NorthWest Biotherapeutics Inc (NWBO)

[hyperopia]

Did you happen to notice that NWBO’s share price just so happened to move to the same price that certain existing warrants that were expiring and out of the money, but were extended and repriced last year? ($0.55 a share)
What a coincidence huh?

Convertible Notes

In April 2023, the Company entered into several ten-month convertible notes (the “April Convertible Notes”) with multiple investors (the “Holders”) with an aggregate principal amount of $0.9 million for a purchase price of $0.8 million. The April Convertible Notes bear interest at 8% per annum and are convertible into Series C preferred shares at $13.75 per share at the Holders’ 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. The Company reclassed $0.7 million Investor advances that were received from the Holders in December 2022 to Convertible notes payable on the condensed consolidated balance sheet as of September 30, 2023. As a result, the Company received net cash proceeds of $0.1 million.

As consideration for entering into the April Convertible Notes, the Company also agreed to amend the investors’ existing outstanding warrants. The exercise price of certain warrants was amended from $2.00 per share to $0.55 per share, and the maturity date was extended for an additional 9 months. The incremental change in fair value resulting from the amendment was approximately $0.2 million, which was recognized as an additional debt discount to the April Convertible Notes.

On June 30, 2023, the Company entered into a one-year convertible note (the “June Convertible Note”) with an individual investor (the “Holder”) with principal amount of $1.0 million. The Company received $1.0 million cash from the June Convertible Note. The June Convertible Note bears interest at 8% per annum and is convertible into Series C preferred shares at $12.50 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.

On July 11, 2023, the Company entered into another one-year convertible note (the “July Convertible Note”) with the same investor as the June Convertible Note with principal amount of $0.5 million. The Company received $0.5 million cash from the July Convertible Note. The July Convertible Note bears interest at 10% per annum and has same conversion feature and conversion price as the June Convertible Note.

During the three months ended September 30, 2023, the Company entered into several one-year convertible notes (the “Convertible Notes”) with multiple investors (the “Holders”) with an aggregate principal amount of $1.4 million for a purchase price of $1.3 million. The Convertible Notes bear interest at 8% per annum and are convertible into Series C preferred shares between $13.75 and $17.50 per share at the Holders’ 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. The Company reclassed $0.5 million Investor advances that were received from the Holders in December 2022 to Convertible notes payable on the condensed consolidated balance sheet as of September 30, 2023. As a result, the Company received net cash proceeds of $0.8 million. As additional consideration for entering into the Convertible Notes, the Company also agreed to amend the Holders’ existing outstanding warrants. The exercise price of certain existing warrants was amended from $2.00 per share to price between $0.55 and $0.70 per share, and the maturity date was extended for an additional 10 months. The incremental change in fair value resulting from the amendment was approximately $0.3 million, which was recognized as an additional debt discount to the Convertible Notes.

Convertible Notes at Fair Value
Between August and September 2023, the Company entered into several one-year convertible notes (the “August & September Convertible Notes”) with multiple individual investors (the “Holders”) with an aggregate principal amount of $10.3 million. The August & September Convertible Notes bear interest at 11% per annum and are convertible into Series C preferred shares between $10.00 and $12.25 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 August & September 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.

One of the August & September Convertible Notes also contains a conversion feature to allow the holder to convert the outstanding debt in lieu of cash payment to purchase common shares via cash exercise of the holder’s existing warrants. In addition, the Company also agreed to amend the holder’s existing warrants to extend the term of the warrant maturity date for an additional 3 months.

The Company elected the FVO to fair value the August & September Convertible Notes under the guidance in ASC 825. The fair value of the August & September Convertible Notes on the issuance date and as of September 30, 2023 was approximately the same. 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.

For the three months ended September 30, 2023 and 2022, interest expense related to outstanding debt totaled approximately $1.7 million and $0.5 million including amortization of debt discounts totaling $0.7 million and $0.6 million, respectively.

For the nine months ended September 30, 2023 and 2022, interest expense related to outstanding debt totaled approximately $4.0 million and $4.8 million including amortization of debt discounts totaling $2.0 million and $2.1 million, respectively.

https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0001072379/000141057823002304/nwbo-20230930x10q.htm