Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

May 13, 2024

 

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 March 31, 2024

 

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

 

For the transition period from              t            

 

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)

 

(Zip Code)

 

+1 (646) 650–1351

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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 May 6, 2024, there were 82,815,121 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 MONTHS ENDED MARCH 31, 2024

 

TABLE OF CONTENTS

 

 

 

 

PAGE

 

PART I

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

FINANCIAL STATEMENTS (UNAUDITED)

 

4

 

 

 

 

 

 

Item 2.

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

 

27

 

 

 

 

 

 

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

33

 

 

 

 

 

 

Item 4.

CONTROLS AND PROCEDURES

 

33

 

 

 

 

 

 

PART II

OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

LEGAL PROCEEDINGS

 

35

 

 

 

 

 

 

Item 1A.

RISK FACTORS

 

35

 

 

 

 

 

 

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

35

 

 

 

 

 

 

Item 3.

DEFAULTS UPON SENIOR SECURITIES

 

35

 

 

 

 

 

 

Item 4.

MINE SAFETY DISCLOSURES

 

35

 

 

 

 

 

 

Item 5.

OTHER INFORMATION

 

35

 

 

 

 

 

 

Item 6.

EXHIBITS

 

36

 

 

 

 

 

 

SIGNATURES

 

37

 

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,, Capture-PCRTM, 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 March 31, 2024, 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, statements regarding predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our development activities or business strategy; clinical studies and results; industry trends; anticipated demand for our products, or the products of our competitors; manufacturing forecasts, and the potential impact of our relationship with contract manufacturers and original equipment manufacturers on our business; the commercialization of our products and the relationships and anticipated outcome of our engagements with our licensors; the future cost and potential benefits of our research and development efforts; forecasts of our liquidity position or available cash resources; our anticipated use of our cash reserves; the impact of pending litigation; 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 expansion of our product development and sales and marketing capabilities could give rise to difficulties in managing our growth;

 

·

Our dependence on third-party distributors;

 

·

Our limited experience with sales and marketing;

 

·

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 diagnostics market;

 

·

Protection of our patents, intellectual property and trade secrets;

 

·

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

 

·

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

 

·

Pressures related to macroeconomic and geopolitical conditions; and

 

·

Other risks identified elsewhere in this Report, as well as in our other filings with the Securities and Exchange Commission (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, 2023, as filed with the SEC on March 25, 2024,  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’ Deficit

 

7

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

8

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

 

9

 

 

4

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Balance Sheets

 (Expressed in United States Dollars, except share numbers)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

$

 

 

$

 

ASSETS

 

(UNAUDITED)

 

 

 

 

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

 

11,772,163

 

 

 

20,729,983

 

Accounts receivable

 

 

133,500

 

 

 

242,617

 

Prepaid expenses

 

 

1,094,287

 

 

 

521,370

 

Other current assets

 

 

470,103

 

 

 

360,125

 

Total Current Assets

 

 

13,470,053

 

 

 

21,854,095

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

5,180,551

 

 

 

5,523,013

 

Operating lease right-of-use assets

 

 

569,163

 

 

 

549,504

 

Intangible assets, net

 

 

215,133

 

 

 

23,886

 

Total Assets

 

 

19,434,900

 

 

 

27,950,498

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

3,527,673

 

 

 

3,211,287

 

Accrued liabilities

 

 

3,305,316

 

 

 

3,928,761

 

Deferred revenue

 

 

23,000,000

 

 

 

23,000,000

 

Management and directors’ fees payable

 

 

60,246

 

 

 

59,625

 

Current portion of long-term debt

 

 

1,149,944

 

 

 

1,207,007

 

Current portion of finance lease liabilities

 

 

47,875

 

 

 

48,570

 

Current portion of operating lease liabilities

 

 

201,047

 

 

 

199,323

 

Current portion of grant repayable

 

 

54,700

 

 

 

55,855

 

Warrant liability

 

 

145,571

 

 

 

126,649

 

Total Current Liabilities

 

 

31,492,372

 

 

 

31,837,077

 

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

3,372,568

 

 

 

3,624,860

 

Finance lease liabilities, net of current portion

 

 

379,667

 

 

 

400,022

 

Operating lease liabilities, net of current portion

 

 

396,376

 

 

 

378,054

 

Grant repayable, net of current portion

 

 

413,968

 

 

 

422,707

 

Total Long-Term Liabilities

 

 

4,562,579

 

 

 

4,825,643

 

Total Liabilities

 

 

36,054,951

 

 

 

36,662,720

 

 

 

 

 

 

 

 

 

 

Stockholders' Deficit

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Issued and outstanding: 82,108,972 shares and 81,898,321 shares, respectively

 

 

82,109

 

 

 

81,898

 

Additional paid-in capital

 

 

194,997,353

 

 

 

194,448,414

 

Accumulated other comprehensive income

 

 

258,966

 

 

 

243,940

 

Accumulated deficit

 

 

(210,943,895 )

 

 

(202,576,507 )

Total VolitionRx Limited Stockholders' Deficit

 

 

(15,605,467 )

 

 

(7,802,255 )

Non-controlling interest

 

 

(1,014,584 )

 

 

(909,967 )

Total Stockholders’ Deficit

 

 

(16,620,051 )

 

 

(8,712,222 )

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

 

19,434,900

 

 

 

27,950,498

 

 

 

 

 

 

 

 

 

 

(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

March 31,

 

 

 

2024

 

 

2023

 

 

 

$

 

 

$

 

Revenues

 

 

 

 

 

 

Service

 

 

39,776

 

 

 

5,356

 

Product

 

 

131,759

 

 

 

144,452

 

Total Revenues

 

 

171,535

 

 

 

149,808

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Research and development

 

 

4,629,527

 

 

 

4,905,678

 

General and administrative

 

 

2,253,743

 

 

 

2,581,703

 

Sales and marketing

 

 

1,672,769

 

 

 

1,707,457

 

Total Operating Expenses

 

 

8,556,039

 

 

 

9,194,838

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

 

(8,384,504 )

 

 

(9,045,030 )

 

 

 

 

 

 

 

 

 

Other Income (Expenses)

 

 

 

 

 

 

 

 

Grant income

 

 

-

 

 

 

165,795

 

Interest income

 

 

8,654

 

 

 

57,648

 

Interest expense

 

 

(77,233 )

 

 

(51,322 )

Loss on change in fair value of warrant liability

 

 

(18,922 )

 

 

-

 

 

 

 

 

 

 

 

 

 

Total Other Income (Expenses)

 

 

(87,501 )

 

 

172,121

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(8,472,005 )

 

 

(8,872,909 )

Net Loss attributable to Non-Controlling Interest

 

 

104,617

 

 

 

93,361

 

Net Loss attributable to VolitionRx Stockholders

 

 

(8,367,388 )

 

 

(8,779,548 )

 

 

 

 

 

 

 

 

 

Other Comprehensive Income (Loss)

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

15,026

 

 

 

(56,478 )

 

 

 

 

 

 

 

 

 

Net Comprehensive Loss

 

 

(8,456,979 )

 

 

(8,929,387 )

 

 

 

 

 

 

 

 

 

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

 

 

(0.10 )

 

 

(0.15 )

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding – Basic and Diluted

 

 

81,956,660

 

 

 

60,176,975

 

 

 

 

 

 

 

 

 

 

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

 

6

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited)

(Expressed in United States Dollars, except share numbers)

 

For the Three Months Ended March 31, 2024 and March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Non -

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Controlling

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

 

#

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Balance, December 31, 2023

 

 

81,898,321

 

 

 

81,898

 

 

 

194,448,414

 

 

 

243,940

 

 

 

(202,576,507 )

 

 

(909,967 )

 

 

(8,712,222 )

Common stock issued for cash, net of issuance costs

 

 

13,350

 

 

 

13

 

 

 

15,721

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,734

 

Common stock issued for settlement of RSUs

 

 

68,169

 

 

 

69

 

 

 

(69 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common stock issued in lieu of license fee

 

 

129,132

 

 

 

129

 

 

 

125,129

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

125,258

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

411,220

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

411,220

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(3,062 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,062 )

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,026

 

 

 

-

 

 

 

-

 

 

 

15,026

 

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,367,388 )

 

 

(104,617 )

 

 

(8,472,005 )

Balance, March 31, 2024

 

 

82,108,972

 

 

 

82,109

 

 

 

194,997,353

 

 

 

258,966

 

 

 

(210,943,895 )

 

 

(1,014,584 )

 

 

(16,620,051 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Non -

 

 

 

 

 

 

 

Common Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Controlling

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Interest

 

 

Total

 

 

 

#

 

 

 

$

 

 

$

 

 

 

$

 

 

$

 

 

 

$

 

 

$

 

Balance, December 31, 2022

 

 

57,873,379

 

 

 

57,873

 

 

 

164,397,468

 

 

 

227,097

 

 

 

(167,257,429 )

 

 

(551,971 )

 

 

(3,126,962 )

Common stock issued for cash

 

 

5,224,703

 

 

 

5,225

 

 

 

8,422,430

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

8,427,655

 

Common stock issued for settlement of RSUs

 

 

26,978

 

 

 

27

 

 

 

(27 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Common stock repurchased

 

 

(13,294 )

 

 

(13 )

 

 

(31,759 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(31,772 )

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

693,657

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

693,657

 

Tax withholdings paid related to stock-based compensation

 

 

-

 

 

 

-

 

 

 

(14,336 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(14,336 )

Foreign currency translation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(56,478 )

 

 

-

 

 

 

-

 

 

 

(56,478 )

Net loss for the period

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,779,548 )

 

 

(93,361 )

 

 

(8,872,909 )

Balance, March 31, 2023

 

 

63,111,766

 

 

 

63,112

 

 

 

173,467,433

 

 

 

170,619

 

 

 

(176,036,977 )

 

 

(645,332 )

 

 

(2,981,145 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

7

Table of Contents

 

VOLITIONRX LIMITED

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Expressed in United States Dollars)

 

 

 

Three Months Ended

March 31,

 

 

 

2024

 

 

2023

 

 

 

 $

 

 

$

 

Operating Activities

 

 

 

 

 

 

Net loss

 

 

(8,472,005 )

 

 

(8,872,909 )

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

263,207

 

 

 

271,990

 

Amortization of operating lease right-of-use assets

 

 

58,866

 

 

 

62,585

 

Stock-based compensation

 

 

411,220

 

 

 

693,657

 

Loss on change in fair value of warrant liability

 

 

18,922

 

 

 

-

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(572,917 )

 

 

(253,447 )

Accounts receivable

 

 

106,325

 

 

 

(118,592 )

Other current assets

 

 

(109,978 )

 

 

(269,344 )

Accounts payable and accrued liabilities

 

 

11,755

 

 

 

(206,562 )

Management and directors’ fees payable

 

 

621

 

 

 

9,019

 

Right-of-use assets operating leases liabilities

 

 

(58,400 )

 

 

(61,141 )

Net Cash Used In Operating Activities

 

 

(8,342,384 )

 

 

(8,744,744 )

Investing Activities

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(28,809 )

 

 

(200,592 )

Purchase of License

 

 

(50,000 )

 

 

-

 

Net Cash Used In Investing Activities

 

 

(78,809 )

 

 

(200,592 )

Financing Activities

 

 

 

 

 

 

 

 

Net proceeds from issuances of common stock

 

 

15,733

 

 

 

8,427,655

 

Tax withholdings paid related to stock-based compensation

 

 

(3,062 )

 

 

(14,336 )

Common stock repurchased

 

 

-

 

 

 

(31,772 )

Payments on long-term debt

 

 

(210,183 )

 

 

(223,340 )

Payments on finance lease obligations

 

 

(11,886 )

 

 

(11,445 )

Net Cash (Used In) Provided By Financing Activities

 

 

(209,398 )

 

 

8,146,762

 

Effect of foreign exchange on cash

 

 

(327,229 )

 

 

(57,598 )

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(8,957,820 )

 

 

(856,172 )

Cash and cash equivalents – beginning of the period

 

 

20,729,983

 

 

 

10,867,050

 

Cash and cash equivalents – End of Period

 

 

11,772,163

 

 

 

10,010,878

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

 

 

 

 

Interest paid

 

 

77,233

 

 

 

51,322

 

Non-Cash Financing Activities

 

 

 

 

 

 

 

 

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

 

 

197

 

 

 

27

 

Offering costs from issuance of common stock

 

 

-

 

 

 

195,892

 

Common stock issued for License rights

 

 

125,258

 

 

 

-

 

Non-cash note payable

 

 

294,603

 

 

 

356,258

 

 

 

 

 

 

 

 

 

 

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

 

8

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 accompanying unaudited condensed consolidated financial statements of VolitionRx Limited (the “Company” or “VolitionRx”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2023 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 25, 2024 (the “Annual Report”). The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Annual Report. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

 

Reclassifications

 

Certain reclassifications within operating expenses have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations and cash flows in all periods presented.

 

Recently Issued Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. These amendments are to be applied retrospectively. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

 

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

 

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its 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 (continued)

 

 

Fair Value Measurements

 

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

 

Level 1

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

 

Level 2

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

 

Level 3

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

 

The financial instruments of the Company consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt, and a warrant liability. These items are considered Level 1 due to their short-term nature and their market interest rates, except for the warrant liability, which is considered Level 2 and is recorded at fair value at the end of each reporting period.

 

Included in the following table are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of March 31, 2024.

 

Fair Value Measurements at March 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Description

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

 

$

 

 

$

 

 

 $

 

 

$

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liability

 

 

-

 

 

 

145,571

 

 

 

-

 

 

 

145,571

 

 

As of December 31, 2023, the warrant liability was $126,649. The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis for the three months ended March 31, 2024, as follows:

 

Warrant Liability

 

 

 

 

Total

 

 

 

$

 

Balance at December 31, 2023

 

 

126,649

 

Loss on change in fair value of warrant liability

 

 

18,922

 

Balance at March 31, 2024

 

 

145,571

 

 

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)

 

 

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 March 31, 2024, 9,094,349 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.

 

11

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 2 – Liquidity and Going Concern Assessment 

 

The Company's condensed consolidated financial statements are prepared using GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Management assesses liquidity and going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period,” as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management considered various scenarios, forecasts, projections, estimates and made certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors.

 

For the three months ended March 31, 2024, the Company incurred a net loss of $8.5 million and used cash flows in operating activities of $8.3 million. As of March 31, 2024, the Company had cash and cash equivalents of $11.8 million and an accumulated deficit of $210.9 million.

 

The Company has generated operating losses and has experienced negative cash flows from operations since inception. The Company has not generated significant revenues and expects to incur further losses in the future, particularly from continued development of its clinical-stage diagnostic tests, and initiation of additional clinical trials to seek regulatory approval. The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain its operations. Management plans to address the above as needed by, (a) securing additional grant funds, (b) obtaining additional financing through debt or equity transactions; (c) granting licenses and/or distribution rights to third parties in exchange for specified up-front and/or back-end payments, and (d) developing and commercializing its products in an efficient manner. Management continues to exercise tight cost controls to conserve cash.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain profitable operations.

 

Management assessed the mitigating effect of its plans to determine if it is probable that the plans would be effectively implemented within one year after the condensed consolidated financial statements are issued and when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. These plans are subject to market conditions and reliance on third parties, and there is no assurance that effective implementation of the Company’s plans will result in the necessary funding to continue current operations and satisfy current and expected debt obligations. The Company has implemented short-term cash preservation and cost-saving initiatives to conserve cash. The Company concluded that these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern beyond one year from the date the condensed consolidated financial statements are issued.

 

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

12

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 March 31, 2024 and December 31, 2023:

 

 

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

Useful Life

 

Cost $

 

 

Cost $

 

Computer hardware and software

 

3 years

 

 

723,899

 

 

 

724,534

 

Laboratory equipment

 

5 years

 

 

4,695,842

 

 

 

4,753,253

 

Office furniture and equipment

 

5 years

 

 

375,815

 

 

 

378,800

 

Buildings

 

30 years

 

 

2,069,344

 

 

 

2,113,031

 

Building improvements

 

5-15 years

 

 

1,576,729

 

 

 

1,610,016

 

Land

 

Not amortized

 

 

129,729

 

 

 

132,468

 

Total property and equipment

 

 

 

 

9,571,358

 

 

 

9,712,102

 

Less accumulated depreciation

 

 

 

 

4,390,807

 

 

 

4,189,089

 

Total property and equipment net

 

 

 

 

5,180,551

 

 

 

5,523,013

 

 

During the three-month periods ended March 31, 2024 and March 31, 2023, the Company recognized $277,501 and $250,861, respectively, in depreciation expense.

 

13

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.

 

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

Cost $

 

 

Cost $

 

Patents

 

 

1,110,005

 

 

 

1,130,936

 

Licenses

 

 

176,220

 

 

 

-

 

Total Patents and Licenses

 

 

1,286,225

 

 

 

1,130,936

 

Less accumulated amortization

 

 

1,071,092

 

 

 

1,107,050

 

Total patents and Licenses, net

 

 

215,133

 

 

 

23,886

 

 

During the three-month periods ended March 31, 2024 and March 31, 2023, the Company recognized $(14,294) and $21,129, 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:

 

 

 

Amount

 

 

 

$

 

2024

 

 

12,887

 

2025

 

 

17,183

 

2026

 

 

17,183

 

2027

 

 

17,183

 

2028

 

 

17,183

 

Greater than 5 years

 

 

133,514

 

Total Intangible Assets

 

 

215,133

 

 

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, 2023. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2023.

 

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).

 

14

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 6 - Common Stock

 

As of March 31, 2024, the Company was authorized to issue 100 million shares of common stock, par value $0.001 per share, of which 82,108,972 and 81,898,321 shares were issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

Stock Option Exercises

 

During the three months ended March 31, 2024, no shares of common stock were issued pursuant to the exercise of stock options.

 

Stock Options Expired / Cancelled

 

During the three months ended March 31, 2024, no stock options to purchase shares of common stock expired or were cancelled.

 

RSU Settlements

 

Below is a table summarizing the RSUs vested and settled during the three months ended March 31, 2024, all of which were issued pursuant to the 2015 Plan.

 

Equity Incentive Plan

 

RSUs Vested (#)

 

 

Vest Date

 

Shares issued (#)

 

 

Shares Withheld for Taxes (#)

 

2015

 

 

21,582

 

 

 Feb 8, 2024

 

 

21,582

 

 

 

-

 

2015

 

 

9,000

 

 

 Mar 1, 2024

 

 

6,057

 

 

 

2,943

 

2015

 

 

44,217

 

 

 Mar 27, 2024

 

 

40,530

 

 

 

3,687

 

 

 

 

74,799

 

 

 

 

 

68,169

 

 

 

6,630

 

 

Warrants Issued in Equity Capital Raise

 

In connection with the June 2023 underwritten public offering of the Company’s common stock pursuant to the underwriting agreement with Prime Executions, Inc. dba Freedom Capital Markets (“Freedom”) dated June 1, 2023, the Company issued Freedom warrants to purchase an aggregate of 448,500 shares of Company common stock at an exercise price of $2.00 per share. The Company evaluated the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480 and ASC 815-40. The Company determined the warrants issued to Freedom failed the indexation guidance under ASC 815-40, specifically, the warrants provide for a Black-Scholes value calculation in the event of certain transactions (“Fundamental Transactions”), which includes a floor on volatility utilized in the value calculation at 100% or greater. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815-40, the Company has classified the fair value of the warrants as a liability upon issuance and marked to market each reporting period in the Company’s consolidated statement of operations until their exercise or expiration.

 

15

Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 6 - Common Stock (continued)

 

 

Warrants Issued in Equity Capital Raise (continued)

 

The fair value of the warrants as of December 31, 2023, and March 31, 2024, were $126,649 and $145,571, respectively. The warrant liability was estimated using the Black-Scholes pricing model with the following assumptions.

 

 

 

March 31,

2024

 

 

December 31,

2023

 

 

 

 

 

 

 

 

Risk-free interest rate

 

 

4.3 %

 

 

3.89 %

Expected volatility

 

 

81.35 %

 

 

76.30 %

Expected life (years)

 

 

4.19

 

 

 

4.44

 

Expected dividend yield

 

 

-

 

 

 

-

 

Total fair value

 

$ 145,571

 

 

$ 126,649

 

 

The fair value of the warrants deemed to be a liability, due to certain contingent put features, was determined using the Black-Scholes option pricing model, which was deemed to be an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price.

 

Common Stock Issued for EpiCypher License Agreement

 

On March 12, 2024, the Company issued 129,132 shares of restricted common stock to EpiCypher, Inc. at a price of $0.97 per share  as partial consideration for license rights in connection with a License Agreement between EpiCypher and Belgian Volition.

 

Equity Distribution Agreement

 

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, with an aggregate offering price of up to $25.0 million, from time to time through an “at the market” offering pursuant to the Company’s 2021 Form S-3 through Jefferies acting as the Company’s agent and/or principal. The Company is not obligated to sell any shares under the 2022 EDA. 

 

During the three months ended March 31, 2024, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $15,733 under the 2022 EDA through the sale of 13,350 shares of its common stock. As of March 31, 2024, the Company has raised aggregate net proceeds (net of broker commissions and fees) of approximately $1.5 million under the 2022 EDA through the sale of 643,882 shares of its common stock.

 

See Note 9, Subsequent Events, for additional details regarding sales under the 2022 EDA subsequent to March 31, 2024.

 

16

Table of Contents

 

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 three-month period ended March 31, 2024.

 

 

 

Number of Warrants

 

 

Weighted Average Exercise Price ($)

 

Outstanding at December 31, 2023

 

 

862,500

 

 

 

3.05

 

Granted

 

 

-

 

 

 

-

 

Expired/Cancelled

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

862,500

 

 

 

3.05

 

 

 

 

 

 

 

 

 

 

Exercisable at March 31, 2024

 

 

835,500

 

 

 

3.05

 

 

Below is a table summarizing the warrants issued and outstanding as of March 31, 2024, which have an aggregate weighted average remaining contractual life of 3.58 years.

 

 

Number Outstanding

 

 

 

Number Exercisable

 

 

 

Exercise Price ($)

 

 

Weighted Average Remaining

Contractual Life (Years)

 

 

Proceeds to Company

if Exercised ($)

 

448,500

 

 

 

448,500

 

 

 

2.00

 

 

 

4.21

 

 

 

897,000

 

54,000

 

 

 

27,000

 

 

 

3.05

 

 

 

4.51

 

 

 

164,700

 

50,000

 

 

 

50,000

 

 

 

3.45

 

 

 

1.92

 

 

 

172,500

 

125,000

 

 

 

125,000

 

 

 

3.95

 

 

 

2.76

 

 

 

493,750

 

185,000

 

 

 

185,000

 

 

 

4.90

 

 

 

2.84

 

 

 

906,500

 

862,500

 

 

 

835,500

 

 

 

 

 

 

 

 

 

 

 

2,634,450

 

 

Stock-based compensation expense related to warrants of $5,071 and $14,920 was recorded in the three months ended March 31, 2024 and March 31, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is $167 and is expected to be recognized over a period of 0.01 years. As of March 31, 2024, the total intrinsic value of warrants outstanding was $nil.

 

b) Options

 

The following table summarizes the changes in options outstanding of the Company during the three-month period ended March 31, 2024.

 

 

 

Number of  Options

 

 

Weighted Average Exercise Price ($)

 

Outstanding at December 31, 2023

 

 

4,699,569

 

 

 

3.87

 

Expired/Cancelled

 

 

-

 

 

 

-

 

Outstanding at March 31, 2024

 

 

4,699,569

 

 

 

3.87

 

 

 

 

 

 

 

 

 

 

Exercisable at March 31, 2024

 

 

4,699,569

 

 

 

3.87

 

 

17

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)

 

 

Below is a table summarizing the options issued and outstanding as of March 31, 2024, all of which were issued pursuant to the Company’s 2011 Plan (for option issuances prior to 2016) or the 2015 Plan (for option and RSU issuances commencing in 2016)and which have an aggregate weighted average remaining contractual life of 3.98 years. As of March 31, 2024, an aggregate of 9,700,000 shares of common stock were authorized for issuance under the 2015 Plan, of which 642,693 shares of common stock remained available for future issuance thereunder.

 

Number Outstanding

 

 

Number Exercisable

 

 

Exercise Price ($)

 

 

Weighted Average Remaining

Contractual Life (Years)

 

 

Proceeds to Company

if Exercised ($)

 

585,000

 

 

 

585,000

 

 

 

3.25

 

 

 

0.87

 

 

 

1,901,250

 

981,569

 

 

 

981,569

 

 

 

3.40

 

 

 

7.35

 

 

 

3,337,335

 

740,000

 

 

 

740,000

 

 

 

3.60

 

 

 

6.11

 

 

 

2,664,000

 

1,607,837

 

 

 

1,607,837

 

 

 

4.00

 

 

 

2.49

 

 

 

6,431,348

 

89,163

 

 

 

89,163

 

 

 

4.38

 

 

 

3.82

 

 

 

390,534

 

50,000

 

 

 

50,000

 

 

 

4.80

 

 

 

2.76

 

 

 

240,000

 

646,000

 

 

 

646,000

 

 

 

5.00

 

 

 

2.99

 

 

 

3,230,000

 

4,699,569

 

 

 

4,699,569

 

 

 

 

 

 

 

 

 

 

 

18,194,467

 

 

Stock-based compensation expense related to stock options of $0 and $117,034 was recorded in the three months ended March 31, 2024 and March 31, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is nil. As of March 31, 2024, 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 March 31, 2024, all of which were issued pursuant to the 2015 Plan.

 

 

 

Number of RSUs

 

 

Weighted Average Grant Date

Fair Value

Share Price ($)

 

Outstanding at December 31, 2023

 

 

3,634,952

 

 

 

1.01

 

Granted

 

 

14,000

 

 

 

0.97

 

Vested/Settled

 

 

(74,799 )

 

 

1.74

 

Cancelled / Forfeited

 

 

(41,873 )

 

 

1.05

 

Outstanding at March 31, 2024

 

 

3,532,280

 

 

 

0.99

 

 

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)

 

c) Restricted Stock Units (continued)

 

 

Below is a table summarizing the RSUs granted during the three months ended March 31, 2024, all of which were issued pursuant to the 2015 Stock Incentive Plan. The RSUs vest equally over periods stated on the dates noted, subject to continued service, and will result in the RSU compensation expense stated.

 

Equity  Incentive  Plan

 

RSUs (#)

 

 

Grant Date

 

Vesting Period

 

First

Vesting Date

 

Second

Vesting Date

 

Third

Vesting Date

 

RSU Expense ($)

 

2015

 

 

14,000

 

 

 Feb 22, 2024

 

36 Months

 

 Feb 22, 2025

 

 Feb 22, 2026

 

 Feb 22, 2027

 

 

13,589

 

 

 

 

14,000

 

 

 

 

 

 

 

 

 

 

 

 

 

13,589

 

 

Below is a table summarizing the RSUs vested and settled during the three months ended March 31, 2024, all of which were issued pursuant to the 2015 Plan.

 

Equity Incentive Plan

 

RSUs Vested (#)

 

 

Vest Date

 

Shares issued (#)

 

 

Shares Withheld for Taxes (#)

 

2015

 

 

21,582

 

 

 Feb 8, 2024

 

 

21,582

 

 

 

-

 

2015

 

 

9,000

 

 

 Mar 1, 2024

 

 

6,057

 

 

 

2,943

 

2015

 

 

44,217

 

 

 Mar 27, 2024

 

 

40,530

 

 

 

3,687

 

 

 

 

74,799

 

 

 

 

 

68,169

 

 

 

6,630

 

 

Below is a table summarizing the RSUs cancelled during the three months ended March 31, 2024, all of which were originally issued pursuant to the 2015 Plan.

 

Equity Incentive Plan

 

RSUs (#)

 

 

Cancellation Date

 

Vest Date

 

RSUs Cancelled (#)

 

2015

 

 

8,000

 

 

 Jan 16, 2024

 

 Sep 28, 2024

 

 

8,000

 

2015

 

 

6,000

 

 

 Jan 16, 2024

 

 Oct 4, 2024

 

 

6,000

 

2015

 

 

8,000

 

 

 Jan 16, 2024

 

 Sep 28, 2025

 

 

8,000

 

2015

 

 

6,000

 

 

 Jan 16, 2024

 

 Oct 4, 2025

 

 

6,000

 

2015

 

 

8,000

 

 

 Jan 16, 2024

 

 Sep 28, 2026

 

 

8,000

 

2015

 

 

667

 

 

 Feb 9, 2024

 

 Jun 15, 2024

 

 

667

 

2015

 

 

667

 

 

 Feb 9, 2024

 

 Jun 15, 2025

 

 

667

 

2015

 

 

666

 

 

 Feb 9, 2024

 

 Jun 15, 2026

 

 

666

 

2015

 

 

1,775

 

 

 Mar 25, 2024

 

 Mar 27, 2024

 

 

1,775

 

2015

 

 

2,098

 

 

 Mar 25, 2024

 

 Jun 15, 2024

 

 

2,098

 

 

 

 

41,873

 

 

 

 

 

 

 

41,873

 

 

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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 (continued)

 

 

Below is a table summarizing the RSUs issued and outstanding as of March 31, 2024 and which have an aggregate weighted average remaining contractual life of 1.59 years.

 

Number Outstanding

 

 

Weighted Average Grant Date Fair Value Share Price ($)

 

 

Weighted Average Remaining Contractual Life (Years)

 

40,000

 

 

 

0.58

 

 

 

1.62

 

450,000

 

 

 

0.68

 

 

 

3.05

 

450,000

 

 

 

0.69

 

 

 

2.01

 

1,545,000

 

 

 

0.70

 

 

 

1.50

 

14,000

 

 

 

0.97

 

 

 

1.90

 

34,000

 

 

 

1.31

 

 

 

1.45

 

14,000

 

 

 

1.32

 

 

 

1.28

 

707,987

 

 

 

1.46

 

 

 

1.01

 

32,294

 

 

 

1.58

 

 

 

0.96

 

12,500

 

 

 

1.69

 

 

 

0.48

 

56,333

 

 

 

1.72

 

 

 

1.42

 

29,000

 

 

 

2.01

 

 

 

0.38

 

666

 

 

 

2.15

 

 

 

1.17

 

11,500

 

 

 

2.45

 

 

 

0.17

 

85,000

 

 

 

2.95

 

 

 

0.26

 

50,000

 

 

 

3.31

 

 

 

0.08

 

3,532,280

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense related to RSUs of $406,149 and $561,703 was recorded in the three months ended March 31, 2024 and March 31, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $1,489,205.

 

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies

 

a) Finance Lease Obligations

 

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 March 31, 2024.

 

For the Three Months Ending March 31, 2024

 

Amount

 

 

 

$

 

2024 - remaining

 

 

43,610

 

2025

 

 

58,147

 

2026

 

 

58,148

 

2027

 

 

58,148

 

2028

 

 

58,147

 

Greater than 5 years

 

 

196,233

 

Total

 

 

472,433

 

Less: Amount representing interest

 

 

(44,891 )

Present value of minimum lease payments

 

 

427,542

 

 

 

b) Operating Lease Right-of-Use Obligations

 

Operating leases as of March 31, 2024, and December 31, 2023, consisted of the following:

 

 

 

 March 31,

2024

 

 

 December 31,

2023

 

 

 

$

 

 

$

 

Operating right-of-use assets

 

 

569,163

 

 

 

549,504

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities, current portion

 

 

201,047

 

 

 

199,323

 

Operating lease liabilities, long term

 

 

396,376

 

 

 

378,054

 

Total operating lease liabilities

 

 

597,423

 

 

 

577,377

 

 

 

 

 

 

 

 

 

 

Weighted average remaining lease (months)

 

 

36

 

 

 

33

 

Weighted average discount rate

 

 

3.26 %

 

 

3.02

 

 

During the three months ended March 31, 2024, cash paid for amounts included for the measurement of lease liabilities was $65,166 and the Company recorded operating lease expense of $65,660.

 

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VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies

 

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 March 31, 2024.

 

For the Three Months Ending March 31, 2024

 

Amount

 

 

 

$

 

2024 - Remaining

 

 

177,094

 

2025

 

 

192,151

 

2026

 

 

165,104

 

2027

 

 

92,786

 

2028

 

 

10,295

 

Total

 

 

637,430

 

Less: imputed interest

 

 

(40,007 )

Total Operating Lease Liabilities

 

 

597,423

 

 

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 three months ended March 31, 2024, the Company recognized $29,961 in short-term lease costs associated with office space leases. The annual payments remaining for short-term office leases were as follows:

 

For the Three Months Ending March 31, 2024

 

Amount

 

 

 

$

 

2024 - Remaining

 

 

78,085

 

2025

 

 

7,186

 

Total Operating Lease Liabilities

 

 

85,271

 

 

c) Grants Repayable

 

As of March 31, 2024, the total grant balance repayable was $468,668 and the payments remaining were as follows:

 

For the Three Months Ending March 31, 2024

 

Amount

 

 

 

$

 

2024 - Remaining

 

 

54,700

 

2025

 

 

36,661

 

2026

 

 

44,187

 

2027

 

 

49,056

 

2028

 

 

52,461

 

Greater than 5 years

 

 

231,603

 

Total Grants Repayable

 

 

468,668

 

 

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Table of Contents

 

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

 

As of March 31, 2024, the total balance for long-term debt payable was $4,522,512 and the payments remaining were as follows:

 

For the Three Months Ending March 31, 2024

 

Amount

 

 

 

$

 

2024 - Remaining

 

 

1,212,648

 

2025

 

 

903,830

 

2026

 

 

678,239

 

2027

 

 

443,116

 

2028

 

 

1,879,108

 

Greater than 5 years

 

 

317,107

 

Total

 

 

5,434,048

 

Less: amount representing interest

 

 

(911,536 )

Total Long-Term Debt

 

 

4,522,512

 

 

e) Collaborative Agreement Obligations

 

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a three-year research period for a cost to the Company of up to $2.55 million payable over such period. As of March 31, 2024, $510,000 is still to be paid by the Company under this agreement.

 

In 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 $449,406 which is still to be paid by the Company under this agreement. As of March 31, 2024, $449,406 is due by the Company under this agreement.

 

In August 2023, the Company entered into a project research agreement with Guy’s and St Thomas’ NHS Foundation Trust to evaluate the practical clinical utility of the NuQ® H3.1 nucleosome levels in adult patients with sepsis to facilitate early diagnosis and prognostication for a cost to the Company of $163,966. As of March 31, 2024, $40,992 is still to be paid by the Company under this agreement. As of March 31, 2024, $40,992 is due by the Company under this agreement.

 

In July 2023, the Company entered into a research agreement with Xenetic Biosciences Inc and CLS Therapeutics Ltd to evaluate the anti-tumoral effects of Nu.Q® CAR T cells for a cost to the Company of $107,589. As of March 31, 2024, $81,447 is still to be paid by the Company under this agreement and as of March 31, 2024, $26,142 is due by the Company under this agreement.

 

In January 2024, the Company entered into an agreement with the University Medical Centre Amsterdam (“UMC”). UMC will perform a retrospective study to evaluate the diagnostic potential of H3.1 nucleosomes as diagnostic, prognostic and phenotyping biomarkers in sepsis for a cost to the Company of $139,965. As of March 31, 2024, $139,965 is still to be paid by the Company under this agreement. As of March 31, 2024, $139,965 is due by the Company under this agreement. The project is expected to be completed by the end of 2024.

 

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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 March 31, 2024, the total amount to be paid for future research and collaboration commitments was approximately $1,344,784 and the payments remaining were as follows:

 

 

 

Total Amount Remaining

 

 

2024 -

Remaining

 

 

2025

 

 

 

$

 

 

 $

 

 

$

 

National Universty of Taiwan

 

 

510,000

 

 

 

510,000

 

 

 

-

 

MD Anderson Cancer Center

 

 

449,406

 

 

 

285,860

 

 

 

163,546

 

Guys and St Thomas

 

 

163,966

 

 

 

163,966

 

 

 

-

 

Xentic Bioscience

 

 

81,447

 

 

 

81,447

 

 

 

-

 

UMC

 

 

139,965

 

 

 

139,965

 

 

 

-

 

Total Collaborative Obligations 

 

 

1,344,784

 

 

 

1,181,238

 

 

 

163,546

 

 

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 March 31, 2024, TAMU has a 12.5% equity interest in Volition Vet.

 

Volition Germany

 

As of March 31, 2024, $211 is payable under the royalty agreement with the founder of Volition Germany based on sales to date towards the Company’s aggregate minimum royalty obligation of $118,918.

 

Volition America

 

Effective February 10, 2024 the Company and Diagnostic Oncology CRO, LLC (“DXOCRO”) further amended and restated August 2022 amended and restated Master Agreement to expand the scope of DXOCRO’s consultant services provided thereunder (the “Second A&R Master Agreement”). The Second A&R Master Agreement requires DXOCRO to conduct a prospective optimization/range finding study of Volition’s Nu.Q®  H3.1 in vitro diagnostic test proposed for use in sepsis. The study is an extension of the sepsis monitoring clinical trial that was previously covered under a separate exhibit. The Company anticipates DXOCRO’s additional services under this Agreement will be completed by the end of the third quarter of 2024 at a total additional cost to the Company of up to $0.7 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 Second A&R Master Agreement terminates on the later of December 31, 2025 or the date upon which all services have been completed. As of March 31, 2024, $130,883 is payable under the Second A&R Master Agreement, and up to $696,920 may be payable by the Company in future periods for services rendered.

 

VolitionRx

 

On February 5, 2024, the Company entered into a 9-month loan agreement with First Insurance Funding for a maximum of $294,603 with fixed interest rate of 8.42%, maturing in November 2024. As of March 31, 2024, the maximum has been drawn down under this agreement and the principal balance payable was $261,869. The agreement is in relation to the directors and officers insurance policy.

 

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Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 8 – Commitments and Contingencies (continued)

 

 

g) Legal Proceedings

 

In the ordinary course of business, the Company may be subject to claims, counter-claims, lawsuits and other litigation of the type that generally arise from the conduct of its business. The Company knows of 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

 

As of March 31, 2024, the Company has recognized total compensation expense of $1,184,860 of which $527,940 is in relation to RSUs from grants in 2022 that will vest in 2023, $388,561 is in relation to RSUs from such grants that will vest in 2024, and $268,359 is in relation to RSUs from such grants that will vest in 2025. The Company has unrecognized compensation expense of $392,093 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards.

 

Total

 

 

 

Amortized

 

 

Amortized

 

 

Amortized

 

 

 

Award

 

 

Vesting

 

2024

 

 

2023

 

 

2022

 

 

Un-Amortized

 

$

 

 

 Year

 

$

 

 

 $

 

 

 $

 

 

$

 

527,940

 

 

2023

 

 

-

 

 

 

393,853

 

 

 

134,087

 

 

 

-

 

455,003

 

 

2024

 

 

63,355

 

 

 

260,119

 

 

 

65,088

 

 

 

129,796

 

486,567

 

 

2025

 

 

44,090

 

 

 

177,584

 

 

 

46,686

 

 

 

262,297

 

1,469,510

 

 

 

 

 

107,445

 

 

 

831,556

 

 

 

245,861

 

 

 

392,093

 

 

In September 2023, the Compensation Committee of the Board of Directors approved the granting of cash bonuses, payable upon achievement of various corporate goals focused around revenue, operations and regulatory, 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, 2023 and June 30, 2024 of specified corporate goals as set forth in the minutes of the Compensation Committee, as well as continued service by the award recipients, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer would pay a cash bonus to such award recipients. As of March 31, 2024, the Company has accrued compensation expense of $536,535 in relation to the cash bonuses to be paid upon achievement of the specified corporate goals based on the expected outcomes related to the prescribed performance targets.

 

As of March 31, 2024, the Company had recognized total compensation expense of $335,437. The Company has unrecognized compensation expense of $746,063 in relation to the RSUs from grants in 2023, of which $177,800 is in relation to RSUs that will vest in 2024, $268,899 in relation to RSUs that will vest in 2025, and $299,364 in relation to RSUs that will vest in 2026 based on the outcomes related to the prescribed performance targets on the outstanding awards.

 

Total

 

 

 

Amortized

 

 

Amortized

 

 

Un-Amortized

 

Award

 

 

Vesting

 

2024

 

 

2023

 

 

2024

 

$

 

 

 Year

 

$

 

 

$  

 

 

$

 

272,570

 

 

2024

 

 

87,942

 

 

 

94,770

 

 

 

177,800

 

316,412

 

 

2025

 

 

44,090

 

 

 

47,513

 

 

 

268,899

 

331,067

 

 

2026

 

 

29,419

 

 

 

31,703

 

 

 

299,364

 

920,049

 

 

 

 

 

161,451

 

 

 

173,986

 

 

 

746,063

 

 

 

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Table of Contents

 

VOLITIONRX LIMITED

Notes to the Condensed Consolidated Financial Statements (Unaudited)

($ expressed in United States Dollars)

 

Note 9 – Subsequent Events

 

Cancellation of Stock Options

 

On April 16 2024, 36,821 vested stock options previously granted to an employee were cancelled and returned as authorized shares under the 2015 Plan on the expiration of the exercise period following the resignation of such employee.

 

Settlement of RSUs

 

On April 4, 2024, 51,000 RSUs previously granted to various employees vested and resulted in the issuance of 32,337 shares of common stock. 18,663 shares of common stock were withheld for taxes and returned to the 2015 Plan.

 

On May 1, 2024, 50,000 RSUs previously granted to an employee vested and resulted in the issuance of 34,496 shares of common stock. 15,504 shares of common stock were withheld for taxes and returned to the 2015 Plan.

 

Sales Pursuant to Equity Distribution Agreement

 

During the period from April 1, 2024 through May 6, 2024, the Company sold and settled 639,316 shares of common stock for aggregate net proceeds (net of broker commissions and fees) of approximately $515,775 under the 2022 EDA.

 

END NOTES TO FINANCIALS

 

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Table of Contents

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion and analysis of our financial condition and results of operations should be read together with our Unaudited Condensed Consolidated Financial Statements and the related notes included elsewhere in this Report and in our Annual Report. This discussion and analysis contains forward-looking statements that are based on our current expectations and reflect our plans, estimates and anticipated future financial performance. These statements involve numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those set forth in the section entitled “Risk Factors” in this Report and in our Annual Report, as well as our other public filings with the SEC. Please refer to the section of this Report entitled “Cautionary Note Regarding Forward-Looking Statements” for additional information.

 

Overview

 

Volition is a multi-national epigenetics company. It has patented technologies that use chromosomal structures, such as nucleosomes, and transcription factors as biomarkers in cancer and other diseases. The tests in the Company’s product portfolio detect certain characteristic changes that occur from the earliest stages of disease, enabling early detection and offering a better way to monitor disease progression and a patient’s response to treatment.

 

The tests offered by Volition and its subsidiaries are designed to diagnose and monitor a range of life-altering diseases, including certain cancers and diseases associated with NETosis, such as sepsis and COVID-19. Early diagnosis and monitoring have the potential to not only prolong the life of patients but also improve their quality of life.

 

Our key pillars of focus are:

 

 

·

Nu.Q® Vet - cost-effective, easy-to-use blood tests for dogs and other companion animals. The Nu.Q® Vet Cancer Test is commercially available as a cancer screening test in dogs.

 

·

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

 

·

Nu.Q® Discover - a complete solution to profiling nucleosomes.

 

·

Nu.Q® Cancer - monitoring disease progression, response to treatment and Minimal Residual Disease.

 

·

Capture-PCRTM - isolating and capturing circulating tumor derived DNA from plasma samples for early cancer detection.

 

Commercialization Strategy

 

We are guided by three underlying principles to our commercialization strategy – ensuring our products:

 

 

·

Result in low capital expenditures for licensors and end users and low operating expenses for Volition,

 

·

Are affordable, and

 

·

Are accessible worldwide.

 

The principles above inform our overall commercialization strategy for our products, which is driven by the following:

 

 

·

Conducting R&D in-house and through our research partners;

 

·

Monetizing our IP with upfront payments, milestone payments, royalties, and sales of kits and key components; and

 

·

Commercializing our products via global players and in fragmented markets through regional companies.

 

We aim to partner with established diagnostic companies to market, sell, and process our tests, leveraging their networks and expertise.

 

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

 

We aim to remain an IP powerhouse in the epigenetic space and expect to monetize our IP and technologies through licensing and distribution contracts with companies that have established distribution networks and expertise on a worldwide or regional basis, in both human and animal care across platforms (centralized labs and point-of-care / in-house diagnostics).

 

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Table of Contents

 

To this end, on March 28, 2022, Volition entered into a master license and product supply agreement with Heska Corporation (“Heska”). In exchange for granting Heska exclusive worldwide rights to sell our Nu.Q® Vet Cancer Test at the point of care for companion animals, Volition received a $10.0 million upfront payment upon signing, received $13.0 million based upon the achievement of two milestones and is eligible to receive up to an additional $5.0 million based upon the achievement of a final milestone upon the earlier of the first commercial sale by or on behalf of Heska of a screening or monitoring test for lymphoma in felines, or the nine-month anniversary of the first peer reviewed paper evidencing clinical utility for the screening or monitoring of lymphoma in felines being published in any one of a number of periodicals identified by the parties. In addition, Volition has granted Heska non-exclusive rights to sell the Nu.Q® Vet Cancer Test in kit format for companion animals through Heska’s network of central reference laboratories. In June 2023 Heska was acquired by Mars Petcare and became part of it’s Antech Diagnostics division. In April 2024, Antech announced the launch of the in-clinic version of the Nu.Q® Canine Cancer test in the US and Europe. 

 

We also entered into a licensing and supply agreement with IDEXX Laboratories, Inc. (“IDEXX”), a global leader in pet healthcare innovation in October 2022. This contract provides worldwide customer reach through IDEXX’s global reference laboratory network as we continue to commercialize our transformational Nu.Q® technology within the companion animal healthcare sector and capitalize on the significant opportunities available. IDEXX launched the IDEXX Nu.Q® Canine Cancer Test in January 2023.

 

In November 2023, we launched the Nu.Q® Vet Cancer Test in the UK and Ireland through our distributor, the Veterinary Pathology Group, and in the UK through Nationwide Laboratories. In March 2024, Fujifilm Vet Systems announced the launch of the Nu.Q® Vet Cancer Test in Japan.

 

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Table of Contents

 

Liquidity and Capital Resources

 

We have financed our operations since inception primarily through private placements and public offerings of our common stock. As of March 31, 2024, we had cash and cash equivalents of approximately $11.8 million.

 

Net cash used in operating activities was $8.3 million for the three months ended March 31, 2024 and $8.7 million for the three months ended March 31, 2023, respectively. The decrease in cash used in operating activities for the period ended March 31, 2024 when compared to the same period in 2023 can be attributed to less expenditure on clinical trials.

 

Net cash used in investing activities was $0.1 million and $0.2 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The decrease was due to a reduction in purchases of laboratory equipment.

 

Net cash used in financing activities was $0.2 million for the three months ended March 31, 2024 and net cash provided by financing activities was $8.1 million for the comparable period ended March 31, 2023. The decrease in cash provided by financing activities for the period ended March 31, 2024 when compared to same period in 2023 was primarily due to $8.0 million in net cash received from the issuance of shares of common stock in a registered public offering in February 2023 and $0.7 million in net cash received from the issuance of shares of common stock under our “at-the-market” facility during the period ended March 31, 2023.

 

For additional information on our “at the market facility,” refer to Note 6, Common Stock – Equity Distribution Agreement, of the notes to the condensed consolidated financial statements included within this Report.

 

The following table summarizes our approximate contractual payments due by year as of March 31, 2024.

 

Approximate Payments (Including Interest) Due by Year

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

2024 -

Remaining

 

 

2025 - 2028

 

2029 +

 

Description

 

 $

 

 

 $

 

 

 $

 

 

 $

 

Financing lease liabilities

 

 

472,433

 

 

 

43,610

 

 

 

232,590

 

 

 

196,233

 

Operating lease liabilities and short-term lease

 

 

722,701

 

 

 

255,179

 

 

 

467,522

 

 

 

-

 

Grants repayable

 

 

468,668

 

 

 

54,700

 

 

 

182,365

 

 

 

231,603

 

Long-term debt

 

 

5,434,048

 

 

 

1,212,648

 

 

 

3,904,293

 

 

 

317,107

 

Collaborative agreements obligations 

 

 

1,344,784

 

 

 

1,181,238

 

 

 

163,546

 

 

 

-

 

Total

 

 

8,442,634

 

 

 

2,747,375

 

 

 

4,950,316

 

 

 

744,943

 

 

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

 

In the event additional financing is delayed, we will prioritize the completion of clinical validation studies for the purpose of the sale of licensing or distribution rights, and the maintenance of our patent rights. In the event of an ongoing lack of financing, it may be necessary to discontinue operations, which will adversely affect the value of our common stock.

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors included in their report on our audited financial statements for the year ended December 31, 2023, an explanatory paragraph regarding factors that raise substantial doubt that we will be able to continue as a going concern.

 

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Results of Operations

 

Comparison of the Three-Months Ended March 31, 2024 and March 31, 2023

 

The following table sets forth our results of operations for the three months ended on March 31, 2024, and March 31, 2023, respectively.

 

 

 

Three Months Ended

March 31,

 

 

Increase

 

 

Increase

 

 

 

2024

 

 

2023

 

 

(Decrease)

 

 

(Decrease)

 

 

 

$

 

 

 $

 

 

$

 

 

 %

 

Service

 

 

39,776

 

 

 

5,356

 

 

 

34,420

 

 

>100 %

Product

 

 

131,759

 

 

 

144,452

 

 

 

(12,693 )

 

(9

%)

Total Revenues

 

 

171,535

 

 

 

149,808

 

 

 

21,727

 

 

 

15 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

4,629,527

 

 

 

4,905,678

 

 

 

(276,151 )

 

(6

%)

General and administrative

 

 

2,253,743

 

 

 

2,581,703

 

 

 

(327,960 )

 

(13

%)

Sales and marketing

 

 

1,672,769

 

 

 

1,707,457

 

 

 

(34,688 )

 

(2

%)

Total Operating Expenses

 

 

8,556,039

 

 

 

9,194,838

 

 

 

(638,799 )

 

(7

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant income

 

 

-

 

 

 

165,795

 

 

 

(165,795 )

 

(100

%)

Interest income

 

 

8,654

 

 

 

57,648

 

 

 

(48,994 )

 

(85

%)

Interest expense

 

 

(77,233 )

 

 

(51,322 )

 

 

(25,911 )

 

 

50 %

Loss on change in fair value of warrant liability

 

 

(18,922 )

 

 

-

 

 

 

(18,922 )

 

>100 %

Total Other Income

 

 

(87,501 )

 

 

172,121

 

 

 

(259,622 )

 

>(100

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

(8,472,005 )

 

 

(8,872,909 )

 

 

(400,904 )

 

(5

%)

 

Revenues

 

Our operations are transitioning from a research and development focused stage to a commercialization stage. Revenues during the three-months ended March 31, 2024 were $171,535, compared with $149,808 for the three-months ended March 31, 2023. Our main source of revenue during the three months ended March 31, 2024 and March 31, 2023 was product revenues from sales of the Nu.Q® Vet Cancer Test.

 

Operating Expenses

 

Total operating expenses decreased to $8.6 million for the three months ended March 31, 2024 from $9.2 million for the three months ended March 31, 2023, as a result of the factors described below.

 

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Table of Contents

 

Research and Development Expenses

 

Research and development expenses decreased to $4.6 million from $4.9 million for the three-months ended March 31, 2024, and March 31, 2023, respectively. This decrease was primarily related to decreased direct research and development expenses as a result of reduced clinical trials with DXOCRO, partially offset by higher personnel expenses. The number of full-time equivalent (“FTE”) personnel we employed in this division decreased by 2 to 66 compared to the prior year period.

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

$

 

 

 $

 

 

$

 

Personnel expenses

 

 

2,213,209

 

 

 

2,044,133

 

 

 

169,076

 

Stock-based compensation

 

 

118,118

 

 

 

143,054

 

 

 

(24,936 )

Direct research and development expenses

 

 

1,715,842

 

 

 

2,174,812

 

 

 

(458,970 )

Other research and development

 

 

318,301

 

 

 

281,072

 

 

 

37,229

 

Depreciation and amortization

 

 

264,057

 

 

 

262,607

 

 

 

1,450

 

Total research and development expenses

 

 

4,629,527

 

 

 

4,905,678

 

 

 

(276,151 )

 

General and Administrative Expenses

 

General and administrative expenses decreased to $2.3 million from $2.6 million for the three-months ended March 31, 2024, and March 31, 2023, respectively. The reduction is due to lower personnel expenses, legal expenses and stock-based compensation during the period. The FTE personnel number within this division decreased by 1 to 20 compared to the prior year period.

 

 

 

Three Months Ended

March 31,

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

 

 

 $

 

 

 $

 

 

$

 

Personnel expenses

 

 

1,140,824

 

 

 

1,260,635

 

 

 

(119,811 )

Stock-based compensation

 

 

176,688

 

 

 

303,525

 

 

 

(126,837 )

Legal and professional fees

 

 

499,947

 

 

 

631,019

 

 

 

(131,072 )

Other general and administrative

 

 

390,316

 

 

 

327,684

 

 

 

62,632

 

Depreciation and amortization

 

 

45,968

 

 

 

58,840

 

 

 

(12,872 )

Total general and administrative expenses

 

 

2,253,743

 

 

 

2,581,703