VOLITIONRX LTD 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA VOLITIONRX LIMITED Consolidated Financial Statements For the Years Ended December 31, 2020 and 2019 Index Report of Independent Registered Public Accounting Firm F - 30 Consolidated Balance Sheets F - 32 Consolidated Statements of Operations and Comprehensive Loss F - 33 Consolidated Statements of Stockholders’ Equity F - 34 Consolidated Statements of Cash Flows F - 35 Notes to the Consolidated Financial Statements F - 36 F-29 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of VolitionRx Limited: Opinion on the Financial Statements 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 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. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit 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. F-30 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. Draper, UT March 22, 2021 F-31 VOLITIONRX LIMITED Consolidated Balance Sheets (Expressed in United States Dollars, except share numbers) December 31, December 31, 2020 2019 $ $ ASSETS Current Assets Cash and cash equivalents 19,444,737 16,966,168 Accounts Receivable 7,118 - Prepaid expenses 303,178 267,518 Other current assets 576,660 322,593 Total Current Assets 20,331,693 17,556,279 Property and equipment, net 5,171,134 2,981,225 Operating lease right-of-use assets 326,085 381,483 Intangible assets, net 321,641 372,305 Total Assets 26,150,553 21,291,292 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable 1,539,547 627,253 Accrued liabilities 3,491,740 2,168,588 Management and directors’ fees payable 55,174 21,979 Current portion of long-term debt 841,319 647,569 Current portion of financing lease liabilities 59,930 97,946 Current portion of operating lease liabilities 179,624 257,244 Current portion of grant repayable 69,218 39,295 Total Current Liabilities 6,236,552 3,859,874 Long-term debt, net of current portion 2,606,885 2,195,278 Finance lease liabilities, net of current portion 601,967 607,708 Operating lease liabilities, net of current portion 151,828 131,875 Grant repayable, net of current portion 259,603 297,991 Total Liabilities 9,856,835 7,092,726 STOCKHOLDERS’ EQUITY Common Stock Authorized: 100,000,000 shares of common stock, at $0.001 par value Issued and outstanding: 48,607,017 shares and 41,125,303 shares, respectively 48,607 41,125 Additional paid-in capital 126,526,239 103,853,627 Accumulated other comprehensive income (loss) (59,978) 125,670 Accumulated deficit (110,173,971) (89,821,856) Total VolitionRx Limited Stockholders' Equity 16,340,897 14,198,566 Non-controlling interest (47,179) - Total Stockholders’ Equity 16,293,718 14,198,566 Total Liabilities and Stockholders’ Equity 26,150,553 21,291,292 (The accompanying notes are an integral part of these consolidated financial statements) F-32 VOLITIONRX LIMITED Consolidated Statements of Operations and Comprehensive Loss (Expressed in United States Dollars, except share numbers) For the year ended December 31, 2020 December 31, 2019 $ $ Revenues Service - 16,204 Royalty 2,112 892 Product 11,321 - Total Revenues 13,433 17,096 Operating Expenses Research and development 14,533,862 10,363,253 General and administrative 5,654,018 4,731,054 Sales and marketing 1,073,368 965,713 Total Operating Expenses 21,261,248 16,060,020 Operating Loss (21,247,815) (16,042,924) Other Income (Expenses) Grant income 635,513 155,031 Gain on disposal of fixed assets 293,312 - Interest income 49,495 112,367 Interest expense (129,799) (126,572) Other expenses - (196,957) Total Other Income (Expenses) 848,521 (56,131) Net Loss (20,399,294) (16,099,055) Net Loss attributable to Non-Controlling Interest 47,179 - Net Loss attributable to VolitionRx Limited Stockholders (20,352,115) (16,099,055) Other Comprehensive Income (Loss) Foreign currency translation adjustments (185,648) (97,981) Net Comprehensive Loss (20,584,942) (16,197,036) Net Loss Per Share – Basic and Diluted (0.45) (0.41) Weighted Average Shares Outstanding – Basic and Diluted 45,278,847 39,180,369 (The accompanying notes are an integral part of these consolidated financial statements) F-33 VOLITIONRX LIMITED Consolidated Statement of Stockholders’ Equity For the Years Ended December 31, 2020 and 2019 (Expressed in United States Dollars, except share numbers) Additional Accumulated Other Non Common Stock Paid-in Comprehensive Accumulated Controlling Shares Amount Capital Income (Loss) Deficit Interest Total # $ $ $ $ $ $ Balance, December 31, 2018 35,335,378 35,335 85,604,271 223,651 (73,722,801) - 12,140,456 Common stock issued in exercise of stock options 2,858 3 (3) - - - - Common stock issued in exercise of warrants 5,783,867 5,784 16,568,745 - - - 16,574,529 Common stock issued in public offering, net 3,200 3 16,544 - - - 16,547 Stock-based compensation - - 1,467,113 - - - 1,467,113 Modification of financing warrants - - 196,957 - - - 196,957 Foreign currency translation - - - (97,981) - - (97,981) Net loss for the year - - - - (16,099,055) - (16,099,055) Balance, December 31, 2019 41,125,303 41,125 103,853,627 125,670 (89,821,856) - 14,198,566 Common stock issued for Director compensation in Volition Germany 73,263 73 333,896 - - - 333,969 Common stock repurchase and retirement (11,364) (11) (54,423) - - - (54,434) Common stock issued in exercise of stock options 147,268 147 82,353 - - - 82,500 Common stock issued for exercise of warrants 25,000 25 61,725 - - - 61,750 Common stock issued in public offering, net 7,247,547 7,248 21,045,034 - - - 21,052,282 Tax withholdings paid related to Stock-based compensation - - (187,465) - - - (187,465) Stock-based compensation - - 1,391,492 - - - 1,391,492 Foreign currency translation - - - (185,648) - - (185,648) Net loss for the Year - - - - (20,352,115) (47,179) (20,399,294) Balance, December 31, 2020 48,607,017 48,607 126,526,239 (59,978) (110,173,971) (47,179) 16,293,718 (The accompanying notes are an integral part of these consolidated financial statements) F-34 VOLITIONRX LIMITED Consolidated Statements of Cash Flows (Expressed in United States Dollars) For the year ended December 31, 2020 December 31, 2019 $ $ Operating Activities: Net loss (20,399,294) (16,099,055) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 716,181 676,815 Amortization of operating lease right-of-use assets 325,192 225,597 Gain on disposal of fixed assets (293,312) - Stock based compensation 1,391,492 1,467,113 Common stock issued for Director compensation in Volition Germany 333,969 - Financing costs for warrants modified - 196,957 Changes in operating assets and liabilities: Prepaid expenses (35,660) (22,080) Accounts receivable (7,118) - Other current assets (254,062) (92,838) Accounts payable and accrued liabilities 2,052,753 1,105,211 Management and directors’ fees payable 33,195 20,779 Right-of-use assets operating leases liabilities (327,580) (217,954) Net Cash Used In Operating Activities (16,464,244) (12,739,455) Investing Activities: Purchases of property and equipment (1,941,060) (511,266) Proceeds from sales of property and equipment 293,312 - Net Cash Used In Investing Activities (1,647,748) (511,266) Financing Activities: Net proceeds from issuance of common shares 21,196,532 16,591,076 Tax withholdings paid related to stock-based compensation (187,465) - Common stock repurchased (54,434) - Proceeds from grants repayable 3,802 32,795 Proceeds from long-term debt 346,465 838,039 Payments on long-term debt (545,389) (351,009) Payments on grants repayable (41,257) (39,335) Payments on financing leases (97,417) (142,039) Net Cash Provided By Financing Activities 20,620,837 16,929,527 Effect of foreign exchange on cash and cash equivalents (30,276) (139,860) Net Change in Cash and Cash Equivalents 2,478,569 3,538,946 Cash and Cash Equivalents – Beginning of Year 16,966,168 13,427,222 Cash and Cash Equivalents – End of Year 19,444,737 16,966,168 Supplemental Disclosures of Cash Flow Information: Interest paid 129,799 126,847 Income tax paid - - Non - Cash Financing Activities: Common Stock issued on cashless exercises of stock options and warrants 118 3 Loan payable for purchase of manufacturing building 584,449 - Offering costs from issuance of common stock 1,250,848 - (The accompanying notes are an integral part of these consolidated financial statements) F-35 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 1 – Nature of Operations The Company was incorporated under the laws of the State of Delaware on September 24, 1998. On September 22, 2011, the Company filed a Certificate for Renewal and Revival of Charter with the Secretary of State of Delaware. Pursuant to Section 312(1) of the Delaware General Corporation Law, the Company was revived under the new name of “VolitionRX Limited” and the name change became effective on October 11, 2011. On October 7, 2016, the Company amended its Certificate of Incorporation to reflect a name change to “VolitionRx Limited.” On October 6, 2011, the Company entered into a share exchange agreement with Singapore Volition Pte. Limited, a Singapore corporation incorporated on August 5, 2010 (“Singapore Volition”), and the shareholders of Singapore Volition. Pursuant to the terms of the share exchange agreement, the former shareholders of Singapore Volition held 85% of the issued and outstanding common shares of the Company. The issuance was deemed to be a reverse acquisition for accounting purposes and as such, Singapore Volition is regarded as the predecessor of the Company. The number of shares outstanding and per share amounts of the Company have been restated to recognize the foregoing recapitalization. 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 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 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, 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. The Company has incurred losses since inception of $110.2 million, has negative cash flows from operations, and has minimal revenues, which creates substantial doubt about its ability to continue as a going concern for a period at least one year from the date of issuance of these consolidated financial statements. The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain its operations. Management plans to address the above as needed by (a) securing additional grant funds, (b) obtaining additional financing through debt or equity transactions; (c) granting licenses to third parties in exchange for specified up-front and/or back end payments, and (d) developing and commercializing its products on an accelerated timeline. Management continues to exercise tight cost controls to conserve cash. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. F-36 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements of the Company have been prepared in accordance with U.S. GAAP and are expressed in US dollars. The Company’s fiscal year end is December 31. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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, 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. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected. Principles of 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. 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 $nil. Property and Equipment Property and equipment are stated at historical cost and depreciated over the useful life of the asset using the straight-line method. Useful lives are assigned to assets depending on their category. For details regarding property and equipment, refer to Note 4. F-37 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) 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 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” . All assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. For revenues and expenses, the weighted average exchange rate for the period is used. Gains and losses arising on translation of foreign currency denominated transactions are included in other comprehensive income (loss). Financial Instruments Pursuant to ASC 820, “ Fair Value Measurements and Disclosures,” an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the assets or liabilities such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. Level 3 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, 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. The Company believes that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Income Taxes Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, “Accounting for Income Taxes,” as of its inception. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. 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. Refer to Note 9 for further details. F-38 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) 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 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. The Company recognizes revenues following the five-step model prescribed under ASC 606: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; 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 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: Royalty 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” under the consolidated statements of operations. The Company does not have future performance obligations under this revenue stream. In accordance with ASC 606, the Company records these revenues based on estimates of the net sales that occurred during the relevant period from the licensee. The relevant period estimates of these royalties are based on preliminary gross sales data provided by Active Motif and analysis of historical gross-to-net adjustments. Differences between actual and estimated royalty revenues are adjusted for in the period in which they become known. Product 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. Service 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. In order to determine the transaction price, in addition to any upfront payment, the Company estimates the amount of variable consideration at the outset of the contract either utilizing the expected value or most likely amount method, depending on the facts and circumstances relative to the contract. The Company constrains the estimates of variable consideration such that it is probable that a significant reversal of previously recognized revenue will not occur throughout the life of the contract. When determining if variable consideration should be constrained, management considers whether there are factors outside the Company’s control that could result in a significant reversal of revenue. In making these assessments, the Company considers the likelihood and magnitude of a potential reversal of revenue. These estimates are re-assessed each reporting period as required. F-39 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) 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 In accordance with ASC 360, “Property Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. Impairment losses of $nil and $nil were recognized during the years ended December 31, 2020 and December 31, 2019, respectively. Stock-Based Compensation The Company records stock-based compensation in accordance with ASC 718, “ Compensation – Stock Compensation” . Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized over the employee’s requisite service period, which is generally the vesting period. The fair value of our stock options and warrants is estimated using a Black-Scholes option valuation model. Restricted stock units are valued based on the closing stock price on the date of grant. Refer to Note 8 for further details. Leases The Company adopted FASB issued Accounting Standards Update No. 2016-02 – Leases (“Topic 842”) as of January 1, 2019, that requires lessees to record the present value of operating lease payments as right-of-use assets and lease liabilities on the balance sheet. See Note 10(b) for discussion of the guidance and the Company’s accounting policy. Grant Income The Company receives funding from public bodies for a proportion of the costs of specific projects. Funds are received in line with claims submitted for the agreed expenditure. The Company recognizes grant income once claims submitted are approved and funds are received. General working capital funding received at the commencement of a project is treated as deferred income until it has been utilized for the expenditure claimed. Funding received that is repayable is shown as a liability. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect. The Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. F-40 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ 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 Accumulated Net Carrying Cost Depreciation Value Useful Life $ $ $ Computer hardware and software 3 years 550,254 412,805 137,449 Laboratory equipment 5 years 2,586,997 1,060,153 1,526,844 Office furniture and equipment 5 years 271,656 171,247 100,409 Buildings 30 years 2,366,236 207,111 2,159,125 Building improvements 5-15 years 1,285,383 184,813 1,100,570 Land Not amortized 146,737 - 146,737 7,207,263 2,036,129 5,171,134 December 31, 2019 Accumulated Net Carrying Cost Depreciation Value Useful Life $ $ $ Computer hardware and software 3 years 426,461 280,554 145,907 Laboratory equipment 5 years 2,052,348 1,256,637 795,711 Office furniture and equipment 5 years 217,545 114,242 103,303 Buildings 30 years 1,472,211 139,021 1,333,190 Building improvements 5-15 years 630,824 117,526 513,298 Land Not amortized 89,816 - 89,816 4,889,205 1,907,980 2,981,225 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 $293,312. F-41 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 5 - Intangible Assets The Company’s intangible assets consist of patents, mainly acquired in the acquisition of Belgian Volition. The patents are being amortized over the assets’ estimated useful lives, which range from 8 to 20 years. December 31, 2020 Accumulated Net Carrying Cost Amortization Value $ $ $ Patents 1,256,064 934,423 321,641 December 31, 2019 Accumulated Net Carrying Cost Amortization Value $ $ $ Patents 1,147,391 775,086 372,305 During the years ended December 31, 2020 and December 31, 2019, the Company recognized $88,626 and $87,285, respectively, in amortization expense. The Company amortizes the long-lived assets on a straight-line basis with terms ranging from 8 to 20 years. The annual estimated amortization schedule over the next five years is as follows: 2021 $ 94,278 2022 $ 94,278 2023 $ 94,278 2024 $ 38,807 Total Intangible Assets $ 321,641 The Company periodically reviews its long-lived assets to ensure that their carrying value does not exceed their fair market value. The Company carried out such a review in accordance with ASC 360 as of December 31, 2020. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2020. Note 6 - Related Party Transactions 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). F-42 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 7 - Common Stock 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. 2020 Issuances Upon Warrant and Option Exercises 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 $54,434. These shares were subsequently retired. F-43 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ 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. Inc. (“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. 2019 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. Additionally, the Company issued to Cotterford a warrant to purchase up to an additional 5.0 million shares of common stock at an exercise price of $3.00 per share payable in cash. This transaction resulted in Cotterford becoming a significant stockholder and therefore a related party in accordance with U.S. GAAP. The shares of common stock (including the shares underlying the warrant) were subsequently registered for resale on Form S-3 (declared effective by the SEC on October 15, 2018, File No. 333-227731). From January 30, 2019 to February 26, 2019, warrants to purchase 754,475 shares of our common stock were exercised at a price of $2.20 per share, for gross proceeds to the Company of approximately $1.66 million. 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 $5.0 million. F-44 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) 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. 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 Agreements For the year ended December 31, 2019, The Company raised aggregate net proceeds (net of broker’s commissions and fees) of $16,547 under the 2018 Equity Distribution Agreement through the sale of 3,200 shares of its common stock. Note 8 – Stock-Based Compensation a) Warrants The following table summarizes the changes in warrants outstanding of the Company during the years ended December 31, 2020 and December 31, 2019: Weighted Average Number of Exercise Price Warrants ($) Outstanding at December 31, 2018 6,107,617 2.88 Granted - - Exercised (5,783,867) 2.86 Expired (133,750) 2.20 Outstanding at December 31, 2019 190,000 2.90 Granted 50,000 3.45 Exercised (25,000) 2.47 Expired (40,000) 4.53 Outstanding at December 31, 2020 175,000 2.75 Exercisable at December 31, 2020 125,000 2.47 F-45 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) 2020 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. 2019 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. The amendment temporarily reduced the exercise price of such warrant from $3.00 per share to $2.90 per share through the close of business on March 8, 2019. As a result of this amendment, $196,957 of financing costs were recorded in other expenses. On March 8, 2019, Cotterford partially exercised its warrant and purchased 1,724,138 shares of our common stock at $2.90 per share resulting in 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 $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 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 $16.6 million. F-46 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 8 – Stock-based Compensation (continued) a) Warrants (continued) Below is a table summarizing the warrants issued and outstanding as of December 31, 2020, which have a weighted average exercise price of $2.47 per share and an aggregate weighted average remaining contractual life of 3.01 years. Weighted Average Proceeds to Exercise Remaining Company if Number Number Price Contractual Exercised Outstanding Exercisable ($) Life (Years) ($) 125,000 125,000 2.47 2.15 308,750 50,000 0 3.45 5.17 172,500 175,000 125,000 481,250 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. b) Options The Company currently has options outstanding under both its 2011 Equity Incentive Plan (the “2011 Plan”) (for option issuances prior to 2016) and its 2015 Plan (for option issuances commencing in 2016). Effective as of January 1, 2016, no additional awards were or may be made under the 2011 Plan. The 2015 Plan was adopted by the Board of Directors on August 18, 2015 and approved by the stockholders at an annual meeting held on October 30, 2015. On August 5, 2016, the Board of Directors adopted an amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 1,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on October 7, 2016. On June 13, 2017, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 2,500,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 8, 2017. On June 15, 2018, the Board of Directors adopted a subsequent amendment to the 2015 Plan to increase the number of shares of common stock available for issuance under such Plan by 750,000 shares to an aggregate maximum of 3,250,000 shares, which amendment was approved by the stockholders at an annual meeting held on September 7, 2018. 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. F-47 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) 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 Number of Exercise Price Options ($) Outstanding at December 31, 2018 3,498,801 4.00 Granted 730,000 3.25 Exercised (10,333) 3.42 Expired/Cancelled (49,167) 3.31 Outstanding at December 31, 2019 4,169,301 3.88 Granted 845,000 3.60 Exercised (691,599) 2.81 Expired/Cancelled (44,083) 4.21 Outstanding at December 31, 2020 4,278,619 4.00 Exercisable at December 31, 2020 3,448,619 4.10 2020 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. 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. 2019 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. 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 $3.25, 77.86% volatility, 2.52% risk free rate, and no forfeiture rate. Subsequent to the February 2019 grant, stock options to purchase 45,000 shares of common stock subject to the grant were forfeited. F-48 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 8 – Stock-Based Compensation (continued) 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 $4.00 per share and an aggregate weighted average remaining contractual life of 2.98 years . As of December 31, 2020, an aggregate of 251,867 shares of common stock remained available for future issuance under the 2015 Plan. Weighted Average Proceeds to Exercise Remaining Company if Number Number Price Contractual Life Exercised Outstanding Exercisable ($) (Years) ($) 685,000 685,000 3.25 4.12 2,226,250 10,351 10,351 3.35 0.33 34,676 10,000 - 3.40 5.92 34,000 820,000 - 3.60 5.28 2,952,000 20,000 20,000 3.80 0.38 76,000 1,782,837 1,782,837 4.00 1.81 7,131,348 15,268 15,268 4.35 1.15 66,416 89,163 89,163 4.38 3.06 390,534 50,000 50,000 4.80 2.00 240,000 796,000 796,000 5.00 2.24 3,980,000 4,278,619 3,448,619 17,131,224 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 $184,800. F-49 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 8 – Stock-Based Compensation (continued) 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 $49,500. Weighted Average Number of Exercise Price RSUs ($) Outstanding at December 31, 2019 - - Granted 67,500 3.47 Vested - - Cancelled - - Outstanding at December 31, 2020 67,500 3.47 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 Remaining Number Share Price Contractual Life Outstanding ($) (Years) 15,000 3.30 1.42 52,500 3.52 0.78 67,500 0.92 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 $262,575. F-50 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 9 - Income Taxes The Company has estimated net operating losses for the years ended December 31, 2020 and 2019 of $24.0 million and $17.3 million, respectively, available to offset taxable income in future years. The significant components of deferred income taxes and assets as of December 31, 2020 and December 31, 2019 are as follows: Net Deferred Tax Liability December 31, 2020 December 31, 2019 $ $ Excess of tax over book depreciation and amortization (966) (3,901) ROU Asset (69,407) (41,250) Lease Liability 73,407 43,896 Prepaid expenses - - Allowance for doubtful accounts - - Accrued expenses 1,154 1,154 Stock-based compensation 21,533 - Net Operating Losses carry-forward 24,011,113 17,326,179 Research and development tax credits 390,666 231,243 Gross deferred tax assets 24,427,500 17,557,321 Valuation allowance (24,427,500) (17,557,321) Net deferred tax asset - - Change in Valuation Allowance (6,870,179) Summary Rate Reconciliation December 31, 2020 December 31, 2019 % % Federal statutory rate 21.0 21.0 State income taxes, net of federal benefit - - Permanent Differences 6.1 4.1 Stock based compensation (1.3) (2.4) Federal Research & Development Credits 0.5 0.6 Foreign taxes 7.4 6.7 Federal Deferred Rate Decrease - (0.2) Change in Valuation Allowance (33.7) (29.8) Total - - Disclosure Amounts December 31, 2020 Net Operating Losses - United States 21,963,567 Net Operating Losses - Foreign 69,344,065 Credit Carryforward - United States - Credit Carryforward - Foreign 390,666 Increase in Valuation Allowance 6,870,179 F-51 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 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 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. The following is a schedule showing the future minimum lease payments under financing leases by years and the present value of the minimum payments as of December 31, 2020. 2021 $ 76,183 2022 $ 67,308 2023 $ 65,772 2024 $ 65,770 2025 $ 65,770 Greater than 5 years $ 419,270 Total $ 760,073 Less: Amount representing interest $ (98,176) Present value of minimum lease payments $ 661,897 b) Operating Lease Right-of-Use Liabilities The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, current portion of operating lease liabilities and operating lease liabilities, net of current portion. As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 2.87% and the weighted average remaining lease term is 39 months. As of December 31, 2020, operating lease right-of-use assets and liabilities arising from operating leases were $326,085 and $331,452, respectively. During the year ended December 31, 2020, cash paid for amounts included for the measurement of lease liabilities was $230,627 and the Company recorded operating lease expense of $231,343. F-52 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 10 – Commitments and Contingencies (continued) 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. 2021 $ 187,848 2022 $ 78,469 2023 $ 53,231 2024 $ 25,997 Total Operating Lease Obligations $ 345,545 Less: Amount representing interest $ (14,093) Present Value of minimum lease payments $ 331,452 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, 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: 2021 $ 21,722 Total Operating Lease Liabilities $ 21,722 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. 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 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. 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 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, 2020, the balance repayable was $328,821 and the annual payments remaining were as follows: 2021 $ 69,218 2022 $ 51,480 2023 $ 52,764 2024 $ 22,194 2025 $ 29,592 Greater than 5 years $ 103,573 Total Grants Repayable $ 328,821 F-53 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) d) Long-Term Debt 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 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 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 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. 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: 2021 $ 991,070 2022 $ 804,373 2023 $ 699,623 2024 $ 544,437 2025 $ 150,390 Greater than 5 years $ 729,808 Total $ 3,919,701 Less: Amount representing interest $ (471,497) Total Long-Term Debt $ 3,448,204 F-54 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, 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 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 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 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: 2021 $ 1,467,700 2022 $ 140,086 Total Collaborative Agreement Obligations $ 1,607,786 F-55 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 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. Volition Vet 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 $55,404 (€50,000) to be paid after the holdback period of 9 months following the closing (subject to offset for breaches of representations and warranties). F-56 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ 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 $35,650 in exchange for the services provided by Mr. Reynolds. g) Legal Proceedings There are no legal proceedings which the Company believes will have a material adverse effect on its financial position. F-57 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ expressed in United States Dollars) Note 11 - Subsequent Events 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. Mr. 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. Mr. 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 $4.90 per share. Chief Operating Officer On January 29, 2021, the Company entered into a consulting services agreement through a related party transaction between its wholly-owned subsidiary, Volition Germany and 3F Management, SPRL (“3F Management”). This agreement is effective October 1, 2020 and provides for certain consultancy services to be rendered by Gaetan Michel through 3F Management to Volition Germany and also to the Company and its other subsidiaries, pursuant to services agreements entered into by and between Volition Germany and the Company or its subsidiaries. As amended by the amendment dated February 1, 2021, the consulting services agreement covers Mr. Michel’s services as Chief Executive Officer of Volition Vet and Chief Operating Officer of the Company. The term of the agreement is perpetual, commencing on October 1, 2020 until terminated upon three months’ prior notice. The agreement includes a six-month non-compete following termination of the agreement. 3F Management will receive a monthly fee of €6,000 in exchange for the services provided by Mr. Michel. This consulting services agreement superseded and replaced in its entirety that certain consultancy agreement between Belgian Volition and 3F Management dated June 14, 2018, as amended. Mr. Michel also has a Permanent Employment Contract dated October 1, 2020 with Belgian Volition for services rendered in his capacity as Chief Executive Officer of Belgian Volition. Refer to Note 10(f) for the details. F-58 VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2020 and 2019 ($ 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. 333-227248). 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. Other 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 F-59 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.