Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of December 31, 2020, our disclosure controls and procedures were not effective because of material weakness in our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles U.S. GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, the Company conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, using the criteria established in “ Internal Control - Integrated Framework ” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2020, the Company determined that there were control deficiencies in the following areas that constituted material weaknesses, as described below:
· segregation of duties in some areas of Finance;
· oversight in the area of Information Technology (”IT”), where certain processes may affect the internal controls over financial reporting; and
· monitoring of review controls with respect to accounting for complex transactions.
Accordingly, the Company concluded that these control deficiencies resulted in a possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the Company’s internal controls.
As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by COSO.
60
Changes in Internal Control over Financial Reporting
The Audit Committee of the Board of Directors meets regularly with our financial management, and with the independent registered public accounting firm engaged by us. Internal accounting controls and the quality of financial reporting are discussed during these meetings. The Audit Committee has discussed with the independent registered public accounting firm matters required to be discussed by the auditing standards adopted or established by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee and the independent registered public accounting firm have discussed the independent registered public accounting firm’s independence from the Company and its management, including the matters in the written disclosures required by PCAOB Rule 3526 “Communicating with Audit Committees Concerning Independence.”
As of December 31, 2020, we did not maintain sufficient internal controls over financial reporting in the following areas:
· segregation of duties in some areas of Finance;
· oversight in the area of IT, where certain processes may affect the internal controls over financial reporting; and
· monitoring of review controls with respect to accounting for complex transactions.
We have developed, and are currently implementing, a remediation plan for these material weaknesses. Specifically, we have identified and selected a system for financial reporting that will allow further automation of the reporting process, thereby strengthening the control environment over financial reporting. As we continue to evaluate and work to enhance our internal controls over financial reporting, we may determine that additional measures should be taken to address these or other control deficiencies, and/or that we should modify our remediation plan considering the Company’s size and growth.
There have been no changes in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2020, other than those described above, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The Company is not required to include, and does not include an auditor’s attestation report under SEC Rules. Consequently, the Company’s registered public accounting firm has not attested to management’s reports on the Company’s internal control over financial reporting.
Continuing Remediation Efforts to Address Deficiencies in Company’s Internal Control over Financial Reporting
Once the Company is engaged in stable business operations and has sufficient personnel and resources available, then our Board of Directors, in particular and in connection with the aforementioned deficiencies, will establish the following remediation measures:
· Additional Finance resources will be recruited to resolve the segregation of duties control weaknesses noted above;
· Internal audit resources will be contracted to review and advise on control weaknesses across the organization; and
· Specialist resources in IT and Human Resources will be recruited to recommend and implement relevant policy and processes to strengthen IT and Human Resources internal controls associated with financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required under this item is incorporated by reference from our definitive proxy statement related to our 2021 Annual Meeting of Stockholders, or the Proxy Statement, to be filed pursuant to Regulation 14A, on or before April 30, 2021.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this item is incorporated herein by reference from the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required under this item is incorporated herein by reference from the Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required under this item is incorporated herein by reference from the Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required under this item is incorporated herein by reference from the Proxy Statement.
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Report:
1. Financial Statements . Included in Part II, Item 8 of this Report and are incorporated by reference herein.
2. Financial Statement Schedules . Financial statement schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.
3. Exhibits .
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
2.1
Share Purchase Agreement by and between Singapore Volition and ValiRX dated September 22, 2010.
8-K/A
000-30402
2.1
5/8/12
2.2
Supplementary Agreement to the Share Purchase Agreement by and between Singapore Volition and ValiRX dated June 9, 2011.
8-K/A
000-30402
10.15
1/11/12
2.3
Share Exchange Agreement by and among Standard Capital Corporation, the controlling shareholders of Standard Capital Corporation and Singapore Volition dated September 26, 2011.
8-K
000-30402
2.1
9/29/11
2.4
Agreement, Consent and Waiver by and between Standard Capital Corporation and its Shareholders dated September 27, 2011.
8-K/A
000-30402
10.28
4/5/12
3.1
Second Amended and Restated Certificate of Incorporation, as currently in effect.
8-K
001-36833
3.1
10/11/16
3.2
Amended and Restated Bylaws, as currently in effect.
S-8
333-208512
4.2
12/11/15
4.1
Description of Capital Stock.
10-K
001-36833
4.1
02/20/20
10.1
Non-Exploitation and Third-Party Patent License Agreement by and among ValiBio SA, ValiRX and The Walloon Region dated December 17, 2009.
8-K/A
000-30402
10.6
2/24/12
10.2
Common Stock Purchase Agreement, by and among VolitionRx and the purchasers thereto dated February 26, 2014.
8-K
000-30402
10.1
2/28/14
10.3 #
Employment Agreement by and between VolitionRx and Jason Terrell MD, dated December 29, 2015.
10-K
001-36833
10.24
3/11/16
63
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
10.4 #
2011 Equity Incentive Plan dated November 17, 2011.
8-K
000-30402
4.1
11/18/11
10.4(a) #
Form Stock Option Agreement.
8-K
000-30402
4.2
11/18/11
10.4(b) #
Form Stock Award Agreement for Restricted Stock under the 2011 Equity Incentive Plan.
8-K
000-30402
4.3
11/18/11
10.5 #
2015 Stock Incentive Plan, as amended March 27, 2019.
8-K
001-36833
10.1
06/18/19
10.5(a) #
Form of Notice of Stock Option Grant and Stock Option Agreement under the 2015 Stock Incentive Plan.
S-8
333-214118
10.2
10/14/16
10.5(b) #
Form of Notice of Restricted Stock Award and Restricted Stock Agreement under the 2015 Stock Incentive Plan.
S-8
333-214118
10.3
10/14/16
10.5(c) #
Form of Notice of Stock Bonus Award and Stock Bonus Award Agreement under the 2015 Stock Incentive Plan
S-8
333-214118
10.4
10/14/16
10.5(d) #
Form of Notice of Stock Appreciation Right Award and Stock Appreciation Right Award Agreement under the 2015 Stock Incentive Plan.
S-8
333-214118
10.5
10/14/16
10.5(e) #
Form of Notice of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the 2015 Stock Incentive Plan.
S-8
333-214118
10.6
10/14/16
10.5(f) #
Form of Notice of Performance Shares Award and Performance Shares Agreement under the 2015 Stock Incentive Plan.
S-8
333-214118
10.7
10/14/16
10.6 #
Independent Director Agreement.
10-Q
001-36833
10.33
5/12/15
10.7
Real Estate Capital Lease Agreement by and between Belgian Volition and ING Asset Finance Belgium S.A., dated October 4, 2016 (English translation of French original).
8-K
001-36833
10.1
10/31/16
64
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
10.8
Deed of Sale to the Sale Agreement by and between Belgian Volition and Gerard Dekoninck S.A., dated October 25, 2016 (English translation of French original).
8-K
001-36833
10.2
10/31/16
10.9 #
Employment Agreement by and between Volition Diagnostics UK and Jacob Micallef, dated March 7, 2017.
10-K
001-36833
10.28
03/10/17
10.10 #
Employment Agreement by and between Volition Diagnostics UK and Martin Faulkes, dated March 7, 2017.
10-K
001-36833
10.30
03/10/17
10.11
Unsecured Credit Agreement dated September 20, 2017, by and among VolitionRx, Belgian Volition and SOFINEX (English translation of French original).
8-K
001-36833
10.1
09/21/17
10.12
Clinical Study Agreement dated July 17, 2017, by and between Volition America and the Regents of the University of Michigan.
10-Q
001-36833
10.1
11/09/17
10.12 (a)
Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America and the Regents of the University of Michigan.
10-K
001-36833
10.22
02/20/20
10.13
Common Stock Purchase Agreement, dated August 8, 2018, by and between VolitionRx and Cotterford Company Limited, including the form of Warrant attached as Exhibit B thereto.
8-K
001-36833
10.1
8/9/18
10.14 #
Warrant to Purchase Common Stock by and between VolitionRx and Jason Terrell MD, dated March 20, 2013; First Amendment to Warrant Agreement dated February 14, 2017; and Second Amendment to Warrant Agreement dated July 1, 2019.
S-3
333-236335
4.3
2/7/20
10.15 #†
Permanent Employment Contract by and between Belgian Volition and Gaetan Michel, dated October 1, 2020.
X
65
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
10.16
Equity Distribution Agreement, dated November 12, 2020, by and among VolitionRx, Oppenheimer & Co. Inc. and Cantor Fitzgerald & Co.
10-Q
001-36833
1.1
11/12/20
10.17 #
Consulting Services Agreement by and between Singapore Volition and PB Commodities Pte. Ltd. (Cameron Reynolds), dated December 1, 2020.
10-Q
001-36833
10.1
11/12/20
10.18 #†
Common Stock Warrant issued by VolitionRx to Gael Forterre, dated January 1, 2021.
X
10.19 #†
Singapore Volition Pte. Limited Employment Agreement by and between Singapore Volition and Terig Hughes, dated January 27, 2021 and effective February 1, 2021, including the form of Common Stock Warrant attached as Schedule 2.
X
10.20 #†
Volition America, Inc. Employment Agreement by and between Volition America and Gael Forterre, dated February 1, 2021.
X
10.21 #†
Consulting Services Agreement by and between Volition Germany and 3F Management SPRL (Gaetan Michel), dated January 29, 2021; First Amendment to Consultancy Services Agreement between Volition Germany and 3F Management SPRL, dated February 1, 2021.
X
10.22
Underwriting Agreement, dated February 10, 2021, by and between VolitionRx Limited and Cantor Fitzgerald & Co.
8-K
001-36833
1.1
02/12/21
21.1
List of Subsidiaries.
X
23.1
Consent of independent registered public accounting firm.
X
24.1
Power of Attorney (included on the signature page of this Report).
X
66
Incorporated by Reference
Exhibit
Number
Exhibit Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
31.1
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
X
31.2
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
X
32.1 *
Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
10.1 INS
XBRL Instance Document
X
101.SCH
XBRL Taxonomy Extension Schema Document.
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
X
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
X
#
Indicates a management contract or compensatory plan or arrangement.
†
Portions of this exhibit are redacted pursuant to Item 601(a)(6) and/or Item (b)(10)(iv) under Regulation S-K. The registrant agrees to furnish supplementally any omitted schedules to the SEC upon request.
*
The certifications attached as Exhibit 32.1 accompany this Report pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the registrant for purposes of Section 18 of the Exchange Act and are not to be incorporated by reference into any of the registrant's filings under the Securities Act or the Exchange Act, irrespective of any general incorporation language contained in any such filing.
ITEM 16. FORM 10-K SUMMARY
None.
67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
VOLITIONRX LIMITED
Dated: March 22, 2021
By: /s/ Cameron Reynolds
Cameron Reynolds
President, Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Cameron Reynolds and Rodney Rootsaert, and each or either of them, acting individually, his or her true and lawful attorney-in-fact and agent, with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons in the capacities and on the date indicated.
Signature
Title
Date
/s/ Cameron Reynolds
Cameron Reynolds
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 22, 2021
/s/ Terig Hughes
Terig Hughes
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
March 22, 2021
/s/ Dr. Martin Faulkes
Dr. Martin Faulkes
Director
March 22, 2021
/s/ Guy Innes
Guy Innes
Director
March 22, 2021
/s/ Dr. Alan Colman
Dr. Alan Colman
Director
March 22, 2021
/s/ Dr. Phil l ip Barnes
Dr. Phillip Barnes
Director
March 22, 2021
/s/ Dr. Edward Futcher
Dr. Edward Futcher
Director
March 22, 2021
/ s/ Dr. Salvatore Thomas Butera
Dr. Salvatore Thomas Butera, D.V.M.
Director
March 22, 2021
68