What changed in this filing

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Item 9A. Controls and Procedures

2022-02-24 compared with 2021-02-25 · 233 added, 215 removed, 676 unchanged (40% of the section changed)

1 unchanged sentence

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.

Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.

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

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.

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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.”

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 2022 (the “2022 Proxy Statement”), under the heading “Election of Directors.”

EXECUTIVE COMPENSATION

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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.”

The information required by this item is incorporated by reference from the information contained in the 2022 Proxy Statement under the headings “Family Relationships and other Arrangements.”

PRINCIPAL ACCOUNTING FEES AND SERVICES

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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).

Cardiff Oncology, Inc.

2021 Omnibus Equity Incentive Plan (incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 28, 2021).

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).

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

Amended and Restated Employment Agreement, dated February 22, 2021, by and between the Company and Mark Erlander (incorporated by reference to Exhibit 10.9 to Form 10-K filed on February 25, 2021).

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

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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.

Employment Agreement, dated February 22, 2021 by and between the Company and Vicki Kelemen (incorporated by reference to Exhibit 10.16 to Form 10-K filed on February 25, 2021).

Employment Agreement, dated July 12, 2021 by and between James Levine and Cardiff Oncology, Inc.

(incorporated by reference to Exhibit 10.1 to Form 8-K filed on July 12,2021).

Employment Agreement, dated August 4, 2021 by and between Katherine Ruffner and Cardiff Oncology, Inc.

(incorporated by reference to Exhibit 10.2 to Form 10-Q filed on August 5, 2021).

Securities Purchase Agreement, dated November 17, 2021 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on November 18, 2021).

Consent of BDO USA, LLP.

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Mark Erlander (Principal Executive Officer)

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

Brigitte Lindsay (Principal Financial and Accounting Officer)

/s/ James Levine Chief Financial Officer 2/24/2022

James Levine (Principal Financial and Accounting Officer)

/s/ Rodney S.

Markin Chairman of the Board and Director 2/24/2022

/s/ Thomas Adams Director 2/25/2021

Armitage Director 2/24/2022

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John Brancaccio

Jacob Director 2/25/2021

/s/ Mani Mohindru Director 2/24/2022

Mani Mohindru

Pace Director 2/24/2022

/s/ Renee Tannenbaum Director 2/24/2022

Renee Tannenbaum

/s/ Lâle White Director 2/24/2022

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Index to Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (BDO USA, LLP ;

San Diego, CA ;

PCAOB ID# 243 )

Balance Sheets

Statements of Operations

Statements of Comprehensive Loss

Statements of Stockholders’ Equity

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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”).

(the “Company”) as of December 31, 2021 and 2020, the related statements of operations, comprehensive loss, 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, 2021 and 2020, 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.

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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.

The communication of critical audit matters does not alter in any way our opinion on the 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.

As disclosed in Note 2 to the 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.

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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.

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

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.

• Testing management’s estimation of 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 billings 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 year end to evaluate the completeness of clinical trial accruals.

/s/ BDO USA, LLP

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Balance Sheets

(in thousands, except par value)

December 31, 2021 December 31, 2020

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Cash and cash equivalents $ 11,943 $ 130,981

Short-term investments 128,878 —

Accounts receivable and unbilled receivable 535 320

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

Prepaid expenses and other current assets 4,771 2,055

Total current assets 146,127 133,356

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Additional paid-in capital 400,503 361,819

Service receivables ( 2,171,258 ) ( 971,673 )

Service receivable ( 139 ) ( 2,171 )

Accumulated other comprehensive loss ( 142 ) —

Accumulated deficit ( 259,810 ) ( 231,495 )

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Statements of Operations

(in thousands, except per share amounts)

Year Ended December 31,

Royalties $ 365,993 $ 243,137

Services — 1,495

Total revenues 365,993 244,632

Royalty revenues $ 359 $ 366

Costs and expenses:

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Loss from operations ( 28,855 ) ( 19,086 )

Other income (expense), net:

Interest income 264 90

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Gain (loss) from changes in fair value of derivative financial instruments—warrants 285 ( 281 )

Total other income (expense), net 564 ( 221 )

Net loss ( 28,291 ) ( 19,307 )

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

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 — ( 602 )

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Cardiff Oncology, Inc.

Statements of Comprehensive Loss

(in thousands)

Year Ended December 31,

Net loss $ ( 28,291 ) $ ( 19,307 )

Unrealized loss on securities available-for-sale ( 142 ) —

Comprehensive loss $ ( 28,433 ) $ ( 19,307 )

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

Deemed dividend recognized on beneficial conversion features of Series D Convertible Preferred Stock issuance — ( 602 )

Deemed dividend recognized on beneficial conversion features of Series E Convertible Preferred Stock issuance — ( 2,665 )

Comprehensive loss attributable to common stockholders $ ( 28,457 ) $ ( 22,598 )

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

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

(in thousands)

Preferred Stock Shares Preferred Stock Amount Common Stock Shares Common Stock Amount Additional

Paid-In Capital Service Receivable Accumulated other

comprehensive loss Accumulated Deficit Total

Stockholders’ Equity

Balance, December 31, 2019 61 $ — 8,594 $ 8 $ 217,173 $ ( 972 ) $ — $ ( 208,897 ) $ 7,312

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

— — — — — ( 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)

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Balance, December 31, 2020 716 1 36,781 4 361,819 ( 2,171 ) — ( 231,495 ) 128,158

(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

Stock-based compensation — — — — 3,234 — — — 3,234

Issuance of common stock upon exercise of warrants — — 771 — 1,263 — — — 1,263

Sale of common stock, net of expenses (2)

— — 4,412 — 34,187 — — — 34,187

Unrealized loss on available-for-sale securities — — — — — — ( 142 ) — ( 142 )

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

Release of clinical trial funding commitment — — — — — 2,032 — — 2,032

Net loss — — — — — — — ( 28,291 ) ( 28,291 )

Balance, December 31, 2021 716 $ 1 41,964 $ 4 $ 400,503 $ ( 139 ) $ ( 142 ) $ ( 259,810 ) $ 140,417

(1) Net of expenses of $ 7.5 million, and fair value of warrants issued as a transaction advisory fee as of the date of issuance of $ 0.4 million.

(2) Net of expenses of $ 0.8 million.

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

1 unchanged sentence

Statements of Cash Flows

(in thousands)

Year ended December 31,

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

Loss on disposal of assets 1 —

Impairment loss — 34

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Stock-based compensation expense 3,234 1,765

Amortization of premiums on short-term investments 1,607 —

Change in fair value of derivative financial instruments—warrants ( 285 ) 281

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Capital expenditures ( 205 ) ( 211 )

Maturities of short-term investments 28,391 —

Purchases of short-term investments ( 174,385 ) —

Sales of short-term investments 14,751 —

Net cash used in investing activities ( 131,448 ) ( 211 )

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Cash paid for taxes $ 1 $ 1

Acquisition of property and equipment included in accounts payable and accrued liabilities $ 6 $ —

Supplemental disclosure of non-cash investing and financing activities:

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

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

$ — $ 268,269

Year ended December 31,

Deemed dividend recognized for beneficial conversion features of Series D Convertible Preferred Stock issuance $ — $ 602

Deemed dividend recognized for beneficial conversion features of Series E Convertible Preferred Stock issuance $ — $ 2,665

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

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 $ —

Common stock, Series D Convertible Preferred Stock and warrants issued in connection with clinical trial funding commitment, net of discount of $ 0 and $ 488 , respectively

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

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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.

(“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage oncology company with the mission of developing new precision medicine treatment options for cancer patients in indications with the greatest unmet medical need, including KRAS-mutated metastatic colorectal cancer, metastatic pancreatic cancer and metastatic castration-resistant prostate cancer.

The Company's common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF".

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.

As of December 31, 2021, the Company had $ 140.8 million in cash, cash equivalents and short-term investments 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.

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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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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.

The most significant estimate involves accrued clinical trial expenses.

Accrued Clinical Trial Expenses

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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.

As of December 31, 2021 the Company’s clinical trial accrual balance of $ 1.6 million is included in accrued liabilities.

The Company’s related 2021 clinical trial expenses are included in research and development expense of $ 17.4 million.

Certain 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.

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.

Cash and cash equivalents consist of cash in readily available checking and money market accounts.

Investment Securities

All investments have been classified as “available-for-sale” and are carried at fair value as determined based upon quoted market prices or pricing models for similar securities at period end.

Investments with contractual maturities less than 12 months at the balance sheet date are considered short-term investments.

Investments with contractual maturities beyond one year are also classified as short-term due to the Company’s ability to liquidate the investment for use in operations within the next 12 months.

Realized gains and losses on investment securities are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

The Company has not realized any significant gains or losses on sales of available-for-sale investment securities during any of the periods presented.

As all the Company’s investment holdings are in the form of debt securities or certificates of deposit, unrealized gains and losses that are determined to be temporary in nature are reported as a component of accumulated other comprehensive loss.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.

Interest income is recognized when earned and is included in investment income, as are the amortization of purchase premiums and accretion of purchase discounts on investment securities.

Concentration of Credit Risk

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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 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.

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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.

These patents are from the Company's legacy portfolio and unrelated to onvasertib.

Agreements may involve multiple elements such as license fees, minimum royalties, usage-based royalties and milestone payments.

Revenue is recognized when the criteria described above have been met as well as the following:

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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.

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.

Such warrants are classified as derivative liabilities and are recorded at their fair market value as of each reporting period as they do not meet the criteria for equity classification.

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.”

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At December 31, 2021 and 2020, the fair value of these warrants was $ 0 and $ 285,000 , respectively, and was recorded as a liability under the caption “derivative financial instruments — warrants” on the balance sheets.

These warrants expire in the first quarter of 2023.

Stock-Based Compensation

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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.

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.

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.

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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.

Long-lived assets consist of property, equipment and lease right-of-use assets.

The Company records property and equipment at cost.

Depreciation on property and equipment is calculated using the straight-line method over the estimated useful life of the asset.

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

The estimated useful lives of the major classes of property and equipment are as follows:

Estimated Useful Lives

Furniture and office equipment 3 to 5 years

Leasehold improvements 5 to 6 years

Laboratory equipment 5 years

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.

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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.

None of the Company’s operating leases provide an implicit rate, therefore 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.

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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.

Also, patent filing and patent 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.

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10,947,627 9,807,474

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.

Recent Accounting Pronouncement Not Yet Adopted

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

In May 2021, the FASB issued ASU No.

2021-04 ("ASU 2021-04), Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).

The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

The Company will adopt this standard on January 1, 2022 and does not expect that the adoption of this standard will have a material impact on its financial statements and related disclosures.

Supplementary Balance Sheet Information

Short-term investments available-for-sale securities consist of the following:

As of December 31, 2021

(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value

Maturity less than 1 year:

Certificate of deposit $ 1,260 $ — $ — $ 1,260

Corporate debt securities 58,822 2 ( 38 ) 58,786

Commercial paper 14,453 4 ( 3 ) 14,454

government 728 — — 728

treasury securities 20,380 — ( 24 ) 20,356

Total maturity less than 1 year 95,643 6 ( 65 ) 95,584

Maturity 1 to 2 years:

Corporate debt securities 29,676 1 ( 73 ) 29,604

treasury securities 3,701 — ( 11 ) 3,690

Total maturity 1 to 2 years 33,377 1 ( 84 ) 33,294

Total short-term investments $ 129,020 $ 7 $ ( 149 ) $ 128,878

For the year ending December 31, 2021 the realized loss on the sale of short-term investments was $ 0 .

The Company did not have short-term investments during the year ending December 31, 2020.

None of the Company’s short-term investments available for sale were in a material unrealized loss position at December 31, 2021.

The Company reviewed its investment holdings as of December 31, 2021 and determined that its unrealized losses were not considered to be other-than-temporary based upon (i) the financial strength of the issuing institution and (ii) the fact that no securities have been in an unrealized loss position for twelve months or more.

As such, the Company has not recognized any impairment in its financial statements related to its available-for-sale investment securities.

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.

Depreciation expense for property and equipment for the years ended December 31, 2021 and 2020 was $ 0.5 million and $ 0.5 million, respectively.

Property and equipment consisted of the following:

As of December 31,

(in thousands) 2021 2020

Furniture and office equipment $ 955 $ 798

1 unchanged sentence

Laboratory equipment 906 868

3,627,719 3,482,116

Less—accumulated depreciation ( 3,441 ) ( 3,004 )

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As of December 31,

(in thousands) 2021 2020

Accrued compensation $ 1,435 $ 1,523

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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.

The Company currently occupies 9,500 square feet of office and lab space in San Diego.

During July 2021, the Company entered into an amended lease agreement to increase its occupied space to 12,300 square feet which commences on January 1, 2022 and expires on February 28, 2027.

Under the current master facility lease, which expired on December 31, 2021, the Company leases 26,100 square feet of office and lab space.

This includes 16,600 square feet of space that is subleased to third parties, all of which expired on December 31, 2021.

The minimum monthly rent under the amended lease is $ 55,000 with an annual rent escalation of 3 % per year beginning on January 1, 2022.

Through December 31, 2021 rent payments were approximately $ 80,000 per month.

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

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.

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

Prior to the expiration of the sublease agreements, the Company as a sublessor was leasing approximately 16,600 square feet of space to third parties.

The components of lease expense were as follows:

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

(in thousands) Twelve Months Ended December 31, 2021 Twelve Months Ended December 31, 2020

Operating lease cost $ 745 $ 441

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Supplemental balance sheet information related to leases was as follows:

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

(in thousands) As of December 31, 2021 As of December 31, 2020

Operating lease ROU assets $ 2,796 $ 343

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$ 3,119 $ 869

Weighted-average remaining lease term–operating leases 1.0 year 2.0 years

Weighted-average remaining lease term–operating leases 5.2 years 1.0 year

Weighted-average discount rate–operating leases 7 % 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

(in thousands) Twelve Months Ended December 31, 2021 Twelve Months Ended December 31, 2020

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

Operating cash flows from operating leases $ 949 $ 944

$ 943,959 $ 916,762

ROU assets obtained in exchange for lease obligations:

Operating leases $ 3,061 $ —

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

(in thousands)

Year Ending December 31, Operating Leases

Thereafter 136

Total future minimum lease payments $ 3,749

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

Granted 5,831,451 $ 1.70

Exercised ( 770,833 ) $ 1.64

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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.

The conversion price is subject to adjustment for dilutive issuances for a period of 12 months beginning March 17, 2006 and the conversion price was adjusted to $ 691.20 per share.

6) Automatic Conversion.

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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

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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.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share for the year-ending December 31, 2020.

Series E Convertible Preferred Stock

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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.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share for the year-ending December 31, 2020.

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

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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.

On March 30, 2020, the Company entered into a Securities Purchase Agreement with Lincoln Park Capital Fund, LLC ("LPC") which the company sold a combination of common stock and warrants for gross proceeds of $ 1.0 million.

Under this agreement 800,000 shares of common stock, 131,967 pre-funded warrants and 931,967 Series J Warrants were sold.

On April 9, 2020, the Company entered into a Securities Purchase Agreement with LPC, which the company sold a combination of common stock and warrants for gross proceeds of $ 1.1 million.

Under this agreement 904,970 shares of common stock, 255,000 pre-funded warrants and 1,159,970 Series L Warrants were sold.

Securities Purchase Agreement with Certain Directors and Executives

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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.

On May 26, 2020, the Company entered into a Securities Purchase Agreement with Acorn which the Company sold a combination of common stock and warrants for gross proceeds of $ 2.5 million.

Under the agreement the Company sold 1,205,400 shares of common stock and 482,160 Series M Warrants.

Underwritten Public Offering

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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.

Sales Agreement with Jefferies LLC

During May 2021, the Company sold 2.0 million shares of its common stock under the Sales Agreement with Jefferies LLC., for gross proceeds of approximately $ 20.0 million.

Pfizer Breakthrough Growth Initiative

During November 2021, the Company sold 2.4 million shares of its common stock under a Securities Purchase Agreement with Pfizer Inc.

("Pfizer"), in a registered direct offering for gross proceeds of approximately $ 15.0 million.

The investment is part of the Pfizer Breakthrough Growth Initiative, which includes an information rights agreement and Pfizer's participation on a Scientific Advisory Board for the Company.

Pfizer has agreed to not sell or transfer any shares for 180 days from the closing date of the agreement.

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.

2021 Equity Incentive Plan

In June 2021 the Company's stockholders approved the 2021 Omnibus Equity Incentive Plan ("2021 Plan").

The number of authorized shares in the 2021 plan is equal to the sum of (i) 3,150,000 shares, plus (ii) the number of shares of Common Stock reserved, but unissued under the 2014 Plan;

and (iii) the number of shares of Common Stock underlying forfeited awards under the 2014 Plan.

As of December 31, 2021, there were 2,284,862 shares available for issuance under the 2021 Plan.

2014 Equity Incentive Plan

Subsequent to the adoption of the 2021 Plan, no additional equity awards can be made under the terms of the 2014 Plan.

Inducement Grants

In July 2021, the Company began issuing equity awards to certain new employees as inducement grants outside of its 2021 Plan.

As of December 31, 2021, an aggregate of 790,112 shares were issuable upon the exercise of inducement grant stock options approved by the Company.

Modification of Stock Options

In June 2021 two of the Company's directors' terms ended.

At the conclusion of their term, the Compensation Committee passed a resolution to extend the expiration date of the departing directors vested stock options, and to immediately accelerate the vesting of one of the directors unvested options.

The Company recorded incremental stock compensation expenses of $ 0.6 million during the twelve months ending December 31, 2021, related to the modifications.

Stock-based compensation has been recognized in operating results as follows:

Years ended December 31,

(in thousands) Years ended December 31,

Research and development expenses 491 355

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Expected volatility (range) 107 % - 110 %

102 % - 106 %

Expected volatility (weighted-average) 108 % 105 %

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The weighted-average fair value per share of all options granted during the years ended December 31, 2021 and 2020, estimated as of the grant date using the Black-Scholes option valuation model, was $ 5.96 and $ 2.09 per share, respectively.

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

The unrecognized compensation cost related to non-vested stock options outstanding at December 31, 2021 was $ 10.1 million.

The weighted-average remaining amortization period at December 31, 2021 for non-vested stock options was 3.2 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 .

The total fair value of shares vested during the years ended December 31, 2021 and 2020 was $ 1.2 million and $ 1.5 million, respectively.

The intrinsic value of stock options exercised during the year ended December 31, 2020 was $ 1.0 million.

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

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Granted 1,926,466 $ 7.27

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

Forfeited ( 10,770 ) $ 2.55

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

Granted 9,167 $ 1.61

Vested ( 10,810 ) $ 9.37

Forfeited ( 5,941 ) $ 13.82

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

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Non-vested RSU's outstanding, December 31, 2021 — $ — $ —

The total fair values of RSU's vested during the year ended December 31, 2020 and 2019 were $ 101,290 and $ 191,436 , respectively.

The total fair values of RSU's vested during the year ended December 31, 2021 and 2020 were $ 0.1 million and $ 0.1 million, respectively.

Derivative Financial Instruments — Warrants

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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:

Year ended December 31,

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 — % — %

The assumptions used to determine the fair value of the warrants using the Black-Scholes option pricing model were:

As of December 31,

Weighted Average (1)(2) :

Fair value of Cardiff Oncology common stock $ 6.01 $ 17.99

Expected warrant term 2.1 years

Expected warrant term 1.1 years 2.1 years

Risk-free interest rate 0.41 % 0.13 %

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Dividend yield 0 % 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.

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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.

(in thousands, except for number of warrants)

Date Description Number of Warrants Derivative

December 31, 2019 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

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December 31, 2021 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.

Fair Value Measurements

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December 31, 2021

Quoted Prices in Active Markets for Identical Assets and Liabilities

(in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities

(Level 1) Significant Other Observable Inputs

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Money market fund $ 10,990 $ — $ — $ 10,990

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

Derivative financial instruments — warrants

$ — $ — $ 284,971 $ 284,971

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

Total included in cash and cash equivalents $ 10,990 $ — $ — $ 10,990

Available for sale investments:

Certificate of deposit — 1,260 — 1,260

Corporate debt securities — 88,390 — 88,390

Commercial paper — 14,454 — 14,454

government — 728 — 728

treasury securities 24,046 — — 24,046

Total available for sale investments (1) $ 24,046 $ 104,832 $ — $ 128,878

Total assets measured at fair value on a recurring basis $ 35,036 $ 104,832 $ — $ 139,868

Fair Value Measurements at

December 31, 2020

Quoted Prices in Active Markets for Identical Assets and Liabilities

(in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities

(Level 1) Significant Other Observable Inputs

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Money market fund $ 129,988 $ — $ — $ 129,988

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

Total assets measured at fair value on a recurring basis $ 129,988 $ — $ — $ 129,988

Derivative financial instruments — warrants (2)

$ — $ — $ 285 $ 285

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.

Total liabilities measured at fair value on a recurring basis $ — $ — $ 285 $ 285

(1) Included in short-term investments in the accompanying balance sheets.

(2) 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.

See Note 7 to the financial statements for further information.

The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.

There were no transfers into or out of Level 3 during the years ended December 31, 2021 and 2020.

At December 31, 2021, 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 $ 73.3 million, which do not expire.

Cardiff Oncology also has California NOLs of approximately $ 75.6 million which, if not used, will begin to expire in 2030.

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 $ 2.4 million and $ 2.0 million, respectively.

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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.

The Company has not completed such an analysis pursuant to Sections 382 and 383 and 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.

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Permanent items 62 — % 261 ( 1 ) %

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

Stock based compensation 325 ( 1 ) % 81 ( 1 ) %

Tax credits ( 366 ) 1 % ( 300 ) 2 %

Other 72 — % — — %

Valuation allowance increase (decrease) 6,081 ( 22 ) % 4,134 ( 22 ) %

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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.

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

These agreements include License fees, Royalties and Milestone payments.

The company also has a legacy license agreement in the field of oncology diagnostics under which royalty payments are due.

These royalty payments are calculated as a percent of revenue.

During the years ended December 31, 2021 and 2020 payments have not been material.

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

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

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

This assay was completed in December 2020.

During the duration of the agreement, one of the Company's directors the late Dr.

Thomas Adams (who is no longer a director as of June 2021), was a principal stockholder of Leucadia.

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

During the 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.

During the years ended December 31, 2021 and 2020, the Company incurred and recorded approximately $ 0.0 million and $ 1.1 million, respectively, of research and development expenses for services performed by Leucadia and Tommy Adams.

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).

Pace, Ph.D, 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 .

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.

Thus far COVID-19 has not caused material disruptions to the Company's operational and financial performance.

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.

Repayment of Small Business Administration Payroll Protection Program Loan

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

Subsequent Events

Conversion of Series E Convertible Preferred Stock

327,535 Series E Convertible Preferred Shares were converted into 1,342,357 shares of common stock on January 5, 2022.

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