UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORMFORM 10-K

 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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

  

ForFor the Fiscal Year Ended December 31, 20192021

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

Forthetransitionperiodfrom __________ to __________

 

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

For the transition period fromto

CommissionCommission File Number: 001-36833

VOLITIONRX LIMITED

(Exact name of registrant as specified in its charter)

 

VOLITIONRX LIMITED

(Exact name of registrant as specified in its charter)

Delaware

91-1949078

(State or other jurisdiction of

incorporation or organization)

13215 Bee Cave Parkway

Suite 125, Galleria Oaks B

Austin, Texas 78738

(Address of principal executive offices)

+1 (646) 650–1351

(Registrant’s telephone number, including area code)

91-1949078

(I.R.S. Employer

Identification No.)

 

13215 Bee Cave Parkway

Suite 125, Galleria Oaks B

Austin, Texas 78738

 (Address of principal executive offices)

 +1 (646) 650-1351

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class:

Trading Symbol(s)

Name of Each Exchange on Which Registered:

Common Stock, par value $0.001 per share

VNRX

VNRX

NYSE American, LLC

 

Securities registered pursuant to Section 12(g) of the Act: None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [   ] No [X].

 

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 [X] No [   ].

 

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

 

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

 

Large accelerated filer

[   ]

Accelerated filer

[   ]

Non-accelerated filer

[X]

Smaller reporting company

[X]

Emerging growth company

[   ]

 

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

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



As of June 28, 2019,30, 2021, the last trading day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting common stock held by non-affiliates of the registrant was $72,468,073$115,639,384 (based upon the $3.14$3.29 per share closing price for the registrant’s common stock as reported by the NYSE American on such date). This calculation does not reflect a determination that persons deemed to be affiliates for this purpose are affiliates for any other purpose.

 

As of February 17, 2020,March 25, 2022, there were 41,204,68553,775,261 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

Documents incorporated by reference:

 

Portions of the registrant’s Proxy Statement for its 20202022 Annual Meeting of Stockholders, to be filed on or before April 29, 2020May 2, 2022 are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K.

 



Tableof Contents

 

Page

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

1

Item 1

BUSINESS

3

Item 1A

RISK FACTORS

13

Item 1B

UNRESOLVED STAFF COMMENTS

28

Item 2

PROPERTIES

28

Item 3

LEGAL PROCEEDINGS

28

Item 4

MINE SAFETY DISCLOSURES

28

PART II

Item 5

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

29

Item 6

RESERVED

29

Item 7

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

30

Item 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

35

Item 8

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

F-36

Item 9

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

70

Item 9A

CONTROLS AND PROCEDURES

70

Item 9B

OTHER INFORMATION

72

Item 9C

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

72

PART III

Item 10

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

73

Item 11

EXECUTIVE COMPENSATION

73

Item 12

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

73

Item 13

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

73

Item 14

PRINCIPAL ACCOUNTANT FEES AND SERVICES

73

PART IV

Item 15

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

74

Item 16

FORM 10-K SUMMARY

78

SIGNATURES

79

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PART IPage

Item 1.BUSINESS………………………………………………………………………………………………

Item 1A.RISK FACTORS………………………………………………………………………………………...

Item 1B.UNRESOLVED STAFF COMMENTS…………………………………………………………………18 

Item 2.PROPERTIES……………………………………………………………………………………………18 

Item 3.LEGAL PROCEEDINGS……………………………………………………………………………….18 

Item 4.MINE SAFETY DISCLOSURES……………………………………………………………………….18 

PART II

Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS  

AND ISSUER PURCHASES OF EQUITY SECURITIES…………………………………………...19 

Item 6.SELECTED FINANCIAL DATA………………………………………………………………….……19 

Item 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  

RESULTS OF OPERATIONS………………………………………………………………………...20 

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK……………….24 

Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA……………………………………..F-25 

Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND  

FINANCIAL DISCLOSURE………………………………………………………………………..…48 

Item 9A.CONTROLS AND PROCEDURES………………………………………………………………….….48 

Item 9B.OTHER INFORMATION…………………………………………………………………………….….49 

PART III

Item 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE…………………..…50 

Item 11.EXECUTIVE COMPENSATION…………………………………………………………………....…50 

Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND  

RELATED STOCKHOLDER MATTERS……………………………………………………….……50 

Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR  

INDEPENDENCE…………………………………………………………………………………...…50 

Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES………………………………………………...50 

PART IV

Item 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES……………………………………………..…51 

Item 16.FORM 10-K SUMMARY…………………………………………………………………………….….54 

SIGNATURES…..…………………………………………………………………………………..………………..……55 



CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which we refer to as2021, (this “Report”), and the information and documents incorporated by reference in this Report, containscontain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended or the Securities Act,(the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended or the Exchange Act,(the “Exchange Act”), which statements are subject to considerable risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report or incorporated by reference into this Report are forward-looking statements.  Throughout this Report, westatements. We have attempted to identify forward-looking statements by using words such as “may,“aim,” “anticipate,” “believe,” “will,“continue,” “could,” “project,” “anticipate,“estimate(s),” “expect,” “estimate,“forecast(s),” “goal,” “intend,” “may,” “plan(s),” “potential,” “project,” “seek,” “should,” “continue,“strategy,“potential,“will,“plans,” “forecasts,” “goal,” “aim,” “seek,” “intend,”and other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words). In particular, forward-looking statements contained in this Report, and the information and documents incorporated by reference within this Report, relate to, among other things, anyour predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our development activities or business strategy, including regulatory approvals, commercialization and market acceptance; statements concerning industry trends and industry size; statements regarding anticipated demand for our products and market opportunity, or the products of our competitors; statements relating to manufacturing forecasts, and the potential impact of our relationship with contract manufacturers and original equipment manufacturers on our business; assumptions regarding the future cost and potential benefits of our research and development efforts; the effect of critical accounting policies; forecasts of our liquidity position or available cash resources; statements relating to the impact of pending litigation; and statements relating to the assumptions underlying any of the foregoing. We caution you that the foregoing list may not include all of the forward-looking statements made in this Report and the information and documents incorporated by reference within this Report.

 

We have based our forward-looking statements on our current assumptions, expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial known and unknown risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this Report.  We discuss these risks

Some significant factors that may impact our estimates and uncertainties in greater detailforward-looking statements include, but are not limited to:

·

Our inability to generate any significant revenue or achieve profitability;

·

Our need to raise additional capital in the future;

·

Our expectations to expand our product development, research and sales and marketing capabilities could give rise to difficulties in managing our growth;

·

Our limited experience with direct sales and marketing;

·

The material weaknesses in our internal control over financial reporting that we have identified;

·

The possibility that we may not be able to continue to operate, as indicated by the “going concern” opinion from our auditors;

·

Our ability to successfully develop, manufacture, market, and sell our future products;

·

Our ability to timely obtain necessary regulatory clearances or approvals to distribute and market our future products;

·

The acceptance by the marketplace of our future products;

·

The highly competitive and rapidly changing nature of the cancer diagnostics market;

·

Our reliance on third parties to manufacture and supply our intended products, and such manufacturers’ dependence on third party suppliers;

·

Our dependence on third party distributors;

·

Protection of our patents, intellectual property and trade secrets; and

·

Business disruptions and economic and other uncertainties surrounding the COVID-19 pandemic.

For additional information, refer to the section entitled “Risk Factors” in Part I, Item 1A of this Report, and the other documents that we have filed with the U.S. Securities and Exchange Commission or the SEC.(the “SEC”).

 

In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, readers are cautioned not to place undue reliance on any forward-looking statements.

 

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You should read this Report in its entirety, including the documents that we file as exhibits to this Report and the documents that we incorporate by reference into this Report, with the understanding that our future results may be materially different from what we currently expect. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations. If we do update or correct any forward-looking statements, readers should not conclude that we will make additional updates or corrections.

 

Use of Terms

Except as otherwise indicated by the context, references in this Report to “Company,” “VolitionRx,” “Volition,” “we,” “us,” and “our” are references to VolitionRx Limited and its wholly-ownedwholly owned subsidiaries, Singapore Volition Pte. Limited, Belgian Volition SPRL,SRL, Volition Diagnostics UK Limited, Volition Germany GmbH, Volition America, Inc, and Volition America, Inc.,Global Services SRL, as well as majority-ownedmajority owned subsidiary Volition Veterinary Diagnostics Development LLC. Additionally, unless otherwise specified, all references to “$” refer to the legal currency of the United States of America.

 

NucleosomicsTM and Nu.QTM® and their respective logos are trademarks and/or service marks of VolitionRx and its subsidiaries. All other trademarks, service marks and trade names referred to in this Report are the property of their respective owners.




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PART I

ITEM 1.

BUSINESS

Overview

 

ITEM 1.BUSINESS

Overview

VolitionRxVolition is a multi-national epigenetics company that applies its NucleosomicsTMNucleosomics™ platform through its subsidiaries to develop simple, easy to use, cost-effective blood tests to help diagnose and monitor a range of life-altering diseases including certain cancers and other diseases. We hope that through earlier diagnosis we can helpdiseases associated with NETosis such as sepsis and COVID-19. Our mission is to save lives and improve outcomes for millions of people and animals worldwide. Early diagnosis and monitoring have the potential to not only prolong the life of patients, but also to improve their quality of many people’s and animal’s lives throughout the world.

Our Solution/ Sciencelife.

 

Our assaystests are based on the science of NucleosomicsTMNucleosomics™, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluid – since changes in these parameters are- an indication that disease is present. We are primarily focused on human diagnostics and monitoring but also have a subsidiary focused on animal diagnostics and monitoring.

 

BackgroundWe have five key pillars of focus: Nu.Q®, Nu.Q® NETs, Nu.Q® Capture, Nu.Q® Discover and Nu.Q® Vet, all of which use the same proprietary Nu.Q® platform to Genetics Epigenetics and Cancercommercialize in different areas.

 

Human genetics,Our research and development activities are centered in Belgium, with an innovation laboratory in California, and additional offices in Texas, London, and Singapore, where we focus on bringing our diagnostic and disease monitoring products to market.

Volition’s Solution and the sequenceScience Behind It

We are dedicated to revolutionizing the diagnosis and monitoring of life-altering diseases by advancing the science of epigenetics. Imagine a world where diseases like cancer and sepsis can be diagnosed early and monitored easily using routine blood tests. That’s the world we’re trying to build by developing our DNA, is essentially a “recipe book” containing detailsinnovative family of howsimple, easy to make eachuse, cost-effective Nu.Q® tests.

Our patented Nucleosomics™ technology uses chromosomal structures called nucleosomes as biomarkers in cancer and other diseases: as explained below, chromosomes consist of the thousandsgenetic material (DNA) wrapped in a coat of different proteins and other molecules. All the tests in our portfolio detect various characteristic changes in nucleosomes that occur from the earliest stages of disease, enabling early detection and potentially a better way to monitor disease progression and the patient’s response to treatment.

Unlocking Epigenetics

We believe epigenetics is the most exciting field in disease detection and management today. Modern genetics - the study of genes and heredity, is underpinned by the linear sequences of molecular “letters” present in the human body; simply put, there is a different gene (or recipe) forDNA double helix of each protein.  However, just because a recipe is in the book, doesn’t mean you have to make it, and nobody makes all the proteins in their DNA. For example, men have all the genes necessary to make ovarian and uterine proteins but do not do so. Similarly, muscle cells do not make liver proteins or kidney proteins. This is because the genes for liver and kidney proteins are “switched off” in muscle cells. The mechanisms for the controlliving cell, many of which genes are active or inactive inencode the genes. It has had an enormous impact on the practice of medicine, revolutionizing the way doctors identify people with inherited conditions, diagnose cancer, and, increasingly, design personalized treatment plans. However, there’s more to chromosomes than just the DNA sequence; at Volition, we focus on chromosomes’ second epigenetic code, which contains a cell are collectively known as epigenetics.

There are many different typeswealth of cancers but generallyadditional information about the primary causehealth and function of each cancer is the mutation within a cellbody’s cells. You can think of the DNA encoding or regulatingsequence of each cell as the expressiontext of one or more specific genes called oncogenes. While many mutations can have no consequence, some can lead toan instruction manual, and epigenetics as the uncontrolled expansion of the mutated cells and their dissemination to otherformatting. Some parts of the bodymanual are bolded, highlighted, or underlined, telling the cell to emphasize those sections, while others are struck out, telling the cell to ignore those genes.

The cells of most bodily organs are continuously replaced by new ones. As they die, many old cells release their nucleosomes into the bloodstream. Our patented Nucleosomics™ technology isolates these circulating nucleosomes from the tissue of origin in a process called metastasis. Another consequence of these mutations is an alteration in the epigenetic regulation of many other genesblood for quantification and this, in turn, can create a unique epigenetic signature in the cancer cells.analysis.

 

Epigenetic control is therefore a critical factor in biology and medicine. A number of epigenetic cancer drugs have been in routine clinical use for more than a decade and the altered epigenetic signature seen in cancer underpins Volition’s diagnostic approaches.vnrx_10kimg7.jpg

 

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A

Chromosome and nucleosome structure represent a major mechanism for epigenetic control is mediated through chromosome and nucleosome structure.control. Each chromosome contains aone long, single molecule of DNA whichthat is coated by a complex array of proteins, mostly in the form of nucleosomes, giving the stretched-out, unwound DNA/protein core, (or chromatin)or chromatin, the appearance of “beads on a string”.string.” Unwound chromatin is accessible for reading (or transcribing), and “unwound”unwound genes may be active. However, genes whose nucleosomes arewith coiled or supercoiled nucleosomes are inaccessible and inactive.

 

Figure 1 – A chromosomevnrx_10kimg8.jpg

 

Each nucleosome consists of a disc of eight histone proteins wrapped by a short length of DNA. Nucleosome structure has a dual role: first, it allows the compact storage and protection of the genetic material (or DNA), and second, it modulates the epigenetic regulation (or transcription)(transcription) of that DNA. This regulation is achieved through reversible chemical changes to both the DNA and protein components as well as through the binding of specific regulatory proteins to the DNA.




Volition’s Epigenetic Approach

 

Volition’sThrough our Nu.Q® (short for nucleosome quantification) family of tests in our five key pillars, we aim to offer a new, convenient and cost-effective approach is to investigate the epigenetic structuredetection, diagnosis and monitoring of chromatin and nucleosomes rather than investigating only the DNA sequence. We are continuously developing new technologies including:diverse diseases from a simple blood test.

 

A suite of low cost Nu.QTM immunoassays that can accurately measure nucleosomes containing numerous epigenetic signals or structure.

Nu.QTM Capture technology to isolate or enrich nucleosomes containing particular epigenetic signals or structures for a wide range of potential scientific and medical applications. For example, the enrichment of nucleosomes of tumor origin in blood samples taken from cancer patients.

We plan to develop an ability to produce synthetic (recombinant) nucleosomes containing exact defined epigenetic signals and structures. These are used to ensure exquisite accuracy of Nu.QTM immunoassay tests but also have many other applications including use as tools in epigenetic drug development.Highlighting abnormalities

 

Our technology seeks to detect characteristic epigenetic changes in nucleosomes that occur from the earliest stages of cancer and other diseases. Epigenetic changes often occur before the diseased cells themselves become abnormal enough to show up in traditional biopsies, and oftentimes before the first symptoms are felt. We aim to replace unpleasant, invasive, and often expensive screening and diagnostic tests such as colonoscopies and biopsies with Nu.Q® blood tests, helping to save lives and to reduce overall healthcare costs.

Population screening

Our technology and tests could potentially play a game-changing role in early detection of disease in asymptomatic people via routine, population-wide screening. We believe that simple, cost-effective, and accurate tests are the “holy grail” of an effective screening program.

Risk stratification and diagnostic aid

In addition to being highly informative in their own right, Nu.Q® tests have the potential to improve the sensitivity and specificity of other clinical tests. Our tests could also reduce the number of people needing invasive biopsies and other diagnostic procedures, which can be expensive and harmful.

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Disease and treatment monitoring

Nu.Q® tests may act as an early warning system by monitoring treatment response, disease progression and remission.

Improving Outcomes for Cancer Patients

 

The prospectsWe have five key pillars of focus: Nu.Q®, Nu.Q® NETs, Nu.Q® Capture, Nu.Q® Discover and Nu.Q® Vet, all using the same proprietary Nu.Q® platform.

Nu.Q® - Detecting cancer early to save lives.

We are developing a simple, cost-effective blood test for cancer. Cancer is a devastating disease that touches many peoples’ lives, accounting for approximately 10 million deaths worldwide each year. Early diagnosis is the best way to improve someone’s chances of surviving cancer; however, current population-wide screening tests (such as mammograms and colonoscopies) are often invasive and unpleasant. They can also be expensive, causing many people to miss routine screening. There are no population screening tests at all for some types of cancer, patients vary greatly depending on whetherincluding aggressive forms of the disease is detected at an early localized stagesuch as ovarian or pancreatic cancers. Unfortunately, many patients are therefore diagnosed too late, when effective treatment options are available, or at an advanced stage when the disease may havetheir cancer has already spread, and treatment is much more difficult. Unfortunately, most cancers are symptomless at early stageWe believe that Nu.Q® can become a cost-effective routine blood test for multiple types of cancer, allowing doctors to check off an extra box along with other routine blood tests like cholesterol during an annual wellness visit. Nu.Q® tests have further potential applications in clinical oncology beyond cancer detection. Being able to use epigenetic information from tumor cells’ nucleosomes could also help physicians select the best treatment for each patient, monitor their response and most patients are not diagnosed until the disease has spread to other organs in the body and the likely outcome is poor. Simple low-cost immunoassay blood tests to detect cancer at an early stage leading to earlier treatment would greatly improve patient outcomes.progression.

 

The LimitationsWe are currently investigating the potential use of DNA SequencingNu.Q® tests in Cancera range of cancers and clinical settings including:

vnrx_10kimg13.jpg

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Nu.Q® NETs - Monitoring the immune system to save lives.

 

The adventimmune system can be both friend and foe; a potent protective force that sometimes overreacts, damaging the body’s own cells and tissues in the process. We are working to develop tests that will identify people at high risk of next generation sequencing has revolutionized medical research and ledpoor outcomes/death caused by an immune system overreaction to a host of medicalCOVID-19 and other innovations. For example, sequencinginfections. The immune system is comprised of many different types of white blood cells with different functions. The most abundant of these white blood cells are neutrophils, which serve as a first line of defense. When neutrophils detect bacteria, viruses, injuries, or other threats, these cells produce Neutrophil Extracellular Traps (“NETs”), which are sticky webs made of long strings of nucleosomes that work to inhibit a perceived threat from spreading through the body.

vnrx_10kimg10.jpg

Although NETs are an important part of the body’s response to infection, the presence of too many of them in the blood can tip the immune system’s delicate balance between reaction and overreaction. Elevated levels of NETs are a complicating factor associated with poor patient outcomes in a range of infectious and non-infectious diseases.

Sepsis—widespread tissue and organ damage triggered by an abnormal immune response to an infection—is an area of particular focus for our research on NETs. A recent global study estimated that there were approximately 49 million cases and 11 million sepsis-related deaths worldwide in 2017, accounting for approximately 20% of all deaths from the same year.

Severe cases of COVID-19 can cause excessive production of NETs in the lungs, which can lead to severe lung impairment or death. Because NETs contain nucleosomes, our proprietary Nu.Q® nucleosome assays have been shown to detect NETs. Using our Nu.Q® nucleosome assays could enable the stratification of patients with a high level of NETs, allow physicians to rapidly triage these patients, and monitor their disease progression and response to treatment.

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The focus on sepsis due to the COVID-19 pandemic has accelerated our research on NETs. Our current programs include:

vnrx_10kimg14.jpg

Nu.Q® Capture - Capturing and concentrating samples for more accurate diagnosis - Locating the needle in a haystack.

Human blood is a mixture of many different cell types floating in a complex soup of proteins and other molecules, including nucleosomes released by cells from all around the body. Detecting a handful of cancerous or other abnormal cells in a patient’s blood sample has historically been like finding a proverbial needle in a haystack. Volition’s Nu.Q® Capture program has several strands of technology which either essentially removes background noise, thereby amplifying the signal or looks to identify the signal in a novel way. This sample enrichment tool removes healthy nucleosomes, leaving an enriched sample of abnormal nucleosomes behind for further analysis. These nucleosomes contain tumor-specific DNA “typos,” epigenetic changes, and other biomarkers that when analyzed could potentially be used to diagnose a specific type of tumor tissueremovedcancer or other medical condition, guide treatment selection, and monitor disease and treatment progress. Other strands of Nu.Q® Capture technology involve isolating various chromatin fragments including nucleosomes and transcription factors from plasma for analysis by surgery or biopsy uncovers cancermass spectrometry and next-generation DNA mutationssequencing.

Deploying Nu.Q® Capture as the first blood sample processing step could potentially:

·

Enhance the sensitivity of subsequent Nu.Q® immunoassays for diagnosing and monitoring different types of disease using our proprietary Nucleosomics™ platform.

·

Aid the development of improved diagnostic DNA sequencing methods.

·

Serve as a quality control tool to reduce the rate of clinical test failure, saving time that is especially valuable for people whose test results are being used to inform their treatment.

·

Aid the discovery of new biomarkers.

·

Allow the complete profiling of nucleosomes.

Another novel method utilizing Nu.Q® Capture and mass spectrometry was published in 2021 and demonstrated the detection and quantification of histone modifications present in the tumor and is used to direct patient treatment selection, but tissue biopsy cannot be used routinely for cancer detection.

However, small fragments of cancer DNA from dead tumor cells are also foundcirculating nucleosomes in the blood of cancer patients. We believe that our work has highlighted for the first time that histone H2A1R3 citrulline is, in plasma, upregulated in colorectal cancer patients and so it is possible to sequence circulating tumor DNA (ctDNA)could be a biomarker we target for future Nu.Q® immunoassay development. Furthermore, the use of Nu.Q® Capture may open up the possibility of using mass spectrometry not only for biomarker discovery as demonstrated in this publication but also as a blood sample taken from a patient to testhigh throughput platform for any cancer DNA mutations (e.g., mutated P53, KRAS, EGFR). Unfortunately, these ctDNA blood tests, often called liquid biopsy tests, have thus far also proved ineffectual for early stage cancer detection.screening and/or diagnostics when used in combination with either sequencing and/or our Nu.Q® assays.

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vnrx_10kimg12.jpg

 

The main reasons why ctDNAThis technology sheds new light on epigenetic changes that cannot be effectively detected amid the noise left behind when using current testing methods, leading to better clinical tests alone have not proved useful for early cancer detection include:and potentially improved outcomes in the future. Volition is engaged in multiple research collaborations with academic laboratories working at the cutting edge of their respective fields, to ensure we take advantage of the latest findings and turn them into new clinical tools as quickly as possible.

 

The level of DNA fragments circulating in the blood is very low.

Only a small proportion of the circulating DNA fragments are of tumor origin and the proportion is especially low in early stage cancer (usually less than 1%). The remaining “healthy” DNA fragments originate mainly from dead white blood cells.

Nu.Q® Discover - A DNA sequence mutation will occur on only one in several million (upcomplete solution to 20 million) of the circulating DNA fragments that do originate from cancer cells.

This means that cancer mutations are found in one in millions of a small percentage of a very low level of circulating DNA fragments, with the result that ctDNA is undetectable in most early stage cancer patients.

Many cancer-like mutations have recently been found to be present in the blood of healthy elderly people through a process known as clonal hematopoiesis. Any DNA released from these cells could lead to false positive readings.profiling nucleosomes.

 

Volition’s Epigenetic ApproachNu.Q® Discover gives clinicians, patients, and researchers access to Cancera range of state-of-the-art assays, built on our proprietary Nucleosomics™ platform, for rapid epigenetic profiling in disease model development, preclinical testing and clinical trials. Our H3.1 assay is also available for purchase as a Research Use Only kit. Our assays run in our Silver One facility in Belgium or on site and can be used to answer clinical questions, such as measuring treatment efficacy, or on-target and off-target effects in drug development. Applications include biomarker discovery in oncology, inflammatory conditions, diabetes and more. Existing and potential customers include both pharmaceutical companies and academic research institutions.

Nu.Q® Vet (through Volition Vet)

 

Cancer is the most common cause of death in essence a diseasedogs over the age of genetic and epigenetic mis-regulation of oncogenes and tumor suppressor genestwo years in the chromosomesUnited States. Up to 50% of affected cells, leading to uncontrolled cell divisionall dogs over the age of 10 will develop cancer in their lifetimes. With approximately 77 million pet dogs in the United States, there are an estimated six million pet dogs diagnosed with cancer each year. As with humans, earlier detection can save lives and eventually to uncontrolled tumor growth and spread. Thus,can also improve the epigenetic signaling structuresquality of chromosomes and nucleosomes are different in cancer cells and healthy cellslife of the same tissue.

When adog and its owner. Yet, as of today, there are few single assay cancer cell dies, its chromosomesblood tests on the veterinary market. Currently, dogs suspected of having cancer are digested into nucleosomes as shown in the figure below. Most nucleosomes are metabolized, but some are released into the blood stream as circulating nucleosomes. The DNA attachedrequired to these nucleosomes is ctDNA.

However, liquid biopsy companies extract only the DNA and discard the remainder of the nucleosome.




Volition analyzes whole circulating nucleosomes containing particular epigenetic signals and structures using our low cost, but highly accurate Nu.QTM nucleosome immunoassay tests.

Figure 2 – Digestion of a chromosome into nucleosomes.

The epigenetic structure of nucleosomes of cancer origin is known to differ from that of nucleosomes from healthy cells. These epigenetic changes occur early and drive the development of cancer, for example by inappropriately activating oncogenes that promote cell division or inactivating tumor suppressor genes that repress cell division. However, the structural epigenetic changes that occur are not restricted to “1 in 20 million” nucleosomes or even to oncogenes and tumor suppressor genes, but are widely distributed, providing a larger cancer signal, enabling earlier detection of cancer. We use our Nu.QTM immunoassay tests to detectundergo a variety of early stage cancers.

Circulating cancer nucleosomes also differ from nucleosomes of healthy origin in other ways. For example, the DNA fragments in cancer nucleosomes are approximately 20 base pairs (or about 14%) shorter than the DNA fragments in nucleosomes originating in healthy cells. This structural difference is used as the basis of one of Volition’s Nu.QTM Capture technologies to separate or enrich cancer nucleosomes by removing nucleosomes of healthy origin. Volition expectsdiagnostic tests that Nu.QTMCapture technology will further increase the accuracy of its Nu.QTM immunoassay tests to detect early stage cancersmay be expensive, time consuming, and will also be useful to ctDNA companies to decrease the cost and increase the accuracy of liquid biopsy tests.

Research and Development

We are developing NucleosomicsTM technologies in a number of areas including:

Adaptation and optimization of Nu.QTM immunoassay tests across multiple clinical platforms worldwidepainful for the rapid quantification of epigenetic changes in blood and other biofluids. Volition’s Nu.QTM assays for use in clinical studies operate on an FDA-approved random access immunoassay autoanalyzer using a chemiluminescent magnetic particle-based assay format, a format which has enhanced analytical performance.

Nu.QTM assays are used foranimal. We hope to change this with the development of Nu.QTM blood tests for the most prevalent cancers focusing initially on colorectal cancer, lung cancer and hematological cancers using our NucleosomicsTM biomarker discovery platform. Our development platform includes assays to be used for asymptomatic (screening) subjects, high-risk populations and symptomatic patients. We are developing blood based Nu.QTM assays to detect specific biomarkers that can be used individually or in combination to generate a profile which forms the basis of a product for a particular cancer or disease.

Nu.QTM Capture technology to isolate or enrich nucleosomes containing particular epigenetic signals or structures for complete analysis by mass spectrometry, DNA sequencing, immunoassays or other methods for a wide range of potential scientific and medical applications. For example, the enrichment of nucleosomes of tumor origin in blood samples taken from cancer patients for biomarker discovery.

More widespread analysis of circulating chromatin fragments that include epigenetically active chromatin proteins.

In addition to human diagnostics, we are also developing the useintroduction of the Nu.QTM® technologyVet Cancer Screening Test: a simple, cost-effective, easy to use enzyme-linked immunosorbent assay (“ELISA”) based screening blood test which may help streamline the diagnostic process for older or “at-risk” dogs.

Data have been published in veterinary applications.  An initial proof-of-concept study demonstratedpeer-reviewed journals demonstrating Nu.Q® Vet’s detection of common canine cancers such as lymphoma and hemangiosarcoma. More recently, data have been presented at the Veterinary Cancer Society Annual Conference suggesting that nucleosomes canNu.Q® Vet may also serve as a more sensitive measurement of both minimal residual disease and remission and could be detected ina useful monitoring test for dogs with cancer.

We are currently conducting ongoing research regarding Nu.Q® Vet as follows:

Broadening the Range of Cancer Detected

·

We have conducted work in other canine cancers and anticipate a further peer reviewed publication in 2022.

·

Although thus far the Nu.Q® Vet Cancer Screening Test has been marketed as a screening test for lymphoma and hemangiosarcoma, this Test may be useful in detecting other forms of cancer as well.

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The Nu.Q® Vet Cancer Screening Test performs best for tumors that are more systemic (higher metastatic rate) or have a high cellular turnover rate.

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We are also working to incorporate additional histone modifications into the Nu.Q® Vet Cancer Screening Test that will help to better differentiate between various cancer types.

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Differential Diagnosis

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We are currently developing additional assays to add to the Nu.Q® Vet Cancer Screening Test to better differentiate inflammatory and other conditions from cancer.

·

Studies are underway at five U.S. university hospitals to collect data comparing a variety of concomitant conditions including:

·

Inflammatory conditions

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Immune mediated disease

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Endocrinopathies

Point of Care Test

·

 We are in the process of developing a point of care test to aid the timely provision of diagnosis and treatment response.

Over the next 12 to 24 months, we are planning to explore and therefore haveevaluate the potential to differentiate cancer from other diseases.  We will now test theuse and early detection efficacy of our Nu.QTM® Vet platform in larger trials in veterinary medicine.  Our extensive intellectual property portfolio includes the coverage of veterinary applications.




Commercialization Strategycats (related to cancer), horses (related to disease and performance fitness), and cattle (for feedlot disease).

 

Manufacturing Capabilities and Strategy

Our Silver One site in Belgium offers cutting edge, purpose-built manufacturing and processing facilities. We currently manufacture our own plates and large-scale manufacturing of our antibodies on beads. Our expert team is on hand throughout, to offer guidance and support and to fulfil customer needs. Our objective is to establish long-term mutually beneficial commercial relationships.

Commercialization Strategy

We believe, that given the global prevalence of cancer and diseases associated with NETosis, and the low-cost, accessible and routine nature of our tests, Nu.QTM® could potentially be used throughout the world.

We have developed and are continuing to develop a large portfolio of intellectual property (“IP”), centered around the science of identifying and measuring nucleosomes in the bloodstream. We call this science Nucleosomics™. Our technologies have a large range of applications, both in humans and animals, to screen, diagnose, and risk stratify patients, and to monitor treatments, disease progression and potential remissions. While we initially focused on cancer, we have now broadened the range of indications to include several diseases associated with NETosis, including sepsis, which is estimated to be responsible for one in five deaths worldwide.

Our launch sequence is largely determined to a large extent by the regulatory hurdles -we face; consequently, we aim to initially launch in Europe and Asia, and subsequently in the United States.

We planaim to workremain an IP powerhouse in the Nucleosomics™ space and expect to monetize our IP and technologies through licensing and distribution contracts with partners and/companies with established distribution networks on a worldwide or distributorsregional basis, in both human and animal care.

The first series of products we expect to commercialize Nu.QTM worldwide. launch, following the roll-out of our canine cancer screening test, are:

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a canine cancer monitoring test;

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a NETosis related screening and monitoring test;

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Nu.Q® Discover; our biomarkers for research purposes and to support clinical trials; and

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Cancer tests for humans in Non-Hodgkin's Lymphoma, colorectal cancer and lung.

Our Nucleosomics™ technology is transferable to multiple platforms such as ELISA 96-well plates, bead-based chemiluminescent and we are currently working on transferring our technology to the widely-utilized homogeneous immunoassay or HIA platform and several point of care platforms to enable rapid turnaround of results in clinic/the doctor’s office.

Additionally, we are working on complete nucleosome analysis inwith our Nu.QTM® Capture technology. The goal of this project is to investigate ways to specifically target ctDNA.circulating tumor DNA (“ctDNA”). The ability to enrich ctDNA will allow us to use mass spectrometry to analyze histone and DNA modifications, and moreover to sequence the DNA present around the nucleosomes. This information might enable cancer diagnosis to identify the tissue of origin of that given cancer.

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Our Market Opportunity

 

Commercialization will take multiple formsVolition applies its Nucleosomics™ platform through its subsidiaries to develop simple, easy to use, cost-effective blood tests to help diagnose and monitor a range of life-altering diseases for both humans and animals including certain cancers and diseases associated with NETosis such as sepsis and COVID-19. Given the wide-ranging nature of our products in various markets and opportunities including, but not limited to:development we believe that our market opportunity is large.

 

Licensing of intellectual propertyBased on our calculations, we believe that Volition’s annual total addressable market is approximately $70 billion. Key assumptions for Research Use Only (RUO) sale of Nu.QTM assays and/or Nu.QTM Capture reagents;

Licensing of intellectual property for laboratory developed patient testing services utilizing Nu.QTM  assays and/or Nu.QTM Capture reagents;

Licensing of intellectual property for clinical products utilizing Nu.QTM assays and/or Nu.QTM Capture reagents;

Sale of clinical products utilizing Nu.QTM assays and/or Nu.QTM Capture reagents through distributor networks;

Direct research services in Nu.QTM assays and/or Nu.QTM Capture technology;

Direct veterinary clinical services in Nu.QTM assays; and

Sale of veterinary clinical products utilizing Nu.QTM Vet assays and/or Nu.QTM Capture reagents through distributor networks.this market forecast are:

 

If we do not have enough funds to fully implement our business plan, we will be forced to scale back our plan of operations and our business activities, increase our anticipated timeframes to complete each milestone or seek additional funding. In the event that additional financing is delayed, we will prioritize the maintenance of our research and development personnel and facilities, primarily in Belgium.

 

The Market Opportunity

Cancer is one of the leading causes of death worldwide, accounting for around 9.5 million annual deaths globally. There are over 18 million new cases of cancer diagnosed each year and given the aging population this is expected to grow rapidly to over 29.5 million new cases annually by 2040. Currently, in the United States there are more than three new cases of cancer diagnosed and one person dies from a cancer-related cause every minute. Statistically, the chances of surviving cancer are greatly improved by early detection and treatment. However, there are currently very few blood tests for diagnosis of cancer in common clinical use.

·

Nu.Q® Vet: opportunity is calculated based on canine and feline populations that are eligible for screening and monitoring.

·

Nu.Q® Discover: opportunity is calculated using drug pipeline data (registered clinical trial programs) for relevant epigenetic targets.

·

Nu.Q® NETs: opportunity is calculated based on average length of stay and estimated hospital admissions and discharges for sepsis.

·

Nu.Q® Cancer: opportunity is calculated based on eligible population for annual screening, target participation rates and incidence/prevalence of specific cancers and risk stratification use cases.

 

We believe that early, non-invasive, accurate cancer diagnosis remains a significant unmet medical need and a significant commercial opportunity. For these reasons, cancer diagnostics is an active field of research and development both academically and commercially.have assumed the following prices per test:

 

The global in vitro diagnostic medical device, or IVD, market was $64.5 billion in 2017 and is forecasted to reach $93.6 billion by 2025, registering a compound annual growth rate, or CAGR, of 4.8% from 2018 to 2025.  The forecasted growth is due primarily to the increasing health care demands of an aging population.

·

Human: $120 for the U.S., €45 for Europe, $25 for the rest of the world.

·

Veterinary: $50 globally.

 

The United States is currentlyTo the largest veterinary market in the world and has a clearly defined regulatory pathway through the U.S. Departmentextent that one or more of Agriculture (USDA), requiring fewer and smaller clinical studies than the FDA process for human diagnostics. This generally allows for a much faster route to revenue for veterinary products as compared to human products.our assumptions prove incorrect our calculation could be materially impacted.

 

We anticipate that because of their ease of use and cost efficiency of our tests they have the potential to become the first method of choice for cancer diagnostics, allowingdisease detection of a range of cancers at an earlier stage than typically occurs currently, and testing of individuals who, for reasons such as time, cost or aversion to current methods, are not currently being tested.monitoring in both humans and animals.

 

Our Competition

 

We anticipate facing competition primarily from other human focused healthcare, pharmaceutical and diagnostic companies such as Exact Sciences Corporation, Guardant Health, GRAIL Inc., Freenome Holdings Inc.,Inc, CellMax Life, Archer DX Inc., Thrive Earlier Detection Corp., Foundation Medicine Inc., Oncocyte Corporation, OpKo Health Inc., MDNA Life Sciences Inc., Oncimmune Holdings Plc, Abbott Laboratories Inc., Cepheid Inc., Koninklijke Philips N.V., GE Healthcare, Siemens, Gen-Probe Incorporated, EpiGenomics AG, MDxHealth SA, and Roche Diagnostics.Diagnostics, and from companies such as Mars Incorporated, IDEXX Laboratories Inc., PetDx, One Health Company (Fidocure) and Vidium Animal Health focused on the veterinary space. There may also be other companies developing products competitive with ours of which we are unaware.




 

We predict that our future products will have a competitive edge compared to those offered by competitors on the basis that our tests are being developed to be accurate, cost-effective, and attractive from a government reimbursement perspective, easy to use, non-invasive, technologically advanced, and compatible with immunoassay systems, based on strong intellectual property and to be used for mass screenings.

 

Many of our competitors have substantially greater financial, technical, and other resources and larger, more established marketing, sales and distribution systems than we have. Many of our competitors also offer broad product lines outside of the diagnostic testing market and have brand recognition. Moreover, our competitors may make rapid technological developments that may result in our intended technologies and products becoming obsolete before we are able to enter the market, recover the expenses incurred to develop them or generate significant revenue. Our success will depend, in part, on our ability to develop our intended products in a timely manner, keep our future products current with advancing technologies, achieve market acceptance of our future products, gain name recognition and a positive reputation in the healthcare industry, and establish successful marketing, sales and distribution efforts.

 

Government Regulations

 

The health carehealthcare industry, and thus our business, is subject to extensive federal, state, local and foreign regulation. Some of the pertinent laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of subjective interpretations. In addition, these laws and their interpretations are subject to change.

 

Both United States federal and state governmental agencies continue to subject the health carehealthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts. As indicated by work plans and reports issued by these agencies, the federal government will continue to scrutinize, among other things, the marketing, labeling, promotion, manufacturing, and export of diagnostic health carehealthcare products. Our diagnostic products fall within the IVD medical device category and are subject to FDA clearance or approval in the United States.

The federal government also has increased funding in recent years to fight health carehealthcare fraud, and various agencies, such as the United States Department of Justice, the Office of Inspector General of the Department of Health and Human Services, or OIG, and state Medicaid fraud control units, are coordinating their enforcement efforts.

 

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Commercialization of our future products in the clinical IVD market (e.g. for patient diagnosis in hospitals, clinics, etc.) requires government approval (CE marking in Europe, FDA approval in the United States, and Chinese Food and Drug Administration (“CFDA”) approval in China). Our diagnostic products fall within the IVD medical device category and are subject to FDA clearance or approval in the United States. We anticipate our tests will have to be cleared through the FDA’s premarket notification (“510(k)”), process, or its premarket approval (“PMA”) process. The determination of whether a 510(k) or a PMA is necessary will depend in part on the proposed indications for use and the FDA’s assessment of the risk associated with the use of the IVD for a particular indication. A similar system operates in China through the CFDA.

In Europe, IVD medical devices are regulated by the European Directive 98/79/EC (“EU IVDD”), where products not listed in ANNEX II, such as the ones developed by Volition, can be CE marked through a self-certification through the CE mark system.process. Under thethis system, developers and manufacturers must operate a Quality System and validate medicalbuild/maintain a technical documentation file demonstrating the conformity of the product with the requirements of the EU IVDD. This includes the validation of the devices in a limited clinical trial to demonstrate the manufacturer has met analytical and clinical performance criteria. We have implemented an International Organization for Standardization standard - ISO 13485 - quality management system forThe manufacturer then issues a declaration of conformity and affixes the design and manufacture of medical devices. ISO 13485 addresses managerial awareness of regulatory requirements, control systems, inspection and traceability, device design, risk and performance criteria as well as verification for corrective and preventative measures for device failure. Medical device companies such as ours are subjectCE mark logo to pre-market compliance assessments from Notified Bodies, a certification organization which the national authority (the competent authority) of a European Union member state designates to carry out one or more of the conformity assessment procedures. ISO 13485 certification establishes conformity to specific European Union directives related to medical devices and allows CE marking and sale of the device.product.

 

As ofIn May 25, 2017, the new European In Vitro Diagnostic Regulation (IVDR - 2017/746), or the 746 (“EU IVDR,IVDR”), became effective, marking the start of a transition period for manufacturers selling IVD devices into Europe. The date of application of the EU IVDR, which replaces IVD Directive 98/79/EC, has a transition period of five years, after which the EU IVDR will apply in full, andIVDD, is May 26, 2022. After this date, no new applications pursuant to the former DirectiveEU IVDD will be accepted. Manufacturers have the duration of the five-year transition period to update their technical documentation and processes to meet the new, more stringent European Union regulatory requirements. We believe the most challenging changes under the EU IVDR will be those regarding the classification of products, which will bring almost all IVDs under the direct review and control of designated assessment organizations (“Notified Bodies,Bodies”), and the performance evaluation of IVDs, which will require extensive clinical and analytical performance studies but alsoin addition to a demonstration of scientific validity. Additional requirements will be applied to reinforce the safety of the products such as extended responsibilities of the economic actors of the supply chain, increased post marketing surveillance activities, unannounced audits from Notified Bodies, implementation of an improved traceability and transparency of the devices with in particular, the introduction of the Unique Device Identification (UDI) system and an expandedEuropean Database on Medical Devices (referred to as EUDAMED).Devices.

 

Notified Bodies can begin auditing toIn January 2022, the EU IVDR once theywas amended. The May 26, 2022, date of application of the EU IVDR remains unchanged. Tailored transitional periods have, however, been designated asintroduced for devices that must undergo a conformity assessment involving Notified BodyBodies for the first time under the EU IVDR by their Competent Authority.  For now, we expectIVDR. The length of the first Notified Bodies to be notified according totransitional periods depends on the EU IVDR by the endclassification of 2019 and we anticipate that TÜV SÜD will be one of these.  device.

In practice, it will not be possible to CE mark a product according to the EU IVDR beforehand.  For Class C devices (we expect that our devices will be Class C), the conformity assessment procedure for our products will be a combination of the Quality Management System (“QMS”) audits and Technical Documentation assessments. The assumed assessment time needed for a Technical Documentation assessment of a Class C device by our Notified Body (“TÜV SÜD”) is expected to last from about 2for nine months to 6 months.at a minimum. We have already begun discussions with the TÜV SÜD in order to ensure compliance with the EU IVDR as soon as possible.




To support the conformity to both the EU IVDD and the new IVDR, Belgian Volition has implemented a QMS, conforming to the internationally agreed standard ISO 13485 that sets out the QMS requirements specific to the medical devices industry. Belgian Volition has maintained its ISO certification since 2015.

We will also be required to comply with numerous other federal, state, and local laws relating to matters such as safe working conditions, industrial safety, and labor laws. We may incur significant costs to comply with such laws and regulations in the future, and lack of compliance could have material adverse effects on our operations.

 

We believe that we have structured our business operations to comply with applicable legal requirements. However, it is possible that governmental entities or other third parties could interpret these laws differently and assert otherwise, which could have a material adverse impact on our business.

 

Regulatory ApproachIntellectual Property

 

Commercialization of our future products in the clinical IVD market (e.g. for patient diagnosis in hospitals, clinics, etc.) requires government approval (CE marking in Europe, FDA approval in the United States, and Chinese Food and Drug Administration (CFDA) approval in China).

In the United States, we anticipate that our tests will have to be cleared through the FDA’s premarket notification or 510(k), process or its premarket approval, or PMA, process. The determination of whether a 510(k) or a PMAVolition is necessary will depend in part on the proposed indications for use and the FDA’s assessment of the risk associated with the use of the IVD for a particular indication. A similar system operates in China through the CFDA. In the European Union, our tests can be marketed after a declaration and marking that the test conforms to the essential requirements of the relevant European health, safety and environmental protection legislation, or CE marking. The CE mark is also recognized in certain Asian territories, including India, for the private payer market.

Intellectual Property

We are working on the development ofdeveloping clinical products based on the enrichment and analysis of epigenetically modified circulating nucleosomes using immunoassay, mass spectrometry, DNA sequencing and other methods. We have used this position to build a growing, broad and strong patent portfolio aroundcovering the ability to profile the epigenetic environment surrounding circulating chromosome fragments from diseased cells, including the epigenetic signaling status of nucleosomes, DNA, and other epigenetic chromatin proteins.

 

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Our patent portfolio includes 2329 patent families and a total of 4484 patents granted related to our diagnostic tests (including veterinary applications), with 812 patents granted in the United States, 914 patents granted in Europe, and a further 2758 patents granted worldwide. Additionally, we have a total of 10593 patent applications currently pending, with 13 patent applications in the United States, 10 in Europe and a further 82 worldwide.

 

We intend to continue our development of the NucleosomicsTMNucleosomics™ technologies and will continue to apply for patents for future product developments. Our IP strategy is to protect the technologies and gain market exclusivity with patents in Europe and the United States and in other strategic countries. The patents on the technologies underlying our products should provide broad coverage for each product, including protection through at least 2031 for products developed using the Nu.Q-X, Nu.Q-V and Nu.Q-A technologies.2031.

 

Employees

 

As of December 31, 2019,2021, we (including our subsidiaries) had 5083 full-time equivalentsequivalent (“FTE”) compared to 4460 as of December 31, 2018.2020. We continually assess employee turnover, recruitment initiatives, compensation and benefits programs, safety in performing critical laboratory work, diversity and other matters relevant to human capital management, and we review results with our board of directors on a periodic basis. We aim to offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages in each of our locations and in each of our employee groups at each level around the globe as assessed with internal and external benchmarking data. We aim to build a pipeline for talent to create more opportunities for workplace diversity and to support greater representation within the Company.

 

Corporate History

 

The CompanyVolitionRx Limited was originally incorporated on September 24, 1998 in the State of Delaware under the name “Standard Capital Corporation”. On September 22, 2011, the Company filed a Certificate for Renewal and Revival of Charter with the Secretary of State of Delaware. Pursuant to Section 312 of Delaware General Corporation Law, the Company was revived under the new name of “VolitionRX Limited” (which name was subsequently amended to reflect “VolitionRx Limited”).  The CompanyCorporation.” VolitionRx acquired its wholly owned operating subsidiary, Singapore Volition Pte. Limited, a Singapore registered company or (“Singapore Volition”) in October 2011. Volition on October 6, 2011.  Singapore Volition currently has one subsidiary, Belgian Volition SPRL,Global Services SRL, a Belgium private limited liability company or(“Volition Global”), was formed in August 2021, which is a wholly owned operating subsidiary of VolitionRx. Singapore Volition has one subsidiary, Belgian Volition SRL, a Belgium private limited liability company (“Belgian Volition”), which it acquired onin September 22, 2010. Belgian Volition has threefour subsidiaries, Volition Diagnostics UK Limited, a private limited company formed under the laws of England and Wales (“Volition Diagnostics”), which was formed onin November 13, 2015, Volition America, Inc., a Delaware corporation (“Volition America”), which was formed on in February 3, 2017, and Volition Veterinary Diagnostics Development LLC, a Texas limited liability company (“Volition Vet”), which was formed onin June 3, 2019.2019, and Volition Germany GmbH (formerly Octamer GmbH, or “Octamer” and now “Volition Germany”), a Munich, Germany-based epigenetic reagent company that it acquired in January 2020.

 

Our principal executive office is located at 13215 Bee Cave Parkway, Suite 125, Galleria Oaks B, Austin, Texas 78738. Our telephone number is +1 (646) 650-1351. Our website is located atwww.volition.com. The information that can be accessed through our website is not incorporated by reference into this Report and should not be considered to be a part hereof.




Financial Information

 

Financial Information

See our Consolidated Financial Statementsconsolidated financial statements and accompanying Notesnotes to the Consolidated Financial Statementsconsolidated financial statements included in this Report.

 

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WHERE YOU CAN GET ADDITIONAL INFORMATION

Table of Contents

 

ITEM 1A.

RISK FACTORS

We file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,

Our short and Current Reports on Form 8-K pursuantlong-term success is subject to Section 13(a)numerous risks and uncertainties, many of which involve factors that are difficult to predict or 15(d) ofbeyond our control. As a result, investing in our common stock involves substantial risk. Before deciding to purchase, hold or sell our common stock, stockholders, and potential stockholders should carefully consider the Exchange Act electronicallyrisks and uncertainties described below, in addition to the other information contained in or incorporated by reference into this Report, as well as the other information we file with the SEC. You can access these reports and other filings electronically on the SEC’s web site,www.sec.gov.




ITEM 1A.RISK FACTORS

An investment in our securities involves certain risks, including those set forth below and elsewhere in this Report.  In addition to the risks set forth below and elsewhere in this Report, other risks and uncertainties may exist that could adversely affect our business and financial condition.  If any of the followingthese risks actually materialize,are realized, our business, financial condition, and/orresults of operations, and prospects could suffer.be materially and adversely affected. In such event,that case, the value of our common stock could decline, and you couldstockholders may lose all or part of their investment. Furthermore, additional risks and uncertainties of which we are currently unaware, or which we currently consider to be immaterial, could have a substantial portionmaterial adverse effect on our business.

Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous risks and uncertainties including those described in this section. Refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements” within this Report for additional information.

Risks Associated with Our Company

We operate in a rapidly changing environment that involves a number of your investment. You should carefully consider the risks describedthat could materially affect our business, financial condition or future results, some of which are beyond our control. The summary below, as well as the discussion that follows the summary, highlights some of the risks that may affect future operating results. These are the risks and uncertainties we believe are most important for you to consider. We cannot be certain that we will successfully address these risks. If we are unable to address these risks, among other informationthings, our business may not grow, our stock price may suffer, and data includedwe may be unable to stay in this Report.

Risks Associated withbusiness. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our Companyindustry or business in general, may also impair our business operations.

 

Risk Factor Summary

Risks Related to our Business and Business Strategy

·

We have incurred significant losses, and we may never achieve profitability.

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We may need to raise additional capital in the future. If we are unable to secure adequate funds on terms acceptable to us, we may be unable to execute our plan of operations.

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It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably.

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The cancer diagnostics market is highly competitive and subject to rapid technological change; accordingly, we will face fierce competition, including from companies with greater resources and experience than us, and our intended products may not achieve significant market penetration and/or may become obsolete.

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Our management has broad discretion over the use of our available cash and might not allocate cash in ways that increase the value of your investment.

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Our future success depends on our ability to retain our officers and directors, scientists, and other key employees and to attract, retain and motivate qualified personnel.

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If any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to continue to operate our business could be materially harmed.

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Failure in our information technology, storage systems or our clinical laboratory equipment could significantly disrupt our operations and our research and development efforts.

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Our business and reputation will suffer if we are unable to establish and comply with stringent quality standards to assure that the highest level of quality is observed in the performance of our tests.

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Declining global economic or business conditions may have a negative impact on our business.

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The COVID-19 pandemic could adversely impact our business operations, strategy, financial performance and results of operations, the extent of which is uncertain and difficult to predict.

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We may engage in acquisitions that are not successful and which could disrupt our business, cause dilution to our stockholders and reduce our financial resources.

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Risks Related to Product Development, Commercialization and Sales of Our Products

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If the marketplace does not accept the products in our development pipeline or any other diagnostic products we might develop, we may be unable to generate sufficient revenue to sustain and grow our business.

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Our business is dependent on our ability to successfully develop and commercialize diagnostic products. If we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations.

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Failure to successfully develop, manufacture, market, and sell our future products will have a material adverse effect on our business, financial condition, and results of operations.

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The results of pre-clinical studies and completed clinical trials are not necessarily predictive of future results, and our current product candidates may not have favorable results in later studies or trials which, in turn, could have a material adverse effect on our business.

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Our research and development efforts will be hindered if we are not able to obtain samples, contract with third parties for access to samples or complete timely enrollment in future clinical trials.

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If the third parties on which we increasingly rely to assist us with our current and anticipated pre-clinical development or clinical trials do not perform as expected, we may not be able to obtain regulatory clearance or approval or commercialize our products.

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We expect to expand our product development, research and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

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We have limited experience with direct sales and marketing and any failure to build and manage a direct sales and marketing team effectively, or to successfully engage third party providers for such services, could have a material adverse effect on our business.

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We will rely on third parties to manufacture and supply our intended products. Any problems experienced by these third parties could result in a delay or interruption in the supply of our intended products to our customers, which could have a material negative effect on our business.

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We will depend on third-party distributors to market and sell our products which will subject us to a number of risks.

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The manufacturing operations of our third-party manufacturers will likely be dependent upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business.

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Defects in our products may subject us to substantial damages which could materially harm our business or financial condition.

Risks Related to Governmental Regulation and Reimbursement

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Our failure to obtain necessary regulatory clearances or approvals on a timely basis would significantly impair our ability to distribute and market our future products on the clinical IVD market.

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Reductions or changes in reimbursement policies could limit our ability to sell our products.

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If we are found to have violated laws concerning the privacy and security of patient health information or other personal information, we could be subject to civil or criminal penalties, which could increase our liabilities and harm our reputation or our business.

Risks Related to our Intellectual Property

·

If the patents we rely on to protect our intellectual property prove to be inadequate, our ability to successfully commercialize our products will be harmed and we may never be able to operate our business profitably.

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If third parties assert that we have infringed their patents and proprietary rights or challenge the validity of our patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time consuming, and delay or prevent the development or commercialization of our products.

·

If we are unable to protect our trade secrets, we may be unable to protect our interests in proprietary technology, processes and know-how that is not patentable or for which we have elected not to seek patent protection.

Risks Related to our Securities

·

The market prices and trading volume of our stock may be volatile.

·

We have identified material weaknesses in our internal control over financial reporting that have not yet been remediated, and although we are working to address such weaknesses, the failure to address these material weaknesses, or the identification of any others, could impact the reliability of our financial reporting and harm investors’ views of us, which could adversely impact our stock price.

·

We have a “going concern” opinion from our auditors, indicating the possibility that we may not be able to continue to operate.

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·

Our Second Amended and Restated Certificate of Incorporation exculpates our officers and directors from certain liability to our Company and our stockholders.

·

Our corporate governance documents, and certain corporate laws applicable to us, and share ownership by executive officers and directors, could make a takeover attempt, which may be beneficial to our stockholders, more difficult.

·

We do not expect to pay dividends in the foreseeable future.

·

We may in the future issue additional shares of our common stock which would reduce investors’ ownership interests in the Company, and which may cause our stock price to decline.

·

Future sales of our common stock could depress the market price of our common stock.

·

If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline.

·

We are a smaller reporting company and a non-accelerated filer, and we cannot be certain if the reduced disclosure requirements applicable to our filing status, as well as the exemption from the requirement to provide an auditor’s attestation report regarding the effectiveness of our internal controls, will make our common stock less attractive to investors.

Risks Related to our Business and Business Strategy

We have not generated anyincurred significant revenue since our inception,losses, and we may never achieve profitability.

 

We are a clinical stage company and have incurred losses since our formation. As of December 31, 2019,2021, we have an accumulated total deficit of approximately $89.8$137 million. As we continue the discovery and development of our future diagnostic products, we expect our expenses are expected to increase significantly. Even as we begin to market and sell our intended products, we expect our losses to continue as a result of ongoing research and development expenses, as well as increased manufacturing, sales and marketing expenses. These losses, among other things, have had and will continue to have an adverse effect on our working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with our product development and commercialization efforts, we are unable to predict when or if we will become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. If we are unable to achieve and then maintain profitability, our business, financial condition and results of operations will be negatively affected, and the market value of our common stock will decline.

 

We may need to raise additional capital in the future. If we are unable to secure adequate funds on terms acceptable to us, we may be unable to execute our plan of operations.

 

We will require additional capital to fully fund our current strategic plan, which includes successfully commercializing our Nu.QTM® cancer pipeline and developing future products. If we incur delays in commencing commercialization of our Nu.QTM® cancer pipeline or other future products or in achieving significant product revenue, or if we encounter other unforeseen adverse business developments, we may exhaust our capital resources prior to the commencement of commercialization.

 

We cannot be certain that additional capital will be available when needed or that our actual cash requirements will not be greater than anticipated. Financing opportunities may not be available to us, or if available, may not be available on favorable terms. The availability of financing opportunities will depend on various factors, such as market conditions and our financial condition and outlook. In addition, if we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, and these newly issued securities may have rights, preferences or privileges senior to those of existing stockholders. If we obtain debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations. If we are unable to obtain financing on terms favorable to us, we may be unable to execute our plan of operations and we may be required to cease or reduce development or commercialization of any future products, sell some or all of our technology or assets or merge with another entity.

 

It is difficult to forecast our future performance, which may cause our financial results to fluctuate unpredictably.

 

Our limited operating history and the rapid evolution of the market for diagnostic products make it difficult for us to predict our future performance. A number of factors, many of which are outside of our control, may contribute to fluctuations in our financial results, such as:

·

our ability to develop or procure antibodies for clinical use in our future products;

·

our ability to translate preliminary clinical results to larger prospective symptomatic and screening populations;

·

the demand for our intended products;

·

our ability to obtain any necessary financing;

·

our ability to market and sell our future products;

 

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our ability to develop or procure antibodies for clinical use in our future products; 

·

market acceptance of our future products and technology;

·

performance of any future strategic business partners;

·

our ability to obtain regulatory clearances or approvals;

·

our success in collecting payments from third-party payors and customers;

·

our ability to translate preliminary clinical results to larger prospective symptomatic and screening populations;

the demand for our intended products;

our ability to obtain any necessary financing;

our ability to market and sell our future products;

market acceptance of our future products and technology;

performance of any future strategic business partners;

our ability to obtain regulatory clearances or approvals;

our success in collecting payments from third-party payer and customers;

changes in technology that may render our future products uncompetitive or obsolete;

·

competition with other cancer diagnostics companies; and

·

adverse changes in the healthcare industry (human and canine).

The cancer diagnostics market is highly competitive and subject to rapid technological change; accordingly, we will face fierce competition, including from companies with greater resources and experience than us, and our intended products may not achieve significant market penetration and/or may become obsolete.

The cancer diagnostics market is extremely competitive and characterized by rapidly evolving industry standards and new product enhancements. Cancer diagnostic tests are technologically innovative and require significant planning, design, development, and testing at the technological, product, and manufacturing process levels. These activities require significant capital commitments and investment. There can be no assurance that our intended products or proprietary technologies will remain competitive following the introduction of new products and technologies by competing companies within the industry. Furthermore, there can be no assurance that our competitors will not develop products that render our future products uncompetitiveobsolete or obsolete;that are more effective, accurate or can be produced at lower costs. There can be no assurance that we will be successful in the face of increasing competition from new technologies or products introduced by existing companies in the industry or by new companies entering the market.

competition with other

The market for cancer diagnostics companies;is also significantly affected by new product introductions and other market activities of industry participants. Our competitors include large multinational corporations and their operating units, including Exact Sciences Corporation, Guardant Health, GRAIL Inc., Freenome Holdings Inc, CellMax Life, Archer DX Inc., Thrive Earlier Detection Corp., Foundation Medicine Inc., Oncocyte Corporation, OpKo Health Inc., MDNA Life Sciences Inc., Oncimmune Holdings Plc, Abbott Laboratories Inc., Cepheid Inc., Koninklijke Philips N.V., GE Healthcare, Siemens, Gen-Probe Incorporated, EpiGenomics AG, MDxHealth SA, and Roche Diagnostics, and from companies such as Mars Incorporated, IDEXX Laboratories Inc., PetDx, One Health Company (Fidocure) and Vidium Animal Health focused on the veterinary space. There may also be other companies developing products competitive with ours of which we are unaware.

adverse

Many of our competitors have greater resources and experience than us and may enjoy several competitive advantages, including:

·

significantly greater name recognition;

·

established relationships with healthcare professionals, companies and consumers;

·

additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;

·

established supply and distribution networks; and

·

greater resources for product development, sales and marketing, and intellectual property protection.

Many of these other companies have developed and will continue to develop new products that will compete directly with our future products. In addition, many of our competitors spend significantly greater funds for the research, development, promotion, and sale of new and existing products. These resources may allow them to respond more quickly to new or emerging technologies and changes in consumer requirements. We also face competition in our search for third parties to assist us with sales and marketing of our product candidates, which may negatively impact our ability to enter into favorable sales and marketing arrangements. For all the healthcare industry.foregoing reasons, we may not be able to compete successfully against our competitors.




Our management has broad discretion over the use of our available cash and might not allocate cash in ways that increase the value of your investment.

As of December 31, 2021, we had approximately $20.6 million in combined cash and cash equivalents compared to approximately $19.4 million as of December 31, 2020. Our management expects to deploy these resources primarily to expand our commercialization activities, to fund our product development efforts and for general corporate and working capital purposes. However, our management has broad discretion to pursue other objectives. Our management might not apply our cash in ways that increase or permit any return of your investment.

Our future success depends on our ability to retain our officers and directors, scientists, and other key employees and to attract, retain and motivate qualified personnel.

 

Our success depends on our ability to attract, retain and motivate highly qualified management and scientific personnel. In particular, we are highly dependent on Cameron Reynolds, our President and Chief Executive Officer, our other officers and directors, scientists and key employees. The loss of any of these persons or their expertise would be difficult to replace and could have a material adverse effect on our ability to achieve our business goals. In addition, the loss of the services of any one of these persons may impede the achievement of our research, development and commercialization objectives by diverting management’s attention to the identification of suitable replacements, if any. There can be no assurance that we will be successful in hiring or retaining qualified personnel and our failure to do so could have a material adverse effect on our business, financial condition and results of operations.

 

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Recruiting and retaining qualified scientific personnel and, in the future, sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among pharmaceutical, biotechnology and diagnostic companies for similar personnel. We also experience competition for the hiring of scientific personnel from universities and research institutions. We do not maintain “key person” insurance on any of our employees. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research, development and commercialization strategies. Our consultants and advisors, however, may have other commitments or employment that may limit their availability to us.

 

We expectIf any of our facilities or our laboratory equipment were damaged or destroyed, or if we experience a significant disruption in our operations for any reason, our ability to expandcontinue to operate our product development,business could be materially harmed.

If our present, or any future facilities, were to be damaged, destroyed or otherwise unable to operate, whether due to fire, floods, storms, tornadoes, earthquakes, other inclement weather events or natural disasters, employee malfeasance, terrorist acts, power outages, or otherwise, it may render it difficult or impossible for us to perform our research and salesdevelopment for some period of time and marketing capabilities,our business could be severely disrupted. The lead time from ordering to delivery of certain specialized equipment we use can be more than six months and difficult to substitute.

Failure in our information technology, storage systems or our clinical laboratory equipment could significantly disrupt our operations and our research and development efforts.

Our ability to execute our business strategy depends, in part, on the continued and uninterrupted performance of our information technology systems, which support our operations including our research and development efforts. The integrity and protection of our own data, and that of our customers, clinical trial subjects and employees, is critical to our business. The regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve. IT systems are vulnerable to damage from a variety of sources. High-profile security breaches at other companies and in government agencies have increased in recent years, and cyber-attacks are becoming more sophisticated and frequent, and in some cases have caused significant harm. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data. While we devote significant resources to security measures to protect our systems and data, these measures cannot provide absolute security.

Any breach or interruption of our information technology systems could compromise our networks and the information stored therein could be accessed by unauthorized parties, publicly disclosed, lost or stolen. Despite the precautionary measures we have taken to prevent unanticipated problems that could affect our IT systems, unauthorized access, loss or disclosure could also disrupt our operations, including our ability to:

·

provide customer assistance services;

·

conduct research and development activities;

·

collect, process and prepare company financial information;

·

provide information about our tests and other patient and healthcare provider education and outreach efforts through our website; and

·

manage the administrative aspects of our business and damage to our reputation.

Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as the U.S. Health Insurance Portability and Accountability Act of 1996, similar U.S. state data protection regulations, including the California Consumer Privacy Act, the EU’s General Data Protection Regulation, and other regulations, the breach of which could result in significant penalties.

Failure to adequately protect and maintain the integrity of our information systems and data, including as a result weof a security breach, may encounter difficulties in managing our growth, which could disrupt our operations.

We are focused on developing our pipeline for future products. Our efforts will result in significant growth in the number of our consultants, advisors,losses and employees and the scope of our operations. In order to manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plan or disrupt our operations.

We have limited experience with direct sales and marketing and any failure to build and manage a direct sales and marketing team effectively, or to successfully engage third party providers for such services, could have a material adverse effect on our business.financial position, results of operations and cash flows.

 

Our productsbusiness and reputation will require several dynamicsuffer if we are unable to establish and evolving sales models tailoredcomply with stringent quality standards to different worldwide markets, users and products. In 2015, we decided to focus our sales strategy onassure that the clinical IVD market withhighest level of quality is observed in the CE markingperformance of our first producttests.

Inherent risks are involved in Europe. Following CE markingproviding and marketing diagnostic and monitoring tests and related services. Patients and healthcare providers rely on us to provide accurate clinical and diagnostic information that may be used to make critical healthcare decisions. Consequently, users of our first product in Europe we intendtests may have a greater sensitivity to enter the European marketserrors than users of some other types of products and following the completion of any necessary regulatory clearances, certain Asian markets.  Even when we have received a CE mark, weservices. We must still seek regulatory clearance inmaintain high service standards and other jurisdictions.  A failure to obtain these regulatory clearances in other jurisdictions could negatively affect our business.  Pending completionquality controls. Performance or accuracy defects, incomplete or improper process controls, excessively slow turnaround times, unanticipated uses of our reviewtests or mishandling of samples or test results (whether by us, patients, healthcare providers, courier delivery services, or others) can lead to adverse outcomes for patients and interruptions to our services. These events could lead to voluntary or legally mandated safety alerts relating to our tests or our laboratory facilities and could result in the regulatory environmentremoval of our products and services from the market or the suspension of our laboratories’ operations. Insufficient quality controls and any resulting negative outcomes could result in significant costs and litigation, as well as negative publicity that could reduce demand for our tests and payers’ willingness to cover our tests. Even if we maintain adequate controls and procedures, damaging and costly errors may occur.

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Declining global economic conditions may have a negative impact on our business.

Concerns over U.S. healthcare reform legislation and energy costs, geopolitical issues, the availability and cost of credit and government stimulus programs in the United States including the effect of recent pronouncements regarding Laboratory Developed Tests, or LDTs, by the FDA, we may decide to enter the United States market through a CLIA certified laboratory located in the United States.  We remain firmly committed to pursuing FDA approval as our primary objective.  FDA approval can consist of PMA or 510(k) clearance depending on the test complexity and risk posed to patients.  We intend to pursue the most appropriate approval pathway for each individual product developed.  We intend to progressively grow to large volumes of tests sold to centralized laboratories and eventually reach the mass diagnostics testing market.  The exact nature of the ideal sales strategy will evolve as we continue to develop our intended products and seek entry into the IVD markets.  We have limited experience with direct sales and marketing and we currently intend to engage a network of distributors to help commercialize our products worldwide. Any failure to build and manage a direct sales and marketing team effectively, or to successfully engage third party providers for such services, could have a material adverse effect on our business.

There are significant risks involved in building and managing our sales and marketing organization, as well as identifying and negotiating deals with the right sales and distribution partners, including risks related to our ability to:

identify appropriate partners;

negotiate beneficial partnership and distribution agreements;

hire qualified individuals as needed;

generate sufficient leads within our targeted market for our sales force;

provide adequate training for effective sales and marketing;

protect intellectual property rights;

retain and motivate our direct sales and marketing professionals; and

effectively oversee geographically dispersed sales and marketing teams.




Our failure to adequately address these risks could have a material adverse effect on our ability to increase sales and use of our future products, which would cause our revenues to be lower than expected and harm our results of operations.

Our Second Amended and Restated Certificate of Incorporation exculpates our officers and directors from certain liability to our Company and our stockholders.

Our Second Amended and Restated Certificate of Incorporation contains a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company.

We have identified material weaknesses in our internal control over financial reporting that have not yet been remediated, and the failure to address these material weaknesses, or the identification of any others, could impact the reliability of our financial reporting and harm investors’ views of us, which could adversely impact our stock price.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel,countries may contribute to provide reasonable assurance regardingincreased volatility and diminished expectations for the reliability of financial reporting andglobal economy. If the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

pertaineconomic climate deteriorates, our business, including our access to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being maderesearch use only, in accordance with authorizations of our management and/or directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

We have determined that we have material weaknesses in our internal control over financial reporting as of December 31, 2019. See Item 9A.Controls and Proceduresof this Reportfor a complete discussion of these material weaknesses in our internal control over financial reporting and remediation efforts. Although we are undertaking steps to address these material weaknesses, the existence of a material weakness is an indication that there is more than a remote likelihood that a material misstatement of our financial statements will not be prevented or detected in the current or any future period. There can be no assurance that we will be able to fully implement our plans and controls, as further described inItem 9A, to address these material weaknesses, or that the plans and controls, if implemented, will be successful in fully remediating these material weaknesses. In addition, we may in the future identify further material weaknesses in our internal control over financial reporting that we have not discovered to date. If we fail to successfully remediate the identified material weaknesses, or we identify further material weaknesses in our internal controls, the market’s confidence in our financial statements could decline and the market price of our common stockclinical IVD markets for diagnostic tests, could be adversely impacted. Additionally, for so long as we remain asaffected, resulting in a smaller reporting company, under current rules our accounting firm will not be required to provide an opinion regarding our internal controls over financial reporting.  

We have a “going concern” opinion from our auditors, indicating the possibility that we may not be able to continue to operate.

Our independent registered public accountants have expressed substantial doubt about our ability to continue as a going concern. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our proposed business plan. As a result, we may have to liquidate our business and investors may lose their investments. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our plan of operations described herein, obtain financing and eventually attain profitable operations. Investors should consider our independent registered public accountant’s comments when deciding whether to invest in the Company.

Our management has broad discretion over the use of our available cash and might not spend available cash in ways that increase the value of your investment.

As of December 31, 2019, we had $16,966,168 in combined cash and cash equivalents compared to $13,427,222 as of December 31, 2018. Our management currently expects to deploy these resources primarily to expand our commercialization activities, to fund our product development efforts and for general corporate and working capital purposes. However, our management has broad discretion to pursue other objectives. You will be relying on the judgment of our management regarding the application and prioritization of our resources. Our management might not apply our cash in ways that increase or permit any return of your investment.




Risks Associated with our Business

Failure to successfully develop, manufacture, market, and sell our future products will have a material adverse effectnegative impact on our business, financial condition and results of operations.

 

WeThe United Kingdom’s withdrawal from the European Union became effective in January 2021. Although it is known what the terms of this withdrawal were, it is still possible that greater restrictions on imports and exports between the European Union countries and the United Kingdom and increased regulatory complexities are in the process of developing a suite of diagnostic tests as well as additional products. The successful development and commercialization offorthcoming. These changes may adversely affect our intended products is critical to our future success. Our ability to successfully develop, manufacture, market and sell our future products is subject to a number of risks, many ofin the United Kingdom which are outside our control. There can be no assurance that we will be able to develop and manufacture products in commercial quantities at acceptable costs, successfully market any products, or generate revenues from the sale of any products. Failure to achieve any of the foregoing wouldcould have a materialan adverse effect on our business, financial condition, and results of operations.

 

In addition, following Russia’s military invasion of Ukraine in February 2022, NATO deployed additional military forces to Eastern Europe, and the United States, European Union, and other nations announced various sanctions against Russia. The invasion of Ukraine and the retaliatory measures that have been taken, and could be taken in future, by the U.S., NATO, and other countries have created global security concerns that could result in a regional conflict and otherwise have a lasting impact on regional and global economies, any or all of which could adversely affect our business.

The COVID-19 pandemic could adversely impact our business operations, strategy, financial performance and results of operations, the extent of which is uncertain and difficult to predict.

As a result of the COVID-19 pandemic and the related responses from government authorities, we have experienced and may continue to experience disruptions that could severely impact our business, strategy, financial performance and financial condition, as well as clinical trials, including:

·

delays or difficulties in enrolling patients in clinical trials;

·

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

·

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as clinical trial sites and hospital staff supporting the conduct of our clinical trials;

·

interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by governments, employers and others;

·

limitations in employee resources, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people;

·

disruptions to our operations, including a shutdown of one or more of our facilities; restrictions on our operations and sales, marketing and distribution efforts; and interruptions to our research and development, manufacturing, clinical/regulatory and other important business activities;

·

increased costs in our manufacturing, production and shipping processes;

·

a slowdown or stoppage in the supply chain of the raw materials, components, and packaging services used to manufacture our products or our inability to secure additional or alternate sources of supplies or services needed to manufacture our products at optimal levels;

·

interruptions or delays in global shipping to transport and deliver our products to our distributors and customers;

·

interruptions in normal operations of certain end user customers that could result in reductions in demand for routine, elective and other non-COVID-19 related healthcare procedures and testing;

·

limitations on employee resources and availability, including due to sickness or personal quarantine, government restrictions, the desire of employees to avoid contact with large groups of people, or school closures or remote learning;

·

a COVID-19 vaccination mandate or requirement that unvaccinated employees be tested frequently could result in employee attrition and difficulty securing future labor needs, including attrition of critically skilled labor, difficulty in obtaining services from impacted suppliers and increased costs; and

·

fluctuations in foreign currency exchange rates or interest rates resulting from market uncertainties.

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The COVID-19 pandemic has resulted in government authorities implementing many measures to contain the spread of COVID-19, including travel bans and restrictions, quarantines, shelter-in-place and stay-at-home orders, and business and school shutdowns. Although many of these measures have been lifted or relaxed, they could be reinstituted if conditions deteriorate and could be in place for a significant period of time, which could adversely affect our operations. For example, at the outset of the pandemic, we temporarily closed our corporate offices and had personnel work remotely to the extent possible and may be required to do so again in the future. Further, our sales and marketing activities were, and may continue to be, adversely affected by the inability to conduct in-person sales activities, meetings, events and conferences, which could negatively impact the success of our sales and marketing strategies and our relationships with our customers.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets, which increases the cost of, and adversely impacts access to, capital and increases economic uncertainty. This volatility and uncertainty may adversely affect our stock price. The actions that governments and individuals have taken in response to COVID-19 have led to a sharp contraction in many aspects of economies worldwide. The pandemic may cause an economic slowdown of potentially extended duration, and it is possible that it could cause a global recession. If this occurs, it could negatively impact our ability to develop and commercialize our products, among other things. Even after the COVID-19 pandemic has subsided, we may continue to experience material adverse effects to our business as a result of the global economic impact of the pandemic.

The effects of COVID-19 may exacerbate our other risk factors described in this Report. The degree to which the COVID-19 pandemic may impact our business and clinical trials and development activities will depend on future developments, which are highly uncertain, continuously evolving and cannot be predicted with confidence, such as the ultimate duration of the pandemic, the severity of continual outbreak surges and variants, travel restrictions and social distancing requirements in the countries where we conduct business, the effectiveness of actions taken to contain and treat the disease, and how quickly and to what extent more normalized economic and operating conditions can resume. Because this situation continues to evolve globally, the ultimate impacts to us of COVID-19 are uncertain, but such impacts could have a material adverse effect on our business, strategy, financial performance and financial condition.

We may engage in acquisitions that are not successful and which could disrupt our business, cause dilution to our stockholders and reduce our financial resources.

From time to time, we may consider opportunities to acquire or invest in other companies, products or technologies that may enhance our product platform or technology, expand the breadth of our markets or customer base, or otherwise advance our business strategies. Potential and completed acquisitions and investments involve numerous risks, including the following:

·

we may be unable to successfully integrate the acquired business (es) into our business;

·

we may be unable to realize the anticipated benefits of the acquisition;

·

the acquisition may not strengthen our competitive position; and

·

our future results may suffer if we do not effectively manage our expanded operations.

We do not know if we will be able to identify future acquisitions or investments we deem suitable, whether we will be able to successfully complete any such acquisitions or investments on favorable terms or at all, or whether we will be able to successfully integrate any acquired products or technologies into our business. Our potential inability to integrate any acquired products or technologies effectively may adversely affect our business, operating results and financial condition.

Risks Related to Product Development, Commercialization and Sales of Our Products

If the marketplace does not accept the products in our development pipeline or any other diagnostic products we might develop, we may be unable to generate sufficient revenue to sustain and grow our business.

Our intended products may never gain significant acceptance in the research or clinical marketplace and therefore may never generate substantial revenue or profits. Physicians, hospitals, clinical laboratories, researchers or others in the healthcare industry may not use our future products unless they determine that they are an effective and cost-efficient means of detecting and diagnosing cancer. If our research and studies do not satisfy providers, payors and others as to the reliability and effectiveness, we may experience reluctance or refusal on the part of the physician to use our future products. In addition, we will need to expend a significant amount of resources on marketing and educational efforts to create awareness of our future products and to encourage their acceptance and adoption. If the market for our future products does not develop sufficiently or the products are not accepted, our revenue potential will be harmed.

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Our business is dependent on our ability to successfully develop and commercialize diagnostic products. If we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations.

 

Our current business strategy focuses on discovering, developing and commercializing diagnostic products. The success of our business will depend on our ability to fully develop and commercialize the diagnostic products in our current development pipeline as well as continue the discovery and development of other diagnostics products.

 

Prior to commercializing the Nu.QTM® tests and other diagnostic products, we will be required to undertake time-consuming and costly development activities with uncertain outcomes, including conducting clinical studies and obtaining regulatory clearance or approval in the United States, Asia and in Europe. Delays in obtaining approvals and clearances could have material adverse effects on us and our ability to fully carry out our plan of operations. We have limited experience in taking products through these processes and there are considerable risks involved in these activities. The science and methods that we are employing are innovative and complex, and it is possible that our development programs will ultimately not yield products suitable for commercialization or government approval. Products that appear promising in early development may fail to be validated in subsequent studies, and even if we achieve positive results, we may still fail to obtain the necessary regulatory clearances or approvals. Few research and development projects result in commercial products, and perceived viability in early clinical studies often is not replicated in later studies. At any point, we may abandon development of a product, or we may be required to expend considerable resources obtaining additional clinical and nonclinical data, which would adversely impact the timing for generating potential revenue from those products. Further, our ability to develop and launch diagnostic tests is dependent on our receipt of substantial additional funding. If our discovery and development programs yield fewer commercial products than we expect, we may be unable to execute our business plan, and our business, financial condition and results of operations may be adversely affected.

 

Failure to successfully develop, manufacture, market, and sell our future products will have a material adverse effect on our business, financial condition, and results of operations.

We are in the process of developing a suite of diagnostic tests as well as additional products. The successful development and commercialization of our intended products is critical to our future success. Our ability to successfully develop, manufacture, market, and sell our future products is subject to a number of risks, many of which are outside our control. There can be no assurance that we will be able to develop and manufacture products in commercial quantities at acceptable costs, successfully market any products, or generate revenues from the sale of any products. Failure to achieve any of the foregoing would have a material adverse effect on our business, financial condition, and results of operations.

The results of pre-clinical studies and completed clinical trials are not necessarily predictive of future results, and our current product candidates may not have favorable results in later studies or trials which, in turn, could have a material adverse effect on our business.

 

As described above, weWe must conduct extensive testing of our product candidates and new indications of our marketed products before we can obtain regulatory approval to market and sell them. Success in pre-clinical studies or completed clinical trials does not ensure that later studies or trials, including continuing pre-clinical studies and large-scale clinical trials, will be successful nor does it necessarily predict future results. Favorable results in early studies or trials may not be repeated in later studies or trials, and product candidates in later stage trials may fail to show acceptable safety and efficacy despite having progressed through earlier trials. We may be required to demonstrate through large, long-term outcome trials that our product candidates are safe and effective for use in a broad population prior to obtaining regulatory approval. The failure of clinical trials to demonstrate the safety and effectiveness of our clinical candidates for the desired indication(s) would preclude the successful development of those candidates for such indication(s), in which event our business, prospects, results of operations and financial condition may be adversely affected.

 

Our failureresearch and development efforts will be hindered if we are not able to obtain samples, contract with third parties for access to samples or complete timely enrollment in future clinical trials.

Access to human and animal sample types, such as blood is necessary regulatory clearancesfor our research and product development. Acquiring samples from individuals / animals with clinical diagnoses or approvalsassociated clinical outcomes through purchase or clinical studies is necessary. Lack of available samples can delay development timelines and increase costs of development. Generally, the agreements under which we gain access to human and animal samples are non-exclusive. Other companies may compete with us for access. If we are not able to negotiate access to clinical samples with research institutions, hospitals, clinical partners, pharmaceutical companies, or companies developing therapeutics and/or diagnostics on a timely basis, would significantly impairor at all, or if other laboratories or our competitors secure access to these samples before us, our ability to distributeresearch, develop and market ourcommercialize future products will be limited or delayed. Equally, we may not be able to conduct or complete clinical studies in a timely manner if we are unable to enroll sufficient numbers of patients in such studies, which could consequently have an adverse effect on our research and development and product commercialization efforts.

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If the third parties on which we increasingly rely to assist us with our current and anticipated pre-clinical development or clinical IVD market.trials do not perform as expected, we may not be able to obtain regulatory clearance or approval or commercialize our products.

As our clinical infrastructure expands, we expect to increasingly rely on third parties, such as contract research organizations, medical institutions, clinical investigators and contract laboratories to conduct some of our current and anticipated pre-clinical investigations and clinical trials. If we are not able to reach mutually acceptable agreements with these third parties on a timely basis, these third parties do not successfully carry out their commitments or regulatory obligations or meet expected deadlines, or the quality or accuracy of the data they obtain is compromised due to the failure to adhere to agreed-upon clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory clearance or approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.

We expect to expand our product development, research and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.

 

We are subject to regulation by the FDAfocused on developing our pipeline for future products. It is likely that our efforts will result in significant growth in the United States,number of our consultants, advisors, and employees, in addition to the Conformité Européenne in Europe, the CFDA in China,scope of our operations. In order to manage our anticipated future growth, we must continue to implement and other regulatory bodies in other countries whereimprove our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited resources, we intend to sell our future products.  Before we aremay not be able to place our intended products ineffectively manage the clinical IVD markets in the United States, China and Europe, we will be required to obtain clearance or approvalexpansion of our future products fromoperations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the FDA and the CFDA with respect to the United States and China, respectively, and receive a CE mark with respect to Europe.execution of our business plan or disrupt our operations.

 

The European Union has recently adopted regulations that may impose additional requirementsWe have limited experience with direct sales and marketing and any failure to obtainbuild and manage a CE mark, which could result in delaysdirect sales and further expense, in terms of staff costsmarketing team effectively, or to us as compared to the current CE mark process. The new regulations will require each product submission to be thoroughly audited by Notified Bodies, instead of the current self-certification process. TheEuropean Medical Device Regulations (EU MDR) will be fully applicable in 2020 and the EU IVDR will be fully applicable in 2022.




Additionally, even if we receive the required government clearance or approval of our intended products, we are still subject to continuing regulation and oversight. Under the FDA, diagnostics are considered medical devices and are subject to ongoing controls and regulations, including inspections, compliance with established manufacturing practices, device-tracking, record-keeping, advertising, labeling, packaging, and compliance with other standards. The process of complying withsuccessfully engage third party providers for such regulations with respect to current and new products can be costly and time-consuming. Failure to comply with these regulationsservices, could have a material adverse effect on our business financial condition,.

As an organization we have limited experience with direct sales however are building a team of experienced individuals in terms of market intelligence, product management and account management in addition to building connections with market-leading established distributors as potential commercial partners. Our products will require several dynamic and evolving sales models tailored to different worldwide markets, users and products. Our sales strategy is initially focused on the clinical IVD market with the CE marking of our first product in Europe. Following CE marking of our first product in Europe we intend to enter the European markets and, following the completion of any necessary regulatory clearances, certain Asian markets. Even if we receive a CE mark, we must still seek regulatory clearance in other jurisdictions. A failure to obtain these regulatory clearances in other jurisdictions could negatively affect our business. Pending completion of our review of the regulatory environment in the United States we may decide to enter the United States market through a Clinical Laboratory Improvement Amendments (“CLIA”), certified laboratory located in the United States. We remain firmly committed to pursuing FDA approval as our primary objective. FDA approval can consist of PMA or 510(k) clearance depending on the test complexity and risk posed to patients. We intend to pursue the most appropriate approval pathway for each individual product developed. We intend to progressively grow to large volumes of tests sold to centralized laboratories and eventually reach the mass diagnostics testing market. The exact nature of the ideal sales strategy will evolve as we continue to develop our intended products and seek entry into the IVD markets. We also have limited experience with direct sales and marketing and we intend to engage a network of distributors to help commercialize our products worldwide. Any failure to build and manage a direct sales and marketing team effectively, or to successfully engage third-party providers for such services, could have a material adverse effect on our business.

There are significant risks involved in building and managing our sales and marketing organization, as well as identifying and negotiating deals with the right sales and distribution partners, including risks related to our ability to:

·

identify appropriate partners;

·

negotiate beneficial partnership and distribution agreements;

·

hire qualified individuals as needed;

·

generate sufficient leads within our targeted market for our sales force;

·

provide adequate training for effective sales and marketing;

·

protect intellectual property rights;

·

retain and motivate our direct sales and marketing professionals; and

·

effectively oversee geographically dispersed sales and marketing teams.

Our failure to adequately address these risks could have a material adverse effect on our ability to increase sales and use of our future products, which would cause our revenues to be lower than expected and harm our results of operations. Furthermore, any FDAFurther, we are required to comply with numerous other federal, state, and local laws relating to matters such as safe working conditions, industrial safety, and labor laws. We may incur significant costs to comply with such laws and regulations governing ourin the future, products are subject to change at any time, which may cause delays and lack of compliance could have material adverse effects on our operations. In Europe, IVD companies are currently able to self-certify that they meet the appropriate regulatory requirements (which are subject to change with the EU MDR and the EU IVDR noted above) but are subject to inspection for enforcement. European national agencies, such as customs authorities and/or the Departments of Health, Industry and Labor, conduct market surveillance to ensure the applicable requirements have been met for products marketed within the European Union.

Reductions or changes in reimbursement policies could limit our ability to sell our products.

Market acceptance and sales of our products will depend, in part, on reimbursement policies and may be affected by healthcare reform measures. Government authorities and third-party payers, such as private health insurers and health maintenance organizations, decide which products they will pay for and establish reimbursement levels for those products. To manage healthcare costs, many governments and third-party payers in the United States increasingly scrutinize the pricing of new products and require greater levels of evidence of favorable clinical outcomes and cost-effectiveness before extending coverage. We cannot be sure that reimbursement will be available for our products and, if reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand for, or the price of, our products. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our future products.

If the marketplace does not accept the products in our development pipeline or any other diagnostic products we might develop, we may be unable to generate sufficient revenue to sustain and grow our business.

Our intended products may never gain significant acceptance in the research or clinical marketplace and therefore may never generate substantial revenue or profits. Physicians, hospitals, clinical laboratories, researchers or others in the healthcare industry may not use our future products unless they determine that they are an effective and cost-efficient means of detecting and diagnosing cancer. If our research and studies do not satisfy providers, payors and others as to the reliability and effectiveness, we may experience reluctance or refusal on the part of the physician to use our future products. In addition, we will need to expend a significant amount of resources on marketing and educational efforts to create awareness of our future products and to encourage their acceptance and adoption. If the market for our future products does not develop sufficiently or the products are not accepted, our revenue potential will be harmed.

The cancer diagnostics market is highly competitive and subject to rapid technological change; accordingly, we will face fierce competition and our intended products may become obsolete.

The cancer diagnostics market is extremely competitive and characterized by evolving industry standards and new product enhancements. Cancer diagnostic tests are technologically innovative and require significant planning, design, development, and testing at the technological, product, and manufacturing process levels. These activities require significant capital commitments and investment. There can be no assurance that our intended products or proprietary technologies will remain competitive following the introduction of new products and technologies by competing companies within the industry. Furthermore, there can be no assurance that our competitors will not develop products that render our future products obsolete or that are more effective, accurate or can be produced at lower costs. There can be no assurancebelieve that we will be successful in the face of increasing competition from new technologieshave structured our business operations to comply with applicable legal requirements. However, it is possible that governmental entities or products introduced by existing companies in the industry or by new companies entering the market.

We expect to face intense competition from companies with greater resources and experience than us, which may increase the difficulty for us to achieve significant market penetration.

The market for cancer diagnostics is intensely competitive, subject to rapid change, and significantly affected by new product introductions and other market activities of industry participants.  Our competitors include large multinational corporations and their operating units, including Exact Sciences Corporation, Guardant Health, GRAIL Inc., Freenome Holdings Inc., CellMax Life, Archer DX Inc., Thrive Earlier Detection Corp., Foundation Medicine Inc., Oncocyte Corporation, OpKo Health Inc., MDNA Life Sciences Inc., Oncimmune Holdings Plc, Abbott Laboratories Inc., Cepheid Inc., Koninklijke Philips N.V., GE Healthcare, Siemens, Gen-Probe Incorporated, EpiGenomics AG, MDxHealth SA, and Roche Diagnostics. There may also be other companies developing products competitive with ours of which we are not aware.  Many of ourcompetitors have greater resources than us and may enjoy several competitive advantages, including:




significantly greater name recognition;

established relationships with healthcare professionals, companies and consumers;

additional lines of products, and the ability to offer rebates or bundle products to offer higher discounts or incentives to gain a competitive advantage;

established supply and distribution networks; and

greater resources for product development, sales and marketing, and intellectual property protection.

Many of these other companies have developed and will continue to develop new products that will compete directly with our future products. In addition, many of our competitors spend significantly greater funds for the research, development, promotion, and sale of new and existing products. These resources may allow them to respond more quickly to new or emerging technologies and changes in consumer requirements. We also face competition in our search for third parties to assist us with salescould interpret these laws differently and marketing of our product candidates,assert otherwise, which may negatively impact our ability to enter into favorable sales and marketing arrangements. For all the foregoing reasons, we may not be able to compete successfully against our competitors.

Declining global economic or business conditions maycould have a negativematerial adverse impact on our business.

 

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Concerns over United States healthcare reform legislation and energy costs, geopolitical issues, the availability and cost of credit and government stimulus programs in the United States and other countries may contribute to increased volatility and diminished expectations for the global economy.  If the economic climate deteriorates, our business, including our access to the Research Use Only, or RUO, or clinical IVD markets for diagnostic tests, could be adversely affected, resulting in a negative impact on our business, financial condition and results of operations.

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On June 23, 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit”. On March 29, 2017, the country formally notified the European Union of its intention to withdraw pursuant to Article 50 of the Lisbon Treaty, and withdrawal negotiations began in June 2017.The United Kingdom’s withdrawal from the European Union rules became effective on January 31, 2020.Existing trade rules will continue to apply through December 31, 2020 (subject to extension), during which the United Kingdom and the European Union will negotiate the rules that will govern their economic relationship following such period. The negotiations between the parties have yet to produce an overall structure for their ongoing relationship following Brexit. Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the European Union countries and the United Kingdom and increased regulatory complexities. These changes may adversely affect our ability to market our future products in the United Kingdom which could have an adverse effect on our business, financial condition, and results of operations.

We will rely on third parties to manufacture and supply our intended products. Any problems experienced by these third parties could result in a delay or interruption in the supply of our intended products to our customers, which could have a material negative effect on our business.

 

We will rely on third parties to manufacture and supply our intended products. The manufacture of our intended diagnostic products will require specialized equipment and utilize complicated production processes that would be difficult, time-consuming and costly to duplicate. If the operations of third-party manufacturers are interrupted or if they are unable to meet our delivery requirements due to capacity limitations or other constraints, we may be limited in our ability to fulfill our future sales orders. Any prolonged disruption in the operations of third-party manufacturers could have a significant negative impact on our ability to sell our future products, could harm our reputation and could cause us to seek other third-party manufacturing contracts, thereby increasing our anticipated development and commercialization costs. In addition, if we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards required by the FDA and with all applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop products or receive approval of any products in a timely manner.

 

We will depend on third-party distributors to market and sell our products, which will subject us to a number of risks.

We will depend on third-party distributors to market, sell, and service our products in our intended markets. We are subject to a number of risks associated with reliance upon third-party distributors including the following:

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lack of day-to-day control over the activities of third-party distributors;

·

third-party distributors may not commit the necessary resources to market and sell our products to our level of expectations;

·

third-party distributors may terminate their arrangements with us on limited or no notice or may change the terms of these arrangements in a manner unfavorable to us; and

·

disagreements with our distributors could result in costly and time-consuming litigation or arbitration which we could be required to conduct in jurisdictions with which we are not familiar.

If we fail to establish and maintain satisfactory relationships with our third-party distributors, our revenues and market share may not grow as anticipated, and we could be subject to unexpected costs which could harm our results of operations and financial condition.

The manufacturing operations of our future third-party manufacturers will likely be dependent upon third-party suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business.

 

The operations of our future third partythird-party manufacturers will likely be dependent upon third-party suppliers. A supply interruption or an increase in demand beyond a supplier’s capabilities could harm the ability of our future manufacturers to manufacture our intended products until new sources of supply are identified and qualified.




Reliance on these suppliers could subject us to a number of risks that could harm our business, including:

·

interruption of supply resulting from modifications to or discontinuation of a supplier’s operations;

·

delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component;

·

a lack of long-term supply arrangements for key components with our suppliers;

·

inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;

·

difficulty and cost associated with locating and qualifying alternative suppliers for components in a timely manner;

·

production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;

·

delay in delivery due to suppliers prioritizing other customer orders over ours;

·

damage to our brand reputation caused by defective components produced by the suppliers; and

·

fluctuation in delivery by the suppliers due to changes in demand from us or their other customers.

 

interruptionWe have implemented certain risk mitigation strategies including the diversification of supply resulting from modifications to or discontinuationsuppliers by region and the internalization of a supplier’s operations;

delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component;

a lack of long-term supply arrangements for key components with our suppliers;

inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;

difficulty and cost associated with locating and qualifying alternative suppliers for components in a timely manner;

certain production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;

delay in delivery due to suppliers prioritizing other customer orders over ours;

damage to our brand reputation caused by defective components produced by the suppliers; and

fluctuation in delivery by the suppliers due to changes in demand from us or their other customers.

Anyprocesses. However, any interruption in the supply of components of our future products or materials, or our inability to obtain substitute components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our future customers, which would have an adverse effect on our business.

 

We will dependDefects in our products may subject us to substantial damages which could materially harm our business or financial condition.

The products we develop could lead to product liability claims based on third-party distributorsallegations that one or more of our products contained a design or manufacturing defect which resulted in the futurefailure to marketdetect the disease for which it was designed. A product liability claim could result in substantial damages and sellbe costly and time consuming to defend, either of which could materially harm our business or financial condition. We cannot assure you that our product liability insurance would protect our assets from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.

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Risks Related to Governmental Regulation and Reimbursement

Our failure to obtain necessary regulatory clearances or approvals on a timely basis would significantly impair our ability to distribute and market our future products which will subject us to a number of risks.on the clinical IVD market.

 

We will depend on third-party distributors to sell, market, and service our future products in our intended markets. We are subject to a number of risks associated with reliance upon third-party distributors including:

lack of day-to-day control overregulation by the activities of third-party distributors;

third-party distributors may not commitFDA in the necessary resourcesUnited States, the CE in Europe, the CFDA in China, and other regulatory bodies in other countries where we intend to market and sell our future products. Before we are able to place our intended products in the clinical IVD markets in the United States, China and Europe, we will be required to our levelobtain clearance or approval of expectations;

third-party distributors may terminate their arrangements with us on limited or no notice or may change the terms of these arrangements in a manner unfavorable to us; and

disagreements with our future distributorsproducts from the FDA and the CFDA with respect to the United States and China, respectively, and receive a CE mark with respect to Europe. In 2017, the European Union adopted the phased-in EU IVDR that may impose additional requirements to obtain a CE mark, which could result in costlydelays and time-consuming litigation or arbitration which we couldfurther expense, in terms of staff costs to us as compared to the current CE mark process. The EU IVDR will require each product submission to be required to conductthoroughly audited by Notified Bodies, instead of the current self-certification process. The EU IVDR will be fully applicable in jurisdictions with which we are not familiar.May 2022.

 

Additionally, even if we receive the required government clearance or approval of our intended products, we are still subject to continuing regulation and oversight. Under the FDA, diagnostics are considered medical devices and are subject to ongoing controls and regulations, including inspections, compliance with established manufacturing practices, device-tracking, record-keeping, advertising, labeling, packaging, and compliance with other standards. The process of complying with such regulations with respect to current and new products can be costly and time-consuming. Failure to comply with these regulations could jeopardize our ability to sell our products and result in enforcement actions such as fines, civil penalties, injunctions, warning letters, recalls of products, delays in the introduction of products into the market, refusal of the FDA or other regulators to grant future clearances or approvals, delays by the FDA or other regulators in granting clearances or approvals, and the suspension or withdrawal of existing approvals by the FDA or other regulators, any of which could have a material adverse effect on our business, financial condition, and results of operations. Furthermore, any FDA regulations governing our future products are subject to change at any time, which may cause delays and have material adverse effects on our operations. In Europe, IVD companies are currently able to self-certify that they meet the appropriate regulatory requirements (which are subject to change with the EU MDR and the EU IVDR noted above) but are subject to inspection for enforcement. European national agencies, such as customs authorities and/or the Departments of Health, Industry and Labor, conduct market surveillance to ensure the applicable requirements have been met for products marketed within the European Union.

Reductions or changes in reimbursement policies could limit our ability to sell our products.

Market acceptance and sales of our products will depend, in part, on reimbursement policies and may be affected by healthcare reform measures. Government authorities and third-party payers, such as private health insurers and health maintenance organizations, decide which products they will pay for and establish reimbursement levels for those products. To manage healthcare costs, many governments and third-party payers in the United States increasingly scrutinize the pricing of new products and require greater levels of evidence of favorable clinical outcomes and cost-effectiveness before extending coverage. We cannot be sure that reimbursement will be available for our products and, if reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand for, or the price of, our products. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our future products.

If we failare found to establishhave violated laws concerning the privacy and maintain satisfactory relationships with our future third-party distributors, our revenues and market share may not grow as anticipated, andsecurity of patient health information or other personal information, we could be subject to unexpected costscivil or criminal penalties, which could increase our liabilities and harm our resultsreputation or our business.

There are a number of operationsU.S. and international laws protecting the privacy and security of personal information. These laws include the U.S. Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and related regulations, U.S. state laws (such as the California Consumer Privacy Act (“CCPA”)), Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”) or the applicable provincial alternatives, the EU’s General Data Protection Regulation (“GDPR”), EU member states directives, or similar applicable laws. These laws place limits on how we may collect, use, share and store medical information and other personal information, and they impose obligations to protect that information against unauthorized access, use, loss, and disclosure.

If we, or any of our service providers who have access to the personal data for which we are responsible, are found to be in violation of the privacy or security requirements of HIPAA, PIPEDA, GDPR, or applicable foreign, U.S. state and Canadian provincial laws, we could be subject to civil or criminal penalties, which could increase our liabilities, harm our reputation and have a material adverse effect on our business, financial condition.condition and operating results. In addition, entities operating in the healthcare industry have increasingly become targets for hackers. Although we utilize a variety of measures to secure the data that we control, even compliant entities can experience security breaches or have inadvertent failures despite employing reasonable practices and safeguards.

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We may also face new risks relating to data privacy and security as the United States, individual U.S. states or Canadian provinces, E.U. member states, and other international jurisdictions adopt or implement new data privacy and security laws and regulations as we continue to commercialize our products worldwide. For example, amendments to privacy and security laws (such as the CCPA) may impose additional requirements on us and increase our regulatory and litigation risk. As we continue to expand, our business will need to adapt to meet these and other similar legal requirements.

Risks Related to our Intellectual Property

If the patents that we rely on to protect our intellectual property prove to be inadequate, our ability to successfully commercialize our future products will be harmed and we may never be able to operate our business profitably.

 

Our success depends, in large part, on our ability to protect proprietary methods, discoveries and technologies that we develop under the patents and intellectual property laws of the United States, Europe and other countries, so that we can seek to prevent others from unlawfully using our inventions and proprietary information.Our patent portfolio includes 2329 patent families and a total 84 patents granted related to our diagnostic tests (including veterinary applications), with 812 patents granted in the United States, 914 patents granted in Europe and a further 2758 patents granted worldwide. Additionally, we have 1393 patent applications currently pending in the United States, 10 in Europe and a further 82 worldwide.

 

If we are not able to protect our proprietary technology and information, our competitors may use our inventions to develop competing products. We cannot assure you that any of the pending patent applications will result in patents being issued. In addition, due to technological changes that may affect our future products or judicial interpretation of the scope of our patents, our intended products might not, now or in the future, be adequately covered by our patents.

 

If third parties assert that we have infringed their patents and proprietary rights or challenge the validity of our patents and proprietary rights, we may become involved in intellectual property disputes and litigation that would be costly, time consuming, and delay or prevent the development or commercialization of our future products.

 

Our ability to commercialize our intended products depends on our ability to develop, manufacture, market and sell our future products without infringing the proprietary rights of third parties. Third parties may allege that our future products or our methods or discoveries infringe their intellectual property rights. Numerous United States and foreign patents and pending patent applications, which are owned by third parties, exist in fields that relate to our intended products and our underlying methodologies, discoveries and technologies. A third party may sue us for infringing its patent rights.




Our ability to successfully commercialize our intended products depends on our ability to protect our proprietary technology and information. Likewise, we may need to resort to litigation to enforce a patent issued or licensed to us or to determine the scope and validity of third-party proprietary rights. In addition, a third party may claim that we have improperly obtained or used its confidential or proprietary information. The cost to us of any litigation or other proceeding relating to intellectual property rights, even if resolved in our favor, could be substantial, and the litigation could divert our management’s attention from other aspects of our business. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. Uncertainties resulting from the initiation and continuation of any litigation could limit our ability to continue our operations. Additionally, we cannot be certain of the level of protection, if any that will be provided by our patents if they are challenged in court, where our competitors may raise defenses such as invalidity, unenforceability or possession of a valid license.

 

If we are found to infringe upon intellectual property rights of third parties, we might be forced to pay damages, potentially including triple damages. In addition to any damages, we might have to pay, a court could require us to stop the infringing activity or obtain a license. Any license required under any patent may not be made available on commercially acceptable terms, if at all. In addition, such licenses are likely to be non-exclusive and, therefore, our competitors may have access to the same technology licensed to us. If we fail to obtain a required license and are unable to design around a patent, we may be unable to effectively market some or all of our future products, which could limit our ability to generate revenue or achieve profitability and possibly prevent us from generating revenue sufficient to sustain our operations.

 

If we are unable to protect our trade secrets, we may be unable to protect our interests in proprietary technology, processes and know-how that is not patentable or for which we have elected not to seek patent protection.

 

In addition to patented technology, we rely upon trade secret protection to protect our interests in proprietary know-how and for processes for which patents are difficult or impossible to obtain or enforce. We may not be able to protect our trade secrets adequately. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, contractors and outside scientific advisors may unintentionally or willfully disclose our information to competitors. Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. We rely, in part, on non-disclosure and confidentiality agreements with our employees, consultants and other parties to protect our trade secrets and other proprietary technology. These agreements may be breached, and we may not have adequate remedies for any breach. Moreover, others may independently develop equivalent proprietary information, and third parties may otherwise gain access to our trade secrets and proprietary knowledge. Any disclosure of confidential information into the public domain or to third parties could allow our competitors to learn our trade secrets and use the information in competition against us, which could adversely affect our competitive advantage.

 

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Defects in

Risks Related to our products may subject us to substantial damages which could materially harm our business or financial condition.Securities

 

The products we develop could lead to product liability claims based on allegations that one or more of our products contained a design or manufacturing defect which resulted in the failure to detect the disease for which it was designed. A product liability claim could result in substantial damages and be costly and time consuming to defend, either of which could materially harm our business or financial condition. We cannot assure you that our product liability insurance would protect our assets from the financial impact of defending a product liability claim. Any product liability claim brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing insurance coverage in the future.

Risks Associated with our Common Stock

The market prices and trading volume of our stock may be volatile.

 

The market price of our common stock is likely to be highly volatile and the trading volume may fluctuate and cause significant price variation to occur. We cannot assure you that the market prices of our common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the prices of our shares or result in fluctuations in those prices or in trading volume of our common stock could include the following, many of which will be beyond our control:

·

competition;

·

comments by securities analysts regarding our business or prospects;

·

additions or departures of key personnel;

·

our ability to execute our business plan;

·

issuance of common stock or other securities;

·

operating results that fall below expectations;

·

loss of any strategic relationship;

·

industry developments;

·

economic and other external factors; and

·

period-to-period fluctuations in our financial results.

 

competition;

comments by securities analysts regarding our business or prospects;

additions or departures of key personnel;

our ability to execute our business plan;

issuance of common stock or other securities;

operating results that fall below expectations;

loss of any strategic relationship;

industry developments;

economic and other external factors; and

period-to-period fluctuations in our financial results.




In addition, the securities markets have from time to timetime-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price and trading volume of our common stock.

 

ShareWe have identified material weaknesses in our internal control over financial reporting that have not yet been remediated, and although we are working to address such weaknesses, the failure to address these material weaknesses, or the identification of any others, could impact the reliability of our financial reporting and harm investors’ views of us, which could adversely impact our stock price.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets;

·

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and/or directors; and

·

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

We have determined that we have material weaknesses in our internal control over financial reporting as of December 31, 2021. See Part II, Item 9Aof this Reportfor a complete discussion of these material weaknesses in our internal control over financial reporting and remediation efforts. Although we have taken and continue to take steps to address these material weaknesses, the existence of a material weakness is an indication that there is more than a remote likelihood that a material misstatement of our financial statements will not be prevented or detected in the current or any future period. There can be no assurance that we will be able to fully implement our plans and controls, as further described in Item 9A, to address these material weaknesses, or that the plans and controls, if implemented, will be successful in fully remediating these material weaknesses. In addition, we may in the future identify further material weaknesses in our internal control over financial reporting that we have not discovered to date. If we fail to successfully remediate the identified material weaknesses, or we identify further material weaknesses in our internal controls, the market’s confidence in our financial statements could decline and the market price of our common stock could be adversely impacted. Additionally, for so long as we remain as a smaller reporting company, under current rules our accounting firm will not be required to provide an opinion regarding our internal controls over financial reporting.

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We have a “going concern” opinion from our auditors, indicating the possibility that we may not be able to continue to operate.

Our independent registered public accountants have expressed substantial doubt about our ability to continue as a going concern. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital when needed, we will not be able to complete our proposed business plan. As a result, we may have to liquidate our business and investors may lose their investments. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our plan of operations described herein, obtain financing and eventually attain profitable operations. Investors should consider our independent registered public accountant’s comments when deciding whether to invest in the Company.

Our Second Amended and Restated Certificate of Incorporation exculpates our officers and directors from certain liability to our Company and our stockholders.

Our Second Amended and Restated Certificate of Incorporation contains a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company.

Our corporate governance documents, certain corporate laws applicable to us, and share ownership by our executive officers and directors, could make ita takeover attempt, which may be beneficial to our stockholders, more difficult for third parties to acquire us or effectuate a change of control that might be viewed favorably by other stockholders.difficult.

 

AsOur board of February 17, 2020,directors has the power, under our charter documents to:

·

issue additional shares of common stock without having to obtain stockholder approval for such action;

·

fill vacant directorships except for vacancies created by the removal of a director;

·

amend our bylaws without stockholder approval subject to certain exceptions; and

·

require compliance with an advance notice procedure with regard to business to be brought by a stockholder before an annual or special meeting of stockholders and with regard to the nomination by stockholders of candidates for election as directors.

Further, our executive officers and directors beneficially owned, in the aggregate, approximately 14.9%own an amount of our outstanding shares. As a result,shares of common stock such that if the executive officers and directorsthey were collectively to oppose a third party’s acquisition proposal for, or a change in control of, the Company, such officers and directors may have sufficient voting power to be able to block or at least delay such an acquisition or change in control from taking place, even if other stockholders would support such a sale or change of control.

 

Our corporate governance documents,These provisions and certain corporate laws applicable to us, could make a takeover attempt, which may be beneficial to our stockholders, more difficult.

Our Board of Directors, or Board, has the power, under our charter documents to:

issue additional shares of common stock without having to obtain stockholder approval for such action;

fill vacant directorships except for vacancies created by the removal of a director;

amend our bylaws without stockholder approval subject to certain exceptions; and

require compliance with an advance notice procedure with regard to business to be brought by a stockholder before an annual or special meeting of stockholders and with regard to the nomination by stockholders of candidates for election as directors.

These provisionscircumstances may discourage potential acquisition proposals and could delay or prevent a change of control, including under circumstances in which our stockholders might otherwise receive a premium over the market price of our common stock.

 

We do not expect to pay dividends in the foreseeable future.

 

We have never declared or paid cash dividends on our common stock. We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in the development and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders may be unable to sell their shares on favorable terms or at all. We cannot assure you of a positive return on investment or that you will not lose the entire amount of your investment in our common stock.

 

We may in the future issue additional shares of our common stock which would reduce investors’ ownership interests in the Company, and which may cause our stock price to decline.

 

Our Second Amended and Restated Certificate of Incorporation authorizes the issuance of 100,000,000 shares of common stock, par value $0.001 per share. The future issuance of all or part of our remaining authorized common stock may result in substantial dilution in the percentage of our common stock held by our then existing stockholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the percentage ownership of our stockholders and, depending upon the prices at which such shares are sold or issued, on their investment in our common stock and, therefore, could have an adverse effect on any trading market for our common stock.

 

Future sales of our common stock could depress the market price of our common stock.

 

Sales of a substantial number of shares of our common stock in the public market or the perception that large sales of our shares could occur, could cause the market price of our common stock to decline or limit our future ability to raise capital through an offering of equity securities.

 

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If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline.

 

The trading market for our common stock could be affected by whether and to what extent equity research analysts publish research or reports about us and our business. If one or more equity analysts cover us and publish research reports about our common stock, the price of our stock could decline rapidly if one or more securities analysts downgrade our stock or if those analysts’ issue or offer unfavorable commentary or cease publishing reports about us. If any of these analysts ceases coverage of us, we could lose visibility in the market, which in turn could cause our common stock price or trading volume to decline and our common stock to be less liquid.




We are a smaller reporting company and a non-accelerated filer and we cannot be certain if the reduced disclosure requirements applicable to our filing status, as well as the exemption from the requirement to provide an auditor’s attestation report regarding the effectiveness of our internal controls, will make our common stock less attractive to investors.

 

We are currently a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million measured as of the last business day of our most recently completed second fiscal quarter. “Smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. We are also a “non-accelerated filer,” meaning that although we have a public float of lessmore than $75 million measured as of the last business day of our most recently completed second fiscal quarter.quarter, our annual revenues are less than $100 million. As a “non-accelerated filer,” we are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting. Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” and as a “non-accelerated filer” may make it harder for investors to analyze our results of operations and financial prospects and may make our common stock a less attractive investment.

 

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ITEM 1B.UNRESOLVED STAFF COMMENTS

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

 

None.

ITEM 2.PROPERTIES

ITEM 2.  

PROPERTIES

 

Listed below are our current facilities as of December 31, 2019:2021:

 

Location

Primary Function

Primary Function

Approx. Square Feet

Leased or Owned

Namur, Belgium(1)

Research and development

17,300

Owned

Namur, Belgium (2)

Manufacturing

9,688

Owned

London, UK(2)(3)

Sales and marketing

690

323

Leased, expiring 20212024

Shaw Centre,Triple One, Singapore(3)(4)

Sales and marketingexecutive

150

Leased, expiring 2020

Austin, Texas(4)420

Executive suite

1,228

Leased, expiring 2022

Austin, Texas (5)

Executive suite

1,238

Leased, expiring 2022

 

(1)Belgian Volition purchased property located in Namur, Belgium, in October 2016, to be used as a laboratory facility for R&D. The purchase price for the property was €1.2 million Euros, exclusive of any closing costs.

(1)        

Belgian Volition purchased property located in Namur, Belgium, in October 2016, to be used as a laboratory facility for R&D. The purchase price for the property was €1.2 million, exclusive of any closing costs.

(2)        

Belgian Volition purchased property located in Namur, Belgium, in December 2020, to be used as a manufacturing facility. The purchase price for the property was €0.6 million, exclusive of any closing costs.

(3)        

Volition Diagnostics signed a new 24-month lease for this property located at 93-95 Gloucester Place, London, W1U 6JQ, United Kingdom, commencing February 1, 2022 until January 31, 2024, at an annual rent of £64,800 GBP.

(4)        

Singapore Volition signed a one-year lease for this property, commencing July 1, 2021, located at 111 Somerset Road, Level 3, Triple One, Somerset, Singapore 238164, at an annual rent of SGD103,692.

(5)        

VolitionRx signed a three-year lease for this property, commencing on June 1, 2019, located at 13215 Bee Cave Parkway, Suite 125, Galleria Oaks B, Austin, Texas 78738, at an annual rent of $34,384.

 

(2)Volition Diagnostics UK signed a two-year lease for this property located at 93-95 Gloucester Place, London, W1U 6JQ, United Kingdom, commencing January 30, 2019, at an annual rent of £118,800 GBP.

(3)Singapore Volition signed a one-year lease for this property, commencing August 1, 2019, located at 1 Scotts Road, #24-05 Shaw Centre, Singapore 228208, at an annual rent of SGD 29,508.

(4)VolitionRx Limited signed a three-year lease for this property, commencing on June 1, 2019, located at 13215 Bee Cave Parkway, Suite 125, Galleria Oaks B, Austin , Texas 78738, at an annual rent of $34,384.

ITEM 3.LEGAL PROCEEDINGS

ITEM 3.

LEGAL PROCEEDINGS

 

In the ordinary course of business, we may be subject to claims, counter claims, suits and other litigation of the type that generally arise from the conduct of our business. We are not aware of any threatened or pending litigation that we expect will have a material adverse effect on our business operations, financial condition or results of operations.

 

ITEM 4.

MINE SAFETY DISCLOSURES

ITEM 4.MINE SAFETY DISCLOSURES

Not Applicable.

 

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Not Applicable.




PART II

 

ITEM 5.MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

Market Information

 

Our common stock is currently traded on the NYSE American under the symbol “VNRX”.

 

Holders

 

As of February 17, 2020,March 25, 2022, there were 41,204,68553,775,261 shares of our common stock outstanding held by 153126 holders of record, based on information provided by our transfer agent. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

 

Dividends

 

We have not declared or paid any cash dividends on our common stock since inception and presently anticipate that all earnings, if any, will be retained for development of our business and that no dividends on our common stock will be declared in the foreseeable future. Any future dividends will be subject to the discretion of our board of directors and will depend upon, among other things, future earnings, operating and financial conditions, capital requirements, general business conditions and other pertinent facts. Therefore, there can be no assurance that any dividends on our common stock will be paid in the future.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

The information required under this item is incorporated by reference from our definitive proxy statement related to our 20202022 Annual Meeting of Stockholders, to be filed pursuant to Regulation 14A, on or before April 29, 2020.May 2, 2022.

 

Recent Sales of Unregistered Securities

From October 1, 2019 through December 31, 2019, we sold the following securities on an unregistered basis for which disclosure under Item 701 of Regulation S-K was not previously provided in a Form 10-Q or Form 8-K filed with the SEC:

On November 15, 2019, 4,167 stock options were exercised to purchase shares of our common stock at $5.00 per share in a cashless exercise that resulted in the issuance of 371 shares of our common stock.

From November 25, 2019 to November 27, 2019, warrants to purchase 29,392 shares of our common stock were exercised at a price of $2.40 per share, for gross proceeds to the Company of $70,541.

We did not utilize any underwriters for any of the sales of securities on an unregistered basis. We relied on an exemption to the registration requirements of the federal securities laws pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunderfor each of the sales of securities on an unregistered basis.  At the time of their issuance, unless registered for resale under an effective registration statement filed with the SEC, the shares were deemed to be restricted securities for purposes of the Securities Act and the certificates representing the shares, if any, and the transfer agent’s books shall bear legends to that effect.

Repurchase of Equity Securities

 

None.

 

ITEM 6.SELECTED FINANCIAL DATARepurchase of Equity Securities

 

No equity securities were repurchased during the fourth quarter of 2021.

ITEM 6.

RESERVED

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ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements in Part II within this Report. This discussion includes an analysis of our financial condition and results of operations for the years ended December 31, 2021 and 2020 and year-over-year comparisons between those periods. Certain statements made in this section constitute “forward-looking statements,” which are subject to numerous risks and uncertainties including those described in this section. For additional information, refer to the section entitled “Cautionary Note Regarding Forward-Looking Statements” within this Report.

Company Overview

Volition is a multi-national epigenetics company that applies its Nucleosomics™ platform through its subsidiaries to develop simple, easy to use, cost-effective blood tests to help diagnose and monitor a range of life-altering diseases including certain cancers and diseases associated with NETosis such as sepsis and COVID-19. Our mission is to save lives and improve outcomes for millions of people and animals worldwide. Early diagnosis and monitoring have the potential to not only prolong the life of patients, but also to improve their quality of life.

Our tests are based on the science of Nucleosomics™, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluid - an indication that disease is present. We are currentlyprimarily focused on human diagnostics and monitoring but also have a smaller reporting companysubsidiary focused on animal diagnostics and monitoring.

We have five key pillars of focus: Nu.Q®, Nu.Q® NETs, Nu.Q® Capture, Nu.Q® Discover and Nu.Q® Vet, all of which use the same proprietary Nu.Q® platform to commercialize in different areas.

Our research and development activities are not requiredcentered in Belgium, with an innovation laboratory in California, and additional offices in Texas, London, and Singapore, we focus on bringing our diagnostic and disease monitoring products to disclose this information.




ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overviewmarket.

 

We have identified the specific processes and resources required to achieve the near and medium-term objectives of our business plan, including personnel, facilities, equipment, research and testing materials including antibodies and clinical samples, and the protection of intellectual property. To date, operations have proceeded satisfactorily in relation to our business plan. However, it is possible that some resources will not readily become available in a suitable form or on a timely basis or at an acceptable cost. It is also possible that the results of some processes may not be as expected, and that modifications of procedures and materials may be required. Such events could result in delays to the achievement of the near and medium-term objectives of our business plan, in particular the progression of clinical validation studies and regulatory approval processes for the purpose of bringing products to the IVD market.

 

Our future as an operating business will depend on our ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain our operations. Management plans to address the above as needed by: (a) securing additional grant funds; (b) obtaining additional equity or debt financing; (c) granting licenses to third parties in exchange for specified up-front and/or back end payments; and (d) developing and commercializing our products on an accelerated timeline. Management continues to exercise tight cost controls to conserve cash.

 

Our ability to continue as a going concern is dependent upon our accomplishment of the plans described in the preceding paragraph and eventually to attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. If we are unable to obtain adequate capital, we could be forced to cease operations.

 

Developments—COVID-19 Pandemic

Throughout 2020 and 2021, in response to the COVID-19 pandemic we implemented contingency planning to protect the health and well-being of our employees, with the majority of our employees working remotely where possible. We have implemented travel restrictions as well as protocols limiting visitor access to our facilities, and we are following social distancing practices.

As a result of the COVID-19 pandemic, we have experienced and may continue to experience disruptions that could impact our clinical trials, including:

·

delays in enrolling patients in clinical trials;

·

delays in sample collection; and

·

diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as clinical trial sites and hospital staff supporting the conduct of our clinical trials.

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The extent to which the COVID-19 pandemic will impact our business, financial condition, and results of operations in the future is highly uncertain and will be affected by a number of factors. These include the duration and extent of the COVID-19 pandemic, the development of new variants of the COVID-19 virus that may be more contagious or virulent than previous versions, the scope of mandated or recommended containment and mitigation measures, the effect of government stabilization and recovery efforts, and the success of vaccine distribution programs.

Liquidity and Capital Resources

 

We have financed our operations since inception primarily through private placements and public offerings of our common stock. As of December 31, 2019,2021, we had cash and cash equivalents of $16,966,168.approximately $20.6 million.

 

Net cash used in operating activities was $12.7$20.9 million and $14.7$16.5 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The decreaseincrease in cash used in operating activities during 20192021 when compared to 2020 was primarily due to reduced researchincreased payroll costs reflecting growth in staff numbers, higher legal and development activities together with lower charges for stock-based compensation offset by increased personnelprofessional fees in relation to a registered public offering and an increase in marketing expenses.

 

Net cash used in investing activities was $0.5$1.0 million and $0.3$1.6 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The increasedecrease in cash used in investing activities during 20192021 was primarily due to a result of increasedreduction in purchases of laboratory equipment for our research and development facility in Belgium.as compared to 2020.

 

Net cash provided by financing activities after associated costs was $16.9$22.9 million and $18.0$20.6 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The decreaseincrease in cash provided by financing activities during 2019for the 2021, when compared to 2020 was primarily due to less capital raised from debt and equity financing as well as reduced debt payments during such period. During 2019, the Company received $16.6$18.9 million in net proceedscash received from the issuance of shares of common stock plus debt fundingin a registered public offering in February 2021, $1.2 million in cash received from the issuance of $0.9shares of common stock pursuant to the 2018 Equity Distribution Agreement, $2.7 million offset by debt paymentsin cash received from the issuance of $0.4 million.shares of common stock pursuant to the 2020 Equity Distribution Agreement and $0.7 million in cash received from the issuance of shares of common stock pursuant to the 2021 Equity Distribution Agreement compared to $12.7 million in net cash received from the issuance of shares of common stock in a registered public offering in May 2020 and $6.5 million in cash received from the issuance of shares of common stock pursuant to the 2018 Equity Distribution Agreement. For additional information on the “at the market offering program,” refer to Note 7, Common Stock – Equity Distribution Agreements, of the Notes to consolidated financial statements.

 

The following table summarizes our approximate contractual payments due by year as of December 31, 2019.2021.

 

Approximate Payments (Including Interest) Due by Years

 

 

 

 

 

 

 

 

 

Total

2020

2021 - 2024

2025 +

Description

 

$

 

$

 

$

 

$

Financing lease liabilities

 

812,497

 

114,649

 

252,517

 

445,331

Operating lease liabilities

 

418,906

 

281,965

 

136,941

 

-

Grants repayable

 

337,286

 

52,879

 

166,046

 

118,361

Long-term debt

 

3,164,547

 

777,648

 

2,212,861

 

174,038

Collaborative agreements obligations

 

2,688,267

 

1,699,767

 

988,500

 

-

                                                    Total

 

7,421,503

 

2,926,908

 

3,756,865

 

737,730

 

 

 

 

 

 

 

 

 




Approximate Payments (Including Interest) Due by Year

 

 

Total

 

 

2022

 

 

2023 - 2026

 

 

2027 +

 

Description

 

$

 

 

$

 

 

$

 

 

$

 

Financing lease liabilities

 

 

636,265

 

 

 

62,620

 

 

 

244,762

 

 

 

328,883

 

Operating lease liabilities and short term lease

 

 

438,452

 

 

 

216,850

 

 

 

221,602

 

 

 

-

 

Grants repayable

 

 

296,321

 

 

 

44,289

 

 

 

108,156

 

 

 

143,876

 

Long-term debt

 

 

3,433,450

 

 

 

926,743

 

 

 

1,893,175

 

 

 

613,532

 

Collaborative agreements obligations

 

 

813,501

 

 

 

813,501

 

 

 

-

 

 

 

-

 

Total

 

 

5,617,989

 

 

 

2,064,003

 

 

 

2,467,695

 

 

 

1,086,291

 

We intend to use our cash reserves to predominantly fund further research and development activities. We do not currently have any substantial source of revenues and expect to rely on additional future financing, through the sale of equity or debt securities, or the sale of licensing or distribution rights, to provide sufficient funding to execute our strategic plan. There is no assurance that we will be successful in raising further funds.

 

In the event that additional financing is delayed, we will prioritize the maintenance of our research and development personnel and facilities, primarily in Belgium, and the maintenance of our patent rights. In such instance, the completion of clinical validation studies and regulatory approval processes for the purpose of bringing products to the IVD market would be delayed. In the event of an ongoing lack of financing, it may be necessary to discontinue operations, which will adversely affect the value of our common stock.

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors statedincluded in their report on our audited financial statements for the fiscal year ended December 31, 20192021, an explanatory paragraph regarding factors that raise substantial doubt that we will be able to continue as a going concern.

 

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Results of Operations

 

Comparison of the Years Ended December 31, 20192021 and December 31, 20182020

 

The following table sets forth our results of operations for the years ended on December 31, 20192021, and December 31, 2018,2020, respectively (expressed in United Stated Dollars, except outstanding share numbers and percentages).

 

 

 

Increase

 

Percentage Increase

 

 

 

Increase

 

Percentage

Increase

2019

 

2018

 

(Decrease)

 

(Decrease)

 

2021

 

2020

 

(Decrease)

 

(Decrease)

$

 

$

 

$

 

%

 

$

 

 

$

 

 

$

 

 

%

Service

16,204

 

-

 

16,204

 

100%

Royalty

892

 

-

 

892

 

100%

 

-

 

2,112

 

(2,112)

 

>100%

 

 

 

 

 

 

 

Product

 

 

90,035

 

 

 

11,321

 

 

 

78,714

 

 

>100%

Total Revenues

17,096

 

-

 

17,096

 

100%

 

90,035

 

13,433

 

76,602

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

10,363,253

 

10,906,871

 

(543,618)

 

(5%)

 

15,541,889

 

14,533,862

 

1,008,027

 

7%

General and administrative

4,731,054

 

5,821,072

 

(1,090,018)

 

(19%)

 

8,751,392

 

5,654,018

 

3,097,374

 

55%

Sales and marketing

965,713

 

1,169,756

 

(204,043)

 

(17%)

 

 

4,129,833

 

 

 

1,073,368

 

 

 

3,056,465

 

 

>100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

16,060,020

 

17,897,699

 

(1,837,679)

 

(10%)

 

 

28,423,114

 

 

 

21,261,248

 

 

 

7,161,866

 

 

 

34%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

155,031

 

-

 

(155,031)

 

100%

 

1,522,533

 

635,513

 

887,020

 

>100%

(Loss)/Gain on disposal of fixed assets

 

(26,166)

 

293,312

 

319,478

 

<100%

Interest income

112,367

 

-

 

(112,367)

 

100%

 

2,734

 

49,495

 

(46,761)

 

(94

%)

Interest expense

(126,572)

 

(110,924)

 

15,648

 

14%

 

 

(155,803)

 

 

(129,799)

 

 

26,004

 

 

 

20%

Other expenses

(196,957)

 

-

 

196,957

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Income (Expenses)

(56,131)

 

(110,924)

 

(54,793)

 

(49%)

 

 

1,343,298

 

 

 

848,521

 

 

 

494,777

 

 

 

58%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

(16,099,055)

 

(18,008,623)

 

(1,909,568)

 

(11%)

 

 

(26,989,781)

 

 

(20,399,294)

 

 

6,590,487

 

 

 

32%

 

 

 

 

 

 

 

Net Loss per Share – Basic and Diluted

(0.41)

 

(0.57)

 

(0.16)

 

(28%)

 

 

 

 

 

 

 

Weighted Average Shares Outstanding - Basic and Diluted

39,180,369

 

31,389,220

 

7,791,149

 

25%

 

 

 

 

 

 

 

Revenues

 

Our operations are still predominantly in the research and development stage and we had minimal revenues of $17,096$90,035 and $Nil$13,433 during the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The main source of revenues during the year ended December 31, 2021 was direct sales of the Nu.Q® Vet Cancer Screening Test via the Gastrointestinal Laboratory at Texas A&M University.




Operating Expenses

 

Total operating expenses decreasedincreased to $16.1$28.4 million from $17.9$21.3 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively, as a result of the factors described below.

 

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Research and Development Expenses

 

Research and development expenses decreasedincreased to $10.4$15.5 million from $10.9$14.5 million for the years ended December 31, 20192021 and December 31, 2018,2020 respectively. The decreaseincrease in overall research and development expenditures during 20192021 was primarily related to higher personnel expenses and stock-based compensation partially offset by lower research collaboration and collaborative expenditures, lower chemical and biologicalantibody costs partly offset bytogether with increased laboratory costs. FTE personnel numbers within this division increased by ten to fifty seven during 2021 compared to the prior year period.

 

2019

 

2018

 

Change

 

2021

 

2020

 

Change

 

$

 

$

 

$

 

$

 

 

$

 

 

$

 

Personnel expenses

3,833,289

 

2,917,147

 

916,142

 

6,405,197

 

5,171,967

 

1,233,230

 

Stock based compensation

410,178

 

811,902

 

(401,724)

 

1,361,989

 

340,075

 

1,021,914

 

Direct research and development expenses

4,619,515

 

5,309,172

 

(689,657)

 

5,517,082

 

6,384,169

 

(867,087)

Other research and development

809,585

 

1,265,967

 

(456,382)

 

1,288,467

 

1,784,111

 

(495,644)

Depreciation and amortization

690,686

 

602,683

 

88,003

 

 

969,154

 

 

 

853,540

 

 

 

115,614

 

Total research and development expenses

10,363,253

 

10,906,871

 

(543,618)

 

 

15,541,889

 

 

 

14,533,862

 

 

 

1,008,027

 

 

 

 

 

 

General and Administrative Expenses

 

General and administrative expenses decreasedincreased to $4.7$8.8 million from $5.8$5.7 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The decreaseincrease in overall general and administrative expenditures during 2019 were2021 was primarily due to favorable foreign exchange costs, reducedhigher personnel expenses, stock-based compensation, director and officer liability insurance and legal costsfees in relation toconnection with our capital raises and reduced stock-based compensation expenses.raises. The FTE personnel number within this division increased by three to thirteen in 2021 compared to the prior year period.

 

2019

 

2018

 

Change

 

2021

 

2020

 

Change

 

$

 

$

 

$

 

$

 

 

$

 

 

$

 

Personnel expenses

2,185,349

 

2,199,866

 

(14,517)

 

2,723,604

 

2,135,578

 

588,026

 

Stock-based compensation

868,762

 

1,505,900

 

(637,138)

 

2,984,253

 

887,181

 

2,097,072

 

Legal and professional fees

1,180,876

 

1,188,554

 

(7,678)

 

1,766,377

 

1,611,495

 

154,882

 

Other general and administrative

284,341

 

889,519

 

(605,178)

 

1,148,133

 

831,931

 

316,202

 

Depreciation and amortization

211,726

 

37,233

 

174,493

 

 

129,025

 

 

 

187,833

 

 

 

(58,808)

Total general and administrative expenses

4,731,054

 

5,821,072

 

(1,090,018)

 

 

8,751,392

 

 

 

5,654,018

 

 

 

3,097,374

 

 

 

 

 

 

Sales and Marketing Expenses

 

Sales and marketing expenses decreasedincreased to $1.0$4.1 million from $1.2$1.1 million for the years ended December 31, 20192021 and December 31, 2018,2020, respectively. The decreaseincrease in overall sales and marketing expenditures was primarily due to reducedincreased personnel expenses, stock-based compensation and direct marketing expenses. The FTE personnel expenses.number within this division increased by ten to thirteen in 2021 compared to the prior year period.

 

2019

 

2018

 

Change

 

2021

 

2020

 

Change

 

$

 

$

 

$

 

$

 

 

$

 

 

$

 

Personnel expenses

586,207

 

673,430

 

(87,223)

 

2,354,732

 

545,842

 

1,808,890

 

Stock-based compensation

188,173

 

275,069

 

(86,896)

 

774,404

 

164,236

 

610,168

 

Direct marketing and professional fees

191,333

 

221,257

 

(29,924)

 

 

1,000,697

 

 

 

363,290

 

 

 

637,407

 

Total sales and marketing expenses

965,713

 

1,169,756

 

(204,043)

 

 

4,129,833

 

 

 

1,073,368

 

 

 

3,056,465

 

 

 

 

 

 

Other Expenses

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Table of Contents

 

Other expenses decreased to $56,131 compared to $110,924 for the years ended December 31, 2019 and December 31, 2018, respectively. This decrease was primarily due the exercise of warrants to purchase approximately 1.7 million shares of our common stock by Cotterford Company Limited during 2019 at an amended exercise price of $2.90 per share, which resulted in a $196,957 expense, offset by interest income received from cash deposited in an overnight money market account and grant income received.




Net LossIncome (Expenses)

 

For the year ended December 31, 2019,2021, other income increased to approximately $1.3 million compared to other income of approximately $0.8 million for the year ended December 31, 2020. This increase in other income was primarily due to grant income received of approximately $1.5 million during 2021.

Net Loss

For the year ended December 31, 2021, the Company’s net loss was $16.1$27.0 million, a decreasean increase of approximately $1.9$6.6 million, or 11%, in comparison to a net loss of $18.0$20.4 million for the year ended December 31, 2018.2020. The change was a result of the factors described above.

 

Going Concern

 

We have not attained profitable operations and are dependent upon obtaining external financing to continue to pursue our operational and strategic plans. For these reasons, management has determined that there is substantial doubt that the business will be able to continue as a going concern without further financing.

 

Off-Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

 

Future Equity or Debt Financings

 

We may seek to obtain additional capital through the sale of debt or equity securities if we deem it desirable or necessary. These sales may include the sale of equity securities from time to time through our “at the market offering program” with Cantor Fitzgerald & Co. and Oppenheimer and Co. Inc. under the 2021 Equity Distribution Agreement (see Note 7, Common Stock – Equity Distribution Agreements, of the Notes to consolidated financial statements). However, we may be unable to obtain such additional capital when needed, or on terms favorable to us or our stockholders, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. If additional funds are raised through the issuance of debt securities, the terms of such securities may place restrictions on our ability to operate our business.

 

Critical Accounting Policies and Estimates

 

Our consolidated financial statements and accompanying notes have been prepared in accordance with United StatesU.S. generally accepted accounting principles, or (“U.S. GAAP,GAAP”), applied on a consistent basis. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We also regularly evaluate estimates and assumptions related to deferred income tax asset valuation allowances, useful lives of property and equipment and intangible assets, borrowing rate used in operating lease right-of-use asset and liability valuations, impairment analysis of intangible assets and valuations of stock-based compensation.

We base our estimates and assumptions on current facts, historical experiences, information from third party professionals and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.

We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the notesNotes to our consolidated financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

We considerhave determined that for the periods reported in this Report the following accounting policies to be critical:are critical in understanding our financial condition and results of operations:

34

Table of Contents

Stock-Based Compensation

 

Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” and. Under the provisions of ASC 505-50, “Equity-Based Payments to Non-Employees”. All transactions in which goods or services are718, stock-based compensation cost is measured at the consideration received for the issuance of equity instruments are accounted forgrant date, based on the fair value of the consideration received or the fair value of the equity instrument issued, whicheveraward, and is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees requiredemployee’s requisite service period, which is generally the vesting period. The fair value of our stock options and warrants is estimated using a Black-Scholes option valuation model. Restricted stock units are valued based on the closing stock price on the date of grant, refer to Note 8 of the consolidated financial statements for further details.




Impairment of Long-Lived Assets

 

In accordance with ASC 360, Property Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. Impairment losses of $nil and $nil were recognized during the years ended December 31, 20192021 and December 31, 2018,2020, respectively.

 

Foreign Currency Translation

 

The Company has functional currencies in the Euro, the United States DollarEuros, U.S. Dollars and British Pounds Sterling and its reporting currency is the United StatesU.S. Dollar. Management has adopted ASC 830-20, “Foreign Currency Matters – Foreign Currency Transactions. All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation of foreign currency denominated transactions are included in Other Comprehensive Income.

 

Use of Estimates

The Company bases its estimates and assumptions on current facts, historical experiences and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.

Recently Issued Accounting Pronouncements

 

The Company has implemented all applicable new accounting pronouncements that are in effect. The Company does not believe that there are any other applicable new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are currently a smaller reporting company and are not required to disclose this information.




ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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ITEM 8. 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

VOLITIONRX LIMITED

 

Consolidated Financial Statements

 

VOLITIONRX LIMITED

Consolidated Financial Statements

For the Years Ended December 31, 20192021 and 2018

2020

 

 

Index

 

 

Report of Independent Registered Public Accounting Firm (PCAOB ID: 3627)

F - 2637

Consolidated Balance Sheets

F - 2738

Consolidated Statements of Operations and Comprehensive Loss

F - 2839

Consolidated Statements of Stockholders’ Equity

F - 2940

Consolidated Statements of Cash Flows

F - 3041

Notes to the Consolidated Financial Statements

F - 3142

F-36

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Picture 8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Shareholders of VolitionRx Limited:

 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of VolitionRx Limited (“the Company”) as of December 31, 20192021 and 2018,2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 20192021 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20192021 and 2018,2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019,2021, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph Regarding Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred losses since inception, has negative cash flows from operations, and has generated minimal revenues.  These factors raiserevenues, which creates substantial doubt about its ability to continue as a going concern. Management'sManagement’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) related to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there are no critical audit matters.

/s/ Sadler, Gibb & Assoc.Associates, LLC

 

We have served as the Company’s auditor since 2011.

 

Salt Lake City,Draper, UT

February 20, 2020March 30, 2022

 

F-37

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Picture 13 




VOLITIONRX LIMITED

Consolidated Balance Sheets

(Expressed in United States Dollars, except share numbers)

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

2019

 

2018

 

2021

 

2020

 

$

 

$

 

$

 

 

$

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

16,966,168

 

13,427,222

 

20,581,313

 

19,444,737

 

Accounts Receivable

 

12,510

 

7,118

 

Prepaid expenses

267,518

 

245,441

 

598,367

 

303,178

 

Other current assets

322,593

 

229,755

 

 

786,642

 

 

 

576,660

 

 

 

 

Total Current Assets

17,556,279

 

13,902,418

 

21,978,832

 

20,331,693

 

 

 

 

 

 

 

 

 

Property and equipment, net

2,981,225

 

3,119,643

 

4,911,077

 

5,171,134

 

Operating lease right-of-use assets

381,483

 

-

 

383,551

 

326,085

 

Intangible assets, net

372,305

 

466,905

 

 

216,876

 

 

 

321,641

 

 

 

 

Total Assets

21,291,292

 

17,488,966

 

 

27,490,336

 

 

 

26,150,553

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

627,253

 

807,162

 

1,542,457

 

1,539,547

 

Accrued liabilities

2,168,588

 

923,034

 

3,841,013

 

3,491,740

 

Management and directors’ fees payable

21,979

 

1,200

 

71,303

 

55,174

 

Current portion of long-term debt

647,569

 

416,553

 

797,855

 

841,319

 

Current portion of financing lease liabilities

97,946

 

145,150

 

48,958

 

59,930

 

Current portion of operating lease liabilities

257,244

 

-

 

171,166

 

179,624

 

Current portion of grant repayable

39,295

 

40,094

 

 

43,100

 

 

 

69,218

 

 

 

 

Total Current Liabilities

3,859,874

 

2,333,193

 

6,515,852

 

6,236,552

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

2,195,278

 

1,984,262

 

2,270,767

 

2,606,885

 

Financing lease liabilities, net of current portion

607,708

 

720,013

Finance lease liabilities, net of current portion

 

511,086

 

601,967

 

Operating lease liabilities, net of current portion

131,875

 

-

 

217,305

 

151,828

 

Grant repayable, net of current portion

297,991

 

311,042

 

 

253,221

 

 

 

259,603

 

 

 

 

Total Liabilities

7,092,726

 

5,348,510

 

 

9,768,231

 

 

 

9,856,835

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

Authorized: 100,000,000 shares of common stock, at $0.001 par value

 

 

 

Issued and outstanding: 41,125,303 shares and 35,335,378 shares, respectively

41,125

 

35,335

Common Stock Authorized: 100,000,000 shares of common stock, at $0.001 par value Issued and outstanding: 53,772,261 shares and 48,607,017 shares, respectively

 

53,772

 

48,607

 

Additional paid-in capital

103,853,627

 

85,604,271

 

154,730,938

 

126,526,239

 

Accumulated other comprehensive income

125,670

 

223,651

Accumulated other comprehensive income (loss)

 

148,326

 

(59,978)

Accumulated deficit

(89,821,856)

 

(73,722,801)

 

 

(136,988,636)

 

 

(110,173,971)

 

 

 

Total VolitionRx Limited Stockholders’ Equity

 

17,944,400

 

16,340,897

 

Non-controlling interest

 

 

(222,295)

 

 

(47,179)

Total Stockholders’ Equity

14,198,566

 

12,140,456

 

 

17,722,105

 

 

 

16,293,718

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

21,291,292

 

17,488,966

 

 

27,490,336

 

 

 

26,150,553

 

 

 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

 

 

 




(The accompanying notes are an integral part of these consolidated financial statements)

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VOLITIONRX LIMITED

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in United States Dollars, except share numbers)

 

For the year ended

December 31, 2019

 

December 31, 2018

$

 

$

Revenues

 

 

 

Service

16,204

 

-

Royalty

892

 

-

 

 

 

 

Total Revenues

17,096

 

-

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Research and development

10,363,253

 

10,906,871

General and administrative

4,731,054

 

5,821,072

Sales and marketing

965,713

 

1,169,756

 

 

 

 

Total Operating Expenses

16,060,020

 

17,897,699

 

 

 

 

Operating Loss

(16,042,924)

 

(17,897,699)

 

 

 

 

Other Income (Expenses)

 

 

 

Grant income

155,031

 

-

   Interest income

112,367

 

-

   Interest expense

(126,572)

 

(110,924)

   Other expenses

(196,957)

 

-

 

 

 

 

Total Other Income (Expenses)

(56,131)

 

(110,924)

 

 

 

 

Net Loss

(16,099,055)

 

(18,008,623)

 

 

 

 

Other Comprehensive Income (Loss)

 

 

 

Foreign currency translation adjustments

(97,981)

 

352,994

 

 

 

 

Net Comprehensive Loss

(16,197,036)

 

(17,655,629)

 

 

 

 

Net Loss per Share – Basic and Diluted

(0.41)

 

(0.57)

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

– Basic and Diluted

39,180,369

 

31,389,220

 

 

 

 

 

 

 

 

(The accompanying notes are an integral part of these consolidated financial statements)




 

 

For the year ended

 

 

 

December 31,

2021

 

 

December 31,

2020

 

 

 

$

 

 

$

 

Revenues

 

 

 

 

 

 

Royalty

 

 

0

 

 

 

2,112

 

Product

 

 

90,035

 

 

 

11,321

 

 

 

 

 

 

 

 

 

 

Total Revenues

 

 

90,035

 

 

 

13,433

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

15,541,889

 

 

 

14,533,862

 

General and administrative

 

 

8,751,392

 

 

 

5,654,018

 

Sales and marketing

 

 

4,129,833

 

 

 

1,073,368

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

 

28,423,114

 

 

 

21,261,248

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

 

(28,333,079)

 

 

(21,247,815)

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

Grant income

 

 

1,522,533

 

 

 

635,513

 

(Loss)/Gain on disposal of fixed assets

 

 

(26,166)

 

 

293,312

 

Interest income

 

 

2,734

 

 

 

49,495

 

Interest expense

 

 

(155,803)

 

 

(129,799)

 

 

 

 

 

 

 

 

 

Total Other Income (Expenses)

 

 

1,343,298

 

 

 

848,521

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(26,989,781)

 

 

(20,399,294)

Net Loss attributable to Non-Controlling Interest

 

 

175,116

 

 

 

47,179

 

Net Loss attributable to VolitionRx Limited Stockholders

 

 

(26,814,665)

 

 

(20,352,115)

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

208,304

 

 

 

(185,648)

Net Comprehensive Loss

 

 

(26,781,477)

 

 

(20,584,942)

 

 

 

 

 

 

 

 

 

Net Loss Per Share – Basic and Diluted attributable to VolitionRx Limited Stockholders

 

 

(0.51)

 

 

(0.45)

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

– Basic and Diluted

 

 

52,655,885

 

 

 

45,278,847

 

 

(The accompanying notes are an integral part of these consolidated financial statements)

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VOLITIONRX LIMITED

Consolidated Statement of Stockholders’ Equity

For the Years Ended December 31, 20192021 and 20182020

(Expressed in United States Dollars, except share numbers)

 

 

 

 

 

Additional

 

Accumulated Other

 

 

 

 

 

Common Stock

 

Paid-in

 

Comprehensive

 

Accumulated

 

 

 

Shares

Amount

 

Capital

 

Income (Loss)

 

Deficit

 

Total

#

$

 

$

 

$

 

$

 

$

Balance, December 31, 2017

26,519,394

26,519

 

65,774,870

 

(129,343)

 

(55,714,178)

 

9,957,868

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash, net

8,804,153

8,804

 

17,236,542

 

-

 

-

 

17,245,346

Common stock issued for cashless exercise of warrants

11,831

12

 

(12)

 

-

 

-

 

-

Employee stock options granted for services

-

-

 

2,570,095

 

-

 

-

 

2,570,095

Warrants granted for services

-

-

 

22,776

 

-

 

-

 

22,776

Foreign currency translation

-

-

 

-

 

352,994

 

-

 

352,994

Net loss for the year

-

-

 

-

 

-

 

(18,008,623)

 

(18,008,623)

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

35,335,378

35,335

 

85,604,271

 

223,651

 

(73,722,801)

 

12,140,456

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash, net

5,787,067

5,787

 

16,585,289

 

-

 

-

 

16,591,076

Common stock issued for cashless exercise of stock options

2,858

3

 

(3)

 

-

 

-

 

-

Employee stock options granted for services

-

-

 

1,458,607

 

-

 

-

 

1,458,607

Warrants granted for services

-

-

 

8,506

 

-

 

-

 

8,506

Modification of financing warrants

-

-

 

196,957

 

-

 

-

 

196,957

Foreign currency translation

-

-

 

-

 

(97,981)

 

-

 

(97,981)

Net loss for the year

-

-

 

-

 

-

 

(16,099,055)

 

(16,099,055)

 

Balance, December 31, 2019

41,125,303

41,125

 

103,853,627

 

125,670

 

(89,821,856)

 

14,198,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

 

 

 

 

 

 

 

Accumulated Other

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Comprehensive Income

 

 

Accumulated

 

 

Non

Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

 

#

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Balance, December 31, 2019

 

 

41,125,303

 

 

 

41,125

 

 

 

103,853,627

 

 

 

125,670

 

 

 

(89,821,856)

 

 

0

 

 

 

14,198,566

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for Director compensation in Volition Germany

 

 

73,263

 

 

 

73

 

 

 

333,896

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

333,969

 

Common stock repurchase and retirement

 

 

(11,364)

 

 

(11)

 

 

(54,423)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(54,434)

Common stock issued for exercise of stock options

 

 

147,268

 

 

 

147

 

 

 

82,353

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

82,500

 

Common stock issued for exercise of warrants

 

 

25,000

 

 

 

25

 

 

 

61,725

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

61,750

 

Common stock issued in public offerings, net

 

 

7,247,547

 

 

 

7,248

 

 

 

21,045,034

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

21,052,282

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

0

 

 

 

(187,465)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(187,465)

Stock-based compensation

 

 

-

 

 

 

0

 

 

 

1,391,492

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,391,492

 

Foreign currency translation

 

 

-

 

 

 

0

 

 

 

0

 

 

 

(185,648)

 

 

0

 

 

 

0

 

 

 

(185,648)

Net loss for the Year

 

 

-

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(20,352,115)

 

 

(47,179)

 

 

(20,399,294)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

48,607,017

 

 

 

48,607

 

 

 

126,526,239

 

 

 

(59,978)

 

 

(110,173,971)

 

 

(47,179)

 

 

16,293,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cashless exercise of stock options

 

 

77,451

 

 

 

77

 

 

 

(77)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Common stock issued for settlement of RSUs

 

 

24,712

 

 

 

25

 

 

 

(25)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Common stock issued in public offerings, net

 

 

5,063,081

 

 

 

5,063

 

 

 

23,214,581

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

23,219,644

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

0

 

 

 

(130,426)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(130,426)

Stock-based compensation

 

 

-

 

 

 

0

 

 

 

2,670,297

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2,670,297

 

Stock-based compensation in relation to modification of options

 

 

-

 

 

 

0

 

 

 

2,450,349

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2,450,349

 

Foreign currency translation

 

 

-

 

 

 

0

 

 

 

0

 

 

 

208,304

 

 

 

0

 

 

 

-

 

 

 

208,304

 

Net loss for the Year

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(26,814,665)

 

 

(175,116)

 

 

(26,989,781)

Balance, December 31, 2021

 

 

53,772,261

 

 

 

53,772

 

 

 

154,730,938

 

 

 

148,326

 

 

 

(136,988,636)

 

 

(222,295)

 

 

17,722,105

 

 




 (The accompanying notes are an integral part of these consolidated financial statements)

F-40

Table of Contents

VOLITIONRX LIMITED

Consolidated Statements of Cash Flows

(Expressed in United States Dollars)

 

For the year ended

December 31, 2019

 

December 31, 2018

$

 

$

 

 

 

 

Operating Activities:

 

Net loss

(16,099,055)

 

(18,008,623)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

676,815

 

636,380

Amortization of operating lease right-of-use assets

225,597

 

-

Loss on disposal of property and equipment

-

 

403

Stock based compensation

1,458,607

 

2,570,095

Warrants issued for services

8,506

 

22,776

Financing costs for warrants modified

196,957

 

-

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

Prepaid expenses

(22,080)

 

10,012

Other current assets

(92,838)

 

(29,910)

Accounts payable and accrued liabilities

1,105,211

 

100,037

Management and directors’ fees payable

20,779

 

(34,197)

Operating leases liabilities

(217,954)

 

-

Net Cash Used In Operating Activities

(12,739,455)

 

(14,733,027)

 

 

 

 

Investing Activities:

 

Purchases of property and equipment

(511,266)

 

(301,805)

 

 

 

 

Net Cash Used In Investing Activities

(511,266)

 

(301,805)

 

 

 

 

Financing Activities:

 

Net proceeds from issuance of common shares

16,591,076

 

17,245,346

Proceeds from grants repayable

32,795

 

177,079

Proceeds from long-term debt

838,039

 

1,159,836

Payments on long-term debt

(351,009)

 

(436,784)

Payments on grants repayable

(39,335)

 

(40,877)

Payments on financing leases

(142,039)

 

(137,513)

 

 

 

 

Net Cash Provided By Financing Activities

16,929,527

 

17,967,087

 

 

 

 

Effect of foreign exchange on cash and cash equivalents

(139,860)

 

378,704

 

 

 

 

Net Change in Cash and Cash Equivalents

3,538,946

 

3,310,959

 

 

 

 

Cash and Cash Equivalents – Beginning of Year

13,427,222

 

10,116,263

 

 

 

 

Cash and Cash Equivalents – End of Year

16,966,168

 

13,427,222

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Interest paid

126,572

 

110,924

Income tax paid

-

 

-

 

 

 

 

Non - Cash Financing Activities:

 

 

 

Common Stock issued on cashless exercises of stock options and warrants

3

 

12

Finance lease obligations

-

 

28,605

Offering costs from issuance of common stock

-

 

872,571

 

 

 

 

(The accompanying notes are an integral part of these consolidated financial statements)




 

 

For the year ended

 

 

 

December 31,

2021

 

 

December 31,

2020

 

 

 

$

 

 

$

 

Operating Activities:

 

 

 

 

 

 

Net loss

 

 

(26,989,781)

 

 

(20,399,294)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

945,367

 

 

 

716,181

 

Amortization of operating lease right-of-use assets

 

 

199,793

 

 

 

325,192

 

Loss (Gain) on disposal of fixed assets

 

 

26,166

 

 

 

(293,312)

Stock based compensation

 

 

2,670,297

 

 

 

1,391,492

 

Common stock issued for Director compensation in Volition Germany

 

 

0

 

 

 

333,969

 

Stock-based compensation in relation to modification of options

 

 

2,450,349

 

 

 

0

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(295,189)

 

 

(35,660)

Accounts receivable

 

 

(12,510)

 

 

(7,118)

Other current assets

 

 

(202,801)

 

 

(254,062)

Accounts payable and accrued liabilities

 

 

534,732

 

 

 

2,052,753

 

Management and directors’ fees payable

 

 

16,129

 

 

 

33,195

 

Right-of-use assets operating leases liabilities

 

 

(196,471)

 

 

(327,580)

Net Cash Used In Operating Activities

 

 

(20,853,919)

 

 

(16,464,244)

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(973,559)

 

 

(1,941,060)

Proceeds from sales of property and equipment

 

 

0

 

 

 

293,312

 

Net Cash Used In Investing Activities

 

 

(973,559)

 

 

(1,647,748)

Financing Activities:

 

 

 

 

 

 

 

 

Net proceeds from issuance of common shares

 

 

23,219,644

 

 

 

21,196,532

 

Tax withholdings paid related to stock-based compensation

 

 

(130,426)

 

 

(187,465)

Common stock repurchased

 

 

0

 

 

 

(54,434)

Proceeds from grants repayable

 

 

37,631

 

 

 

3,802

 

Proceeds from long-term debt

 

 

592,423

 

 

 

346,465

 

Payments on long-term debt

 

 

(755,721)

 

 

(545,389)

Payments on grants repayable

 

 

(47,789)

 

 

(41,257)

Payments on financing leases

 

 

(58,210)

 

 

(97,417)

Net Cash Provided By Financing Activities

 

 

22,857,552

 

 

 

20,620,837

 

Effect of foreign exchange on cash and cash equivalents

 

 

106,502

 

 

 

(30,276)

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

1,136,576

 

 

 

2,478,569

 

Cash and Cash Equivalents – Beginning of Year

 

 

19,444,737

 

 

 

16,966,168

 

Cash and Cash Equivalents – End of Year

 

 

20,581,313

 

 

 

19,444,737

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

 

 

155,803

 

 

 

129,799

 

Income tax paid

 

 

0

 

 

 

0

 

 

 

 

 

 

 

 

 

 

Non-Cash Financing Activities:

 

 

 

 

 

 

 

 

Common Stock issued on exercises of stock options and warrants and settlement of RSUs

 

 

102

 

 

 

118

 

Loan payable for purchase of manufacturing building

 

 

0

 

 

 

584,449

 

Offering costs from issuance of common stock

 

 

218,459

 

 

 

1,250,848

 

(The accompanying notes are an integral part of these consolidated financial statements)

 

F-41

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 1 - Nature of Operations

 

The Company was incorporated under the laws of the State of Delaware on September 24, 1998. On September 22, 2011, the Company filed a Certificate for Renewal and Revival of Charter with the Secretary of State of Delaware. Pursuant to Section 312(1) of the Delaware General Corporation Law, the Company was revived under the new name of “VolitionRX Limited” and the name change became effective on October 11, 2011. On October 7, 2016, the Company amended its Certificate of Incorporation to reflect a name change to “VolitionRx Limited.”

 

On October 6, 2011, the Company entered into a share exchange agreement with Singapore Volition Pte. Limited, a Singapore corporation incorporated on August 5, 2010 (“Singapore Volition”), and the shareholders of Singapore Volition. Pursuant to the terms of the share exchange agreement, the former shareholders of Singapore Volition held 85% of the issued and outstanding common shares of the Company. The issuance was deemed to be a reverse acquisition for accounting purposes and as such, Singapore Volition is regarded as the predecessor of the Company. The number of shares outstanding and per share amounts of the Company have been restated to recognize the foregoing recapitalization.

 

The Company’s principal business objective through its subsidiaries is to develop and bring to market simple, easy to use, cost effective blood tests designed to help diagnose and monitor a range of life-altering diseases, including some cancers and other diseases.diseases associated with NETosis such as sepsis and COVID-19. The tests are based on the science of NucleosomicsTM, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluid – an indication that disease is present. The Company has onetwo wholly owned subsidiary,subsidiaries, Volition Global Services SRL (“Volition Global”) which was formed in August 2021 and Singapore Volition. Singapore Volition has one wholly owned subsidiary, Belgian Volition SPRL,SRL, a Belgium private limited liability company formerly known as ValiBioSA (“Belgian Volition”), which it acquired as ofin September 22, 2010. Belgian Volition has threefour subsidiaries, Volition Diagnostics UK Limited (“Volition Diagnostics”), which was formed as ofin November 13, 2015, Volition America, Inc. (“Volition America”), which was formed as ofin February 3, 2017, Volition Germany GmbH (“Volition Germany”), which was acquired in January 2020, as well as its majority–ownedmajority-owned subsidiary Volition Veterinary Diagnostics Development LLC, (“Volition Vet”), which was formed as ofin June 3, 2019. Following the acquisition of Singapore Volition in 2011, the Company’s fiscal year end was changed from August 31 to December 31.

 

Note 2 - Going Concern

 

The Company's Consolidated Financial StatementsCompany’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America (“U.S. GAAP”), applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred losses since inception of $89.8$137.0 million, has negative cash flows from operations, and has minimal revenues, which creates substantial doubt about its ability to continue as a going concern for a period at least one year from the date of issuance of these Consolidated Financial Statements.consolidated financial statements.

 

The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain its operations. Management plans to address the above as needed by, (a) securing additional grant funds, (b) obtaining additional financing through debt or equity transactions; (c) granting licenses and/or distribution rights to third parties in exchange for specified up-front and/or back endback-end payments, and (d) developing and commercializing its products on an accelerated timeline. Management continues to exercise tight cost controls to conserve cash.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain profitable operations. The accompanying Consolidated Financial Statementsconsolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations.




F-42

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 3 - Summary of Significant Accounting Policies

 

Basis of Presentation

 

The consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP and are expressed in United StatesUS dollars. The Company’s fiscal year end is December 31.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, useful lives of property and equipment and intangible assets, borrowing rate used in operating lease right-of-use asset and liability valuations, impairment analysis of intangible assets and valuations of stock-based compensation.

 

The Company bases its estimates and assumptions on current facts, historical experiences and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.

 

Principles of Consolidation

 

The accompanying consolidated financial statements for the year ended December 31, 20192021 include the accounts of the Company and its wholly owned subsidiaries, Singapore Volition, Belgian Volition, Volition Diagnostics UK Limited, Volition Germany, Volition America, Volition Vet, and Volition Global Services SRL. See Note 10(f) for more information regarding Volition Vet, Volition Germany, Volition America as well as its majority-owned subsidiary Volition Vet.and Singapore Volition. All significant intercompany balances and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. AtAs of December 31, 20192021, and December 31, 2018,2020, the Company had $16,966,168$20,581,313 and $13,427,222,$19,444,737, respectively, in cash and cash equivalents. AtAs of December 31, 20192021, and December 31, 2018,2020, the Company had $16,499,679$19,753,877 and $12,899,095,$18,592,210, respectively, in its domestic accounts in excess of Federal Deposit Insurance Corporation insured limits. AtAs of December 31, 20192021, and December 31, 2018,2020, the Company had $2,887,483$134,134 and $451,468,$831,110, respectively, in its foreign accounts in excess of the Belgian Deposit Guarantee insured limits. AtAs of December 31, 20192021, and December 31, 2018,2020, the Company had $170,387$102,514 and $76,665,$282,137, respectively, in its foreign accounts in excess of the Singapore Deposit Insurance Scheme. Atinsured limits. As of December 31, 20192021, and December 31, 2018,2020, the Company had $777,432$142,410 and $55,398,$186,168, respectively, in its foreign accounts in excess of the UK Deposit Protection Scheme.insured limits.

 

Accounts Receivable

Trade accounts receivable are stated at the amount the Company expects to collect. Due to the nature of the accounts receivable balance, the Company believes the risk of doubtful accounts is minimal and therefore no allowance is recorded. If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required. The Company may provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance. Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable. As of December 31, 2021, the accounts receivable balance was $12,510 and the allowance for doubtful accounts was $nil.

Property and Equipment

Property and equipment are stated at historical cost and depreciated over the useful life of the asset using the straight-line method. Useful lives are assigned to assets depending on their category. For details regarding property and equipment, refer to Note 4.

F-43

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 3 - Summary of Significant Accounting Policies (continued)

Basic and Diluted Net Loss Per Share

 

The Company computes net loss per share in accordance with Accounting Standards Codification (“ASC”) 260,“Earnings PerShare,, which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. As of December 31, 2019, 4,359,3012021, and December 31, 2020, 6,323,268 and 4,556,669, respectively, of potential common shares equivalents from warrantsstock options, RSUs and optionswarrants were excluded from the diluted EPS calculations as their effect is anti-dilutive.




VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2019 and 2018

($ expressed in United States Dollars)

 

Note 3 - Summary of Significant Accounting Policies (Continued)

Foreign Currency Translation

 

The Company has functional currencies in the Euro, the United States DollarEuros, US Dollars and British Pounds Sterling and its reporting currency is the United StatesUS Dollar. Management has adopted ASC 830-20,“Foreign Currency Matters – Foreign Currency Transactions”. All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation of foreign currency denominated transactions are included in other comprehensive income (loss).

 

Financial Instruments

 

Pursuant to ASC 820, “Fair Value Measurements and Disclosures”,Disclosures,” an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

 

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

 

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the assets or liabilities such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

 

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

 

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, loansnotes payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consists of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

 

Other Comprehensive Income (Loss)

ASC 220, “Other Comprehensive Income/(Loss)”, establishes standards for the reporting and display of other comprehensive loss and its components in the financial statements. As of December 31, 2021, the Company had $148,326 of accumulated other comprehensive income, relating to foreign currency translation.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 3 - Summary of Significant Accounting Policies (continued)

Income Taxes

 

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740,“Accounting for Income Taxes” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. Refer to Note 9 for further details.

 

Other Comprehensive Income (Loss)Revenue Recognition

 

The Company adopted ASC 220,606,Other Comprehensive Income/(Loss)”, establishes standards for the reporting and display of other comprehensive loss and its components in the financial statements. As of December 31, 2019, the Company had $125,670 of accumulated other comprehensive loss, relating to foreign currency translation.




VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2019 and 2018

($ expressed in United States Dollars)

Note 3 - Summary of Significant Accounting Policies (Continued)

Revenue Recognition

Beginning in 2014, the Financial Accounting Standards Board (“FASB”) issued several Accounting Standards Updates establishing Accounting Standards Codification (“ASC”) Topic 606,Revenue from Contracts with Customers, (“ASC 606”).  ASC 606 replaces most industry-specific revenue recognition guidance in U.S. GAAP with a new principles-based, five-step revenue recognition model.  The Company adopted ASC 606 effective January 1, 2019. Under ASC 606, the Company recognizes revenues when the customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company recognizes revenues following the five stepfive-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfythe Company satisfies the performance obligation(s).

 

The Company generates revenueproduct revenues from its license agreement with Active Motif, Inc. (“Active Motif”) for the sale of Research Use Only (“ROU”) kitsits Nu.Q® Vet Cancer Screening Test, from which the Company receives royalties.sale of nucleosomes, and from the sale of research use only kits. In addition, revenue is received from external third parties for services the Company performs for them in its laboratory.

 

Revenues, and their respective treatment for financial reporting purposes under ASC 606, are as follows:

 

Royalty

 

The Company receives royalty revenues on the net sales recognized during the period in which the revenue is earned, and the amount is determinable from the licensee. These are presented under “Royalty” inunder the consolidated statements of operations. The Company does not have future performance obligations under this revenue stream. In accordance with ASC 606, the Company records these revenues based on estimates of the net sales that occurred during the relevant period from the licensee. The relevant period estimates of these royalties are based on preliminary gross sales data provided by Active Motif and analysis of historical gross-to-net adjustments. Differences between actual and estimated royalty revenues are adjusted for in the period in which they become known.

 

ServicesProduct

The Company includes revenue from product sales recognized during the period in which goods are shipped to third parties, and the amount is deemed collectable from the third parties. These are presented in “Product” in the consolidated statements of operations and comprehensive loss.

Service

 

The Company includes revenue recognized from laboratory services performed in the Company’s laboratory on behalf of third parties under “Services” in“Service” under the consolidated statements of operations.

 

For each development and/or commercialization agreement that results in revenues, the Company identifies all performance obligations, aside from those that are immaterial, which may include a license to intellectual property and know-how, development activities and/or transition activities. In order to determine the transaction price, in addition to any upfront payment, the Company estimates the amount of variable consideration at the outset of the contract either utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract. The Company constrains the estimates of variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur throughout the life of the contract. When determining if variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required.

 

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 3 - Summary of Significant Accounting Policies (continued)

Research and Development

 

In accordance with ASC 730, the Company follows the policy of expensing its research and development costs in the period in which they are incurred. The Company incurred research and development expenses of $10.4$15.5 million and $10.9$14.5 million during the years ended December 31, 20192021 and December 31, 2018,2020, respectively.




VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2019 and 2018

($ expressed in United States Dollars)

 

Note 3 - Summary of Significant Accounting Policies (Continued)

Impairment of Long-Lived Assets

 

In accordance with ASC 360, Property Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. Impairment losses of $nil and $nil were recognized during the years ended December 31, 20192021 and December 31, 2018,2020, respectively.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation” and. Under the provisions of ASC 505-50,Equity-Based Payments to Non-Employees. All transactions in which goods or services are718, stock-based compensation cost is measured at the consideration received for the issuance of equity instruments are accounted forgrant date, based on the fair value of the consideration received or the fair value of the equity instrument issued, whicheveraward, and is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees requiredemployee’s requisite service period, which is generally the vesting period. The fair value of our stock options and warrants is estimated using a Black-Scholes option valuation model. Restricted stock units are valued based on the closing stock price on the date of grant. Refer to Note 8 for further details.

 

Leases

 

In February of 2016,The Company adopted FASB issued Accounting Standards Update No. 2016-02 – Leases (“Topic 842”), which significantly amends the way companies are required to account for leases. Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet. In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense. The Company adopted Topic 842 as of January 1, 2019, usingthat requires lessees to record the modified retrospective transition method and prior periods have not been restated. Upon implementation, the Company recognized an initialpresent value of operating lease payments as right-of-use asset of $110,630assets and operating lease liability of $110,630. Due toliabilities on the simplistic naturebalance sheet. See Note 10(b) for discussion of the Company's leases, no retained earnings adjustment was required.guidance and the Company’s accounting policy.

 

Grants receivedGrant Income

 

The Company receives funding from public bodies for a proportion of the costs of specific projects. Funds are received in line with claims submitted for the agreed expenditure. The Company recognizes grant income once claims submitted are approved and funds are received. General working capital funding received at the commencement of a project is treated as deferred income and is recorded in accrued liabilities until it has been utilized for the expenditure claimed. Funding received that is repayable is shown as a liability.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.




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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 3 - Summary of Significant Accounting Policies (continued)

COVID-19 Pandemic Impact

The extent to which the COVID-19 pandemic will impact the Company’s business, financial condition, and results of operations in the future is highly uncertain and will be affected by a number of factors. These include the duration and extent of the COVID-19 pandemic, the development of new variants of the COVID-19 virus that may be more contagious or virulent than previous versions, the scope of mandated or recommended containment and mitigation measures, the effect of government stabilization and recovery efforts, and the success of vaccine distribution programs.

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 4 - Property and Equipment

 

The Company’s property and equipment consist of the following amounts as of December 31, 20192021 and December 31, 2018:2020:

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2019

 

 

 

 

December 31,

2021

 

 

 

 

 

Accumulated

 

Net Carrying

 

 

 

 

 

Accumulated

 

Net Carrying

 

 

 

Cost

 

Depreciation

 

Value

 

 

 

Cost

 

Depreciation

 

Value

 

Useful Life

 

$

 

$

 

$

 

Useful Life

 

$

 

 

$

 

 

$

 

Computer hardware and software

3 years

 

426,461

 

280,554

 

145,907

 

3 years

 

599,944

 

474,169

 

125,775

 

Laboratory equipment

5 years

 

2,052,348

 

1,256,637

 

795,711

 

5 years

 

3,032,108

 

1,434,347

 

1,597,761

 

Office furniture and equipment

5 years

 

217,545

 

114,242

 

103,303

 

5 years

 

293,427

 

213,244

 

80,183

 

Buildings

30 years

 

1,472,211

 

139,021

 

1,333,190

 

30 years

 

2,128,729

 

243,750

 

1,884,979

 

Building improvements

5-15 years

 

630,824

 

117,526

 

513,298

 

5-15 years

 

1,293,258

 

256,309

 

1,036,949

 

Land

Not amortized

 

89,816

 

-

 

89,816

 

Not amortized

 

 

185,430

 

 

 

-

 

 

 

185,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,889,205

 

1,907,980

 

2,981,225

 

 

 

 

7,532,896

 

 

 

2,621,819

 

 

 

4,911,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2018

 

 

 

 

Accumulated

 

Net Carrying

 

 

Cost

 

Depreciation

 

Value

Useful Life

 

$

 

$

 

$

Computer hardware and software

3 years

 

344,383

 

166,750

 

177,633

Laboratory equipment

5 years

 

1,673,215

 

928,841

 

744,374

Office furniture and equipment

5 years

 

204,129

 

75,137

 

128,992

Buildings

30 years

 

1,502,171

 

91,785

 

1,410,386

Building improvements

5-15 years

 

643,663

 

77,049

 

566,614

Land

Not amortized

 

91,644

 

-

 

91,644

 

 

 

 

 

 

 

 

 

4,459,205

 

1,339,562

 

3,119,643

 

 

 

 

 

 

 

The

 

 

 

 

 

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

Useful Life

 

$

 

 

$

 

 

$

 

Computer hardware and software

 

3 years

 

 

550,254

 

 

 

412,805

 

 

 

137,449

 

Laboratory equipment

 

5 years

 

 

2,586,997

 

 

 

1,060,153

 

 

 

1,526,844

 

Office furniture and equipment

 

5 years

 

 

271,656

 

 

 

171,247

 

 

 

100,409

 

Buildings

 

30 years

 

 

2,366,236

 

 

 

207,111

 

 

 

2,159,125

 

Building improvements

 

5-15 years

 

 

1,285,383

 

 

 

184,813

 

 

 

1,100,570

 

Land

 

Not amortized

 

 

146,737

 

 

 

-

 

 

 

146,737

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,207,263

 

 

 

2,036,129

 

 

 

5,171,134

 

During the year ended December 31, 2021, the total capital expenditure was $1.0 million, the majority of capital expenditures in 2019 are related to €0.4 million Euros for software andwhich were purchases of laboratory equipment.equipment of $0.7 million.

 

During the years ended December 31, 20192021 and December 31, 2018,2020, the Company recognized $589,532$812,109 and $548,005,$627,555, respectively, in depreciation expense.




During the year ended December 31, 2020, the Company sold laboratory equipment for cash proceeds of $293,312, resulting in a gain on disposal of equipment of $293,312.

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 5 - Intangible Assets

 

The Company’s intangible assets consist of patents, mainly acquired in the acquisition of Belgian Volition. The patents are being amortized over the assets’ estimated useful lives, which range from 8 to 20 years.

 

 

 

 

 

 

December 31,

2019

 

 

 

Accumulated

 

Net Carrying

 

Cost

 

Amortization

 

Value

 

$

 

$

 

$

 

 

 

 

 

 

Patents

1,147,391

 

775,086

 

372,305

 

 

 

 

 

 

 

 

 

 

 

December 31,

2018

 

 

 

Accumulated

 

Net Carrying

 

Cost

 

Amortization

 

Value

 

$

 

$

 

$

 

 

 

 

 

 

Patents

1,167,383

 

700,478

 

466,905

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

$

 

 

$

 

 

$

 

Patents

 

 

1,178,135

 

 

 

961,259

 

 

 

216,876

 

 

 

 

 

 

 

December 31,

2020

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

$

 

 

$

 

 

$

 

Patents

 

 

1,256,064

 

 

 

934,423

 

 

 

321,641

 

During the years ended December 31, 2019,2021 and December 31, 2018,2020, the Company recognized $87,285$91,645 and $91,911,$88,626, respectively, in amortization expense.

 

The Company amortizes the long-lived assets on a straight-line basis with terms ranging from 8 to 20 years. The annual estimated amortization schedule over the next five years is as follows:

 

 

 

2020

$

87,539

2021

$

87,539

2022

$

87,539

2023

$

87,539

2024

$

22,149

Total Intangible Assets

$

372,305

 

 

 

2022

 

$88,545

 

2023

 

$88,545

 

2024

 

$39,786

 

Total Intangible Assets

 

$216,876

 

The Company periodically reviews its long-lived assets to ensure that their carrying value does not exceed their fair market value. The Company carried out such a review in accordance with ASC 360 as of December 31, 2019.2021. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2019.2021.

 

Note 6 - Related Party Transactions

See Note 7 for common stock issued to related parties and Note 8 for stock options, warrants and warrantsRSUs issued to related parties. The Company has agreements with related parties for the purchase of products and consultancy services which are accrued under accruals and management and directors’ fees payable (see consolidated balance sheet)sheets).




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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 7 - Common Stock

 

As of December 31, 2019,2021, the Company was authorized to issue 100 million shares of common stock par value $0.001 per share, of which 41,125,30353,772,261 and 35,335,37848,607,017 shares were issued as of December 31, 20192021 and December 31, 2018,2020, respectively.

 

On June 14, 2019, an amendment to2021

Stock Option Exercises

During the 2015 Stock Incentive Plan (the “2015 Plan”) was approved by the stockholders at the annual meeting to increase the numberyear ended December 31, 2021 we issued a total of 77,451 shares of common stock available for issuance underfrom the 2015 Plan by 1,000,000 shares to an aggregate maximumcashless exercise of 4,250,000 shares.options, as follows:

 

 

Stock Incentive

 

 

Stock Options

 

 

Price Per Share

 

 

Shares Issued

 

Date 

 

Plan 

 

 

#

 

 

$

 

 

#

 

January 13 - March 19, 2021

 

2011

 

 

 

7,634

 

 

 

3.35

 

 

 

948

 

February 2, 2021

 

2011

 

 

 

20,000

 

 

 

3.80

 

 

 

6,181

 

February 8, 2021

 

2011

 

 

 

15,000

 

 

 

4.00

 

 

 

5,769

 

February 8, 2021

 

2015

 

 

 

100,000

 

 

 

5.00

 

 

 

19,446

 

February 8 - February 9, 2021

 

2015

 

 

 

85,000

 

 

 

4.00

 

 

 

26,357

 

February 8, 2021

 

2015

 

 

 

50,000

 

 

 

3.25

 

 

 

18,750

 

 

 

 

 

 

 

277,634

 

 

 

 

 

 

77,451

 

2020

 

2019Stock Option Exercises

 

Issuances Upon Warrant and Option Exercises

On August 10, 2018,During the Companyyear ended December 31, 2020 we issued to Cotterford Company Limited (“Cotterford”) in a private placement offering (PIPE) 5.0 milliontotal of 147,268 shares of common stock from the exercise of options, as follows:

 

 

Stock Incentive

 

 

Stock Options

 

 

Price Per Share

 

 

Shares Issued

 

 

Proceeds

 

Date 

 

 Plan

 

 

#

 

 

$

 

 

#

 

 

$

 

February 24 - September 2, 2020

 

2011

 

 

 

11,599

 

 

 

2.35

 

 

 

2,752

 

 

Cashless

 

January 7 - August 17, 2020

 

2011

 

 

 

307,500

 

 

 

2.50

 

 

 

69,230

 

 

Cashless

 

August 12, 2020

 

2011

 

 

 

15,000

 

 

 

2.50

 

 

 

15,000

 

 

 

37,500

 

January 7 - August 17, 2020

 

2011

 

 

 

307,500

 

 

 

3.00

 

 

 

38,800

 

 

Cashless

 

August 12, 2020

 

2011

 

 

 

15,000

 

 

 

3.00

 

 

 

15,000

 

 

 

45,000

 

January 7, 2020

 

2011

 

 

 

10,000

 

 

 

4.00

 

 

 

1,853

 

 

Cashless

 

January 7, 2020

 

2015

 

 

 

25,000

 

 

 

4.00

 

 

 

4,633

 

 

Cashless

 

 

 

 

 

 

 

691,599

 

 

 

 

 

 

147,268

 

 

 

82,500

 

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 7 - Common Stock (continued)

2021

RSU Settlements

During the year ended December 31, 2021 we issued a total of 24,712 shares of common stock from the settlement of RSUs, as follows:

 

 

Restricted Stock

Units Vested

 

 

Price Settled

Per Share

 

 

Shares Issued

 

 

Shares Withheld

for Tax

 

Date 

 

#

 

 

$

 

 

#

 

 

#

 

January 20, 2021

 

 

5,000

 

 

 

4.10

 

 

 

3,000

 

 

 

2,000

 

April 21, 2021

 

 

26,250

 

 

 

3.44

 

 

 

21,712

 

 

 

4,538

 

2021

Equity Capital Raises

On February 10, 2021, the Company entered into an underwriting agreement with Cantor Fitzgerald & Co (“Cantor”), in connection with an underwritten public offering of 3,809,524 shares (the “Firm Shares”) of the Company’s common stock, pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-227248) and related prospectuses. Cantor purchased the Firm Shares from the Company at a price of $1.80$4.9533 per share for aggregate gross proceeds of $9.0 million.  In connection with the transaction, approximately $0.1 million was incurred for legal and other fees resulting inon February 12, 2021. The net proceeds of approximately $8.9 million. Additionally,received by the Company issued to Cotterford a warrantfor the sale and issuance of the Firm Shares were approximately $18.9 million. Under the terms of the underwriting agreement, the Company granted Cantor an option, exercisable for 30 days, to purchase up to an additional 5.0 million571,428 shares of common stock at the same price per share as the Firm Shares which option was not exercised.

2020

Equity Capital Raises

On May 20, 2020, the Company entered into an exerciseunderwriting agreement with National Securities Corporation, acting on its own behalf and as representative of the several underwriters, in connection with the public offering, issuance and sale by the Company of 4,365,000 shares of the Company’s common stock, at the public offering price of $3.00$2.75 per share payable in cash.  This transaction resulted in Cotterford becoming a significant stockholder(less underwriting discounts and therefore a related party in accordance with U.S. GAAP.  The shares of common stock (includingcommissions), pursuant to the shares underlying the warrant) were subsequently registered for resaleCompany’s effective shelf registration statement on Form S-3 (declared effective by(File No. 333-227248) and related prospectuses. Under the SEC on October 15, 2018, File No. 333-227731).

From Januaryterms of the underwriting agreement, the Company granted the underwriters an option, exercisable for 30 2019 to February 26, 2019, warrantsdays to purchase 754,475up to 654,750 additional shares of ourthe Company’s common stock were exercisedto cover overallotments, if any, at athe public offering price of $2.20$2.75 per share, less underwriting discounts and commissions. On May 21, 2020, the underwriters exercised the overallotment option in full. As a result of the equity capital raise, the Company issued a total of approximately 5 million shares for aggregate gross proceeds of $13.8 million. Additionally, in connection with this transaction, $1.1 million was incurred in fees relating to the equity offering, resulting in net proceeds to the Company of approximately $1.66$12.7 million.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 7 - Common Stock (continued)

2021 and 2020

Equity Distribution Agreements

 

On March 8, 2019, Cotterford partially exercised its warrantSeptember 24, 2021, the Company entered into an equity distribution agreement (the “2021 EDA”) with Cantor and purchased 1,724,138Oppenheimer & Co. Inc. (“Oppenheimer”), to sell shares of ourits common stock at ahaving an aggregate offering price of $2.90 per share, for gross proceedsup to $25.0 million from time-to-time, through an “at the market offering program” pursuant to the Company’s effective “shelf” registration statement on Form S-3 (File No. 333-259783) and related prospectuses, through Cantor and Oppenheimer each acting as the Company’s agent and/or principal. The Company was not obligated to sell any shares under the 2021 EDA. From inception through December 31, 2021, the Company raised aggregate net proceeds (net of $5.0 million. 

On May 3, 2019, Cotterford partially exercised its warrantbroker’s commissions and purchased 1,666,667fees) of approximately $0.7 million under the 2021 EDA through the sale of 190,600 shares of ourits common stock at a pricestock. The 2021 EDA replaced the 2020 EDA effective as of $3.00 per share,November 8, 2021. See Note 11 for gross proceedsadditional details regarding the Company’s equity distribution agreements subsequent to the Company of $5.0 million.

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at a price of $3.00 per share, for gross proceeds to the Company of approximately $4.8 million.

From August 20, 2019 to September 20, 2019, 6,166 stock options were exercised to purchase shares of our common stock at $2.35 per share in a cashless exercise that resulted in the issuance of 2,487 shares of our common stock.December 31, 2021.

 

On November 15, 2019, 4,167 stock options were exercised10, 2020, the Company entered into an equity distribution agreement (the “2020 EDA”) with Cantor and Oppenheimer to purchasesell shares of ourits common stock at $5.00 per share in a cashless exercise that resulted inhaving an aggregate offering price of up to $25.0 million from time-to-time, through an “at the issuancemarket offering program” pursuant to the Company’s effective “shelf” registration statement on Form S-3 (File No. 333-227248) and related prospectuses, through Cantor and Oppenheimer each acting as the Company’s agent and/or principal. The Company was not obligated to sell any shares under the 2020 EDA. During the year ended December 31, 2021 (and from inception of 371the 2020 EDA), the Company raised aggregate net proceeds (net of broker’s commissions and fees) of $2.7 million under the 2020 EDA through the sale of 754,348 shares of ourits common stock.

From November 25, 2019 to November 27, 2019, warrants to purchase 29,392 shares of our common stock were exercised at a price of $2.40 per share, for gross proceeds to No further sales will be made under the Company of $70,541.

Equity Distribution Agreement2020 EDA.

 

On September 7, 2018, the Company entered into an equity distribution agreement (as amended, the “2018 EDA”) with Oppenheimer & Co. Inc. (“Oppenheimer”), which agreement allows it to offer and sell shares of its common stock having an aggregate offering price of up to $10.0 million from time-to-time, through an “at the market offering program” pursuant to athe Company’s effective shelf registration statement on Form S-3 (declared effective by the SEC on September 28, 2018, File No.(File No 333-227248) and related prospectuses, through Oppenheimer acting as the Company’s agent and/or principal. Through December From inception through the full utilization of the 2018 EDA during the March 31,2019, 2021 quarter, the Companyraised aggregate net proceeds (net of brokerbroker’s commissions and fees) of $16,547approximately $9.7 million under the equity distribution agreement2018 EDA through the sale of 3,2002,539,606 shares of its common stock. All of such shares were sold during

During the quarteryear ended December 31, 2019. The2021, the Company used theraised aggregate net proceeds (net of broker’s commissions and fees) of $1.2 million under the 2018 EDA through the sale of 308,609 shares of its common stock. During the year ended December 31, 2020, the Company raised to date for continued product development, clinical studies, product commercialization, working capitalaggregate net proceeds (net of broker’s commissions and other general corporate purposes.fees) of $8.5 million under the 2018 EDA through the sale of 2,227,797 shares of its common stock. No further sales will be made under the 2018 EDA.

 

20182020

 

From February 5 to June 4, 2018, 29,375Issuances Upon Warrant Exercises

For the year ended December 31, 2021 no warrants were exercised. During the year ended December 31, 2020 a total of 25,000 warrants were exercised to purchase shares of our common stock, at a price of $2.00 per share in a cashless exercise that resulted in the issuance of 11,831 shares of our common stock.as follows:




 

 

Warrants Exercised

 

 

Price Per Share

 

 

Shares Issued

 

 

Proceeds

 

Date 

 

#

 

 

$

 

 

#

 

 

$

 

September 18, 2020

 

 

25,000

 

 

 

2.47

 

 

 

25,000

 

 

 

61,750

 

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 7 - Common Stock (Continued)(continued)

2020

Stock Issuance for Services

 

On March 13, 2018, the CompanyJanuary 9, 2020, 73,263 shares were issued 3.5 millionas fully paid shares of common stock invalued at $333,969 as compensation to a registered public offeringmanaging director of Volition Germany (see Note 10(f)).

2020

Stock Repurchase

On January 12, 2020, the Company purchased from its Chief Medical Officer 11,364 shares of its common stock at a price of $2.40$4.79 per share, for aggregate gross proceeds of $8.4 million. In connection with the transaction, approximately $0.8 million was incurred for legal and underwriting fees resulting in net proceeds of approximately $7.6 million. Pursuant to this offering, the underwriters had the option to purchase up to an additional 525,000 shares of our common stock for 30 days following the pricing of the initial closing, which option was not exercised.

On August 10, 2018, the Company issued to Cotterford in a private placement offering (“PIPE”) 5.0 million shares of our common stock at a price of $1.80 per share, for aggregate gross proceeds of $9.0 million.

On October 16, 2018, 243,903 warrants were exercised at a price of $2.40 per share, for gross cash proceedstotal cost to the Company of $585,367. As a result, a total of 243,903$54,434. These shares of our common stock were issued.subsequently retired.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

 

On October 16, 2018, 60,250 warrants were exercised at a price of $2.20 per share, for gross cash proceeds to the Company of $132,550. As a result, a total of 60,250 shares of our common stock were issued.

Note 8 - Warrants and OptionsStock-Based Compensation

 

a) Warrants

 

The following table summarizes the changes in warrants outstanding of the Company during the years ended December 31, 20192021 and December 31, 2018:2020:

 

Number of

 

Weighted Average

 

 

Weighted Average

 

Warrants

 

Exercise Price ($)

 

Number of

 

Exercise Price

 

Outstanding at December 31, 2017

1,731,680

 

2.36

 

Warrants

 

 

 $

 

Outstanding at December 31, 2019

 

190,000

 

2.90

 

Granted

5,000,000

 

3.00

 

50,000

 

3.45

 

Exercised

(333,528)

 

2.33

 

(25,000)

 

2.47

 

Expired

(290,535)

 

2.54

 

 

(40,000)

 

 

4.53

 

Outstanding at December 31, 2018

6,107,617

 

2.88

Outstanding at December 31, 2020

 

175,000

 

2.75

 

Granted

-

 

-

 

310,000

 

4.52

 

Exercised

(5,783,867)

 

2.86

 

-

 

0

 

Expired

(133,750)

 

2.20

 

 

-

 

 

 

0

 

Outstanding at December 31, 2019

190,000

 

2.90

Outstanding at December 31, 2021

 

 

485,000

 

 

 

3.88

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2019

65,000

 

4.53

Exercisable at December 31, 2021

 

 

175,000

 

 

 

2.75

 

 

20192021

 

Effective March 5, 2019,January 1, 2021, the Company entered into an amendment to an outstanding warrantgranted warrants to purchase up to an aggregate of 5.0 million125,000 shares of our common stock originally issued to Cotterford, a significant stockholder, in connectionCompany employee for services to the Company. These warrants vest on January 1, 2022 (subject to continued employment through such date) and expire on January 1, 2027, with an equity financing completed on or about August 10, 2018.  The amendment temporarily reduced the exercise price of such warrant from $3.00$3.95 per share to $2.90 per share throughshare. The Company has calculated the closeestimated fair market value of business on March 8, 2019. As a result of this amendment, $196,957 of financing costs were recorded in other expenses.these warrants at $242,877, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.80, exercise price $3.95, 74.53% volatility, 0.50% risk free rate, and no forfeiture rate.

 

On March 8, 2019, Cotterford partially exercised its warrant and purchased 1,724,138Effective February 1, 2021, the Company granted warrants to purchase 185,000 shares of our common stock at $2.90 per share resulting in gross proceedsto a Company employee for services to the Company. These warrants vest on February 1, 2022 (subject to continued employment through such date) and expire on February 1, 2027, with an exercise price of $4.90 per share. The Company has calculated the estimated fair market value of $5.0 million.these warrants at $459,352, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $4.80, exercise price $4.90, 75.03% volatility, 0.59% risk free rate, and no forfeiture rate.

 

On May 3, 2019, Cotterford partially exercised its warrant and purchased 1,666,667 shares of our common stock at $3.00 per share resulting in gross proceeds of $5.0 million to the Company.2020

 

On July 1, 2019,Effective February 26, 2020, the Company modifiedvesting criteria of the performance criteria for certain vesting milestones onremaining installment of a warrant held byoriginally granted March 20, 2013 to an officer of the Company, and previously amended, was deemed met pursuant to the approval of the Compensation Committee, resulting in the vesting of the Warrant as a resultto 125,000 shares effective February 26, 2020, with an expiration date of February 26, 2023.

Effective March 1, 2020, the Company re-measuredgranted warrants held by the officer, to purchase 125,00050,000 shares of our common stock atto a Company employee for services to the Company. These warrants vest on September 1, 2021 (subject to continued employment through such date) and expire on March 1, 2026, with an exercise price of $2.47$3.45 per share, resulting in $11,829share. The Company has calculated the estimated fair market value of additional warrant expense to be recorded overthese warrants at $86,771, using the vesting period. These warrants vest on achievement of certain business objectivesBlack-Scholes model and expire 3the following assumptions: term 3.75 years, from the date of vesting.stock price $3.44, exercise price $3.45, 69.03% volatility, 0.95% risk free rate, and no forfeiture rate.




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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 8 - Warrants and Options (Continued)Stock-based Compensation (continued)

 

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at $3.00 per share resulting in gross proceeds of $4.8 million to the Company.a) Warrants (continued)

 

During the year 2019, warrants to purchase an aggregate of 5,783,067 shares of our common stock were exercised (including the exercises by Cotterford referenced above) for gross cash proceeds to the Company of approximately of $16.6 million.

2018

On August 10, 2018, in conjunction with the PIPE transaction the Company issued to Cotterford a warrant to purchase up to 5.0 million shares of common stock at an exercise price of $3.00 per share payable in cash (subject to adjustment pursuant to the terms of the warrant). The warrant has an expiration date of August 10, 2019 and is exercisable for a period of 6 months commencing on February 10, 2019.

On November 13, 2018, the Board of Directors amended the terms of an aggregate of 29,392 outstanding warrants to purchase common stock of the Company originally issued in connection with an equity financing completed on or about December 31, 2013 to extend the expiration date from December 31, 2018 to December 31, 2019.

During 2018, 333,528 warrants were exercised for gross cash proceeds to the Company of $717,917.  Refer to Note 7 for the details of the exercises.

 

Below is a table summarizing the warrants issued and outstanding as of December 31, 2019, which2021. The warrants outstanding have a weighted average exercise price of $2.90$3.88 per share and an aggregate weighted average remaining contractual life of 2.913.96 years. The warrants exercisable have a weighted average price of $2.75 per share.

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Remaining

Proceeds to

Number

 

Number

 

Exercise

 

Contractual

Company if

Outstanding

 

Exercisable

 

Price ($)

 

Life (Years)

Exercised ($)

150,000

 

25,000

 

2.47

 

3.25

 

370,500

40,000

 

40,000

 

4.53

 

0.87

 

181,200

190,000

 

65,000

 

 

 

 

 

551,700

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Proceeds to

 

 

 

 

 

 

 

Exercise

 

 

Remaining

 

 

Company if

 

Number

 

 

Number

 

 

Price

 

 

Contractual

 

 

Exercised

 

Outstanding

 

 

Exercisable

 

 

$

 

 

Life (Years)

 

 

$

 

 

125,000

 

 

 

125,000

 

 

 

2.47

 

 

 

1.15

 

 

 

308,750

 

 

50,000

 

 

 

50,000

 

 

 

3.45

 

 

 

4.17

 

 

 

172,500

 

 

125,000

 

 

 

-

 

 

 

3.95

 

 

 

5.01

 

 

 

493,750

 

 

185,000

 

 

 

-

 

 

 

4.90

 

 

 

5.09

 

 

 

906,500

 

 

485,000

 

 

 

175,000

 

 

 

 

 

 

 

 

 

 

 

1,881,500

 

Warrant

Stock-based compensation expense related to warrants of $8,506$701,781 and $22,776$68,541 was recorded infor the years ended December 31, 2019,2021, and December 31, 2018,2020, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is $20,335approximately $39,013 and is expected to be recognized over a period of 1.00.09 years. As of December 31, 2019,2021, the total intrinsic value of warrants was $348,900.$83,750.

 

b) Options

 

The Company currently has options outstanding under both its 2011 Equity Incentive Plan (the “2011 Plan”) (for option issuances prior to 2016)2016,) and its 2015 Stock Incentive Plan (the “2015 Plan”) (for option issuances commencing in 2016). Effective as of January 1, 2016, no additional awards were or may be made under the 2011 Plan.

 

The 2015 Plan was adopted by the Board of Directors on August 18, 2015 and approved by the stockholders at an annual meeting held on October 30, 2015. On August 5, 2016, the Board of Directors adopted an amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 1,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on October 7, 2016. On June 13, 2017, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 2,500,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 8, 2017. On June 15, 2018, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 3,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 7, 2018.

On March 27, 2019, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under thesuch Plan by 1,000,000 shares to an aggregate maximum of 4,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 14, 2019. On March 31, 2021, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 1,750,000 shares to an aggregate maximum of 6,000,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 17, 2021.




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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 8 - Warrants andStock-based Compensation (continued)

b) Options (Continued)(continued)

 

The 2015 Plan permits the grant of incentive stock options, non-statutory stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units and performance awards. The primary purpose of the 2015 Plan is to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company that is tied to the Company’s performance, thereby giving them an interest in the success and increased value of the Company. The 2015 Plan is administered by the Compensation Committee comprised solely of members of the Board of Directors or by the Board of Directors as a whole.

 

The following table summarizes the changes in options outstanding of the Company during the years ended December 31, 20192021 and 2018:December 31, 2020:

 

 

Number of

 

Weighted Average

 

 

Weighted Average

 

 

Options

 

Exercise Price ($)

 

Number of

 

Exercise Price

 

Outstanding at December 31, 2017

 

2,939,134

 

4.09

 

Options

 

 

$

 

Outstanding at December 31, 2019

 

4,169,301

 

3.88

 

Granted

 

805,000

 

4.00

 

845,000

 

3.60

 

Exercised

 

-

 

-

 

(691,599)

 

2.81

 

Expired/Cancelled

 

(245,333)

 

4.98

 

 

(44,083)

 

 

4.21

 

Outstanding at December 31, 2018

 

3,498,801

 

4.00

Outstanding at December 31, 2020

 

4,278,619

 

4.00

 

Granted

 

730,000

 

3.25

 

1,090,000

 

3.41

 

Exercised

 

(10,333)

 

3.42

 

(277,634)

 

4.19

 

Expired/Cancelled

 

(49,167)

 

3.31

 

 

(63,467)

 

 

3.64

 

Outstanding at December 31, 2019

 

4,169,301

 

3.88

Outstanding at December 31, 2021

 

 

5,027,518

 

 

 

3.87

 

 

 

 

 

 

 

 

 

 

Exercisable at December 31, 2019

 

3,484,301

 

4.01

 

 

 

 

Exercisable at December 31, 2021

 

 

3,937,518

 

 

 

4.00

 

2019

2021

 

Effective February 11, 2019,May 20, 2021, the Company granted stock options to purchase 730,00040,000 shares of our common stock to a Company employee in exchange for services provided to the Company. These options vest on May 20, 2022 and were initially scheduled to expire six years after the grant date, with an exercise price of $3.60 per share. The Company extended the expiration date to ten years after the original grant date. The Company has calculated the estimated fair market value of these options at $73,641, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $3.50, exercise price $3.60, 76.16% volatility, 0.58% risk free rate, and no forfeiture rate.

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 8 - Stock-based Compensation (continued)

b) Options (continued)

During the year ended December 31, 2021, the Company modified a total of 3,342,518 options to extend their expiration dates to ten years from the original dates of grant. This resulted in $2,450,349 of expense.

The following table summarizes the amendments to the expiration dates of various options approved during the year ended December 31, 2021. Except as otherwise noted, the expiration dates for all options in the table below were extended from six years to ten years from the original date of grant.

Amendment

 

 

Equity Incentive

 

 

Stock Options

 

 

Grant

 

 

New Expiration

 

 

Option Expense

 

Date

 

 

Plan

 

 

#

 

 

Date

 

 

Date

 

 

$

 

July 14, 2021

(i)

 

2011

 

 

 

292,000

 

 

 July 23, 2015

 

 

 July 23, 2025

 

 

 

442,273

 

 July 14, 2021

 

 

2011

 

 

 

6,367

 

 

 March 20, 2013

 

 

 March 20, 2023

 

 

 

4,151

 

 July 14, 2021

 

 

2011

 

 

 

8,151

 

 

 September 2, 2013

 

 

 September 2, 2023

 

 

 

6,009

 

 September 21, 2021

 

 

2015

 

 

 

335,000

 

 

 April 13, 2020

 

 

 April 13, 2030

 

 

 

163,945

 

September 21, 2021

(ii)

 

2015

 

 

 

89,163

 

 

 January 23, 2018

 

 

 January 23, 2028

 

 

 

24,194

 

September 21, 2021

(ii)

 

2015

 

 

 

308,066

 

 

 February 13, 2017

 

 

 February 13, 2027

 

 

 

127,719

 

 November 3, 2021

 

 

2015

 

 

 

760,000

 

 

 April 15, 2016

 

 

 April 15, 2026

 

 

 

984,511

 

 November 3, 2021

 

 

2015

 

 

 

15,000

 

 

 June 23, 2016

 

 

 June 23, 2026

 

 

 

19,582

 

 November 3, 2021

 

 

2015

 

 

 

50,000

 

 

 January 1, 2017

 

 

 January 1, 2027

 

 

 

32,456

 

 November 3, 2021

 

 

2015

 

 

 

387,934

 

 

 March 30, 2017

 

 

 March 30, 2027

 

 

 

224,901

 

 November 3, 2021

 

 

2015

 

 

 

615,837

 

 

 January 23, 2018

 

 

 January 23, 2028

 

 

 

213,646

 

 December 8, 2021

 

 

2015

 

 

 

425,000

 

 

 April 13, 2020

 

 

 April 13, 2030

 

 

 

180,267

 

 December 8, 2021

 

 

2015

 

 

 

10,000

 

 

 December 1, 2020

 

 

 December 1, 2030

 

 

 

5,209

 

 December 8, 2021

 

 

2015

 

 

 

40,000

 

 

 May 20, 2021

 

 

 May 20, 2031

 

 

 

21,486

 

 

 

 

 

 

 

 

3,342,518

 

 

 

 

 

 

 

 

 

2,450,349

 

(i)

The expiration date of these options were extended from five and a half years to ten years from the original date of grant.

(ii)

These options were previously amended on December 16, 2019 and amended again on September 21, 2021.

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 8 - Stock-based Compensation (continued)

b) Options (continued)

Effective August 3, 2021, the Company approved the granting of options under the 2015 Stock Incentive Plan vesting upon achievement of certain corporate goals (see additional details in Note 10(h)). Pursuant to this approval, the Company granted stock options to purchase an aggregate of 926,640 shares of common stock to various personnel (including directors, executives, members of management and employees)employees of the Company and/or its subsidiaries) in exchange for services provided to the Company.Company and/or its subsidiaries. These options vestedvest over two years with options to purchase up to 463,328 shares vesting on February 11, 2020August 3, 2022, and options to purchase up to 463,312 shares vesting on August 3, 2023, subject to continued service by the optionee, and expire 510 years afterfrom the vesting date of grant with an exercise price of $3.25$3.40 per share. The actual number of options that are eligible for the time-based vesting is contingent upon the timely achievement of certain pre-determined corporate goals by the Company and/or its subsidiaries as set forth in the grant documents. The Company has calculated the estimated fair market value of these options at $1,811,216, using the Black-Scholes model and the following assumptions: term 5.5 years, stock price $3.31, exercise price $3.40, 69.13% volatility, 1.19% risk free rate, and no forfeiture rate.

Effective September 7, 2021, the Company granted stock options to purchase 50,000 shares of common stock to two employees in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with 25,000 shares vesting on September 7, 2022, and 25,000 shares vesting on September 7, 2023 subject to continued service by the optionee, and expire 10 years from the date of grant with an exercise price of $3.40 per share. The Company has calculated the estimated fair market value of these options at $1,569,816,$98,322, using the Black-Scholes model and the following assumptions: term 65.5 years, stock price $3.16,$3.32, exercise price $3.25, 77.86%$3.40, 68.98% volatility, 2.52%1.38% risk free rate, and no forfeiture rate.

 

SubsequentEffective October 4, 2021, the Company approved the granting of options under the 2015 Plan vesting upon achievement of certain corporate goals (see additional details in Note 10 (h)). Pursuant to the February 2019 grant, stock options to purchase 45,000 shares of our common stock subject to the grant were forfeited.

2018

Effective January 23, 2018,this approval the Company granted stock options to purchase 780,00073,360 shares of ourcommon stock to an employee in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with 36,680 shares vesting on October 4, 2022, and 36,680 shares vesting on October 4, 2023, subject to continued service by the optionee, and expire 10 years from the date of grant with an exercise price of $3.40 per share. The actual number of options that are eligible for the time-based vesting is contingent upon the timely achievement of certain pre-determined corporate goals by the Company and/or its subsidiaries as set forth in the grant documents. The Company has calculated the estimated fair market value of these options at $128,003, using the Black-Scholes model and the following assumptions: term 5.5 years, stock price $3.04, exercise price $3.40, 68.80% volatility, 1.49% risk free rate, and no forfeiture rate.

2020

Effective April 13, 2020, the Company granted stock options to purchase 835,000 shares of common stock to various Company personnel (including directors, executives, members of management and employees) in exchange for services provided to the Company. These options vested on January 23, 2019April 13, 2021 and were initially scheduled to expire 56 years after the vestinggrant date, with an exercise price of $4.00$3.60 per share. In 2021, the Company extended the expiration date to ten years after the original grant date for the remaining outstanding options. The Company has calculated the estimated fair market value of these options at $1,930,265,$1,481,709, using the Black-Scholes model and the following assumptions: term 63.5 years, stock price $3.75,$3.52, exercise price $4.00, 75.4%$3.60, 72.94% volatility, 2.55%0.54% risk free rate, and no forfeiture rate.




VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2019 and 2018

($ expressed in United States Dollars)

Note 8 - Warrants and Options (Continued)

 

Effective September 28, 2018,December 1, 2020, the Company granted stock options to purchase 25,00010,000 shares of our common stock to thea Company controlleremployee for services to the Company. These options vested on September 28, 2019December 1, 2021 and were initially scheduled to expire 56 years after the vestinggrant date, with an exercise price of $4.00$3.40 per share. In 2021, the Company extended the expiration date to ten years after the original grant date. The Company has calculated the estimated fair market value of these options at $39,733,$16,315 using the Black-Scholes model and the following assumptions: term 63.5 years, stock price $2.59,$3.30, exercise price $4.00, 77.59%$3.40, 71.60% volatility, 3.01%0.55% risk free rate, and no forfeiture rate.

In December 2018, the Board of Directors amended the terms of certain outstanding options such that (i) the expiration date for outstanding options to purchase up to an aggregate of 645,000 shares of the Company’s common stock, granted on August 18, 2014 under the 2011 Plan, was extended for both vesting installments from four (4) years from the vesting date of each installment to a single expiration date of August 18, 2020, (ii) the expiration date for outstanding options to purchase up to an aggregate of 20,000 shares of the Company’s common stock, granted on May 18, 2015 under the 2011 Plan, was extended from four (4) years after the vesting date to May 18, 2021, and (iii) the expiration date for outstanding options to purchase up to an aggregate of 317,000 shares of the Company’s common stock, granted July 23, 2015 under the 2011 Plan, was extended from four (4) years after vesting to five years and six months after vesting, or July 23, 2021.

 

Below is a table summarizing the options issued and outstanding as of December 31, 2019,2021, all of which were issued pursuant to the 2011 Plan (for option issuances prior to 2016) or the 2015 Plan (for option issuances commencing in 2016)and which have a weighted average exercise price of $3.88$3.87 per share and an aggregate weighted average remaining contractual life of 2.97 years.6.25 years.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

 

As of December 31, 2019, an aggregate of 1,114,000 shares of common stock remained available for future issuance under the 2015 Plan.Note 8 - Stock-Based Compensation (continued)

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

Remaining

 

Proceeds to

Number

 

Number

 

Exercise

 

Contractual

 

Company if

Outstanding

 

Exercisable

 

Price ($)

 

Life (Years)

 

Exercised ($)

11,599

 

11,599

 

2.35

 

0.35

 

27,258

322,500

 

322,500

 

2.50

 

0.63

 

806,250

322,500

 

322,500

 

3.00

 

0.63

 

967,500

685,000

 

-

 

3.25

 

5.12

 

2,226,250

17,767

 

17,767

 

3.35

 

1.20

 

59,519

20,000

 

20,000

 

3.80

 

1.38

 

76,000

1,817,837

 

1,817,837

 

4.00

 

3.03

 

7,271,348

89,163

 

89,163

 

4.38

 

3.03

 

390,534

17,768

 

17,768

 

4.35

 

2.20

 

77,291

50,000

 

50,000

 

4.80

 

3.01

 

240,000

815,167

 

815,167

 

5.00

 

2.51

 

4,075,836

4,169,301

 

3,484,301

 

 

 

 

 

16,217,786

b) Options (continued)

 

 

 

 

 

 

 

Weighted Average

 

 

Proceeds to

 

 

 

 

 

 

 

Exercise

 

 

Remaining

 

 

Company if

 

Number

 

 

Number

 

 

Price

 

 

Contractual Life

 

 

Exercised

 

Outstanding

 

 

Exercisable

 

 

$

 

 

(Years)

 

 

$

 

 

635,000

 

 

 

635,000

 

 

 

3.25

 

 

 

3.12

 

 

 

2,063,750

 

 

2,717

 

 

 

2,717

 

 

 

3.35

 

 

 

1.67

 

 

 

9,102

 

 

1,060,000

 

 

 

10,000

 

 

 

3.40

 

 

 

9.60

 

 

 

3,604,000

 

 

800,000

 

 

 

760,000

 

 

 

3.60

 

 

 

8.35

 

 

 

2,880,000

 

 

1,682,837

 

 

 

1,682,837

 

 

 

4.00

 

 

 

4.76

 

 

 

6,731,348

 

 

11,801

 

 

 

11,801

 

 

 

4.35

 

 

 

1.44

 

 

 

51,334

 

 

89,163

 

 

 

89,163

 

 

 

4.38

 

 

 

6.07

 

 

 

390,534

 

 

50,000

 

 

 

50,000

 

 

 

4.80

 

 

 

5.01

 

 

 

240,000

 

 

696,000

 

 

 

696,000

 

 

 

5.00

 

 

 

5.24

 

 

 

3,480,000

 

 

5,027,518

 

 

 

3,937,518

 

 

 

 

 

 

 

 

 

19,450,068

 

 

Stock optionStock-based compensation expense related to stock options of $1,458,607$1,069,605 and $2,570,095$1,220,165 was recorded infor the year ended December 31, 20192021 and December 31, 2018,2020 respectively. Total remaining unrecognized compensation cost related to non-vested stock options is $165,465approximately $1,458,282 and is expected to be recognized over a period of 0.121.76 years. As of December 31, 2019,2021, the total intrinsic value of stock options was $3,759,645.$nil.




As of December 31, 2021, an aggregate of 374,352 shares of common stock remained available for future issuance under the 2015 Plan.

c) Restricted Stock Units (RSUs)

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2021, all of which were issued pursuant to the 2015 Stock Incentive Plan.

 

 

 

 

Weighted Average

 

 

 

Number of

 

 

Exercise Price

 

 

 

RSUs

 

 

$

 

Outstanding at December 31, 2019

 

 

-

 

 

0

 

Granted

 

 

67,500

 

 

 

3.47

 

Outstanding at December 31, 2020

 

 

67,500

 

 

 

3.47

 

Granted

 

 

789,500

 

 

 

3.33

 

Vested

 

 

(31,250)

 

 

3.55

 

Cancelled

 

 

(15,000)

 

 

3.30

 

Outstanding at December 31, 2021

 

 

810,750

 

 

 

3.33

 

F-59

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 8 - Stock-Based Compensation (continued)

c) Restricted Stock Units (RSUs) (continued)

2021

Effective January 1, 2021, the Company granted RSUs of 5,000 shares of common stock to a Company employee in exchange for services provided to the Company. These RSUs vested immediately, on January 1, 2021 and resulted in the issuance of 3,000 shares (the remaining 2,000 shares were withheld for taxes and returned as authorized shares under the 2015 Plan) and total compensation expense of $19,450.

Effective March 25, 2021, the Company granted aggregate RSUs of 30,000 shares of common stock to two non-executive directors in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of March 25, 2022 and March 25, 2023, subject to continued service, and will result in total compensation expense of $107,700.

On March 25, 2021, 15,000 RSUs previously granted to a non-executive director were cancelled and returned as authorized shares under the 2015 Plan upon the resignation of such director prior to vesting.

On April 13, 2021, 26,250 RSUs vested and resulted in the issuance of 21,712 shares (the remaining 4,538 shares were withheld for taxes and returned as authorized shares under the 2015 Plan).

Effective May 1, 2021, the Company granted RSUs of 150,000 shares of common stock to an employee in exchange for services provided to the Company. These RSUs vest over three years with 50,000 units vesting on each of May 1, 2022, May 1, 2023 and May 1, 2024, respectively, subject to continued service, and will result in total compensation expense of $496,500.

Effective August 3, 2021, the Company approved the granting of RSUs under the 2015 Plan vesting upon achievement of certain corporate goals (see additional details in Note 10(h)). Pursuant to this approval, the Company granted RSUs of 460,191 shares of common stock to various personnel (including directors, executives, members of management and employees of the Company and/or its subsidiaries) in exchange for services provided to the Company and/or its subsidiaries. The actual number of RSUs that are eligible for the time-based vesting is contingent based upon the timely achievement of certain pre-determined corporate goals by the Company and/or its subsidiaries as set forth in the grant documents as well as continued service by the participant through the applicable vesting date. The RSUs eligible for vesting shall vest over two years with up to 230,102 units vesting on August 3, 2022, and up to 230,089 units vesting on August 3, 2023 and will result in total compensation expense of $1,523,232.

Effective September 7, 2021, the Company granted RSUs of 38,000 shares of common stock to various employees of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. These RSUs vest over two years with 19,000 units vesting on September 7, 2022, and 19,000 units vesting on September 7, 2023, subject to continued service and will result in total compensation expense of $126,160.

Effective October 4, 2021, the Company approved the granting of RSUs under the 2015 Plan vesting upon achievement of certain corporate goals (see additional details in Note 10 (h)). Pursuant to this approval, the Company granted RSUs of 39,809 shares of common stock to an employee of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. The actual number of RSUs that are eligible for the time-based vesting is contingent based upon the timely achievement of certain pre-determined corporate goals by the Company and/or its subsidiaries as set forth in the grant documents. These RSUs vest over two years with 19,905 units vesting on October 4, 2022, and 19,904 units vesting on October 4, 2023, subject to continued service by the participant through the applicable vesting dates, and will result in total compensation expense of $121,019.

Effective November 1, 2021, the Company granted RSUs of 43,500 shares of common stock to an employee of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. These RSUs vest over two years with 21,750 units vesting on November 1, 2022, and 21,750 units vesting on November 1, 2023, subject to continued service and will result in total compensation expense of $152,685.

Effective December 15, 2021, the Company granted RSUs of 23,000 shares of common stock to various employees of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. These RSUs vest over two years with 11,500 units vesting on December 15, 2022, and 11,500 units vesting on December 15, 2023, subject to continued service and will result in total compensation expense of $77,740.

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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 8 - Stock-Based Compensation (continued)

c) Restricted Stock Units (RSUs) (continued)

2020

Effective April 13, 2020, the Company granted RSUs of 52,500 shares of common stock to various Company personnel (including a director and an employee) in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of April 13, 2021 and April 13, 2022 and will result in total compensation expense of $184,800.

Effective December 1, 2020, the Company granted RSUs of 15,000 shares of common stock to a non-executive director of the Company in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of December 1, 2021 and December 1, 2022 and will result in total compensation expense of $49,500.

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2021 of which the last to vest have a remaining contractual life of 2.33 years.

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

Remaining

 

Number

 

 

Share Price

 

 

Contractual Life

 

Outstanding

 

 

$

 

 

(Years)

 

 

39,809

 

 

 

3.04

 

 

 

1.26

 

 

610,191

 

 

 

3.31

 

 

 

1.10

 

 

38,000

 

 

 

3.32

 

 

 

1.18

 

 

23,000

 

 

 

3.38

 

 

 

1.46

 

 

43,500

 

 

 

3.51

 

 

 

1.34

 

 

26,250

 

 

 

3.52

 

 

 

0.28

 

 

30,000

 

 

 

3.59

 

 

 

0.73

 

 

810,750

 

 

 

 

 

 

1.13

 

Stock-based compensation expense related to RSUs of $898,910 and $102,786 was recorded in the year ended December 31, 2021, and December 31, 2020, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $1,807,140. As of December 31, 2021, the total intrinsic value of RSUs was $3,981.

F-61

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 9 - Income Taxes

 

The Company has estimated net operating losses carry-forward for the years ended December 31, 20192021 and 20182020 of $17.3$24.4 million and $12.4$24.0 million, respectively, available to offset taxable income in future years.

 

The significant components of deferred income taxes and assets as of December 31, 20192021 and December 31, 20182020 are as follows:

 

Net Deferred Tax Liability

 

December 31, 2019

 

December 31, 2018

$

$

Excess of tax over book depreciation and amortization

 

(3,901)

 

(10,761)

ROU Asset

 

(41,250)

 

 

Lease Liability

 

43,896

 

 

Prepaid expenses

 

-

 

-

Allowance for doubtful accounts

 

-

 

-

Accrued expenses

 

1,154

 

1,154

Stock-based compensation

 

-

 

-

Net Operating Losses carry-forward

 

17,326,179

 

12,437,561

Research and development tax credits

 

231,243

 

337,507

Gross deferred tax assets

 

17,557,321

 

12,765,461

Valuation allowance

 

(17,557,321)

 

(12,765,461)

 

 

 

 

 

Net deferred tax asset

 

-

 

-

 

 

 

 

 

Change in Valuation Allowance

 

(4,791,860)

 

 

 

 

 

 

 

Summary Rate Reconciliation

 

December 31, 2019

 

December 31, 2018

%

%

Federal statutory rate

 

21.0

 

21.0

State income taxes, net of federal benefit

 

-

 

-

Permanent Differences

 

4.1

 

(15.1)

Stock based compensation

 

(2.4)

 

(3.2)

Federal Research & Development  Credits

 

0.6

 

0.4

Foreign taxes

 

6.7

 

6.2

Federal Deferred Rate Decrease

 

(0.2)

 

-

Increase/(decrease) in valuation reserve

 

(29.8)

 

(9.3)

Total

 

-

 

-

 

 

 

 

 

Disclosure Amounts

 

December 31, 2019

$

 

 

 

 

 

 

 

Net Operating Losses - United States

 

18,214,929

 

 

Net Operating Losses - Foreign

 

50,464,000

 

 

Credit Carryforward - United States

 

-

 

 

Credit Carryforward - Foreign

 

231,243

 

 

 

 

 

 

 

Increase in Valuation Allowance

 

4,791,860

 

 

 

 

 

 

 

 

 

December 31,

2021

 

 

December 31,

2020

 

Net Deferred Tax Asset

 

$

 

 

$

 

Excess of tax over book depreciation and amortization

 

 

(8,330)

 

 

(966)

ROU Asset

 

 

(28,657)

 

 

(69,407)

Lease Liability

 

 

47,301

 

 

 

73,407

 

Accrued expenses

 

 

1,199

 

 

 

1,154

 

Unrealized Gain/Loss

 

 

103,106

 

 

 

0

 

Stock-based compensation

 

 

186,252

 

 

 

21,533

 

Net Operating Losses carry-forward

 

 

24,390,040

 

 

 

24,011,113

 

Research and development tax credits

 

 

606,729

 

 

 

390,666

 

Gross deferred tax assets

 

 

25,297,640

 

 

 

24,427,500

 

Valuation allowance

 

 

(25,297,640)

 

 

(24,427,500)

Net deferred tax asset

 

 

0

 

 

 

0

 

Change in Valuation Allowance

 

 

(870,140)

 

 

 

 

 




 

 

December 31,

2021

 

 

December 31,

2020

 

Summary Rate Reconciliation

 

%

 

 

%

 

Federal statutory rate

 

 

21.0

 

 

 

21.0

 

State income taxes, net of federal benefit

 

 

-

 

 

 

-

 

Permanent Differences

 

 

(4.8)

 

 

6.1

 

Stock based compensation

 

 

(0.6)

 

 

(1.3)

Federal Research & Development Credits

 

 

0.5

 

 

 

0.5

 

Foreign taxes

 

 

1.5

 

 

 

7.4

 

Federal Deferred Rate Decrease

 

 

(14.4)

 

 

-

 

Change in Valuation Allowance

 

 

(3.2)

 

 

(33.7)

Total

 

 

-

 

 

 

-

 

Disclosure Amounts

December 31,

2021

$

Net Operating Losses - United States

32,130,715

Net Operating Losses - Foreign

78,460,307

Credit Carryforward - United States

0

Credit Carryforward - Foreign

606,730

Increase in Valuation Allowance

870,140

F-62

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 10 - Commitments and Contingencies

 

a) FinancingFinance Lease Obligations

 

In 2015, the Company entered into an equipment financingfinance lease to purchase three Tecan machines (automated liquid handling robots) for €550,454, Euros, maturing May 2020. As of December 31, 2019,2021, the balance payable was $44,477.$nil.

 

In 2016, the Company entered into a real estate financingcapital lease with ING Asset Finance Belgium S.A. (“ING”) to purchase a property located in Belgium for €1.12 million, Euros, maturing May 2031.2031, with implicit interest of 2.62%. As of December 31, 2019,2021, the balance payable was $641,513.$558,613.

 

In 2018, the Company entered into a financingcapital lease with BNP Paribas leasing solutions to purchase a freezer for the Belgium facility for €25,000, Euros, maturing January 2022.2022, with implicit interest of 1.35%. The leased equipment is amortized on a straight-line basis over 5 years. As of December 31, 2019,2021, the balance payable was $19,664.

$1,431. The following is a schedule showing the future minimum lease payments under financing leases by years and the present value of the minimum payments as of December 31, 2019.2021.

 

2020

$

114,649

2021

$

69,946

2022

$

61,798

 

$62,620

 

2023

$

60,387

 

$61,191

 

2024

$

60,386

 

$61,190

 

2025

 

$61,190

 

2026

 

$61,191

 

Greater than 5 years

$

445,331

 

$328,883

 

Total

$

812,497

 

$636,265

 

Less: Amount representing interest

$

(106,843)

 

$(76,221)

 

 

Present value of minimum lease payments

$

705,654

 

$560,044

 

 

b) Operating Lease Right-of-Use Liabilities

 

The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Currentcurrent portion of operating lease liabilities and Operatingoperating lease liabilities, net of current portion.

 

As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 4.47%4.50% and the weighted average remaining lease term is 2129 months.

 

As of December 31, 2019,2021, operating lease right-of-use assets and liabilities arising from operating leases were $381,483$383,551 and $389,119,$388,471, respectively. During the year ended December 31, 2019,2021, cash paid for amounts included for the measurement of lease liabilities was $242,656$195,753 and the Company recorded operating lease expense of $224,283.$199,793.




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Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 20192021 and 20182020

($ expressed in United States Dollars)

 

Note 10 – Commitments and Contingencies (Continued)(continued)

b) Operating Lease Right-of-Use Liabilities (continued)

 

The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of December 31, 2019.2021.

 

2020

$

269,215

2021

$

91,671

2022

$

34,497

 

$178,721

 

2023

$

10,773

 

$161,071

 

Total Operating Lease Liabilities

$

406,156

2024

 

$55,331

 

2025

 

$5,200

 

Total Operating Lease Obligations

 

$400,323

 

Less: Amount representing interest

$

(17,037)

 

$(11,852)

Present Value of minimum lease payments

$

389,119

 

$388,471

 

 

The Company’s office space leases are short term, and the Company has elected under the short-term recognition exemption not to recognize them on the balance sheet. During the year ended December 31, 2019, $22,0962021, $79,623 was recognized in short-term lease costs associated with the office space lease in Singapore. The annual payments remaining for such short-term office leaseleases were as follows:

 

2020

$

12,750

2021

$

-

Total Operating Lease Liabilities

$

12,750

 

 

 

2022

 

$38,129

 

Total Operating Lease Liabilities

 

$38,129

 

c) Grants Repayable

 

In 2010, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €1.05 million Euros.€1,048,020. Per the terms of the agreement, €314,406 Euros of the grant is to be repaid by installments over the period from June 30, 2014 to June 30, 2023. The Company has recorded the balance of €733,614 Euros to other income in previous years as there is no obligation to repay this amount. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 6% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €314,406 Euros and the 6% royalty on revenue, is twice the amount of funding received. As of December 31, 2019,2021, the grant balance repayable was $137,425.$62,571.

 

In 2018, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €605,000 Euros.€605,000. Per the terms of the agreement, €181,500 Euros of the grant is to be repaid by instalments over 12 years commencing in 2020.2020. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 3.53% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €181,500 Euros and the 3.53% royalty on revenue, is equal to the amount of funding received. As of December 31, 2019,2021, the grant balance repayable was $199,861.$122,116.

In 2020, the Company entered into an agreement with the Walloon Region government in Belgium for a research grant for €495,000. Per the terms of the agreement, €148,500 of the grant is to be repaid by installments over 10 years commencing in 2023. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 2.89% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €148,500 and the 2.89% royalty on revenue, is equal to the amount of funding received. As of December 31, 2021, the grant balance repayable was $58,800.

F-64

Table of Contents

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

c) Grants Repayable (continued)

In 2020, the Company entered into an agreement with the Walloon Region government in Belgium for a research grant for €929,433. Per the terms of the agreement, €278,830 of the grant is to be repaid by instalments over 15 years commencing in 2022. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 4.34% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €278,830 and the 4.34% royalty on revenue, is equal to the amount of funding received. As of December 31, 2021, the grant balance repayable was $52,834.

 

As of December 31, 2019,2021, the total balance for grant repayable was $337,286$296,321 and the annual payments remaining were as follows:

 

2020

$

52,879

2021

$

49,967

2022

$

47,266

2023

$

48,436

2024

$

20,377

Greater than 5 years

$

118,361

Total Grants Repayable

$

337,286

 

 

 




VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2019 and 2018

($ expressed in United States Dollars)

2022

 

$44,289

 

2023

 

$42,589

 

2024

 

$18,482

 

2025

 

$20,344

 

2026

 

$26,741

 

Greater than 5 years

 

$143,876

 

Total Grants Repayable

 

$296,321

 

 

Note 10 – Commitments and Contingencies (Continued)

d) Long-Term Debt

 

In 2016, the Company entered into a 7-year loan agreement with Namur Invest for €440,000 Euros with a fixed interest rate of 4.85%, maturing December 2023. As of December 31, 2019,2021, the principal balance payable was $322,128.  $171,102.

 

In 2016, the Company entered into a 15-year loan agreement with ING for €270,000 Euros with a fixed interest rate of 2.62%, maturing December 2031. As of December 31, 2019,2021, the principal balance payable was $252,629.$219,303.

 

In 2017, the Company entered into a 4-year loan agreement with Namur Invest for €350,000 Euros with a fixed interest rate of 4.00%, maturing June 2021. As of December 31, 2019,2021, the principal balance payable was $175,150.$0.

 

In 2017, the Company entered into a 7-year loan agreement with SOFINEX for up to €1 million Euros with a fixed interest rate of 4.50%, maturing September 2024. As of December 31, 2019,2021, €1 million Euros has been drawn down under this agreement and the principal balance payable was $1,122,701.$739,473.

 

In 2018, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 Euros with fixed interest rate of 4.00%, maturing June 2022. As of December 31, 2019,2021, the principal balance payable was $408,888.$86,208.

 

On November 28,In 2019, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 Euros with fixed interest rate of 4.80%, maturing September 2024. As of December 31, 2019,2021, the principal balance payable was $561,351.$454,832.

On October 13, 2020, the Company entered into a 10-year loan agreement with Namur Invest for a maximum of €830,000 with fixed interest rate of 4.00%, maturing March 2021. As of December 31, 2021, the amount that has been drawn down under this agreement was €778,588, representing a principal balance payable of $885,761.

On November 23, 2021, the Company entered into a 3 ½ year loan agreement with SOFINEX for a maximum of €450,000 with fixed interest rate of 5.00%, maturing June 2025. As of December 31, 2021, the amount that has been drawn down under this agreement was €450,000, representing a principal balance payable of $511,943.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

d) Long-Term Debt (continued)

 

As of December 31, 2019,2021, the total balance for long-term debt payable was $2,842,847$3,068,622 and the payments remaining were as follows:

 

2020

$

777,648

2021

$

735,546

2022

$

622,760

 

$926,743

 

2023

$

526,585

 

$839,657

 

2024

$

327,970

 

$686,782

 

2025

 

$226,822

 

2026

 

$139,914

 

Greater than 5 years

$

174,038

 

$613,532

 

Total

$

3,164,547

 

$3,433,450

 

Less: Amount representing interest

$

(321,700)

 

$(364,828)

Total Long-Term Debt

$

2,842,847

 

$3,068,622

 

 

 

e) Collaborative Agreement Obligations

In 2015, the Company entered into a research sponsorship agreement with the German Cancer Research Center, or DKFZ, in Germany for a 3-year period for €338,984 Euros.  As of December 31, 2019, $224,540 is still to be paidby the Company under this agreement.

 

In 2016, the Company entered into a research co-operation agreement with DKFZ, in Germany for a 5-year period for €400,000 Euros.€400,000. As of December 31, 2019, $84,2032021, $227,530 is still to be paid by the Company under this agreement.

 

In 2016, the Company entered into a collaborative research agreement with Munich University, in Germany for a 3-year period for €360,000 Euros.  As of December 31, 2019, $110,025 is still to be paid by the Company under this agreement.

In 2017, the Company entered into a clinical study research agreement withthe Regents of theUniversity of Michigan for a 3-year period forup to $3.0$3 million. As of December 31, 2019,up to $388,000 is still to be paidby the Company under this agreement. This agreementwas amended in February 2020 to redefine a new clinical study. See Note 11.




VOLITIONRX LIMITED

NotesPursuant to Consolidated Financial Statements

For Years Endedthe terms of the amendment, the parties acknowledged that, although not fully completed, the requirements of the original clinical study had been satisfied, including any and all payment obligations by Volition America. Further, the Amendment provided that a new clinical study would be undertaken at no additional cost to Volition America. As of December 31, 2019 and 2018

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (Continued)2021, $nil is still to be paid by the Company under this agreement.

 

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a 3-year period for a cost to the Company of up to $2.55 million payable over such period. As of December 31, 2021, $510,000 is still to be paid by the Company under this agreement.

In 2019, $1.66 millionthe Company entered into a funded sponsored research agreement with the Texas A&M University (“TAMU”) in consideration for the license granted to the Company for a 5-year period for a cost to the Company of up to $400,000 payable over such period. As of December 31, 2021, $58,775 is still to be paid by the Company under this agreement.

 

On May 1, 2019,September 16, 2020, the Company entered into a research collaboration agreement for the bioinformatic analysis of cell-free DNA fragments from whole-genome sequencing with the Hebrew University of Taiwan to collect a total of 1,200 samplesJerusalem for a 2-year period6 months for a cost to the Company of up to $320,000 payable over such period.€54,879. As of December 31, 2019, $224,0002021, $17,196 is still to be paid by the Company under this agreement.

 

As of December 31, 2019,2021, the total amount to be paid for future researchand collaboration commitments was $2.69 millionapproximately $813,501 and the annual payments remaining were as follows:

 

2020

$

1,699,767

2021

$

988,500

Total Collaborative Agreement Obligations

$

2,688,267

 

 

 

2022

 

$813,501

 

Total Collaborative Agreement Obligation

 

$813,501

 

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

f) Other Commitments

Volition Vet

On October 25, 2019, the Company entered into an agreement with TAMU for provision of in-kind services of personnel, animal samples and laboratory equipment in exchange for a non-controlling interest of 7.5% in Volition Vet with an additional 5%, vesting in a year from the date of the agreement, giving TAMU in aggregate, a 12.5% equity interest as of such date. As of December 31, 2021, TAMU has a 12.5% equity interest in Volition Vet.

Volition Germany

On January 10, 2020, the Company, through its wholly-owned subsidiary Belgian Volition, acquired an epigenetic reagent company, Octamer GmbH (“Octamer”), based in Munich, Germany, and hired its founder for his expertise and knowledge to be passed to Company personnel. On March 9, 2020, Octamer was renamed to Volition Germany GmbH (or “Volition Germany”).

Upon considering the definition of a business, as defined in ASC 805 “Business Combinations,” paragraph 805-10-20, which is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return, the Company has determined that this did not constitute a business. This is primarily due to the fact that additional inputs are needed in the form of training personnel further to produce outputs. Accordingly, the Company has treated this transaction as the hiring of a member of management, described below, rather than accounting for the transaction as a business combination.

The Company agreed to terms of the transaction on December 13, 2019 and closed on January 10, 2020. Pursuant to the transaction agreement, the Company purchased all outstanding shares of Octamer. In exchange, the Company agreed to issue 73,263 newly-issued restricted shares of Company common stock valued at $333,969 (based on the $4.56 per share volume weighted trading price for the five days prior to December 13, 2019), committed to pay approximately €350,000, subject to adjustments, and agreed to pay off certain Octamer expenses leading up to the agreement (representing net liabilities of $6,535). At closing, the Company issued 73,263 restricted shares of Company common stock, paid an adjusted amount of approximately $357,000 (€321,736) and recorded a holdback liability of $55,404 (€50,000) to be paid after the holdback period of 9 months following the closing (subject to offset for breaches of representations and warranties). During the three months ended March 31, 2021, an amount of €43,152 was paid in full settlement of the amount due. The Company has no further financial obligations under the transaction agreement.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

f) Other Commitments (continued)

In connection with the transaction agreement, the Company also entered into a 2-year Managing Director’s agreement with the founder of Octamer to continue to manage Volition Germany for a payment of €288,000 payable in equal monthly installments over such 2-year period and a royalty agreement with the founder providing for the payment of royalties in the amount of 6% of net sales of Volition Germany’s nucleosomes as reagents to pharmaceutical companies for use in the development, manufacture and screening of molecules for use as therapeutic drugs for a period of 5 years post-closing.

The Company recorded approximately $753,000 in compensation expense during the year 2020, as a result of cash paid, holdback liability, stock issued and assumption of expenses. As of December 31, 2021, $nil is still to be paid by the Company under the Managing Director’s agreement, $229 is currently payable under the 6% royalty agreement on sales to date (towards the Company’s aggregate minimum royalty obligation of $134,217). The holdback liability of $55,404 (€50,000) outstanding at December 31, 2020, was settled during the year ended December 31, 2021 by an amount of €43,152 in full settlement of the amount due. The Company has no further financial obligations under the Managing Director’s agreement, but has a continuing obligation under the 6% royalty agreement.

Volition America

On November 3, 2020, the Company entered into a professional services master agreement with Diagnostic Oncology CRO, LLC to conduct a pivotal clinical trial and provide regulatory submission and reimbursement related services. Under the terms of the agreement Diagnostic Oncology CRO, LLC will provide ad hoc consulting assistance on a project-by-project basis related to the review and assessment of existing data and information to prepare recommended intended use claims and coverage/reimbursement plans to support the preparation of FDA pre-submissions, clinical trial protocol development and study administration, and potential 510k regulatory marketing submissions of the Company’s diagnostic tests, including those proposed for use as an adjunct diagnostic tool for common and aggressive forms of Non-Hodgkin’s Lymphoma. The initial projects contemplated by the agreement relating to Non-Hodgkin’s Lymphoma obligate the Company to pay in aggregate of up to $2.9 million over a period of 22 months. Such payment obligations are on a project-by-project basis as deliverables are executed and subject to certain terms and conditions. Additionally, the Company may terminate the agreement or any project with or without cause upon at least 30 days’ prior written notice. Unless earlier terminated, the term of the agreement is until December 31, 2025 or such later date as when all projects have been completed. As of December 31, 2021, $13,738 is currently payable by Company under this agreement.

Singapore Volition

On November 10, 2020, the Company entered into a consulting services agreement through a related party transaction between its wholly owned subsidiary, Singapore Volition and PB Commodities Pte Ltd (“PB Commodities”). This agreement is effective December 1, 2020 and provides for consultancy services to be rendered by Cameron Reynolds through PB Commodities to Singapore Volition. Singapore Volition will also make available the services of Mr. Reynolds, as Group Chief Executive Officer, to the Company and its subsidiaries, pursuant to services agreements entered into by and between Singapore Volition and the Company or its subsidiaries. The term of the agreement is perpetual, commencing on December 1, 2020 until terminated upon six months’ prior notice. The agreement includes a six-month non-compete following termination of the agreement. PB Commodities will receive a monthly fee of $35,650 in exchange for the services provided by Mr. Reynolds.

g) Legal Proceedings

 

There are no legal proceedings which the Company believes will have a material adverse effect on its financial position.

 

h) Commitments in Respect of Corporate Goals and Performance-Based Awards

In August 2021, an incentive plan was authorized by the Compensation Committee of the Board of Directors in order to provide company personnel with an element of performance-based compensation tied to the timely achievement of certain corporate goals focused around product development and commercialization.

Effective August 3, 2021, the Company approved an incentive plan to issue equity-based awards and cash bonuses, vesting upon achievement of certain corporate goals, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries.

Conditional upon the achievement by December 31, 2021 of a specified corporate goal as set forth in the minutes of the Compensation Committee dated August 3, 2021, as well as continued service by the award recipient, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer shall pay a cash bonus to such award recipient). The Company estimates the total compensation expense based on current recipients to be $330,788. As of December 31, 2021, the Company has accrued compensation expense of $330,788 based on the probable outcomes related to the prescribed performance targets.

Conditional upon the achievement by July 1, 2022 of all specified corporate goals as set forth in the minutes of the Compensation Committee dated August 3, 2021, as well as continued service by the award recipient, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer would pay an additional cash bonus to such award recipient. The Company estimates the total compensation expense based on current recipients to be $182,131. As of the December 31, 2021, the Company has accrued compensation expense of $90,403 based on the probable outcomes related to the prescribed performance targets.

As discussed in detail in Note 8, in August and October 2021, a total of 1,000,000 stock options were issued under this plan and 500,000 RSUs were issued under this plan.

As of the December 31, 2021, the Company has recognized compensation expense of $584,044 in relation to stock options and $513,651 in relation to RSUs, based on the probable outcomes related to the prescribed performance targets on the outstanding awards.

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VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2021 and 2020

($ expressed in United States Dollars)

Note 11 - Subsequent Events

 

On January 7, 2020, a former directorCommon Stock Issuances, Option Exercises and RSU Grants

Effective February 8, 2022, the Company granted RSUs of 8,000 shares of common stock to an employee of the Company exercised 60,000 stock optionsin exchange for services provided to purchasethe Company. These RSUs vest over 2 years, with 50% vesting on each of February 8, 2023, and February 8, 2024, subject to continued service by the employee, and will result in total compensation expense of $22,640.

Effective March 1, 2022, the Company granted RSUs of 30,000 shares of our common stock at prices ranging from $2.50 to $4.00 per sharevarious employees of the Company in a cashless exercise that resultedexchange for services provided to the Company. These RSUs vest over 2 years, with 50% vesting on each of March 1, 2023, and March 1, 2024, subject to continued service by the employee, and will result in total compensation expense of $84,300.

Equity Distribution Agreements

From January 1, 2022 to March 10, 2022, the issuanceCompany raised aggregate net proceeds (net of 17,483broker’s commissions and fees) of approximately $9,468 under the 2021 Equity Distribution Agreement through the sale of 3,000 shares of ourits common stock.

 

OnOther Commitments

Effective January 10, 2020,13, 2022, the Company through its wholly owned subsidiary Belgian Volition, acquired an epigenetic reagent company Octamer GmbH, based in Munich, Germany,entered into a lease agreement with Aro Partners, a California Limited Partnership for a property of 6,645 square foot industrial building located at Corte el Cedro, Carlsbad, California for a term of five years and two months commencing February 1, 2022. The total purchase price of approximately $725,000, of this amount $400,000 was in cash andpayable under the balance was paid with 73,263 restricted shares of our common stock. This strategic acquisition helps secure the supply of one of the key components of Volition’s Nu.QTM   tests, the recombinant nucleosome used as the calibrant.lease is $471,556.

Other Information

 

On January 14, 2020, the Company purchased from its Chief Medical Officer 11,364 shares of our common stock at $4.79 per share, for a total cost to the Company of $54,434. These shares were subsequently retired.

On February 17, 2020,March 28, 2022, Belgian Volition America entered into an amendment, ora License and Supply Agreement (the “License Agreement”) with Heska Corporation (“Heska”), pursuant to which Belgian Volition granted Heska worldwide exclusive rights to sell the Amendment,NuQ® Vet Cancer Screening Test for companion animals, including dogs and cats, at the point of care (“POC”) and non-exclusive rights to that certain Clinical Study Agreement, or the CSA, by and between Volition America and the Regents of the University of Michigan, or the Regents, with regards to Volition America’s participation with the Regents and the Nationalsell its NuQ® Vet Cancer Institute, or NCI, Early Detection Research Network in a clinical study.  Pursuant toScreening Test through Heska’s central reference laboratories (“Central Lab”).  Under the terms of the Amendment,License Agreement, Belgian Volition will receive an upfront payment of $10 million, and is eligible to receive up to an additional $18 million upon the parties acknowledged that, although not fully-completed,achievement of certain near and mid-term milestones. Belgian Volition will supply kits for the requirementsCentral Lab and will receive a pre-agreed price per test of approximately $10, adjusted annually for inflation, which is a discounted price to reflect Heska’s upfront payment. The price per test for POC key components (“Key Components”) is also discounted to reflect the lower cost to Belgian Volition and additional assembly costs for Heska, as well as consideration for Heska’s upfront and milestone payments. Heska will assemble the Key Components into a cartridge for use on Heska’s proprietary Element i+ Immunodiagnostic Analyzer, a POC platform.  Heska is responsible for marketing and distribution efforts and related costs. The License Agreement may be terminated by either party for a material breach by the other party, subject to notice and cure provisions, or in the event of the original clinical study had been satisfied, including any and all payment obligations by Volition America. Further,other party’s insolvency.  Heska also has the Amendment provided that a new clinical study would be undertaken at no additional costoption to Volition America. The remaining termsterminate if it is unable to complete validation of the CSA remain unchanged.POC cartridge on any platform. Unless earlier terminated, the License Agreement will continue in effect for an initial term of 22 years for POC and 5 years for Central Lab, with the Central Lab term then continuing on a rolling one-year basis for the POC term.

 

END NOTES TO FINANCIALS




ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 

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ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A.CONTROLS AND PROCEDURES

ITEM 9A.

CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.Act). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of December 31, 2019,2021, our disclosure controls and procedures were not effective because of material weakness in our internal control over financial reporting.reporting relating to the segregation of duties in some areas of finance.

 

Management’s Report on Internal Control Over Financial Reporting

 

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles U.S GAAP.

 

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.

 

Under the supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019,2021, using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

 

A material weakness is a deficiency, or 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.

 

During the year ended December 31, 2021, our management, with oversight from our audit committee, implemented the following remediation steps to address and mitigate all but one of the underlying deficiencies which gave rise to the previously disclosed material weaknesses and to improve our internal control over financial reporting. We anticipate the remaining weakness regarding segregation of duties in some areas of finance to be resolved in 2022.

Remediation steps undertaken include:

Oversight in Information Technologies

·

ensured that third party support and back up is available as cover for our information technology manager;

·

ensured that appropriate finance approvals are taken before adding users or access for financial systems and applications; and

·

implemented a quarterly user access control review process across finance and information technology systems.

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As a result of these actions, management has concluded that this particular deficiency has been remedied.

Monitoring of Review Controls with Respect to Accounting for Complex Transactions

·

reallocated responsibilities across the finance organization to ensure that the appropriate level of knowledge and experience is applied based on complexity of tasks being undertaken;

·

further embedded the use of Certent, an equity management platform, to help with control and reporting of equity awards;

·

implemented additional review procedures; and

·

in the event we encounter or anticipate any new and particularly complex transaction we will engage advisors from our wide professional network.

As a result of these actions, management has concluded that this particular deficiency has been remedied.

Segregation of Duties in Some Areas of Finance

·

hired an additional full-time Business Controller in Belgium with an appropriate level of experience;

·

hired an experienced financial planning and analysis manager to implement forecasting and budgeting processes;

·

changed organizational reporting lines and reallocated certain responsibilities to improve segregation of duties; and

·

implemented additional review procedures at each month end close.

During 2022, we intend to take additional measures around certain processes we have identified which we believe once implemented and in conjunction with the completed actions above will mitigate and remedy this weakness.

We also intend to take additional steps to further strengthen the control environment. Such measures include but may not be limited to:

·

recruitment of a specialist in Human Resources to recommend and implement relevant policies and processes that will strengthen the control environment;

·

further strengthening our internal processes and reviews, including formal documentation thereof;

·

preparation of risk-control matrices to identify key risks and develop and document policies to mitigate those risks; and

·

engaging additional resources if necessary to help us assess, document, design and implement control activities related to internal control over financial reporting.

As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material weaknesses or modify certain of the remediation procedures described above. We also may implement additional changes to our internal control over financial reporting as may be appropriate in the course of remediating the material weakness. Management, with the oversight of our audit committee, will continue to take steps necessary to remedy the material weakness to reinforce the overall design and capability of our control environment.

In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2019,2021, the Company determined that there were control deficiencies in the following areas that constituted material weaknesses, as described below:

segregation of duties in some areas of Finance;

oversight in the area of Information Technology (“IT”), where certain processes may affect the internal controls over financial reporting; and  

monitoring of review controls with respect to accounting for complex transactions.Finance that constituted a material weakness.

 

Accordingly, the Company concluded that these control deficiencies resulted in a possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.basis.

 

As a result, of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2019,2021, based on criteria established in Internal Control—Integrated Framework issued by COSO.




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Changes in Internal Control over Financial Reporting

 

The Audit Committee of the Board of Directors meets regularly with our financial management, and with the independent registered public accounting firm engaged by us. Internal accounting controls and the quality of financial reporting are discussed during these meetings. The Audit Committee has discussed with the independent registered public accounting firm matters required to be discussed by the auditing standards adopted or established by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee and the independent registered public accounting firm have discussed the independent registered public accounting firm’s independence from the Company and its management, including the matters in the written disclosures required by PCAOB Rule 3526“Communicating with Audit Committees Concerning Independence.”

As of December 31, 2019, we did not maintain sufficient internal controls over financial reporting in the following areas:

segregation of duties in some areas of Finance;

oversight in the area of IT, where certain processes may affect the internal controls over financial reporting; and  

monitoring of review controls with respect to accounting for complex transactions.

We have developed, and are currently implementing, a remediation plan for these material weaknesses. Specifically, we have identified and selected a system for financial reporting that will allow further automation of the reporting process, thereby strengthening the control environment over financial reporting.

As we continue to evaluate and work to enhance our internal controls over financial reporting, we may determine that additional measures should be taken to address these or other control deficiencies, and/or that we should modify our remediation plan.

 

There have been no changes in our internal control over financial reporting that occurred during the fiscal yearquarter ended December 31, 2019, other than those described above,2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.reporting, other than those described above.

 

The Company is not required by current SEC rules to include, and does not include an auditor’s attestation report.report under SEC Rules. Consequently, the Company’s registered public accounting firm has not attested to management’s reports on the Company’s internal control over financial reporting.

 

ITEM 9B.

OTHER INFORMATION

Continuing Remediation Efforts to address deficiencies in Company’s Internal Control over Financial Reporting

None.

 

ITEM 9C.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Once the Company is engaged in stable business operations and has sufficient personnel and resources available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:

None.

 

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Additional Finance resources will be recruited to resolve the segregation of duties control weaknesses noted above; 

Internal audit resources will be contracted to review and advise on control weaknesses across the organization; and

Specialist resources in IT and Human Resources will be recruited to recommend and implement relevant policy and processes to strengthen IT and Human Resources internal controls associated with financial reporting.PART III

 

ITEM 9B.OTHER INFORMATION  

On February 17, 2020, Volition America, Inc., or Volition America, a wholly-owned subsidiary of the Company, entered into an amendment, or the Amendment, to that certain Clinical Study Agreement, or the CSA, by and between Volition America and the Regents of the University of Michigan, or the Regents, with regards to Volition America’s participation with the Regents and the National Cancer Institute, or NCI, Early Detection Research Network in a clinical study involving approximately 13,500 asymptomatic screening samples provided by the Regents and/or NCI (including more than 4,600 previously collected samples) from people aged 50 and over who had not previously undergone screening or diagnostic colonoscopy, referred to as the Original Study. Pursuant to the terms of the Amendment, the parties acknowledged that, although not fully-completed, the requirements of the Original Study had been satisfied, including any and all payment obligations by Volition America.  Further, the Amendment provided that a new clinical study, referred to as the New Study, would be undertaken at no additional cost to Volition America that involves approximately 1,800 asymptomatic screening samples provided by the Regents and/or NCI (including approximately 500 previously collected samples) from people aged 18 and over (i) who are being seen preoperatively for colon adenocarcinoma or adenoma and who had not previously had any radiation or chemotherapy for the current diagnosis, or (ii) who are undergoing colonoscopy procedures for colonic neoplasia screening, surveillance or resection of known neoplastic lesions.  The screening samples from the New Study will be tested by Volition America for blood-based, cell-free circulating biomarkers on Volition’s proprietary Nu.QTM platform to validate Volition’s Nu.QTM Colorectal Cancer Screening Test for U.S. regulatory purposes. The enrollment period and sample collection is anticipated to take up to 14 months to complete. The remaining terms of the CSA remain unchanged.  The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by such Amendment, a copy of which is filed as Exhibit 10.22 to this Report




PART III

ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

The information required under this item is incorporated by reference from our definitive proxy statement related to our 20202022 Annual Meeting of Stockholders, or the Proxy Statement, to be filed pursuant to Regulation 14A, on or before April 29, 2020.May 2, 2022.

 

ITEM 11.EXECUTIVE COMPENSATION

ITEM 11.

EXECUTIVE COMPENSATION

 

The information required under this item is incorporated herein by reference from the Proxy Statement.

 

ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required under this item is incorporated herein by reference from the Proxy Statement.

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required under this item is incorporated herein by reference from the Proxy Statement.

ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

The information required under this item is incorporated herein by reference from the Proxy Statement.

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 




PART IVThe information required under this item is incorporated herein by reference from the Proxy Statement.

 

ITEM 14. 

PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES

The information required under this item is incorporated herein by reference from the Proxy Statement.

 

73

Table of Contents

(a)The following documents are filed as part of this Report: 

PART IV

 

1.Financial Statements. Included in Part II,Item 8 of this Report and are incorporated by reference herein. 

ITEM 15.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

2.Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. 

(a)

The following documents are filed as part of this Report:

1.

Financial Statements. Included in Part II, Item 8 of this Report and are incorporated by reference herein.

2.

Financial Statement Schedules. Financial statement schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

3.

Exhibits.

 

3.Exhibits

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing

Date

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

2.1

 

Share Purchase Agreement by and between Singapore Volition and ValiRX dated September 22, 2010. 

 

8-K/A

 

000-30402

 

2.1

 

5/8/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.2

 

Supplementary Agreement to the Share Purchase Agreement by and between Singapore Volition and ValiRX dated June 9, 2011. 

 

8-K/A

 

000-30402

 

10.15

 

1/11/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.3

 

Share Exchange Agreement by and among Standard Capital Corporation, the controlling shareholders of Standard Capital Corporation and Singapore Volition dated September 26, 2011. 

 

8-K

 

000-30402

 

2.1

 

9/29/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.4

 

Agreement, Consent and Waiver by and between Standard Capital Corporation and its Shareholders dated September 27, 2011. 

 

8-K/A

 

000-30402

 

10.28

 

4/5/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.1

 

Second Amended and Restated Certificate of Incorporation, as currently in effect. 

 

8-K

 

001-36833

 

3.1

 

10/11/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2

 

Amended and Restated Bylaws, as currently in effect. 

 

S-8

 

333-208512

 

4.2

 

12/11/15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4.1

 

Description of Capital Stock. 

 

10-K

 

001-36833

 

4.1

 

02/20/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.1

 

Non-Exploitation and Third-Party Patent License Agreement by and among ValiBio SA, ValiRX and The Walloon Region dated December 17, 2009. 

 

8-K/A

 

000-30402

 

10.6

 

2/24/12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.2#

 

Employment Agreement by and between VolitionRx and Jason Terrell MD, dated December 29, 2015.

 

10-K

 

001-36833

 

10.24

 

3/11/16

 

 

 

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing

Date

 

Filed

Herewith

2.1

 

Share Purchase Agreement by and between Singapore Volition and ValiRX dated September 22, 2010.

 

 

8-K/A

 

000-30402

 

2.01

 

5/8/12

 

 

2.2

 

Supplementary Agreement to the Share Purchase Agreement by and between Singapore Volition and ValiRX dated June 9, 2011.

 

 

8-K/A

 

000-30402

 

10.15

 

1/11/12

 

 

2.3

 

Share Exchange Agreement by and among Standard Capital Corporation, the controlling shareholders of Standard Capital Corporation and Singapore Volition dated September 26, 2011.

 

 

8-K

 

000-30402

 

2.1

 

9/29/11

 

 

2.4

 

Agreement, Consent and Waiver by and between Standard Capital Corporation and its Shareholders dated September 27, 2011.

 

 

8-K/A

 

000-30402

 

10.28

 

4/5/12

 

 

3.1

 

Second Amended and Restated Certificate of Incorporation, as currently in effect.

 

 

8-K

 

001-36833

 

3.1

 

10/11/16

 

 

3.2

 

Amended and Restated Bylaws, as currently in effect.

 

 

S-8

 

333-208512

 

4.2

 

12/11/15

 

 

4.1

 

Description of Capital Stock.

 

 

 

 

 

 

 

 

 

 

X

10.1

 

Non-Exploitation and Third-Party Patent License Agreement by and among ValiBio SA, ValiRX and The Walloon Region dated December 17, 2009.

 

 

8-K/A

 

000-30402

 

10.06

 

2/24/12

 

 

10.2

 

Common Stock Purchase Agreement, by and among VolitionRx and the purchasers thereto dated February 26, 2014.

 

 

8-K

 

000-30402

 

10.1

 

2/28/14

 

 

10.3#

 

Employment Agreement by and between VolitionRx and Jason Terrell MD, dated December 29, 2015.

 

 

10-K

 

001-36833

 

10.24

 

3/11/16

 

 




 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No

 

Exhibit

 

Filing

Date

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4#

 

2011 Equity Incentive Plan dated November 17, 2011.

 

 

8-K

 

000-30402

 

4.01

 

11/18/11

 

 

10.6(b)#

 

Form Stock Award Agreement for Restricted Stock under the 2011 Equity Incentive Plan.

 

 

8-K

 

000-30402

 

4.03

 

11/18/11

 

 

10.7#

 

2015 Stock Incentive Plan, as amended March 27, 2019.

 

 

8-K

 

001-36833

 

10.1

 

06/18/19

 

 

10.8(a)#

 

Form of Notice of Stock Option Grant and Stock Option Agreement under the 2015 Stock Incentive Plan.

 

 

S-8

 

333-214118

 

10.2

 

10/14/16

 

 

10.9(b)#

 

Form of Notice of Restricted Stock Award and Restricted Stock Agreement under the 2015 Stock Incentive Plan.

 

 

S-8

 

333-214118

 

10.3

 

10/14/16

 

 

10.10(c)#

 

Form of Notice of Stock Bonus Award and Stock Bonus Award Agreement under the 2015 Stock Incentive Plan

 

 

S-8

 

333-214118

 

10.4

 

10/14/16

 

 

10.11(d)#

 

Form of Notice of Stock Appreciation Right Award and Stock Appreciation Right Award Agreement under the 2015 Stock Incentive Plan.

 

 

S-8

 

333-214118

 

10.5

 

10/14/16

 

 

10.11(e)#

 

Form of Notice of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the 2015 Stock Incentive Plan.

 

 

S-8

 

333-214118

 

10.6

 

10/14/16

 

 

10.11(f)#

 

Form of Notice of Performance Shares Award and Performance Shares Agreement under the 2015 Stock Incentive Plan.

 

 

S-8

 

333-214118

 

10.7

 

10/14/16

 

 

10.12#

 

Independent Director Agreement.

 

 

10-Q

 

001-36833

 

10.33

 

5/12/15

 

 

10.13

 

Real Estate Capital Lease Agreement by and between Belgian Volition and ING Asset Finance Belgium S.A., dated October 4, 2016 (English translation of French original).

 

 

8-K

 

001-36833

 

10.1

 

10/31/16

 

 

10.14

 

Deed of Sale to the Sale Agreement by and between and Gerard Dekoninck S.A., dated October 25, 2016 (English translation of French original).

 

 

8-K

 

001-36833

 

10.2

 

10/31/16

 

 

10.15#

 

Employment Agreement by and between Volition Diagnostics UK Limited and Cameron Reynolds, dated March 7, 2017.

 

 

10-K

 

001-36833

 

10.27

 

03/10/17

 

 




 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing

Date

 

Filed

Herewith

10.16#

 

Employment Agreement by and between Volition Diagnostics UK Limited and Jacob Micallef, dated March 7, 2017.  

 

 

10-K

 

001-36833

 

10.28

 

03/10/17

 

 

10.18#

 

Employment Agreement by and between Volition Diagnostics UK Limited and Martin Faulkes, dated March 7, 2017.

 

 

10-K

 

001-36833

 

10.30

 

03/10/17

 

 

10.19#

 

Employment Agreement by and between Volition Diagnostics UK Limited and David Vanston, dated April 10, 2017.

 

 

10-Q

 

001-36833

 

10.1

 

05/11/17

 

 

10.20

 

Unsecured Credit Agreement dated September 20, 2017, by and among VolitionRx Limited, Belgian Volition SPRL and SOFINEX (English translation of French original).

 

 

8-K

 

001-36833

 

10.1

 

09/21/17

 

 

10.21

 

Clinical Study Agreement dated July 17, 2017, by and between Volition America, Inc. and the Regents of the University of Michigan.

 

 

10-Q

 

001-36833

 

10.1

 

11/09/17

 

 

10.22

 

Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America, Inc. and the Regents of the University of Michigan.

 

 

 

 

 

 

 

 

 

 

X

10.23

 

Common Stock Purchase Agreement, dated August 8, 2018, by and between VolitionRx and Cotterford Company Limited, including the form of Warrant attached as Exhibit B thereto.

 

 

8-K

 

001-36833

 

10.1

 

8/9/18

 

 

10.24

 

Equity Distribution Agreement, dated September 7, 2018, by and between VolitionRx and Oppenheimer & Co. Inc.

 

 

S-3

 

333-227248

 

1.2

 

9/10/18

 

 

10.25#

 

Warrant to Purchase Common Stock by and between VolitionRx and Jason Terrell MD, dated March 20, 2013; First Amendment to Warrant Agreement dated February 14, 2017; and Second Amendment to Warrant Agreement dated July 1, 2019.

 

 

S-3

 

333-236335

 

4.3

 

2/7/20

 

 

21.1

 

List of Subsidiaries.

 

 

 

 

 

 

 

 

 

 

X

23.1

 

Consent of independent registered public accounting firm.

 

 

 

 

 

 

 

 

 

 

X




74

Table of Contents

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing

Date

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3#

 

2011 Equity Incentive Plan dated November 17, 2011. 

 

8-K

 

000-30402

 

4.1

 

11/18/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3(a)#

 

Form Stock Option Agreement.  

 

8-K

 

000-30402

 

4.2

 

11/18/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.3(b)#

 

Form Stock Award Agreement for Restricted Stock under the 2011 Equity Incentive Plan. 

 

8-K

 

000-30402

 

4.3

 

11/18/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4#

 

2015 Stock Incentive Plan, as amended March 31, 2021.

 

8-K

 

001-36833

 

10.1

 

06/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(a)#

 

Form of Notice of Stock Option Grant and Stock Option Agreement under the 2015 Stock Incentive Plan. 

 

S-8

 

333-214118

 

10.2

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(b)#

 

Form of Notice of Restricted Stock Award and Restricted Stock Agreement under the 2015 Stock Incentive Plan. 

 

S-8

 

333-214118

 

10.3

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(c)#

 

Form of Notice of Stock Bonus Award and Stock Bonus Award Agreement under the 2015 Stock Incentive Plan 

 

S-8

 

333-214118

 

10.4

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(d)#

 

Form of Notice of Stock Appreciation Right Award and Stock Appreciation Right Award Agreement under the 2015 Stock Incentive Plan. 

 

S-8

 

333-214118

 

10.5

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(e)#

 

Form of Notice of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the 2015 Stock Incentive Plan. 

 

S-8

 

333-214118

 

10.6

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.4(f)#

 

Form of Notice of Performance Shares Award and Performance Shares Agreement under the 2015 Stock Incentive Plan. 

 

S-8

 

333-214118

 

10.7

 

10/14/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.5#

 

Independent Director Agreement. 

 

10-Q

 

001-36833

 

10.33

 

5/12/15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.6

 

Real Estate Capital Lease Agreement by and between Belgian Volition and ING Asset Finance Belgium S.A., dated October 4, 2016 (English translation of French original). 

 

8-K

 

001-36833

 

10.1

 

10/31/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.7

 

Deed of Sale to the Sale Agreement by and between Belgian Volition and Gerard Dekoninck S.A., dated October 25, 2016 (English translation of French original).  

 

8-K

 

001-36833

 

10.2

 

10/31/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.8#

 

Employment Agreement by and between Volition Diagnostics UK Limited and Jacob Micallef, dated March 7, 2017.

 

10-K

 

001-36833

 

10.28

 

03/10/17

 

 

75

Table of Contents

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

  Form

 

  File No.

 

  Exhibit

 

Filing

Date

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

10.9#

 

Employment Agreement by and between Volition Diagnostics UK and Martin Faulkes, dated March 7, 2017. 

 

10-K

 

001-36833

 

10.30

 

03/10/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.10

 

Unsecured Credit Agreement dated September 20, 2017, by and among VolitionRx, Belgian Volition and SOFINEX (English translation of French original). 

 

8-K

 

001-36833

 

10.1

 

09/21/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.11

 

Clinical Study Agreement dated July 17, 2017, by and between Volition America and the Regents of the University of Michigan. 

 

10-Q

 

001-36833

 

10.1

 

11/09/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.11(a)

 

Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America, Inc. and the Regents of the University of Michigan. 

 

 10-K

 

001-36833

 

10.22

 

02/20/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.12#

 

Warrant to Purchase Common Stock by and between VolitionRx and Jason Terrell MD, dated March 20, 2013; First Amendment to Warrant Agreement dated February 14, 2017; and Second Amendment to Warrant Agreement dated July 1, 2019. 

 

S-3

 

333-236335

 

4.3

 

2/7/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.13#†

 

Permanent Employment Contract by and between Belgian Volition and Gaetan Michel, dated October 1, 2020.  

 

10-K

 

001-36833

 

10.15

 

03/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.14

 

Equity Distribution Agreement, dated November 12, 2020, by and among VolitionRx, Oppenheimer & Co. Inc. and Cantor Fitzgerald & Co.  

 

10-Q

 

001-36833

 

1.1

 

11/12/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.15#

 

Consulting Services Agreement by and between Singapore Volition and PB Commodities Pte. Ltd. (Cameron Reynolds), dated December 1, 2020.  

 

10-Q

 

001-36833

 

10.1

 

11/12/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.16#†

 

Common Stock Warrant issued by VolitionRx to Gael Forterre, dated January 1, 2021.  

 

10-K

 

001-36833

 

10.18

 

03/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.17#†

 

Singapore Volition Pte. Limited Employment Agreement by and between Singapore Volition and Terig Hughes, dated January 27, 2021 and effective February 1, 2021, including the form of Common Stock Warrant attached as Schedule 2.  

 

10-K

 

001-36833

 

10.19

 

03/22/21

 

 

76

Table of Contents

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

  Form

 

  File No.

 

  Exhibit

 

Filing

Date

 

Filed

Herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

10.18#†

 

Volition America, Inc. Employment Agreement by and between Volition America and Gael Forterre, dated February 1, 2021.

 

10-K

 

001-36833

 

10.20

 

03/22/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.19#†

 

Consulting Services Agreement between Volition Germany and 3F Management SPRL (Gaetan Michel), dated January 29, 2021; First Amendment between Volition Germany and 3F Management SPRL, dated February 1, 2021; Second Amendment between Volition Germany and 3F Management SPRL, dated May 1, 2021.

 

10-Q

 

001-36833

 

10.7

 

05/11/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.20#

 

Volition Veterinary Diagnostics Development, LLC Employment Agreement Chief Executive Officer, between Volition Veterinary Diagnostics Development and Salvatore Thomas Butera, dated March 25, 2021.

 

10-Q

 

001-36833

 

10.6

 

05/11/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.21

 

Equity Distribution Agreement, dated September 24, 2021, by and among VolitionRx, Oppenheimer & Co. Inc. and Cantor Fitzgerald & Co.

 

S-3

 

333-259783

 

1.2

 

09/24/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.22#

 

Employment Agreement between Volition America and Gaetan Michel, dated September 15, 2021.  

 

10-Q

 

001-36833

 

10.1

 

11/10/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.23#†

 

Consulting Services Agreement between Volition Global and 3F Management SPRL (Gaetan Michel), dated September 15, 2021.

 

10-Q

 

001-36833

 

10.2

 

11/10/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10.24#

 

Employment Agreement between Volition Diagnostics and Nick Plummer, dated August 23, 2021.

 

10-Q

 

001-36833

 

10.3

 

11/10/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21.1

 

List of Subsidiaries.

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

23.1

 

Consent of independent registered public accounting firm.

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

24.1

 

Power of Attorney (included on the signature page of this Report). 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

32.1*

 

Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

 

 

X

77

Table of Contents

 

 

 

 

Incorporated by Reference

 

 

Exhibit

Number

 

Exhibit Description

 

Form

 

File No.

 

Exhibit

 

Filing

Date

 

Filed

Herewith

24.1

 

Power of Attorney (included on the signature page of this Report).

10.1 INS

XBRL Instance Document 

 

 

 

 

 

 

 

 

 

X

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

101.SCH

XBRL Taxonomy Extension Schema Document. 

 

 

 

 

 

 

 

 

 

X

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document. 

 

 

 

 

 

 

 

 

 

X

32.1*

 

Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document. 

 

 

 

 

 

 

 

 

 

X

10.1 INS

101.LAB

 

XBRL Instance Document

Taxonomy Extension Label Linkbase Document. 

 

 

 

 

 

 

 

 

 

X

101.SCH

XBRL Taxonomy Extension Schema Document.

 

 

 

 

 

 

 

 

 

 

X

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document.

X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

X

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

X

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

 

#104

 

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)  

X

#

Indicates a management contract or compensatory plan or arrangement.

Portions of this exhibit are redacted pursuant to Item 601(a)(6) and/or Item (b)(10)(iv) under Regulation S-K. The registrant agrees to furnish supplementally any omitted schedules to the SEC upon request.

*

The certifications attached as Exhibit 32.1 accompany this Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, and are not to be incorporated by reference into any of the registrant’s filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.

 

ITEM 16.FORM 10-K SUMMARY

ITEM 16.

FORM 10-K SUMMARY

 

None.




78

Table of Contents

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

VOLITIONRX LIMITED

 

 

 

 

 

Dated: March 30, 2022

By:

/s/ Cameron Reynolds

 

Dated: February 20, 2020

By:  /s/ Cameron Reynolds                                    

 

 

Cameron Reynolds

 

 

 

President, Chief Executive Officer and Director

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Cameron Reynolds and Rodney Rootsaert, and each or either of them, acting individually, his or her true and lawful attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons in the capacities and on the date indicated.

 

Signature

Title

Title

Date

 

 

 

/s/ Cameron Reynolds

Cameron Reynolds

President, Chief Executive Officer and Director

March 30, 2022

Cameron Reynolds

(Principal Executive Officer)

February 20, 2020

 

 

 

/s/ David Vanston                            Terig Hughes

David Vanston

Chief Financial Officer and Treasurer

March 30, 2022

Terig Hughes

(Principal Financial and Accounting Officer)

February 20, 2020

 

 

 

/s/ Dr. Martin Faulkes

Director

March 30, 2022

Dr. Martin Faulkes

Director

February 20, 2020

 

 

 

/s/ Guy Innes

Guy Innes

Director

February 20, 2020

March 30, 2022

Guy Innes

 

 

 

/s/ Dr. Alan Colman

Director

March 30, 2022

Dr. Alan Colman

Director

February 20, 2020

 

 

 

/s/ Dr. Phillip Barnes

Director

March 30, 2022

Dr. Phillip Barnes

Director

February 20, 2020

 

 

 

/s/s/ Dr. Edward Futcher

Dr. Edward Futcher

Director

February 20, 2020

March 30, 2022

Dr. Edward Futcher 

 

 

 

/s/ Kim Nguyen

Director

March 30, 2022

Kim Nguyen

/s/ Richard Brudnick

Director

March 30, 2022

Richard Brudnick


55

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