What changed in this filing

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Item 9A. Controls and Procedures

2022-03-30 compared with 2021-03-22 · 65 added, 42 removed, 121 unchanged (47% of the section changed)

3 unchanged sentences

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.

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 (as such term is defined in 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, 2021, our disclosure controls and procedures were not effective because of material weakness in our internal control over financial reporting relating to the segregation of duties in some areas of finance.

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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

2 unchanged sentences

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;

During the year ended December 31, 2021, our management, with oversight from our audit committee, implemented the following remediation steps to address and mitigate all but one of the underlying deficiencies which gave rise to the previously disclosed material weaknesses and to improve our internal control over financial reporting.

We anticipate the remaining weakness regarding segregation of duties in some areas of finance to be resolved in 2022.

Remediation steps undertaken include:

Oversight in Information Technologies

ensured that third party support and back up is available as cover for our information technology manager;

ensured that appropriate finance approvals are taken before adding users or access for financial systems and applications;

implemented a quarterly user access control review process across finance and information technology systems.

As a result of these actions, management has concluded that this particular deficiency has been remedied.

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.

reallocated responsibilities across the finance organization to ensure that the appropriate level of knowledge and experience is applied based on complexity of tasks being undertaken;

further embedded the use of Certent, an equity management platform, to help with control and reporting of equity awards;

implemented additional review procedures;

in the event we encounter or anticipate any new and particularly complex transaction we will engage advisors from our wide professional network.

As a result of these actions, management has concluded that this particular deficiency has been remedied.

Segregation of Duties in Some Areas of Finance

hired an additional full-time Business Controller in Belgium with an appropriate level of experience;

hired an experienced financial planning and analysis manager to implement forecasting and budgeting processes;

changed organizational reporting lines and reallocated certain responsibilities to improve segregation of duties;

implemented additional review procedures at each month end close.

During 2022, we intend to take additional measures around certain processes we have identified which we believe once implemented and in conjunction with the completed actions above will mitigate and remedy this weakness.

We also intend to take additional steps to further strengthen the control environment.

Such measures include but may not be limited to:

recruitment of a specialist in Human Resources to recommend and implement relevant policies and processes that will strengthen the control environment;

further strengthening our internal processes and reviews, including formal documentation thereof;

preparation of risk-control matrices to identify key risks and develop and document policies to mitigate those risks;

engaging additional resources if necessary to help us assess, document, design and implement control activities related to internal control over financial reporting.

As we continue to evaluate and test the remediation plan outlined above, we may also identify additional measures to address the material weaknesses or modify certain of the remediation procedures described above.

We also may implement additional changes to our internal control over financial reporting as may be appropriate in the course of remediating the material weakness.

Management, with the oversight of our audit committee, will continue to take steps necessary to remedy the material weakness to reinforce the overall design and capability of our control environment.

In its assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, the Company determined that there were control deficiencies in the segregation of duties in some areas of Finance that constituted a material weakness.

As a result, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by COSO.

Changes in Internal Control over Financial Reporting

3 unchanged sentences

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;

· 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.

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than those described above.

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;

· 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.

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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.

The information required under this item is incorporated by reference from our definitive proxy statement related to our 2022 Annual Meeting of Stockholders, or the Proxy Statement, to be filed pursuant to Regulation 14A, on or before May 2, 2022.

EXECUTIVE COMPENSATION

7 unchanged sentences

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this Report:

The following documents are filed as part of this Report:

Financial Statements .

12 unchanged sentences

Non-Exploitation and Third-Party Patent License Agreement by and among ValiBio SA, ValiRX and The Walloon Region dated December 17, 2009.

Common Stock Purchase Agreement, by and among VolitionRx and the purchasers thereto dated February 26, 2014.

Employment Agreement by and between VolitionRx and Jason Terrell MD, dated December 29, 2015.

13 unchanged sentences

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).

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).

Employment Agreement by and between Volition Diagnostics UK Limited and Jacob Micallef, dated March 7, 2017.

Incorporated by Reference

Exhibit Description

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).

Employment Agreement by and between Volition Diagnostics UK and Jacob Micallef, dated March 7, 2017.

Employment Agreement by and between Volition Diagnostics UK and Martin Faulkes, dated March 7, 2017.

1 unchanged sentence

Clinical Study Agreement dated July 17, 2017, by and between Volition America and the Regents of the University of Michigan.

Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America and the Regents of the University of Michigan.

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.

Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America, Inc.

and the Regents of the University of Michigan.

Warrant to Purchase Common Stock by and between VolitionRx and Jason Terrell MD, dated March 20, 2013;

2 unchanged sentences

Permanent Employment Contract by and between Belgian Volition and Gaetan Michel, dated October 1, 2020.

Incorporated by Reference

Exhibit Description

Equity Distribution Agreement, dated November 12, 2020, by and among VolitionRx, Oppenheimer & Co.

5 unchanged sentences

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.

Incorporated by Reference

Exhibit Description

Volition America, Inc.

Employment Agreement by and between Volition America and Gael Forterre, dated February 1, 2021.

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.

Underwriting Agreement, dated February 10, 2021, by and between VolitionRx Limited and Cantor Fitzgerald & Co.

Consulting Services Agreement between Volition Germany and 3F Management SPRL (Gaetan Michel), dated January 29, 2021;

First Amendment between Volition Germany and 3F Management SPRL, dated February 1, 2021;

Second Amendment between Volition Germany and 3F Management SPRL, dated May 1, 2021.

Volition Veterinary Diagnostics Development, LLC Employment Agreement Chief Executive Officer, between Volition Veterinary Diagnostics Development and Salvatore Thomas Butera, dated March 25, 2021.

Equity Distribution Agreement, dated September 24, 2021, by and among VolitionRx, Oppenheimer & Co.

and Cantor Fitzgerald & Co.

Employment Agreement between Volition America and Gaetan Michel, dated September 15, 2021.

Consulting Services Agreement between Volition Global and 3F Management SPRL (Gaetan Michel), dated September 15, 2021.

Employment Agreement between Volition Diagnostics and Nick Plummer, dated August 23, 2021.

List of Subsidiaries.

1 unchanged sentence

Power of Attorney (included on the signature page of this Report).

Incorporated by Reference

Exhibit Description

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.

2 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incorporated by Reference

Exhibit Description

XBRL Instance Document

4 unchanged sentences

XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Indicates a management contract or compensatory plan or arrangement.

14 unchanged sentences

/s/ Cameron Reynolds

Cameron Reynolds

President, Chief Executive Officer and Director

(Principal Executive Officer)

March 30, 2022

Cameron Reynolds

(Principal Executive Officer)

/s/ Terig Hughes

Chief Financial Officer and Treasurer

(Principal Financial and Accounting Officer)

March 30, 2022

Martin Faulkes

(Principal Financial and Accounting Officer)

Martin Faulkes

March 30, 2022

Martin Faulkes

/s/ Guy Innes

1 unchanged sentence

March 30, 2022

Phil l ip Barnes

Phillip Barnes

March 30, 2022

Phillip Barnes

Edward Futcher

March 30, 2022

Edward Futcher

/s/ Kim Nguyen

March 30, 2022

Salvatore Thomas Butera

Salvatore Thomas Butera, D.V.M.

/s/ Richard Brudnick

March 30, 2022

Richard Brudnick

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures