What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-22 compared with 2020-02-20 · 397 added, 176 removed, 471 unchanged (55% of the section changed)

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Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of VolitionRx Limited (“the Company”) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2019 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of VolitionRx Limited (“the Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2020 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph Regarding Going Concern

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

As discussed in Note 2 to the financial statements, the Company has incurred losses since inception, has negative cash flows from operations, and has generated minimal revenues.

These factors raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has incurred losses since inception, has negative cash flows from operations, and has minimal revenues, which creates substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

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

/s/ Sadler Gibb & Assoc.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

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

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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Going Concern

As described further in Note 2 to the financial statements, the Company has incurred losses since inception, has negative cash flows from operations, and has generated minimal revenues.

Accordingly, the Company has determined that these factors raise substantial doubt about its ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on its ability to obtain sufficient capital contributions, financing and/or generate revenues.

Management plans to address the concerns as needed by, (a) securing additional grant funds, (b) obtaining additional financing through debt or equity transactions, (c) granting licenses to third parties in exchange for specified up-front and/or back end payments, (d) developing and commercializing its products on an accelerated timeline, and (e) continuing to exercise tight cost controls to conserve cash.

Management has not concluded that these plans alleviate the substantial doubt related to its ability to continue as a going concern.

We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s available capital and the risk of bias in management’s judgments and assumptions in their determination.

Our audit procedures related to the following:

· We performed testing procedures such as analytical procedures to identify conditions and events that indicate there could be substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

· We reviewed and evaluated management's plans for dealing with adverse effect of these conditions and events.

· We inquired of Company management and reviewed company records to assess whether there are additional factors that contribute to the uncertainties disclosed.

· We assessed whether the Company’s determination that there is substantial doubt about its ability to continue as a going concern was adequately disclosed.

/s/ Sadler, Gibb & Associates, LLC

We have served as the Company’s auditor since 2011.

Salt Lake City, UT

February 20, 2020

March 22, 2021

VOLITIONRX LIMITED

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Cash and cash equivalents

Accounts Receivable

Prepaid expenses

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Long-term debt, net of current portion

Financing lease liabilities, net of current portion

Finance lease liabilities, net of current portion

Operating lease liabilities, net of current portion

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Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

(110,173,971)

Total VolitionRx Limited Stockholders' Equity

Non-controlling interest

Total Stockholders’ Equity

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Other Income (Expenses)

Gain on disposal of fixed assets

Interest income

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Total Other Income (Expenses)

Net Loss attributable to Non-Controlling Interest

Net Loss attributable to VolitionRx Limited Stockholders

Other Comprehensive Income (Loss)

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(Expressed in United States Dollars, except share numbers)

Accumulated Other

Comprehensive

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Balance, December 31, 2018

Common stock issued for cash, net

Common stock issued for cashless exercise of warrants

Employee stock options granted for services

Warrants granted for services

Common stock issued in exercise of stock options

Common stock issued in exercise of warrants

Common stock issued in public offering, net

Stock-based compensation

Modification of financing warrants

Foreign currency translation

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Balance, December 31, 2019

Common stock issued for cash, net

Common stock issued for cashless exercise of stock options

Employee stock options granted for services

Warrants granted for services

Modification of financing warrants

Common stock issued for Director compensation in Volition Germany

Common stock repurchase and retirement

Common stock issued in exercise of stock options

Common stock issued for exercise of warrants

Common stock issued in public offering, net

Tax withholdings paid related to Stock-based compensation

Stock-based compensation

Foreign currency translation

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Balance, December 31, 2020

(110,173,971)

(The accompanying notes are an integral part of these consolidated financial statements)

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Amortization of operating lease right-of-use assets

Loss on disposal of property and equipment

Gain on disposal of fixed assets

Stock based compensation

Warrants issued for services

Common stock issued for Director compensation in Volition Germany

Financing costs for warrants modified

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Prepaid expenses

Accounts receivable

Other current assets

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Management and directors’ fees payable

Operating leases liabilities

Right-of-use assets operating leases liabilities

Net Cash Used In Operating Activities

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Purchases of property and equipment

Proceeds from sales of property and equipment

Net Cash Used In Investing Activities

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Net proceeds from issuance of common shares

Tax withholdings paid related to stock-based compensation

Common stock repurchased

Proceeds from grants repayable

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Common Stock issued on cashless exercises of stock options and warrants

Finance lease obligations

Loan payable for purchase of manufacturing building

Offering costs from issuance of common stock

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The Company’s principal business objective through its subsidiaries is to develop and bring to market simple, easy to use, cost effective blood tests designed to help diagnose a range of cancers and other diseases.

The tests are based on the science of Nucleosomics, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluid – an indication that disease is present.

The tests are based on the science of Nucleosomics TM , which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluid – an indication that disease is present.

The Company has one wholly owned subsidiary, Singapore Volition.

Singapore Volition has one wholly owned subsidiary, Belgian Volition SPRL, a Belgium private limited liability company formerly known as ValiBioSA (“Belgian Volition”), which it acquired as of September 22, 2010.

Belgian Volition has three subsidiaries, Volition Diagnostics UK Limited (“Volition Diagnostics”), which was formed as of November 13, 2015, Volition America, Inc.

(“Volition America”), which was formed as of February 3, 2017, as well as its majority–owned subsidiary Volition Veterinary Diagnostics Development LLC (“Volition Vet”), which was formed as of June 3, 2019.

Singapore Volition has one wholly owned subsidiary, Belgian Volition SRL, a Belgium private limited liability company formerly known as ValiBioSA (“Belgian Volition”), which it acquired as of September 22, 2010.

Belgian Volition has four subsidiaries, Volition Diagnostics UK Limited (“Volition Diagnostics”), which was formed as of November 13, 2015, Volition America, Inc.

(“Volition America”), which was formed as of February 3, 2017, Volition Germany GmbH (“Volition Germany”), which was acquired as of January 10, 2020, as well as its majority-owned subsidiary Volition Veterinary Diagnostics Development LLC, (“Volition Vet”), which was formed as of June 3, 2019.

Following the acquisition of Singapore Volition in 2011, the Company’s fiscal year end was changed from August 31 to December 31.

Note 2 - Going Concern

The Company's Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America (“U.S.

The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America, or U.S.

GAAP, applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

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The consolidated financial statements of the Company have been prepared in accordance with U.S.

GAAP and are expressed in United States dollars.

GAAP and are expressed in US dollars.

The Company’s fiscal year end is December 31.

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GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.

The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, impairment analysis of intangible assets and valuations of stock-based compensation.

The Company also regularly evaluates estimates and assumptions related to deferred income tax asset valuation allowances, useful lives of property and equipment and intangible assets, borrowing rate used in operating lease right-of-use asset and liability valuations, impairment analysis of intangible assets and valuations of stock-based compensation.

The Company bases its estimates and assumptions on current facts, historical experiences and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources.

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Principles of Consolidation

The accompanying consolidated financial statements for the year ended December 31, 2019 include the accounts of the Company and its wholly owned subsidiaries, Singapore Volition, Belgian Volition, Volition Diagnostics UK Limited and Volition America, as well as its majority-owned subsidiary Volition Vet.

All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements for the year ended December 31, 2020 include the accounts of the Company and its subsidiaries, Singapore Volition, Belgian Volition, Volition Diagnostics UK, Volition Germany, Volition America, and Volition Vet.

See Note 10(f) for more information regarding Volition Vet and Volition Germany.

All intercompany balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

At December 31, 2019 and December 31, 2018, the Company had $16,966,168 and $13,427,222, respectively, in cash and cash equivalents.

At December 31, 2019 and December 31, 2018, the Company had $16,499,679 and $12,899,095, respectively, in its domestic accounts in excess of Federal Deposit Insurance Corporation insured limits.

At December 31, 2019 and December 31, 2018, the Company had $2,887,483 and $451,468, respectively, in its foreign accounts in excess of the Belgian Deposit Guarantee insured limits.

At December 31, 2019 and December 31, 2018, the Company had $170,387 and $76,665, respectively, in its foreign accounts in excess of the Singapore Deposit Insurance Scheme.

At December 31, 2019 and December 31, 2018, the Company had $777,432 and $55,398, respectively, in its foreign accounts in excess of the UK Deposit Protection Scheme.

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with Accounting Standards Codification (“ASC”) 260, “Earnings Per Share ,” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

As of December 31, 2019, 4,359,301 potential common shares equivalents from warrants and options were excluded from the diluted EPS calculations as their effect is anti-dilutive.

As of December 31, 2020, and December 31, 2019, the Company had $19,444,737 and $16,966,168, respectively, in cash and cash equivalents.

As of December 31, 2020, and December 31, 2019, the Company had $18,592,210 and $16,499,679, respectively, in its domestic accounts in excess of Federal Deposit insured limits.

As of December 31, 2020, and December 31, 2019, the Company had $831,110 and $2,887,483, respectively, in its foreign accounts in excess of the Belgian Deposit insured limits.

As of December 31, 2020, and December 31, 2019, the Company had $282,137 and $170,387, respectively, in its foreign accounts in excess of the Singapore Deposit insured limits.

As of December 31, 2020, and December 31, 2019, the Company had $186,168 and $777,432, respectively, in its foreign accounts in excess of the UK Deposit insured limits.

Accounts Receivable

Trade accounts receivable are stated at the amount the Company expects to collect.

Due to the nature of the accounts receivable balance, the Company believes the risk of doubtful accounts is minimal and therefore no allowance is recorded.

If the financial condition of the Company’s customers were to deteriorate, adversely affecting their ability to make payments, additional allowances would be required.

The Company may provide for estimated uncollectible amounts through a charge to earnings and a credit to a valuation allowance.

Balances that remain outstanding after the Company has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

As of December 31, 2020, the accounts receivable balance was $7,118 and the allowance for doubtful accounts was $nil.

Property and Equipment

Property and equipment are stated at historical cost and depreciated over the useful life of the asset using the straight-line method.

Useful lives are assigned to assets depending on their category.

For details regarding property and equipment, refer to Note 4.

VOLITIONRX LIMITED

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Note 3 - Summary of Significant Accounting Policies (continued)

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with Accounting Standards Codification (“ASC”) 260, “Earnings Per Share,” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement.

Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.

Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method.

In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.

As of December 31, 2020, and December 31, 2019, 4,556,669 and 4,359,301, respectively, of potential common shares equivalents from stock options, RSUs and warrants were excluded from the diluted EPS calculations as their effect is anti-dilutive.

Foreign Currency Translation

The Company has functional currencies in the Euro, the United States Dollar and British Pounds Sterling and its reporting currency is the United States Dollar.

The Company has functional currencies in Euros, US Dollars and British Pounds Sterling and its reporting currency is the US Dollar.

Management has adopted ASC 830-20, “Foreign Currency Matters – Foreign Currency Transactions” .

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Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, loans payable, and amounts due to related parties.

The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, notes payable, and amounts due to related parties.

Pursuant to ASC 820, the fair value of cash is determined based on “Level 1” inputs, which consists of quoted prices in active markets for identical assets.

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The potential benefits of net operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Other Comprehensive Income (Loss)

ASC 220, “ Other Comprehensive Income/(Loss)”, establishes standards for the reporting and display of other comprehensive loss and its components in the financial statements.

As of December 31, 2019, the Company had $125,670 of accumulated other comprehensive loss, relating to foreign currency translation.

Refer to Note 9 for further details.

VOLITIONRX LIMITED

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Note 3 - Summary of Significant Accounting Policies (continued)

Other Comprehensive Income (Loss)

ASC 220, “ Other Comprehensive Income/(Loss)”, establishes standards for the reporting and display of other comprehensive loss and its components in the financial statements.

As of December 31, 2020, the Company had $59,978 of accumulated other comprehensive income, relating to foreign currency translation.

Revenue Recognition

Beginning in 2014, the Financial Accounting Standards Board (“FASB”) issued several Accounting Standards Updates establishing Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers ” (“ASC 606”).

ASC 606 replaces most industry-specific revenue recognition guidance in U.S.

GAAP with a new principles-based, five-step revenue recognition model.

The Company adopted ASC 606 effective January 1, 2019.

The Company adopted ASC 606, “ Revenue from Contracts with Customers,” effective January 1, 2019.

Under ASC 606, the Company recognizes revenues when the customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services.

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(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenues when (or as) we satisfy the performance obligation(s).

and (v) recognize revenues when (or as) the Company satisfies the performance obligation(s).

The Company generates revenue from its license agreement with Active Motif, Inc.

(“Active Motif”) for the sale of Research Use Only (“ROU”) kits from which the Company receives royalties.

(“Active Motif”) for the sale of ROU kits from which the Company receives royalties.

In addition, revenue is received from external third parties for services the Company performs for them in its laboratory.

The Company also generates product revenues from the sale of its Nu.Q ® Vet Cancer Screening Test and from the sale of nucleosomes.

Revenues, and their respective treatment for financial reporting purposes under ASC 606, are as follows:

The Company receives royalty revenues on the net sales recognized during the period in which the revenue is earned, and the amount is determinable from the licensee.

These are presented under “Royalty” in the consolidated statements of operations.

These are presented under “Royalty” under the consolidated statements of operations.

The Company does not have future performance obligations under this revenue stream.

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Differences between actual and estimated royalty revenues are adjusted for in the period in which they become known.

The Company includes revenue recognized from laboratory services performed in the Company’s laboratory on behalf of third parties under “Services” in the consolidated statements of operations.

The Company includes revenue from product sales recognized during the period in which goods are shipped to third parties, and the amount is deemed collectable from the third parties.

These are presented in “Product” in the consolidated statements of operations and comprehensive loss.

The Company includes revenue recognized from laboratory services performed in the Company’s laboratory on behalf of third parties under “Service” under the consolidated statements of operations.

For each development and/or commercialization agreement that results in revenues, the Company identifies all performance obligations, aside from those that are immaterial, which may include a license to intellectual property and know-how, development activities and/or transition activities.

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These estimates are re-assessed each reporting period as required.

Research and Development

In accordance with ASC 730, the Company follows the policy of expensing its research and development costs in the period in which they are incurred.

The Company incurred research and development expenses of $10.4 million and $10.9 million during the years ended December 31, 2019 and December 31, 2018, respectively.

VOLITIONRX LIMITED

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Note 3 - Summary of Significant Accounting Policies (continued)

Research and Development

In accordance with ASC 730, the Company follows the policy of expensing its research and development costs in the period in which they are incurred.

The Company incurred research and development expenses of $14.5 million and $10.4 million during the years ended December 31, 2020 and 2019, respectively.

Impairment of Long-Lived Assets

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Stock-Based Compensation

The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation” and ASC 505-50, Equity-Based Payments to Non-Employees .

All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued and are recognized over the employees required service period, which is generally the vesting period.

In February of 2016, FASB issued Accounting Standards Update No.

2016-02 – Leases (“Topic 842”), which significantly amends the way companies are required to account for leases.

Under the updated leasing guidance, some leases that did not have to be reported previously are now required to be presented as an asset and liability on the balance sheet.

In addition, for certain leases, what was previously classified as an operating expense must now be allocated between amortization expense and interest expense.

The Company adopted Topic 842 as of January 1, 2019 using the modified retrospective transition method and prior periods have not been restated.

Upon implementation, the Company recognized an initial operating lease right-of-use asset of $110,630 and operating lease liability of $110,630.

Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required.

Grants received

The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation” .

Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the employee’s requisite service period, which is generally the vesting period.

The fair value of our stock options and warrants is estimated using a Black-Scholes option valuation model.

Restricted stock units are valued based on the closing stock price on the date of grant.

Refer to Note 8 for further details.

The Company adopted FASB issued Accounting Standards Update No.

2016-02 – Leases (“Topic 842”) as of January 1, 2019, that requires lessees to record the present value of operating lease payments as right-of-use assets and lease liabilities on the balance sheet.

See Note 10(b) for discussion of the guidance and the Company’s accounting policy.

The Company receives funding from public bodies for a proportion of the costs of specific projects.

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($ expressed in United States Dollars)

Note 3 - Summary of Significant Accounting Policies (continued)

COVID-19 Pandemic Impact

On March 11, 2020, the World Health Organization designated the outbreak of the novel strain of coronavirus known as COVID-19 as a global pandemic.

Governments and businesses around the world have taken unprecedented actions to mitigate the spread of COVID-19, including, but not limited to, shelter-in-place orders, quarantines, significant restrictions on travel, as well as restrictions that prohibit many employees from going to work.

Uncertainty with respect to the economic impacts of the pandemic has introduced significant volatility in the financial markets.

The Company did not observe significant impacts on its business or results of operations for the twelve months ended December 31, 2020 due to the global emergence of COVID-19.

While the extent to which COVID-19 impacts the Company’s future results will depend on future developments, the pandemic and associated economic impacts could result in a material impact to the Company’s future financial condition, results of operations and cash flows .

Note 4 - Property and Equipment

The Company’s property and equipment consist of the following amounts as of December 31, 2020 and December 31, 2019:

December 31, 2020

Computer hardware and software

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Not amortized

December 31, 2019

Computer hardware and software

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Not amortized

The majority of capital expenditures in 2019 are related to €0.4 million Euros for software and laboratory equipment.

The majority of capital expenditures in 2020 are related to purchasing a new manufacturing facility of $0.8 million, manufacturing building improvements of $0.6 million, and laboratory equipment of $1.0 million.

During the years ended December 31, 2020 and December 31, 2019, the Company recognized $627,555 and $589,532, respectively, in depreciation expense.

During the year ended December 31, 2020, the Company sold laboratory equipment for cash proceeds of $293,312, resulting in a gain on disposal of equipment of $293,312.

VOLITIONRX LIMITED

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The patents are being amortized over the assets’ estimated useful lives, which range from 8 to 20 years.

December 31, 2020

December 31, 2019

During the years ended December 31, 2020 and December 31, 2019, the Company recognized $88,626 and $87,285, respectively, in amortization expense.

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Note 6 - Related Party Transactions

See Note 7 for common stock issued to related parties and Note 8 for stock options and warrants issued to related parties.

The Company has agreements with related parties for consultancy services which are accrued under management and directors’ fees payable (see consolidated balance sheet).

See Note 7 for common stock issued to related parties and Note 8 for stock options, warrants and RSUs issued to related parties.

The Company has agreements with related parties for the purchase of products and consultancy services which are accrued under accruals and management and directors’ fees payable (see consolidated balance sheets).

VOLITIONRX LIMITED

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As of December 31, 2020, the Company was authorized to issue 100 million shares of common stock par value $0.001 per share, of which 48,607,017 and 41,125,303 shares were issued as of December 31, 2020 and December 31, 2019, respectively.

On June 14, 2019, an amendment to the 2015 Stock Incentive Plan (the “2015 Plan”) was approved by the stockholders at the annual meeting to increase the number of shares of common stock available for issuance under the 2015 Plan by 1,000,000 shares to an aggregate maximum of 4,250,000 shares.

Issuances Upon Warrant and Option Exercises

On August 10, 2018, the Company issued to Cotterford Company Limited (“Cotterford”) in a private placement offering (PIPE) 5.0 million shares of common stock at a price of $1.80 per share, for aggregate gross proceeds of $9.0 million.

From January 7, 2020 to August 17, 2020, 97,500 stock options were exercised to purchase shares of common stock at $2.50 per share in cashless exercises that resulted in the issuance of 30,033 shares of common stock.

From January 7, 2020 to August 17, 2020, 97,500 stock options were exercised to purchase shares of common stock at $3.00 per share in cashless exercises that resulted in the issuance of 16,539 shares of common stock.

On January 7, 2020, 35,000 stock options were exercised to purchase shares of common stock at $4.00 per share in cashless exercises that resulted in the issuance of 6,486 shares of common stock.

From February 24, 2020 to September 2, 2020, 11,599 stock options were exercised to purchase shares of common stock at $2.35 per share in cashless exercises that resulted in the issuance of 2,752 shares of common stock.

From July 16, 2020 to August 10, 2020, 210,000 stock options were exercised to purchase shares of common stock at $2.50 per share in cashless exercises and withholding of shares for taxes that resulted in the issuance of 39,197 shares of common stock.

From July 21, 2020 to August 12, 2020, 210,000 stock options were exercised to purchase shares of common stock at $3.00 per share in cashless exercises and withholding of shares for taxes that resulted in the issuance of 22,261 shares of common stock.

On August 12, 2020, 15,000 stock options were exercised to purchase shares of common stock at $2.50 per share that resulted in the issuance of 15,000 shares of common stock for proceeds to the Company of $37,500.

On August 12, 2020, 15,000 stock options were exercised to purchase shares of common stock at $3.00 per share that resulted in the issuance of 15,000 shares of common stock for proceeds to the Company of $45,000.

On September 18, 2020, 25,000 warrants were exercised to purchase shares of common stock at $2.47 per share that resulted in the issuance of 25,000 shares of common stock for proceeds to the Company of $61,750.

Stock Issuance for Services

On January 9, 2020, 73,263 shares were issued as fully paid shares of common stock valued at $333,969 as compensation to a managing director of Volition Germany (see Note 10(f)).

Stock Repurchase

On January 12, 2020, the Company purchased from its Chief Medical Officer 11,364 shares of our common stock at $4.79 per share, for a total cost to the Company of $54,434.

These shares were subsequently retired.

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 7 - Common Stock (continued)

Equity Capital Raise

On May 20, 2020, the Company entered into an underwriting agreement with National Securities Corporation, acting on its own behalf and as representative of the several underwriters, in connection with the public offering, issuance and sale by the Company of 4,365,000 shares of the Company’s common stock, at the public offering price of $2.75 per share, less underwriting discounts and commissions.

Under the terms of the agreement, the Company granted the underwriters an option, exercisable for 30 days from the date of the agreement, to purchase up to 654,750 additional shares of the Company’s common stock to cover overallotments, if any, at the public offering price of $2.75 per share, less underwriting discounts and commissions.

On May 21, 2020, the underwriters exercised the overallotment option in full.

As a result of the equity capital raise, the Company issued a total of approximately 5 million shares for aggregate gross proceeds of $13.8 million.

Additionally, in connection with this transaction, $1.1 million was incurred in fees relating to the equity offering, resulting in net proceeds of $12.7 million.

Equity Distribution Agreements

On November 10, 2020, the Company entered into an Equity Distribution Agreement (the “2020 EDA”) with Cantor Fitzgerald & Co.

(“Cantor”) and Oppenheimer & Co.

(“Oppenheimer”), to sell shares of its common stock having an aggregate offering price of up to $25,000,000 from time-to-time, through an “at the market offering program” pursuant to the Company’s effective “shelf” registration statement on Form S-3 (File No.

333-227248) and related prospectuses, through Cantor and Oppenheimer each acting as the Company’s agent and/or principal.

The Company is not obligated to sell any shares under the 2020 EDA.

As of December 31, 2020, the Company had made no sales of common stock under the 2020 EDA.

See Note 11 for details regarding additional sales of common stock under the 2020 EDA after December 31, 2020.

On September 7, 2018, the Company entered into an equity distribution agreement (as amended, the “2018 Equity Distribution Agreement”) with Oppenheimer, which agreement allows it to offer and sell shares of common stock having an aggregate offering price of up to $10.0 million from time-to-time through an “at the market offering program,” pursuant to a shelf registration statement on Form S-3 (declared effective by the SEC on September 28, 2018, File No.333-227248) and related prospectuses, through Oppenheimer acting as the Company’s agent and/or principal.

From inception through December 31, 2020, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of approximately $8.5 million under the 2018 Equity Distribution Agreement through the sale of 2,230,997 shares of its common stock.

For the year ended December 31, 2020, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of approximately $8.5 million under the 2018 Equity Distribution Agreement through the sale of 2,227,797 shares of its common stock.

Additionally, in connection with this transaction $126,492 was incurred in fees relating to the Equity Distribution Agreement.

See Note 11 for details regarding additional sales of common stock under the 2018 Equity Distribution Agreement after December 31, 2020.

Issuances Upon Warrant and Option Exercises

On August 10, 2018, the Company issued to Cotterford Company Limited (“Cotterford”) 5.0 million shares of common stock at a price of $1.80 per share in a private placement offering, for aggregate gross proceeds of $9.0 million.

In connection with the transaction, approximately $0.1 million was incurred for legal and other fees resulting in net proceeds of approximately $8.9 million.

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On March 8, 2019, Cotterford partially exercised its warrant and purchased 1,724,138 shares of our common stock at a price of $2.90 per share, for gross proceeds to the Company of $5.0 million.

On May 3, 2019, Cotterford partially exercised its warrant and purchased 1,666,667 shares of our common stock at a price of $3.00 per share, for gross proceeds to the Company of $5.0 million.

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at a price of $3.00 per share, for gross proceeds to the Company of approximately $4.8 million.

From August 20, 2019 to September 20, 2019, 6,166 stock options were exercised to purchase shares of our common stock at $2.35 per share in a cashless exercise that resulted in the issuance of 2,487 shares of our common stock.

On November 15, 2019, 4,167 stock options were exercised to purchase shares of our common stock at $5.00 per share in a cashless exercise that resulted in the issuance of 371 shares of our common stock.

From November 25, 2019 to November 27, 2019, warrants to purchase 29,392 shares of our common stock were exercised at a price of $2.40 per share, for gross proceeds to the Company of $70,541.

Equity Distribution Agreement

On September 7, 2018, the Company entered into an equity distribution agreement with Oppenheimer & Co.

(“Oppenheimer”), which agreement allows it to offer and sell shares of its common stock having an aggregate offering price of up to $10.0 million from time-to-time pursuant to a shelf registration statement on Form S-3 (declared effective by the SEC on September 28, 2018, File No.

333-227248) through Oppenheimer acting as the Company’s agent and/or principal.

Through December 31, 2019, the Company raised aggregate net proceeds (net of broker commissions and fees) of $16,547 under the equity distribution agreement through the sale of 3,200 shares of its common stock.

All of such shares were sold during the quarter ended December 31, 2019.

The Company used the net proceeds raised to date for continued product development, clinical studies, product commercialization, working capital and other general corporate purposes.

From February 5 to June 4, 2018, 29,375 warrants were exercised to purchase shares of our common stock at a price of $2.00 per share in a cashless exercise that resulted in the issuance of 11,831 shares of our common stock.

VOLITIONRX LIMITED

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Note 7 - Common Stock (continued)

On March 13, 2018, the Company issued 3.5 million shares of common stock in a registered public offering at a price of $2.40 per share, for aggregate gross proceeds of $8.4 million.

In connection with the transaction, approximately $0.8 million was incurred for legal and underwriting fees resulting in net proceeds of approximately $7.6 million.

Pursuant to this offering, the underwriters had the option to purchase up to an additional 525,000 shares of our common stock for 30 days following the pricing of the initial closing, which option was not exercised.

On August 10, 2018, the Company issued to Cotterford in a private placement offering (“PIPE”) 5.0 million shares of our common stock at a price of $1.80 per share, for aggregate gross proceeds of $9.0 million.

On October 16, 2018, 243,903 warrants were exercised at a price of $2.40 per share, for gross cash proceeds to the Company of $585,367.

As a result, a total of 243,903 shares of our common stock were issued.

On October 16, 2018, 60,250 warrants were exercised at a price of $2.20 per share, for gross cash proceeds to the Company of $132,550.

As a result, a total of 60,250 shares of our common stock were issued.

Note 8 - Warrants and Options

2019 (continued)

Issuances Upon Warrant and Option Exercises (continued)

On May 3, 2019, Cotterford partially exercised its warrant and purchased 1,666,667 shares of our common stock at a price of $3.00 per share, for gross proceeds to the Company of $5.0 million.

From November 25, 2019 to November 27, 2019, warrants to purchase 29,392 shares of our common stock were exercised at a price of $2.40 per share, for gross proceeds to the Company of $70,541.

Equity Distribution Agreements

For the year ended December 31, 2019, The Company raised aggregate net proceeds (net of broker’s commissions and fees) of $16,547 under the 2018 Equity Distribution Agreement through the sale of 3,200 shares of its common stock.

Note 8 – Stock-Based Compensation

The following table summarizes the changes in warrants outstanding of the Company during the years ended December 31, 2020 and December 31, 2019:

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Exercisable at December 31, 2020

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 8 – Stock-Based Compensation (continued)

a) Warrants (continued)

Effective February 26, 2020, the vesting criteria of the remaining installment of a warrant originally granted March 20, 2013 to an officer of the Company, and previously amended, was deemed met pursuant to the approval of the Compensation Committee, resulting in the vesting of the Warrant as to 125,000 shares effective February 26, 2020, with an expiration date of February 26, 2023.

Effective March 1, 2020, the Company granted warrants to purchase 50,000 shares of common stock to a Company employee for services to the Company.

These warrants vest on September 1, 2021 (subject to continued employment through such date) and expire on March 1, 2026, with an exercise price of $3.45 per share.

The Company has calculated the estimated fair market value of these warrants at $86,771, using the Black-Scholes model and the following assumptions:

term 3.75 years, stock price $3.44, exercise price $3.45, 69.03% volatility, 0.95% risk free rate, and no forfeiture rate.

Effective March 5, 2019, the Company entered into an amendment to an outstanding warrant to purchase up to an aggregate of 5.0 million shares of our common stock, originally issued to Cotterford, a significant stockholder, in connection with an equity financing completed on or about August 10, 2018.

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On May 3, 2019, Cotterford partially exercised its warrant and purchased 1,666,667 shares of our common stock at $3.00 per share resulting in gross proceeds of $5.0 million to the Company.

On July 1, 2019, the Company modified the performance criteria for certain vesting milestones on a warrant held by an officer of the Company and as a result the Company re-measured warrants held by the officer, to purchase 125,000 shares of our common stock at an exercise price of $2.47 per share, resulting in $11,829 of additional warrant expense to be recorded over the vesting period.

On July 1, 2019, the Company modified the performance criteria for certain vesting milestones on a warrant agreement held by an officer of the Company and as a result the Company re-measured warrants held by the officer, to purchase 125,000 shares of common stock at an exercise price of $2.47 per share, resulting in $11,829 of additional warrant expense to be recorded over the vesting period.

These warrants vest on achievement of certain business objectives and expire 3 years from the date of vesting.

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at $3.00 per share resulting in gross proceeds of $4.8 million to the Company.

During the year 2019, warrants to purchase an aggregate of 5,783,067 shares of our common stock were exercised (including the exercises by Cotterford referenced above) for gross cash proceeds to the Company of approximately of $16.6 million.

VOLITIONRX LIMITED

2 unchanged sentences

($ expressed in United States Dollars)

Note 8 - Warrants and Options (Continued)

On July 24, 2019, Cotterford exercised the remainder of its warrant and purchased 1,609,195 shares of our common stock at $3.00 per share resulting in gross proceeds of $4.8 million to the Company.

On August 10, 2018, in conjunction with the PIPE transaction the Company issued to Cotterford a warrant to purchase up to 5.0 million shares of common stock at an exercise price of $3.00 per share payable in cash (subject to adjustment pursuant to the terms of the warrant).

The warrant has an expiration date of August 10, 2019 and is exercisable for a period of 6 months commencing on February 10, 2019.

On November 13, 2018, the Board of Directors amended the terms of an aggregate of 29,392 outstanding warrants to purchase common stock of the Company originally issued in connection with an equity financing completed on or about December 31, 2013 to extend the expiration date from December 31, 2018 to December 31, 2019.

During 2018, 333,528 warrants were exercised for gross cash proceeds to the Company of $717,917.

Refer to Note 7 for the details of the exercises.

Note 8 – Stock-based Compensation (continued)

a) Warrants (continued)

Below is a table summarizing the warrants issued and outstanding as of December 31, 2020, which have a weighted average exercise price of $2.47 per share and an aggregate weighted average remaining contractual life of 3.01 years.

Exercised ($)

Warrant expense of $8,506 and $22,776 was recorded in the years ended December 31, 2019, and December 31, 2018, respectively.

Total remaining unrecognized compensation cost related to non-vested warrants is $20,335 and is expected to be recognized over a period of 1.0 years.

Weighted Average

Stock-based compensation expense related to warrants of $68,541 and $8,506 was recorded for the years ended December 31, 2020, and December 31, 2019, respectively.

Total remaining unrecognized compensation cost related to non-vested warrants is approximately $38,565 and is expected to be recognized over a period of 0.67 years.

As of December 31, 2020, the total intrinsic value of warrants was $199,500.

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On March 27, 2019, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of common stock available for issuance under the Plan by 1,000,000 shares to an aggregate maximum of 4,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 14, 2019.

The 2015 Plan permits the grant of incentive stock options, non-statutory stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units and performance awards.

The primary purpose of the 2015 Plan is to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company that is tied to the Company’s performance, thereby giving them an interest in the success and increased value of the Company.

The 2015 Plan is administered by the Compensation Committee comprised solely of members of the Board of Directors or by the Board of Directors as a whole.

VOLITIONRX LIMITED

2 unchanged sentences

($ expressed in United States Dollars)

Note 8 - Warrants and Options (Continued)

The 2015 Plan is administered by the Compensation Committee comprised solely of members of the Board of Directors or by the Board of Directors as a whole.

The following table summarizes the changes in options outstanding of the Company during the years ended December 31, 2019 and 2018:

Note 8 – Stock-based Compensation (continued)

b) Options (continued)

The following table summarizes the changes in options outstanding of the Company during the years ended December 31, 2020 and December 31, 2019:

Weighted Average

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Exercisable at December 31, 2020

Effective February 11, 2019, the Company granted stock options to purchase 730,000 shares of our common stock to various Company personnel (including directors, executives, members of management and employees) for services to the Company.

These options vested on February 11, 2020 and expire 5 years after the vesting date, with an exercise price of $3.25 per share.

Effective April 13, 2020, the Company granted stock options to purchase 835,000 shares of common stock to various Company personnel (including directors, executives, members of management and employees) in exchange for services provided to the Company.

These options vest on April 13, 2021 and expire 5 years after the vesting date, with an exercise price of $3.60 per share.

The Company has calculated the estimated fair market value of these options at $1,481,709, using the Black-Scholes model and the following assumptions:

term 3.5 years, stock price $3.52, exercise price $3.60, 72.94% volatility, 0.54% risk free rate, and no forfeiture rate.

Subsequent to the February 2019 grant, stock options to purchase 45,000 shares of our common stock subject to the grant were forfeited.

Effective January 23, 2018, the Company granted stock options to purchase 780,000 shares of our common stock to various Company personnel (including directors, executives, members of management and employees) for services to the Company.

These options vested on January 23, 2019 and expire 5 years after the vesting date, with an exercise price of $4.00 per share.

Effective December 1, 2020, the Company granted stock options to purchase 10,000 shares of common stock to a Company employee for services to the Company.

These options vest on December 1, 2021 and expire 5 years after the vesting date, with an exercise price of $3.40 per share.

The Company has calculated the estimated fair market value of these options at $16,315 using the Black-Scholes model and the following assumptions:

term 3.5 years, stock price $3.30, exercise price $3.40, 71.60% volatility, 0.55% risk free rate, and no forfeiture rate.

These options vested on February 11, 2020 and expire 5 years after the vesting date, with an exercise price of $3.25 per share.

The Company has calculated the estimated fair market value of these options at $1,569,816, using the Black-Scholes model and the following assumptions:

term 6 years, stock price $3.16, exercise price $3.25, 77.86% volatility, 2.52% risk free rate, and no forfeiture rate.

Subsequent to the February 2019 grant, stock options to purchase 45,000 shares of common stock subject to the grant were forfeited.

VOLITIONRX LIMITED

2 unchanged sentences

($ expressed in United States Dollars)

Note 8 - Warrants and Options (Continued)

Effective September 28, 2018, the Company granted stock options to purchase 25,000 shares of our common stock to the Company controller for services to the Company.

These options vested on September 28, 2019 and expire 5 years after the vesting date, with an exercise price of $4.00 per share.

The Company has calculated the estimated fair market value of these options at $39,733, using the Black-Scholes model and the following assumptions:

term 6 years, stock price $2.59, exercise price $4.00, 77.59% volatility, 3.01% risk free rate, and no forfeiture rate.

In December 2018, the Board of Directors amended the terms of certain outstanding options such that (i) the expiration date for outstanding options to purchase up to an aggregate of 645,000 shares of the Company’s common stock, granted on August 18, 2014 under the 2011 Plan, was extended for both vesting installments from four (4) years from the vesting date of each installment to a single expiration date of August 18, 2020, (ii) the expiration date for outstanding options to purchase up to an aggregate of 20,000 shares of the Company’s common stock, granted on May 18, 2015 under the 2011 Plan, was extended from four (4) years after the vesting date to May 18, 2021, and (iii) the expiration date for outstanding options to purchase up to an aggregate of 317,000 shares of the Company’s common stock, granted July 23, 2015 under the 2011 Plan, was extended from four (4) years after vesting to five years and six months after vesting, or July 23, 2021.

Note 8 – Stock-Based Compensation (continued)

b) Options (continued)

Below is a table summarizing the options issued and outstanding as of December 31, 2020, all of which were issued pursuant to the 2011 Plan (for option issuances prior to 2016) or the 2015 Plan (for option issuances commencing in 2016) and which have a weighted average exercise price of $4.00 per share and an aggregate weighted average remaining contractual life of 2.98 years .

As of December 31, 2020, an aggregate of 251,867 shares of common stock remained available for future issuance under the 2015 Plan.

Exercised ($)

Stock option expense of $1,458,607 and $2,570,095 was recorded in the year ended December 31, 2019 and December 31, 2018, respectively.

Total remaining unrecognized compensation cost related to non-vested stock options is $165,465 and is expected to be recognized over a period of 0.12 years.

Weighted Average

Contractual Life

Stock-based compensation expense related to stock options of $1,220,165 and $1,458,607 were recorded for the years ended December 31, 2020 and December 31, 2019 respectively.

Total remaining unrecognized compensation cost related to non-vested stock options is approximately $416,706 and is expected to be recognized over a period of 0.92 years.

As of December 31, 2020, the total intrinsic value of stock options was $688,489.

c) Restricted Stock Units (RSUs)

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2020, all of which were issued pursuant to the 2015 Stock Incentive Plan.

Effective April 13, 2020, the Company granted RSUs of 52,500 shares of common stock to various Company personnel (including a director and an employee) in exchange for services provided to the Company.

These RSUs vest over 2 years, with 50% vesting on each of April 13, 2021 and April 13, 2022 and will result in total compensation expense of $184,800.

VOLITIONRX LIMITED

2 unchanged sentences

($ expressed in United States Dollars)

Note 8 – Stock-Based Compensation (continued)

c) Restricted Stock Units (RSUs) (continued)

Effective December 1, 2020, the Company granted RSUs of 15,000 shares of common stock to a non-executive director of the Company in exchange for services provided to the Company.

These RSUs vest over 2 years, with 50% vesting on each of December 1, 2021 and December 1, 2022 and will result in total compensation expense of $49,500.

Weighted Average

Exercise Price

Outstanding at December 31, 2019

Outstanding at December 31, 2020

Below is a table summarizing the RSUs issued and outstanding as of December 31, 2020 and which have an aggregate weighted average remaining contractual life of 0.92 years.

Weighted Average

Contractual Life

Stock-based compensation expense related to RSUs of $102,786 and $nil was recorded in the year ended December 31, 2020, and December 31, 2019, respectively.

Total remaining unrecognized compensation cost related to non-vested RSUs is $131,514.

As of December 31, 2020, the total intrinsic value of RSUs was $262,575.

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 9 - Income Taxes

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Federal Deferred Rate Decrease

Increase/(decrease) in valuation reserve

Change in Valuation Allowance

Disclosure Amounts

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Note 10 – Commitments and Contingencies

a) Financing Lease Obligations

In 2015, the Company entered into an equipment financing lease to purchase three Tecan machines (automated liquid handling robots) for €550,454 Euros, maturing May 2020.

As of December 31, 2019, the balance payable was $44,477.

In 2016, the Company entered into a real estate financing lease with ING Asset Finance Belgium S.A.

(“ING”) to purchase a property located in Belgium for €1.12 million Euros, maturing May 2031.

a) Finance Lease Obligations

In 2015, the Company entered into an equipment finance lease to purchase three Tecan machines (automated liquid handling robots) for €550,454, maturing May 2020.

As of December 31, 2020, the balance payable was $nil.

In 2016, the Company entered into a real estate capital lease with ING Asset Finance Belgium S.A.

(“ING”) to purchase a property located in Belgium for €1.12 million, maturing May 2031, with implicit interest of 2.62%.

As of December 31, 2020, the balance payable was $650,209.

In 2018, the Company entered into a financing lease with BNP Paribas leasing solutions to purchase a freezer for the Belgium facility for €25,000 Euros, maturing January 2022.

In 2018, the Company entered into a capital lease with BNP Paribas leasing solutions to purchase a freezer for the Belgium facility for €25,000, maturing January 2022, with implicit interest of 1.35%.

The leased equipment is amortized on a straight-line basis over 5 years.

As of December 31, 2020, the balance payable was $11,688.

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Note 10 – Commitments and Contingencies (continued)

b) Operating Lease Right-of-Use Liabilities (continued)

The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of December 31, 2020.

Total Operating Lease Liabilities

Total Operating Lease Obligations

Amount representing interest

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The Company’s office space leases are short term, and the Company has elected under the short-term recognition exemption not to recognize them on the balance sheet.

During the year ended December 31, 2019, $22,096 was recognized in short-term lease costs associated with the office lease in Singapore.

The annual payments remaining for such short-term office lease were as follows:

During the year ended December 31, 2020, $30,117 was recognized in short-term lease costs associated with the office space lease in Singapore.

The annual payments remaining for such short-term office leases were as follows:

Total Operating Lease Liabilities

c) Grants Repayable

In 2010, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €1.05 million Euros.

Per the terms of the agreement, €314,406 Euros of the grant is to be repaid by installments over the period from June 30, 2014 to June 30, 2023.

The Company has recorded the balance of €733,614 Euros to other income in previous years as there is no obligation to repay this amount.

In 2010, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €1.05 million.

Per the terms of the agreement, €314,406 of the grant is to be repaid by installments over the period from June 30, 2014 to June 30, 2023.

The Company has recorded the balance of €733,614 to other income in previous years as there is no obligation to repay this amount.

In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 6% royalty on such revenue to the Walloon Region.

The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €314,406 Euros and the 6% royalty on revenue, is twice the amount of funding received.

The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €314,406 and the 6% royalty on revenue, is twice the amount of funding received.

As of December 31, 2020, the grant balance repayable was $106,881.

In 2018, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €605,000 Euros.

Per the terms of the agreement, €181,500 Euros of the grant is to be repaid by instalments over 12 years commencing in 2020 .

In 2018, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €605,000.

Per the terms of the agreement, €181,500 of the grant is to be repaid by instalments over 12 years commencing in 2020 .

In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 3.53% royalty on such revenue to the Walloon Region.

The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €181,500 Euros and the 3.53% royalty on revenue, is equal to the amount of funding received.

The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €181,500 and the 3.53% royalty on revenue, is equal to the amount of funding received.

As of December 31, 2020, the grant balance repayable was $221,940.

As of December 31, 2019, the total balance for grant repayable was $337,286 and the annual payments remaining were as follows:

As of December 31, 2020, the balance repayable was $328,821 and the annual payments remaining were as follows:

Greater than 5 years

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d) Long-Term Debt

In 2016, the Company entered into a 7-year loan agreement with Namur Invest for €440,000 Euros with a fixed interest rate of 4.85%, maturing December 2023.

In 2016, the Company entered into a 7-year loan agreement with Namur Invest for €440,000 with a fixed interest rate of 4.85%, maturing December 2023.

As of December 31, 2020, the principal balance payable was $269,400.

In 2016, the Company entered into a 15-year loan agreement with ING for €270,000 Euros with a fixed interest rate of 2.62%, maturing December 2031.

In 2016, the Company entered into a 15-year loan agreement with ING for €270,000 with a fixed interest rate of 2.62%, maturing December 2031.

As of December 31, 2020, the principal balance payable was $255,725.

In 2017, the Company entered into a 4-year loan agreement with Namur Invest for €350,000 Euros with a fixed interest rate of 4.00%, maturing June 2021.

In 2017, the Company entered into a 4-year loan agreement with Namur Invest for €350,000 with a fixed interest rate of 4.00%, maturing June 2021.

As of December 31, 2020, the principal balance payable was $64,863.

In 2017, the Company entered into a 7-year loan agreement with SOFINEX for up to €1 million Euros with a fixed interest rate of 4.50%, maturing September 2024.

As of December 31, 2019, €1 million Euros has been drawn down under this agreement and the principal balance payable was $1,122,701.

In 2018, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 Euros with fixed interest rate of 4.00%, maturing June 2022.

In 2017, the Company entered into a 7-year loan agreement with SOFINEX for up to €1 million with a fixed interest rate of 4.50%, maturing September 2024.

As of December 31, 2020, €1 million has been drawn down under this agreement and the principal balance payable was $1,039,390.

In 2018, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 with fixed interest rate of 4.00%, maturing June 2022.

As of December 31, 2020, the principal balance payable was $272,524.

On November 28, 2019, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 Euros with fixed interest rate of 4.80%, maturing September 2024.

In 2019, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 with fixed interest rate of 4.80%, maturing September 2024.

As of December 31, 2020, the principal balance payable was $611,406.

On October 13, 2020, the Company entered into a 10-year loan agreement with Namur Invest for a maximum of €830,000 with fixed interest rate of 4.00%, maturing March 2021.

As of December 31, 2020, the amount that has been drawn down under this agreement was €764,547, representing a principal balance payable of $934,896.

As of December 31, 2020, the total balance for long-term debt payable was $3,448,204 and the payments remaining were as follows:

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Total Long-Term Debt

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

e) Collaborative Agreement Obligations

In 2015, the Company entered into a research sponsorship agreement with the German Cancer Research Center, or DKFZ, in Germany for a 3-year period for €338,984 Euros.

In 2015, the Company entered into a research sponsorship agreement with the German Cancer Research Center, in Germany for a 3-year period for €338,984.

As of December 31, 2020, $nil is still to be paid by the Company under this agreement.

In 2016, the Company entered into a research co-operation agreement with DKFZ, in Germany for a 5-year period for €400,000.

As of December 31, 2020, $244,562 is still to be paid by the Company under this agreement.

In 2016, the Company entered into a research co-operation agreement with DKFZ, in Germany for a 5-year period for €400,000 Euros.

In 2017, the Company entered into a collaborative research agreement with Munich University, in Germany for a 3-year period for €360,000.

As of December 31, 2020, $nil is still to be paid by the Company under this agreement.

In 2017, the Company entered into a clinical study research agreement with the University of Michigan for a 3-year period for up to $3 million.

This agreement was amended in February 2020 to redefine a new clinical study.

Pursuant to the terms of the amendment, the parties acknowledged that, although not fully completed, the requirements of the original clinical study had been satisfied, including any and all payment obligations by Volition America.

Further, the Amendment provided that a new clinical study would be undertaken at no additional cost to Volition America.

As of December 31, 2020, $nil is still to be paid by the Company under this agreement.

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a 3-year period for a cost to the Company of up to $2.55 million payable over such period.

As of December 31, 2020, $892,500 is still to be paid by the Company under this agreement.

In 2016, the Company entered into a collaborative research agreement with Munich University, in Germany for a 3-year period for €360,000 Euros.

In 2019, the Company entered into a research collaboration agreement with the University of Taiwan to collect a total of 1,200 samples for a 2-year period for a cost to the Company of up to $320,000 payable over such period.

As of December 31, 2020, $96,000 is still to be paid by the Company under this agreement.

In 2017, the Company entered into a clinical study research agreement with the Regents of the University of Michigan for a 3-year period for up to $3.0 million.

As of December 31, 2019, up to $388,000 is still to be paid by the Company under this agreement.

This agreement was amended in February 2020 to redefine a new clinical study.

In 2019, the Company entered into a funded sponsored research agreement with the Texas A&M University (“TAMU”) in consideration for the license granted to the Company for a 5-year period for a cost to the Company of up to $400,000 payable over such period.

As of December 31, 2020, $329,986 is still to be paid by the Company under this agreement.

In 2019, the Company entered into a lyophilization study and a CE marking project including GMP validation and documentation with Biomerica Inc.

for $160,000.

As of December 31, 2020, $nil is still to be paid by the Company under this agreement.

On September 16, 2020, the Company entered into a research agreement for the bioinformatic analysis of cell-free DNA fragments from whole-genome sequencing with the Hebrew University of Jerusalem for 6 months for a cost to the Company of €54,879.

As of December 31, 2020, $44,738 is still to be paid by the Company under this agreement.

As of December 31, 2020, the total amount to be paid for future research and collaboration commitments was approximately $1.6 million and the annual payments remaining were as follows:

Total Collaborative Agreement Obligations

VOLITIONRX LIMITED

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Note 10 – Commitments and Contingencies (continued)

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a 3-year period for a cost to the Company of up to $2.55 million payable over such period.

As of December 31, 2019, $1.66 million is still to be paid by the Company under this agreement.

On May 1, 2019, the Company entered into a research collaboration agreement with the University of Taiwan to collect a total of 1,200 samples for a 2-year period for a cost to the Company of up to $320,000 payable over such period.

As of December 31, 2019, $224,000 is still to be paid by the Company under this agreement.

As of December 31, 2019, the total amount to be paid for future research and collaboration commitments was $2.69 million and the annual payments remaining were as follows:

Total Collaborative Agreement Obligations

f) Legal Proceedings

f) Other Commitments

Belgian Volition

On October 1, 2020, Belgian Volition entered into an agreement with Gaetan Michel to serve as Chief Executive Officer for an indefinite period, which employment may be terminated without compensation or notice on grounds of serious misconduct by either party.

In exchange for his services, Mr.

Michel shall receive, among other things (i) €10,000 per month, and (ii) the equivalent of one-half of his salary for the 12-month non-competition period following termination of the agreement, subject to adjustments.

On November 4, 2020, the Company terminated a consulting services agreement with Novis Animal Solutions LLC to provide chief commercial officer services for Volition Vet.

The termination was effective immediately and the compensation payable to Novis for the required two-month notice period and a general release of any claims was $19,000.

As of December 31, 2020, Novis Animal Solutions LLC has no equity interest in Volition Vet.

On October 25, 2019, the Company entered into an agreement with TAMU for provision of in kind services of personnel, animal samples and laboratory equipment in exchange for a non-controlling interest of 7.5% in Volition Vet with an additional 5%, vesting in a year from the date of the agreement, giving TAMU, in aggregate, a 12.5% equity interest as of such date.

As of December 31, 2020, TAMU has a 12.5 % equity interest in Volition Vet.

Volition Germany

On January 10, 2020, the Company, through its wholly-owned subsidiary Belgian Volition, acquired an epigenetic reagent company, Octamer GmbH (“Octamer”), based in Munich, Germany, and hired its founder for his expertise and knowledge to be passed to Company personnel.

On March 9, 2020, Octamer was renamed to Volition Germany GmbH (or “Volition Germany”).

Upon considering the definition of a business, as defined in ASC 805 “Business Combinations,” paragraph 805 - 10-20, which is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return, the Company has determined that this did not constitute a business.

This is primarily due to the fact that additional inputs are needed in the form of training personnel further to produce outputs.

Accordingly, the Company has treated this transaction as the hiring of a member of management, described below, rather than accounting for the transaction as a business combination.

The Company agreed to terms of the transaction on December 13, 2019 and closed on January 10, 2020.

Pursuant to the transaction agreement, the Company purchased all outstanding shares of Octamer.

In exchange, the Company agreed to issue 73,263 newly-issued restricted shares of Company common stock valued at $333,969 (based on the $4.56 per share volume weighted trading price for the five days prior to December 13, 2019), committed to pay approximately €350,000, subject to adjustments, and agreed to pay off certain Octamer expenses leading up to the agreement (representing net liabilities of $6,535).

At closing, the Company issued 73,263 restricted shares of Company common stock, paid an adjusted amount of approximately $357,000 (€321,736) and recorded a holdback liability of $55,404 (€50,000) to be paid after the holdback period of 9 months following the closing (subject to offset for breaches of representations and warranties).

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 10 – Commitments and Contingencies (continued)

f) Other Commitments (continued)

Volition Germany (continued)

In connection with the transaction agreement, the Company also entered into a 2-year Managing Director’s agreement with the founder of Octamer to continue to manage Volition Germany for a payment of €288,000 payable in equal monthly installments over such 2-year period and a royalty agreement with the founder providing for the payment of royalties in the amount of 6% of net sales of Volition Germany’s nucleosomes as reagents to pharmaceutical companies for use in the development, manufacture and screening of molecules for use as therapeutic drugs for a period of 5 years post-closing.

The Company recorded approximately $753,000 in compensation expense as a result of cash paid, holdback liability, stock issued and assumption of expenses.

As of December 31, 2020, $176,085 is still to be paid by the Company under the Managing Director’s agreement, $239 is payable under the 6% royalty agreement on sales to date (towards the Company’s aggregate minimum royalty obligation of $134,217), and $52,581 is still to be paid under the holdback liability.

The Company has no further financial obligations under the transaction agreement.

Volition America

On November 3, 2020, the Company entered into a professional services master agreement with Diagnostic Oncology CRO, LLC to conduct a pivotal clinical trial and provide regulatory submission and reimbursement related services.

Under the terms of the agreement Diagnostic Oncology CRO, LLC will provide ad hoc consulting assistance on a project-by-project basis related to the review and assessment of existing data and information to prepare recommended intended use claims and coverage/reimbursement plans to support the preparation of FDA pre-submissions, clinical trial protocol development and study administration, and potential 510k regulatory marketing submissions of the Company’s diagnostic tests, including those proposed for use as an adjunct diagnostic tool for common and aggressive forms of Non-Hodgkin’s Lymphoma.

The initial projects contemplated by the agreement relating to Non-Hodgkin’s Lymphoma obligate the Company to pay in aggregate of up to $2.9 million over a period of 22 months.

Such payment obligations are on a project-by-project basis as deliverables are executed and subject to certain terms and conditions.

Additionally, the Company may terminate the agreement or any project with or without cause upon at least 30 days’ prior written notice.

Unless earlier terminated, the term of the agreement is until December 31, 2025 or such later date as when all projects have been completed.

As of December 31, 2020, $nil is to be paid by Company under this agreement.

Singapore Volition

On November 10, 2020, the Company entered into a consulting services agreement through a related party transaction between its wholly owned subsidiary, Singapore Volition and PB Commodities Pte Ltd (“PB Commodities”).

This agreement is effective December 1, 2020 and provides for consultancy services to be rendered by Cameron Reynolds through PB Commodities to Singapore Volition.

Singapore Volition will also make available the services of Mr.

Reynolds, as Group Chief Executive Officer, to the Company and its subsidiaries, pursuant to services agreements entered into by and between Singapore Volition and the Company or its subsidiaries.

The term of the agreement is perpetual, commencing on December 1, 2020 until terminated upon six months’ prior notice.

The agreement includes a six-month non-compete following termination of the agreement.

PB Commodities will receive a monthly fee of $35,650 in exchange for the services provided by Mr.

g) Legal Proceedings

There are no legal proceedings which the Company believes will have a material adverse effect on its financial position.

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 11 - Subsequent Events

On January 7, 2020, a former director of the Company exercised 60,000 stock options to purchase shares of our common stock at prices ranging from $2.50 to $4.00 per share in a cashless exercise that resulted in the issuance of 17,483 shares of our common stock.

On January 10, 2020, the Company through its wholly owned subsidiary Belgian Volition, acquired an epigenetic reagent company Octamer GmbH, based in Munich, Germany, for a total purchase price of approximately $725,000, of this amount $400,000 was in cash and the balance was paid with 73,263 restricted shares of our common stock.

This strategic acquisition helps secure the supply of one of the key components of Volition’s Nu.Q TM tests, the recombinant nucleosome used as the calibrant.

On January 14, 2020, the Company purchased from its Chief Medical Officer 11,364 shares of our common stock at $4.79 per share, for a total cost to the Company of $54,434.

These shares were subsequently retired.

On February 17, 2020, Volition America entered into an amendment, or the Amendment, to that certain Clinical Study Agreement, or the CSA, by and between Volition America and the Regents of the University of Michigan, or the Regents, with regards to Volition America’s participation with the Regents and the National Cancer Institute, or NCI, Early Detection Research Network in a clinical study.

Pursuant to the terms of the Amendment, the parties acknowledged that, although not fully-completed, the requirements of the original clinical study had been satisfied, including any and all payment obligations by Volition America.

Further, the Amendment provided that a new clinical study would be undertaken at no additional cost to Volition America.

The remaining terms of the CSA remain unchanged.

Employment Agreements

Group Chief Commercial Officer

Effective January 1, 2021, Gael Forterre entered into an employment agreement with Volition America to serve as Group Chief Commercial Officer.

Forterre’s employment agreement continues until terminated by either party providing not less than three months’ prior notice.

In exchange for his services, Mr.

Forterre shall receive, among other things (i) $15,000 per month;

and (ii) a lump sum severance payment if terminated by Volition America without cause (as per the agreement) equal to the salary that he would have received between the date of termination and the completion of a three-month notice period.

This employment agreement superseded and replaced in its entirety that certain employment agreement dated December 30, 2020 between Mr.

Forterre and Volition America for services as Vice President of Sales of Volition America.

Effective January 1, 2021, the Company granted warrants to purchase 125,000 shares of common stock to Gael Forterre in exchange for services provided to the Company as Group Chief Commercial Officer.

These warrants vest on January 1, 2022 and expire 5 years after the vesting date, with an exercise price of $3.95 per share.

Effective January 1, 2021, the Company granted RSUs of 5,000 shares of common stock to a Gael Forterre in exchange for services provided to the Company as Group Chief Commercial Officer.

These RSUs vested immediately on January 1, 2021 and resulted in the issuance of 3,000 shares of common stock, net of withholding shares for taxes.

Group Chief Financial Officer

Effective February 1, 2021, Terig Hughes entered into an employment agreement with Singapore Volition as Group Chief Financial Officer and Treasurer.

Hughes’ employment agreement continues until terminated by either party providing not less than three months’ prior notice.

In exchange for his services, Mr.

Hughes shall receive, among other things (i) $30,000 SGD per month (approximately $22,500);

and (ii) a lump sum severance payment if terminated by Singapore Volition without cause (as per the agreement) equal to the salary that he would have received between the date of termination and the completion of a three-month notice period.

Effective February 1, 2021, the Company granted warrants to purchase 185,000 shares of common stock to Terig Hughes in exchange for services provided to the Company as Group Chief Financial Officer.

These warrants vest on February 1, 2022 and expire 5 years after the vesting date, with an exercise price of $4.90 per share.

Chief Operating Officer

On January 29, 2021, the Company entered into a consulting services agreement through a related party transaction between its wholly-owned subsidiary, Volition Germany and 3F Management, SPRL (“3F Management”).

This agreement is effective October 1, 2020 and provides for certain consultancy services to be rendered by Gaetan Michel through 3F Management to Volition Germany and also to the Company and its other subsidiaries, pursuant to services agreements entered into by and between Volition Germany and the Company or its subsidiaries.

As amended by the amendment dated February 1, 2021, the consulting services agreement covers Mr.

Michel’s services as Chief Executive Officer of Volition Vet and Chief Operating Officer of the Company.

The term of the agreement is perpetual, commencing on October 1, 2020 until terminated upon three months’ prior notice.

The agreement includes a six-month non-compete following termination of the agreement.

3F Management will receive a monthly fee of €6,000 in exchange for the services provided by Mr.

This consulting services agreement superseded and replaced in its entirety that certain consultancy agreement between Belgian Volition and 3F Management dated June 14, 2018, as amended.

Michel also has a Permanent Employment Contract dated October 1, 2020 with Belgian Volition for services rendered in his capacity as Chief Executive Officer of Belgian Volition.

Refer to Note 10(f) for the details.

VOLITIONRX LIMITED

Notes to Consolidated Financial Statements

For Years Ended December 31, 2020 and 2019

($ expressed in United States Dollars)

Note 11 - Subsequent Events (continued)

Common Stock Issuances Upon Warrant and Option Exercises

From January 13, 2021 to March 1, 2021, 4,450 stock options were exercised to purchase shares of common stock at $3.35 per share in cashless exercises that resulted in the issuance of 854 shares of common stock.

On February 2, 2021, 20,000 stock options were exercised to purchase shares of our common stock at $3.80 per share in a cashless exercise that resulted in the issuance of 6,181 shares of our common stock.

From February 2, 2021 to February 8, 2021, 100,000 stock options were exercised to purchase shares of common stock at $4.00 per share in cashless exercises and withholding of shares for taxes that resulted in the issuance of 32,126 shares of common stock.

On February 8, 2021, 50,000 stock options were exercised to purchase shares of our common stock at $3.25 per share in a cashless exercise and withholding of shares for taxes that resulted in the issuance of 18,750 shares of our common stock.

On February 8, 2021, 100,000 stock options were exercised to purchase shares of our common stock at $5.00 per share in cashless exercises and withholding of shares for taxes that resulted in the issuance of 19,446 shares of our common stock.

Equity Distribution Agreements

From January 1 to January 27, 2021, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of approximately $1.2 million under the 2018 Equity Distribution Agreement through the sale of 308,609 shares of its common stock in accordance with a Rule 10b5-1 plan.

As of February 1, 2021, the Company fully-utilized the availability under the 2018 Equity Distribution Agreement and no further sales will be made under such Agreement.

From February 5, 2021 to February 10, 2021, the Company raised aggregate net proceeds (net of broker’s commissions and fees) of $343,957 under the 2020 Equity Distribution Agreement through the sale of 65,400 shares of its common stock.

Equity Capital Raise

On February 10, 2021, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Cantor Fitzgerald & Co.

(the “Underwriter”) in connection with an underwritten public offering (the “Offering”) of 3,809,524 shares (the “Firm Shares”) of the Company’s common stock, $0.001 par value per share (“Common Stock”) pursuant to the Company’s shelf registration statement on Form S-3 (declared effective by the SEC on September 28, 2018, File No.

The Underwriter purchased the Firm Shares from the Company at a price of $4.9533 per share on February 12, 2021.

The net proceeds received by the Company for the sale and issuance of the Firm Shares were approximately $18.9 million.

Under the terms of the Underwriting Agreement, the Company granted the Underwriter an option, exercisable for 30 days, to purchase up to an additional 571,428 shares of Common Stock (the “Option Shares”) at the same price per share as the Firm Shares which option was not exercised.

On January 6, 2021, the Company announced it had been awarded additional non-dilutive funding totaling approximately $4 million from the Walloon Region and Namur Invest, Belgium, consisting of a cash grant of $1.3 million to support the Company’s project entitled “Epigenetic Modifications of Nucleosomes Associated with Cancer” and $2.7 million in loans.

END NOTES TO FINANCIALS

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What changed 10-K

Item 8. Financial Statements and Supplementary Data