Cardiff Oncology, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our chief executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are 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 recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. 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 50 Table of Contents 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. Management’s Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. As of December 31, 2020, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of December 31, 2020, our internal control over financial reporting was effective based on those criteria. Changes in Internal Control Over Financial Reporting There has been no change in our internal control over financial reporting during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 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.” ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated by reference from the information contained in the 2021 Proxy Statement under the heading “Executive Compensation.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 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.” ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 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.” ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES 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”. 51 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 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. (b) Exhibits Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of Trovagene, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 10-12G filed on November 25, 2011). 3.2 Certificate of Amendment of Amended and Restated Certificate of Incorporation of Trovagene, Inc. (incorporated by reference to Appendix B to the Company’s Proxy Statement on Schedule 14A filed on March 20, 2012). 3.3 By-Laws of Trovagene, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Form 10-12G filed on November 25, 2011). 3.4 Certificate of Amendment of Amended and Restated Certificate of Trovagene, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed on June 1, 2018). 3.5 Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock. (incorporated by reference to Exhibit 3.1 to Form 8-K filed on June 12, 2018). 3.6 Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 29, 2019). 3.7 Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 31, 2019). 3.8 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 February 20, 2019). 3.9 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). 3.10 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). 3.11 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). 4.1 Form of Common Stock Certificate of Trovagene, Inc. (incorporated by reference to Exhibit 4.1 to the Company’s Form 10-12G filed on November 25, 2011). 4.2 + 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) 4. 3 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). 4. 4 + Trovagene, Inc. 2014 Equity Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on July 23, 2014). 4. 5 Form of Warrant to Purchase Common Stock (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on July 26, 2016). 4. 6 Form of Warrant to Purchase Common Stock (Incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 12, 2018). 4.7 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). 10.1 Summary of Terms of Lease Agreement dated as of October 28, 2009 between Trovagene, Inc. and BMR-Sorrento West LLC (incorporated by reference to Exhibit 10.3 to the Company’s Form 10-12G/A filed on February 15, 2012). 10.2 Form of First Amendment to Standard Industrial Net Lease dated September 28, 2011 between Trovagene, Inc. and BMR-Sorrento West LLC (incorporated by reference to Exhibit 10.4 to the Company’s Form 10-12G/A filed on February 15, 2012). 52 Table of Contents 10.3 Form of Second Amendment to Standard Industrial Net Lease dated October 2011 between Trovagene, Inc. and BMR-Sorrento West LLC (incorporated by reference to Exhibit 10.5 to the Company’s Form 10-12G/A filed on February 15, 2012). 10.4 Form of Third Amendment to Standard Industrial Net Lease dated October 22, 2012 between Trovagene, Inc. and BMR-Sorrento West, LP. (incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K filed on March 12, 2015). 10.5 Form of Fourth Amendment to Standard Industrial Net Lease dated December 2, 2013 between Trovagene, Inc. and BMR-Coast 9 LP. (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed on March 12, 2015). 10.6 Form of Fifth Amendment to Standard Industrial Net Lease dated May 14, 2014 between Trovagene, Inc. and BMR-Coast 9 LP. (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filed on March 12, 2015). 10.7 Sixth Amendment to Standard Industrial Net Lease dated June 11, 2015 between Trovagene, Inc. and BMR-Coast 9 LP (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 10, 2015). 10.8 + 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). 10.9 + Amended and Restated Employment Agreement, dated February 22, 2021, by and between the Company and Mark Erlander . 10.10 Form of Seventh Amendment to Standard Industrial Net Lease dated April 4, 2016 between Trovagene, Inc. and BMR-Coast 9 LP (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on August 4, 2016). 10.11 * License Agreement dated as of March 13, 2017 between Nerviano Medical Sciences S.r.l. and Trovagene, Inc. (incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K filed on March 15, 2017). 10.12 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). 10.12 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 13, 2020). 10.13 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 19, 2020). 10.14 Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 16, 2020). 10.15 + 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). 10.16 + Employment Agreement, dated February 22, 2021 by and between the Company and Vicki Keleman. 10.17 + Employment Agreement, dated February 22, 2021 by and between the Company and Brigitte Lindsay. 23.1 Consent of BDO USA, LLP. 24 Power of Attorney (included on signature page hereto). 31.1 Certification of Principal Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act. 31.2 Certification of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act. 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 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. 53 Table of Contents * The SEC has granted confidential treatment with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC. ITEM 16. FORM 10-K SUMMARY None. 54 Table of Contents SIGNATURES 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. 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 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. 55 Table of Contents 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. Markin Chairman of the Board and Director 2/25/2021 Rodney S. Markin /s/ Thomas Adams Director 2/25/2021 Thomas Adams /s/ James O. Armitage Director 2/25/2021 James O. Armitage /s/ John Brancaccio Director 2/25/2021 John Brancaccio /s/ Gary S. Jacob Director 2/25/2021 Gary S. Jacob /s/ Gary W. Pace Director 2/25/2021 Gary W. Pace /s/ Lâle White Director 2/25/2021 Lâle White 56 Table of Contents CARDIFF ONCOLOGY, INC. Index to Financial Statements Report of Independent Registered Public Accounting Firm F- 2 Balance Sheets F- 4 Statements of Operations F- 5 Statements of Stockholders’ Equity F- 6 Statements of Cash Flows F- 7 Notes to Financial Statements F- 9 F-1 Report of Independent Registered Public Accounting Firm Board of Directors and Stockholders Cardiff Oncology, Inc. San Diego, California Opinion on the Financial Statements 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. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. 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: F-2 • 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 We have served as the Company’s auditor since 2007. San Diego, California February 25, 2021 F-3 Table of Contents Cardiff Oncology, Inc. Balance Sheets December 31, 2020 December 31, 2019 Assets Current assets: Cash and cash equivalents $ 130,980,681 $ 10,195,292 Accounts receivable and unbilled receivable 320,458 203,480 Prepaid expenses and other assets 2,055,321 954,957 Total current assets 133,356,460 11,353,729 Property and equipment, net 623,694 877,823 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 Current liabilities: Accounts payable $ 1,366,008 $ 656,304 Accrued liabilities 3,850,763 3,260,061 Operating lease liabilities 860,206 865,379 Other current liabilities 42,000 — Total current liabilities 6,118,977 4,781,744 Derivative financial instruments—warrants 284,971 4,127 Operating lease liabilities, net of current portion 9,291 860,963 Other liabilities 156,266 128,368 Total liabilities 6,569,505 5,775,202 Commitments and contingencies (Note 10) Stockholders’ equity Preferred stock, $ 0.001 par value, 20,000,000 shares authorized; (Note 5) 716 60 Common stock, $ 0.0001 par value, 150,000,000 shares authorized; 36,780,805 and 8,593,633 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively 3,678 8,312 Additional paid-in capital 361,820,025 217,172,528 Service receivables ( 2,171,258 ) ( 971,673 ) Accumulated deficit ( 231,495,279 ) ( 208,897,883 ) Total stockholders’ equity 128,157,882 7,311,344 Total Liabilities and Stockholders’ Equity $ 134,727,387 $ 13,086,546 The accompanying notes are an integral part of these financial statements. F-4 Table of Contents Cardiff Oncology, Inc. Statements of Operations Year Ended December 31, 2020 2019 Revenues: Royalties $ 365,993 $ 243,137 Services — 1,495 Total revenues 365,993 244,632 Costs and expenses: Research and development 11,235,396 11,162,236 Selling, general and administrative 8,216,471 5,760,890 Total operating expenses 19,451,867 16,923,126 Loss from operations ( 19,085,874 ) ( 16,678,494 ) Interest income 89,809 234,169 Interest expense ( 1,519 ) — Other gain (loss), net ( 28,244 ) 1,978 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 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 ) Net loss per common share — basic and diluted $ ( 1.08 ) $ ( 2.80 ) Weighted-average shares outstanding — basic and diluted 20,874,665 5,973,906 The accompanying notes are an integral part of these financial statements. F-5 Table of Contents Cardiff Oncology, Inc. Statements of Stockholders’ Equity Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional Paid-In Capital Service Receivable Accumulated Deficit Total Stockholders’ Equity 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 — — 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 — — 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 — — 6,466 — — — — — Release of clinical trial funding commitment — — — — — 703,327 — 703,327 Net loss — — — — — ( 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, 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 — — 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 ) 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. F-6 Table of Contents Cardiff Oncology, Inc. Statements of Cash Flows Year ended December 31, 2020 2019 Operating activities Net loss $ ( 19,306,672 ) $ ( 16,414,159 ) Adjustments to reconcile net loss to net cash used in operating activities: Impairment loss 34,169 — Depreciation 466,009 494,232 Stock-based compensation expense 1,764,804 884,943 Change in fair value of derivative financial instruments—warrants 280,844 ( 28,188 ) Release of clinical trial funding commitment 1,100,415 703,327 Changes in operating assets and liabilities: Other assets ( 246,656 ) ( 54,778 ) Accounts receivable and unbilled receivable ( 116,978 ) ( 35,725 ) Prepaid expenses and other current assets ( 1,100,364 ) 115,459 Operating lease right-of-use assets 320,248 302,491 Accounts payable and accrued expenses 1,276,166 1,455,336 Operating lease liabilities ( 856,845 ) ( 776,806 ) Other liabilities 69,898 86,368 Net cash used in operating activities ( 16,314,962 ) ( 13,267,500 ) Investing activities Capital expenditures ( 211,880 ) ( 67,622 ) Net cash used in investing activities ( 211,880 ) ( 67,622 ) Financing activities 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 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 Net change in cash and cash equivalents 120,785,389 ( 1,257,841 ) Cash and cash equivalents—Beginning of period 10,195,292 11,453,133 Cash and cash equivalents—End of period $ 130,980,681 $ 10,195,292 Supplementary disclosure of cash flow activity: Cash paid for taxes $ 800 $ 800 Supplemental disclosure of non-cash investing and financing activities: Preferred stock dividend payable on Series A Convertible Preferred Stock $ 24,240 $ 24,240 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 $ — $ 1,675,000 F-7 Table of Contents Year ended December 31, 2020 2019 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. F-8 Table of Contents Cardiff Oncology, Inc. Notes to Financial Statements 1. Business Overview and Liquidity Business Organization and Overview 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. Liquidity The Company has incurred net losses since its inception and has negative operating cash flows. 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 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. F-9 Table of Contents 2. Basis of Presentation and Summary of Significant Accounting Policies 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. GAAP”). 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 Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations as, and manages its business in, one operating segment. Use of Estimates The preparation of financial statements in conformity with U.S. 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 Cash and cash equivalents consist of operating and money market accounts as of December 31, 2020 and 2019 on deposit. Cash equivalents are considered by the Company to be highly liquid investments purchased with original maturities of three months or less from the date of purchase. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains deposit accounts at financial institutions that are in excess of federally insured limits. 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 non FDIC insured money market funds denominated and payable in U.S. dollars. Additionally, the Company has established guidelines regarding diversification of its investments and their maturities, which are designed to maintain principal and maximize liquidity. F-10 Table of Contents Revenues 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. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of goods or service to the customer, meaning the customer has the ability to use and obtain the benefit of goods or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control. For sales-based royalties, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Royalty and License Revenues The Company licenses and sublicenses its patent rights to healthcare companies, medical laboratories and biotechnology partners. These agreements may involve multiple elements such as license fees, royalties and milestone payments. Revenue is recognized when the criteria described above have been met as well as the following: • Up-front nonrefundable license fees pursuant to agreements under which the Company has no continuing performance obligations are recognized as revenues on the effective date of the agreement and when collection is probable. • Minimum royalties are recognized as earned, and royalties are earned based on the licensee’s use. The Company estimates and records licensee’s sales based on historical usage rate and collectability. • For sales-based royalties, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). Payment terms and conditions vary by contracts, although terms generally include a requirement of payment within 30 to 45 days after invoice. Minimum royalties are generally due quarterly or annually. Derivative Financial Instruments—Warrants The Company has issued common stock warrants in connection with the execution of certain equity financings. Such warrants are classified as derivative liabilities and are recorded at their fair market value as of each reporting period. Such warrants do not meet the exemption that a contract should not be considered a derivative instrument if it is (1) indexed to its own stock and (2) classified in stockholders’ equity. The warrants contain a feature that could require the transfer of cash in the event a change of control occurs without an authorization of the Company’s Board of Directors, and therefore classified as a liability. 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 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 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. Stock-Based Compensation Stock-based compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized straight-line over the requisite service period of the individual grants, which typically equals the vesting period. Fair Value of Financial Instruments 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 F-11 Table of Contents 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. The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows: The Company measures certain assets and liabilities at fair value on a recurring basis using the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three tiers include: • Level 1 — Quoted prices for identical instruments in active markets. • Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable. • Level 3 — Instruments where significant value drivers are unobservable to third parties. Long-Lived 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. 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. Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities and non-current operating lease liabilities in the Company’s balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would expect to pay to borrow on a collateralized and fully amortizing basis over a similar term an amount equal to the lease payments in a similar economic environment. The operating lease ROU asset also includes any lease payments made less lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Our facilities lease agreement contains lease and non-lease components, such as common area maintenance. We have elected to account for these lease and non-lease components of this agreement as a single lease component. Leases with an initial term of 12 months or less are not recorded on the Company's balance sheets. These short-term leases are expensed on a straight-line basis over the lease term. F-12 Table of Contents Income Taxes 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 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. The assessment of whether or not a valuation allowance is required often requires significant judgment. Contingencies 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 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. Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts are recognized as an expense. Net Loss 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: December 31, 2020 2019 Options to purchase Common Stock 1,860,507 1,015,418 Warrants to purchase Common Stock 5,260,992 10,589,482 Restricted Stock Units 491 11,301 Series A Convertible Preferred Stock 877 877 Series E Convertible Preferred Stock 2,684,607 — 9,807,474 11,617,078 Recently Adopted Accounting Pronouncement In August 2018, the FASB issued ASU No. 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. F-13 Table of Contents 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 Company is currently evaluating the impact of this standard on its financial statements and related disclosures. F-14 Table of Contents 3. Supplementary Balance Sheet Information Property and Equipment 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: As of December 31, 2020 2019 Furniture and office equipment $ 797,739 $ 775,030 Leasehold improvements 1,962,230 1,962,230 Laboratory equipment 867,750 744,856 3,627,719 3,482,116 Less—accumulated depreciation ( 3,004,025 ) ( 2,604,293 ) Property and equipment, net $ 623,694 $ 877,823 Accrued Liabilities Accrued liabilities consisted of the following: As of December 31, 2020 2019 Accrued compensation $ 1,523,321 $ 1,003,383 Preferred stock dividend 389,495 365,255 Clinical trials 1,557,134 1,504,660 Research agreements and services 66,593 181,408 Director fees 92,500 67,500 Professional fees and outside services 38,180 21,000 Patent, license and other fees 117,440 69,950 Other accrued liabilities 66,100 46,905 Total accrued liabilities $ 3,850,763 $ 3,260,061 4. Leases 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 three separate subleases. All of these subleases have been determined to be operating leases and are accounted for separately from the head lease. Master Facility Lease The Company leases a building in San Diego under an operating lease that expires on December 31, 2021. The lease currently requires fixed monthly rent payments of approximately $ 78,000 , with 3 % annual escalation. 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 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 F-15 Table of Contents 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, 2020 Twelve Months Ended December 31, 2019 Operating lease cost $ 441,529 $ 444,878 Operating sublease income ( 291,173 ) ( 381,653 ) Net operating lease cost $ 150,356 $ 63,225 Supplemental balance sheet information related to leases was as follows: As of December 31, 2020 As of December 31, 2019 Operating lease ROU assets $ 343,001 $ 697,418 Current operating lease liabilities $ 860,206 $ 865,379 Non-current operating lease liabilities 9,291 860,963 Total operating lease liabilities $ 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, 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 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 $ 869,497 F-16 Table of Contents 5. Stockholders’ Equity Warrants A summary of warrant activity and changes in warrants outstanding, including both liability and equity classifications, is presented below: Number of Warrants Weighted-Average Exercise Price 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: 1. 605,072 pre-funded warrants outstanding as of December 31, 2019; 2. 386,967 pre-funded warrants which were issued during the twelve months ending December 31, 2020; 3. 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: 1) Dividends. Holders of the Company’s Series A Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 4 % per annum, payable quarterly on March 31, June 30, September 30 and December 31, beginning with September 30, 2005. Dividends are payable, at the Company’s sole election, in cash or shares of common stock. 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 F-17 Table of Contents 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. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series A Convertible Preferred Stock are entitled to receive an amount equal to the Stated Value per share, which is currently $ 10 per share plus any accrued and unpaid dividends. 4) Conversion Rights. Each share of Series A 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, currently $ 10 per share, by the conversion price, which at the time of issuance was $ 928.80 per share, and subsequently adjusted to $ 691.20 per share. 5) Subsequent Equity Sales. The conversion price is subject to adjustment for dilutive issuances for a period of 12 months beginning upon registration of the common stock underlying the Series A Convertible Preferred Stock. The relevant registration statement became effective on March 17, 2006 and the conversion price was adjusted to $ 691.20 per share. 6) Automatic Conversion. If the price of the Company’s common stock equals $ 1,857.60 per share for 20 consecutive trading days, and an average of 116 shares of common stock per day are traded during the 20 trading days, the Company will have the right to deliver a notice to the holders of the Series A Convertible Preferred Stock, requesting the holders to convert any portion of the shares of Series A Convertible Preferred Stock into shares of common stock at the applicable conversion price. As of the date of these financial statements, such conditions have not been met. 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. 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 $ 1.675 million service receivables as contra equity. The Company releases the service receivables as clinical trial services are performed. The conversion feature of the Series C Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date. Because the Series C 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 $ 0.3 million related to the beneficial conversion feature arising from the issuance of Series C Convertible Preferred Stock. This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share. Series D Convertible Preferred Stock and Service Receivable On May 8, 2020, the Company entered into a Stock and Warrant Subscription Agreement with PoC, whereby PoC agreed to finance an additional $ 2.3 million for a clinical trial in exchange for (i) 602,833 shares of its common stock (the “Common Stock”), (ii) 154,670 shares of its Series D Preferred Stock 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. F-18 Table of Contents 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 . F-19 Table of Contents 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. F-20 Table of Contents 6. Stock-Based Compensation 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 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. Stock-based compensation has been recognized in operating results as follows: Years ended December 31, 2020 2019 Research and development expenses 354,692 399,687 Selling, general and administrative expenses 1,410,112 485,256 Total stock-based compensation $ 1,764,804 $ 884,943 Stock Options The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following assumptions during the years indicated below: Years ended December 31, 2020 2019 Risk-free interest rate 0.39 % - 0.93 % 1.66 % - 2.33 % Dividend yield 0 % 0 % Expected volatility (range) 102 % - 106 % 95 % - 99 % Expected volatility (weighted-average) 105 % 96 % 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 — 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. Options are considered to be “plain vanilla” if they have the following basic characteristics: (1) are granted “at-the-money”; (2) exercisability is conditioned upon service through the vesting date; (3) termination of service prior to vesting results in forfeiture; (4) limited exercise period following termination of service; and (5) are non-transferable and non-hedgeable. Forfeitures — The Company estimates forfeitures based on its historical experience. 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. F-21 Table of Contents 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 Intrinsic Value Weighted-Average Remaining Contractual Life 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 RSU's are measured at the grant date based on the closing market price of the Company’s common stock at the grant date and recognized ratably over the service period through the vesting date. All RSU's were granted with no purchase price. Vesting of the RSU's is generally subject to service conditions. A summary of the RSU's activity is presented below: Number of Shares Weighted Average Grant Date Fair Value Per Share Intrinsic Value 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 The total fair values of RSU's vested during the year ended December 31, 2020 and 2019 were $ 101,290 and $ 191,436 , respectively. 7. Derivative Financial Instruments — Warrants Certain warrants issued in connection with the Company’s equity financings are accounted for as derivative liabilities. Accordingly, the warrants are remeasured at each balance sheet date based on their estimated fair value using the Black-Scholes option pricing model. Changes in fair value are recorded within Company’s statements of operations. The range of assumptions used to determine the fair value of the warrants valued using the Black-Scholes option pricing model during the periods indicated was: F-22 Table of Contents Year ended December 31, 2020 2019 Fair value of Cardiff Oncology common stock $ 1.01 - $ 17.99 $ 1.24 - $ 3.75 Expected warrant term 2.1 - 3.1 years 3.1 - 4.1 years Risk-free interest rate 0.13 % - 1.62 % 1.56 % - 2.49 % Expected volatility 110 % - 118 % 102 % - 111 % Dividend yield — % — % 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. Treasury security rates consistent with the expected remaining term of the warrants at each balance sheet date. 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. Date Description Number of Warrants Derivative Instrument Liability 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 — ( 28,188 ) December 31, 2019 Balance of derivative financial instruments — warrants liability 64,496 4,127 Change in fair value of derivative financial instruments — warrants during the year recognized as a loss in the statement of operations — 280,844 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. F-23 Table of Contents 8. Fair Value Measurements The following table presents the Company’s assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of December 31, 2020 and 2019: Fair Value Measurements at December 31, 2020 Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Money market fund (1) $ 129,987,804 $ — $ — $ 129,987,804 Total Assets $ 129,987,804 $ — $ — $ 129,987,804 Liabilities: Derivative financial instruments — warrants $ — $ — $ 284,971 $ 284,971 Total Liabilities $ — $ — $ 284,971 $ 284,971 Fair Value Measurements at December 31, 2019 Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Assets: Money market fund (1) $ 10,131,240 $ — $ — $ 10,131,240 Total Assets $ 10,131,240 $ — $ — $ 10,131,240 Liabilities: Derivative financial instruments — warrants $ — $ — $ 4,127 $ 4,127 Total Liabilities $ — $ — $ 4,127 $ 4,127 (1) Included as a component of cash and cash equivalents on the accompanying balance sheet. The change in the fair value of the “derivative financial instruments—warrants” is recorded as a gain or loss in the Company’s statement of operations. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, the Company reviews the assets and liabilities that are subject to ASC Topic 815-40 and ASC Topic 480-10. 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. F-24 Table of Contents 9. Income Taxes 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 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, 2020 2019 Current: State $ 1 $ 1 Total current provision 1 1 Deferred: Federal ( 4,043 ) ( 2,634 ) State ( 92 ) ( 148 ) Total deferred (benefit) expense ( 4,135 ) ( 2,782 ) Valuation allowance 4,134 2,781 Total income tax provision $ — $ — Significant components of the Company’s taxes and the rates as of December 31 are shown below (in thousands, except percentages): Years ended December 31, 2020 2019 Tax computed at the federal statutory rate $ ( 4,054 ) 21 % $ ( 3,447 ) 21 % State tax, net of federal tax benefit ( 122 ) 1 % ( 177 ) 1 % Permanent Items 261 ( 1 ) % 353 ( 2 ) % Stock options true-up 81 ( 1 ) % 875 ( 5 ) % Tax credits ( 300 ) 2 % ( 384 ) 2 % Valuation allowance increase (decrease) 4,134 ( 22 ) % 2,780 ( 17 ) % Provision for income taxes $ — — % $ — — % F-25 Table of Contents Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes as of December 31 are shown below (in thousands): Years ended December 31, 2020 2019 Deferred tax assets: Tax loss carryforwards $ 42,331 $ 38,494 Research and development credits and other tax credits 3,904 3,710 Stock-based compensation 684 531 Other 1,116 1,252 Total deferred tax assets 48,035 43,987 Deferred tax liabilities: Operating lease right-of-use assets ( 74 ) ( 154 ) Other ( 6 ) ( 12 ) Total deferred tax liabilities ( 80 ) ( 166 ) Net deferred tax assets before valuation allowance 47,955 43,821 Valuation allowance ( 47,955 ) ( 43,821 ) Net deferred tax asset $ — $ — 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. 10. Commitments and Contingencies Executive Agreements Certain executive agreements provide for severance payments in case of terminations without cause or certain change of control scenarios. Research and Development and Clinical Trial Agreements In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which 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. The Company plans to develop onvansertib in patients with leukemias/lymphomas and solid tumor cancers. 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 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. License fees are generally calculated as a percentage of product revenues, with rates that vary by agreement. To date, payments have not been material. Litigation 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 F-26 Table of Contents 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. 11. Employee Benefit Plan The Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Service ("IRS") Code covering its employees. The plan allows employees to defer, up to the maximum allowed, a percentage of their income through contributions to the plan as allowed by IRS Code. The Company does not currently make matching contributions. 12. 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”). 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, Co-Founder & Chief Operating Officer of Leucadia, who is the son of Dr. Adams. 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. 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. Dr. 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). 13. COVID-19 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. F-27