UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A





þ
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT
      OF 1934





For
the quarterly period ended March 31, 2010




OR





 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT
      OF 1934





For
the transition period from ____ to ____





Commission
file number 000-33393





Northwest
Biotherapeutics, Inc.


(Exact
Name of Registrant as Specified in its Charter)





Delaware
            94-3306718(State or other Jurisdiction of Incorporation or Organization)
            (I.R.S. Employer Identification No.)




4800 Montgomery Lane, Suite 800
            20814Bethesda, Maryland 20814
            (Zip Code)(Address of Principal Executive Offices)




(240)
497-9024


(Registrant’s
Telephone Number, Including Area Code)





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





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted  pursuant to Rule 405 of Regulation S-T(§232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes þ No  ̈




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





Large accelerated filer   ̈
                
                Accelerated filer   ̈
                
                Non-accelerated filer   ̈
                Smaller reporting company  þ(do not check if a smaller reporting company)





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





As of May
12, 2010, the total number of shares of common stock, par value $0.001 per
share, outstanding was 63,965,454.





Explanatory
Note: This Form 10-Q/A was
amended to correct the dates and titles of the signature page and certifications
included herein.








NORTHWEST
BIOTHERAPEUTICS, INC.





TABLE
OF CONTENTS





PagePART
      I — FINANCIAL INFORMATIONItem
      1. Financial StatementsCondensed
      Consolidated Balance Sheets as of December 31, 2009 and March 31, 2010
      (unaudited)
              3Condensed
      Consolidated Statements of Operations (unaudited) for the three months
      ended March 31, 2009 and 2010 and the period from March 18, 1996
      (inception) to March 31, 2010
              4Condensed
      Consolidated Statements of Cash Flows (unaudited) for the three months
      ended March 31, 2009 and 2010 and the period from March 18, 1996
      (inception) to March 31, 2010
              5Notes
      to Condensed Consolidated Financial Statements
              6Item 2. Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              13Item 3. Quantitative and Qualitative Disclosures
      About Market Risk
              15Item 4T. Controls and
      Procedures
              15PART II — OTHER INFORMATIONItem 1. Legal Proceedings
              16Item 1A. Risk Factors
              17Item 2. Unregistered Sales of Equity
      Securities and Use of Proceeds
              17Item 3. Defaults Upon Senior
      Securities
              18Item 4. Submission of Matters to a Vote of
      Security Holders
              18Item 5. Other Information
              18Item 6. Exhibits
              18SIGNATURES
              19INDEX TO EXHIBITS
              20








Part
I — Financial Information





NORTHWEST
BIOTHERAPEUTICS, INC.


(A
Development Stage Company)





Condensed
Consolidated Balance Sheets


(in
thousands)





December
                    31,
                    2009
                  
                  
                  March 31,
                    2010(Unaudited)AssetsCurrent
      assets:Cash
                  
                  $
                  65
                  
                  
                  $
                  94Prepaid
      expenses and other current assets
                  
                  
                  36
                  
                  
                  
                  29Total
      current assets
                  
                  
                  101
                  
                  
                  
                  123Property
      and equipment:Laboratory
      equipment
                  
                  
                  29
                  
                  
                  
                  29Office
      furniture and other equipment
                  
                  
                  82
                  
                  
                  
                  82111
                  
                  
                  
                  111Less
      accumulated depreciation and amortization
                  
                  
                  (111
                  )
                  
                  
                  (111
                  )Property
      and equipment, net
                  
                  
                  —
                  
                  
                  
                  —Deposit
      and other non-current assets
                  
                  
                  2
                  
                  
                  
                  16Total
      assets
                  
                  $
                  103
                  
                  
                  $
                  139Liabilities
      And Stockholders’ Equity (Deficit)Current
      liabilities:Accounts
      payable
                  
                  $
                  3,249
                  
                  
                  $
                  3,062Accounts
      payable, related party
                  
                  
                  6,328
                  
                  
                  
                  6,350Accrued
      expenses
                  
                  
                  1,874
                  
                  
                  
                  1,798Accrued
      expense, related party
                  
                  
                  1,329
                  
                  
                  
                  1,394Notes
      payable
                  
                  
                  2,650
                  
                  
                  
                  2,650Note
      payable to related parties
                  
                  
                  4,000
                  
                  
                  
                  4,000Convertible
      notes payable, net
                  
                  
                  —
                  
                  
                  
                  724Total
      current liabilities
                  
                  
                  19,430
                  
                  
                  
                  19,978Long
      term liabilities:Convertible
      notes payable, net
                  
                  
                  1,061
                  
                  
                  
                  815Convertible
      notes payable to related party, net
                  
                  
                  298
                  
                  
                  
                  459Total
      long term liabilities
                  
                  
                  1,359
                  
                  
                  
                  1,274Total
      liabilities
                  
                  
                  20,789
                  
                  
                  
                  21,252Stockholders’
      equity (deficit):Preferred
      stock, $0.001 par value; 20,000,000 shares authorized and none issued and
      outstandingCommon
      stock, $0.001 par value; 150,000,000 shares authorized at December 31,
      2009 and March 31, 2010 and 58,877,087 and 62,131,373 shares issued and
      outstanding at December 31, 2009 and March 31, 2010,
      respectively
                  
                  
                  58
                  
                  
                  
                  62Additional
      paid-in capital
                  
                  
                  169,202
                  
                  
                  
                  174,593Deficit
      accumulated during the development stage
                  
                  
                  (189,897
                  )
                  
                  
                  (195,742
                  )Cumulative
      translation adjustment
                  
                  
                  (49
                  )
                  
                  
                  (26
                  )Total
      stockholders’ equity (deficit)
                  
                  
                  (20,686
                  )
                  
                  
                  (21,113
                  )Total liabilities and
      stockholders’ equity
      (deficit)
                  
                  $
                  103
                  
                  
                  $
                  139





See
accompanying notes to condensed consolidated financial
statements.


3





NORTHWEST BIOTHERAPEUTICS, INC.


(A
Development Stage Company)





Condensed
Consolidated Statements of Operations


(in
thousands, except per share data)


(Unaudited)





Three Months Ended
                    March 31,
                  
                  
                  Period from
                    March 18,
                    1996
                    (Inception) to
                    March 31,2009
                  
                  
                  2010
                  
                  
                  2010Revenues:Research
      material sales
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  560Contract
      research and development from related parties
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,128Research
      grants and other
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,061Total
      revenues
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,749Operating
      costs and expenses:Cost
      of research material sales
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  382Research
      and development
                  
                  
                  2,492
                  
                  
                  
                  1,991
                  
                  
                  
                  68,904General
      and administrative
                  
                  
                  1,333
                  
                  
                  
                  1,356
                  
                  
                  
                  56,199Depreciation
      and amortization
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,351Loss
      on facility sublease
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  895Asset
      impairment loss and other (gain) loss
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  2,445Total
      operating costs and expenses
                  
                  
                  3,825
                  
                  
                  
                  3,347
                  
                  
                  
                  131,176Loss
      from operations
                  
                  
                  (3,825
                  )
                  
                  
                  (3,347
                  )
                  
                  
                  (128,427
                  )Other
      income (expense):Warrant
      valuation
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  6,759Loan
      conversion inducement
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (5,617)Gain
      on sale of intellectual property and property and
equipment
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,664Interest
      expense
                  
                  
                  (751
                  )
                  
                  
                  (2,498
                  )
                  
                  
                  (28,530
                  )Interest
      income and other
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,218Net
      loss
                  
                  
                  (4,576
                  )
                  
                  
                  (5,845
                  )
                  
                  
                  (150,933
                  )Issuance
      of common stock in connection with elimination of Series A and Series A-1
      preferred stock preferences
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (12,349
                  )Modification
      of Series A preferred stock warrants
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (2,306
                  )Modification
      of Series A-1 preferred stock warrants
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (16,393
                  )Series
      A preferred stock dividends
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (334
                  )Series
      A-1 preferred stock dividends
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (917
                  )Warrants
      issued on Series A and Series A-1 preferred stock
dividends
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (4,664
                  )Accretion
      of Series A preferred stock mandatory redemption
obligation
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,872
                  )Series
      A preferred stock redemption fee
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,700
                  )Beneficial
      conversion feature of Series D preferred stock
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (4,274
                  )Net
      loss applicable to common stockholders
                  
                  $
                  (4,576
                  )
                  
                  $
                  (5,845
                  )
                  
                  $
                  (195,742
                  )Net
      loss per share applicable to common stockholders — basic and
      diluted
                  
                  $
                  (0.11
                  )
                  
                  $
                  (0.10
                  )Weighted
      average shares used in computing basic and diluted net loss per
      share
                  
                  
                  43,385
                  
                  
                  
                  59,928





See
accompanying notes to condensed consolidated financial
statements.


4





NORTHWEST
BIOTHERAPEUTICS, INC.


(A
Development Stage Company)





Condensed
Consolidated Statements of Cash Flows


(in
thousands)


(Unaudited)





Three Months Ended
                            March 31,
                          
                          
                          Period from
                            March 18,
                            1996
                            (Inception) to
                            March 31,2009
                          
                          
                          2010
                          
                          
                          2010Cash
      Flows from Operating Activities:Net
      Loss
                          
                          $
                          (4,576
                          )
                          
                          $
                          (5,845
                          )
                          
                          $
                          (150,933
                          )Reconciliation
      of net loss to net cash used in operating activities:Depreciation
      and amortization
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,351Amortization
      of deferred financing costs
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          320Amortization
      debt discount
                          
                          
                          509
                          
                          
                          
                          343
                          
                          
                          
                          20,044Accrued
      interest converted to stock
                          
                          
                          —
                          
                          
                          
                          1,047
                          
                          
                          
                          1,307Accreted
      interest on convertible promissory note
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1,484Stock-based
      compensation costs
                          
                          
                          190
                          
                          
                          
                          514
                          
                          
                          
                          10,018Stock
      and warrants issued for services and other expenses
                          
                          
                          —
                          
                          
                          
                          2,166
                          
                          
                          
                          5,165Loan
      conversion inducement
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          5,617Warrant
      valuation
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (6,759
                          )Asset
      impairment loss and loss (gain) on sale of properties
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (936
                          )Loss
      on facility sublease
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          895Increase
      (decrease) in cash resulting from changes in assets and
      liabilities:Prepaid
      expenses and other current assets
                          
                          
                          354
                          
                          
                          
                          (7
                          )
                          
                          
                          681Accounts
      payable and accrued expenses
                          
                          
                          248
                          
                          
                          
                          (263
                          )
                          
                          
                          4,782Related
      party accounts payable and accrued expenses
                          
                          
                          1,979
                          
                          
                          
                          (87
                          )
                          
                          
                          7,744Accrued
      loss on sublease
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (265
                          )Deferred
      rent
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          410Net
      Cash used in Operating Activities
                          
                          
                          (1,296
                          )
                          
                          
                          (1,958
                          )
                          
                          
                          (98,075
                          )Cash
      Flows from Investing Activities:Purchase
      of property and equipment, net
                          
                          
                          (2
                          )
                          
                          
                          —
                          
                          
                          
                          (5,003
                          )Proceeds
      from sale of property and equipment
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          258Proceeds
      from sale of intellectual property
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1,816Proceeds
      from sale of marketable securities
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,000Refund
      of security deposit
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (3
                          )Transfer
      of restricted cash
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,035
                          )Net
      Cash used in Investing Activities
                          
                          
                          (2
                          )
                          
                          
                          —
                          
                          
                          
                          (1,967
                          )Cash
      Flows from Financing Activities:Proceeds
      from issuance of note payable
                          
                          
                          760
                          
                          
                          
                          875
                          
                          
                          
                          5,585Proceeds
      from issuance of convertible notes payable to related
    parties
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1,300Proceeds
      from issuance of note payable to related parties
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          11,250Repayment
      of note payable to related party
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (6,700
                          )Proceeds
      from issuance of convertible promissory note and warrants, net of issuance
      costs
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          13,099Repayment
      of convertible promissory note
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (119
                          )Borrowing
      under line of credit, Northwest Hospital
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,834Repayment
      of line of credit, Northwest Hospital
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (2,834
                          )Payment
      on capital lease obligations
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (323
                          )Payments
      on note payable
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (420
                          )Proceeds
      from issuance preferred stock, net
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          28,708Proceeds
      from exercise of stock options and warrants
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          228Proceeds
      from issuance common stock, net
                          
                          
                          1,029
                          
                          
                          
                          1,089
                          
                          
                          
                          50,825Payment
      of preferred stock dividends
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,251
                          )Series
      A preferred stock redemption fee
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,700
                          )Deferred
      financing costs
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (320
                          )Net
      Cash provided by Financing Activities
                          
                          
                          1,789
                          
                          
                          
                          1,964
                          
                          
                          
                          100,162Effect
      of exchange rates on cash
                          
                          
                          59
                          
                          
                          
                          23
                          
                          
                          
                          (26
                          )Net
      increase in cash
                          
                          
                          550
                          
                          
                          
                          29
                          
                          
                          
                          94Cash
      at beginning of period
                          
                          
                          16
                          
                          
                          
                          65
                          
                          
                          
                          —Cash
      at end of period
                          
                          $
                          566
                          
                          
                          $
                          94
                          
                          
                          $
                          94Supplemental
      disclosure of cash flow information — Cash paid during the period for
      interest
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          1,879Supplemental
      schedule of non-cash financing activities:Equipment
      acquired through capital leases
                          
                          $
                          —
                          
                          
                          $
                          —
                          
                          
                          $
                          285Issuance
      of common stock in connection with elimination of Series A and Series A-1
      preferred stock preferences
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          12,349Issuance
      of common stock in connection with conversion of related party notes
      payable and accrued interest and convertible promissory notes and accrued
      interest
                          
                          
                          —
                          
                          
                          
                          
                          
                          
                          
                          1,500Modification
      of Series A preferred stock warrants
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,306Modification
      of Series A-1 preferred stock warrants
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          16,393Warrants
      issued on Series A and Series A-1 preferred stock
dividends
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          4,664Common
      stock warrant liability
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          11,841Accretion
      of mandatorily redeemable Series A preferred stock redemption
      obligation
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          1,872Debt
      discount on promissory notes
                          
                          
                          73
                          
                          
                          
                          579
                          
                          
                          
                          11,416Conversion
      of convertible promissory notes and accrued interest to Series D preferred
      stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          5,324Conversion
      of convertible promissory notes and accrued interest to Series A-1
      preferred stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          7,707Conversion
      of convertible promissory notes and accrued interest to common
      stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          269Issuance
      of Series C preferred stock warrants in connection with lease
      agreement
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          43Issuance
      of common stock for license rights
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          4Liability
      for and issuance of common stock and warrants to Medarex
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          840Issuance
      of common stock to landlord
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          35Deferred
      compensation on issuance of stock options and restricted stock
      grants
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          759Cancellation
      of options and restricted stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          849Financing
      of prepaid insurance through note payable
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          491Stock
      subscription receivable
                          
                          
                          365
                          
                          
                          
                          
                          
                          
                          
                          480





See
accompanying notes to condensed consolidated financial
statements.


5




Northwest
Biotherapeutics, Inc.


(A
Development Stage Company)




Notes
to Condensed Consolidated Financial Statements


(unaudited)




1.
Basis of Presentation





The
accompanying unaudited condensed consolidated financial statements include the
accounts of Northwest Biotherapeutics, Inc. and its subsidiary, NW Bio Europe
Sarl (collectively, the “Company”, “we”, “us”, and “our” ). All material
intercompany balances and transactions have been eliminated. The accompanying
unaudited condensed consolidated financial statements should be read in
conjunction with the financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2009. The year-end condensed balance sheet
data was derived from audited financial statements, but does not include all
disclosures required by accounting principles generally accepted in the United
States of America (“GAAP”). All normal recurring adjustments which are necessary
for the fair presentation of the results for the interim periods are reflected
herein. Operating results for the three month periods ended March 31, 2009 and
2010 are not necessarily indicative of results to be expected for a full
year.





The
independent registered public accounting firm’s report on the financial
statements for the fiscal year ended December 31, 2009 states that because of
recurring operating losses, net operating cash flow deficits, and a deficit
accumulated during the development stage, there is substantial doubt about the
Company’s ability to continue as a going concern. A “going concern” opinion
indicates that the financial statements have been prepared assuming 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.





2.
Summary of Significant Accounting Policies





The
significant accounting policies used in the preparation of the Company’s
condensed consolidated financial statements are disclosed in Note 3 to our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2009.





Recent
and Adopted Accounting Pronouncements





In March
2010, The Financial Accounting Standards Board ("FASB") issued new authoritative
guidance regarding revenue recognition to define a milestone and clarify that
the milestone method of revenue recognition is a valid application of the
proportional performance model when applied to research or development
arrangements.  Accordingly, a company can make an accounting policy
election to recognize a payment that is contingent upon the achievement of a
substantive milestone in its entirety in the period in which the milestone is
achieved.  This guidance begins phasing in during the third quarter of
2010.  We do not expect the implementation of this guidance to have a
material impact on our consolidated financial statements.





In
January 2010, the FASB issued new authoritative guidance regarding the
disclosure of fair value measurements, which clarifies certain existing
disclosure requirements as well as requiring new disclosures related to
significant transfers between each fair value level as well as requiring
additional information about Level 3 activity. We adopted the guidance in
2010 without material impact on our consolidated financial
statements.





3.
Stock-Based Compensation





Compensation
expense for all stock-based awards is measured at the grant date based on the
fair value of the award and is recognized as an expense, on a straight-line
basis, over the employee's requisite service period (generally the vesting
period of the equity award). The fair value of each option award is estimated on
the date of grant using a Black-Scholes option valuation model. Stock-based
compensation expense is recognized only for those awards that are expected to
vest using an estimated forfeiture rate. We estimate pre-vesting option
forfeitures at the time of grant and reflect the impact of estimated pre-vesting
option forfeitures in compensation expense recognized.  For options
and warrants issued to non-employees, the Company recognizes stock compensation
costs utilizing the fair value methodology over the related period of
benefit.





Stock-based
compensation expense was as follows for the three months ended March 31 (in
thousands):




2009
                  
                  
                  2010Research
      and development
                  
                  $
                  (139)
                  
                  
                  $
                  186General
      and administrative expenses
                  
                  
                  329
                  
                  
                  
                  329Total
      stock- based compensation expense
                  
                  $
                  190
                  
                  
                  $
                  514


6





There
were no options to purchase common stock issued during the three month periods
ended March 31, 2009 and 2010.





At March
31, 2010, the unrecognized compensation expense related to stock options was
$3.2 million which is to be recognized over a weighted average period of 6.53
years.





4.
Liquidity





The
Company has experienced recurring losses from operations, and, as of March 31,
2010, had a working capital deficit of $19.9 million and a deficit accumulated
during the development stage of $195.7 million. Of this $195.7 million
deficit, $98.1 million (about half) reflects cash used in operations, and the
remaining $97.6 million reflects non-cash accounting measures.





Between
2004 and 2010, the Company has undergone a significant recapitalization through
the transactions described below.





Toucan
Capital and Toucan Partners





Toucan
Capital Fund II, L.P. (“Toucan Capital”) loaned the Company $6.75 million during
2004 and 2005.  The Board’s Chairperson is the managing director of
Toucan Capital. In April 2006, the $6.75 million of notes payable plus all
accrued interest were converted into shares of Series A-1 cumulative convertible
Preferred Stock (the “Series A-1 Preferred Stock”). In connection with these
loans the Company issued Toucan Capital a warrant to purchase 8,166,667 shares
of Series A-1 Preferred Stock.  The warrants to purchase Series A-1
Preferred Stock were later converted into warrants to purchase 17,256,888 shares
of common stock in connection with the Conversion Agreement, described
below.





On
January 26, 2005, Toucan Capital purchased 32.5 million shares of Series A
cumulative convertible preferred stock (the “Series A Preferred Stock”) at $0.04
per share, for a total of $1.276 million. In connection with the securities
purchase agreement, the Company issued Toucan Capital a warrant to purchase
2,166,667 million shares of Series A Preferred Stock.  The warrants to
purchase Series A Preferred Stock were later converted into warrants to purchase
4,778,201 shares of common stock in connection with the Conversion Agreement,
described below.





From
November 14, 2005 through May 25, 2007, Toucan Partners, LLC (“Toucan Partners”)
loaned the Company $4.825 million under various promissory note
agreements.  The Board’s Chairperson is the managing member of Toucan
Partners.  The promissory note agreements were amended and restated
into the 2007 Convertible Notes.  The 2007 Convertible Notes also
included warrants to purchase shares of Series A-1 Preferred Stock ("2007
Warrants").  The Company repaid $5.3 million of principal and accrued
interest due to Toucan Partners during 2007.  The warrants to purchase
Series A-1 Preferred Stock were later converted into warrants to purchase
8,832,541 shares of common stock in connection with the Conversion Agreement,
described below.





Under the
June 22, 2007 Conversion Agreement, Toucan Capital and Toucan Partners agreed to
eliminate a number of rights, preferences and protections associated with the
Series A Preferred Stock and the Series A-1 Preferred Stock and Toucan Capital
received 4,287,851 shares of common stock and Toucan Partners received 2,572,710
shares of common stock.  Also, Toucan Capital converted its preferred
shares into 15,011,635 shares of common stock. Additionally under the conversion
agreement the Company exchanged the warrants to purchase Series A-1 Preferred
Stock and Series A Preferred Stock (discussed above) for warrants to purchase
common stock. As a result of the conversion Toucan Capital received warrants to
purchase 14,150,732 shares of Common Stock at an exercise price of $0.60 per
share and warrants to purchase 7,884,357 shares of Common Stock at an exercise
price of $0.15 per share and Toucan Partners received warrants to purchase
8,832,541 shares of Common Stock at an exercise price of $0.60 per
share.





Toucan
Partners loaned the Company $1.0 million on August 19, 2008 under the terms of
an unsecured promissory note (the “Toucan Partners August Loan”) with a
principal amount of $1,060,000 (reflecting an original issue discount of
$60,000).  On September 28, 2009, the note principal and accrued
interest (including a default penalty of 0.25% per month) amounting to
$1,156,718 was converted to 5,783,589 shares of common stock at a
conversion price of $0.20.  In connection with the conversion,
the Company issued Toucan Partners a warrant to purchase 690,000 shares of
common stock at an exercise price of $0.20 per share.





Toucan
Partners loaned the Company $500,000 on December 22, 2008 under the terms of an
unsecured 12% promissory note (the “Toucan Partners December
Loan”).  In connection with the promissory note, the Company issued to
Toucan Partners a warrant to purchase 132,500 shares of common stock at an
exercise price of $0.40 per share and a term of 5 years.  On September
28, 2009, the note principal and accrued interest (including a default penalty
of 0.25% per month) amounting to $552,738 was converted to
2,763,691 shares of common stock at a conversion rate of
$0.20.  To bring the December Loan into conformity with the SDS and
Private Lender notes issued in October and November 2008, as agreed by the
parties at the time of the Toucan Partners December Loan, the Company issued
Toucan Partners a warrant to purchase 513,841 shares of common stock at an
exercise price of $0.41 per share.  In connection with the conversion,
the Company issued Toucan Partners a warrant to purchase 152,375 shares of
common stock at an exercise price of $0.20 per share.


7




Toucan
Partners and the Board's Chairperson also received a total of 2,504,034 shares of
common stock as compensation for services rendered during 2008 and
2009.





Toucan
Partners loaned the Company a total of $1,300,000 on June 30, 2009, July 2, 2009
and July 17, 2009 under unsecured 6% convertible promissory notes due June 29,
2011, July 1, 2011 and July 16, 2011.  The conversion feature of the
notes allows Toucan Partners to convert the principal into shares of
common stock at a conversion price of $0.20.





As a
result of the financings described above, as of March 31, 2010 Toucan Capital
held:





•
            an aggregate of 19,299,486 shares
      of Common Stock;





•
            warrants to purchase 14,150,732
      shares of Common Stock at an exercise price of $0.60 per share;
      and





•
            warrants to purchase 7,884,357
      shares of Common Stock at an exercise price of $0.15 per
      share.





As a
result of the financings described above, as of March 31, 2010, Toucan Partners
and its managing member Ms. Linda Powers held:





•
            an aggregate of 13,624,024 shares
      of Common Stock;





•
            warrants to purchase 8,832,541
      shares of Common Stock at an exercise price of $0.60 per
      share;





•
            warrants to purchase
      513,841 shares of common stock at an exercise price of
      $0.41;





•
            warrants to purchase
      132,500 shares of common stock at an exercise price of $0.40;
      and





•
            warrants to purchase
      842,375 shares of common stock at an exercise price of
      $0.20.





As of
March 31, 2010, Toucan Capital, including the holdings of Toucan Partners, held
32,923,510 shares of common stock, representing approximately 53% of the common
stock outstanding.  Further, as of March 31, 2010, Toucan Capital,
including the holdings of Toucan Partners, beneficially owned (including
unexercised warrants) 65,279,856 shares of common stock, representing a
beneficial ownership interest of approximately 64.5%.





Other
Financings





In April
2006, the Company completed the PIPE Financing and raised approximately
$5.5 million from the issuance of 2.6 million shares of common
stock.





On
June 22, 2007, we placed 15,789,473 shares of common stock with
foreign institutional investors at a price of £0.95 per share. The gross
proceeds from the placement were approximately £15.0 million, or
$29.9 million, while net proceeds from the offering, after deducting
commissions and expenses, were approximately £13.0 million, or
$25.9 million.





On
January 16, 2009 we entered into a securities purchase agreement for $700,000
with Al Rajhi Holdings who purchased 1,000,000 shares of our common stock at
$0.70 per share.





On March
27, 2009, we completed a private placement of 1.4 million shares of our common
stock and received $700,000.





Between
February 22, 2010 and March 31, 2010, we sold 1,451,666 shares of common stock
at $0.75 per share for net proceeds of  $1,088,750.




Shareholder
Loan





Al Rajhi
loaned the Company $4.0 million on May 12, 2008 under the terms of an unsecured
promissory note with a principal amount of $4,240,000 (reflecting an original
issue discount of $240,000).  The note was initially due on November
12, 2008.  Al Rajhi agreed to extend the term of the note of the loan
until December 31, 2009.  On February 22, 2010, Al Rajhi agreed to
extend the term of the note to December 31, 2010. Additionally,  Al Rajhi agreed to
convert the interest accrued pursuant to the promissory note into shares of
common stock.  A total of $853,952 was converted into 1,138,603 shares
of common stock at a conversion price of $0.75.  In consideration of
the extension the Company agreed to extend the term of the warrants issued to Al
Rajhi to September 30, 2013.


8




Other
Loans





On
October 1, 2008, the Company entered into a $1 million unsecured 12% Loan
Agreement with SDS (the “SDS Loan”).  The SDS Loan was initially due
April 1, 2009, and SDS agreed to extend the maturity on terms that are currently
being negotiated.





On dates
between October 21, 2008 and November 6, 2008, the Company entered into
unsecured 12% Loan Agreements (the “Private Investor Loans”) and Promissory
Notes (the “Private Investor Promissory Notes”) with SDS and a group of private
investors (the “Private Investors”).  Under the Private Investor
Promissory Notes, SDS loaned the Company $1 million and the Private Investors
loaned the Company $650,000 for a total of $1.65 million. The Private Investor
Promissory Notes were initially due in April 2009, and the Private Investors
(excluding SDS) agreed to extend the maturity date to June 2010.  SDS
agreed to extend the maturity on terms that are currently being
negotiated.





During
March 2009, the Company received $650,000 upon issuing unsecured 6% convertible
loan agreements and promissory notes due in March 2011 to a group of private
lenders (“Private Lenders”).





During
March 2009, the Company received $110,000 upon issuing a unsecured 6%
convertible loan agreement and promissory note due in March 2011 to a private
lender (“Private Lender”).





On dates
between August 13, 2009 and September 24, 2009, the Company received $580,000
upon issuing a series of small unsecured 6% convertible loan agreements and
promissory notes due in August and September 2011 to a group of Private
Lenders.





On dates
between October 6, 2009 and December 31, 2009, the Company received $720,000
upon issuing a series of small unsecured 6% convertible loan agreements and
promissory notes due in August and September 2011 to a group of Private
Lenders.





On dates
between January 8, 2010 and March 29, 2010, the Company received $875,000 upon
issuing a series of small unsecured 6% convertible loan agreements and
promissory notes due between January and March 2012 to a group of Private
Lenders.





Going
Concern





As of May
5, 2010,   the Company had approximately $0.3 million of cash on hand.
The Company will need to raise additional capital in the near future to
fund its clinical trials and other operating activities. The
Company is in discussions with multiple parties regarding potential funding
transaction. However, these parties are not obligated to provide any
financing.





The
Company will require additional funding before it achieves
profitability and there can be no assurance that its efforts to seek such
funding will be successful. The Company may raise additional funds by
issuing additional common stock or securities (equity or debt) convertible into
shares of Common Stock, in which case, the ownership interest of its
stockholders will be diluted. Any debt financing, if available, is likely to
include restrictive covenants that could limit the Company’s ability
to take certain actions. Further, the Company may seek funding from Toucan
Capital or Toucan Partners or their affiliates or other third parties. Such
parties are under no obligation to provide the Company with any additional
funds, and any such funding may be dilutive to stockholders and may contain
restrictive covenants. The Company is currently exploring additional
financings with several other parties; however, there can be no assurance that
the Company will be able to complete any such financings or that the terms of
such financings will be attractive to the Company. If the Company’s capital
raising efforts are unsuccessful, its inability to obtain additional cash
as needed could have a material adverse effect on the Company’s financial
position, results of operations and the Company’s ability to continue its
existence. The Company’s independent registered public accounting firm has
indicated in its report on the Company’s consolidated financial statements
included in the Annual Report on Form 10-K for the year ended December 31, 2009
that there is substantial doubt about the Company’s ability to continue as a
going concern.





5.
   Notes Payable





Notes
Payable Originating During 2010





On dates
between January 8, 2010 and March 29, 2010, the Company received $875,000 upon
issuing a series of small unsecured 6% convertible loan agreements and
promissory notes due between January and March 2012 to a group of Private
Lenders.  The conversion feature allows the holders to elect in their
discretion to receive shares of common stock at a conversion price of
$0.50.  The intrinsic value of the convertible notes resulted in a
beneficial conversion feature amounting to $579,000 which was recorded as a debt
discount to be amortized over the term of the notes.


9




Notes
payable to related parties consist of the following at December 31, 2009 and
March 31, 2010 (in thousands):




December
                    31, 2009
                  
                  
                  March
                    31,201012%
      note payable to Al Rajhi, due December 31, 2010
                  
                  $
                  4,000
                  
                  
                  $
                  4,0006%
      unsecured convertible note payable to Toucan Partners, due July, 2011 and
      November 2011, (net of discount of $1,002 and $841 in 2009 and 2010,
      respectively)
                  
                  
                  298
                  
                  
                  
                  4594,298
                  
                  
                  
                  4,459Less
      current portion
                  
                  
                  (4,000
                  )
                  
                  
                  (4,000
                  )Long-term
      notes payable to related parties (net)
                  
                  $
                  298
                  
                  
                  $
                  459




Notes
payable consist of the following at December 31, 2009 and March 31, 2010 (in
thousands):




December
                    31, 2009
                  
                  
                  March 31,
                    201012%
      unsecured note payable to SDS
                  
                  $
                  1,000
                  
                  
                  $
                  1,00012%
      unsecured notes payable to SDS and Private Investors
                  
                  
                  1,650
                  
                  
                  
                  1,6506%
      unsecured convertible notes payable to Private Lenders, due in August and
      September 2011, (net of discount of $485 and $413 in 2009 and 2010,
      respectively)
                  
                  
                  95
                  
                  
                  
                  1676%
      unsecured convertible notes payable to Private Lenders, due March 25,
      2011, (net of discount of $46 and $36 in 2009 and 2010,
      respectively)
                  
                  
                  604
                  
                  
                  
                  6146%
      unsecured convertible note payable to Private Lender, due March 25,
      2011
                  
                  
                  110
                  
                  
                  
                  1106%
      unsecured convertible notes payable to Private Lenders, due October, 2011,
      (net of discount of $194 and $167 in 2009 and 2010,
      respectively)
                  
                  
                  21
                  
                  
                  
                  486%
      unsecured convertible notes payable to Private Lenders, due October and
      December 2011, (net of discount of $274 and $243 in 2009 and 2010,
      respectively)
                  
                  
                  231
                  
                  
                  
                  2626%
      unsecured convertible notes payable to Private Lenders, due between
      January and March 2012, (net of discount of $537 in 2010)
                  
                  
                  -
                  
                  
                  
                  3383,711
                  
                  
                  
                  4,189Less
      current portion
                  
                  
                  (2,650
                  )
                  
                  
                  (3,374
                  )Long-term
      notes payable (net)
                  
                  $
                  1,061
                  
                  
                  $
                  815




The
current portion of notes payable at March 31, 2010, is reported in the
accompanying consolidated balance sheet as follows (in thousands):




Notes
      payable, net
                
                $
                2,650Convertible
      notes payable, net
                
                
                724$
                3,374





6.
Net Income (Loss) Per Share Applicable to Common Stockholders





For the
three months ended March 31, 2009 and 2010, respectively, options to purchase
940,000 and 4,158,000 shares of common stock, and warrants to purchase 35
million and 37 million shares of common stock, were not included in the
computation of diluted net loss per share because they were anti-dilutive. In
addition, for the three months ended March 31, 2009 and 2010, respectively, 1.2
million and 16.4 million shares of common stock issuable on conversion of notes
payable were not included in the computation of diluted net loss per share
because they were antidilutive.


10




7.
Related Party Transactions





Cognate
Agreement





On
July 30, 2004, the Company entered into a service agreement with Cognate
Therapeutics, Inc. (now known as Cognate BioServices, Inc., or Cognate), a
contract manufacturing and services organization in which Toucan Capital has a
majority interest. In addition, two of the principals of Toucan Capital are
members of Cognate’s board of directors and, on May 17, 2007, the managing
director of Toucan Capital was appointed to serve as a director of the Company
and to serve as the non-executive Chairperson of the Company’s Board of
Directors. Under the service agreement, the Company agreed to utilize Cognate’s
services for an initial two-year period, related primarily to manufacturing
DCVax ® product
candidates, regulatory advice, research and development preclinical activities
and managing clinical trials. The agreement expired on July 30, 2006;
however, the Company continued to utilize Cognate’s services under the same
terms as set forth in the expired agreement. On May 17, 2007, the Company
entered into a new service agreement with Cognate pursuant to which Cognate will
provide certain consulting and, when needed, manufacturing services to the
Company for its DCVax ® -Brain
Phase II clinical trial. Under the terms of the new contract, the Company
paid a non-refundable contract initiation fee of $250,000 and committed to pay
budgeted monthly service fees of $400,000, subject to quarterly true-ups, and
monthly facility fees of $150,000. Under the terms of the contract unless the
contract is terminated earlier the contract will expire at the earlier of (i)
the submission of an FDA biological license application/new drug application on
the Company’s brain cancer clinical trial or (ii) July 1, 2010. The Company
may terminate this agreement with 180 days notice and payment of all
reasonable wind-up costs and Cognate may terminate the contract in the event
that the brain cancer clinical trial fails to complete enrollment by
July 1, 2009. However, if such termination by the Company occurs at any
time prior to the earlier of the submission of an FDA biological license
application/new drug application on the Company’s brain cancer clinical trial or
July 1, 2010 or, such termination by Cognate results from failure of the
brain cancer clinical trial to complete patient enrollment by July 1, 2009,
the Company is obligated to make an additional termination fee payment to
Cognate equal to $2 million.  Although the Company failed to
complete enrollment the brain cancer clinical trial by July 1, 2009 Cognate
has elected not to terminate the agreement and as such the $2 million
termination penalty had not been triggered.    Since July 1, 2009 with
the mutual agreement of Cognate and the Company the agreement has continued on a
month to month basis on the same terms as included in the original
agreement.




Cognate
has moved its operations from Sunnyvale, California to its newer facility
in Memphis, Tennessee. The current capacity in Memphis (using only
part of the facility) is approximately 600 patients per year, which we believe
will be sufficient for our Phase II clinical trial for DCVax ® -Brain.
We have a plan with Cognate to accommodate an increase in production capacity
based on demand and have detailed plans and cost analysis for additional 
modular expansions which should increase the capacity of the current facilities
from approximately 600 patients to over 9,000 patients per
year.




During
the three months ending March 31, 2009 and 2010, respectively, the Company
recognized approximately $2.0 million and $1.2 million of research and
development costs related to three service agreements. As of December 31, 2009
and March 31, 2010, the Company owed Cognate approximately $5.9 and $6.2
million, respectively.





During
2009, the Company and Cognate agreed that most of the accounts payable owed by
the Company to Cognate, will be converted into shares of common stock instead of
paid in cash.  The conversion price will be no less favorable than the
conversion price applied to any other creditor of the Company.  The impact
of the conversion will result in a reduction of liabilities for the amount
converted.  In addition, the Company will recognize the value of common
stock issued in excess of the amount of accounts payable converted, if any, as a
charge to operations when the conversion takes place.  Initial review of
the payables by both parties indicated a difference in the parties respective
understanding of the amounts due. The parties are in the process of reviewing
the accounts payable in order to reach agreement about such amounts and
conversion arrangements.




Toucan
Capital Management





In
accordance with a recapitalization agreement dated April 26, 2004 between
the Company and Toucan Capital, as amended and restated on July 30, 2004
and further amended ten times between October 22, 2004 and
November 14, 2005, pursuant to which Toucan Capital agreed to recapitalize
the Company by making loans to the Company, the Company accrued and paid certain
legal and other administrative costs on Toucan Capital’s behalf. Pursuant to the
terms of the Conversion Agreement discussed above, the recapitalization
agreement was terminated on June 22, 2007. Subsequent to the termination of
the recapitalization agreement, Toucan Capital continues to incur costs on
behalf of the Company. These costs primarily relate to consulting costs and
travel expenses incurred in support of the Company’s international expansion
efforts. In addition, during 2007, 2008 and 2009 the Company accrued and
recorded rent expense due to Toucan Capital Corp. an affiliate of Toucan Capital
for its office space in Bethesda, Maryland.





During
the three months ending March 31, 2009 and 2010, respectively, the Company
recognized approximately nil and $0.8 million of general and administrative
costs for rent expense, as well as legal, travel and other costs incurred by
Toucan Capital on the Company’s behalf. At December 31, 2009 and March 31, 2010,
accrued expenses payable to Toucan Capital amounted to $0.5 million and
$1.4 million, respectively, and are included in the accompanying
consolidated balance sheets.




Also
during 2009, the Company agreed with Toucan Capital, Toucan Partners and Linda
Powers (the Board’s Chairperson) that a portion of the accrued expenses owed by
the Company to these parties for certain expense reimbursements will be
converted into shares of common stock instead of paid in cash.  The parties
agreed that these accrued expenses will be converted into common stock (at a
conversion rate of $0.20 per share).  The impact of the conversion will
result in a reduction of liabilities for the amount converted.  In
addition, the Company will recognize the value of common stock issued in excess
of the amount of the accrued expenses converted, if any, as a charge to
operations when the conversion takes place.  Finalization of these
arrangements is in process.





8.
Contingencies and Commitments





The Company terminated its lease with Toucan Capital Corporation on December 31,
2009.  The Company is obligated to make monthly payments of approximately
$5,000 during 2010 and 2011 and other amounts thereafter under the terminated
lease.  Management is not able to estimate the amount of obligations
subsequent to 2011.


11




On March
17, 2010, we entered into a non-cancelable operating lease for 7,097 square feet
of office space in Bethesda, Maryland, which expires in September 2012. Future
minimum lease payments under the lease are $73,188, $163,475, $126,027, in 2010,
2011 and 2012, respectively. Rent expense for the three months ended March 31,
2009 and 2010 amounted to nil and $5,975, respectively. The Company expects
to lease part of this space to Toucan and proceeds of this sublease, if any,
will be offset against the minimum lease payments specified above.





As of
March 31, 2010, the Company has no other contractual commitments which
result in material financial obligations other than the month to month agreement
with Cognate and office lease.





9.  Stockholders’
Equity (Deficit)





Common
Stock Issuances





Between
February 22, 2010 and March 31, 2010, we sold 1,451,666 shares of common stock
at $0.75 per share for net proceeds of $1,088,750.





During
the three months ended March 31, 2010, accrued interest payable to Al Rajhi
under the promissory note dated May 12, 2008 amounting to $853,952 was converted
into 1,138,603 shares of common stock at a conversion rate of $0.75 per
share.  The fair value of the common stock issued in excess of the
accrued interest payable converted into common stock amounted to $194,761 and is
recorded as charge to interest expense in the accompanying consolidated
financial statements.





During
the three months ended March 31, 2010, we issued 358,850 shares of common stock
valued at $278,390 based on the closing market price on the date of issuance of
the shares to employees in lieu of cash payment of salaries.





During
three months ended March 31, 2010 , we issued 305,167 shares of common stock for
services valued at $262,444 based on the closing market price on the date of
issuance of the shares.





Stock
Purchase Warrants





During
2009, Al Rajhi agreed to extend the due date of the May 12, 2008 promissory
note in the amount of $4 million, to December 31, 2009.  As
consideration for the extension of the due date to December 31, 2009, the
Company issued Al Rajhi warrants to purchase 1,743,111 shares of common stock at
an exercise price of $0.63 for three years.  During February 2010, Al
Rajhi agreed to extend the due date of the promissory note to December 31,
2010.  As consideration for the extension of the due date of the
promissory note to December 31, 2010, the Company extended the term of the
warrants by one year.  The warrants now expire in September
2013.  Upon extending the term of the warrants, the Company recognized
the increase in the fair value of the warrants amounting to $53,018 as a charge
to interest expense in the accompanying consolidated financial
statements.  The fair value of the warrants was determined using the
Black-Scholes option pricing model with the following assumptions: expected
dividend yield of 0%, risk-free interest rate of 1.98% volatility of 201%, and a
contractual life of 4 years.





During
the three months ended March 31, 2010, the Company, Toucan Partners, and Toucan
Capital agreed to extend the term of various warrants to purchase shares of
common stock an additional three years.  The extension of the term
applies to 7,884,357 warrants with an exercise price of $0.15 held by Toucan
Capital, 132,500 warrants with an exercise price of $0.40 held by Toucan
Partners, 14,150,732 warrants with an exercise price of $0.60 held by Toucan
Capital, and 8,832,541 warrants with an exercise price of $0.60 held by Toucan
Partners.  Upon extending the term of the warrants, the Company
recognized the increase in the fair value of the warrants amounting to
$1,500,722 as a charge to interest expense in the accompanying consolidated
financial statements.  The fair value of the warrants was determined
using the Black-Scholes option pricing model with the following assumptions:
expected dividend yield of 0%, risk-free interest rate of 2.46% volatility of
217%, and a contractual life of 5 years.





During
the three months ended March 31, 2010, the Company issued warrants to purchase
100,000 shares of common stock at an exercise price of $0.75 for three years to
a consultant.  The fair value of the warrants amounting to $72,494 was
charged to general and administrative expense in the accompanying consolidated
financial statements and was determined using the Black-Scholes option pricing
model with the following assumptions: expected dividend yield of 0%, risk-free
interest rate of 1.7% volatility of 198%, and a contractual life of
3 years.





10.
Subsequent Events





As of May
1, 2010 we raised a total of $1.35 million through a series of small
transactions in an ongoing private placement totaling 1,799,996 shares of common
stock.  In connection with this private placement the Company issued
warrants to purchase 180,000 shares of common stock at an exercise price of
$0.75 per share. The fair value of the warrants amounting to $192,096 was
determined using the Black-Scholes option pricing model with the following
assumptions: expected dividend yield of 0%, risk-free interest rate of 1.4%
volatility of 198%, and a contractual life of 3 years.


12





In April
2010, we issued 34,085 shares of common stock for services valued at $25,800
based on the closing market price on the date of issuance of the
shares.





Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations





The
following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and the notes to those statements included
with this report. In addition to historical information, this report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. The words
“believe,” “expect,” “intend,” “anticipate,” and similar expressions are used to
identify forward-looking statements, but some forward-looking statements are
expressed differently. Many factors could affect our actual results, including
those factors described under “Risk Factors” elsewhere in this report. These
factors, among others, could cause results to differ materially from those
presently anticipated by us. You should not place undue reliance on these
forward-looking statements.





Overview





We are a
development stage biotechnology company focused on discovering, developing and
commercializing immunotherapy products that generate and enhance immune system
responses to treat cancer. Data from our clinical trials suggest that our cancer
therapies significantly extend both the time to recurrence and survival, while
providing a superior quality of life with no debilitating side effects when
compared with current therapies.




Our
financing activities are described below under “— Liquidity and Capital
Resources”. We will need to raise additional capital to fund our operations,
including our Phase II DCVax ® -Brain
clinical trial. Depending on the trial results, we plan to seek product approval
for DCVax ® -Brain,
our leading product candidate, in both the U.S. and E.U.





We have
experienced recurring losses from operations and have a deficit accumulated
during the development stage of $195.7 million at March 31, 2010. In
addition, our independent registered public accounting firm has indicated in its
report on our financial statements included in this Annual Report on
Form 10-K that there is substantial doubt about our ability to continue as
a going concern.





Critical
Accounting Policies and Estimates





Our
discussion and analysis of our financial condition and results of operations is
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses and
related disclosure of contingent assets and liabilities. The critical accounting
policies that involve significant judgments and estimates used in the
preparation of our financial statements are disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2009.





Recent
Accounting Pronouncements





See Note
2 to Condensed Consolidated Financial Statements in this Form 10-Q





Results
of Operations





Operating
costs:





Operating
costs and expenses consist primarily of research and development expenses,
including clinical trial expenses which increase when we are actively
participating in clinical trials, and general and administrative
expenses.





Research
and development:





Discovery
and preclinical research and development expenses include scientific
personnel-related salary and benefit expenses, costs of laboratory supplies used
in our internal research and development projects, travel, regulatory
compliance, and expenditures for preclinical and clinical trial operation and
management when we are actively engaged in clinical trials.





Because
we are a development stage company, we do not allocate research and development
costs on a project basis. We adopted this policy, in part, due to the
unreasonable cost burden associated with accounting at such a level of detail
and our limited number of financial and personnel resources. We shifted our
focus, starting in 2002, from discovering, developing, and commercializing
immunotherapy products to conserving cash and primarily concentrating on
securing new working capital to re-activate our two DCVax® clinical trial
programs.


13




General
and administrative:





General
and administrative expenses include administrative personnel related salary and
benefit expenses, cost of facilities, insurance, travel, legal support, property
and equipment and amortization of stock options and warrants.





Three
Months Ended March 31, 2010 and 2009





We
recognized a net loss of $5.8 million for the three months ended March 31, 2010
compared to a net loss of $4.6 million for the three months ended March 31,
2009. The increase in net loss was primarily attributable to an increase in debt
discount and interest associated with notes payable that were outstanding during
the three month period ended March 31, 2010. In addition, we incurred $1.6
million of expense from the modification of warrant agreements during the 2010
period.





Research and Development
Expense. Research and development expense decreased from $2.5 million for
the three months ended March 31, 2009 to $2.0 million for the three months ended
March 31, 2010. This decrease was primarily due to reduced staffing in
2010.




General and Administrative
Expense. General and administrative expense was $1.3 million for the
three months ended March 31, 2009 compared to $1.4 million for the three months
ended March 31, 2010.





Interest (Expense).
Interest expense increased from $0.8 million for the three months ended March
31, 2009 to $2.5 million for the three months ended March 31, 2010. Interest
expense for the three-month period ended March 31, 2010 was primarily related to
the debt discount and interest expense associated with our outstanding notes
payable that were outstanding during the three month period ended March 31,
2010.  In addition, interest expense includes $1.6 million of expense from
the modification of warrant agreements during the 2010 period.





Liquidity
and Capital Resources





At
March 31, 2010, cash totaled $94,000, compared to $65,000 at
December 31, 2009.    Working capital was a deficit of
$19.9 million at March 31, 2010, compared to a deficit of
$19.3 million at December 31, 2009.    The working capital
deficit increased as of March 31, 2010 primarily due to an increase in
current liabilities due to an increase in notes payable in 2010.   
Cash balances increased during the quarter ended March 31, 2010 due primarily to
the financing transactions discussed below that were executed in
2010.




The
change in cash for the periods presented was comprised of the following (in
thousands):





March 31,
                  2009
                
                
                March 31,
                  2010
                
                
                ChangeNet
      cash provided by (used in):Operating
      activities
                
                $
                (1,296)
                
                
                $
                (1,958
                )
                
                $
                (662)Investing
      activities
                
                
                (2)
                
                
                
                (—
                )
                
                
                2Financing
      activities
                
                
                1,789
                
                
                
                1,964
                
                
                
                175Effect
      of exchange rates on cash
                
                
                59
                
                
                
                23
                
                
                
                (38)Increase
      in cash
                
                $
                550
                
                
                $
                29
                
                
                $
                (521)




Operating
Activities




We used
$2.0 million in cash for operating activities during the three months ended
March 31, 2010.    The increase in cash used in operating
activities was a result of the reductions accounts payable and accounts payable
related parties.





Investing
Activities





Investing activities for the periods presented are not material.




Financing
Activities





During
the three months ended March 31, 2010, our financing activities consisted of
proceeds from notes payable amounting to $0.9 million and proceeds from the
issuance of common stock amounting to $1.1 million.  The 2010
financing transactions consisted of:





Between
February 22, 2010 and March 31, 2010, we sold 1,451,666 shares of common stock
at $0.75 per share for net proceeds of $1,088,750.


14




On dates
between January 8, 2010 and March 29, 2010, the Company received $875,000 upon
issuing a series of small unsecured 6% convertible loan agreements and
promissory notes due between January and March 2012 to a group of Private
Lenders.





During
three months ended March 31, 2009, our financing activities consisted of
proceeds from notes payable amounting to $0.8 million and proceeds from the
issuance of common stock amounting to $1.0 million.  The 2009
financing transactions consisted of:





During
the three months ended March 31, 2009 we received $1.0 million from the issuance
of 2.4 million shares of common stock. Stock subscriptions receivable amounting
to $0.4 million related to these shares were collected during April
2009.




During
March 2009, the Company received $760,000 upon issuing unsecured 6% convertible
loan agreements and promissory notes due in March 2011 to a group of private
lenders.





We
estimate that our current funding is sufficient to enable us to proceed with our
current (reduced) activities under our DCVax ® -Brain
program.  Our ongoing funding requirements will depend on many
factors, including the number of staff we employ, the pace of patient enrollment
in our brain cancer trial, the cost of establishing clinical studies and
compassionate use/named patient programs in other countries, and unanticipated
developments, including potential adverse developments in pending litigation
and/or regulatory matters.  Without additional capital, we will not be
able to proceed with significant enrollment in our DCVax ® -Brain
clinical trial or move forward with compassionate use/named patients programs or
with any of our other product candidates for which investigational new drug
applications have been cleared by the FDA. We will also be constrained in
developing our second generation manufacturing processes, which offer the
potential for significant reduction in product costs.




Additional
funding will be required in the near future and there can be no assurance that
our efforts to seek such funding will be successful. If our capital raising
efforts are unsuccessful, our inability to obtain additional cash as needed
could have a material adverse effect on our financial position, results of
operations and our ability to continue our existence. Our independent registered
public accounting firm has indicated in its report on our financial statements
included in the Annual Report on Form 10-K for the year ended
December 31, 2009 that there is substantial doubt about our ability to
continue as a going concern. We may seek additional funds through the issuance
of additional common stock or other securities (equity or debt) convertible into
shares of common stock, which could dilute the ownership interest of our
stockholders. We may seek funding from Toucan Capital or Toucan Partners or
their affiliates or other third parties. Such parties are under no obligation to
provide us any additional funds, and any such funding may be dilutive to
stockholders and may contain restrictive covenants that could limit our ability
to take certain actions.





Item
3. Quantitative and Qualitative Disclosures about Market Risk





Not
required for smaller reporting companies.





Item
4T. Controls and Procedures





Conclusion
Regarding the Effectiveness of Disclosure Controls and Procedures


Under the
supervision and with the participation of our management, including our
principal executive, financial and accounting officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended.  Based on this evaluation, our principal executive, financial
and accounting officer concluded that, as of March 31, 2010, in light of the
material weaknesses described below, our disclosure controls and procedures were
not effective to ensure that the information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is
accumulated and communicated to management, including our chief executive
officer, financial and accounting officer, to allow timely decisions regarding
required disclosure, and that such information is recorded, processed,
summarized and reported within the time periods prescribed by the
SEC.





Management's
Report on Internal Controls Over Financial Reporting


Our
management is responsible for establishing and maintaining adequate internal
controls over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f).  Under the supervision and with the participation of our
management, including our principal executive, financial and accounting officer,
we conducted an evaluation of the effectiveness of our internal controls over
financial reporting as of March 31, 2010.  This evaluation was based
on the framework in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
("COSO").





A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis.





Based on management's evaluation as of March 31,
2010, our management identified the material weaknesses set forth below in our
internal control over financial reporting:


15




(i)
            The Company's process for
      internally reporting material information in a systematic manner to allow
      for timely filing of material information is ineffective, due to its
      inherent limitations from being a small company, and there exist material
      weaknesses in internal control over financial reporting that contribute to
      the weaknesses in our disclosure controls and procedures.  These
      weaknesses include the lack
of:





·
            appropriate segregation of
      duties;


·
            appropriate oversight and
      review;


·
            internal accounting technical
      expertise;


·
            preparation, review and
      verification of internally developed
  documentation;


·
            controls in place to insure that
      all material developments impacting the financial statements are
      reflected; and


·
            executed agreements for
      significant contracts.





(ii)
            Lack of a sufficient number of
      independent directors for our board and audit committee.  We
      currently only have one independent director on our board, which is
      comprised of three directors, and on our audit
      committee.  Although we are considered a controlled company,
      whereby a group holds more than 50% of the voting power, and as such are
      not required to have a majority of our board of directors be independentit
      is our intention to have a majority of independent directors in due
      course.





(iii)
            Lack of a financial expert on our
      audit committee.  We currently do not have an audit committee
      financial expert, as defined by SEC regulations on our audit committee as
      defined by the SEC.





(iv)
            Insufficient corporate governance
      policies.  Although we have a code of ethics which provides
      broad guidelines for corporate governance, our corporate governance
      activities and processes are not always formally
      documented.  Specifically, decisions made by the board to be
      carried out by management should be documented and communicated on a
      timely basis to reduce the likelihood of any misunderstandings regarding
      key decisions affecting our operations and
    management.





(v)
            Inadequate approval and control
      over transactions and commitments made on our behalf by related
      parties.  Specifically, during the year certain related party
      transactions were not effectively communicated to all internal personnel
      who needed to be involved to account for and report the transaction in a
      timely manner.  This resulted in material adjustments during the
      quarterly reviews and annual audit, respectively, that otherwise would
      have been avoided if effective communication and approval processes had
      been maintained.





Our
company's management concluded that in light of the material weaknesses
described above, our company did not maintain effective internal control over
financial reporting as of March 31, 2010 based on the criteria set forth in
Internal Control—Integrated Framework issued by the COSO.





Changes
in Internal Control over Financial Reporting


There has
been no change in our internal controls over financial reporting that occurred
during the fiscal quarter ended March 31, 2010 that has materially affected, or
is reasonably expected to materially affect, our internal controls over
financial reporting.





Inherent
Limitations


Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.





Part
II — Other Information





Item
1. Legal Proceedings





From time
to time, we are involved in claims and suits that arise in the ordinary course
of our business. Although management currently believes that resolving any such
claims against us will not have a material adverse impact on our business,
financial position or results of operations, these matters are subject to
inherent uncertainties and management’s view of these matters may change in the
future. In addition to any such claims and suits, we are involved in the
following legal proceedings.


16




SOMA
Arbitration





Soma
Partners, LLC





Soma
Partners, LLC (“Soma”), a New Jersey-based investment bank, which we engaged to
locate potential investors. filed an arbitration claim against us in January,
2003 with the American Arbitration Association in New York, NY claiming unpaid
commission fees of $186,000 and seeking potential fees for future transactions
that may be undertaken by us with Toucan Capital.  Soma subsequently
filed an amended arbitration claim, claiming unpaid commission fees of $339,000,
warrants to purchase 6% of the aggregate securities issued to date and fees for
future financing transactions which may be undertaken by us with Toucan Capital
and others, plus attorneys’ fees and costs related to the proceedings. On May
24, 2005; the arbitrator ruled in our favor that we did not owe Soma the fees
and warrants sought by Soma, that we would not owe Soma fees in connection with
future financings, if any, and that we had no obligation to pay any of Soma’s
attorneys’ fees or expenses. The arbitrator agreed with us that the only amount
we owed Soma was $6,702.87, which payment we made on May 27, 2005.





On
August 29, 2005, Soma filed a notice of petition to vacate the May 24,
2005 arbitration award with the Supreme Court of the State of New York. On
December 30, 2005, the Supreme Court of the State of New York dismissed
Soma’s petition. On June 19, 2007, the Appellate Division, First Department of
the Supreme Court of the State of New York, reversed the December 30, 2005
decision and ordered a new arbitration proceeding. On July 26, 2007, we filed a
Motion for Leave to Appeal with the Court of Appeals of the State of New York
and on October 16, 2007, the Court of Appeals York denied our motion to appeal.
A new arbitration hearing was held in New York and on September 4, 2009 the
Arbitrators denied Soma’s claims and ruled that the administrative fees of the
American Arbitration Association totaling $7,450 and the compensation of the
arbitrators totaling $57,013 shall be borne equally by both
parties.  As a result the Company was required to reimburse Soma the
sum of $2,650 representing the portion of the fees in excess of the apportioned
costs previously incurred by Soma.  The award was in settlement of all
claims and counterclaims submitted to the arbitration. All claims not expressly
granted in the arbitration were denied.




Lonza
Patent Infringement Claim





On
July 27, 2007, Lonza Group AG (“Lonza”) filed a complaint against us in the
United States District Court for the District of Delaware alleging patent
infringement relating to recombinant DNA methods, sequences, vectors, cell lines
and host cells. The complaint sought temporary and permanent injunctions
enjoining us from infringing Lonza’s patents and unspecified damages. On
November 27, 2007, the complaint was dismissed from the United States
District Court for the District of Delaware. Also on November 27, 2007, a
new complaint was filed by Lonza in the United States District Court for the
District of Maryland. The new complaint alleged the same patent infringement
relating to recombinant DNA methods, sequences, vectors, cell lines and host
cells by the Company’s DCVax ®
..




On April
14, 2008, we and Lonza entered into a binding agreement to settle the dispute.
Under the terms of the settlement, we did not pay any monetary or other
consideration to Lonza nor did we acquire any license from Lonza. The only
action to which we agreed was to destroy any recombinant modified prostate
specific membrane antigen or cell lines using Lonza’s GS Expression System
currently in our possession which had been manufactured by and purchased from
Medarex Inc. more than six years ago, as well as any documentation received from
Medarex on know–how regarding the use of the GS Expression System and cell
lines. On May 14, 2008 the parties filed a Joint Stipulation of Dismissal of the
Lawsuit with Prejudice, including all claims and counterclaims
therein.





Stockholder
Class Action Lawsuits





On August
13, 2007, a complaint was filed in the U.S. District Court for the Western
District of Washington naming the Company, the Chairperson of its Board of
Directors, Linda F. Powers, and its Chief Executive Officer, Alton L. Boynton,
as defendants in a class action for violation of federal securities laws. After
this complaint was filed, five additional complaints were filed in other
jurisdictions alleging similar claims. The complaints were filed on behalf of
purchasers of the Company’s Common Stock between July 9, 2007 and July 18, 2007
and allege violations of Section 10(b) of the Exchange Act and Rule 10b-5
thereunder. The complaints seek unspecified compensatory damages, costs and
expenses. On December 18, 2007, a consolidated complaint was filed in the U.S.
District Court for the Western District of Washington consolidating the
stockholder actions previously filed. The putative securities class action
lawsuit, In re Northwest
Biotherapeutics, Inc. Securities Litigation , No. C-07-1254-RAJ was
settled with prejudice January 8, 2009.  The Company has agreed to pay
in settlement US$1 million.  In accordance with the stipulation the
insurance company has directly deposited the $1,000,000 in a court
controlled escrow account. The case alleged that the Company misrepresented
certain facts that resulted in the artificial inflation of the price of
Northwest Biotherapeutics publicly-traded common stock between April 17, 2007
and July 18, 2007.  The Company disputed the allegations of the
lawsuit, and denied that there was any such misrepresentation or that the shares
of Northwest Biotherapeutics common stock were artificially
inflated.  Nevertheless the Company settled the lawsuit to avoid
potentially expensive and protracted litigation. The Class Action Lawsuit final
settlement was approved by the Court, and the case was dismissed with prejudice
on June 16, 2009.  Additional details about the settlement can be
found in the formal settlement documents, which are available from the United
States District Court for the Western District of Washington.





We have
no other legal proceedings pending at this time.





Item 1A.
 Risk Factors





Not
required for smaller reporting companies




Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





Between
February 22, 2010 and March 31, 2010, we sold 1,451,666 shares of common stock
at a purchase price of $0.75 per share for net proceeds of
$1,088,750.


17




On
February 22, 2010, we agreed to extend the term of the note made in favor of Al
Rajhi in the principal amount of $4 million issued on May 12, 2008 from December
31, 2009 to December 31, 2010. Additionally,  Al Rajhi agreed to
convert the interest accrued pursuant to the promissory into shares of common
stock.  A total of $853,952 was converted into 1,138,603 shares of
common stock at a conversion price of $0.75.  In consideration of the
extension, the Company agreed to extend by one year the term of the warrants
issued to Al Rajhi.





The sales
of the securities identified above were made pursuant to privately negotiated
transactions that did not involve a public offering of securities and,
accordingly, we believe that these transactions were exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act and Rule 506 of Regulation D. The agreements executed in
connection with this sale contain representations to support the Company’s
reasonable belief that the Investor had access to information concerning the
Company’s operations and financial condition, the Investor acquired the
securities for their own account and not with a view to the distribution thereof
in the absence of an effective registration statement or an applicable exemption
from registration, and that the Investor are sophisticated within the meaning of
Section 4(2) of the Securities Act and are “accredited investors” (as defined by
Rule 501 under the Securities Act). In addition, the issuances did not involve
any public offering; the Company made no solicitation in connection with the
sale other than communications with the Investor; the Company obtained
representations from the Investor regarding their investment intent, experience
and sophistication; and the Investor either received or had access to adequate
information about the Company in order to make an informed investment
decision.  All of the foregoing securities are deemed restricted
securities for purposes of the Securities Act.





Item
3. Defaults upon Senior Securities




None





Item
4. Submission of Matters to a Vote of Security Holders





None





Item
5. Other Information





None





Item
6. Exhibits





3.1
            
            Seventh
      Amended and Restated Certificate of Incorporation
  (3.1)(1)3.2
            
            Third
      Amended and Restated Bylaws (3.1)(2)3.3
            
            Amendment
      to the Seventh Amended and Restated Certificate of Incorporation
      (3.2)(2)3.4
            
            Amendment
      to Seventh Amended and Restated Certificate of Incorporation
      (3.4)(3)*10.1
            
            Lease
      Agreement*31.1
            
            Certification
      of President (Principal Executive Officer and Principal Financial and
      Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and
      15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.*32.1
            
            Certification
      of President, Chief Executive Officer and Principal Financial and
      Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.







(1)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Registrant’s
      registration statement Form S-1 (File No. 333-67350) on July 17,
      2006.





(2)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Registrant’s
      Current Report on Form 8-K on June 22,
  2007.





(3)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Post-Effective
      Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 on
      January 28, 2008.





*
            Filed
      herewith.


18




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





NORTHWEST
      BIOTHERAPEUTICS, INCDated:
      January 17, 2011
            By:
            /s/ Alton L. BoyntonAlton
      L. BoyntonPresident,
      Chief Executive Officer and Director(Principal
      Executive Officer)By:
            /s/   LINDA
  POWERSLinda
      PowersDirectorBy:
            /s/   ROBERT
    FARMERLinda
      PowersDirector


19




NORTHWEST
BIOTHERAPEUTICS, INC.


(A
Development Stage Company)





EXHIBIT
INDEX





3.1
            
            Seventh
      Amended and Restated Certificate of Incorporation
  (3.1)(1)3.2
            
            Third
      Amended and Restated Bylaws (3.1)(2)3.3
            
            Amendment
      to the Seventh Amended and Restated Certificate of Incorporation
      (3.2)(2)3.4
            
            Amendment
      to Seventh Amended and Restated Certificate of Incorporation
      (3.4)(3)*10.1
            
            Lease
      Agreement*31.1
            
            Certification
      of President (Principal Executive Officer and Principal Financial and
      Accounting Officer), Pursuant to Exchange Act Rules 13a-14(a) and
      15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.*32.1
            
            Certification
      of President, Chief Executive Officer and Principal Financial and
      Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.





(1)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Registrant’s
      registration statement Form S-1 (File No. 333-67350) on July 17,
      2006.





(2)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Registrant’s
      Current Report on Form 8-K on June 22,
  2007.





(3)
            Incorporated by reference to the
      exhibit shown in the preceding parentheses filed with the Post-Effective
      Amendment No. 2 to the Registrant’s Registration Statement on Form S-1 on
      January 28, 2008.





*
            Filed
      herewith.


20