What changed in this filing

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Item 1. Financial Statements

2020-08-11 compared with 2020-05-07 · 245 added, 142 removed, 261 unchanged (60% of the section changed)

FINANCIAL STATEMENTS

TROVAGENE, INC.

CARDIFF ONCOLOGY, INC.

CONDENSED BALANCE SHEETS

March 31, 2020

2020 December 31,

6 unchanged sentences

Operating lease right-of-use assets 501,894 697,418

Other assets 152,585 157,576

Total Assets $ 30,128,979 $ 13,086,546

Liabilities and Stockholders’ Equity

2 unchanged sentences

Accrued expenses 2,858,161 3,260,061

Note payable 70,730 —

Operating lease liabilities 877,607 865,379

1 unchanged sentence

Derivative financial instruments—warrants 46,164 4,127

Note payable, net of current portion 234,270 —

Operating lease liabilities, net of current portion 429,776 860,963

3 unchanged sentences

Stockholders’ equity

Preferred stock, $0.001 par value, 20,000,000 shares authorized;

277,100 designated as Series A Convertible Preferred Stock;

60,600 shares outstanding at March 31, 2020 and December 31, 2019 with liquidation preference of $606,000 at March 31, 2020 and December 31, 2019;

200,000 designated as Series C Convertible Preferred Stock;

0 shares outstanding at March 31, 2020 and December 31, 2019

Preferred stock, 20,000,000 shares authorized;

Common stock, $ 0.0001 par value, 150,000,000 shares authorized;

11,010,587 and 8,593,633 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

21,325,076 and 8,593,633 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital 247,528,273 217,172,528

4 unchanged sentences

See accompanying notes to the unaudited condensed financial statements.

TROVAGENE, INC.

CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Royalties $ 42,633 $ 36,852 $ 110,337 $ 98,873

Services — 1,496 — 1,496

Total revenues 42,633 38,348 110,337 100,369

7 unchanged sentences

Other income (expense), net 6,257 1,106 3,771 3,116

Net loss ( 4,124,532 ) ( 4,125,303 ) ( 8,213,094 ) ( 8,030,074 )

Preferred stock dividend payable on Series A Convertible Preferred Stock ( 6,060 ) ( 6,060 ) ( 12,120 ) ( 12,120 )

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance — — — ( 268,269 )

Deemed dividend recognized on beneficial conversion features of Series D Convertible Preferred Stock issuance ( 601,767 ) — ( 601,767 ) —

Deemed dividend recognized on beneficial conversion features of Series E Convertible Preferred Stock issuance ( 2,664,717 ) — ( 2,664,717 ) —

Net loss attributable to common stockholders $ ( 7,397,076 ) $ ( 4,131,363 ) $ ( 11,491,698 ) $ ( 8,310,463 )

2 unchanged sentences

See accompanying notes to the unaudited condensed financial statements.

TROVAGENE, INC.

CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

Preferred Stock

Paid-In Capital

Service Receivable

Accumulated Deficit

Shares Preferred Stock

Amount Common Stock

Shares Common Stock

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Stockholders’ Equity

6 unchanged sentences

Release of clinical trial funding commitment — — — — — 293,017 — 293,017

Net loss — — — — — — ( 4,088,562 ) ( 4,088,562 )

Balance, March 31, 2020 60,600 $ 60 11,010,587 $ 8,554 $ 219,805,965 $ ( 678,656 ) $ ( 212,992,505 ) $ 6,143,418

Preferred Stock

Stock-based compensation — — — — 281,776 — — 281,776

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment 154,670 15 602,833 60 2,292,425 ( 2,300,000 ) — ( 7,500 )

Deemed dividend recognized on beneficial conversion features of Series D Convertible Preferred Stock issuance — — — — 601,767 — ( 601,767 ) —

Deemed dividend recognized on beneficial conversion features of Series E Convertible Preferred Stock issuance — — — — 2,664,717 — ( 2,664,717 ) —

Sale of common stock, preferred stock and warrants (1)

865,824 866 4,689,313 469 17,277,093 — — 17,278,428

Issuance of common stock upon exercise of warrants — — 3,473,393 347 4,604,670 — — 4,605,017

Issuance of common stock upon vesting of restricted stock units — — 2,250 — — — — —

Issuance of common stock upon conversion of Series D Convertible Preferred Stock ( 154,670 ) ( 15 ) 1,546,700 155 ( 140 ) — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Release of clinical trial funding commitment — — — — — 213,492 — 213,492

Net loss — — — — — — ( 4,124,532 ) ( 4,124,532 )

Balance, June 30, 2020 926,424 $ 926 21,325,076 $ 9,585 $ 247,528,273 $ ( 2,765,164 ) $ ( 220,389,581 ) $ 24,384,039

(1) Net of expenses of $ 616,143 , and fair value of warrants issued as a transaction advisory fee as of the date of issuance of $ 370,666 .

Preferred Stock

Paid-In Capital

Service Receivable

Accumulated Deficit

Shares Preferred Stock

Amount Common Stock

Shares Common Stock

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Stockholders’ Equity

2 unchanged sentences

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment, net of expenses and discount of $ 40,000 and $ 235,640 , respectively

200,000 200 183,334 110 1,634,690 ( 1,675,000 ) — ( 40,000 )

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance — — — — 268,269 — ( 268,269 ) —

4 unchanged sentences

Release of clinical trial funding commitment — — — — — 70,487 — 70,487

Net loss — — — — — — ( 3,904,771 ) ( 3,904,771 )

Balance, March 31, 2019 260,600 $ 260 4,525,354 $ 7,906 $ 207,652,843 $ ( 1,604,513 ) $ ( 196,370,315 ) $ 9,686,181

Stock-based compensation — — — — 148,834 — — 148,834

Sale of common stock and warrants, net of expenses — — 421,917 42 2,902,698 — — 2,902,740

Issuance of common stock upon exercise of warrants — — 156,353 16 1,548 — — 1,564

Issuance of common stock upon vesting of restricted stock units — — 4,433 — — — — —

Issuance of common stock upon conversion of Series C Convertible Preferred Stock ( 200,000 ) ( 200 ) 333,333 33 167 — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Release of clinical trial funding commitment — — — — — 240,279 — 240,279

Net loss — — — — — ( 4,125,303 ) ( 4,125,303 )

Balance, June 30, 2019 60,600 $ 60 5,441,390 $ 7,997 $ 210,706,090 $ ( 1,364,234 ) $ ( 200,501,678 ) $ 8,848,235

See accompanying notes to the unaudited condensed financial statements.

TROVAGENE, INC.

CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

Net loss $ ( 8,213,094 ) $ ( 8,030,074 )

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

Depreciation and amortization

Impairment loss 34,169 —

Depreciation 233,909 248,958

Stock-based compensation expense 459,085 348,901

2 unchanged sentences

Changes in operating assets and liabilities:

Other assets 4,991 ( 32,464 )

Accounts receivable and unbilled receivable 94,146 45,474

9 unchanged sentences

Financing activities:

Proceeds from sales of common stock and warrants

Proceeds from sales of common stock, preferred stock and warrants, net of expenses of $ 92,648 and $ 97,260 , respectively

18,801,924 2,902,740

Costs related to the clinical trial funding commitment ( 7,500 ) ( 40,000 )

Proceeds from exercise of warrants

Proceeds from exercise of warrants, net of expenses of $ 393,285 and $ 0 , respectively

6,125,884 3,283,830

Borrowings under long-term debt 305,000 —

Net cash provided by financing activities 25,225,308 6,146,570

5 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Acquisition of property and equipment included in accounts payable and accrued expenses $ 11,453 $ —

Expenses from sales of common stock, preferred stock and warrants included in accounts payable and accrued liabilities $ 523,495 $ —

Expenses from exercise of warrants included in accounts payable and accrued liabilities $ 64,498 $ —

Preferred stock dividend payable on Series A Convertible Preferred Stock $ 12,120 $ 12,120

Deemed dividend recognized for beneficial conversion features of Series C Convertible Preferred Stock issuance $ — $ 268,269

Six Months Ended June 30,

Deemed dividend recognized for beneficial conversion features of Series D Convertible Preferred Stock issuance $ 601,767 $ —

Deemed dividend recognized for beneficial conversion features of Series E Convertible Preferred Stock issuance $ 2,664,717 $ —

Common stock, Series C Convertible Preferred Stock and warrants issued in connection with clinical trial funding commitment, net of discount of $ 235,640

$ — $ 1,675,000

Common stock, Series D Convertible Preferred Stock and warrants issued in connection with clinical trial funding commitment, net of discount of $ 488,270

$ 2,300,000 $ —

Common stock issued upon conversion of Series C Convertible Preferred Stock $ — $ 33

Common stock issued upon conversion of Series D Convertible Preferred Stock $ 155 $ —

See accompanying notes to the unaudited condensed financial statements.

TROVAGENE, INC.

CARDIFF ONCOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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Business Organization and Overview

Trovagene, Inc.

(“Trovagene” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company with the singular mission of developing new treatment options for cancer patients in indications with the greatest medical need, including KRAS-mutated metastatic colorectal cancer, Zytiga®-resistant metastatic castration-resistant prostate cancer and relapsed or refractory acute myeloid leukemia.

Our goal is to overcome resistance, improve response to treatment and increase overall survival.

Trovagene’s intellectual property and proprietary technology enables the Company to analyze circulating tumor DNA (“ctDNA”) and clinically actionable markers.

Unique to the Company’s clinical development plan, is the integration of predictive clinical biomarkers to assess patient response to treatment.

Cardiff Oncology, Inc.

(“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company with the singular mission of developing new treatment options for cancer patients in indications with the greatest medical need, including KRAS-mutated metastatic colorectal cancer, Zytiga®-resistant metastatic castration-resistant prostate cancer and relapsed or refractory acute myeloid leukemia.

Our goal is to overcome resistance, improve response to treatment and increase overall survival and the integration of predictive clinical biomarkers to assess patient response to treatment.

Basis of Presentation

The accompanying unaudited interim condensed financial statements of Trovagene have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q.

The accompanying unaudited interim condensed financial statements of Cardiff Oncology have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q.

Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations.

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These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2019 included in the Company’s annual report on Form 10-K filed with the SEC on February 27, 2020.

Trovagene’s condensed financial statements as of March 31, 2020 have been prepared under the assumption that Trovagene will continue as a going concern, which assumes that the Company will realize its assets and satisfy its liabilities in the normal course of business.

The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty concerning the Company’s ability to continue as a going concern.

The Company has incurred net losses since its inception and has negative operating cash flows.

Considering the Company’s current cash resources, and service receivable related to the clinical trial funding commitment, management projects the Company’s existing resources will be sufficient to fund the Company’s planned operations into the fourth quarter of 2020 .

Based on its current business plan and assumptions, the Company expects to continue to incur significant losses and require significant additional capital to further advance its clinical trial programs and support its other operations.

The Company has based its cash sufficiency estimates on its current business plan and its assumptions that may prove to be wrong.

The Company could utilize its available capital resources sooner than it currently expects, and it could need additional funding to sustain its operations even sooner than currently anticipated.

These circumstances raise substantial doubt about the Company’s ability to continue as a going concern for at least one year from the issuance of these financial statements.

For the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional capital.

As of June 30, 2020, the Company had $ 27.8 million in cash and cash equivalents and believes it has sufficient cash to meet its funding requirements for at least the next 12 months following the issuance date of these financial statements.

For the foreseeable future, the Company expects to continue to incur losses and require additional capital to further advance its clinical trial programs and support its other operations.

The Company cannot be certain that additional funding will be available on acceptable terms, or at all.

To the extent that the Company can raise additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution.

To the extent that the Company can raise additional funds by issuing equity securities, the Company’s stockholders may experience additional dilution.

The economic effects of COVID-19 could also have an adverse effect on the Company's ability to raise additional capital.

See Note 10 to the condensed financial statements for further information.

If the Company is unable to raise additional capital when required or on acceptable terms, it may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of its product candidates, all of which would have a material adverse impact on the Company’s operations.

The Company may also be required to:

Seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available;

Relinquish licenses or otherwise dispose of rights to technologies, product candidates or products that the Company would otherwise seek to develop or commercialize themselves, on unfavorable terms.

The Company is evaluating the following options to raise additional capital, increase revenue, as well as reduce costs, in an effort to strengthen its liquidity position:

Raising capital through public and private equity offerings;

Introducing operation and business development initiatives to bring in new revenue streams;

Reducing operating costs by identifying internal synergies;

Engaging in strategic partnerships.

Between April 1, 2020 and April 30, 2020 , the Company has received approximately $1,085,000 from the sale of common stock, pre-funded warrants and warrants.

In addition, on April 15, 2020 the Company has received a loan of $305,000 through the United States Small Business Administration Payroll Protection Program (see Note 11 for further details.)

Summary of Significant Accounting Policies

During the three months ended March 31, 2020, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, except as described below.

During the six months ended June 30, 2020, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, except as described below.

Net Loss Per Share

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The following table sets forth the computation of basic and diluted earnings per share:

Ended March 31,

Ended June 30, Six Months

Ended June 30,

2020 2019 2020 2019

Net loss attributable to common shareholders $ ( 7,397,076 ) $ ( 4,131,363 ) $ ( 11,491,698 ) $ ( 8,310,463 )

8 unchanged sentences

Series A Convertible Preferred Stock 877 877

Series C Convertible Preferred Stock

Series E Convertible Preferred Stock 3,548,459 —

17,805,051 5,452,523

Recently Adopted Accounting Pronouncement

6 unchanged sentences

Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of March 31, 2020 and December 31, 2019 :

Fair Value Measurements at

March 31, 2020

June 30, 2020

Quoted Prices in Active Markets for Identical Assets and Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Money market fund (1) $ 27,706,506 $ — $ — $ 27,706,506

Total Assets $ 27,706,506 $ — $ — $ 27,706,506

Derivative financial instruments — warrants (2)

$ — $ — $ 46,164 $ 46,164

Total Liabilities $ — $ — $ 46,164 $ 46,164

2 unchanged sentences

Quoted Prices in Active Markets for Identical Assets and Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

(Level 3) Total

Money market fund (1) $ 10,131,240 $ — $ — $ 10,131,240

Total Assets $ 10,131,240 $ — $ — $ 10,131,240

Derivative financial instruments — warrants (2)

$ — $ — $ 4,127 $ 4,127

Total Liabilities $ — $ — $ 4,127 $ 4,127

5 unchanged sentences

Property and equipment consist of the following:

As of March 31,

As of June 30,

2020 As of December 31,

2 unchanged sentences

Laboratory equipment 756,310 744,856

3,493,570 3,482,116

Less—accumulated depreciation and amortization ( 2,838,203 ) ( 2,604,293 )

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Income will continue to be recognized on a straight-line basis over the term of the sublease.

Impairment of Right-of-Use Assets

The Company recorded an impairment loss of $ 34,169 for the three months ended June 30, 2020.

The loss related to a vacated portion of the facility that is no longer being subleased.

The Company determined that the prolonged loss of sublease income and an adverse commercial real estate market caused by COVID-19 were indicators of impairment.

A fair value approach using quoted prices for similar assets was used to determine the impairment loss.

The loss was recorded within operating expenses in the condensed statement of operations.

The components of lease expense were as follows:

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Operating lease cost $ 139,283 $ 112,115 $ 246,028 $ 225,708

2 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 31, 2020

December 31, 2019

As of June 30,

2020 As of December 31,

Operating lease ROU assets $ 501,894 $ 697,418

2 unchanged sentences

Total operating lease liabilities $ 1,307,383 $ 1,726,342

Weighted-average remaining lease term–operating leases

Weighted-average remaining lease term–operating leases 1.5 years 2.0 years

Weighted-average discount rate–operating leases 6.5 % 6.5 %

Supplemental cash flow and other information related to leases was as follows:

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Total remaining annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows:

Year Ending December 31,

Operating Leases

Sublease Income

Net Operating Leases

2020 (excluding the three months ended March 31, 2020)

Year Ending December 31, Operating Leases Sublease Income Net Operating Leases

2020 (excluding the six months ended June 30, 2020) $ 395,916 $ ( 145,587 ) $ 250,329

2021 968,165 ( 291,173 ) 676,992

2022 5,868 — 5,868

2023 3,423 — 3,423

Total future minimum lease payments 1,373,372 $ ( 436,760 ) $ 936,612

Less imputed interest ( 65,989 )

Total $ 1,307,383

Derivative Financial Instruments — Warrants

Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”) or ASC Topic 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”), Trovagene determined that certain warrants issued in connection with the execution of certain equity financings must be recorded as derivative liabilities.

Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”) or ASC Topic 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”), Cardiff Oncology determined that certain warrants issued in connection with the execution of certain equity financings must be recorded as derivative liabilities.

In accordance with ASC 815-40 and ASC 480-10, the warrants are also being re-measured at each balance sheet date based on estimated fair value, and any resultant change in fair value is being recorded in the Company’s condensed statements of operations.

1 unchanged sentence

The range of assumptions and weighted averages used to determine the fair value of the warrants valued using the Black-Scholes option pricing model during the periods indicated were:

Three Months Ended March 31,

Estimated fair value of Trovagene common stock

$1.01 - $1.24

Six Months Ended June 30,

Estimated fair value of Cardiff Oncology common stock $ 1.01 - $ 5.01

$ 2.50 - $ 3.75

Expected warrant term

2.8 - 3.1 years

Expected warrant term 2.6 - 3.1 years

3.6 - 4.1 years

Risk-free interest rate 0.17 - 1.62 %

Expected volatility of Trovagene common stock

1.72 - 2.49 %

Expected volatility of Cardiff Oncology common stock 111 - 118 %

Dividend yield 0 % 0 %

As of June 30,

Weighted Average (1)(2) :

Fair value of Trovagene common stock

Expected warrant term

Fair value of Cardiff Oncology common stock $ 5.01

Expected warrant term 2.6 years

Risk-free interest rate 0.17 %

Expected volatility of Trovagene common stock

Expected volatility of Cardiff Oncology common stock 118 %

Dividend yield 0 %

1 unchanged sentence

(2) The weighted average was calculated using the relative fair value method.

Expected volatility is based on historical volatility of Trovagene’s common stock.

Expected volatility is based on historical volatility of Cardiff Oncology’s common stock.

The warrants have a transferability provision and based on guidance provided in Staff Accounting Bulletin (“SAB”) No.

107, Share-Based Payment (“SAB No.

107”) , for instruments issued with such a provision, Trovagene used the remaining contractual term as the expected term of the warrants.

107”) , for instruments issued with such a provision, Cardiff Oncology used the remaining contractual term as the expected term of the warrants.

The risk-free rate is based on the U.S.

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The following table sets forth the components of changes in the Company’s derivative financial instruments — warrants liability balance, valued using the Black-Scholes option pricing method, for the periods indicated.

Number of Warrants

December 31, 2019

Balance of derivative financial instruments — warrants liability

Change in fair value of derivative financial instruments — warrants during the period recognized as a gain in the condensed statements of operations

March 31, 2020

Balance of derivative financial instruments — warrants liability

Date Description Number of Warrants Derivative

December 31, 2019 Balance of derivative financial instruments — warrants liability

64,496 $ 4,127

Change in fair value of derivative financial instruments — warrants during the period recognized as a loss in the condensed statements of operations

June 30, 2020 Balance of derivative financial instruments — warrants liability

64,496 $ 46,164

Stockholders’ Equity

Stock Options

Stock-based compensation expense related to Trovagene equity awards have been recognized in operating results as follows:

Three Months Ended March 31,

Stock-based compensation expense related to Cardiff Oncology equity awards have been recognized in operating results as follows:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Included in research and development expense $ 70,085 $ 86,058 $ 146,953 $ 196,138

1 unchanged sentence

Total stock-based compensation expense $ 281,776 $ 148,834 $ 459,085 $ 348,901

The unrecognized compensation cost related to non-vested stock options outstanding at March 31, 2020 and 2019 , net of estimated forfeitures, was $1,048,776 and $165,954 , respectively, which is expected to be recognized over a weighted-average remaining vesting period of 2.1 and 0.8 years , respectively.

The weighted-average remaining contractual term of outstanding options as of March 31, 2020 was approximately 8.8 years .

The total fair value of stock options vested during the three months ended March 31, 2020 and 2019 were $34,929 and $188,984 , respectively.

The unrecognized compensation cost related to non-vested stock options outstanding at June 30, 2020 and 2019, net of estimated forfeitures, was $ 2,732,126 and $ 1,735,973 , respectively, which is expected to be recognized over a weighted-average remaining vesting period of 2.4 and 2.5 years, respectively.

The weighted-average remaining contractual term of outstanding options as of June 30, 2020 was approximately 9.4 years.

The total fair value of stock options vested during the six months ended June 30, 2020 and 2019 were $ 764,724 and $ 279,760 , respectively.

The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions during the following periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

Risk-free interest rate 0.44 % 1.8 %

Dividend yield 0 % 0 %

Expected volatility of Trovagene common stock

Expected term

Expected volatility of Cardiff Oncology common stock 105 % 95 %

Expected term 5.9 years 5.9 years

A summary of stock option activity and changes in stock options outstanding is presented below:

Total Options

Weighted-Average

Total Options Weighted-Average

Exercise Price

Per Share Intrinsic

Balance outstanding, December 31, 2019 1,015,418 $ 12.77 $ —

Granted 969,965 $ 2.53

Canceled / Forfeited ( 46,069 ) $ 12.58

Balance outstanding, March 31, 2020

Exercisable at March 31, 2020

On June 6, 2019, the number of authorized shares in the Trovagene 2014 Equity Incentive Plan (“2014 EIP”) was increased from 243,056 to 1,243,056 .

As of March 31, 2020 , there were 207,798 shares available for issuance under the 2014 EIP.

Expired ( 15,275 ) $ 8.98

Balance outstanding, June 30, 2020 1,924,039 $ 7.64 $ 4,675,733

Exercisable at June 30, 2020 441,316 $ 24.82 $ 973,456

On June 6, 2019, the number of authorized shares in the Cardiff Oncology 2014 Equity Incentive Plan (“2014 EIP”) was increased from 243,056 to 1,243,056 .

On April 16, 2020 the 2014 EIP was amended to increase the number of shares of common stock reserved for issuance thereunder to 2,243,056 from 1,243,056 .

As of June 30, 2020, there were 258,497 shares available for issuance under the 2014 EIP.

Restricted Stock Units

A summary of the RSU activity is presented below:

Number of Shares

Weighted-Average

Total Restricted Stock Units Weighted-Average

Grant Date Fair Value

Intrinsic Value

Per Share Intrinsic Value

Non-vested RSUs outstanding, December 31, 2019 11,301 $ 15.38 $ 14,013

Non-vested RSUs outstanding, March 31, 2020

The total fair value of vested RSUs during the three months ended March 31, 2020 and 2019 were $95,170 and $126,983 , respectively.

Vested ( 9,060 ) $ 10.89 $ 13,763

Non-vested RSUs outstanding, June 30, 2020 2,241 $ 33.49 $ 11,227

The total fair value of vested RSUs during the six months ended June 30, 2020 and 2019 were $ 98,703 and $ 147,516 , respectively.

A summary of warrant activity and changes in warrants outstanding, including both liability and equity classifications is presented below:

Total Warrants (1)

Weighted-Average

Total Warrants Weighted-Average

Exercise Price

Per Share (1)

Weighted-Average

Per Share Weighted-Average

Remaining Contractual

Balance outstanding, December 31, 2019

Balance outstanding, March 31, 2020

(1) Balance outstanding as of March 31, 2020 excludes 131,967 pre-funded warrants to purchase shares of common stock at a nominal exercise price of $0.01 per share.

These pre-funded warrants were exercised on April 28, 2020, see Note 11 to the condensed financial statements for further information.

Balance outstanding, December 31, 2019 10,589,482 $ 4.08 3.7 years

Granted 5,831,451 $ 1.70

Exercised ( 4,091,498 ) $ 1.59

Balance outstanding, June 30, 2020 12,329,435 $ 3.78 4.5 years

Preferred Stock

A summary of our Company's classes of preferred stock is presented below:

Shares outstanding

Class Par value Shares designated Liquidation preference As of June 30,

2020 As of December 31,

Series A Convertible Preferred Stock $ 0.001 277,100 $ 606,000 60,600 60,600

Series B Convertible Preferred Stock $ 0.001 8,860 None — —

Series C Convertible Preferred Stock $ 0.001 200,000 None — —

Series D Convertible Preferred Stock $ 0.0001 154,670 None — —

Series E Convertible Preferred Stock $ 0.001 865,824 None 865,824 —

Series C Convertible Preferred Stock and Service Receivable

On January 25, 2019, the Company entered into a Master Services Agreement and a Stock and Warrant Subscription Agreement with PoC Capital, LLC (“PoC”), whereby PoC agreed to finance $1.675 million in clinical studies, including the development costs associated with Phase 1b/2 trial of onvansertib in combination with FOLFIRI and Avastin ® in patients with metastatic Colorectal Cancer (“mCRC”) harboring KRAS mutation in exchange for (i) 183,334 shares of common stock, (ii) warrants to purchase an aggregate of 150,000 shares of common stock, with an exercise price of $3.762 per share, expiring on January 25, 2024, and (iii) 200,000 shares of Series C Convertible Preferred Stock, each share of which was convertible into 1.67 shares of common stock.

On January 25, 2019, the Company entered into a Master Services Agreement and a Stock and Warrant Subscription Agreement with PoC Capital, LLC (“PoC”), whereby PoC agreed to finance $ 1.675 million for the development costs associated with Phase 1b/2 study of onvansertib in combination with FOLFIRI and Avastin ® in patients with metastatic Colorectal Cancer (“mCRC”) harboring KRAS mutation in exchange for (i) 183,334 shares of common stock, (ii) warrants to purchase an aggregate of 150,000 shares of common stock, with an exercise price of $ 3.762 per share, expiring on January 25, 2024, and (iii) 200,000 shares of Series C Convertible Preferred Stock, each share of which was convertible into 1.67 shares of common stock.

In April of 2019, all 200,000 shares of Series C Convertible Preferred Stock were converted into 333,333 shares of the Company's common stock.

As of March 31, 2020 , there were no shares of Series C Convertible Preferred Stock outstanding.

As of June 30, 2020, there were no shares of Series C Convertible Preferred Stock outstanding.

The Company evaluated the awards issued under this transaction and determined they should be classified as equity.

These equity awards were fully vested and nonforfeitable.

These equity awards were fully vested and non-forfeitable.

Since the equity awards were for clinical trial services yet to be provided, the Company recognized $ 1.675 million service receivables as contra equity.

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This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

Series D Convertible Preferred Stock and Service Receivable

On May 8, 2020, the Company entered into a Stock and Warrant Subscription Agreement with PoC, whereby PoC agreed to finance an additional $ 2.3 million for a clinical trial in exchange for (i) 602,833 shares of its common stock (the “Common Stock”), (ii) 154,670 shares of its Series D Preferred Stock (as defined below) and (iii) a warrant (the “Warrant”) exercisable for 859,813 shares of its Common Stock.

In exchange for PoC funding clinical development of onvansertib, the Company’s first-in-class, 3rd generation oral and highly selective PLK1 inhibitor in a Phase 1b/2 clinical trial in patients with metastatic colorectal cancer pursuant to a Master Services Agreement dated as of January 25, 2019 by and among the Company, Integrium, LLC and PoC, as amended.

The Series N Warrants will be exercisable six months following the date of issuance at an exercise price of $ 1.50 per share and will expire on November 7, 2025.

In June of 2020, all 154,670 Series D Preferred Stock were converted to 1,546,700 shares of Common Stock.

As of June 30, 2020, there were no shares of Series D Convertible Preferred Stock outstanding.

The Company evaluated the awards issued under this transaction and determined they should be classified as equity.

These equity awards were fully vested and non-forfeitable.

Since the equity awards were for clinical trial services yet to be provided, the Company recognized $ 2.3 million service receivables as contra equity.

The Company releases the service receivables as clinical trial services are performed.

The conversion feature of the Series D Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date.

Because the Series D Convertible Preferred Stock was perpetual with no stated maturity date, and the conversions could occur any time from inception, the Company immediately recorded a non-cash deemed dividend of $ 0.6 million related to the beneficial conversion feature arising from the issuance of Series D Convertible Preferred Stock.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

Series E Convertible Preferred Stock and Service Receivable

On June 15, 2020 the Company entered into a Securities Purchase Agreement with Acorn Bioventures LP ("Acorn"), CDK Associates, L.L.C.

(“CDK”) and Third Street Holdings LLC (“Third Street”), pursuant to which the Company agreed to offer, issue and sell to Acorn, CDK and Third Street, (i) in a registered direct offering, an aggregate of 1,984,328 shares of common stock and (ii) in a concurrent private placement, (a) an aggregate of 865,824 shares of Series E Preferred Stock (“Series E Preferred Stock”) and (b) Series N warrants to purchase up to 2,213,115 shares of Common Stock.

The Series E Preferred Stock is convertible at any time determined by dividing the $ 10 stated value per share of the Series E Preferred Stock by a conversion price of $ 2.44 per share, subject to adjustment in accordance with the Certificate of Designation.

The Series N Warrants will be exercisable six months following the date of issuance at an exercise price of $ 2.39 per share and will expire on December 16, 2025.

As of June 30, 2020, there were 865,824 shares of Series E Convertible Preferred Stock outstanding.

The conversion feature of the Series E Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date.

Because the Series E Convertible Preferred Stock was perpetual with no stated maturity date, and the conversions could occur any time from inception, the Company immediately recorded a non-cash deemed dividend of $ 2.7 million related to the beneficial conversion feature arising from the issuance of Series E Convertible Preferred Stock.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

In conjunction with the June 15, 2020 offering, we issued 184,426 warrants as an advisory fee.

These warrants are exercisable six months following the date of issuance at an exercise price of $ 3.05 per share and will expire 5.5 years following the date of issuance.

These warrants are classified as equity and its estimated fair value of $ 370,666 was recognized as additional paid in capital on the issuance date.

The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

Securities Purchase Agreements with Lincoln Park Capital Fund, LLC

On March 30, 2020, the Company entered into a Securities Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company agreed to offer, issue and sell to LPC, (i) in a registered direct offering, an aggregate of (a) 800,000 shares of common stock and (b) Series I warrants to purchase up to 131,967 shares (the “Series I Warrant Shares”) of common stock.

In a concurrent private placement, the Company also sold to LPC Series J warrants (the “Series J Warrants”) to purchase one share of common stock for each Share and for each Series I Warrant purchased for cash in the registered direct offering.

The Series J Warrants are exercisable six months following the date of issuance at an exercise price of $ 0.948 per share and will expire 5.5 years following the date of issuance.

The gross proceeds from this purchase were $ 1.0 million.

On April 9, 2020, the Company entered into a Securities Purchase Agreement with LPC, pursuant to which the Company agreed to offer, issue and sell to LPC, (i) in a registered direct offering, an aggregate of (a) 904,970 shares of common stock and (b) Series K warrants to purchase up to 255,000 shares (the “Series K Warrant Shares”) of common stock.

In a concurrent private placement, the Company also sold to LPC Series L warrants (the “Series L Warrants”) to purchase one share of Common Stock for each Share and for each Series K Warrant purchased for cash in the registered direct offering.

The Series L Warrants are exercisable six months following the date of issuance at an exercise price of $ 0.81 per share and will expire 5.5 years following the date of issuance.

The gross proceeds form this purchase were $ 1.1 million.

Securities Purchase Agreement With Certain Directors and Executives

On May 11, 2020 and May 14, 2020, the Company entered into Securities Purchase Agreements with certain directors and executives of the Company pursuant to which the Company sold 447,761 shares of common stock at a purchase price of $ 1.34 per share and 146,854 shares of common stock at a purchase price of $ 1.43 per share.

The gross proceeds from these purchases were $ 810,000 .

Securities Purchase Agreement with Acorn Bioventures LP

On May 26, 2020, the Company entered into a Securities Purchase Agreement with Acorn, pursuant to which the Company agreed to offer, issue and sell to Acorn, (i) in a registered direct offering, an aggregate of 1,205,400 shares of common stock and (ii) in a concurrent private placement, Series M warrants to purchase up to 482,160 shares of common stock.

The Series M Warrants are exercisable six months following the date of issuance at an exercise price of $ 2.024 per share and will expire 5.5 years following the date of issuance.

The gross proceeds from this purchase were $ 2.5 million.

Commitments and Contingencies

Executive and Consulting Agreements

Executive Agreements

Certain executive agreements provide for severance payments in case of terminations without cause or certain change of control scenarios.

Research and Development and Clinical Trial Agreements

In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which Trovagene refers to as onvansertib.

In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which Cardiff Oncology refers to as onvansertib.

Onvansertib is an oral, investigative drug and a highly-selective adenosine triphosphate competitive inhibitor of the serine/threonine PLK1.

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License fees are generally calculated as a percentage of product revenues, with rates that vary by agreement.

For the three months ended March 31, 2020 and 2019 , payments have not been material.

Trovagene does not believe that it has legal liabilities that are probable or reasonably possible that require either accrual or disclosure.

For the six months ended June 30, 2020 and 2019, payments have not been material.

Cardiff Oncology does not believe that it has legal liabilities that are probable or reasonably possible that require either accrual or disclosure.

From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business.

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In November 2018, the Company entered into a Material Transfer Agreement (“MTA”) with Leucadia Life Sciences (“Leucadia”) pursuant to which Leucadia will develop a PCR-based assay for onvansertib for Acute Myeloid Leukemia (“AML”).

The Company’s CEO, Dr.

The Company’s Executive Chairman, Dr.

Thomas Adams, is a principal stockholder of Leucadia.

In connection with the MTA, the Company entered into a consulting agreement with Tommy Adams, Co-Founder & Chief Operating Officer of Leucadia, who is the son of Dr.

During the three months ended March 31, 2020 and 2019 , the Company incurred and recorded approximately $276,000 and $245,000 respectively, of research and development expenses for services performed by Leucadia and Tommy Adams.

During the three months ended June 30, 2020 and 2019 the Company incurred and recorded research and development expenses of approximately $ 253,000 and $ 258,000 , respectively, during the six months ended June 30, 2020 and 2019 the Company incurred and recorded approximately $ 529,000 and $ 503,000 , respectively, for services performed by Leucadia and Tommy Adams.

The COVID-19 outbreak in the United States has caused significant business disruption.

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At this point, the extent to which COVID-19 may impact the Company's financial condition or results of operations is uncertain.

A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of Company to complete certain clinical trials and other efforts required to advance the development of its drugs and raise additional capital.

A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to complete certain clinical trials and other efforts required to advance the development of its drugs and raise additional capital.

In response to the pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020.

The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The CARES did not have a material impact on our income tax provision for the three months ended March 31, 2020 .

We continue to evaluate the impact of the CARES Act on our financial position, results of operations and cash flows.

On April 15, 2020, the Company was granted a loan pursuant to the Paycheck Protection Program under Division A, Title I of the CARES Act (see Note 11).

Subsequent Events

Private Placement

On April 9, 2020, the Company entered into a securities purchase agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which it sold to LPC, (i) in a registered direct offering, an aggregate of (a) 904,970 shares (the “Shares”) of common stock, par value $0.0001 per share (“Common Stock”) and (b) Series K pre-funded warrants (the “Series K Pre-Funded Warrants”) to purchase up to 255,000 shares (the “Series K Warrant Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), which will be exercisable immediately upon issuance for a period of five years after the date of issuance, and (ii) in a concurrent private placement, Series L warrants (the “Series L Warrants”) to purchase up to 1,159,970 shares (the “Series L Warrant Shares”) of Common Stock, for aggregate gross proceeds to the Company of approximately $1.084 million , before deducting estimated offering expenses payable by the Company.

On April 28, 2020 LPC exercised 255,000 Series K Pre-Funded Warrants.

The Company is utilizing the deferment of employer social security payments.

The CARES Act did not have a material impact on our income tax provision for the three or six months ended June 30, 2020.

We continue to monitor changes and revisions of the CARES Act and its impact on our financial position, results of operations and cash flows.

Small Business Administration Payroll Protection Program Loan

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in the aggregate amount of $ 305,000 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act.

The Loan, which was in the form of a Note dated April 15, 2020 issued by the Company, matures on April 15, 2022 and bears interest at a rate of 0.98% per annum, payable monthly commencing on November 15, 2020.

The Note may be prepaid by the Company at any time prior to maturity with no prepayment penalties.

The Loan, which was in the form of a Note dated April 15, 2020 issued by us, matures on April 15, 2022 and bears interest at a rate of 0.98 % per annum, payable monthly commencing on April 15, 2021.

The Note may be prepaid by us at any time prior to maturity with no prepayment penalties.

Funds from the Loan may only be used for payroll costs, rent, and utilities.

The Company intends to use the entire Loan amount for qualifying expenses.

We intend to use the entire Loan amount for qualifying expenses.

Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act.

Amendment to 2014 Equity Incentive Plan

On April 16, 2020 the 2014 Equity Incentive Plan was approved by the shareholders and amended to increase the number of shares of common stock reserved for issuance thereunder to 2,243,056 from 1,243,056 .

Exercise of Series I Pre-Funded Warrants

On April 28, 2020 LPC exercised 131,967 Series I Pre-Funded Warrants.

The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company.

This certification further required the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business.

The certification made by the Company did not contain any objective criteria and is subject to interpretation.

If, despite the good-faith belief that given the Company’s circumstances all eligibility requirements for the PPP were satisfied, it is later determined that the Company had violated any applicable laws or regulations or it is otherwise determined the Company was ineligible to receive the PPP, it may be required to repay the PPP in its entirety and/or be subject to additional penalties.

Subsequent Events

Exercise of Series G Warrants

In July 2020 we received net proceeds of approximately $ 2.3 million from the exercise of 1,600,000 Series G Warrants at $ 1.56 per share.

Exercise of Series F Warrants

In August 2020 we received net proceeds of approximately $ 0.6 million from the exercise of 300,000 Series F Warrants at $ 1.936 per share.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements