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, 2022

 

     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.)

  

1489 West Warm Springs Road, Suite 110

Henderson, Nevada 89014

(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 7, 2022, there were 57,521,369 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, 2022

 

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, 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, 2022, 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, 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. These statements include, among other things, 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.

 

Some significant factors that may impact our estimates and forward-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;

 

·

Business disruptions and economic and other uncertainties surrounding the COVID-19 pandemic; 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” within this report, as well as in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on March 30, 2022,  or our Annual Report, in 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. Except as required by law or the listing rules of the NYSE American market, we expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof. If we do update or correct any forward-looking statements, readers should not conclude that we will make additional updates or corrections. We qualify all of our forward-looking statements with these cautionary statements.

 

 
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,

 

 

 

2022

 

 

2021

 

 

 

 $

 

 

$

 

ASSETS

 

(UNAUDITED)

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

 

16,416,069

 

 

 

20,581,313

 

Accounts receivable

 

 

5,492

 

 

 

12,510

 

Prepaid expenses

 

 

825,748

 

 

 

598,367

 

Other current assets

 

 

426,228

 

 

 

786,642

 

Total Current Assets

 

 

17,673,537

 

 

 

21,978,832

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

4,880,663

 

 

 

4,911,077

 

Operating lease right-of-use assets

 

 

657,557

 

 

 

383,551

 

Intangible assets, net

 

 

129,600

 

 

 

216,876

 

Total Assets

 

 

23,341,357

 

 

 

27,490,336

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

2,467,672

 

 

 

1,542,457

 

Accrued liabilities

 

 

3,069,288

 

 

 

3,828,501

 

Deferred revenue

 

 

10,000,000

 

 

 

12,512

 

Management and directors’ fees payable

 

 

71,642

 

 

 

71,303

 

Current portion of long-term debt

 

 

1,064,741

 

 

 

797,855

 

Current portion of finance lease liabilities

 

 

41,693

 

 

 

48,958

 

Current portion of operating lease liabilities

 

 

232,161

 

 

 

171,166

 

Current portion of grant repayable

 

 

30,908

 

 

 

43,100

 

Total Current Liabilities

 

 

16,978,105

 

 

 

6,515,852

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

2,275,045

 

 

 

2,270,767

 

Finance lease liabilities, net of current portion

 

 

408,344

 

 

 

511,086

 

Operating lease liabilities, net of current portion

 

 

449,326

 

 

 

217,305

 

Grant repayable, net of current portion

 

 

390,709

 

 

 

253,221

 

Total Liabilities

 

 

20,501,529

 

 

 

9,768,231

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Issued and outstanding: 57,496,003 shares and 53,772,261 shares, respectively

 

 

57,496

 

 

 

53,772

 

Additional paid-in capital

 

 

162,939,998

 

 

 

154,730,938

 

Accumulated other comprehensive income

 

 

315,546

 

 

 

148,326

 

Accumulated deficit

 

 

(160,015,333)

 

 

(136,988,636)

Total VolitionRx Limited Stockholders' Equity

 

 

3,297,707

 

 

 

17,944,400

 

Non-controlling interest

 

 

(457,879)

 

 

(222,295)

Total Stockholders’ Equity

 

 

2,839,828

 

 

 

17,722,105

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Equity

 

 

23,341,357

 

 

 

27,490,336

 

 

 

 

 

 

 

 

 

 

(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,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

$

 

 

$

 

 

$

 

 

$

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Services

 

 

9,881

 

 

 

-

 

 

 

80,181

 

 

 

-

 

Royalty

 

 

2,911

 

 

 

-

 

 

 

2,911

 

 

 

-

 

Product

 

 

19,922

 

 

 

25,483

 

 

 

103,585

 

 

 

75,795

 

Total Revenues

 

 

32,714

 

 

 

25,483

 

 

 

186,677

 

 

 

75,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

3,737,516

 

 

 

3,611,528

 

 

 

10,606,892

 

 

 

9,723,154

 

General and administrative

 

 

2,763,202

 

 

 

3,139,592

 

 

 

8,451,194

 

 

 

7,993,682

 

Sales and marketing

 

 

1,524,952

 

 

 

836,655

 

 

 

4,897,999

 

 

 

1,907,017

 

Total Operating Expenses

 

 

8,025,670

 

 

 

7,587,775

 

 

 

23,956,085

 

 

 

19,623,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

 

(7,992,956)

 

 

(7,562,292)

 

 

(23,769,408)

 

 

(19,548,058)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

171,439

 

 

 

419,271

 

 

 

564,879

 

 

 

810,803

 

Loss on disposal of fixed assets

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(26,167)

Interest income

 

 

46,945

 

 

 

290

 

 

 

58,108

 

 

 

2,503

 

Interest expense

 

 

(37,699)

 

 

(38,767)

 

 

(115,860)

 

 

(120,636)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Other Income

 

 

180,685

 

 

 

380,794

 

 

 

507,127

 

 

 

666,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(7,812,271)

 

 

(7,181,498)

 

 

(23,262,281)

 

 

(18,881,555)

Net Loss Attributable to Non-Controlling Interest

 

 

69,305

 

 

 

45,065

 

 

 

235,584

 

 

 

102,028

 

Net Loss Attributable to VolitionRx Limited Stockholders

 

 

(7,742,966)

 

 

(7,136,433)

 

 

(23,026,697)

 

 

(18,779,527)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

71,027

 

 

 

(20,875)

 

 

167,220

 

 

 

68,710

 

Net Comprehensive Loss

 

 

(7,741,244)

 

 

(7,202,373)

 

 

(23,095,061)

 

 

(18,812,845)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Per Share - Basic and Diluted Attributable to VolitionRx Limited

 

 

(0.14)

 

 

(0.13)

 

 

(0.42)

 

 

(0.36)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic and Diluted

 

 

56,120,079

 

 

 

53,166,781

 

 

 

54,603,929

 

 

 

52,355,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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, 2022 and September 30, 2021

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

Non

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Controlling

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

 

#

 

 

$

 

 

 $

 

 

$

 

 

$

 

 

$

 

 

 $

 

Balance, December 31, 2021

 

 

53,772,261

 

 

 

53,772

 

 

 

154,730,938

 

 

 

148,326

 

 

 

(136,988,636)

 

 

(222,295)

 

 

17,722,105

 

Common stock issued for cash

 

 

3,000

 

 

 

3

 

 

 

9,464

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

9,467

 

Common stock issued for settlement of RSUs

 

 

15,000

 

 

 

15

 

 

 

(15)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

915,031

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

915,031

 

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(117,904)

 

 

-

 

 

 

-

 

 

 

(117,904)

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,634,030)

 

 

(83,977)

 

 

(7,718,007)

Balance, March 31, 2022

 

 

53,790,261

 

 

 

53,790

 

 

 

155,655,418

 

 

 

30,422

 

 

 

(144,622,666)

 

 

(306,272)

 

 

10,810,692

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for settlement of RSUs

 

 

56,712

 

 

 

57

 

 

 

(57)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

854,304

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

854,304

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(67,988)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(67,988)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

214,097

 

 

 

-

 

 

 

-

 

 

 

214,097

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,649,701)

 

 

(82,302)

 

 

(7,732,003)

Balance, June 30, 2022

 

 

53,846,973

 

 

 

53,847

 

 

 

156,441,677

 

 

 

244,519

 

 

 

(152,272,367)

 

 

(388,574)

 

 

4,079,102

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for cash

 

 

3,450,000

 

 

 

3,450

 

 

 

5,941,733

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

5,945,183

 

Common stock issued for settlement of RSUs

 

 

199,030

 

 

 

199

 

 

 

(199)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

639,075

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

639,075

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(82,288)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(82,288)

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

71,027

 

 

 

-

 

 

 

-

 

 

 

71,027

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(7,742,966)

 

 

(69,305)

 

 

(7,812,271)

Balance, September 30, 2022

 

 

57,496,003

 

 

 

57,496

 

 

 

162,939,998

 

 

 

315,546

 

 

 

(160,015,333)

 

 

(457,879)

 

 

2,839,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 
7

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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, 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 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)

 

 
8

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Expressed in United States Dollars)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

2021

 

 

 $

 

$

Operating Activities

 

 

 

 

 

 

Net Loss

 

 

(23,262,281)

 

 

(18,881,555)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

687,116

 

 

 

708,520

 

Amortization of operating lease right-of-use assets

 

 

193,444

 

 

 

148,075

 

Loss on disposal of fixed assets

 

 

-

 

 

 

26,167

 

Stock-based compensation

 

 

2,408,410

 

 

 

2,393,568

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(227,381)

 

 

(595,008)

Accounts receivable

 

 

6,960

 

 

 

(12,416)

Other current assets

 

 

360,414

 

 

 

(20,010)

Deferred Revenue, current and non-current

 

 

9,987,488

 

 

 

-

 

Accounts payable and accrued liabilities

 

 

(75,283)

 

 

(27,183)

Management and directors’ fees payable

 

 

339

 

 

 

(36,749)

Right-of-use assets operating leases liabilities

 

 

(173,830)

 

 

(147,924)

Net Cash Used In Operating Activities

 

 

(10,094,604)

 

 

(16,444,515)

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

Purchases of property and equipment

 

 

(991,430)

 

 

(844,987)

Net Cash Used In Investing Activities

 

 

(991,430)

 

 

(844,987)

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

Net proceeds from issuances of common stock

 

 

5,954,650

 

 

 

21,436,571

 

Tax withholdings paid related to stock-based compensation

 

 

(150,276)

 

 

(130,426)

Proceeds from grants repayable

 

 

210,603

 

 

 

37,631

 

Proceeds from long-term debt

 

 

1,632,384

 

 

 

79,614

 

Payments on long-term debt

 

 

(941,857)

 

 

(571,616)

Payments on grants repayable

 

 

(37,824)

 

 

(47,789)

Payments on finance lease obligations

 

 

(35,063)

 

 

(43,881)

Net Cash Provided By Financing Activities

 

 

6,632,617

 

 

 

20,760,104

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange on cash

 

 

288,173

 

 

 

(13,555)

 

 

 

 

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

 

(4,165,244)

 

 

3,457,047

 

Cash and cash equivalents - Beginning of Period

 

 

20,581,313

 

 

 

19,444,737

 

Cash and cash equivalents - End of Period

 

 

16,416,069

 

 

 

22,901,784

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

 

 

 

 

Interest paid

 

 

115,860

 

 

 

120,636

 

Non-Cash Financing Activities

 

 

 

 

 

 

 

 

Common stock issued on cashless exercises of stock options and settlement of vested RSUs

 

 

271

 

 

 

102

 

Offering costs from issuance of common stock

 

 

420,819

 

 

 

125,494

 

 

 

 

 

 

 

 

 

 

(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 condensed consolidated financial statements of VolitionRx Limited (the “Company” or “VolitionRx”) for the three and nine months ended September 30, 2022 and September 30, 2021, respectively, are unaudited. These interim 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 the Company’s management, the accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position as of September 30, 2022, and its results of operations and cash flows for the periods ended September 30, 2022 and September 30, 2021, respectively. The results of operations for the periods ended September 30, 2022 and September 30, 2021, respectively, are not necessarily indicative of the results for a full-year period. These interim condensed consolidated financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission (the "SEC") on March 30, 2022 (the “Annual Report”).

 

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. In addition, the Company has considered the potential impact of the COVID-19 pandemic, as well as certain economic factors, including inflation, rising interest rates, and recessionary pressures, on its business and operations. Although the full impact of these factors is unknown and cannot be reasonably estimated, the Company believes it has made appropriate accounting estimates and assumptions based on the facts and circumstances available as of the reporting date. However, the Company’s actual results may differ materially and adversely from these estimates and assumptions, which may result in material effects on the Company’s financial condition, results of operations, and liquidity. To the extent there are material differences between the estimates and the actual results, the Company’s condensed consolidated financial statements could be materially affected.

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements for the period ended September 30, 2022 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), Commitments and Contingencies - Other Commitments, 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, 2022, cash and cash equivalents totaled approximately $16.4 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, 2022, the accounts receivable balance was $5,492 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. In addition, revenue is received from external third parties for Nu.Q®  Discover 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 condensed 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 customers 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 condensed consolidated statements of operations and comprehensive loss.

 

 
11

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)

 

Services

 

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

 

For each development and /or commercialization agreement that results in revenue, 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 reassessed each reporting period as required.

 

Licensing

 

The Company includes revenue recognized from the licensing of certain rights to third parties in “Licensing” 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 reassessed each reporting period as required.

 

Deferred Revenue (Contract Liabilities) and Contract Assets

 

Deferred revenue consists of amounts for which the Company has an unconditional right to bill, and/or amounts for which payment has been received (including non-refundable amounts), but have not been recognized as revenue because the related performance obligations are deemed incomplete. As of September 30, 2022, the Company recorded $10.0 million as deferred revenue in respect of a non-refundable payment received in relation to a licensing and product supply agreement with Heska Corporation.

 

Contract assets include costs and services incurred on contracts with open performance obligations. These contract assets were immaterial as of September 30, 2022.

 

 
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)

 

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, 2022, 6,302,138 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.

 

Foreign Currency Translation

 

The Company has functional currencies in Euros, US Dollars and British Pounds Sterling and its reporting currency is the US 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).

 

Research and Development

 

In accordance with ASC 730, “Research and Development,” 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 $10.6 million and $9.7 million during the nine-months ended September 30, 2022, and September 30, 2021, respectively.

 

Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation.” Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the employee’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. RSUs are valued based on the closing stock price on the date of grant. Refer to Note 7, Stock-Based Compensation, for further details.

 

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 for the quarter ended September 30, 2022. Certain reclassifications have been made to the prior years’ financial statements in relation to Research and Development expenses, General and Administrative expenses and Sales and Marketing expenses to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations.

 

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.

 

 
13

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 impacts of the COVID-19 pandemic, the Company has experienced and may continue to experience disruptions to its clinical trials, including patient enrollment and sample collection delays.

 

Although the Company has taken steps to mitigate the impacts of the COVID-19 pandemic, the extent to which the pandemic will impact its business, financial condition, and results of operations in future periods is highly uncertain and will be affected by a number of factors outside of the Company’s control. 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 $160.0 million, has had negative cash flows from operations on an annual basis, 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 milestone 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.

 

 
14

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, 2022 and December 31, 2021:

 

 

 

 

 

 

 

 

September 30,

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

Useful Life

 

$

 

 

$

 

 

$

 

Computer hardware and software

 

3 years

 

 

585,691

 

 

 

433,718

 

 

 

151,973

 

Laboratory equipment

 

5 years

 

 

3,633,518

 

 

 

1,639,545

 

 

 

1,993,973

 

Office furniture and equipment

 

5 years

 

 

316,956

 

 

 

210,685

 

 

 

106,271

 

Buildings

 

30 years

 

 

1,873,543

 

 

 

256,530

 

 

 

1,617,013

 

Building improvements

 

5-15 years

 

 

1,171,604

 

 

 

277,625

 

 

 

893,979

 

Land

 

Not amortized

 

 

117,454

 

 

 

-

 

 

 

117,454

 

 

 

 

 

 

7,698,766

 

 

 

2,818,103

 

 

 

4,880,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

Useful Life

 

 

$

 

 

 $

 

 

$

 

Computer hardware and software

 

3 years

 

 

599,944

 

 

 

474,169

 

 

 

125,775

 

Laboratory equipment

 

5 years

 

 

3,032,108

 

 

 

1,434,347

 

 

 

1,597,761

 

Office furniture and equipment

 

5 years

 

 

293,427

 

 

 

213,244

 

 

 

80,183

 

Buildings

 

30 years

 

 

2,177,641

 

 

 

243,750

 

 

 

1,933,891

 

Building improvements

 

5-15 years

 

 

1,293,258

 

 

 

256,309

 

 

 

1,036,949

 

Land

 

Not amortized

 

 

136,518

 

 

 

-

 

 

 

136,518

 

 

 

 

 

 

7,532,896

 

 

 

2,621,819

 

 

 

4,911,077

 

 

During the nine-month periods ended September 30, 2022 and September 30, 2021, the Company recognized $624,830 and $639,091, respectively, in depreciation expense.

 

 
15

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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,

 

 

 

 

 

 

 

 

 

2022

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

$

 

 

$

 

 

$

 

Patents

 

 

1,021,459

 

 

 

891,859

 

 

 

129,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

 

 

 

 

Accumulated

 

 

Net Carrying

 

 

 

Cost

 

 

Amortization

 

 

Value

 

 

 

$

 

 

$

 

 

$

 

Patents

 

 

1,178,135

 

 

 

961,259

 

 

 

216,876

 

 

During the nine-month periods ended September 30, 2022 and September 30, 2021, the Company recognized $62,286 and $69,410, 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:

 

2022

 

$16,122

 

2023

 

$77,852

 

2024

 

$35,626

 

Total Intangible Assets

 

$129,600

 

 

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 “Property, Plant and Equipment,” as of December 31, 2021. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2021.

 

Note 5 - Related-Party Transactions

 

See 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).

 

 
16

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 6 - Common Stock

 

As of September 30, 2022, the Company was authorized to issue 100 million shares of common stock, par value $0.001 per share, of which 57,496,003 and 53,772,261 shares were issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

 

Stock Option Exercises and RSU Settlements

 

On March 28, 2022, 15,000 RSUs vested and resulted in the issuance of 15,000 shares of common stock.

 

On April 19, 2022, 26,250 RSUs vested, resulting in the issuance of 21,712 shares of common stock and the withholding of 4,538 shares of common stock for taxes, which were returned as authorized shares to the Company’s 2015 Stock Incentive Plan, as amended (the “2015 Stock Incentive Plan”).

 

On May 1, 2022, 50,000 RSUs vested, resulting in the issuance of 35,000 shares of common stock and the withholding of 15,000 shares of common stock for taxes, which were returned as authorized shares to the 2015 Stock Incentive Plan.

 

On August 3, 2022, 230,102 RSUs vested, resulting in the issuance of 191,992 shares of common stock and the withholding of 38,110 shares of common stock for taxes which were returned as authorized shares under the 2015 Stock Incentive Plan.

 

On September 7, 2022, 12,000 RSUs vested resulting in the issuance of 7,038 shares of common stock and the withholding of 4,962 shares of common stock for taxes, which were returned as authorized shares under the 2015 Stock Incentive Plan.

 

Equity Capital Raise

 

On July 29, 2022, the Company entered into an underwriting agreement with Newbridge Securities Corporation (the “Underwriter”) in connection with an underwritten public offering of 3,450,000 shares (the “Shares”) of the Company’s common stock, $0.001 par value per share pursuant to the Company’s shelf registration statement on Form S-3 (declared effective by the SEC on November 8, 2021, File No. 333-259783) (the “Effective Form S-3”). The Underwriter purchased the Shares from the Company at a price of $2.00 per share on August 2, 2022.  The net proceeds received by the Company for the sale and issuance of the Shares were approximately $6.4 million, before deducting offering expenses of $0.4 million paid by the Company.

 

Equity Distribution Agreements

 

On September 24, 2021, the Company entered into an equity distribution agreement (the “2021 EDA”) with Cantor Fitzgerald & Co. Inc. (“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 Form S-3 and related prospectuses, through Cantor and Oppenheimer each acting as the Company’s agent and/or principal. Effective May 7, 2022, the Company terminated its 2021 EDA and no further sales of the Company’s common stock will be made under the 2021 EDA. From inception through termination on May 7, 2022, the Company raised aggregate net proceeds (net of brokers’ commissions and fees) of approximately $0.7 million under the 2021 EDA through the sale of 193,600 shares of its common stock.

 

On May 20, 2022, the Company entered into an equity distribution agreement (the “2022 EDA”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s 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 Form S-3 and related prospectuses, through Jefferies acting as the Company’s agent and/or principal. The Company is not obligated to sell any shares under the 2022 EDA. The 2022 EDA replaces the 2021 EDA. As of September 30, 2022, no shares of common stock have been sold under the 2022 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, 2022:

 

 

 

Number of

 

 

Weighted Average

 

 

 

Warrants

 

 

Exercise Price ($)

 

Outstanding at December 31, 2021

 

 

485,000

 

 

 

3.88

 

Granted

 

 

54,000

 

 

 

3.05

 

Outstanding at September 30, 2022

 

 

539,000

 

 

 

3.80

 

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2022

 

 

485,000

 

 

 

3.88

 

 

Below is a table summarizing the warrants issued and outstanding as of September 30, 2022, which have an aggregate weighted average remaining contractual life of 3.49 years.

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

Proceeds to

 

Number

 

 

Number

 

 

Exercise

 

 

Contractual

 

 

Company if

 

Outstanding

 

 

Exercisable

 

 

Price ($)

 

 

Life (Years)

 

 

Exercised ($)

 

 

125,000

 

 

 

125,000

 

 

 

2.47

 

 

 

0.41

 

 

 

308,750

 

 

54,000

 

 

 

-

 

 

 

3.05

 

 

 

6.02

 

 

 

164,700

 

 

50,000

 

 

 

50,000

 

 

 

3.45

 

 

 

3.42

 

 

 

172,500

 

 

125,000

 

 

 

125,000

 

 

 

3.95

 

 

 

4.26

 

 

 

493,750

 

 

185,000

 

 

 

185,000

 

 

 

4.90

 

 

 

4.34

 

 

 

906,500

 

 

539,000

 

 

 

485,000

 

 

 

 

 

 

 

 

 

 

 

2,046,200

 

 

Effective April 4, 2022, the Company granted a warrant to purchase 54,000 shares of common stock to a Company employee for services to the Company and/or its subsidiaries. This warrant shall vest in two equal installments at 12 months and 24 months from the grant date, subject to continued service and expire on April 4, 2028 and April 4, 2029, respectively, with an exercise price of $3.05 per share. The Company has calculated the estimated fair market value of this warrant at $80,901, using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $2.95, exercise price $3.05, 71.07% volatility, 2.53% risk-free rate, and no forfeiture rate.

 

Stock-based compensation expense related to warrants of $68,852 and $524,780 was recorded in the nine months ended September 30, 2022 and September 30, 2021, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is $51,063 and is expected to be recognized over a period of 1.51 years. As of September 30, 2022, the total intrinsic value of warrants outstanding was $nil.

 

 
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)

 

b) Options

 

The following table summarizes the changes in options outstanding of the Company during the nine-month period ended September 30, 2022:

 

 

 

Number of

 

 

Weighted Average

 

 

 

Options

 

 

Exercise Price ($)

 

Outstanding at December 31, 2021

 

 

5,027,518

 

 

 

3.87

 

Granted

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

Expired/Cancelled

 

 

(2,515)

 

 

3.40

 

Outstanding at September 30, 2022

 

 

5,025,003

 

 

 

3.87

 

 

 

 

 

 

 

 

 

 

Exercisable at September 30, 2022

 

 

4,465,846

 

 

 

3.93

 

 

Below is a table summarizing the options issued and outstanding as of September 30, 2022, all of which were issued pursuant to the Company’s 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 5.50 years. As of September 30, 2022, an aggregate of 7,750,000 shares of common stock were authorized for issuance under the 2015 Stock Incentive Plan, of which 1,928,740 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

 

2.37

 

2,063,750

2,717

 

2,717

 

3.35

 

0.92

 

9,102

1,057,485

 

498,328

 

3.40

 

8.85

 

3,595,449

800,000

 

800,000

 

3.60

 

7.60

 

2,880,000

1,682,837

 

1,682,837

 

4.00

 

4.01

 

6,731,348

11,801

 

11,801

 

4.35

 

0.70

 

51,334

89,163

 

89,163

 

4.38

 

5.32

 

390,534

50,000

 

50,000

 

4.80

 

4.26

 

240,000

696,000

 

696,000

 

5.00

 

4.49

 

3,480,000

5,025,003

 

4,465,846

 

 

 

 

 

19,441,517

 

 
19

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 7 - Stock-Based Compensation (continued)

 

b) Options (continued)

 

Stock-based compensation expense related to stock options of $1,021,938 and $664,819 was recorded in the nine months ended September 30, 2022 and September 30, 2021, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is $436,344 and is expected to be recognized over a period of 1.01 years. As of September 30, 2022, the total intrinsic value of stock options outstanding was $nil.

 

c) Restricted Stock Units

 

Below is a table summarizing the RSUs issued and outstanding as of September 30, 2022, all of which were issued pursuant to the 2015 Stock Incentive Plan.

 

 

 

Number of

 

 

Weighted Average

 

 

 

RSUs

 

 

Share Price ($)

 

Outstanding at December 31, 2021

 

 

810,750

 

 

 

3.33

 

Granted

 

 

295,102

 

 

 

2.57

 

Vested/Settled

 

 

(333,352)

 

 

3.34

 

Cancelled

 

 

(34,365)

 

 

3.35

 

Outstanding at September 30, 2022

 

 

738,135

 

 

 

3.02

 

 

Effective February 8, 2022, the Company granted aggregate RSUs of 8,000 shares of common stock to an employee in exchange for services provided to the Company. These RSUs vest over 24 months, with 50% vesting on each of February 8, 2023 and February 8, 2024, subject to continued service, and will result in total compensation expense of $22,640.

 

Effective March 1, 2022, the Company granted aggregate RSUs of 30,000 shares of common stock to various employees in exchange for services provided to the Company. These RSUs vest over 24 months, with 50% vesting on each of March 1, 2023 and March 1, 2024, subject to continued service, and will result in total compensation expense of $84,300.

 

On March 28, 2022, 15,000 RSUs vested and resulted in the issuance of 15,000 shares of common stock.

 

Effective April 4, 2022, the Company granted aggregate RSUs of 32,000 shares of common stock to employees of the Company and /or its subsidiaries in exchange for services provided to the Company and /or its subsidiaries. The RSUs shall vest in two equal installments at 12 months and 24 months from the grant date, subject to continued service, and will result in total compensation expense of $94,400.

 

Effective April 4, 2022, the Company granted aggregate RSUs of 104,000 shares of common stock to employees of the Company and /or its subsidiaries in exchange for services provided to the Company and /or its subsidiaries. The RSUs shall vest in three equal installments at 12 months, 24 months and 36 months from the grant date, subject to continued service, and will result in total compensation expense of $306,800.

 

On April 19, 2022, 26,250 RSUs vested and resulted in the issuance of 21,712 shares of common stock and the remaining 4,538 shares of common stock were withheld for taxes and returned as authorized shares under the 2015 Stock Incentive Plan.

 

On May 1, 2022, 50,000 RSUs vested and resulted in the issuance of 35,000 shares of common stock and the remaining 15,000 shares of common stock were withheld for taxes and returned as authorized shares under the 2015 Stock Incentive Plan.

 

On May 31, 2022, an aggregate of 33,000 RSUs previously granted to employees were cancelled and returned as authorized shares under the 2015 Stock Incentive Plan upon the resignation of  such employees prior to vesting.

 

Effective June 1, 2022, the Company granted aggregate RSUs of 33,000 shares of common stock to various employees in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of June 1, 2023 and June 1, 2024, subject to continued service, and will result in total compensation expense of $80,850.

 

 
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 (continued)

 

On August 3, 2022, 230,102 RSUs vested and resulted in the issuance of 191,992 shares of common stock and the remaining 38,110 shares of common stock were withheld for taxes and returned as authorized shares under the 2015 Stock Incentive Plan.

 

Effective August 15, 2022, the Company granted aggregate RSUs of 63,102 shares of common stock to various employees in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of August 15, 2023 and August 15, 2024, subject to continued service, and will result in total compensation expense of $126,835.

 

On August 18 2022, 1,365 RSUs previously granted to employees were cancelled and returned as authorized shares under the 2015 Stock Incentive Plan upon the resignation of  such employees prior to vesting.

 

On September 7, 2022, 12,000 RSUs vested and resulted in the issuance of 7,038 shares of common stock and the remaining 4,962 shares of common stock were withheld for taxes and returned as authorized shares under the 2015 Stock Incentive Plan.

 

Effective September 21, 2022, the Company granted aggregate RSUs of 25,000 shares of common stock to various employees in exchange for services provided to the Company. These RSUs vest over two years, with 50% vesting on each of September 21, 2023 and September 21, 2024, subject to continued service, and will result in total compensation expense of $42,250.

 

Below is a table summarizing the RSUs issued and outstanding as of September 30, 2022 and which have an aggregate weighted average remaining contractual life of 1.02 years.

 

 

 

 

 

Weighted

 

 

 

 

Average

 

 

 

 

Remaining

Number

 

Share

 

Contractual

Outstanding

 

Price ($)

 

Life (Years)

25,000

 

1.69

 

1.48

63,102

 

2.01

 

1.33

33,000

 

2.45

 

1.17

30,000

 

2.81

 

0.92

8,000

 

2.83

 

0.86

136,000

 

2.95

 

1.23

39,809

 

3.04

 

0.51

328,724

 

3.31

 

0.86

12,000

 

3.32

 

0.94

4,000

 

3.38

 

0.71

43,500

 

3.51

 

0.59

15,000

 

3.59

 

0.48

738,135

 

 

 

 

 

Stock-based compensation expense related to RSUs of $1,317,620 and $435,678 was recorded in the nine months ended September 30, 2022 and September 30, 2021, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $1,120,983.

 

 
21

Table of Contents

 

Note 8 - Commitments and Contingencies

 

a) Finance Lease Obligations

 

In 2016, the Company entered into a capital 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, 2022, the balance payable was $450,037.

 

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, that matured 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, 2022, the balance payable was $nil.

 

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, 2022.

 

2022

 

$13,161

 

2023

 

$52,645

 

2024

 

$52,644

 

2025

 

$52,645

 

2026

 

$52,646

 

Greater than 5 years

 

$282,957

 

Total

 

$506,698

 

Less: Amount representing interest

 

$(56,661)

Present value of minimum lease payments

 

$450,037

 

 

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 2.40% and the weighted average remaining lease term is 28 months.

 

During the nine months ended September 30, 2022, the Company entered into a new lease agreement. The lease is initially for 62 months and the initial rent is $7,642 a month. In connection with the new lease agreement the Company recorded $461,341 of right of use assets in exchange for right of use liabilities.

 

As of September 30, 2022, operating lease right-of-use assets and liabilities arising from operating leases were $716,208 and $681,487, respectively. During the nine months ended September 30, 2022, cash paid for amounts included for the measurement of lease liabilities was $142,171 and the Company recorded operating lease expense of $162,189.

 

 
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 (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 September 30, 2022.

 

2022

 

$60,784

 

2023

 

$251,092

 

2024

 

$158,384

 

2025

 

$118,449

 

2026

 

$120,400

 

Total Operating Lease Obligations

 

$709,109

 

Less: Amount representing interest

 

$(27,622)

Present Value of minimum lease payments

 

$681,487

 

 

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, 2022, the Company recognized $53,895 in short-term lease costs associated with office space leases. The annual payments remaining for short-term office leases were as follows:

 

2022

 

$12,203

 

2023

 

$21,812

 

2024

 

$-

 

Total Operating Lease Liabilities

 

$34,015

 

 

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 6.00% royalty on revenue, is equal to twice the amount of funding received. As of September 30, 2022, the grant balance repayable was $24,470.

 

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, 2022, the grant balance repayable was $97,838.

 

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, 2022, the grant balance repayable was $210,119.

 

 
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 €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, 2022, the grant balance repayable was $89,190.

 

As of September 30, 2022, the total grant balance repayable was $421,617 and the payments remaining were as follows:

 

2022

 

$-

 

2023

 

$44,945

 

2024

 

$24,205

 

2025

 

$31,537

 

2026

 

$38,328

 

Greater than 5 years

 

$282,602

 

Total Grants Repayable

 

$421,617

 

 

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, 2022, the principal balance payable was $99,713.

 

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, 2022, the principal balance payable was $176,358.

 

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, 2022, €1 million had been drawn down under this agreement and the principal balance payable was $489,391.

 

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 4.00%, maturing in June 2022. As of September 30, 2022, the principal balance payable was $0.

 

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, 2022, the principal balance payable was $301,131.

 

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, 2022, the principal balance payable was $716,058.

 

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 September 30, 2022, the principal balance payable was $440,452.

 

On February 5, 2022, the Company entered into a 9-month loan agreement with First Insurance Funding for a maximum of $620,549 with fixed interest rate of 3.57%, maturing November 2022. As of September 30, 2022, the maximum has been drawn down under this agreement and the principal balance payable was $137,900.

 

 
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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)

 

In July 2022, Volition was awarded a €1.5 million loan facility by Namur Invest Capital Risk to fund an early access program for its Nu.Q® product portfolio at key sites across the EU, UK, and US. On August 16, 2022, the Company entered into a 4-year loan agreement with Namur Invest for a maximum of €1.0 million with fixed interest rate of 6.0%, maturing in August 2026. As of September 30, 2022, €1.0 million has been drawn down under this agreement and the principal balance payable was $978,783. The remaining €0.5 million remains available for future drawdown.

 

As of September 30, 2022, the total balance for long-term debt payable was $3,339,786 and the payments remaining were as follows:

 

2022

 

$464,780

 

2023

 

$1,012,234

 

2024

 

$901,615

 

2025

 

$505,886

 

2026

 

$301,640

 

Greater than 5 years

 

$527,857

 

Total

 

$3,714,012

 

Less: Amount representing interest

 

$(374,226)

Total Long-Term Debt

 

$3,339,786

 

 

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, 2022, $195,757 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, 2022, $510,000 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, 2022, $0 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 $117,711 (€100,236). In the nine-months ended September 30, 2022, the parties entered into agreements for an additional cost to the Company of $40,918 (€39,000). As of September 30, 2022, $20,992 is still to be paid by the Company under the amended agreement.

 

On August 10, 2022, the Company entered into a sponsored research agreement with The University of Texas MD Anderson Cancer Center to evaluate the role of neutrophil extracellular traps ("NETs") in cancer patients with sepsis for a cost to the Company of $346,787. As of September 30, 2022, $346,787 is still to be paid by the Company under this 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)

 

e) Collaborative Agreement Obligations (continued)

 

As of September 30, 2022, the total amount to be paid for future research and collaboration commitments was approximately $1,073,536 and the payments remaining were as follows:

 

2022 - remaining

 

$138,095

 

2023 - 2026

 

$935,441

 

Total Collaborative Agreement Obligations 

 

$1,073,536

 

 

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, 2022, 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 (“Volition Germany”).

 

In connection with the transaction agreement, the Company entered into 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.

 

As of September 30, 2022, $191 is payable under the 6% royalty agreement on sales to date towards the Company’s aggregate minimum royalty obligation of $107,666.

 

Volition America

 

On November 3, 2020, the Company entered into a professional services master agreement (the “Master Agreement”) with Diagnostic Oncology CRO, LLC (“DXOCRO”) to conduct a pivotal clinical trial and provide regulatory submission and reimbursement related services. On August 8, 2022, the Company and DXOCRO amended and restated the Master Agreement to expand the scope of DXOCRO’s consultant services provided thereunder (the “A&R Master Agreement”). The A&R Master Agreement requires DXOCRO to support development and clinical validation studies for the Company’s Nu.Q® product portfolio in the United States, including by conducting large-scale finding studies across multiple sites in the U.S. using Nu.Q® NETs and Nu.Q® Cancer tests to determine clinical utility in sepsis and non-Hodgkin’s lymphoma. The Company anticipates DXOCRO’s services under the agreement will be completed by the end of the third quarter 2023 at a total cost to the Company of up to $4.2 million. The Company’s payment obligations accrue upon delivery of projects under the agreement. The Company may terminate the agreement or any project thereunder upon at least 30 days’ prior written notice. Unless earlier terminated, the A&R Master Agreement terminates on the later of December 31, 2025 or the date upon which all services have been completed. As of September 30, 2022, $119,035 is payable under the A&R Master Agreement, and up to $ 3,817,118 maybe payable by Company in future periods for services rendered.

 

 
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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)

 

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 and October 2021 the Compensation Committee of the Board of Directors 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 focused around product development and commercialization, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries.

 

Conditional upon the achievement by July 1, 2022 of all specified corporate goals as set forth in the minutes of the Compensation Committee, 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 a cash bonus to such award recipient. As of September 30, 2022, the Company has paid compensation expense of $737,137 based on the actual outcomes related to the prescribed performance targets and no further amounts are due.

 

As discussed in detail in Note 8, - Stock-Based Compensation, of the notes to condensed consolidated financial statements contained in the Annual Report an aggregate of 1,000,000 stock options and 500,000 RSUs were issued under the 2015 Stock Incentive Plan in connection with the August and October 2021 grants.

 

On June 23, 2022, the Compensation Committee of the Board of Directors approved the achievement of all of the remaining outstanding corporate goals resulting in the payment of the cash bonus awards and the vesting of the rights to the equity-based awards, which equity-based awards remain subject to time-based vesting in equal installments on each of August 3, 2022 and August 3, 2023 (with the exception of October 4, 2022 and October 4, 2023 for one award) and the continuous service of the award recipient through the applicable vesting date.

 

As of September 30, 2022, the Company has recognized compensation expense of $687,919 in relation to such stock options and $561,860 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards.

 

As of September 30, 2022, the Company has unrecognized compensation expense of $413,343 in relation to such stock options and $349,157 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards.

 

In September 2022 the Compensation Committee of the Board of Directors approved the granting of cash bonuses, payable upon achievement of various corporate goals focused around product development, manufacturing, financing and commercialization, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries.

 

Conditional upon the achievement by January 1, 2023 and July 1, 2023 of all specified corporate goals as set forth in the minutes of the Compensation Committee, 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 a cash bonus to such award recipient. As of September 30, 2022, the Company accrued compensation expense of $408,520 based on the actual outcomes related to the prescribed performance targets.

 

 
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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

Note 9 - Subsequent Events

 

Restricted Stock Units

 

Effective October 4, 2022, the Company granted aggregate RSUs of 1,144,000 shares of common stock under the Company’s 2015 Stock Incentive Plan to various employees in exchange for services provided to the Company. These RSUs vest upon the achievement of corporate goals focused around product development and commercialization with further time-based vesting over three years, with one-third vesting on each of October 4, 2023, October 4, 2024 and October 4, 2025, subject to continued service of the award recipient to the Company through the applicable vesting dates, and will result in total compensation expense of $1,670,240. On October 13, 2022, the Compensation Committee of the Board of Directors approved the satisfactory achievement of two of the  corporate goals, which will result in the vesting of the rights to 17.5% of the RSUs, or 200,200 RSUs, subject to the foregoing time-based vesting and conditioned upon the recipient’s continued service through the applicable vesting date.

 

Effective October 4, 2022, the Company granted aggregate RSUs of 450,000 shares of common stock under the Company’s 2015 Stock Incentive Plan to various employees in exchange for services provided to the Company. These RSUs vest upon the share price closing above $5.00 per share for a minimum of ten consecutive trading days within a period of three years from the date of grant, with further time-based vesting in a single installment six months after the timely achievement of the target, if at all, and subject to continued service. The estimated fair value of the RSUs that include a market vesting condition will be measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporating the probability of vesting occurring. The estimated fair value of these awards will be recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met.

 

On October 4, 2022, 19,905 RSUs vested and resulted in the issuance of 13,022 shares of common stock. An aggregate 6,883 shares of common stock were withheld as taxes and returned as authorized shares to the Company’s 2015 Stock Incentive Plan.

 

On November 1, 2022, 21,750 RSUs vested and resulted in the issuance of 12,344 shares of common stock. An aggregate 9,406 shares of common stock were wit