VOLITIONRX LTD 10-K

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 (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 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, 2021, 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. 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; and · implemented a quarterly user access control review process across finance and information technology systems. 70 Table of Contents 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 · 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; and · 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; and · 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; and · 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. 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. 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. 71 Table of Contents 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.” 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. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS None. 72 Table of Contents 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 2022 Annual Meeting of Stockholders, or the Proxy Statement, to be filed pursuant to Regulation 14A, on or before May 2, 2022. 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. 73 Table of Contents 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# Employment Agreement by and between VolitionRx and Jason Terrell MD, dated December 29, 2015. 10-K 001-36833 10.24 3/11/16 74 Table of Contents Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 10.3# 2011 Equity Incentive Plan dated November 17, 2011. 8-K 000-30402 4.1 11/18/11 10.3(a)# Form Stock Option Agreement. 8-K 000-30402 4.2 11/18/11 10.3(b)# Form Stock Award Agreement for Restricted Stock under the 2011 Equity Incentive Plan. 8-K 000-30402 4.3 11/18/11 10.4# 2015 Stock Incentive Plan, as amended March 31, 2021. 8-K 001-36833 10.1 06/22/21 10.4(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 10.4(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 10.4(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 10.4(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 10.4(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 10.4(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 10.5# Independent Director Agreement. 10-Q 001-36833 10.33 5/12/15 10.6 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 10.7 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 10.8# Employment Agreement by and between Volition Diagnostics UK Limited and Jacob Micallef, dated March 7, 2017. 10-K 001-36833 10.28 03/10/17 75 Table of Contents Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 10.9# Employment Agreement by and between Volition Diagnostics UK and Martin Faulkes, dated March 7, 2017. 10-K 001-36833 10.30 03/10/17 10.10 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 10.11 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 10.11(a) Amendment #1 to Clinical Study Agreement, dated February 17, 2020, by and between Volition America, Inc. and the Regents of the University of Michigan. 10-K 001-36833 10.22 02/20/20 10.12# 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 10.13#† Permanent Employment Contract by and between Belgian Volition and Gaetan Michel, dated October 1, 2020. 10-K 001-36833 10.15 03/22/21 10.14 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 10.15# 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 10.16#† Common Stock Warrant issued by VolitionRx to Gael Forterre, dated January 1, 2021. 10-K 001-36833 10.18 03/22/21 10.17#† 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. 10-K 001-36833 10.19 03/22/21 76 Table of Contents Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 10.18#† Volition America, Inc. Employment Agreement by and between Volition America and Gael Forterre, dated February 1, 2021. 10-K 001-36833 10.20 03/22/21 10.19#† 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. 10-Q 001-36833 10.7 05/11/21 10.20# Volition Veterinary Diagnostics Development, LLC Employment Agreement Chief Executive Officer, between Volition Veterinary Diagnostics Development and Salvatore Thomas Butera, dated March 25, 2021. 10-Q 001-36833 10.6 05/11/21 10.21 Equity Distribution Agreement, dated September 24, 2021, by and among VolitionRx, Oppenheimer & Co. Inc. and Cantor Fitzgerald & Co. S-3 333-259783 1.2 09/24/21 10.22# Employment Agreement between Volition America and Gaetan Michel, dated September 15, 2021. 10-Q 001-36833 10.1 11/10/21 10.23#† Consulting Services Agreement between Volition Global and 3F Management SPRL (Gaetan Michel), dated September 15, 2021. 10-Q 001-36833 10.2 11/10/21 10.24# Employment Agreement between Volition Diagnostics and Nick Plummer, dated August 23, 2021. 10-Q 001-36833 10.3 11/10/21 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 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 77 Table of Contents Incorporated by Reference Exhibit Number Exhibit Description Form File No. Exhibit Filing Date Filed Herewith 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 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 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. 78 Table of Contents 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 30, 2022 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 President, Chief Executive Officer and Director March 30, 2022 Cameron Reynolds (Principal Executive Officer) /s/ Terig Hughes Chief Financial Officer and Treasurer March 30, 2022 Terig Hughes (Principal Financial and Accounting Officer) /s/ Dr. Martin Faulkes Director March 30, 2022 Dr. Martin Faulkes /s/ Guy Innes Director March 30, 2022 Guy Innes /s/ Dr. Alan Colman Director March 30, 2022 Dr. Alan Colman /s/ Dr. Phillip Barnes Director March 30, 2022 Dr. Phillip Barnes /s / Dr. Edward Futcher Director March 30, 2022 Dr. Edward Futcher /s/ Kim Nguyen Director March 30, 2022 Kim Nguyen /s/ Richard Brudnick Director March 30, 2022 Richard Brudnick 79