UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2021

 

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

 

For the transition period from ______ to ______

 

Commission File Number: 001-36833

 

VOLITIONRX LIMITED

(Exact name of registrant as specified in its charter)

  

Delaware

 

91-1949078

(State or other jurisdiction of

incorporation or organization)

 

(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

NYSE American, LLC

 

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     ☐ 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     ☐ 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

Smaller reporting company

 

 

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     ☒ No

 

As of November 4, 2021, there were 53,536,161 shares of the registrant’s $0.001 par value common stock issued and outstanding.

 

 

 

 

VOLITIONRX LIMITED

 

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

 

TABLE OF CONTENTS

 

PART I

FINANCIAL INFORMATION

PAGE

 

Item 1.

FINANCIAL STATEMENTS (UNAUDITED)

 

4

 

Item 2.

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

29

 

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

37

 

Item 4.

CONTROLS AND PROCEDURES

37

 

 

 

 

 

 

PART II

OTHER INFORMATION

 

 

Item 1.

LEGAL PROCEEDINGS

39

 

Item 1A.

RISK FACTORS

39

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

39

 

Item 3.

DEFAULTS UPON SENIOR SECURITIES

39

 

Item 4.

MINE SAFETY DISCLOSURES

39

 

Item 5.

OTHER INFORMATION

39

 

Item 6.

EXHIBITS

40

 

SIGNATURES

41

 

 

Use of Terms

 

Except as otherwise indicated by the context, references in this Quarterly Report on Form 10-Q to the “Company,” “VolitionRx,” “Volition,” “we,” “us,” and “our” are references to VolitionRx Limited and its wholly-owned subsidiaries, Volition Global Services SRL, Singapore Volition Pte. Limited, Belgian Volition SRL, Volition Diagnostics UK Limited, Volition America, Inc., Volition Germany GmbH, and its majority-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.Q® 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 herein are the property of their respective owners.

 

 
2

Table of Contents

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, or this Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. 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. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our development activities or business strategy; statements concerning clinical studies and results; statements concerning industry trends; statements regarding anticipated demand for our products, 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; statements relating to the commercialization of our products, assumptions regarding the future cost and potential benefits of our research and development efforts; forecasts of our liquidity position or available cash resources; statements relating to the impact of pending litigation; statements regarding the anticipated impact of the COVID-19 pandemic and statements relating to the assumptions underlying any of the foregoing. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words).

 

We have based our forward-looking statements on our current 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 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. For instance, if we fail to develop and commercialize diagnostic products, we may be unable to execute our plan of operations. Other risks and uncertainties include those associated with:

 

 

·

the COVID-19 pandemic;

 

 

 

 

·

our failure to obtain necessary regulatory clearances or approvals to distribute and market future products in the veterinary or clinical in-vitro diagnostics, or IVD, market;

 

 

 

 

·

a failure by the marketplace to accept the products in our development pipeline or any other diagnostic products we might develop;

 

 

 

 

·

our failure to secure adequate intellectual property protection;

 

 

 

 

·

the potential obsolescence of our intended products due to the highly competitive nature of the diagnostics market and its rapid technological change; and

 

 

 

 

·

other risks identified elsewhere in this Report, as well as in our other filings with the Securities and Exchange Commission, or 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. Our actual financial condition and results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on March 22, 2021, or our Annual Report, this Report, 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.

 

 
3

Table of Contents

 

PART I FINANCIAL INFORMATION

 

ITEM 1.     FINANCIAL STATEMENTS (UNAUDITED)

 

 

 

 

 

 

 

Page

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

5

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

 

6

 

Condensed Consolidated Statements of Stockholders’ Equity

 

7

 

Condensed Consolidated Statements of Cash Flows

 

9

 

Notes to the Condensed Consolidated Financial Statements

 

10

 

  

4

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Balance Sheets

(Expressed in United States Dollars, except share numbers)

     

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

$

 

 

$

 

ASSETS

 

(UNAUDITED)

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

 

22,901,784

 

 

 

19,444,737

 

Accounts receivable

 

 

19,566

 

 

 

7,118

 

Prepaid expenses

 

 

898,186

 

 

 

303,178

 

Other current assets

 

 

598,442

 

 

 

576,660

 

Total Current Assets

 

 

24,417,978

 

 

 

20,331,693

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

5,081,207

 

 

 

5,171,134

 

Operating lease right-of-use assets

 

 

263,440

 

 

 

326,085

 

Intangible assets, net

 

 

240,954

 

 

 

321,641

 

Total Assets

 

 

30,003,579

 

 

 

26,150,553

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

1,181,917

 

 

 

1,539,547

 

Accrued liabilities

 

 

3,607,809

 

 

 

3,491,740

 

Management and directors’ fees payable

 

 

91,213

 

 

 

55,174

 

Current portion of long-term debt

 

 

759,507

 

 

 

841,319

 

Current portion of finance lease liabilities

 

 

51,950

 

 

 

59,930

 

Current portion of operating lease liabilities

 

 

124,872

 

 

 

179,624

 

Current portion of grant repayable

 

 

34,731

 

 

 

69,218

 

Total Current Liabilities

 

 

5,851,999

 

 

 

6,236,552

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

2,027,882

 

 

 

2,606,885

 

Finance lease liabilities, net of current portion

 

 

532,301

 

 

 

601,967

 

Operating lease liabilities, net of current portion

 

 

143,998

 

 

 

151,828

 

Grant repayable, net of current portion

 

 

266,813

 

 

 

259,603

 

Total Liabilities

 

 

8,822,993

 

 

 

9,856,835

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

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

Issued and outstanding: 53,223,761 shares and 48,607,017 shares, respectively

 

 

53,224

 

 

 

48,607

 

Additional paid-in capital

 

 

150,221,335

 

 

 

126,526,239

 

Accumulated other comprehensive income (loss)

 

 

8,732

 

 

 

(59,978)

Accumulated deficit

 

 

(128,953,498)

 

 

(110,173,971)

Total VolitionRx Limited Stockholders' Equity

 

 

21,329,793

 

 

 

16,340,897

 

Non-controlling interest

 

 

(149,207)

 

 

(47,179)

Total Stockholders’ Equity

 

 

21,180,586

 

 

 

16,293,718

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

 

30,003,579

 

 

 

26,150,553

 

 

 

 

 

 

 

 

 

 

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

 

5

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(Expressed in United States Dollars, except share numbers)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Royalty

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,112

 

Product

 

 

25,483

 

 

 

575

 

 

 

75,795

 

 

 

4,201

 

Total Revenues

 

 

25,483

 

 

 

575

 

 

 

75,795

 

 

 

6,313

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,445,877

 

 

 

3,180,177

 

 

 

11,968,424

 

 

 

10,567,988

 

General and administrative

 

 

2,426,854

 

 

 

1,080,308

 

 

 

6,053,613

 

 

 

4,292,666

 

Sales and marketing

 

 

715,044

 

 

 

244,510

 

 

 

1,601,816

 

 

 

734,355

 

Total Operating Expenses

 

 

7,587,775

 

 

 

4,504,995

 

 

 

19,623,853

 

 

 

15,595,009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

 

(7,562,292)

 

 

(4,504,420)

 

 

(19,548,058)

 

 

(15,588,696)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

419,271

 

 

 

-

 

 

 

810,803

 

 

 

           98,870

 

Gain / ( Loss) on disposal of fixed assets

 

 

-

 

 

 

200,393

 

 

 

(26,167)

 

 

293,595

 

Interest income

 

 

290

 

 

 

2,801

 

 

 

2,503

 

 

 

48,956

 

Interest expense

 

 

(38,767)

 

 

(34,722)

 

 

(120,636)

 

 

(91,105)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Income

 

 

380,794

 

 

 

168,472

 

 

 

666,503

 

 

 

350,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(7,181,498)

 

 

(4,335,948)

 

 

(18,881,555)

 

 

(15,238,380)

Net Loss attributable to Non-Controlling Interest

 

 

45,065

 

 

 

8,050

 

 

 

102,028

 

 

 

23,396

 

Net Loss attributable to VolitionRx Limited Stockholders

 

 

(7,136,433)

 

 

(4,327,898)

 

 

(18,779,527)

 

 

(15,214,984)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive (Loss) / Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(20,875)

 

 

(573,397)

 

 

68,710

 

 

 

(273,791)

Net Comprehensive Loss

 

 

(7,202,373)

 

 

(4,909,345)

 

 

(18,812,845)

 

 

(15,512,171)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

(0.13)

 

 

(0.09)

 

 

(0.36)

 

 

(0.34)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

– Basic and Diluted

 

 

53,166,781

 

 

 

47,027,011

 

 

 

52,355,681

 

 

 

44,148,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

6

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(Expressed in United States Dollars, except share numbers)

 

For the Nine Months Ended September 30, 2021 and September 30, 2020

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Non

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

 

#

 

 

 $

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

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 cash

 

 

4,183,533

 

 

 

4,184

 

 

 

20,324,744

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

20,328,928

 

Common stock issued for cashless exercise of stock options and settlement of RSUs

 

 

80,451

 

 

 

80

 

 

 

(80)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

555,342

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

555,342

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(23,758)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(23,758)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

134,133

 

 

 

-

 

 

 

-

 

 

 

134,133

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(6,116,146)

 

 

(9,424)

 

 

(6,125,570)

Balance, March 31, 2021

 

 

52,871,001

 

 

 

52,871

 

 

 

147,382,487

 

 

 

74,155

 

 

 

(116,290,117)

 

 

(56,603)

 

 

31,162,793

 

Common stock issued for cash

 

 

251,369

 

 

 

251

 

 

 

854,460

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

854,711

 

Common stock issued for cashless exercise of stock options and settlement of RSUs

 

 

21,712

 

 

 

22

 

 

 

(22)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

337,744

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

337,744

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(106,668)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(106,668)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(44,548)

 

 

-

 

 

 

-

 

 

 

(44,548)

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,526,948)

 

 

(47,539)

 

 

(5,574,487)

Balance, June 30, 2021

 

 

53,144,082

 

 

 

53,144

 

 

 

148,468,001

 

 

 

29,607

 

 

 

(121,817,065)

 

 

(104,142)

 

 

26,629,545

 

Common stock issued for cash

 

 

79,679

 

 

 

80

 

 

 

252,852

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

252,932

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

732,191

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

732,191

 

Stock-based compensation in relation to modification of options

 

 

-

 

 

 

-

 

 

 

768,291

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

768,291

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,875)

 

 

-

 

 

 

-

 

 

 

(20,875)

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,136,433)

 

 

(45,065)

 

 

(7,181,498)

Balance, September 30, 2021

 

 

53,223,761

 

 

 

53,224

 

 

 

150,221,335

 

 

 

8,732

 

 

 

(128,953,498)

 

 

(149,207)

 

 

21,180,586

 

 

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

 

7

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(Expressed in United States Dollars, except share numbers)

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Non

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

#

 

 

$

 

 

 $

 

 

$

 

 

 $ 

 

 

$

 

$

Balance, December 31, 2019

 

 

41,125,303

 

 

 

41,125

 

 

 

103,853,627

 

 

 

125,670

 

 

 

(89,821,856)

 

 

-

 

 

 

14,198,566

 

Common stock issued for Director compensation in Volition Germany

 

 

73,263

 

 

 

73

 

 

 

333,896

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

333,969

 

Common stock issued for cashless exercise of stock options

 

 

19,430

 

 

 

20

 

 

 

(20)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

192,669

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

192,669

 

Stock repurchase

 

 

(11,364)

 

 

(11)

 

 

(54,423)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(54,434)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

373,926

 

 

 

-

 

 

 

-

 

 

 

373,926

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,849,772)

 

 

(9,567)

 

 

(5,859,339)

Balance, March 31, 2020

 

 

41,206,632

 

 

 

41,207

 

 

 

104,325,749

 

 

 

499,596

 

 

 

(95,671,628)

 

 

(9,567)

 

 

9,185,357

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash, net

 

 

5,452,922

 

 

 

5,453

 

 

 

14,229,160

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

14,234,613

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

360,640

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

360,640

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(74,320)

 

 

-

 

 

 

-

 

 

 

(74,320)

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5,037,314)

 

 

(5,779)

 

 

(5,043,093)

Balance, June 30, 2020

 

 

46,659,554

 

 

 

46,660

 

 

 

118,915,549

 

 

 

425,276

 

 

 

(100,708,942)

 

 

(15,346)

 

 

18,663,197

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in exercise of warrants

 

 

1,252,183

 

 

 

1,252

 

 

 

4,820,839

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,822,091

 

Common stock issued in exercise of stock options

 

 

127,838

 

 

 

128

 

 

 

82,372

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

82,500

 

Common stock issued for cash exercise of warrants

 

 

25,000

 

 

 

25

 

 

 

61,725

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

61,750

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

428,683

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

428,683

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(187,465)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(187,465)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(573,397)

 

 

-

 

 

 

-

 

 

 

(573,397)

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,327,898)

 

 

(8,050)

 

 

(4,335,948)

Balance, September 30, 2020

 

 

48,064,575

 

 

 

48,065

 

 

 

124,121,703

 

 

 

(148,121)

 

 

(105,036,840)

 

 

(23,396)

 

 

18,961,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

8

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Cash Flows (Unaudited)
(Expressed in United States Dollars)

 

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

 

 

$

 

 

$

 

Operating Activities

 

 

 

 

 

 

Net loss

 

 

(18,881,555)

 

 

(15,238,380)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

708,520

 

 

 

525,150

 

Amortization of operating lease right-of-use assets

 

 

148,075

 

 

 

194,749

 

Loss (Gain) on disposal of fixed assets

 

 

26,167

 

 

 

(293,595)

Stock-based compensation

 

 

2,393,568

 

 

 

981,992

 

Common stock issued for Director compensation in Volition Germany

 

 

-

 

 

 

333,969

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(595,008)

 

 

(177,354)

Accounts receivable

 

 

(12,416)

 

 

(573)

Other current assets

 

 

(20,010)

 

 

(274,398)

Accounts payable and accrued liabilities

 

 

(27,183)

 

 

365,167

 

Management and directors’ fees payable

 

 

(36,749)

 

 

47,672

 

Right-of-use assets operating leases liabilities

 

 

(147,924)

 

 

(194,146)

Net Cash Used In Operating Activities

 

 

(16,444,515)

 

 

(13,729,747)

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(844,987)

 

 

(679,782)

Proceeds from sales of property and equipment

 

 

-

 

 

 

97,388

 

Net Cash Used In Investing Activities

 

 

(844,987)

 

 

(582,394)

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

 

Net proceeds from issuances of common stock

 

 

21,436,571

 

 

 

19,200,954

 

Tax withholdings paid related to stock-based compensation

 

 

(130,426)

 

 

(187,465)

Common stock repurchased

 

 

-

 

 

 

(54,434)

Proceeds from grants repayable

 

 

37,631

 

 

 

3,802

 

Proceeds from long-term debt

 

 

79,614

 

 

 

-

 

Payments on long-term debt

 

 

(571,616)

 

 

(356,701)

Payments on grants repayable

 

 

(47,789)

 

 

(41,257)

Payments on finance lease obligations

 

 

(43,881)

 

 

(83,221)

Net Cash Provided By Financing Activities

 

 

20,760,104

 

 

 

18,481,678

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange on cash

 

 

(13,555)

 

 

(207,976)

 

 

 

 

 

 

 

 

 

Net Change in Cash

 

 

3,457,047

 

 

 

3,961,561

 

Cash and cash equivalents – Beginning of Period

 

 

19,444,737

 

 

 

16,966,168

 

Cash and cash equivalents – End of Period

 

 

22,901,784

 

 

 

20,927,729

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

 

Interest paid

 

 

120,636

 

 

 

91,105

 

Non-Cash Financing Activities:

 

 

 

 

 

 

 

 

Common stock issued on cashless exercises of stock options

 

 

102

 

 

 

118

 

Offering costs from issuance of common stock

 

 

125,494

 

 

 

1,229,169

 

 

 

 

 

 

 

 

 

 

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

 

9

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

 

Basis of Presentation

 

The interim consolidated financial statements of VolitionRx Limited (the “Company”, "VolitionRx," "we" or "us") for the three and nine months ended September 30, 2021 and September 30, 2020, respectively, are not audited. Our consolidated financial statements are prepared in accordance with the requirements for unaudited interim periods and, consequently, do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of our management, the accompanying consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of our financial position as of September 30, 2021, and our results of operations and cash flows for the periods ended September 30, 2021 and September 30, 2020, respectively. The results of operations for the periods ended September 30, 2021 and September 30, 2020, respectively, are not necessarily indicative of the results for a full-year period. These interim consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the Securities and Exchange Commission (the "SEC") on March 22, 2021.

 

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 experience 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 condensed consolidated financial statements for the period ended September 30, 2021 include the accounts of the Company and its subsidiaries. The Company has two wholly-owned subsidiaries Singapore Volition Pte. Limited (“Singapore Volition”) and Volition Global Services SRL (“Volition Global”). Singapore Volition has one wholly-owned subsidiary, Belgian Volition SRL (“Belgian Volition”). Belgian Volition has four subsidiaries, Volition Diagnostics UK Limited (“Volition Diagnostics”), Volition America, Inc. (“Volition America”), Volition Germany GmbH (“Volition Germany”), and its one majority-owned subsidiary Volition Veterinary Diagnostics Development LLC (“Volition Vet”). See Note 8(f) for more information regarding Volition Vet and Volition Germany. All intercompany balances and transactions have been eliminated in consolidation.

 

Cash and Cash Equivalents

 

For the purposes of the statements of cash flows, the Company considers interest bearing deposits with original maturity dates of three months or less to be cash equivalents. The Company invests excess cash from its operating cash accounts in overnight investments and reflects these amounts in cash and cash equivalents in the condensed consolidated balance sheets at fair value using quoted prices in active markets for identical assets. As of September 30, 2021, cash and cash equivalents totaled approximately $22.9 million, of which $10.2 million was held in an overnight money market account.

 

10

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

 

Accounts Receivables

 

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 September 30, 2021, the accounts receivable balance was $19,566 and the allowance for doubtful debts was nil.

 

Revenue Recognition

 

The Company adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” 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 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) the Company satisfies the performance obligation(s).

 

The Company generates product revenues from the sale of its Nu.Q® Vet Cancer Screening Test, from the sale of nucleosomes, and from the sale of Research Use Only kits pursuant to its license agreement with Active Motif, Inc. (“Active Motif”) from which the Company receives royalties. 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 in “Royalty” in the consolidated statements of operations and comprehensive loss. 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.

 

Product

 

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.

 

11

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

 

Services

 

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

 

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 (reduces) 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.

 

Basic and Diluted Net Loss Per Share

 

The Company computes net loss per share in accordance with ASC 260, “Earnings Per Share,” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations and comprehensive loss. 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 September 30, 2021, 6,143,599 potential common shares equivalents from warrants, options, and restricted stock units (“RSUs”) were excluded from the diluted EPS calculations as their effect is anti-dilutive.

 

Reclassification

 

Certain amounts presented in previously issued financial statements have been reclassified to be consistent with the current period presentation. The Company has reclassified the prior period comparative amounts in the statement of stockholders’ equity and cash flows to be consistent with the current year classification.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. The Company does not believe 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.

 

12

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

 

COVID-19 Pandemic Impact

 

As of the date of this filing, there continue to be widespread concerns regarding the ongoing impacts and disruptions caused by the COVID-19 pandemic in the regions in which the Company operates. As a result of the COVID-19 pandemic, the Company has experienced and may continue to experience disruptions that could impact our clinical trials, including delays enrolling patients and in sample collection.

 

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.

 

Note 2 - Going Concern

 

The Company's condensed consolidated financial statements are prepared using 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 $129.0 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 of at least one year from the date of issuance of these condensed 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 to 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 to third parties in exchange for specified up-front and/or back-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 eventually attain profitable operations. The accompanying condensed consolidated 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.

 

13

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 3 - Property and Equipment

 

The Company’s property and equipment consisted of the following amounts as of September 30, 2021 and December 31, 2020:

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

Useful Life

 

 $

 

 

$

 

 

$

 

Computer hardware and software

 

3 years

 

 

586,119

 

 

 

460,004

 

 

 

126,115

 

Laboratory equipment

 

5 years

 

 

3,065,910

 

 

 

1,378,894

 

 

 

1,687,016

 

Office furniture and equipment

 

5 years

 

 

298,471

 

 

 

202,746

 

 

 

95,725

 

Buildings

 

30 years

 

 

2,240,235

 

 

 

253,222

 

 

 

1,987,013

 

Building improvements

 

5-15 years

 

 

1,285,339

 

 

 

238,925

 

 

 

1,046,414

 

Land

 

Not amortized

 

 

138,924

 

 

 

-

 

 

 

138,924

 

 

 

 

 

 

7,614,998

 

 

 

2,533,791

 

 

 

5,081,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 nine-month periods ended September 30, 2021 and September 30, 2020, the Company recognized $639,091 and $459,450, respectively, in depreciation expense.

 

14

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 4 - 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.

 

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

 $

 

 

$

 

 

$

 

Patents

 

 

1,195,677

 

 

 

954,723

 

 

 

240,954

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

 

$

 

 

$

 

 

 

$

 

Patents

 

 

1,256,064

 

 

 

934,423

 

 

 

321,641

 

 

During the nine-month periods ended September 30, 2021 and September 30, 2020, the Company recognized $69,410 and $65,567, respectively, in amortization expense.

 

The Company amortizes the patents 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:

 

2021 - remaining

 

$22,852

 

2022

 

$91,015

 

2023

 

$91,015

 

2024

 

$36,072

 

2025

 

$-

 

Total Intangible Assets

 

$240,954

 

 

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 Topic “Property, Plant and Equipment” as of December 31, 2020. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2020.

 

Note 5 - Related Party Transactions

 

Refer to Note 6, Common Stock, for common stock issued to related parties and Note 7, Stock-Based Compensation, for stock options, warrants and RSUs issued to related parties. The Company has agreements with related parties for the purchase of products and consultancy services which are accrued under management and directors’ fees payable (see condensed consolidated balance sheets).

 

15

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 6 - Common Stock

 

As of September 30, 2021, the Company was authorized to issue 100 million shares of common stock par value $0.001 per share, of which 53,223,761 and 48,607,017 shares were issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.

 

Stock Option Exercises and RSU Settlements

 

From January 13, 2021 to March 19, 2021, 7,634 stock options were exercised to purchase shares of common stock at $3.35 per share in a cashless exercise that resulted in the issuance of 948 shares of common stock.

 

On January 20, 2021, 5,000 RSUs vested and resulted in the issuance of 3,000 shares of common stock (the remaining 2,000 shares were withheld for taxes and returned as authorized shares under the 2015 Stock Incentive Plan).

 

On February 2, 2021, 20,000 stock options were exercised to purchase shares of common stock at $3.80 per share in a cashless exercise that resulted in the issuance of 6,181 shares of common stock.

 

On February 8, 2021, 100,000 stock options were exercised to purchase shares of common stock at $5.00 per share in a cashless exercise that resulted in the issuance of 19,446 shares of common stock.

 

From February 8, 2021 to February 9, 2021, 100,000 stock options were exercised to purchase shares of common stock at $4.00 per share in cashless exercises that resulted in the issuance of 32,126 shares of common stock.

 

On February 8, 2021, 50,000 stock options were exercised to purchase shares of common stock at $3.25 per share in a cashless exercise that resulted in the issuance of 18,750 shares of common stock.

 

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

 

Equity Capital Raise

 

On February 10, 2021, the Company entered into an underwriting agreement (the “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 shelf registration statement on Form S-3 (declared effective by the SEC on September 28, 2018, File No. 333-227248). Cantor purchased the Firm Shares from the Company at a price of $4.9533 per share on February 12, 2021. The net proceeds received by the Company for 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 571,428 shares of common stock at the same price per share as the Firm Shares which option was not exercised.

 

16

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 6 - Common Stock (continued)

 

Equity Distribution Agreements

 

On September 24, 2021, the Company entered into an equity distribution agreement (the “2021 EDA”) with Cantor and Oppenheimer & Co. Inc. (“Oppenheimer”), to sell shares of its common stock having an aggregate offering price of up 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 is not obligated to sell any shares under the 2021 EDA. No sales of shares have been made under the 2021 EDA as of the date of filing of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021. The 2021 EDA replaces the 2020 EDA effective as of November 8, 2021 and no further sales will be made under the 2020 EDA as of such date.

 

On November 10, 2020, the Company entered into an equity distribution agreement (the “2020 EDA”) with Cantor and Oppenheimer to sell shares of its common stock having an aggregate offering price of up 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. 333-227248) and related prospectuses, through Cantor and Oppenheimer each acting as the Company’s agent and/or principal. The Company is not obligated to sell any shares under the 2020 EDA. During the three months ended September 30, 2021, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of $259,397 under the 2020 EDA through the sale of 79,679 shares of its common stock. From inception through September 30, 2021, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of $1,460,564 under the 2020 EDA through the sale of 396,448 shares of its common stock. The 2021 EDA replaces the 2020 EDA effective as of November 8, 2021 and no further sales will be made under the 2020 EDA as of such date.

 

On September 7, 2018, the Company entered into an equity distribution agreement (as amended, the “2018 EDA”) with Oppenheimer to sell shares of 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 the Company’s effective “shelf” registration statement on Form S-3 (File No 333-227248) and related prospectuses, through Oppenheimer acting as the Company’s agent and/or principal. From inception through March 31, 2021, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of approximately $9.7 million under the 2018 EDA through the sale of 2,539,606 shares of its common stock and fully utilized the availability under the 2018 EDA during the quarter ended March 31, 2021. No further sales will be made under the 2018 EDA.

 

17

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 – Stock-Based Compensation

 

a) Warrants

 

The following table summarizes the changes in warrants outstanding of the Company during the nine-month period ended September 30, 2021:

 

 

 

Number of

 

 

Weighted Average

 

 

 

Warrants

 

 

Exercise Price ($)

 

Outstanding at December 31, 2020

 

 

175,000

 

 

 

2.75

 

Granted

 

 

310,000

 

 

 

4.52

 

Outstanding at September 30, 2021

 

 

485,000

 

 

 

3.88

 

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2021

 

 

175,000

 

 

 

2.75

 

 

Effective January 1, 2021, the Company granted warrants to purchase 125,000 shares of common stock to a Company 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 exercise price of $3.95 per share. The Company has calculated the estimated fair market value of 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.

 

Effective February 1, 2021, the Company granted warrants to purchase 185,000 shares of common stock to 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 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.

 

Below is a table summarizing the warrants issued and outstanding as of September 30, 2021, which have an aggregate weighted average remaining contractual life of 4.21 years.

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

Proceeds to

 

Number

 

 

Number

 

 

Exercise

 

 

Contractual

 

 

Company if

 

Outstanding

 

 

Exercisable

 

 

Price ($)

 

 

Life (Years)

 

 

Exercised ($)

 

 

125,000

 

 

 

125,000

 

 

 

2.47

 

 

 

1.41

 

 

 

308,750

 

 

50,000

 

 

 

50,000

 

 

 

3.45

 

 

 

4.42

 

 

 

172,500

 

 

125,000

 

 

 

-

 

 

 

3.95

 

 

 

5.26

 

 

 

493,750

 

 

185,000

 

 

 

-

 

 

 

4.90

 

 

 

5.34

 

 

 

906,500

 

 

485,000

 

 

 

175,000

 

 

 

 

 

 

 

 

 

 

 

1,881,500

 

 

18

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 – Stock-Based Compensation (continued)

 

a) Warrants (continued)

 

Stock-based compensation expense related to warrants of $524,780 and $56,127 was recorded in the nine months ended September 30, 2021 and September 30, 2020, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is $216,014 and is expected to be recognized over a period of 0.34 years. As of September 30, 2021, the total intrinsic value of warrants outstanding was $78,750.

 

b) Options

 

The following table summarizes the changes in options outstanding of the Company during the nine-month period ended September 30, 2021:

 

 

 

Number of

 

 

Weighted Average

 

 

 

Options

 

 

Exercise Price ($)

 

Outstanding at December 31, 2020

 

 

4,278,619

 

 

 

4.00

 

Granted

 

 

1,016,640

 

 

 

3.41

 

Exercised

 

 

(277,634)

 

 

4.19

 

Expired/Cancelled

 

 

(63,467)

 

 

3.64

 

Outstanding at September 30, 2021

 

 

4,954,158

 

 

 

3.88

 

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2021

 

 

3,927,518

 

 

 

4.00

 

 

Effective May 20, 2021, the Company granted stock options to purchase 40,000 shares of common stock to a Company employee in exchange for services provided to the Company. These options vest on May 20, 2022 and expire five years after the vesting date, with an exercise price of $3.60 per share. 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.

 

On July 14, 2021, the Company amended the terms of certain outstanding options granted pursuant to the 2011 Equity Incentive Plan such that (i) the expiration date for outstanding options to purchase up to an aggregate of 292,000 shares of the Company’s common stock, granted on July 23, 2015, was extended from five years and six months after vesting to ten years from the date of grant, or an expiration date of July 23, 2025, (ii) the expiration date for outstanding options to purchase up to an aggregate of 6,367 shares of the Company’s common stock, granted on March 20, 2013, was extended from six years after vesting to ten years from the date of grant, or an expiration date of March 20, 2023, and (iii) the expiration date for outstanding options to purchase up to an aggregate of 8,151 shares of the Company’s common stock, granted September 2, 2013, was extended from six years after vesting to ten years from the date of grant, or an expiration date of September 2, 2023. As a result of these amendments $452,433 was recorded as additional options expense.

 

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 8 (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 of the Company and/or its subsidiaries) in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with options to purchase up to 463,328 shares vesting on August 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 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 $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.

 

19

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 – Stock-Based Compensation (continued)

 

b) Options (continued)

 

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 $98,322, using the Black-Scholes model and the following assumptions: term 5.5 years, stock price $3.32, exercise price $3.40, 68.98% volatility, 1.38% risk free rate, and no forfeiture rate.

 

On September 21, 2021, the Company amended the terms of certain outstanding options such that (i) the expiration date for outstanding options to purchase up to an aggregate of 335,000 shares of the Company’s common stock, granted on April 13, 2020 under the 2015 Stock Incentive Plan, were extended from six (6) to ten (10) years from the date of the grant. (ii) the expiration date for outstanding options to purchase up to an aggregate of 89,163 shares of the Company’s common stock, granted on January 23, 2018 and amended on December 16, 2019 under the 2015 Stock Incentive Plan, were extended from six (6) to ten (10) years from the date of the grant and (iii) the expiration date for outstanding options to purchase up to an aggregate of 308,066 shares of the Company’s common stock, granted on February 13, 2017 and March 30, 2017 (and amended on December 16, 2019) under the 2015 Stock Incentive Plan, were extended from six (6) to ten (10) years from the date of the grant. As a result of these amendments $315,858 was recorded as additional options expense.

 

Below is a table summarizing the options issued and outstanding as of September 30, 2021, all of which were issued pursuant to the 2011 Equity Incentive Plan (for option issuances prior to 2016) or the 2015 Stock Incentive Plan (for option issuances commencing in 2016) and which have an aggregate weighted average remaining contractual life of 4.58 years. As of September 30, 2021, an aggregate of 6,000,000 shares of common stock were authorized for issuance under the 2015 Stock Incentive Plan, of which 554,021 shares of common stock remained available for future issuance thereunder.

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

Proceeds to

 

Number

 

 

Number

 

 

Exercise

 

 

Contractual

 

 

Company if

 

Outstanding

 

 

Exercisable

 

 

Price ($)

 

 

Life (Years)

 

 

Exercised ($)

 

 

635,000

 

 

 

635,000

 

 

 

3.25

 

 

 

3.37

 

 

 

2,063,750

 

 

2,717

 

 

 

2,717

 

 

 

3.35

 

 

 

1.92

 

 

 

9,102

 

 

986,640

 

 

 

-

 

 

 

3.40

 

 

 

9.78

 

 

 

3,354,576

 

 

800,000

 

 

 

760,000

 

 

 

3.60

 

 

 

5.93

 

 

 

2,880,000

 

 

1,682,837

 

 

 

1,682,837

 

 

 

4.00

 

 

 

2.06

 

 

 

6,731,348

 

 

11,801

 

 

 

11,801

 

 

 

4.35

 

 

 

1.70

 

 

 

51,334

 

 

89,163

 

 

 

89,163

 

 

 

4.38

 

 

 

6.32

 

 

 

390,534

 

 

50,000

 

 

 

50,000

 

 

 

4.80

 

 

 

1.25

 

 

 

240,000

 

 

696,000

 

 

 

696,000

 

 

 

5.00

 

 

 

2.99

 

 

 

3,480,000

 

 

4,954,158

 

 

 

3,927,518

 

 

 

 

 

 

 

 

 

 

 

19,200,644

 

 

Stock-based compensation expense related to stock options of $664,819 and $861,312 was recorded in the nine months ended September 30, 2021 and September 30, 2020, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is $1,738,661 and is expected to be recognized over a period of 1.94 years. As of September 30, 2021, the total intrinsic value of stock options outstanding was nil.

 

20

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 – Stock-Based Compensation (continued)

 

c) Restricted Stock Units (RSUs)

 

Below is a table summarizing the RSUs issued and outstanding as of September 30, 2021, all of which were issued pursuant to the 2015 Stock Incentive Plan.

 

 

 

Number of

 

 

Weighted Average

 

 

 

RSUs

 

 

Share Price ($)

 

Outstanding at December 31, 2020

 

 

67,500

 

 

 

3.47

 

Granted

 

 

683,191

 

 

 

3.32

 

Vested/Settled

 

 

(31,250)

 

 

3.56

 

Cancelled

 

 

(15,000)

 

 

3.30

 

Outstanding at September 30, 2021

 

 

704,441

 

 

 

3.33

 

 

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 Stock Incentive 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 Stock Incentive 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 Stock Incentive 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 RSU’s under the 2015 Stock Incentive Plan vesting upon achievement of certain corporate goals (see additional details in Note 8 (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. The RSUs eligible for vesting shall vest in two equal installments at 12 months and 24 months from the grant date, subject to continued service. These RSUs 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.

  

21

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 – Stock-Based Compensation (continued)

 

c) Restricted Stock Units (RSUs) (continued)

 

Below is a table summarizing the RSUs issued and outstanding as of September 30, 2021 and which have an aggregate weighted average remaining contractual life of 1.35 years.

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Average

 

 

 

 

 

 

Remaining

 

Number

 

 

Share

 

 

Contractual

 

Outstanding

 

 

Price ($)

 

 

Life (Years)

 

 

610,191

 

 

 

3.31

 

 

 

1.35

 

 

38,000

 

 

 

3.32

 

 

 

1.44

 

 

26,250

 

 

 

3.52

 

 

 

0.53

 

 

30,000

 

 

 

3.59

 

 

 

0.98

 

 

704,441

 

 

 

 

 

 

 

 1.35

 

 

Stock-based compensation expense related to RSUs of $435,678 and $64,553 was recorded in the nine months ended September 30, 2021 and September 30, 2020, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $1,972,118. As of September 30, 2021, the total intrinsic value of the RSUs outstanding was nil.

 

Note 8 – Commitments and Contingencies

 

a) Finance Lease Obligations

 

In 2016, the Company entered into a real estate finance lease with ING Asset Finance Belgium S.A. (“ING”) to purchase a property located in Belgium for €1.12 million, maturing in May 2031 with implicit interest of 2.62%. As of September 30, 2021, the balance payable was $580,355.

 

In 2018, the Company entered into a capital lease with BNP Paribas leasing solutions to purchase a freezer for the Belgium facility for €25,000, maturing in January 2022 with implicit interest of 1.35%. The leased equipment is amortized on a straight-line basis over 5 years. As of September 30, 2021, the balance payable was $3,896.

 

The following is a schedule showing the future minimum lease payments under finance leases by years and the present value of the minimum payments as of September 30, 2021.

 

2021 - remaining

 

$18,031

 

2022

 

$63,724

 

2023

 

$62,269

 

2024

 

$62,268

 

2025

 

$62,268

 

Greater than 5 years

 

$396,946

 

Total

 

$665,506

 

Less: Amount representing interest

 

$(81,255)

Present value of minimum lease payments

 

$584,251

 

 

 

22

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies (continued)

 

b) Operating Lease Right-of-Use Obligations

 

As all the existing leases subject to the new lease standard ASC 842 (“Leases”) 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 the Company used its incremental borrowing rate as the discount rate. The Company’s weighted average discount rate is 4.49% and the weighted average remaining lease term is 30 months.

 

As of September 30, 2021, operating lease right-of-use assets and liabilities arising from operating leases were $263,440 and $268,870, respectively. During the nine months ended September 30, 2021, cash paid for amounts included for the measurement of lease liabilities was $151,003 and the Company recorded operating lease expense of $151,635.

 

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 September 30, 2021.

 

2021 - remaining

 

$50,545

 

2022

 

$99,623

 

2023

 

$74,653

 

2024

 

$48,868

 

2025

 

$5,292

 

Total Operating Lease Obligations

 

$278,981

 

Less: Amount representing interest

 

$(10,111)

Present Value of minimum lease payments

 

$268,870

 

 

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 nine months ended September 30, 2021, $58,720 was recognized in short-term lease costs associated with office space leases. The annual payments remaining for short-term office leases were as follows:

 

2021 - remaining

 

$19,244

 

2022

 

$37,860

 

Total Operating Lease Liabilities

 

$57,104

 

 

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. Per the terms of the agreement, €314,406 of the grant is to be repaid, by installments over the period from June 30, 2014 to June 30, 2023. 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 and the 6% royalty on revenue, is equal to twice the amount of funding received. As of September 30, 2021, the grant balance repayable was $63,673.

 

In 2018, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €605,000. Per the terms of the agreement, €181,500 of the grant is to be repaid by installments over 12 years commencing in 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 and the 3.53% royalty on revenue, is equal to the amount of funding received. As of September 30, 2021, the grant balance repayable was $124,270.

 

23

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – 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 installments 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 September 30, 2021, the grant balance repayable was $53,765.

 

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 September 30, 2021, the grant balance repayable was $59,836.

 

As of September 30, 2021, the total grant balance repayable was $301,544 and the payments remaining were as follows:

 

2021 - remaining

 

$-

 

2022

 

$45,069

 

2023

 

$43,330

 

2024

 

$18,808

 

2025

 

$20,703

 

Greater than 5 years

 

$173,634

 

Total Grants Repayable

 

$301,544

 

 

d) Long-Term Debt

 

In 2016, the Company entered into a 7-year loan agreement with Namur Invest for €440,000 with a fixed interest rate of 4.85%, maturing in December 2023. As of September 30, 2021, the principal balance payable was $194,720.

 

In 2016, the Company entered into a 15-year loan agreement with ING for €270,000 with a fixed interest rate of 2.62%, maturing in December 2031.As of September 30, 2021, the principal balance payable was $227,954.

 

In 2017, the Company entered into a 4-year loan agreement with Namur Invest for €350,000 with a fixed interest rate of 4.00%, maturing in June 2021. As of September 30, 2021, the principal balance payable was nil.

 

In 2017, the Company entered into a 7-year loan agreement with SOFINEX for up to €1 million with a fixed interest rate of 4.50%, maturing in September 2024. As of September 30, 2021, €1 million had been drawn down under this agreement and the principal balance payable was $810,388.

 

In 2018, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 with a fixed interest rate of 4.0%, maturing in June 2022. As of September 30, 2021, the principal balance payable was $130,938.

 

In 2019, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 with a fixed interest rate of 4.80%, maturing in September 2024. As of September 30, 2021, the principal balance payable was $501,978.

 

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 2031. As of September 30, 2021, the principal balance payable was $921,411.

 

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies (continued)

 

d) Long-Term Debt (continued)

 

As of September 30, 2021, the total balance for long-term debt payable was $2,787,389 and the payments remaining were as follows:

 

2021 - remaining

 

$281,249

 

2022

 

$761,541

 

2023

 

$662,368

 

2024

 

$515,446

 

2025

 

$142,380

 

Greater than 5 years

 

$766,723

 

Total

 

$3,129,707

 

Less: Amount representing interest

 

$(342,318)

Total Long-Term Debt

 

$2,787,389

 

 

e) Collaborative Agreement Obligations

 

In 2016, the Company entered into a research co-operation agreement with DKFZ in Germany for a five-year period for €400,000. As of September 30, 2021, $231,539 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 three-year period for a cost to the Company of up to $2.55 million payable over such period. As of September 30, 2021, $510,000 is still to be paid by the Company under this agreement.

 

In 2019, the Company entered into a research collaboration agreement with the University of Taiwan for a two-year period to collect a total of 1,200 samples for a cost to the Company of up to $320,000 payable over such period. As of September 30, 2021, nil is still to be paid by the Company under this agreement.

 

In 2019, the 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 five-year period for a cost to the Company of up to $400,000 payable over such period. As of September 30, 2021, $98,711 is still to be paid by the Company under this agreement.

 

On September 16, 2020, the Company entered into a research agreement for the bioinformatic analysis of cell-free DNA fragments from whole-genome sequencing with the Hebrew University of Jerusalem for six months for a cost to the Company of €54,879. Subsequently the parties entered into an amendment to the agreement with an additional cost to the Company of €155,115. As of September 30, 2021, $92,749 is still to be paid by the Company under the amended agreement.

 

As of September 30, 2021, the total amount to be paid for future research and collaboration commitments was approximately $ 932,999 and the payments remaining were as follows:

 

2021 - remaining

 

$816,789

 

2022 - 2025

 

$116,210

 

Total Collaborative Agreement Obligations

 

$932,999

 

   

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – 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 September 30, 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). During the three months ended March 31, 2021, an amount of €43,152 was paid in full settlement of the amount due.

 

In connection with the transaction agreement, the Company also entered into a two-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 two-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 five years post-closing.

 

During the three months ended March 31, 2020, the Company recorded approximately $753,000 in January 2020 as compensation expense as a result of cash paid in, holdback liability, stock issued and assumption of expenses. As of September 30, 2021,$41,677 is still to be paid by the Company under the Managing Director’s agreement and $229 is payable under the 6% royalty agreement.

 

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies (continued)

 

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 September 30, 2021, nil is payable by Company for services rendered under the agreement.

 

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 the Compensation Committee of the Board of Directors approved the issuance of certain equity-based awards and cash bonuses 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 the granting of equity-based awards under the 2015 Stock Incentive Plan as well as 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 $330,837. As of September 30, 2021, the Company has accrued compensation expense of $229,900 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 $467,269. As of September 30, 2021, the Company has accrued compensation expense of $116,121 based on the probable outcomes related to the prescribed performance targets.

 

As discussed in detail in Note 7, in August 2021 a total of 926,640 stock options and 460,191 restricted stock units were issued under the 2015 Stock Incentive Plan.

 

As of September 30, 2021, the Company has recognized compensation expense of $219,077 in relation to such stock options and $190,981 in relation to such restricted stock units, based on the probable outcomes related to the prescribed performance targets on the outstanding awards.

 

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 9 – Subsequent Events

 

Effective October 4, 2021, the Company granted stock options to purchase 73,360 shares of common stock to an officer of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. These options vest over two years with options to purchase up to 50% of the shares vesting on October 4, 2022, and options to purchase up to 50% of the 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 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 ye