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Item 9A. Controls and Procedures

2021-02-25 compared with 2020-02-27 · 392 added, 670 removed, 499 unchanged (68% of the section changed)

4 unchanged sentences

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

decisions regarding required disclosure.

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

10 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Executive Officers, Directors and Key Employees

The following table sets forth the names and ages of the members of our Board of Directors and our executive officers and the positions held by each as of February 20, 2020 .

Chief Executive Officer and Chairman of the Board

Mark Erlander, Ph.D.

Chief Scientific Officer

John Brancaccio

Markin, M.D., Ph.D.

All directors hold office until the next annual meeting of stockholders and the election and qualification of their successors.

Officers serve at the discretion of the board.

Executive Biographies

The principal occupations for the past five years (and, in some instances, for prior years) of each of our directors and executive officers are as follows:

- Chairman and Chief Executive Officer

Adams has served as Chairman of the Board since April 2009 and as our Chief Executive Officer since June 2018.

He is currently a Director at Hepion Pharmaceuticals, Inc.

where he has served since 2014.

Previously, Dr.

Adams served as Chairman of Clearbridge BioPhotonics, Inc., an imaging solutions company, from 2013 to 2019, and as Director of Synergy Pharmaceuticals, Inc.

from 2009 to 2019.

He served in several leadership roles at IRIS International, including Director, Head of Personalized Medicine and Chief Technology Officer, from 2005 until the company’s acquisition by Danaher Corporation in 2012.

From 1998 to 2006, Dr.

Adams was Chairman and Chief Executive Officer of Leucadia Technologies, a privately held biotechnology company which was acquired by IRIS International, Inc.

Adams founded Genta, Inc.

in 1989 and served as its Chief Executive Officer until 1997.

He also founded Gen-Probe, Inc.

in 1984 and served as Chairman and Chief Executive Officer until its acquisition by Chugai Biopharmaceuticals, Inc.

Adams holds a Ph.D.

in Biochemistry from the University of California, Riverside.

The Board believes that Dr.

Adams’ executive leadership and the extensive healthcare expertise he has developed qualifies Dr.

Adams to serve as a director of our company.

Mark Erlander, Ph.D.

- Chief Scientific Officer

Erlander has served as our Chief Scientific Officer since March 2013.

Prior to his current assignment, he was Chief Scientific Officer at bioTheranostics, a subsidiary of bioMérieux, a molecular diagnostic testing company focused on clinical applications in oncology, where he served from 2008 to 2013.

From 2000 to 2008, Dr.

Erlander was Chief Scientific Officer at Arcturus, Inc.

(later AviaraDx), which was acquired by bioMérieux in 2008.

Erlander entered therapeutics as a Group Leader and then Research Fellow in drug discovery at Johnson & Johnson from 1994 to 2000.

From 1991 to 1994, Dr.

Erlander was a Postdoctoral Fellow and then Assistant Professor at Scripps Research.

He has 44 issued patents, over 50 pending applications, and has co-authored over 90 scientific publications.

Erlander holds a B.S.

in Biochemistry from the University of California, Davis, an M.S.

degree in Biochemistry from Iowa State University, and a Ph.D.

in Neuroscience from the University of California, Los Angeles.

John Brancaccio - Independent Director

Brancaccio, a retired CPA, has been a Director since December 2005.

Brancaccio currently serves on the boards of Rasna Therapeutics, Inc.

since 2016, Hepion Pharmaceuticals, Inc.

since 2013, and Tamir Biotechnology, Inc.

(formerly Alfacell Corporation) since 2004.

Previously, Mr.

Brancaccio served as Chief Financial Officer of Accelerated Technologies, Inc., an incubator for medical device companies from 2004 until his retirement in 2017.

The Board believes Mr.

Brancaccio’s experience as a chief financial officer provides valuable financial and accounting expertise that qualifies him to serve as a director of our company.

- Independent Director

Jacob has been a Director since February 2009.

He is Chief Executive Officer of Immuron Limited, an Australian public biotechnology company, where he has served since November 2018 and has been Chairman of Hepion Pharmaceuticals, Inc.

From 2008 to 2017, Dr.

Jacob served as President and Chief Executive Officer of Synergy Pharmaceuticals, Inc.

and as Chairman from 2013 to 2018.

In December of 2018, Synergy Pharmaceuticals, Inc.

filed a petition for relief under Chapter 11 of the U.S.

Bankruptcy Code.

Jacob served as Chief Executive Officer of Callisto Pharmaceuticals, Inc.

from 2003 to 2013 and as Director from 2004 until its merger with Synergy Pharmaceuticals, Inc.

The Board believes Dr.

Jacob’s broad management expertise in the pharmaceutical and biotechnology industry provides relevant experience in a number of strategic and operational areas that qualifies him to serve as a director of our company.

Markin, M.D., Ph.D.

- Independent Director

Markin has been a Director since February 2014.

He is currently Vice President for Network Development, Nebraska Medicine and Associate Vice Chancellor for Business and Executive Director of the UNeTech Institute at the University of Nebraska Medical Center, a public center of health sciences research, patient care, and education, where he has served since July 1985.

Markin also serves concurrently as Courtesy Professor of Psychiatry and Courtesy Professor of Surgery at the University of Nebraska and David T.

Purtilo Distinguished Professor of Pathology and Microbiology since 2005 and Professor of Pathology and Microbiology.

He serves on the boards of Perceptimed Inc.

since 2014, MikroScan Technologies Inc.

since 2015, Afaxys Inc.

since 2017, and Paradigm Diagnostics Inc.

In the non-profit sector, Dr.

Markin serves as a Director of Children’s Hospital and Medical Center Foundation and as Trustee for Keck Graduate Institute, and the Make-A-Wish Foundation, since 2015.

Previously, Dr.

Markin served as Chief Technology Officer and Associate Vice Chancellor for Business Development at the University of Nebraska from 2011 to 2017, and as Director of Transgenomic, Inc.

from 2007 to 2014.

The Board believes Dr.

Markin’s medical insight, board experience and executive experience in institutional healthcare qualifies him to serve as a director of our company.

Family Relationships and Other Arrangements

There are no family relationships among our directors and executive officers.

There are no arrangements or understandings between or among our executive officers and directors pursuant to which any director or executive officer was or is to be selected as a director or executive officer.

Board Leadership Structure and Role in Risk Oversight

From April 2009 to June 2018, we separated the roles of Chairman of the Board (“Chairman”) and Chief Executive Officer.

Although the separation of roles has been appropriate for us during this time period, in the view of the Board, the advisability of the separation of these roles depends upon the specific circumstances and dynamics of our leadership.

The Board, as a unified body and through committee participation, organizes the execution of its monitoring and oversight roles and does not expect its Chairman to organize those functions.

The Board has three standing committees-Audit, Compensation and Corporate Governance/Nominating.

The membership of each of the committees of the Board is comprised of independent directors, with each of the committees having a chairman, each of whom is an independent director.

Our non-management members of the Board meet in executive session at each regular Board meeting.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success.

Management is responsible for the day-to-day management of the risks we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management.

In its risk oversight role, the Board is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The Board believes that establishing the right “tone at the top” and that full and open communication between executive management and the Board are essential for effective risk management and oversight.

Our CEO communicates frequently with members of the Board to discuss strategy and challenges facing our company.

Senior management usually attends our regular quarterly Board meetings and is available to address any questions or concerns raised by the Board on risk management-related and any other matters.

Each quarter, the Board receives presentations from senior management on matters involving our key areas of operations.

Audit Committee

We have a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

The Audit Committee’s responsibilities include, among other things:

(i) selecting and retaining an independent registered public accounting firm to act as our independent auditors, setting the compensation for our independent auditors, overseeing the work done by our independent auditors and terminating our independent auditors, if necessary, (ii) periodically evaluating the qualifications, performance and independence of our independent auditors, (iii) pre-approving all auditing and permitted non-audit services to be provided by our independent auditors, (iv) reviewing with management and our independent auditors our annual audited financial statements and our quarterly reports prior to filing such reports with the SEC, including the results of our independent auditors’ review of our quarterly financial statements, and (v) reviewing with management and our independent auditors significant financial reporting issues and judgments made in connection with the preparation of our financial statements.

The Audit Committee also prepares the Audit Committee report that is required to be included in our annual proxy statement pursuant to the rules of the SEC.

As of December 31, 2019 , the Audit Committee consisted of John P.

Brancaccio, chairman of the Audit Committee, Dr.

Markin and Dr.

Athena Countouriotis, who resigned from the Board on January 24, 2020.

Jacob replaced Dr.

Countouriotis as a member of the Audit Committee in 2020.

Under the applicable rules and regulations of Nasdaq, each member of a company’s audit committee must be considered independent in accordance with Nasdaq Listing Rule 5605(c)(2)(A)(i) and (ii) and Rule 10A-3(b)(1) under the Exchange Act.

The Board has determined that each of Mr.

Brancaccio, Dr.

Jacob and Dr.

Countouriotis is “independent” as that term is defined under applicable Nasdaq and SEC rules.

Brancaccio is our audit committee financial expert.

The Board has adopted a written charter setting forth the authority and responsibilities of the Audit Committee, which is available on our website at http://trovageneoncology.investorroom.com/ under “Corporate Governance”.

Compensation Committee

The purpose of the Compensation Committee is to discharge the Board’s responsibilities relating to compensation of our directors and executive officers.

The Compensation Committee has responsibility for, among other things, (i) recommending to the Board for approval the overall compensation philosophy for our company and periodically reviewing the overall compensation philosophy for all employees to ensure it is appropriate and does not incentivize unnecessary and excessive risk taking, (ii) reviewing annually and making recommendations to the Board for approval, as necessary or appropriate, with respect to our compensation plans, (iii) based on an annual review, determining and approving, or at the discretion of the Compensation Committee, recommending to the Board for determination and approval, the compensation and other terms of employment of each of our officers, (iv) reviewing and making recommendations to the Board with respect to the compensation of directors, (v) overseeing our regulatory compliance with respect to compensation matters, (vi) reviewing and discussing with management, prior to the filing of our annual proxy statement or annual report on Form 10-K, our disclosure relating to executive compensation, including our Compensation Discussion and Analysis and executive and director compensation tables as required by SEC rules, and (vii) preparing an annual report regarding executive compensation for inclusion in our annual proxy statement or our annual report on Form 10-K.

The Compensation Committee has the power to form one or more subcommittees, each of which may take such actions as may be delegated by the Compensation Committee.

The charter of the Compensation Committee grants the Compensation Committee authority to select, retain, compensate, oversee and terminate any compensation consultant to be used to assist in the evaluation of director, chief executive officer, officer and our other compensation and benefit plans and to approve the compensation consultant’s fees and other retention terms.

The Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any internal or external legal, accounting or other advisors and consultants retained by the Compensation

The Compensation Committee may also select or retain advice and assistance from an internal or external legal, accounting or other advisor as the Compensation Committee determines to be necessary or advisable in connection with the discharge of its duties and responsibilities and will have the direct responsibility to appoint, compensate and oversee any such advisor.

During the past year, the Compensation Committee engaged Marsh & McLennan Agency LLC (“Marsh & McLennan”) as a compensation consultant.

As of December 31, 2019 , the Compensation Committee consisted of Dr.

Markin, chairman of the Compensation Committee, Dr.

Jacob and John Brancaccio.

The Board has determined that all of the members are “independent” under Nasdaq Listing Rule 5605(a)(2).

The Board has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee, which is available on our website at http://trovageneoncology.investorroom.com/ under “Corporate Governance”.

Corporate Governance/Nominating Committee

The Corporate Governance/Nominating Committee has responsibility for assisting the Board in, among other things, (i) effecting Board organization, membership and function, including identifying qualified board nominees, (ii) effecting the organization, membership and function of the committees of the Board, including the composition of the committees of the Board and recommending qualified candidates for the committees of the Board, (iii) evaluating and providing successor planning for the chief executive officer and our other executive officers, (iv) identifying and evaluating candidates for director in accordance with certain general and specific criteria, (v) developing and recommending to the Board Corporate Governance Guidelines and any changes thereto, setting forth the corporate governance principles applicable to us, and overseeing compliance with the Corporate Governance Guidelines, and (vi) reviewing potential conflicts of interest involving directors and determining whether such directors may vote on issues as to which there may be a conflict.

The Corporate Governance/Nominating Committee is responsible for identifying and evaluating candidates for director.

Potential nominees are identified by the Board based on the criteria, skills and qualifications that are deemed appropriate by the Corporate Governance/Nominating Committee.

The Corporate Governance/Nominating Committee believes that candidates for director should have certain minimum qualifications, including high character and integrity, an inquiring mind and vision, willingness to ask hard questions, ability to work well with others, freedom from conflicts of interest, willingness to devote sufficient time to the Company’s affairs, diligence in fulfilling his or her responsibilities and the capacity and desire to represent the best interests of the Company and our stockholders as a whole and not primarily a special interest group or constituency.

While our nominating criteria does not prescribe specific diversity standards, the Corporate Governance/Nominating Committee and its independent members seek to identify nominees that have a variety of perspectives, professional experience, education, difference in viewpoints and skills, and personal qualities that will result in a well-rounded Board.

As of December 31, 2019 , the Corporate Governance/Nominating Committee consisted of Dr.

Markin, chairman of the Corporate Governance/Nominating Committee, Mr.

John Brancaccio, and Dr.

Athena Countouriotis, who resigned from the Board on January 24, 2020.

The Board has determined that all of the members are “independent” under Nasdaq Listing Rule 5605(a)(2).

The Board has adopted a written charter setting forth the authority and responsibilities of the Corporate Governance/Nominating Committee, which is available on our website at http://trovageneoncology.investorroom.com/ under “Corporate Governance”.

Code of Business Conduct and Ethics

We have adopted a formal Code of Business Conduct and Ethics applicable to all Board members, officers and employees.

Our Code of Business Conduct and Ethics can be found on our website (www.trovageneoncology.com).

A copy of our Code of Business Conduct and Ethics may be obtained without charge upon written request to Secretary, Trovagene, Inc., 11055 Flintkote Avenue, San Diego, California 92121.

If we make any substantive amendments to our Code of Business Conduct and Ethics or grant any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website (www.trovageneoncology.com) and/or in our public filings with the SEC.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines, which are designed to help us achieve our goals, govern us with high standards of integrity and increase stockholder value.

These Corporate Governance Guidelines provide a framework for the conduct of the Board’s business.

The Corporate Governance Guidelines also set forth the practices our Board will follow with respect to Board composition and selection, Board meetings and Board committees and Chief Executive Officer performance evaluation and compensation.

Our Corporate Governance Guidelines can be found on our website (www.trovageneoncology.com).

Hedging and Pledging Policies

As part of our Insider Trading Policy, all of our officers, all of our directors, certain of our employees and consultants and family members or others sharing a household with any of the foregoing are prohibited from engaging in short sales of our securities, any hedging or monetization transactions involving our securities and in transactions involving puts, calls or other derivative securities based on our securities.

Our Insider Trading Policy further prohibits such persons from purchasing our securities on margin, borrowing against any account in which our securities are held or pledging our securities as collateral for a loan unless pre-cleared by our Insider Trading Compliance Officer.

As of February 20, 2020 , none of our directors or executive officers had pledged any shares of our common stock.

The information required by this item is incorporated by reference from the information contained in our Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Stockholders to be held in 2021 (the “2021 Proxy Statement”), under the headings “Election of Directors.”

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Principal Executive Officer and our other highest paid executive officer whose total annual salary and bonus exceeded $100,000 (collectively, the “named executive officers”) for fiscal year 2019 .

Name and Principal Position

Non-Equity Incentive Plan Compensation ($) (1)

Option Awards ($) (2)

Stock Awards ($) (3)

Mark Erlander, CSO

The amounts in this column relate to bonuses earned by the Named Executive Officers in 2019 and 2018 .

Amounts shown in this column do not reflect dollar amounts actually received by our named executive officers.

Instead, these amounts represent the aggregate grant date fair value of stock option awards determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718.

The valuation assumptions used in determining 2019 and 2018 amounts are described in Note 6 to our financial statements included in our Annual Reports on Form 10-K for the fiscal years ended December 31, 2019 and 2018 .

Our named executive officers will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.

This reflects the grant date fair value of awards granted during fiscal years ended December 31, 2019 and 2018 .

Of this amount, $60,000 was the compensation paid for non-employee director service in 2018.

Stock option awards were granted for non-employee director service in 2018.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information for the named executive officers regarding the number of shares subject to both exercisable and unexercisable stock options and RSU's as well as the exercise prices and expiration dates thereof, as of December 31, 2019 .

Except for the options and RSU's set forth in the table below, no other equity awards were held by any our named executive officers as of December 31, 2019 .

Option Awards (1)

Number of Securities

Underlying Unexercised Options (#)

Number of Securities

Underlying Unexercised Options (#)

Unexercisable

Exercise Price ($)

Expiration Date

shares or units of

have not vested (#)

Market value of

shares or units of

have not vested ($)

Mark Erlander

For each executive officer, the shares listed in this table are subject to a single stock option award carrying the varying exercise prices as set forth herein.

The option awards remain exercisable until they expire ten years from the date of grant, subject to earlier expiration following termination of employment.

Director Compensation

Under our non-employee director compensation policy, a new non-employee director receives an initial grant of options to purchase a number of shares of common stock equal to 0.1% of our shares of common stock issued and outstanding as of the date of grant (subject to adjustment for recapitalizations, stock split, stock dividends and the like).

In addition, each non-employee director receives the following annual compensation for his or her service:

(i) an annual retainer fee of $50,000, payable quarterly, and an equity grant of options to purchase a number of shares of common stock equal to 0.1% of shares of our common stock issued and outstanding as of the date of grant (subject to adjustment for recapitalizations, stock split, stock dividends and the like), all of which vest on the one year anniversary of the date of grant, (ii) an additional annual retainer fee of $40,000, payable quarterly, if such non-employee director serves as the Chairman of the Board of Directors, (iii) an additional annual retainer fee of $16,000, $10,000 and $8,000 payable quarterly, if such non-employee director serves as the chair of the Audit Committee, Compensation Committee or Nominating/Corporate Governance Committee, respectively, and (iv) an additional annual retainer fee of $8,000, $6,000 and $4,000 to such non-employee director if he or she serves as a non-chair member of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee, respectively, per committee.

We also reimburse all of our directors for out-of-pocket expenses incurred in connection with the rendering of services as a director.

The following table sets forth summary information concerning the total compensation paid to our non-employee directors in 2019 for services to our company.

Fees Earned or Paid in Cash ($)

Option Awards ($) (1)

John Brancaccio (2)

Athena Countouriotis (5)

Amounts shown in this column do not reflect dollar amounts actually received by our non-employee directors.

Instead, these amounts represent the aggregate grant date fair value of stock option awards determined in accordance with FASB ASC Topic 718.

The valuation assumptions used in determining 2019 amounts are described in Note 6 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 .

Our non-employee directors will only realize compensation to the extent the trading price of our common stock is greater than the exercise price of such stock options on the date the options are exercised.

As of December 31, 2019 , 47,806 stock options were outstanding, of which 3,072 were exercisable.

As of December 31, 2019 , 47,376 stock options were outstanding, of which 2,642 were exercisable.

As of December 31, 2019 , 46,969 stock options were outstanding, of which 2,235 were exercisable.

As of December 31, 2019 , 46,019 stock options were outstanding, of which 1,109 were exercisable.

Countouriotis resigned from the Board on January 24, 2020.

Employment Agreements

Mark Erlander Employment Agreement

On February 18, 2016, we entered into an employment agreement with Dr.

Erlander (the “Erlander Employment Agreement”).

The term of the Erlander Employment Agreement commenced on February 18, 2016 and will continue until January 1, 2020, following which time the Erlander Employment Agreement will be automatically renewed for successive one year periods at the end of each term, unless either party delivers written notice to the other party of their intent to not renew the agreement.

Pursuant to the Erlander Employment Agreement, Dr.

Erlander’s base compensation, as of December 31, 2019 , was $397,201 per year.

Erlander is eligible to receive a cash bonus of up to 50% of his base salary per year based on meeting certain performance objectives and bonus criteria.

Erlander’s employment is terminated by us for cause or as a result of Dr.

Erlander’s death or permanent disability, or if Dr.

Erlander terminates his employment agreement voluntarily, Dr.

Erlander will be entitled to receive a lump sum equal to (i) any portion of unpaid base compensation then due for periods prior to termination, (ii) any bonus earned but not yet paid through the date of his termination, and (iii) all business expenses reasonably and necessarily incurred by Dr.

Erlander prior to the date of termination.

Erlander’s employment is terminated by us without cause or by Dr.

Erlander for good reason, Dr.

Erlander will be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Dr.

Erlander of his employment voluntarily, in addition to (provided that Dr.

Erlander executes a written release with respect to certain matters) a severance payment equal to his base compensation for 12 months from the date of termination and the bonus and any benefits that Dr.

Erlander would be eligible for during such 12 month period.

In addition, if Dr.

Erlander’s employment is terminated:

(a) by us without cause within 12 months prior to a change of control (as defined in the Erlander Employment Agreement) that was pending during such 12 month period, (b) by Dr.

Erlander for good reason within 12 months after a change of control, or (c) by us without cause at any time upon or within 12 months after a change of control, Dr.

Erlander will be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Dr.

Erlander of his employment voluntarily, in addition to the severance payments due if Dr.

Erlander’s employment is terminated by us without cause or by Dr.

Erlander for good reason, and all of Dr.

Erlander’s unvested stock options and other equity awards would immediately vest and become fully exercisable (x) in the event a change of control transaction is pending, for a period of six months following the date of termination, and (y) in the event a change of control transaction is not then pending, for the period of time set forth in the applicable agreement evidencing the award.

Potential Payments Upon Termination Or Change In Control

Other than the provisions of the executive severance benefits to which our named executive officers would be entitled to at December 31, 2019 as set forth above, we have no liabilities under termination or change in control conditions.

We do not have a formal policy to determine executive severance benefits.

Each executive severance arrangement is negotiated on an individual basis.

The table below estimates the current value of amounts payable to our named executive officer in the event that a termination of employment occurred on December 31, 2019 .

The closing price of our common stock, as reported on The Nasdaq Capital Market, was $1.24 on December 31, 2019 .

The following table excludes certain benefits, such as accrued vacation, that are available to all employees generally.

The actual amount of payments and benefits that would be provided can only be determined at the time of a change in control and/or the named executive officer’s qualifying separation from our Company.

Mark Erlander

By Trovagene Without

Cause Outside a Change

By Trovagene Without

Cause or by Dr.

Good Reason in Connection

with a Change In Control (1)

Value of Equity Securities Accelerated

Cash Payments

Total Cash Benefits and Payments

Relates to the termination of the Erlander Employment Agreement:

(a) by us without cause within 12 months prior to a change of control that was pending during such 12 month period, (b) by Dr.

Erlander for good reason within 12 months after a change of control, or (c) by us without cause at any time upon or within 12 months after a change of control.

The information required by this item is incorporated by reference from the information contained in the 2021 Proxy Statement under the heading “Executive Compensation.”

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding beneficial ownership of shares of our common stock as of February 20, 2020 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers, and (iv) all of our directors and executive officers as a group.

Except as otherwise indicated, the persons named in the table below have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws, where applicable.

Name of Beneficial Owner (1)

Shares of Common

Stock Beneficially Owned

Percentage (2)

Executive officers and directors:

John Brancaccio

Athena Countouriotis

Mark Erlander

All Officers and Directors as a Group (6 persons)

*less than 1%

The address of each person is c/o Trovagene, Inc., 11055 Flintkote Avenue, San Diego, CA 92121 unless otherwise indicated herein.

The calculation in this column is based upon 10,209,587 shares of common stock outstanding on February 20, 2020 .

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the subject securities.

Shares of common stock that are currently exercisable or exercisable within 60 days of February 20, 2020 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage beneficial ownership of such person, but are not treated as outstanding for the purpose of computing the percentage beneficial ownership of any other person.

Includes 6,495 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Includes 3,072 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Includes 2,642 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Includes 2,235 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Includes 1,109 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Countouriotis resigned from the Board on January 24, 2020.

Includes 24,062 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Includes 39,615 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days after February 20, 2020 .

Section 16(A) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC.

Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

Based on a review of the copies of such forms received, we believe that during 2019 , all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

The information required by this item is incorporated by reference from the information contained in the 2021 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The following is a description of transactions or series of transactions since January 1, 2019 , or any currently proposed transaction, to which we were or are to be a participant and in which the amount involved in the transaction or series of transactions exceeds $120,000, and in which any of our directors, executive officers or persons who we know hold more than five percent of any class of our capital stock, including their immediate family members, had or will have a direct or indirect material interest, other than compensation arrangements with our directors and executive officers.

In November 2018, we 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 AML.

Thomas Adams, is a principal stockholder of Leucadia.

In connection with the MTA, we entered into a consulting agreement with Tommy Adams, VP of Operations of Leucadia, who is the son of Dr.

During the years ended December 31, 2019 and 2018 , we incurred and recorded approximately $1,005,000 and $183,000 , respectively, of research and development expenses for services performed by Leucadia and Tommy Adams.

We have entered into indemnification agreements with our directors and executive officers under which we agreed to indemnify those individuals under the circumstances and to the extent provided for in the agreements, for expenses, damages, judgments, fines, settlements and any other amounts they may be required to pay in actions, suits or proceedings which they are or may be made a party or threatened to be made a party by reason of their position as a director, officer or other agent of ours, and otherwise to the fullest extent permitted under Delaware law and our By-Laws.

We also have an insurance policy covering

our directors and executive officers with respect to certain liabilities, including liabilities arising under the Securities Act of 1933, as amended, or otherwise.

Our board has adopted a written related party transaction policy to set forth the policies and procedures for the review, approval and ratification of related party transactions.

This policy covers any financial transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which we are or are to be a participant, the amount involved will or may be expected to exceed $50,000 since the beginning of our last completed fiscal year, and a related party has or will have a direct or indirect material interest.

A related party is any individual who is, or who has been since the beginning of our last fiscal year, an executive officer, director or nominee for election as a director, or any person known to be the record or beneficial owner of more than 5% of any class of our voting securities, any immediate family member of any of the foregoing persons or any entity which is owned or controlled by any of the foregoing persons, or any entity in which one of the foregoing persons has a substantial ownership interest in or control over such entity.

Transactions involving the employment or compensation of our executive officers or compensation to our directors, transactions with another company at which a related party’s only relationship is as a director and/or beneficial owner of less than 10% of such company’s equity interests, transactions in which all of our stockholders receive proportional benefits, certain regulated transactions and certain banking-related services are not considered related-person transactions under this policy.

Under our Audit Committee Charter and our related party transaction policy, our Audit Committee is responsible for reviewing and approving in advance any related party transaction.

In connection with its review of a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the related party transaction.

Director Independence

Our Board has determined that a majority of the Board consists of members who are currently “independent” as that term is defined under Nasdaq Listing Rule 5605(a)(2).

The Board considers Drs.

Jacob, Markin, and Mr.

Brancaccio to be “independent”.

The information required by this item is incorporated by reference from the information contained in the 2021 Proxy Statement under the headings “Certain Relationships and Related Transactions.”

PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit and Non-Audit Fees

The aggregate fees billed to us by BDO, our independent registered public accounting firm, for the indicated services for each of the last two fiscal years were as follows:

Audit fees (1)

Audit fees consist of fees for professional services performed by BDO for the audit and review of our financial statements, preparation and filing of our registration statements, including issuance of comfort letters.

Tax fees consist of fees for professional services performed by BDO with respect to tax compliance.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Consistent with SEC policies and guidelines regarding audit independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services provided by our independent registered public accounting firm on a case-by-case basis.

Our Audit Committee has established a policy regarding approval of all audit and permissible non-audit services provided by our principal accountants.

Our Audit Committee pre-approves these services by category and service.

Our Audit Committee has pre-approved all of the services provided by our independent registered public accounting firm.

The information required by this item is incorporated by reference from the information contained in the 2021 Proxy Statement under the heading “Proposal 2:

Ratification of the Appointment of Our Independent Registered Public Accounting Firm for Fiscal Year Ending December 31, 2021”.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Description of Exhibit

Number Description of Exhibit

(a)(1) Financial Statements

The financial statements required by this item are submitted in a separate section beginning on page F-1 of this Annual Report on Form 10-K.

Number Description

Amended and Restated Certificate of Incorporation of Trovagene, Inc.

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(incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on February 20, 2019).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Trovagene, Inc.

(incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on May 6, 2020).

Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on May 13, 2020).

Certificate of Designation of Preferences, Rights and Limitations of Series E Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on June 16, 2020).

Form of Common Stock Certificate of Trovagene, Inc.

1 unchanged sentence

2004 Stock Option Plan (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on July 19, 2004)

Form of Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 28, 2012).

Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on July 1, 2014).

3 unchanged sentences

Form of Warrant to Purchase Common Stock (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 12, 2018).

Form of Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on January 29, 2019).

Form of Series A Warrant (incorporated by reference to Exhibit 10.2 to Form 8-K filed on April 5, 2019).

Form of Series B Warrant (incorporated by reference to Exhibit 10.3 to Form 8-K filed on April 5, 2019).

Form of Series C Warrant (incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 13, 2019).

Form of Series D Warrant (incorporated by reference to Exhibit 10.3 to Form 8-K filed on May 13, 2019).

Form of Series E Pre-Funded Warrant (incorporated by reference to Exhibit 10.2 to Form 8-K filed on August 21, 2019).

Form of Series F Warrant (incorporated by reference to Exhibit 10.3 to Form 8-K filed on August 21, 2019).

Form of Series G, H and Pre-Funded Warrant and Placement Agent Warrant (incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 28, 2019).

Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.

Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.16 to Form 10-K filed on February 27, 2020).

Summary of Terms of Lease Agreement dated as of October 28, 2009 between Trovagene, Inc.

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Form of Indemnification Agreement to be entered into between the Company and its directors and executive officers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 15, 2015).

Employment Agreement, dated February 18, 2016, by and between the Company and Mark Erlander (incorporated by reference to Exhibit 10.33 to the Company’s Quarterly Report on Form 10-Q filed on May 10, 2016).

Amended and Restated Employment Agreement, dated February 22, 2021, by and between the Company and Mark Erlander .

Form of Seventh Amendment to Standard Industrial Net Lease dated April 4, 2016 between Trovagene, Inc.

3 unchanged sentences

(incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed on March 15, 2017).

Stock and Warrant Subscription Agreement entered into as of January 25, 2019 by and between Trovagene, Inc.

and PoC Capital, LLC (incorporated by reference to Exhibit 10.1 to Form 8-K filed on January 29, 2019).

Securities Purchase Agreement dated April 4, 2019 by and between Trovagene, Inc.

and the Purchaser (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 5, 2019).

Securities Purchase Agreement dated May 10, 2019 by and between Trovagene, Inc.

and the Purchaser (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 13, 2019).

Securities Purchase Agreement dated August 20, 2019 by and between Trovagene, Inc.

and the Purchaser (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 21, 2019).

Form of Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 28, 2019).

Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.3 to Form 8-K filed on October 28, 2019).

Stock and Warrant Subscription Agreement entered into as of May 8, 2020 by and between Cardiff Oncology, Inc.

and POC Capital, LLC.

(incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 13, 2020).

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 13, 2020).

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 19, 2020).

Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 16, 2020).

Separation Agreement between Thomas Adams and Cardiff Oncology, Inc.

dated December 21, 2020 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 21, 2020).

Employment Agreement, dated February 22, 2021 by and between the Company and Vicki Keleman.

Employment Agreement, dated February 22, 2021 by and between the Company and Brigitte Lindsay.

Consent of BDO USA, LLP.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

XBRL Instance Document.

XBRL Taxonomy Extension Schema.

XBRL Taxonomy Extension Calculation Linkbase.

XBRL Taxonomy Extension Labels Linkbase.

XBRL Taxonomy Extension Presentation Linkbase.

XBRL Taxonomy Extension Definition Linkbase.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema.

101.CAL XBRL Taxonomy Extension Calculation Linkbase.

101.LAB XBRL Taxonomy Extension Labels Linkbase.

101.PRE XBRL Taxonomy Extension Presentation Linkbase.

101.DEF XBRL Taxonomy Extension Definition Linkbase.

+ Indicates a management contract or compensatory plan or arrangement.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TROVAGENE, INC.

/s/ Thomas H.

CARDIFF ONCOLOGY, INC.

/s/ Mark Erlander

2/25/2021 Chief Executive Officer (Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Thomas H.

Adams as his or her attorney-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mark Erlander as his or her attorney-in-fact, with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Thomas H.

Chief Executive Officer and Chairman of the Board

(Principal Executive Officer)

/s/ Brigitte Lindsay

Brigitte Lindsay

(Principal Financial and Accounting Officer)

/s/ John Brancaccio

John Brancaccio

SIGNATURE TITLE DATE

/s/ Mark Erlander Chief Executive Officer 2/25/2021

Mark Erlander (Principal Executive Officer)

/s/ Brigitte Lindsay VP, Finance 2/25/2021

Brigitte Lindsay (Principal Financial and Accounting Officer)

/s/ Rodney S.

TROVAGENE, INC.

Markin Chairman of the Board and Director 2/25/2021

/s/ Thomas Adams Director 2/25/2021

Armitage Director 2/25/2021

/s/ John Brancaccio Director 2/25/2021

John Brancaccio

Jacob Director 2/25/2021

Pace Director 2/25/2021

/s/ Lâle White Director 2/25/2021

CARDIFF ONCOLOGY, INC.

Index to Financial Statements

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Board of Directors and Stockholders

Trovagene, Inc.

Cardiff Oncology, Inc.

San Diego, California

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Trovagene, Inc.

We have audited the accompanying balance sheets of Cardiff Oncology, Inc.

(the “Company”) as of December 31, 2020 and 2019, the related statements of operations, stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 2 of the financial statements, the Company has changed its method of accounting for leases during the year ended December 31, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases .

Going Concern Uncertainty

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee of the Company’s board of directors and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued clinical trial expenses

As disclosed in Note 2 to the consolidated financial statements, the Company expenses research and development expenditures as incurred, which include costs relating to clinical trial activities.

The Company accrues costs for clinical trial activities based upon estimates of the services performed and costs incurred that have not been invoiced by the service providers.

The Company’s clinical trial accrual balance at December 31, 2020 is $1.69 million, and the Company’s related 2020 clinical trial expenses are included in research and development expense of $11.2 million for the year ended December 31, 2020.

We identified accrued clinical trial expenses as a critical audit matter.

When estimating clinical trial expenses, the Company considers several factors including clinical trial budgets, contract amendments and the progress toward completion.

Auditing these elements involves especially challenging auditor judgment due to the nature and extent of audit effort required to address these matters and a high degree of auditor subjectivity.

The primary procedures we performed to address the critical audit matter included:

• Testing management’s process for estimating accrued clinical trial expenses by (i) obtaining and inspecting significant agreements, clinical trial budgets, and contract amendments, (ii) evaluating the Company’s documentation of trial progress and status (including consideration of patient enrollment and milestones achieved), (iii) confirming clinical trial progress with third party service providers, and (iv) testing a sample of transactions by comparing the costs against the related invoices and agreements.

• Testing the completeness of the Company’s clinical trial accruals by (i) evaluating publicly available information (such as press releases, investor presentations and public databases that track clinical trials) and board of directors’ minutes which discuss the status of clinical trials, (ii) inquiring of clinical staff outside of finance to gain an understanding of the status of significant on-going clinical trials, and (iii) testing a sample of payments subsequent to the year end to evaluate the completeness of clinical trial accruals.

/s/ BDO USA, LLP

2 unchanged sentences

February 25, 2021

Trovagene, Inc.

Cardiff Oncology, Inc.

Balance Sheets

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Current assets:

1 unchanged sentence

Accounts receivable and unbilled receivable 320,458 203,480

Prepaid expenses

Prepaid expenses and other assets 2,055,321 954,957

Total current assets 133,356,460 11,353,729

1 unchanged sentence

Operating lease right-of-use assets 343,001 697,418

Other assets 404,232 157,576

Total Assets $ 134,727,387 $ 13,086,546

Liabilities and Stockholders’ Equity

2 unchanged sentences

Accrued liabilities 3,850,763 3,260,061

Deferred rent

Operating lease liabilities 860,206 865,379

Other current liabilities 42,000 —

Total current liabilities 6,118,977 4,781,744

1 unchanged sentence

Operating lease liabilities, net of current portion 9,291 860,963

Deferred rent, net of current portion

Other liabilities 156,266 128,368

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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 December 31, 2019 and December 31, 2018 with liquidation preference of $606,000 at December 31, 2019 and December 31, 2018;

8,860 designated as Series B Convertible Preferred Stock;

0 shares outstanding at December 31, 2019 and 2018, respectively;

200,000 designated as Series C Convertible Preferred Stock;

0 shares outstanding at December 31, 2019 and December 31, 2018

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

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The accompanying notes are an integral part of these financial statements.

Trovagene, Inc.

Cardiff Oncology, Inc.

Statements of Operations

Year Ended December 31,

Royalties $ 365,993 $ 243,137

Services — 1,495

Total revenues 365,993 244,632

Costs and expenses:

Cost of revenue

Research and development 11,235,396 11,162,236

Selling, general and administrative 8,216,471 5,760,890

Restructuring charges

Total operating expenses 19,451,867 16,923,126

3 unchanged sentences

Other gain (loss), net ( 28,244 ) 1,978

Gain on extinguishment of debt

Gain from changes in fair value of derivative financial instruments—warrants

Gain (loss) from changes in fair value of derivative financial instruments—warrants ( 280,844 ) 28,188

Net loss ( 19,306,672 ) ( 16,414,159 )

Preferred stock dividend payable on Series A Convertible Preferred Stock ( 24,240 ) ( 24,240 )

Deemed dividend recognized on beneficial conversion features of Series B Convertible Preferred Stock issuance

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 ) —

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

Net loss attributable to common stockholders $ ( 22,597,396 ) $ ( 16,706,668 )

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The accompanying notes are an integral part of these financial statements.

Trovagene, Inc.

Cardiff Oncology, Inc.

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

Balance, January 1, 2018

Balance, December 31, 2018 60,600 $ 60 3,831,879 $ 7,742 $ 202,267,605 $ — $ ( 192,191,215 ) $ 10,084,192

Sale of common stock and warrants, net of expenses

Sale of Series B Convertible Preferred Stock, net of expenses

— — 1,994,929 199 8,817,573 — — 8,817,772

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment, net of expenses and discount

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

Stock-based compensation

— — — — 884,942 — — 884,942

Issuance of common stock upon exercise of warrants

— — 2,221,635 223 3,299,287 — — 3,299,510

Issuance of common stock upon vesting of restricted stock units

Deemed dividend recognized on beneficial conversion features of Series B Convertible Preferred Stock issuance

Issuance of common stock upon conversion of Series B Convertible Preferred Stock

— — 22,057 5 ( 5 ) — — —

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance

— — — — 268,269 — ( 268,269 ) —

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 — — — — — — ( 24,240 ) ( 24,240 )

Issuance of common stock for share rounding as a result of reverse stock split

Cumulative effect of change in accounting principle related to revenue recognition

— — 6,466 — — — — —

Release of clinical trial funding commitment

— — — — — 703,327 — 703,327

— — — — — ( 16,414,159 ) ( 16,414,159 )

Balance, December 31, 2019 60,600 $ 60 8,593,633 $ 8,312 $ 217,172,528 $ ( 971,673 ) $ ( 208,897,883 ) $ 7,311,344

Sale of common stock and warrants, net of expenses

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment, net of expenses and discount

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

865,824 866 12,964,313 1,297 112,297,786 — — 112,299,949

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 )

Stock-based compensation

— — — 1,764,804 — — 1,764,804

Issuance of common stock upon exercise of warrants

— — 12,138,469 1,214 24,870,372 — — 24,871,586

Issuance of common stock upon vesting of restricted stock units

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance

Issuance of common stock upon conversion of Series C Convertible Preferred Stock

— — 10,810 1 ( 1 ) — — —

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 ) —

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

Issuance of common stock upon conversion of Series E Convertible Preferred Stock ( 210,780 ) ( 210 ) 863,852 86 124 — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 24,240 ) ( 24,240 )

Issuance of common stock for share rounding as a result of reverse stock split

Release of clinical trial funding commitment — — — — — 1,100,415 1,100,415

Common Stock par value adjustment — — — ( 7,453 ) 7,453 — — —

Issuance of common stock upon exercise of stock options — — 60,195 6 148,190 — — 148,196

Net loss — — — — — — ( 19,306,672 ) ( 19,306,672 )

Balance, December 31, 2020 715,644 $ 716 36,780,805 $ 3,678 $ 361,820,025 $ ( 2,171,258 ) $ ( 231,495,279 ) $ 128,157,882

(1) Net of expenses of $ 7,507,123 , and fair value of warrants issued as a transaction advisory fee as of the date of issuance of $ 370,666

The accompanying notes are an integral part of these financial statements.

Trovagene, Inc.

Cardiff Oncology, Inc.

Statements of Cash Flows

1 unchanged sentence

Operating activities

Net loss $ ( 19,306,672 ) $ ( 16,414,159 )

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

Loss on disposal of assets

Impairment loss 34,169 —

Depreciation and amortization

Depreciation 466,009 494,232

Stock-based compensation expense 1,764,804 884,943

Gain on extinguishment of debt

Deferred rent

Change in fair value of derivative financial instruments—warrants 280,844 ( 28,188 )

1 unchanged sentence

Changes in operating assets and liabilities:

Other assets ( 246,656 ) ( 54,778 )

Accounts receivable and unbilled receivable ( 116,978 ) ( 35,725 )

Prepaid expenses

Prepaid expenses and other current assets ( 1,100,364 ) 115,459

Operating lease right-of-use assets 320,248 302,491

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Capital expenditures ( 211,880 ) ( 67,622 )

Proceeds from disposals of capital equipment

Purchases of short-term investments

Sales of short-term investments

Net cash provided (used) by investing activities

Net cash used in investing activities ( 211,880 ) ( 67,622 )

Financing activities

Proceeds from sale of common stock and warrants, net of expenses of $158,678 and $1,336,123 respectively

Proceeds from sales of Series B Convertible Preferred Stock, net of expenses of $0 and $497,617 respectively

Proceeds from sale of common stock, preferred stock and warrants, net of expenses of $ 7,507,123 and $ 158,678 respectively

112,299,949 8,817,772

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

Proceeds from exercise of warrants 24,871,586 3,299,509

Repayments under equipment line of credit

Payment upon debt extinguishment

Proceeds from exercise of options 148,196 —

Borrowings under note payable 305,000 —

Repayments of note payable ( 305,000 ) —

Net cash provided by financing activities 137,312,231 12,077,281

4 unchanged sentences

Cash paid for taxes $ 800 $ 800

Cash paid for interest

Supplemental disclosure of non-cash investing and financing activities:

Preferred stock dividend payable on Series A Convertible Preferred Stock $ 24,240 $ 24,240

Year ended December 31,

Deemed dividend recognized for beneficial conversion features of Series B Convertible Preferred Stock issuance

Deemed dividend recognized for beneficial conversion features of Series C Convertible Preferred Stock issuance

$ — $ 268,269

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

Common stock issued upon conversion of Series B Convertible Preferred Stock

$ — $ 1,675,000

Year ended December 31,

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 $ —

Common stock issued upon conversion of Series E Convertible Preferred Stock $ 86 $ —

The accompanying notes are an integral part of these financial statements.

Trovagene, Inc.

Cardiff Oncology, Inc.

Notes to Financial Statements

Business Overview and Going Concerns

Business Overview and Liquidity

Business Organization and Overview

Trovagene, Inc.

(“Trovagene” or the “Company”) headquartered in San Diego, California, is a clinical-stage, oncology therapeutics company, taking a Precision Cancer Medicine TM (“PCM TM ”) approach to develop drugs that target mitosis (cell division) to treat various types of cancer, including leukemias, lymphomas and solid tumors.

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, and a key component of its PCM TM approach, is the integration of predictive clinical biomarkers to identify patients most likely to respond to treatment.

Going Concern Uncertainty

Trovagene’s financial statements as of December 31, 2019 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.

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, pancreatic cancer, Zytiga®-resistant metastatic castration-resistant prostate cancer and leukemias.

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

Through the integration of tumor genomics and biomarker technology, we are able to assess patient response to treatment.

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

Management estimates that the Company’s current cash resources will be sufficient to fund the Company’s planned operations into third 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 the foreseeable future, the Company’s ability to continue its operations is dependent upon its ability to obtain additional capital.

As of December 31, 2020, the Company had $ 131.0 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.

Any debt financing, if available, may involve restrictive covenants that impact the Company’s ability to conduct its business.

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 both raise additional capital 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 January 1, 2020 and February 27, 2020 the Company received approximately $1.5 million of net proceeds through the exercise of 1,005,072 Series H warrants.

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 13 to the financial statements for further information.

Basis of Presentation and Summary of Significant Accounting Policies

The accompanying financial statements of Trovagene have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The Company made a reverse split of its common stock, $0.0001 par value, at a ratio of 1 for 12 , effective June 1, 2018.

On February 19, 2019 the Company made an additional reverse split of its common stock, $0.0001 par value, at a ratio of 1 for 6 .

All share and per share information in the financial statements and the accompanying notes have been retroactively adjusted to reflect the reverse stock splits for all periods presented.

The accompanying financial statements of Cardiff Oncology have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The Company made a reverse split of its common stock, $0.0001 par value, at a ratio of 1 for 6, effective February 19, 2019.

All share and per share information in the financial statements and the accompanying notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.

Segment Reporting

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The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The most significant estimates involve accrued clinical trial expenses and determining the assumptions made for stock-based compensation.

Accrued Clinical Trial Expenses

The Company expenses research and development expenditures as incurred, which include costs related to clinical trial activities.

The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the clinical research organizations (CROs), investigators, professional service providers, and other vendors providing clinical trial services (collectively, the “service providers”).

As of December 31, 2020 the Company’s Clinical trial accrual balance of $ 1,683,195 is included in accrued liabilities and other liabilities.

The Company’s related 2020 clinical trial expenses are included in research and development expense of $ 11,235,396 .

Certain accrued clinical trial expenses are released from service receivables classified within equity (see Note 5) as clinical trial services are performed.

Cash and Cash Equivalents

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The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash due to the financial position of the depository institution in which those deposits are held.

The Company limits its exposure to credit loss by generally placing its cash in high credit quality financial institutions and investment in fixed income instruments denominated and payable in U.S.

The Company limits its exposure to credit loss by generally placing its cash in high credit quality financial institutions and investment in non FDIC insured money market funds denominated and payable in U.S.

Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity.

The Company recognizes revenue when control of its products and services is transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services.

The Company recognizes revenue when control of its products and services are transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services.

This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied.

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Changes in fair value of derivative liabilities are recorded in the statement of operations under the caption “Change in fair value of derivative instruments — warrants.”

The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding the historical volatility of Trovagene’s common stock price, the remaining life of the warrants, and the risk-free interest rates at each period end.

The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding the historical volatility of Cardiff Oncology’s common stock price, the remaining life of the warrants, and the risk-free interest rates at each period end.

The Company thus uses model-derived valuations where inputs are observable in active markets to determine the fair value.

The use of historical volatility as an input to derive the fair value, classifies such warrants as Level 3 (See " Fair Value of Financial Instruments" below).

The use of the Black-Scholes model classifies such warrants as Level 3 (See " Fair Value of Financial Instruments" below).

At December 31, 2020 and 2019, the fair value of these warrants was $ 284,971 and $ 4,127 , respectively, and was recorded as a liability under the caption “derivative financial instruments — warrants” on the balance sheets.

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Fair Value of Financial Instruments

Financial instruments consist of cash and cash equivalents, short-term investments, accounts receivable, accounts payable, debt and derivative liabilities.

The Company has adopted ASC 820 for financial assets and liabilities that are required to be measured at fair value and non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis.

Financial instruments consist of cash equivalents, accounts receivable, accounts payable and derivative liabilities.

The Company applies ASC 820 for financial assets and liabilities that are required to be measured at fair value and non-financial assets

and liabilities that are not required to be measured at fair value on a recurring basis.

These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature as they reflect current market interest rates.

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Long-Lived Assets

Long-lived assets consist of property and equipment and finite-lived intangible assets.

Long-lived assets consist of property and equipment.

The Company records property and equipment at cost, and records other intangible assets based on their fair values at the date of acquisition.

Depreciation on property and equipment is calculated using the straight-line method over the estimated useful life of five years for laboratory equipment and three to five years for furniture and office equipment.

Amortization of leasehold improvements is computed based on the shorter of the life of the asset or the term of the lease.

Amortization of intangible assets is calculated using the straight-line method over the estimated useful life of the assets, based on when the Company expects to receive cash inflows generated by the intangible assets.

Depreciation of leasehold improvements is computed based on the shorter of the life of the asset or the term of the lease.

Impairment losses on long-lived assets used in operations are recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

During the year ended December 31, 2019 and 2018 , the Company recorded $0 and $187,500 of impairment losses on long-lived intangible assets, respectively.

The Company determines if an arrangement is a lease at inception.

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These short-term leases are expensed on a straight-line basis over the lease term.

Restructuring

Restructuring costs are included in loss from operations in the statements of operations.

One-time termination benefits are recorded at the time they are communicated to the affected employees.

In May 2018, the Company closed its CLIA laboratory operations.

Costs associated with winding down the CLIA laboratory were recorded in the restructuring charges in the December 31, 2018 financial statements.

See Note 13 to the financial statements for further information.

Income taxes are determined using the asset and liability approach of accounting for income taxes.

Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid.

Deferred taxes result from differences between the financial statement and tax bases of Trovagene’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.

Deferred taxes result from differences between the financial statement and tax bases of Cardiff Oncology’s assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.

Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

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Contingencies

In the normal course of business, Trovagene is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, stockholder lawsuits, product and environmental liability, and tax matters.

In accordance with FASB ASC Topic 450, Accounting for Contingencies , Trovagene records such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Trovagene, in accordance with this guidance, does not recognize gain contingencies until realized.

Cost of Revenue

Cost of revenue represents the cost of materials, personnel costs, costs associated with processing specimens including pathological review, quality control analyses, and delivery charges necessary to render an individualized test result.

Costs associated with performing tests are recorded as the tests are processed.

In the normal course of business, Cardiff Oncology is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, stockholder lawsuits, product and environmental liability, and tax matters.

In accordance with FASB ASC Topic 450, Contingencies , Cardiff Oncology records such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Cardiff Oncology, in accordance with this guidance, does not recognize gain contingencies until realized.

Research and Development

Research and development expenses, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, clinical trials, purchased in-process research and development and regulatory and scientific consulting fees, as well as contract research and insurance.

Research and development expenses include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, clinical trials, purchased in-process research and development and regulatory and scientific consulting fees, as well as contract research and insurance.

Also, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.

While certain of the Company’s research and development costs may have future benefits, the Company’s policy of expensing all research and development expenditures is predicated on the fact that Trovagene has no history of successful commercialization of molecular diagnostic products to base any estimate of the number of future periods that would be benefited.

Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized.

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Net Loss Per Share

Basic and diluted net loss per share is presented for all periods presented.

In accordance with this guidance, basic and diluted net loss per common share is determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period.

Preferred dividends are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share.

Basic and diluted net loss per common share is determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period.

Preferred dividends and deemed dividends recognized in connection with certain preferred share issuances are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive.

Shares used in calculating diluted net loss per common share exclude as anti-dilutive the following share equivalents:

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Series A Convertible Preferred Stock 877 877

The following table summarizes the Company’s diluted net loss per share:

Net loss attributable to common stockholders

Net loss used for basic and diluted loss per share

Weighted-average shares used to compute basic and diluted net loss per share

Net loss per share attributable to common stockholders:

Basic and diluted

Revision of Previously Issued Financial Statements for Correction of Immaterial Errors

During the fourth quarter of 2019, the Company identified an immaterial error related to pre-funded warrants.

The correction of the error resulted in higher weighted-average shares used to compute basic and diluted net loss per share for the three months ended June 30, 2019 and September 30, 2019, the six months ended June 30, 2019 and the nine months ended September 30, 2019.

The following table summarizes the immaterial adjustments and corrected amounts:

Three Months Ended

Six Months Ended June 30, 2019

Nine Months Ended September 30, 2019

June 30, 2019

September 30, 2019

Weighted-average shares used to compute basic and diluted net loss per share:

Previously Reported

Basic and diluted loss per share:

Previously reported

Series E Convertible Preferred Stock 2,684,607 —

9,807,474 11,617,078

Recently Adopted Accounting Pronouncement

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”).

ASU 2016-02 changes accounting for leases and requires lessees to recognize the assets and liabilities arising from most leases, including those classified as operating leases under previous accounting guidance, on the balance sheet and requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842 , which provides narrow amendments to clarify how to apply certain aspects of the new lease standard.

In July 2018, ASU 2018-11, Leases:

Targeted Improvements , was issued to provide relief to companies from restating comparative periods.

Pursuant to this ASU, in the period of adoption the Company will not restate comparative periods presented in its financial statements.

The Company adopted ASU 2016-02 as of January 1, 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment and did not restate comparative periods.

The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date.

The Company did not elect to apply the hindsight practical expedient when determining lease term and assessing impairment of right-of-use assets.

The adoption of ASU 2016-02 on January 1, 2019

resulted in the recognition of right-of-use assets of approximately $1,000,000 and lease liabilities for operating leases of approximately $2,503,000 .

There was no cumulative effect adjustment to accumulated deficit as a result of the adoption and there was not a material impact to the Company’s statement of operations.

Refer to Note 4 to the financial statements for further details.

Recent Accounting Pronouncement Not Yet Adopted

In August 2018, the FASB issued ASU No.

2018-13, Changes to the Disclosure Requirements for Fair Value Measurement.

2018-13 ("ASU 2018-13"), Changes to the Disclosure Requirements for Fair Value Measurement .

This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.

The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The Company has prospectively adopted ASU 2018-13 as of January 1, 2020 for periods presented after adoption.

The adoption of ASU 2018-13 did not have a material impact on the Company's financial statements.

Recent Accounting Pronouncement Not Yet Adopted

In August 2020, the FASB issued ASU No.

2020-06 ("ASU 2020-06"), Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) .

ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation.

The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021 (or December 15, 2023 for companies who meet the SEC definition of Smaller Reporting Companies), and interim periods within those fiscal years.

The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition.

Early adoption is permitted.

The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

Supplementary Balance Sheet Information

Property and Equipment

Fixed assets consists of furniture and office equipment, leasehold improvements and laboratory equipment.

Depreciation and amortization expense for property and equipment for the years ended December 31, 2019 and 2018 was $494,232 and $736,088 , respectively.

Fixed assets consist of furniture and office equipment, leasehold improvements and laboratory equipment.

Depreciation expense for property and equipment for the years ended December 31, 2020 and 2019 was $ 466,009 and $ 494,232 , respectively.

Property and equipment consisted of the following:

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Laboratory equipment 867,750 744,856

Less—accumulated depreciation and amortization

3,627,719 3,482,116

Less—accumulated depreciation ( 3,004,025 ) ( 2,604,293 )

Property and equipment, net $ 623,694 $ 877,823

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Preferred stock dividend 389,495 365,255

Research agreements and clinical trials

Clinical trials 1,557,134 1,504,660

Research agreements and services 66,593 181,408

Director fees 92,500 67,500

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As a lessee, the Company’s current leases include its master facility lease and immaterial equipment leases, all of which are considered operating leases.

The Company (as a sublessor) also subleases portions of its facility to third parties under two separate subleases.

The Company (as a sublessor) also subleases portions of its facility to third parties under three separate subleases.

All of these subleases have been determined to be operating leases and are accounted for separately from the head lease.

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The lease currently requires fixed monthly rent payments of approximately $ 78,000 , with 3 % annual escalation.

The lease also contains one five -year renewal option with minimum monthly rent equal to the then-current fair market value, subject to a 3% annual increase.

As the Company is not reasonably certain to exercise this option, it has not been included in the calculation of the lease liability or right-of-use asset related to this lease.

Facility Subleases

As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and has subleased space to third parties under two separate sublease agreements, which both expire December 31, 2021.

An additional sublease expired on October 31, 2019 and was not renewed.

The Company recorded a cease-use loss liability and expense in 2018 pursuant to ASC 420, Exit or Disposal Cost Obligations , representing the total expected shortfall in sublease income for two of the subleases as compared to its required payments for those spaces under the remainder of the master lease term.

This liability was being amortized over the remaining lease term until the adoption of ASC 842, whereupon the remaining cease-use loss liability of approximately $487,000 was eliminated and treated as a reduction to the beginning ROU asset value for the master lease as of January 1, 2019.

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

As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and has subleased space to third parties under three separate sublease agreements, which all expire December 31, 2021.

Income is 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 and $ 0 for the twelve months ending December 31, 2020 and 2019, respectively.

The loss related to a vacated portion of the facility that was 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 statement of operations.

The components of lease expense were as follows:

Twelve Months Ended December 31, 2019

Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019

Operating lease cost $ 441,529 $ 444,878

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Supplemental balance sheet information related to leases was as follows:

December 31, 2019

As of December 31, 2020 As of December 31, 2019

Operating lease ROU assets $ 343,001 $ 697,418

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Total operating lease liabilities

Weighted-average remaining lease term–operating leases

$ 869,497 $ 1,726,342

Weighted-average remaining lease term–operating leases 1.0 year 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:

Twelve Months Ended December 31, 2019

Twelve Months Ended December 31, 2020 Twelve Months Ended December 31, 2019

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

Operating cash flows from operating leases

$ 943,959 $ 916,762

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

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

2021 $ 889,586 $ ( 403,345 ) $ 486,241

2022 5,868 — 5,868

2023 3,423 — 3,423

Total future minimum lease payments 898,877 $ ( 403,345 ) $ 495,532

Less imputed interest ( 29,380 )

Total annual commitments under non-cancelable lease agreements as of December 31, 2018 under the previous lease accounting guidance are as follows:

Year Ending December 31,

Operating Leases

Sublease Income

Net Operating Leases

Total $ 869,497

Stockholders’ Equity

During the year ended December 31, 2019 , the Company issued a total of 4,761,754 shares of Common Stock, the issuances were a result of the following:

2,221,635 shares of common stock were issued upon exercise of pre-funded warrants and warrants, 1,724,322 and 497,313 , respectively;

1,994,929 shares of common stock were issued through private placements with certain accredited investors;

333,333 shares were issued upon conversion of Series C Convertible Preferred Stock;

183,334 shares of common stock in connection with a clinical trial funding commitment;

22,057 shares were issued upon vesting of RSU's;

6,466 shares were issued for share rounding as a result of the reverse stock split.

During the year ended December 31, 2018 , the Company issued a total of 3,098,662 shares of common stock, the issuances were a result of the following:

1,523,333 shares of common stock were sold through an underwritten public offering;

1,476,667 shares were issued upon conversion of Series B Convertible Preferred Stock;

78,917 shares were issued upon exercise of warrants;

18,609 shares were issued upon vesting of RSU's;

1,136 shares were issued for share rounding as a result of the reverse stock split.

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

Weighted-Average

Warrants Weighted-Average

Exercise Price

Per Share (1)

Weighted-Average Remaining Contractual Term (1)

Balance outstanding, December 31, 2017

Balance outstanding, December 31, 2018

Balance outstanding, December 31, 2019

(1) Balance outstanding, December 31, 2019 excludes 605,072 pre-funded warrants to purchase shares of common stock at a nominal exercise price of $0.01 per share.

The pre-funded warrants expire when exercised in full.

As of February 20, 2020 all of the pre-funded warrants have been exercised.

In connection with an underwritten public offering occurred in June 2018, the Company issued warrants to purchase an aggregate of 3,450,000 shares of common stock at an exercise price of $6.60 per share which expire on the 5 year anniversary of the original issuance date.

Approximately 497,000 of these warrants were exercised during 2019.

In connection with registered direct offerings during the twelve months ending December 31, 2019 the Company issued the following warrants:

On April 5, 2019 the Company issued Series B Warrants to purchase an aggregate of 382,166 shares of common stock at an exercise price of $3.80 per share, which vested 6 months after issuance and expire 5.5 years from the issuance date;

On May 13, 2019 the Company issued Series D Warrants to purchase an aggregate of 458,015 shares of common stock at an exercise price of $3.15 per share, which vested 6 months after issuance and expire 5.5 years from the issuance date;

On August 22, 2019 the Company issued Series F Warrants to purchase an aggregate of 727,802 shares of common stock at an exercise price of $1.936 per share, which vested 6 months after issuance and expire 5.5 years from the issuance date;

On October 30, 2019 the Company issued Series G Warrants to purchase an aggregate of 2,756,340 shares of common stock at an exercise price of $1.56 per share, which vested immediately and expire 5.5 years from the issuance date;

On October 30, 2019 the Company issued Series H Warrants to purchase an aggregate of 2,756,340 shares of common stock at an exercise price of $1.56 per share, which vested immediately and expire 1.5 years from the issuance date;

On October 30, 2019 the Company issued Placement Agent Warrants to purchase an aggregate of 206,726 shares of common stock at an exercise price of $2.2675 per share, which vested immediately and expire 5.5 years from the issuance date.

Per Share Weighted-Average Remaining Contractual Term

Balance outstanding, December 31, 2018 3,649,341 $ 8.91 4.4 years

Granted 7,437,454 $ 1.87

Exercised ( 497,313 ) $ 6.60

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

Granted 5,831,451 $ 1.70

Exercised ( 11,159,941 ) $ 2.31

Balance outstanding, December 31, 2020 5,260,992 $ 5.19 4.1 years

The above table excludes pre-funded warrants with a nominal exercise price of $ .01 per share:

605,072 pre-funded warrants outstanding as of December 31, 2019;

386,967 pre-funded warrants which were issued during the twelve months ending December 31, 2020;

All 992,039 pre-funded warrants were exercised in full during the twelve months ending December 31, 2020.

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 December 31, 2020 As of December 31, 2019

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 655,044 —

Series A Convertible Preferred Stock

The material terms of the Series A Convertible Preferred Stock consist of:

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Dividends are payable, at the Company’s sole election, in cash or shares of common stock.

As of December 31, 2019 and 2018 , the Company had $365,255 and $341,015 , respectively in accrued cumulative unpaid preferred stock dividends, included in accrued liabilities in the Company’s balance sheets, and $24,240 and $24,240 of accrued dividends was recorded during the years ended December 31, 2019 and 2018 , respectively.

As of December 31, 2020 and 2019, the Company had $ 389,495 and $ 365,255 , respectively in accrued cumulative unpaid preferred stock dividends, included in accrued liabilities in the Company’s balance sheets, and $ 24,240 and $ 24,240 of accrued dividends were recorded during the years ended December 31, 2020 and 2019, respectively.

2) Voting Rights.

Shares of the Series A Convertible Preferred Stock have no voting rights.

However, so long as any shares of Series A Convertible Preferred Stock are outstanding, the Company may not, without the affirmative vote of the holders of the shares of Series A Convertible Preferred Stock then outstanding, (a) adversely change the powers, preferences or rights given to the Series A Convertible Preferred Stock, (b) authorize or create any class of stock senior or equal to the Series A Convertible Preferred Stock, (c) amend its certificate of incorporation or other charter documents, so as to affect adversely any rights of the holders of Series A Convertible Preferred Stock or (d) increase the authorized number of shares of Series A Convertible Preferred Stock.

documents, so as to affect adversely any rights of the holders of Series A Convertible Preferred Stock or (d) increase the authorized number of shares of Series A Convertible Preferred Stock.

3) Liquidation.

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As of the date of these financial statements, such conditions have not been met.

As of each of December 31, 2019 and 2018 , there were 60,600 shares of Series A Convertible Preferred Stock outstanding.

Series B Convertible Preferred Stock

On June 12, 2018, the Company closed an underwritten public offering for total gross proceeds of $18.0 million .

The total related offering costs were approximately $1.8 million .

The securities offered by the Company consisted of (i) 1,523,333 shares of common stock, at an offering price of $6.00 per share, (ii) warrants to purchase an aggregate of 3,450,000 shares of common stock, including the over-allotment option for 450,000 option warrants, at an exercise price of $6.60 per share, and (iii) 8,860 shares of Series B Convertible Preferred Stock, with a stated value of $1,000 , and convertible into an aggregate of 1,476,667 shares of common stock.

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

Because the Series B Convertible Preferred Stock is perpetual with no stated maturity date, and the conversions may occur any time from inception, the Company immediately recorded a one-time, non-cash deemed dividend of $2.8 million related to the beneficial conversion feature arising from the issuance of Series B Convertible Preferred Stock.

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

As of December 31, 2019 and 2018 , there were no shares of Series B Convertible Preferred Stock outstanding, all of which has been converted to common stock.

The holders of Series B Convertible Preferred Stock are entitled to receive dividends on an as-if-converted-to-Common-Stock basis when, as and if such dividends are paid on shares of the Common Stock.

Each share of Series B Convertible Preferred Stock shall entitle the holder to vote on an as-if-converted-to-Common-Stock basis (not exceeding the Beneficial Ownership Limitation).

Upon any liquidation, dissolution or winding-up of the Company, the holders of Series B

Convertible Preferred Stock are entitled to participate on an as-if-converted-to-Common Stock basis (without giving effect to the Beneficial Ownership Limitation) with holders of the Common Stock in any distribution of assets of the Company.

Each share of Series B Convertible Preferred Stock is convertible at the option of the holder into that number of shares of Common Stock determined by dividing the stated value of $1,000 per share, by the conversion price.

The conversion price was $6.00 per share.

Series C Convertible Preferred Stock

On January 25, 2019, the Company entered into a Master Services Agreement and a Stock and Warrant Subscription Agreement with 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 mCRC harboring KRAS mutations 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.

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 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 December 31, 2019, 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.

The holders of Series C Convertible Preferred Stock were granted the right to vote, on an as-converted to common stock basis (limited to 93.41% of the then as-if converted common stock) on all matters submitted to a vote of holders of the Company’s common stockholders.

In the event of liquidation, dissolution or winding-up, holders of Series C Convertible Preferred Stock were entitled to receive the same amount that a holder of the Company’s common stock would receive if the Series C Convertible Preferred Stock were fully converted into shares of the Company’s common stock at the conversion price which amounts shall be paid pari passu with all holders of common stock.

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 and (iii) a warrant exercisable for 859,813 shares of its Common Stock.

In exchange, PoC is funding our clinical development of onvansertib in metastatic colorectal cancer pursuant to a Master Services Agreement dated as of January 25, 2019, as amended.

The warrant 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.

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

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.

Certain investors converted 210,780 shares of Series E Convertible Preferred stock to 863,852 shares of Common Stock during December 2020.

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 from 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.

Underwritten Public Offering

On October 2, 2020 the Company completed an underwritten public offering of 6,500,000 shares of its common stock at a price to the public of $ 13.50 per share.

In addition, the underwriters exercised in full an option to purchase an additional 975,000 shares of common stock at the public offering price, less the underwriting discounts and commissions.

All of the shares in the offering were sold by the Company, with gross proceeds of approximately $ 100.9 million, and net proceeds of approximately $ 94.0 million, after deducting underwriting discounts, commissions and estimated offering expenses.

Stock-Based Compensation

The Trovagene, Inc.

The Cardiff Oncology, Inc.

2014 Equity Incentive Plan (the “2014 EIP”), authorizing up to 34,722 shares of common stock for issuance under the 2014 EIP, was approved by the Board in June 2014 and approved by the stockholders of the Company at the September 17, 2014 Annual Meeting of Stockholders.

The total number of authorized shares was increased to 243,056 between the inception of the 2014 EIP through December 31, 2018.

At the May 30, 2018 Annual Meeting of Stockholders, the stockholders approved the increase of number of authorized shares in the 2014 EIP to 243,056 .

At the June 6, 2019 Annual Meeting of Stockholders, the stockholders approved the increase of number of authorized shares in the 2014 EIP to 1,243,056 .

At the April 6, 2020 Annual meeting of Stockholders, the stockholders approved the increase of number of authorized shares in the 2014 EIP to 2,243,056

As of December 31, 2020, there were 260,446 shares available for issuance under the 2014 EIP.

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Years ended December 31,

Cost of revenue

Research and development expenses 354,692 399,687

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1.66 % - 2.33 %

2.42% - 2.93%

Dividend yield 0 % 0 %

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Expected volatility (weighted-average) 105 % 96 %

Expected term (in years)

Expected term (in years) 5.9 years 5.9 years

Risk-free interest rate — Based on the daily yield curve rates for U.S.

Treasury obligations with maturities that correspond to the expected term of the Company’s stock options.

Dividend yield — Trovagene has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.

Expected volatility — Based on the historical volatility of Trovagene’s common stock.

Dividend yield — Cardiff Oncology has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.

Expected volatility — Based on the historical volatility of Cardiff Oncology’s common stock.

Expected term — The expected option term represents the period that stock-based awards are expected to be outstanding based on the simplified method, which averages an award’s weighted-average vesting period and expected term for “plain vanilla” share options.

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The weighted-average fair value per share of all options granted during the years ended December 31, 2020 and 2019, estimated as of the grant date using the Black-Scholes option valuation model, was $ 2.09 and $ 1.91 per share, respectively.

The unrecognized compensation cost related to non-vested stock options outstanding at December 31, 2019 and 2018 was $1,256,924 and $375,548 , respectively.

The weighted-average remaining amortization period at December 31, 2019 and 2018 for non-vested stock options was 2.2 years and 1.2 years , respectively.

The unrecognized compensation cost related to non-vested stock options outstanding at December 31, 2020 was $ 1,519,004 .

The weighted-average remaining amortization period at December 31, 2020 for non-vested stock options was 1.9 years.

The total fair value of shares vested during the years ended December 31, 2020 and 2019 was $ 1,522,984 and $ 386,654 , respectively.

The intrinsic value of stock options exercised during the year ended December 31, 2019 was $ 0 .

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

Number of Options

Weighted-Average Exercise Price Per Share

Weighted-Average

Number of Options Weighted-Average Exercise Price Per Share Intrinsic

Value Weighted-Average

Contractual Life

Balance outstanding, December 31, 2017

Balance outstanding, December 31, 2018

Balance outstanding, December 31, 2019

Vested and exercisable, December 31, 2019

Balance outstanding, December 31, 2019 1,015,418 $ 12.77 $ — 9.1 years

Granted 969,965 $ 2.53

Exercised ( 60,195 ) $ 2.46 $ 970,145

Forfeited ( 48,537 ) $ 22.91

Expired ( 16,144 ) $ 21.29

Balance outstanding, December 31, 2020 1,860,507 $ 7.43 $ 27,963,363 8.9 years

Vested and exercisable, December 31, 2020 753,206 $ 14.63 $ 10,837,211 8.5 years

Vested and expected to vest, December 31, 2020 1,777,407 $ 7.65 $ 26,682,849 8.9 years

Restricted Stock Units

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A summary of the RSU's activity is presented below:

Number of Shares

Weighted Average

Number of Shares Weighted Average

Grant Date Fair Value

Per Share Intrinsic

Non-vested RSU's outstanding, December 31, 2018 30,132 $ 14.36 $ 95,005

Granted 9,167 $ 1.61

Vested ( 22,057 ) $ 8.68

Forfeited ( 5,941 ) $ 13.82

Non-vested RSU's outstanding, December 31, 2019 11,301 $ 15.38 $ 14,013

Vested ( 10,810 ) $ 9.37

Non-vested RSU's outstanding, December 31, 2020 491 $ 147.60 $ 7,641

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Year ended December 31,

Fair value of Trovagene common stock

$1.24 - $3.75

Fair value of Cardiff Oncology common stock $ 1.01 - $ 17.99

$ 1.24 - $ 3.75

Expected warrant term

3.1 - 4.1 years

Expected warrant term 2.1 - 3.1 years

3.1 - 4.1 years

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1.56 % - 2.49 %

1.76% - 2.92%

Expected volatility 110 % - 118 %

102 % - 111 %

Dividend yield — % — %

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

The warrants have a transferability provision and based on guidance for instruments issued with such a provision, Trovagene used the remaining contractual term as the expected term of the warrants.

As of December 31, 2020

Weighted Average (1)(2) :

Fair value of Cardiff Oncology common stock $ 17.99

Expected warrant term 2.1 years

Risk-free interest rate 0.13 %

Expected volatility of Cardiff Oncology common stock 116 %

Dividend yield 0 %

(1) Weighted average is only disclosed for periods after January 1, 2020 under the adoption of ASU 2018-13.

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

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

The warrants have a transferability provision and based on guidance for instruments issued with such a provision, Cardiff Oncology used the remaining contractual term as the expected term of the warrants.

The risk-free interest 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, 2017

Balance of derivative financial instruments — warrants liability

Expiration of derivative financial instruments

Change in fair value of derivative financial instruments — warrants during the year recognized as a gain in the statement of operations

December 31, 2018

Balance of derivative financial instruments — warrants liability

Date Description Number of Warrants Derivative

December 31, 2018 Balance of derivative financial instruments — warrants liability

64,496 $ 32,315

Change in fair value of derivative financial instruments — warrants during the year recognized as a gain in the statement of operations

December 31, 2019

Balance of derivative financial instruments — warrants liability

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

Change in fair value of derivative financial instruments — warrants during the year recognized as a loss in the statement of operations

December 31, 2020 Balance of derivative financial instruments — warrants liability

64,496 $ 284,971

The remaining contractual term of the warrants outstanding at December 31, 2020 and 2019 was approximately 2.1 and 3.1 years, respectively.

At December 31, 2019 and 2018 , the total fair value of the above warrants accounted for as derivative financial instruments — warrants, valued using the Black-Scholes option pricing model, was $4,127 and $32,315 , respectively, and is classified as derivative financial instruments — warrants liability on the balance sheet.

Fair Value Measurements

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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) $ 129,987,804 $ — $ — $ 129,987,804

Total Assets $ 129,987,804 $ — $ — $ 129,987,804

Derivative financial instruments — warrants

$ — $ — $ 284,971 $ 284,971

Total Liabilities $ — $ — $ 284,971 $ 284,971

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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

$ — $ — $ 4,127 $ 4,127

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

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At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments that trade infrequently and therefore have little or no price transparency are classified as Level 3.

Equipment Line of Credit

In November 2015, the Company entered into a Loan and Security Agreement with Silicon Valley Bank that provided for cash borrowings for equipment (“Equipment Advances”) of up to $2.0 million , secured by the equipment financed.

The Company repaid the outstanding Equipment Line of Credit in Full during 2018.

Under the terms of the agreement, interest is equal to 1.25% above the Prime Rate.

Interest only payments are due on borrowings through November 30, 2016, with both interest and principal payments commencing in December 2016.

All unpaid principal and interest on each Equipment Advance will be due on November 1, 2019.

The Company has an obligation to make a final payment equal to 7% of total amounts borrowed at the loan maturity date.

The Company is also subject to certain affirmative and negative covenants under the Equipment Line of Credit.

On June 20, 2017, the Company received a Notice of Event of Default (“Default Letter”) from SVB which stated that Events of Default had occurred and SVB will decide in its sole discretion whether or not to exercise rights and remedies.

On April 6, 2018, the Company paid approximately $1.1 million to SVB.

This payment repaid the outstanding Equipment Line of Credit loan in full.

The Company recorded $25,161 in interest expense related to the Equipment Line of Credit during the year ended December 31, 2018.

At December 31, 2019 , Trovagene had federal net operating loss carryforwards (“NOLs”) of approximately $129.0 million , if not used, will begin to expire in 2020, and federal net operating loss carryforwards of approximately $30.3 million , which do not expire.

Trovagene also has California NOLs of approximately $70.1 million , if not used, will begin to expire in 2029.

Trovagene also has research and development tax credits available for federal and California purposes of approximately $2.4 million and $1.7 million , respectively.

At December 31, 2020, Cardiff Oncology had federal net operating loss carryforwards (“NOLs”) of approximately $ 128.9 million which, if not used, will continue to expire through 2037, and federal net operating loss carryforwards of approximately $ 48.4 million, which do not expire.

Cardiff Oncology also has California NOLs of approximately $ 70.7 million which, if not used, will begin to expire in 2029.

Cardiff Oncology has Federal and California capital loss carryforwards of $ 0.7 million which, if not used, will begin to expire in 2022.

Cardiff Oncology also has research and development tax credits available for federal and California purposes of approximately $ 2.5 million and $ 1.8 million, respectively.

The federal research and development tax credits will begin to expire on January 31, 2025.

The California research and development tax credits are not set to expire.

The utilization of these NOLs and research and development tax credits is subject to limitations based on past and future changes in ownership of Trovagene pursuant to Section 382 (“Section 382”) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Company has determined that ownership changes have occurred for purposes of Section 382 and, therefore, the ability of the Company to utilize its NOLs is limited.

The California research and development tax credits do not expire.

Pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) Sections 382 and 383, annual use of a company’s NOL and research and development credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% within a three-year period.

The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change.

Subsequent ownership changes may further affect the limitation in future years.

If limited, the related tax asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance.

The Company has not completed such an analysis pursuant to Sections 382 and 383 and therefore has established a valuation allowance as the realization of such deferred tax assets has not met the more likely than not threshold requirement.

Due to the existence of the valuation allowance, further changes in the Company’s unrecognized tax benefits will not impact the Company’s effective tax rate.

The provision for income taxes based on losses from continuing operations consists of the following at December 31 (in thousands):

Years ended December 31,

State $ 1 $ 1

Total current provision

Federal ( 4,043 ) ( 2,634 )

State ( 92 ) ( 148 )

Total deferred (benefit) expense ( 4,135 ) ( 2,782 )

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Stock options true-up 81 ( 1 ) % 875 ( 5 ) %

Tax credits ( 300 ) 2 % ( 384 ) 2 %

Valuation allowance increase (decrease) 4,134 ( 22 ) % 2,780 ( 17 ) %

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Stock-based compensation 684 531

Other 1,116 1,252

Total deferred tax assets 48,035 43,987

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Operating lease right-of-use assets ( 74 ) ( 154 )

Other ( 6 ) ( 12 )

Total deferred tax liabilities ( 80 ) ( 166 )

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Net deferred tax asset $ — $ —

Trovagene records a valuation allowance against deferred tax assets to the extent that it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.

Due to the substantial doubt related to Trovagene’s ability to utilize its deferred tax assets, the Company recorded a valuation allowance against the deferred tax assets.

Trovagene does not have any unrecognized tax benefits.

Trovagene’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense, and none have been incurred to date.

Since inception the Company has incurred continuing losses and expects to continue to incur losses for the foreseeable future.

The Company has recorded a full valuation allowance against its net deferred tax assets as it is more likely than not they will not be realized.

Cardiff Oncology does not have any unrecognized tax benefits.

Cardiff Oncology’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense, and none have been incurred to date.

The Company does not anticipate a significant change in unrecognized tax benefits over the next 12 months.

The Company is subject to taxation in the U.S.

and California.

Due to net operating losses all tax years since inception remain open to examination.

Commitments and Contingencies

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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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Upon execution of the agreement, the Company paid $ 2.0 million in license fees which were expensed to research and development costs.

The Company was committed to pay $1.0 million for future services provided by Nerviano, such as the cost to manufacture drug product, no later than June 30, 2019, and these services have been ordered in full.

Terms of the agreement also provide for the Company to pay royalties based on certain development and sales milestones.

The Company was committed to order $ 1.0 million of future services provided by Nerviano, such as the cost to manufacture drug product, no later than June 30, 2019, and these services have been purchased.

Terms of the agreement also provide for the Company to pay development milestones and royalties based on sales volume.

The Company is a party to various agreements under which it licenses technology on an exclusive basis in the field of human diagnostics and oncology therapeutics.

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To date, 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.

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.

Litigation is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm the Company’s business.

Litigation is subject to inherent uncertainties, and an adverse result in matters may arise

from time to time that may harm the Company’s business.

As of the date of this report, management believes that there are no claims against the Company, which it believes will result in a material adverse effect on the Company’s business or financial condition.

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The Company does not currently make matching contributions.

Restructuring Charges

In May 2018, the Company closed its CLIA laboratory operations in order to streamline the Company’s business model.

The loss recognized from disposition of CLIA laboratory was reported as restructuring charges, a component of operating loss in the financial statements.

During the year ended December 31, 2018, the Company recorded total restructuring charges of approximately $664,000 for CLIA laboratory disposal transactions, of which, approximately $187,000 was related to impairment loss on CLIA laboratory license, approximately $52,000 was related to loss on disposal of property and equipment and other non-capital assets, and approximately $425,000 was related to loss on sublease of office and laboratory space.

Related Party Transactions

Leucadia Life Sciences

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”).

In December 2019, the MTA was amended and increased to $1,470,000 to account for additional deliverables in development of the PCR-based assay.

The Company’s CEO, Dr.

One of the Company’s Directors, Dr.

Thomas Adams, is a principal stockholder of Leucadia.

In connection with the MTA, the Company entered into a consulting agreement with Tommy Adams, VP of Operations of Leucadia, who is the son of Dr.

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 years ended December 31, 2020 and 2019, the Company incurred and recorded approximately $ 1,083,000 and $ 1,005,000 , respectively, of research and development expenses for services performed by Leucadia and Tommy Adams.

Subsequent Events

Exercise of Warrants

In January 2020 we received net proceeds of approximately $1.5 million from the exercise of 1,005,072 Series H Warrants at $1.56 per share.

The assay was completed in December 2020.

Gary Pace Securities Purchase Agreement

In May 2020, the Company entered into a Securities Purchase Agreement with Gary W.

Pace, one of the Company's directors.

Pace purchased 447,761 shares of the Company's common stock at $ 1.34 per share for an aggregate purchase price of $ 600,000 (see Note 5).

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

The extent of the impact of COVID-19 on the Company's future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and impact on the Company's clinical trials, employees and vendors, all of which are uncertain and cannot be predicted.

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

While there has not been a material impact on the Company's financial statements for the twelve months ended December 31, 2020, 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 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 twelve months ended December 31, 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.

Repayment of Small Business Administration Payroll Protection Program Loan

On April 15, 2020, the Company was granted a loan (the “Loan”) from JPMorgan Chase Bank, N.A.

in the aggregate amount of $ 305,000 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act with an interest rate of 0.98 % per annum.

On October 19, 2020 the Company repaid in full the outstanding principal and interest of the PPP Loan.

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-K

Item 9A. Controls and Procedures