10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 14, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
+1 (
(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 |
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. ☒
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). ☒
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 |
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Accelerated filer |
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Smaller reporting company |
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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).
As of November 6, 2024, there were
VOLITIONRX LIMITED
QUARTERLY REPORT ON FORM 10-Q
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024
TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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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., 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 September 30, 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:
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Our inability to generate any significant revenues or achieve profitability; |
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Our need to raise additional capital in the future; |
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Our expansion of our product development and sales and marketing capabilities could give rise to difficulties in managing our growth; |
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Our dependence on third-party distributors; |
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Our limited experience with sales and marketing; |
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The possibility that we may not be able to continue to operate, as indicated by the “going concern” opinion from our auditors; |
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Our ability to successfully develop, manufacture, market, and sell our future products; |
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Our ability to timely obtain necessary regulatory clearances or approvals to distribute and market our future products; |
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The acceptance by the marketplace of our future products; |
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The highly competitive and rapidly changing nature of the diagnostics market; |
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Protection of our patents, intellectual property and trade secrets; |
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Our reliance on third parties to manufacture and supply our intended products, and such manufacturers’ dependence on third-party suppliers; |
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Pressures related to macroeconomic and geopolitical conditions; |
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The material weaknesses in our internal control over financial reporting that we have identified; and |
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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, 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)
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Condensed Consolidated Statements of Operations and Comprehensive Loss |
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| Table of Contents |
VOLITIONRX LIMITED
Condensed Consolidated Balance Sheets
(Expressed in United States Dollars, except share numbers)
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September 30, |
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December 31, |
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2024 |
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2023 |
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$ |
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$ |
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ASSETS |
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(UNAUDITED) |
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Current Assets |
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Cash and cash equivalents |
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Accounts receivable |
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Prepaid expenses |
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Other current assets |
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Total Current Assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangible assets, net |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accounts payable |
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Accrued liabilities |
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Deferred revenue |
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Management and directors’ fees payable |
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Current portion of long-term debt |
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Current portion of finance lease liabilities |
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Current portion of operating lease liabilities |
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Current portion of grant repayable |
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Warrant liability |
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Total Current Liabilities |
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Long-term debt, net of current portion |
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Finance lease liabilities, net of current portion |
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Operating lease liabilities, net of current portion |
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Grant repayable, net of current portion |
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Total Long-Term Liabilities |
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Total Liabilities |
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Stockholders' Deficit |
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Common Stock |
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Authorized: |
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Issued and outstanding: |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total VolitionRx limited Stockholders' Deficit |
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Non-controlling interest |
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( |
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Total Stockholders’ Deficit |
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( |
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( |
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Total Liabilities and Stockholders’ Deficit |
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(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)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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$ |
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$ |
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$ |
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$ |
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Revenues |
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Services |
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Product |
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Total Revenues |
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Operating Expenses |
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Research and development |
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General and administrative |
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Sales and marketing |
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Total Operating Expenses |
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Operating Loss |
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Other Income (Expenses) |
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Grant income |
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Loss on disposal of fixed assets |
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( |
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( |
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( |
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Interest income |
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Interest expense |
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( |
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( |
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( |
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Gain on change in fair value of warrant liability |
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Total Other Income (Expenses) |
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( |
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Net Loss |
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( |
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( |
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( |
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Net Loss Attributable to Non-Controlling Interest |
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Net Loss Attributable to VolitionRx Limited Stockholders |
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( |
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( |
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( |
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Other Comprehensive Income (Loss) |
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Foreign currency translation adjustments |
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( |
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( |
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Net Comprehensive Loss |
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( |
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( |
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( |
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Net Loss Per Share – Basic and Diluted Attributable to VolitionRx Limited |
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( |
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( |
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( |
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Weighted Average Shares Outstanding– Basic and Diluted |
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(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 Nine Months Ended September 30, 2024 and September 30, 2023 | ||||||||||||||||||||||||||||
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Accumulated |
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Additional |
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Other |
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Non - |
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Common Stock |
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Paid-in |
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Comprehensive |
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Accumulated |
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Controlling |
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Shares |
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Amount |
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Capital |
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Income |
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Deficit |
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Interest |
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Total |
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# |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance, December 31, 2023 |
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Common stock issued for cash, net of issuance costs |
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Common stock issued for settlement of RSUs |
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Common stock issued in lieu of license fee |
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Stock-based compensation |
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- |
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Tax withholdings paid related to stock-based compensation |
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- |
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( |
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( |
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Foreign currency translation |
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- |
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Net loss for the period |
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- |
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( |
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( |
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Balance, March 31, 2024 |
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( |
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Common stock issued for cash, net of issuance costs |
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Common stock issued for settlement of RSUs |
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Stock-based compensation |
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- |
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Tax withholdings paid related to stock-based compensation |
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- |
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( |
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Foreign currency translation |
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Net loss for the period |
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- |
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( |
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( |
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Balance, June 30, 2024 |
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Common stock issued for cash, net of issuance costs |
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Common stock issued for settlement of RSUs |
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|
||||||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tax withholdings paid related to stock-based compensation |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | ||||
Foreign currency translation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) | |||
Net loss for the period |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | ||
Balance, September 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | ||||
| ||||||||||||||||||||||||||||
(The accompanying notes are an integral part of these condensed consolidated financial statements) | ||||||||||||||||||||||||||||
| 7 |
| Table of Contents |
VOLITIONRX LIMITED
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(Expressed in United States Dollars, except share numbers)
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
Additional |
|
|
Other |
|
|
|
|
|
Non - |
|
|
|
|
|||||||
|
|
Common Stock |
|
|
Paid-in |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Controlling |
|
|
|
|
||||||||||
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Income (Loss) |
|
|
Deficit |
|
|
Interest |
|
|
Total |
|
|||||||
|
|
# |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Balance, December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | ||||
Common stock issued for cash, net of issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock issued for settlement of RSUs |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tax withholdings paid related to stock-based compensation |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | ||||
Common stock repurchased |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | |||
Foreign currency translation |
|
|
- |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) | ||||
Net loss for the period |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | |||
Balance, March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | ||||
Common stock issued for cash, net of issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Common stock issued for settlement of RSUs |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tax withholdings paid related to stock-based compensation |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | ||||
Foreign currency translation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss for the period |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | |||
Balance, June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|||||
Issuance costs |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | ||||
Common stock issued for settlement of RSUs |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Stock-based compensation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tax withholdings paid related to stock-based compensation |
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) | ||||
Foreign currency translation |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net loss for the period |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | |||
Balance, September 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
$ |
|
|
$ |
|
||
Operating Activities |
|
|
|
|
|
|
||
Net loss |
|
|
( |
) |
|
|
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of operating lease right-of-use assets |
|
|
|
|
|
|
||
Loss on disposal of fixed assets |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Gain on change in fair value of warrant liability |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
( |
) |
|
|
( |
) |
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Other current assets |
|
|
( |
) |
|
|
( |
) |
Deferred revenue, current and non-current |
|
|
( |
) |
|
|
|
|
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
|
|
Management and directors’ fees payable |
|
|
( |
) |
|
|
( |
) |
Right-of-use assets operating leases liabilities |
|
|
( |
) |
|
|
( |
) |
Net Cash Used In Operating Activities |
|
|
( |
) |
|
|
( |
) |
Investing Activities |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Purchase of License |
|
|
( |
) |
|
|
|
|
Net Cash Used In Investing Activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Net proceeds from issuances of common stock |
|
|
|
|
|
|
||
Tax withholdings paid related to stock-based compensation |
|
|
( |
) |
|
|
( |
) |
Common stock repurchased |
|
|
|
|
|
( |
) | |
Proceeds from grants repayable |
|
|
|
|
|
|
||
Proceeds from long-term debt |
|
|
|
|
|
|
||
Payments on long-term debt |
|
|
( |
) |
|
|
( |
) |
Payments on grants repayable |
|
|
( |
) |
|
|
|
|
Payments on finance lease obligations |
|
|
( |
) |
|
|
( |
) |
Net Cash Provided By Financing Activities |
|
|
|
|
|
|
||
Effect of foreign exchange on cash |
|
|
( |
) |
|
|
|
|
Net change in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash and cash equivalents – beginning of the period |
|
|
|
|
|
|
||
Cash and cash equivalents – End of Period |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow Information |
|
|
|
|
|
|
|
|
Interest paid |
|
|
|
|
|
|
||
Non-Cash Financing Activities |
|
|
|
|
|
|
|
|
Common stock issued upon cashless exercises of stock options and settlement of vested RSUs |
|
|
|
|
|
|
||
Offering costs from issuance of common stock |
|
|
|
|
|
|
||
Fair value of warrants issued in connection with public offering |
|
|
|
|
|
|
||
Common stock issued for License rights |
|
|
|
|
|
|
||
Non-cash note payable |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
(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 and use of estimates
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 does 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 audited consolidated financial statements and accompanying notes thereto 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 audited 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 nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.
The preparation of the Company's Condensed Consolidated Financial Statements requires management to make certain estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported and reported amounts of revenues and expenses. Such estimates include impairment of long-lived assets, accounts receivable, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes among others. These estimates and assumptions are based on management’s judgment. Estimates and underlying assumptions are reviewed on an ongoing basis. Changes in accounting estimates may be necessary if there are changes in the circumstances or experiences on which the estimate was based or as a result of new information. Changes in estimates, including those resulting from changes in the economic environment, are reflected in the period in which the change in estimate occurs.
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 Financial Accounting Standards Board (the “FASB” issued Accounting Standards Update (“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 annual and interim 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, 2024, 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 annual and interim 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.
| 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)
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 September 30, 2024.
Fair Value Measurements at September 30, 2024 |
||||||||||||||||
Description |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
$ |
$ |
$ |
$ |
|||||||||||||
Liabilities |
||||||||||||||||
Warrant liability |
||||||||||||||||
As of December 31, 2023, the warrant liability was $
Warrant Liability |
||||
Total |
||||
$ |
||||
Balance at December 31, 2023 |
||||
Gain on change in fair value of warrant liability |
( |
) | ||
Balance at September 30, 2024 |
||||
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, 2024,
| 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 nine months ended September 30, 2024, the Company incurred a net loss of $
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 commercialization activities. The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions or, financing, and/or generate revenues as may be required to sustain its operations. Management plans to address the above as needed by, (a) granting licenses and/or distribution rights to third parties in exchange for specified up-front and/or back-end payments, (b) obtaining additional financing through debt or equity transactions, (c) securing additional grant funds, and (d) developing and commercializing its products in an efficient manner. Management continues to exercise tight cost controls to conserve cash. As part of the Company’s cash conservation efforts, directors and certain employees have elected to exchange a portion of their fees earned or paid in cash or salary, respectively, for RSUs in the Company for a period of up to six months.
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 these 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 September 30, 2024 and December 31, 2023:
September 30, 2024 |
December 31, 2023 |
|||||||||
Useful Life |
Cost $ |
Cost $ |
||||||||
Computer hardware and software |
||||||||||
Laboratory equipment |
||||||||||
Office furniture and equipment |
||||||||||
Buildings |
||||||||||
Building improvements |
||||||||||
Land |
Not amortized |
|||||||||
Total property and equipment |
||||||||||
Less accumulated depreciation |
||||||||||
Total property and equipment, net |
||||||||||
During the nine-month periods ended September 30, 2024 and September 30, 2023, the Company recognized $
| 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.
September 30, 2024 |
December 31, 2023 |
|||||||
Cost $ |
Cost $ |
|||||||
Patents |
||||||||
Licenses |
||||||||
Total Patents and Licenses |
||||||||
Less accumulated amortization |
||||||||
Total patents and Licenses, net |
||||||||
During the nine-month periods ended September 30, 2024 and September 30, 2023, the Company recognized $(
The Company amortizes the patents and licenses on a straight-line basis with terms ranging from
2024 |
$ | |||
2025 |
$ | |||
2026 |
$ | |||
2027 |
$ | |||
2028 |
$ | |||
Greater than 5 years |
$ | |||
Total Intangible Assets |
$ |
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 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 September 30, 2024, the Company was authorized to issue
Stock Option Exercises
During the nine months ended September 30, 2024, no shares of common stock were issued pursuant to the exercise of stock options.
Stock Options Expired / Cancelled
On April 16, 2024,
RSU Settlements
Below is a table summarizing the RSUs that vested and settled during the nine months ended September 30, 2024, all of which were issued pursuant to the 2015 Plan.
Equity Incentive Plan |
RSUs Vested (#) |
Vest Date |
Shares Issued (#) |
Shares Withheld for Taxes (#) |
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| 15 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 6 - Common Stock (continued)
2023 Equity Capital Raise
In connection with the June 2023 underwritten public offering of the Company’s common stock under the Company’s Registration Statement on Form S-3 (File No. 333-259783) effective November 8, 2021 (the “2021 Form S-3”), and pursuant to the underwriting agreement with Prime Executions, Inc, doing business as Freedom Capital Markets (“Freedom”), dated June 1, 2023, (the “2023” Equity Capital Raise”) the Company issued as compensation to Freedom warrants to purchase an aggregate of
The fair value of the warrants issued in the 2023 Equity Capital Raise as of September 30, 2024, and December 31, 2023, were $
September 30, 2024 |
December 31, 2023 |
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Risk-free interest rate |
% | % | ||||||
Expected volatility |
% | % | ||||||
Expected life (years) |
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Expected dividend yield |
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Total fair value |
$ | $ | ||||||
The fair value of the warrants issued in the 2023 Equity Capital Raise was deemed to be a liability, due to certain contingent put features, and 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.
| 16 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 6 - Common Stock (continued)
2024 Equity Capital Raise
On August 8, 2024, the Company entered into a securities purchase agreement with a purchaser pursuant to which the Company issued and sold to such purchaser, in a registered direct offering under the 2021 Form S-3 (the “2024 Equity Capital Raise”), an aggregate of
Common Stock Issued for EpiCypher License Agreement
On March 12, 2024, the Company issued
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 $
During the nine months ended September 30, 2024, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $
| 17 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 7 – Stock-Based Compensation
a) (i) Common Stock Warrants
The following table summarizes the changes in common stock warrants of the Company outstanding during the nine-month period ended September 30, 2024.
Number of Warrants |
Weighted Average Exercise Price ($) |
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Outstanding at December 31, 2023 |
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Granted |
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Expired/Cancelled |
- | |||||||
Outstanding at September 30, 2024 |
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Exercisable at September 30, 2024 |
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Below is a table summarizing the common stock warrants issued and outstanding as of September 30, 2024, which have an aggregate weighted average remaining contractual life of
Number Outstanding |
Number Exercisable |
Exercise Price ($) |
Weighted Average Remaining Contractual Life (Years) |
Proceeds to Company if Exercised ($) |
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Stock-based compensation expense related to warrants of $
| 18 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 7 – Stock-Based Compensation (continued)
a) (ii) Warrants – Series A and Series B Common Stock Warrants
The following table summarizes the changes in Series A and Series B common stock warrants of the Company outstanding during the nine-month period ended September 30, 2024.
Number of Warrants |
Weighted Average Exercise Price ($) |
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Outstanding at December 31, 2023 |
- | |||||||
Granted |
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Exercised |
- | - | ||||||
Expired/Cancelled |
- | |||||||
Outstanding at September 30, 2024 |
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Exercisable at September 30, 2024 |
- | |||||||
Below is a table summarizing the Series A and Series B common stock warrants issued and outstanding as of September 30, 2024, which have a maximum aggregate weighted average remaining contractual life of
Description |
Number Outstanding |
Number Exercisable |
Exercise Price ($) |
Weighted Average Remaining Contractual Life (Years) |
Proceeds to Company if Exercised ($) |
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Investor A Warrants |
- | |||||||||||||||||||
Investor B Warrants |
- | |||||||||||||||||||
Placement Agent Series B Warrants |
- | |||||||||||||||||||
| - | ||||||||||||||||||||
b) Options
The following table summarizes the changes in options outstanding of the Company during the nine-month period ended September 30, 2024.
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Number of Options |
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Weighted Average Exercise Price ($) |
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Outstanding at December 31, 2023 |
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Expired/Cancelled |
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Outstanding at September 30, 2024 |
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Exercisable at September 30, 2024 |
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| 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)
Below is a table summarizing the options issued and outstanding as of September 30, 2024, all of which were issued pursuant to the Company’s 2011 Equity Incentive 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
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Number Outstanding |
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Number Exercisable |
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Exercise Price ($) |
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Weighted Average Remaining Contractual Life (Years) |
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Proceeds to Company if Exercised ($) |
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Stock-based compensation expense related to stock options of $nil and $
c) Restricted Stock Units
Below is a table summarizing the RSUs issued and outstanding as of September 30, 2024, all of which were issued pursuant to the 2015 Plan.
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RSUs (#) |
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Weighted Average Grant Date Fair Value Share Price ($) |
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Outstanding at December 31, 2023 |
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Granted |
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Vested/Settled |
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Cancelled / Forfeited |
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Outstanding at September 30, 2024 |
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| 20 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 7 – Stock-Based Compensation (continued)
c) Restricted Stock Units (continued)
Below is a table summarizing the RSUs granted during the nine months ended September 30, 2024, all of which were issued pursuant to the 2015 Plan. The RSUs vest equally over periods stated on the dates noted, subject to the recipient’s continued service to the Company, and will result in the RSU compensation expense stated. On June 1, 2024, the Company granted
Equity Incentive Plan |
RSUs Granted (#) |
Grant Date |
Vesting Period |
First Vesting Date |
Second Vesting Date |
Third Vesting Date |
RSU Expense ($) |
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N/A |
N/A |
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N/A |
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N/A |
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N/A |
N/A |
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| 21 |
| Table of Contents |
VOLITIONRX LIMITED
Notes to the Condensed Consolidated Financial Statements (Unaudited)
($ expressed in United States Dollars)
Note 7 – Stock-Based Compensation (continued)
c) Restricted Stock Units (continued)
Below is a table summarizing the RSUs vested and settled during the nine months ended September 30, 2024, all of which were issued pursuant to the 2015 Plan.
Equity Incentive Plan |
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RSUs Vested (#) |
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Vest Date |
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Shares Issued (#) |
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Shares Withheld for Taxes (#) |
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| 22 |
| 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 cancelled during the nine months ended September 30, 2024, all of which were originally issued pursuant to the 2015 Plan.
Equity Incentive Plan |
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RSUs (#) |
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Cancellation Date |
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Vesting Date |
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RSUs Cancelled (#) |
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