composition. Obtain the first approval or clearance of the new IND by a regulator. Milestone payment of £0.35 million (approximately $0.5 million) upon completion.