VOLITIONRX LTD 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA VOLITIONRX LIMITED Consolidated Financial Statements For the Years Ended December 31, 2023 and 2022 Index Report of Independent Registered Public Accounting Firm (PCAOB ID: 3627 ) F - 35 Consolidated Balance Sheets F - 36 Consolidated Statements of Operations and Comprehensive Loss F - 37 Consolidated Statements of Stockholders’ Deficit F - 38 Consolidated Statements of Cash Flows F - 39 Notes to the Consolidated Financial Statements F - 40 F-34 Table of Contents 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, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2023 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2023, 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 the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, negative cash flows from operations and minimal revenues which raises 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. We determined that there are no critical audit matters. /s/ Sadler, Gibb & Associates, LLC We have served as the Company’s auditor since 2011. Draper, UT March 25, 2024 F-35 Table of Contents VOL ITIONRX LIMITED Consolidated Balance Sheets (Expressed in United States Dollars, except share numbers) December 31, December 31, 2023 2022 $ $ ASSETS Current Assets Cash and cash equivalents 20,729,983 10,867,050 Accounts receivable 242,617 72,609 Prepaid expenses 521,370 784,920 Other current assets 360,125 447,566 Total Current Assets 21,854,095 12,172,145 Property and equipment, net 5,523,013 5,393,012 Operating lease right-of-use assets 549,504 619,392 Intangible assets, net 23,886 110,505 Total Assets 27,950,498 18,295,054 LIABILITIES AND STOCKHOLDERS' DEFICIT Current Liabilities Accounts payable 3,211,287 3,043,008 Accrued liabilities 3,928,761 2,872,247 Deferred revenue 23,000,000 10,000,000 Management and directors’ fees payable 59,625 71,119 Current portion of long-term debt 1,207,007 1,066,700 Warrant liability 126,649 - Current portion of financing lease liabilities 48,570 46,014 Current portion of operating lease liabilities 199,323 245,163 Current portion of grant repayable 55,855 41,836 Total Current Liabilities 31,837,077 17,386,087 Long-term debt, net of current portion 3,624,860 2,779,240 Finance lease liabilities, net of current portion 400,022 436,132 Operating lease liabilities, net of current portion 378,054 400,091 Grant repayable, net of current portion 422,707 420,466 Total Liabilities 36,662,720 21,422,016 Stockholders' Deficit Common stock Authorized: 100,000,000 shares of common stock, at $ 0.001 par value Issued and outstanding: 81,898,321 shares and 57,873,379 shares, respectively 81,898 57,873 Additional paid-in capital 194,448,414 164,397,468 Accumulated other comprehensive income 243,940 227,097 Accumulated deficit ( 202,576,507 ) ( 167,257,429 ) Total VolitionRx Limited Stockholders' Deficit ( 7,802,255 ) ( 2,574,991 ) Non-controlling interest ( 909,967 ) ( 551,971 ) Total Stockholders’ Deficit ( 8,712,222 ) ( 3,126,962 ) Total Liabilities and Stockholders’ Deficit 27,950,498 18,295,054 (The accompanying notes are an integral part of these consolidated financial statements) F-36 Table of Contents VOL ITIONRX LIMITED Consolidated Statements of Operations and Comprehensive Loss (Expressed in United States Dollars, except share numbers) For the Years Ended December 31, 2023 December 31, 2022 $ Revenues Royalty 1,369 2,911 Service 175,476 92,488 Product 598,457 210,993 Total Revenues 775,302 306,392 Operating Expenses Research and development 19,551,523 15,332,989 General and administrative 10,368,314 10,177,229 Sales and marketing 6,843,160 6,576,246 Total Operating Expenses 36,762,997 32,086,464 Operating Loss ( 35,987,695 ) ( 31,780,072 ) Other Income (Expenses) Grant income 214,451 1,229,425 Loss on disposal of fixed assets ( 15,843 ) - Interest income 93,324 125,265 Interest expense ( 221,622 ) ( 173,087 ) Gain on change in fair value of warrant liability 240,311 - Total Other Income 310,621 1,181,603 Net Loss ( 35,677,074 ) ( 30,598,469 ) Net Loss attributable to Non-Controlling Interest 357,996 329,676 Net Loss attributable to VolitionRx Limited Stockholders ( 35,319,078 ) ( 30,268,793 ) Other Comprehensive Income (Loss) Foreign currency translation adjustments 16,843 78,771 Net Comprehensive Loss ( 35,660,231 ) ( 30,519,698 ) Net Loss Per Share – Basic and Diluted attributable to VolitionRx Limited Stockholders ( 0.50 ) ( 0.55 ) Weighted Average Shares Outstanding – Basic and Diluted 71,234,565 55,350,401 (The accompanying notes are an integral part of these consolidated financial statements) F-37 Table of Contents VOL ITIONRX LIMITED Consolidated Statement of Stockholders’ Deficit For the Years Ended December 31, 2023 and 2022 (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, 2021 53,772,261 53,772 154,730,938 148,326 ( 136,988,636 ) ( 222,295 ) 17,722,105 Common stock issued for settlement of RSUs 297,289 297 ( 297 ) - - - - Common stock issued in public offerings, net 3,803,829 3,804 6,732,640 - - - 6,736,444 Tax withholdings paid related to stock-based compensation - - ( 180,472 ) - - - ( 180,472 ) Stock-based compensation - - 3,114,659 - - - 3,114,659 Foreign currency translation - - - 78,771 - - 78,771 Net loss - - - - ( 30,268,793 ) ( 329,676 ) ( 30,598,469 ) Balance, December 31, 2022 57,873,379 57,873 164,397,468 227,097 ( 167,257,429 ) ( 551,971 ) ( 3,126,962 ) Common stock issued for settlement of RSUs 658,102 658 ( 658 ) - - - - Common stock issued for cash, net of issuance costs and allocation to warrant liability 23,380,134 23,380 27,997,696 - - - 28,021,076 Common stock repurchased and retired ( 13,294 ) ( 13 ) ( 31,759 ) - - - ( 31,772 ) Tax withholdings paid related to stock-based compensation - - ( 203,878 ) - - - ( 203,878 ) Stock-based compensation - - 2,289,545 - - - 2,289,545 Foreign currency translation - - - 16,843 - - 16,843 Net loss - - - - ( 35,319,078 ) ( 357,996 ) ( 35,677,074 ) Balance, December 31, 2023 81,898,321 81,898 194,448,414 243,940 ( 202,576,507 ) ( 909,967 ) ( 8,712,222 ) (The accompanying notes are an integral part of these consolidated financial statements) F-38 Table of Contents VOL ITIONRX LIMITED Consolidated Statements of Cash Flows (Expressed in United States Dollars) For the Years Ended December 31, 2023 December 31, 2022 $ $ Operating Activities: Net loss ( 35,677,074 ) ( 30,598,469 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,152,534 936,084 Amortization of operating lease right-of-use assets 260,743 253,864 Loss on disposal of fixed assets 15,843 - Stock-based compensation 2,289,545 3,114,659 Gain on change in fair value of warrant liability ( 240,311 ) - Changes in operating assets and liabilities: Accounts receivable ( 169,666 ) ( 72,609 ) Prepaid expenses 263,550 433,995 Other current assets 87,441 351,514 Accounts payable and accrued liabilities 1,224,743 548,611 Deferred revenue 13,000,000 9,987,488 Management and directors’ fees payable ( 11,494 ) ( 184 ) Operating lease liabilities ( 258,853 ) ( 232,695 ) Net Cash Used In Operating Activities ( 18,062,999 ) ( 15,277,742 ) Investing Activities: Purchases of property and equipment ( 1,083,749 ) ( 1,570,182 ) Net Cash Used In Investing Activities ( 1,083,749 ) ( 1,570,182 ) Financing Activities: Net proceeds from issuance of common shares 28,388,036 6,736,444 Tax withholdings paid related to stock-based compensation ( 203,878 ) ( 180,472 ) Common stock repurchased ( 31,772 ) - Proceeds from grants repayable 25,315 218,445 Proceeds from long-term debt 1,854,877 1,523,098 Payments on long-term debt ( 981,291 ) ( 1,268,386 ) Payments on grants repayable ( 22,096 ) ( 45,664 ) Payments on financing leases ( 46,506 ) ( 45,433 ) Net Cash Provided By Financing Activities 28,982,685 6,938,032 Effect of foreign exchange on cash and cash equivalents 26,996 195,629 Net Change in Cash and Cash Equivalents 9,862,933 ( 9,714,263 ) Cash and Cash Equivalents – Beginning of Year 10,867,050 20,581,313 Cash and Cash Equivalents – End of Year 20,729,983 10,867,050 Supplemental Disclosures of Cash Flow Information: Interest paid 221,622 173,110 Non-Cash Financing Activities: Common Stock issued for settlement of vested RSUs 658 297 Offering costs from issuance of common stock 392,822 427,443 Fair value of warrants issued in connection with public offering at issuance 366,960 - Non-cash note payable 356,258 620,549 (The accompanying notes are an integral part of these consolidated financial statements) F-39 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 1 – Organization and 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 and monitor a range of life-altering diseases, including certain cancers and diseases associated with NETosis such as sepsis and COVID-19. 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 two wholly owned subsidiaries, Volition Global Services SRL (“Volition Global”) which was formed in August 2021 and Singapore Volition. Singapore Volition has one wholly owned subsidiary, Belgian Volition SRL, a Belgium private limited liability company (“Belgian Volition”), which it acquired in September 2010. Belgian Volition has four subsidiaries, Volition Diagnostics UK Limited (“Volition Diagnostics”), which was formed in November 2015, Volition America, Inc. (“Volition America”), which was formed in February 2017, Volition Germany GmbH (“Volition Germany”), which was acquired in January 2020, as well as its majority-owned subsidiary Volition Veterinary Diagnostics Development LLC (“Volition Vet”), which was formed in June 2019. Following the acquisition of Singapore Volition in 2011, the Company’s fiscal year end was changed from August 31 to December 31. No te 2 – Liquidity and Go ing Concern Assessment Management assesses liquidity and going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period. The Company has incurred substantial losses since its inception of $ 202.6 million, has negative cash flows from operations, and has minimal revenues and expects to continue to incur operating losses in the near-term. These factors raise substantial doubt about its ability to continue as a going concern. The Company believes that it has access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations, related party funding, or other means to continue as a going concern. 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 and/or distribution rights to third parties in exchange for specified up-front and/or back-end payments, and (d) developing and commercializing its products in an efficient manner. 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-40 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ 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, 2023 include the accounts of the Company and its subsidiaries. The Company has two wholly owned subsidiaries, Singapore Volition Pte. Limited and Volition Global Services SRL. Singapore Volition has one wholly owned subsidiary, Belgian Volition SRL. Belgian Volition has four subsidiaries, Volition Diagnostics UK Limited, Volition America, Inc, Volition Germany GmbH, and its one majority owned subsidiary Volition Veterinary Diagnostics Development LLC. See Note 10(f), Commitments and Contingencies – Other Commitments , for more information regarding Volition Vet, Volition Germany and Volition America. 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, 2023, and December 31, 2022, the Company had $ 20,729,983 and $ 10,867,050 , respectively, in cash and cash equivalents. As of December 31, 2023, and December 31, 2022, the Company had $ 15,220,237 and $ 7,925,876 , respectively, in its domestic accounts in excess of Federal Deposit insured limits. As of December 31, 2023, and December 31, 2022, the Company had $ 4,227,147 and $ 1,725,981 , respectively, in its foreign accounts in excess of the Belgian Deposit insured limits. As of December 31, 2023, and December 31, 2022, the Company had $ 107,349 and $ 100,601 , respectively, in its foreign accounts in excess of the Singapore Deposit insured limits. As of December 31, 2023, and December 31, 2022, the Company had $ 320,124 and $ 326,631 , respectively, in its foreign accounts in excess of the UK Deposit insured limits. Accounts Receivable Accounts receivable consist of trade receivables in the normal course of business. 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, 2023, the accounts receivable balance was $ 242,617 and the allowance for doubtful accounts was $nil. F-41 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) Property and Equipment Property and equipment is stated at historical cost less accumulated depreciation. Leasehold improvements are amortized over the lesser of the base term of the lease or estimated life of the leasehold improvements. Depreciation is calculated using the straight-line method over the estimated useful lives as follows: Useful Life Computer hardware and software 3 years Laboratory equipment 5 years Office furniture and equipment 5 years Buildings 30 years Building improvements 5 - 15 years Land Not amortized 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 calculated by dividing net income (loss) attributable to Volition shareholders by the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is calculated by adjusting the weighted average number of shares of common stock outstanding for the dilutive effect, if any, of common stock equivalents. Common stock equivalents whose effect would be antidilutive are not included in diluted earnings (loss) per share. The Company uses the treasury stock method to determine the dilutive effect, which assumes that all common stock equivalents have been exercised at the beginning of the period and that the funds obtained from those exercises were used to repurchase shares of common stock of the Company at the average closing market price during the period. There were 9,197,021 and 7,787,013 potential common stock equivalents from stock options, RSUs and warrants excluded from the diluted EPS calculations as their effect is anti-dilutive for the years ended December 31, 2023, and December 31, 2022, respectively. 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). 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, 2023, the Company had $ 243,940 of accumulated other comprehensive income, relating to foreign currency translation. F-42 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) 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. Included in the following table are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2023. Fair Value Measurements at December 31, 2023 Description Level 1 Level 2 Level 3 Total $ $ $ $ Liabilities Warrant liability - 126,649 - 126,649 As of December 31, 2022, there was no warrant liability. The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis for the year ended December 31, 2023, as follows: Warrant Liability $ Balance at December 31, 2022 - Fair value of warrant liability, at issuance 366,960 Gain on change in fair value of warrant liability ( 240,311 ) Balance at December 31, 2023 126,649 F-43 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) 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. 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 product revenues from the sale of its Nu.Q ® Vet Cancer Test, from the sale of nucleosomes, and from the sale of research use only kits. In addition, revenue is received from external third parties for services the Company performs for them in its laboratory. 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. 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-44 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) Revenue Recognition (continued) Licensing The Company includes revenue recognized from the licensing of certain rights to third parties in “Licensing” in the consolidated statements of operations and comprehensive loss. For each licensing, 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 (reduces) 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. Revenue from Heska Agreement On March 28, 2022, Belgian Volition entered into a Master License and Supply Agreement (the “License Agreement”) with Heska Corporation (“Heska”), a leading global provider of advanced veterinary diagnostics, pursuant to which Belgian Volition granted Heska worldwide exclusive rights to sell the Nu.Q® Vet Cancer Test at the point of care (“POC”) initially for the screening of lymphoma and hemangiosarcoma in dogs (“Canine Lymphoma & HSA”), and non-exclusive rights to sell its Nu.Q® Vet Cancer Test in kit format (“Kits”) through Heska’s network of central reference laboratories (“Central Lab”) initially for Canine Lymphoma & HSA . Under and subject to the terms of the License Agreement, Belgian Volition received an upfront payment of $10.0 million in 2022, and received further milestone payments in 2023 of (i) $6.5 million upon the first commercial sale by or on behalf of Heska of a POC screening test for Canine Lymphoma & HSA and (ii) $6.5 million upon the first commercial sale by or on behalf of Heska of a POC monitoring test for the same conditions. A further milestone payment of $5.0 million will be payable to Volition pursuant to the Agreement upon the earlier of (a) the first commercial sale by or on behalf of Heska of a screening or monitoring test for lymphoma in felines, or (b) the 9-month anniversary of the first peer reviewed paper evidencing clinical utility for the screening or monitoring of lymphoma in felines being published in any one of a number of periodicals identified by the parties. Any further expansion of the License Agreement to cover the use of the Nu.Q® Vet Cancer Test for other cancer and non-cancer indications is subject to negotiation between the parties. Pursuant to the terms of the License Agreement, Belgian Volition will also supply Central Lab Kits and will receive a pre-agreed price per test, adjusted annually for inflation. The price per test for POC key components (“Key Components”) is also discounted to reflect the lower cost to Belgian Volition and additional assembly costs for Heska, as well as consideration for Heska’s upfront and milestone payments. Heska will assemble the Key Components for use at the POC, and is additionally responsible for marketing and distribution efforts and related costs. F-45 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) Revenue Recognition (continued) The License Agreement may be terminated by either party for a material breach by the other party, subject to notice and cure provisions, or in the event of the other party’s insolvency. Heska also has the option to terminate if it is unable to adapt the Key Components for use on a POC platform. Unless earlier terminated, the License Agreement will continue in effect for an initial term of 22 years for POC and 5 years for Central Lab, with the Central Lab term then continuing on a rolling one-year basis for the POC term. According to ASC Topic 606, “ Revenue from Contracts with Customers ”, a performance obligation is a commitment to provide a distinct good or service or a series of distinct goods or services. Goods and services that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is created. A good or service promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. In conjunction with the License Agreement, the Company evaluated whether or not the performance obligations granted under the License Agreement were distinct and concluded that they were not distinct as Heska could not benefit from the license without the supply (manufacturing) services. The supply services are highly specialized and are dependent on the supply of the product from the Company. As such, the performance obligations granted under the License Agreement were combined to constitute a single performance obligation and the Company accounts for them as a single contract. During the first quarter of 2022, the Company received a $ 10.0 million upfront payment under the License Agreement and further upfront payments totaling $ 13.0 million in the fourth quarter of 2023, which is included as deferred revenue on the accompanying consolidated balance sheet as of $23.0 million. The Company allocated the milestone payments that were not constrained to the single performance obligation in the contract. The Company expects to recognize the total $ 28.0 million of milestone amounts under the License Agreement over time using an output method based on Key Components and Kits supplied to Heska. In determining the transaction price, the Company analyzed the variable consideration and whether or not such variable consideration was constrained. The Company will reassess this variable consideration at each reporting period and adjust the transaction price, if necessary. The total Key Components and Kits that the Company expects to manufacture for Heska over the life of the contract will be a significant judgment in recognizing revenue once the Company begins to supply product to Heska. Sales to the Company’s three largest customers represented over 61% of total sales for the year ended December 31, 2023. Deferred Revenue (Contract Liabilities) and Contract Assets Deferred revenue consists of amounts for which the Company has an unconditional right to bill, and/or amounts for which payment has been received (including non-refundable amounts) but have not been recognized as revenue because the related performance obligations are deemed incomplete. As of December 31, 2023, the Company recorded $ 23.0 million as deferred revenue in respect of a non-refundable payment received in relation to a licensing and product supply agreement with Heska Corporation. As of December 31, 2022, the Company recorded $ 10.0 million as deferred revenue. Contract assets include costs and services incurred on contracts with open performance obligations. These contract assets were immaterial as of December 31, 2023. 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 $ 19.6 million and $ 15.3 million during the years ended December 31, 2023 and 2022, respectively. F-46 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) Impairment of Long-Lived Assets In accordance with ASC 360, “Property Plant and Equipment”, the Company reviews the carrying value of long-lived assets such as intangible assets with definite lives, property and equipment, and right-of-use (“ROU”) assets for impairment whenever events or changes in circumstances indicate the carrying amount of the assets might not be recoverable. These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company’s share price, a significant decline in revenue or adverse changes in the economic environment. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies, which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset group’s carrying amount and its estimated fair value. Impairment losses of $nil were recognized during the years ended December 31, 2023, and December 31, 2022, 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 (“RSUs)” are valued based on the closing stock price on the date of grant (intrinsic value method). The fair value of RSUs that include a market vesting condition will be measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporating the probability of vesting occurring, with the estimated fair value of these awards will be recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. The Company has elected to recognize forfeitures as they occur. Refer to Note 8 for further details. Operating Leases The Company accounts for leases in accordance with ASC 842, “ Leases. ” The Company determines whether a contract is a lease at contract inception or for a modified contract at the modification date. At inception or modification, the Company recognizes right-of-use assets (“ROU”) and related lease liabilities on the balance sheet for all leases greater than one year in duration. Lease liabilities and their corresponding ROU assets are initially measured at the present value of the unpaid lease payments as of the lease commencement date. If the lease contains a renewal and/or termination option, the exercise of the option is included in the term of the lease if the Company is reasonably certain that a renewal or termination option will be exercised. As the Company’s leases do not provide an implicit rate, the Company uses an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date of the respective lease to determine the present value of future payments. The IBR is determined by estimating what it would cost the Company to borrow a collateralized amount equal to the total lease payments over the lease term based on the contractual terms of the lease and the location of the leased asset. Operating lease payments are recognized as an expense on a straight-line basis over the lease term in equal amounts of rent expense attributed to each period during the term of the lease, regardless of when actual payments are made. This generally results in rent expense in excess of cash payments during the early years of a lease and rent expense less than cash payments in later years. The difference between rent expense recognized and actual rental payments is typically represented as the spread between the ROU asset and lease liability. F-47 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 $ expressed in United States Dollars) Note 3 - Summary of Significant Accounting Policies (continued) Operating Leases (continued) When calculating the present value of minimum lease payments, we account for leases as one single lease component if a lease has both lease and non-lease fixed cost components. Variable lease and non-lease cost components are expensed as incurred. We do not recognize ROU assets and lease liabilities for short-term leases that have an initial lease term of 12 months or less. We recognize the lease payments associated with short-term leases as an expense on a straight-line basis over the lease term. 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 and is recorded in accrued liabilities until it has been utilized for the expenditure claimed. Funding received that is repayable is shown as a liability. Reclassifications Certain reclassifications within operating expenses have been made to prior period’s consolidated financial statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations and cash flows in all periods presented. Concentration of Credit Risk Financial instruments that potentially subject the company to concentration of credit risk consist primarily of accounts receivable. The company performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. Management does not believe significant credit risks exist at December 31, 2023. As at December 31, 2023 the two largest customer balances represented over 65 % of the total outstanding accounts receivable balance. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standard Updates “ASUs” issued by the Financial Accounting Standards Board (“FASB”). The Company has evaluated all recent accounting pronouncements and determined that the adoption of pronouncements applicable to the Company has not had or is not expected to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016-13, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes may result in earlier recognition of credit losses. The Company adopted ASU 2016-13 on January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements and related disclosures. F-48 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 4 - Property and Equipment The Company’s property and equipment consist of the following amounts as of December 31, 2023 and December 31, 2022: December 31, 2023 Accumulated Net Carrying Cost Depreciation Value $ $ $ Computer hardware and software 724,534 610,577 113,957 Laboratory equipment 4,753,253 2,491,149 2,262,104 Office furniture and equipment 378,800 280,396 98,404 Buildings 2,113,031 377,328 1,735,703 Building improvements 1,610,016 429,639 1,180,377 Land 132,468 - 132,468 9,712,102 4,189,089 5,523,013 December 31, 2022 Accumulated Net Carrying Cost Depreciation Value $ $ $ Computer hardware and software 656,759 497,306 159,453 Laboratory equipment 4,190,289 1,951,387 2,238,902 Office furniture and equipment 358,575 239,436 119,139 Buildings 2,054,332 298,397 1,755,935 Building improvements 1,317,132 326,337 990,795 Land 128,788 - 128,788 8,705,875 3,312,863 5,393,012 During the years ended December 31, 2023 and December 31, 2022, the total capital expenditure was $ 1.1 million and $ 1.6 million, respectively, the majority of which was from purchases of laboratory equipment. During the years ended December 31, 2023 and December 31, 2022, the Company recognized $ 1,080,475 and $ 865,262 , respectively, in depreciation expense. F-49 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ 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, 2023 Accumulated Net Carrying Cost Amortization Value $ $ $ Patents 1,130,936 1,107,050 23,886 December 31, 2022 Accumulated Net Carrying Cost Amortization Value $ $ $ Patents 1,104,103 993,598 110,505 During the years ended December 31, 2023 and December 31, 2022, the Company recognized $ 84,910 and $ 75,558 , 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: 2024 $ 23,886 Total Intangible Assets $ 23,886 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, 2023. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2023. 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-50 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock As of December 31, 2023, the Company was authorized to issue 100 million shares of common stock par value $0.001 per share, of which 81,898,321 and 57,873,379 shares were issued as of December 31, 2023 and December 31, 2022, respectively. 2023 Equity Capital Raises On February 17, 2023, the Company entered into an underwriting agreement with Newbridge Securities Corporation (“Newbridge”) in connection with an underwritten public offering of 4,945,000 shares of the Company’s common stock, which includes Newbridge’s exercise in full of its overallotment option, pursuant to the Company’s “shelf” registration statement on Form S-3 (declared effective by the SEC on November 8, 2021, File No. 333-259783) (as amended and supplemented from time to time, the “2021 Form S-3”). The public offering price was $ 1.75 per share. The underwriter purchased the shares from the Company at a price of $ 1.6275 per share on February 22, 2023, after taking into account the underwriting discounts and commissions. The net proceeds received by the Company for the sale and issuance of the shares were approximately $ 8.0 million, before deducting offering expenses of $ 0.2 million paid by the Company. On June 1, 2023, the Company entered into an underwriting agreement with Prime Executions, Inc. dba Freedom Capital Markets (“Freedom”) acting as the book-running manager of the offering and Bancroft Capital, LLC acting as co-manager in connection with an underwritten public offering of 14,950,000 shares of the Company’s common stock, which includes Freedom’s exercise in full of its overallotment option, pursuant to the 2021 Form S-3. The underwriter purchased 13,000,000 shares and 1,950,000 shares from the Company on June 5 and June 23, 2023 respectively. The public offering price was $ 1.27 per share. The underwriter purchased the shares from the Company at a price of $ 1.1811 per share. The net proceeds received by the Company for the sale and issuance of the shares were approximately $ 17.6 million, before deducting offering expenses of $ 0.1 million paid by the Company. In addition, the Company issued warrants to purchase an aggregate of 448,500 shares of Company common stock to Freedom, at an exercise price of $ 2.00 per share. The Company evaluated the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480 and ASC 815-40. The Company determined the warrants issued in the Freedom offering failed the indexation guidance under ASC 815-40, specifically, the warrants provide for a Black-Scholes value calculation in the event of certain transactions (“Fundamental Transactions”), which includes a floor on volatility utilized in the value calculation at 100% or greater. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815-40, the Company has classified the fair value of the warrants as a liability upon issuance and marked to market each reporting period in the Company’s consolidated statement of operations until their exercise or expiration. F-51 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) Equity Capital Raises (continued) The fair value of the warrants as of June 1, 2023, the issuance date, and December 31, 2023, were $ 366,960 and $ 126,649 , respectively. The warrant liability was estimated using the Black-Scholes pricing model with the following assumptions. (At Issuance) December 31, 2023 June 1, 2023 Risk-free interest rate 3.89 % 3.70 % Expected volatility 76.30 % 71.56 % Expected life (years) 4.44 5.03 Expected dividend yield - - Total fair value $ 126,649 $ 366,960 On December 5, 2023 the Company issued 3,205,431 shares of its common stock in a private placement to Wallonie Entreprendre S.A (W.E.) at a purchase price of $ 0.8337 per share, or an aggregate purchase price of approximately $ 2.7 million (€2.5 million). The shares of common stock will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Equity Capital Raises 2022 On July 29, 2022, the Company entered into an underwriting agreement with Newbridge in connection with an underwritten public offering of 3,450,000 shares of the Company’s common stock, which includes Newbridge’s exercise in full of its overallotment option, pursuant to the “2021 Form S-3. Newbridge purchased the shares from the Company at a price of $ 1.87 per share. The offering closed on August 2, 2022. The Company received net proceeds of approximately $ 6.4 million from the offering before deducting offering expenses of $ 0.2 million paid by the Company. F-52 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) Equity Distribution Agreements 2023 During the year ended December 31, 2023, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $ 0.7 million under the 2022 EDA (as defined below) through the sale of 279,703 shares of its common stock. As of December 31, 2023, the Company has raised aggregate net proceeds (net of broker commissions and fees) of approximately $ 1.5 million under the 2022 EDA through the sale of 630,532 shares of its common stock. See Note 11 for additional details regarding sales under the 2022 EDA subsequent to December 31, 2023. 2022 On May 20, 2022, the Company entered into an equity distribution agreement (the “2022 EDA”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, with an aggregate offering price of up to $ 25.0 million, from time to time through an “at the market” offering pursuant to the 2021 Form S-3 through Jefferies acting as the Company’s agent and/or principal. The Company is not obligated to sell any shares under the 2022 EDA. As of December 31, 2022, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $ 0.8 million under the 2022 EDA through the sale of 350,829 shares of common stock. From January 1, 2022 through May 7, 2022, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $ 9,500 under its equity distribution agreement with Cantor Fitzgerald & Co. and Oppenheimer & Co. Inc. (the “2021 EDA”) through the sale of 3,000 shares of its common stock. The Company terminated the 2021 EDA effective May 7, 2022. 2023 and 2022 Issuances Upon Warrant Exercises For the years ended December 31, 2023 and December 31, 2022 no warrants were exercised. 2023 and 2022 Stock Option Exercises During the year ended December 31, 2023 and December 31, 2022 no shares of common stock were issued pursuant to the exercise of stock options. F-53 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) Stock Options Expired / Cancelled The table below summarizes the stock options granted under the Company’s 2015 Stock Incentive Plan (the “2015 Plan”) or the 2011 Equity Incentive Plan (the “2011 Plan”), as indicated, that expired or were cancelled during the year ended December 31, 2023. Equity Incentive Plan Options (#) Grant Date Options Cancelled (#) Grant Price ($) Cancellation Date 2015 25,000 Apr 15, 2016 25,000 4.00 Feb 18, 2023 2015 55,000 Apr 13, 2020 55,000 3.60 Feb 18, 2023 2015 50,000 Mar 30, 2017 50,000 5.00 Feb 18, 2023 2015 50,000 Feb 11, 2019 50,000 3.25 Feb 18, 2023 2015 50,000 Jan 23, 2018 50,000 4.00 Feb 18, 2023 2015 32,383 Aug 3, 2021 32,383 3.40 Feb 18, 2023 2011 5,267 Mar 20, 2013 5,267 4.35 Mar 20, 2023 2011 1,100 Mar 20, 2013 1,100 4.35 Mar 20, 2023 2015 4,317 Aug 3, 2021 4,317 3.40 Jun 28, 2023 2011 550 Sep 2, 2013 550 3.35 Sep 2, 2023 2011 550 Sep 2, 2013 550 4.35 Sep 2, 2023 2011 550 Sep 2, 2013 550 4.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 3.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 4.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 4.35 Sep 2, 2023 2015 4,318 Aug 3, 2021 4,318 3.40 Sep 28, 2023 285,536 285,536 F-54 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) RSU Settlements 2023 During the year ended December 31, 2023 we issued a total of 658,102 shares of common stock from the settlement of RSUs, as follows: Equity Incentive Plan RSUs # Vest Date Shares Issued Shares Withheld for Taxes 2015 4,000 Feb 8, 2023 2,369 1,631 2015 15,000 Mar 1, 2023 9,609 5,391 2015 15,000 Mar 25, 2023 15,000 - 2015 2,500 Apr 4, 2023 1,759 741 2015 13,500 Apr 4, 2023 7,995 5,505 2015 35,000 Apr 4, 2023 22,610 12,390 2015 50,000 May 1, 2023 35,707 14,293 2015 4,000 Jun 1, 2023 2,270 1,730 2015 7,500 Jun 1, 2023 4,257 3,243 2015 208,809 Aug 3, 2023 167,809 41,000 2015 34,102 Aug 15, 2023 23,764 10,338 2015 12,000 Sep 7, 2023 7,046 4,954 2015 12,500 Sep 21, 2023 7,434 5,066 2015 357,346 Oct 4, 2023 298,738 58,608 2015 19,904 Oct 4, 2023 6,883 13,021 2015 21,583 Oct 13, 2023 21,583 - 2015 21,750 Nov 1, 2023 21,750 - 2015 334 Nov 29, 2023 334 - 2015 2,000 Dec 15, 2023 1,185 815 836,828 658,102 178,726 F-55 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 7 - Common Stock (continued) RSU Settlements (continued) 2022 During the year ended December 31, 2022 we issued a total of 297,289 shares of common stock from the settlement of RSUs, as follows: Equity Incentive Plan RSUs # Vest Date Shares Issued Shares Withheld for Taxes 2015 15,000 Mar 25, 2022 15,000 - 2015 26,250 Apr 13, 2022 21,712 4,538 2015 50,000 May 1, 2022 35,000 15,000 2015 230,102 Aug 3, 2022 191,992 38,110 2015 12,000 Sep 7, 2022 7,038 4,962 2015 19,905 Oct 4, 2022 13,022 6,883 2015 21,750 Nov 1, 2022 12,344 9,406 2015 2,000 Dec 15, 2022 1,181 819 377,007 297,289 79,718 F-56 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation a ) Warrants The following table summarizes the changes in warrants outstanding of the Company during the year ended December 31, 2023 and December 31, 2022: Weighted Average Number of Exercise Price Warrants $ Outstanding at December 31, 2021 485,000 3.88 Granted 54,000 3.05 Outstanding at December 31, 2022 539,000 3.80 Granted 448,500 2.00 Expired ( 125,000 ) 2.47 Outstanding at December 31, 2023 862,500 3.05 Exercisable at December 31, 2023 835,500 3.05 Warrants Granted 2023 The Company issued warrants to purchase an aggregate of 448,500 shares of Company common stock to Freedom, at an exercise price of $ 2.00 per share. The Company evaluated the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480 and ASC 815-40. The Company determined the warrants issued in the Freedom offering failed the indexation guidance under ASC 815-40, specifically, the warrants provide for a Black-Scholes value calculation in the event of certain transactions (“Fundamental Transactions”), which includes a floor on volatility utilized in the value calculation at 100% or greater . The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815-40, the Company has classified the fair value of the warrants as a liability upon issuance and marked to market each reporting period in the Company’s consolidated statement of operations until their exercise or expiration. 2022 Effective April 4, 2022, the Company granted a warrant to purchase 54,000 shares of common stock to a Company employee for services to the Company and/or its subsidiaries. This warrant shall vest in two equal installments at 12 months and 24 months from the grant date, subject to continued service and expire on April 4, 2028 and April 4, 2029, respectively, with an exercise price of $3.05 per share . The Company has calculated the estimated fair market value of this warrant at $ 80,901 , using the Black-Scholes model and the following assumptions: term 3.5 years, stock price $ 2.95 , exercise price $ 3.05 , 71.07 % volatility, 2.53 % risk-free rate, and no forfeiture rate. F-57 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) a ) Warrants (continued) Warrant Expiration 2023 Effective February 26, 2023, a warrant to purchase 125,000 shares of common stock expired unexercised. 2022 During the year ended December 31, 2022, no warrants expired unexercised. Below is a table summarizing the warrants issued and outstanding as of December 31, 2023. The warrants outstanding have a weighted average price of $ 3.05 per share and an aggregate weighted average remaining contractual life of 3.83 years. The warrants exercisable have a weighted average price of $ 3.05 per share. Weighted Average Proceeds to Exercise Remaining Company if Number Number Price Contractual Exercised Outstanding Exercisable ($) Life (Years) $ 448,500 448,500 2.00 4.46 897,000 54,000 27,000 3.05 4.76 164,700 50,000 50,000 3.45 2.17 172,500 125,000 125,000 3.95 3.01 493,750 185,000 185,000 4.90 3.09 906,500 862,500 835,500 2,634,450 Stock-based compensation expense related to warrants of $ 30,574 and $ 84,102 was recorded for the years ended December 31, 2023, and December 31, 2022, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is approximately $ 5,238 and is expected to be recognized over a period of 0.26 years. As of December 31, 2023, the total intrinsic value of warrants was $nil. F-58 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) b) Options The Company currently has options outstanding under both its 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 shares of common stock available for issuance under such 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. On March 31, 2021, 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 1,750,000 shares to an aggregate maximum of 6,000,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 17, 2021. On April 4, 2022, 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 1,750,000 shares to an aggregate maximum of 7,750,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 13, 2022. On April 17, 2023, 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 1,950,000 shares to an aggregate maximum of 9,700,000 shares, which amendment was approved by the stockholders at an annual meeting held on June 28, 2023. 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-59 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 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, 2023 and December 31, 2022. Weighted Average Number of Exercise Price Options $ Outstanding at December 31, 2021 5,027,518 3.87 Expired/Cancelled ( 42,413 ) 3.43 Outstanding at December 31, 2022 4,985,105 3.87 Expired/Cancelled ( 285,536 ) 3.89 Outstanding at December 31, 2023 4,699,569 3.87 Exercisable at December 31, 2023 4,699,569 3.87 2023 During the year ended December 31, 2023, no options were granted. F-60 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) b ) Options (continued) 2023 During the year ended December 31, 2023, the following table summarizes the options cancelled. Equity Incentive Plan Options (#) Grant Date Options Cancelled (#) Grant Price ($) Cancellation Date 2015 25,000 Apr 15, 2016 25,000 4.00 Feb 18, 2023 2015 55,000 Apr 13, 2020 55,000 3.60 Feb 18, 2023 2015 50,000 Mar 30, 2017 50,000 5.00 Feb 18, 2023 2015 50,000 Feb 11, 2019 50,000 3.25 Feb 18, 2023 2015 50,000 Jan 23, 2018 50,000 4.00 Feb 18, 2023 2015 32,383 Aug 3, 2021 32,383 3.40 Feb 18, 2023 2011 5,267 Mar 20, 2013 5,267 4.35 Mar 20, 2023 2011 1,100 Mar 20, 2013 1,100 4.35 Mar 20, 2023 2015 4,317 Aug 3, 2021 4,317 3.40 Jun 28, 2023 2011 550 Sep 2, 2013 550 3.35 Sep 2, 2023 2011 550 Sep 2, 2013 550 4.35 Sep 2, 2023 2011 550 Sep 2, 2013 550 4.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 3.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 4.35 Sep 2, 2023 2011 2,167 Sep 2, 2013 2,167 4.35 Sep 2, 2023 2015 4,318 Aug 3, 2021 4,318 3.40 Sep 28, 2023 285,536 285,536 2022 During the year ended December 31, 2022, the following table summarizes the options cancelled. Equity Incentive Plan Options (#) Grant Date Options Cancelled (#) Grant Price ($) Cancellation Date 2015 2,515 Aug 3, 2021 2,515 3.40 Aug 18, 2022 2015 5,000 Apr 13, 2020 5,000 3.60 Nov 18, 2022 2015 2,515 Aug 3, 2021 2,515 3.40 Nov 18, 2022 2015 32,383 Aug 3, 2021 32,383 3.40 Nov 18, 2022 42,413 42,413 F-61 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) b ) Options (continued) Below is a table summarizing the options issued and outstanding as of December 31, 2023, 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 $ 3.87 per share and an aggregate weighted average remaining contractual life of 4.23 years. Weighted Average Proceeds to Exercise Remaining Company if Number Number Price Contractual Life Exercised Outstanding Exercisable ($) (Years) $ 585,000 585,000 3.25 1.12 1,901,250 981,569 981,569 3.40 7.60 3,337,335 740,000 740,000 3.60 6.36 2,664,000 1,607,837 1,607,837 4.00 2.73 6,431,348 89,163 89,163 4.38 4.07 390,534 50,000 50,000 4.80 3.01 240,000 646,000 646,000 5.00 3.24 3,230,000 4,699,569 4,699,569 18,194,467 Stock-based compensation expense related to stock options of $ 287,363 and $ 1,127,502 was recorded for the year ended December 31, 2023 and December 31, 2022 respectively. Total remaining unrecognized compensation cost related to non-vested stock options is approximately $nil and is expected to be recognized over a period of nil years. As of December 31, 2023, the total intrinsic value of stock options was $nil. As of December 31, 2023, an aggregate of 608,190 shares of common stock remained available for future issuance under the 2015 Plan. F-62 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) c ) Restricted Stock Units (RSUs) Below is a table summarizing the RSUs issued and outstanding as of December 31, 2023, all of which were issued pursuant to the 2015 Plan. Weighted Average Number of Exercise Price RSUs $ Outstanding at December 31, 2021 810,750 3.33 Granted 1,892,102 1.64 Vested ( 377,007 ) 3.33 Cancelled ( 62,937 ) 2.88 Outstanding at December 31, 2022 2,262,908 2.05 Granted 2,317,882 0.79 Vested ( 836,828 ) 2.35 Cancelled ( 109,010 ) 1.77 Outstanding at December 31, 2023 3,634,952 1.01 2023 Below is a table summarizing the RSUs granted during the year ended December 31, 2023, all of which were issued pursuant to the 2015 Plan. These RSUs vest equally over periods stated on the dates noted, subject to continued service, and will result in the compensation expense stated. The exception to this is specified in note (iv) which is described in detail below. Equity First Second Third RSU Incentive RSUs # Grant Vesting Vesting Vesting Vesting Expense Note Plan Date Period Date Date Date $ 2015 57,000 Mar 27, 2023 36 Months Mar 27, 2024 Mar 27, 2025 Mar 27, 2026 98,040 2015 50,000 Mar 27, 2023 24 Months Mar 27, 2024 Mar 27, 2025 N/A 86,000 2015 5,325 Mar 27, 2023 12 Months Mar 27, 2024 N/A N/A 9,159 2015 47,000 Jun 15, 2023 36 Months Jun 15, 2024 Jun 15, 2025 Jun 15, 2026 74,260 2015 8,392 Jun 15, 2023 12 Months Jun 15, 2024 N/A N/A 13,260 2015 43,165 Jul 13, 2023 6 Months Oct 13, 2023 Jan 13, 2024 N/A 56,978 2015 14,000 Jul 13, 2023 36 Months Jul 13, 2024 Jul 13, 2025 Jul 13, 2026 18,479 2015 34,000 Sep 11, 2023 36 Months Sep 11, 2024 Sep 11, 2025 Sep 11, 2026 44,540 2015 1,569,000 Sep 28, 2023 36 Months Sep 28, 2024 Sep 28, 2025 Sep 28, 2026 1,098,300 (i) 2015 450,000 Oct 19, 2023 Up to 42 Months Variable Variable Variable 306,000 2015 40,000 Dec 11, 2023 36 Months Dec 11, 2024 Dec 11, 2025 Dec 11, 2026 23,200 2,317,882 1,828,216 F-63 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) c ) Restricted Stock Units (RSUs) (continued) (i) These RSUs were granted by the Compensation Committee of the Board of Directors in September 2023, with an effective date of October 19, 2023 and vest upon the share price closing above $5.00 per share for a minimum of thirty consecutive trading days within a period of three years from the date of grant, with further time-based vesting in a single installment six months after the timely achievement of the target, if at all, and subject to continued service. The estimated fair value of the RSUs that include a market vesting condition will be measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporating the probability of vesting occurring. The estimated fair value of these awards will be recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. 2022 Below is a table summarizing the RSUs granted during the year ended December 31, 2022, all of which were issued pursuant to the 2015 Plan. These RSUs vest equally over periods stated on the dates noted, subject to continued service, and will result in the compensation expense stated. The exception to this is specified in note (iv) which is described in detail below. Equity First Second Third RSU Incentive RSUs Grant Vesting Vesting Vesting Vesting Expense Note Plan # Date Period Date Date Date $ 2015 8,000 Feb 8, 2022 24 Months Feb 8, 2023 Feb 8, 2024 N/A 22,640 2015 30,000 Mar 1, 2022 24 Months Mar 1, 2023 Mar 1, 2024 N/A 84,300 2015 32,000 Apr 4, 2022 24 Months Apr 4, 2023 Apr 4, 2024 N/A 94,400 2015 104,000 Apr 4, 2022 36 Months Apr 4, 2023 Apr 4, 2024 Apr 4, 2025 306,800 2015 33,000 Jun 1, 2022 24 Months Jun 1, 2023 Jun 1, 2024 N/A 80,850 2015 63,102 Aug 15, 2022 24 Months Aug 15, 2023 Aug 15, 2024 N/A 126,835 2015 25,000 Sep 21, 2022 24 Months Sep 21, 2023 Sep 21, 2024 N/A 42,250 (ii) 2015 1,144,000 Oct 4, 2022 36 Months Oct 4, 2023 Oct 4, 2024 Oct 4, 2025 1,670,240 (iii) 2015 450,000 Oct 4, 2022 Up to 42 Months Variable Variable Variable 321,078 (iv) 2015 3,000 Nov 29, 2022 36 Months Nov 29, 2023 Nov 29, 2024 Nov 29, 2025 6,450 1,892,102 2,755,843 (ii) These RSUs vest upon the achievement of corporate goals focused around product development and commercialization with further time-based vesting, subject to continued service of the award recipient to the Company through the applicable vesting dates. On October 13, 2022, the Compensation Committee of the Board of Directors approved the satisfactory achievement of certain corporate goals previously established by the Compensation Committee, which resulted in the vesting of the rights with respect to an aggregate of 198,275 RSUs. The RSUs are further subject to a three-year time-based vesting schedule, vesting in three equal installments on the dates set forth in the table above, and conditioned upon the recipient’s continued service through the applicable vesting date. On January 12, 2023, the Compensation Committee of the Board of Directors approved the satisfactory achievement of certain additional corporate goals, which resulted in the vesting of the rights with respect to an aggregate of an additional 424,875 RSUs, subject to the foregoing time-based vesting and conditioned upon the recipient’s continued service through the applicable vesting date. F-64 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) c ) Restricted Stock Units (RSUs) (continued) (iii) These RSUs vest upon the share price closing above $ 5.00 per share for a minimum of ten consecutive trading days within a period of three years from the date of grant, with further time-based vesting in a single installment six months after the timely achievement of the target, if at all, and subject to continued service. The estimated fair value of the RSUs that include a market vesting condition will be measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporating the probability of vesting occurring. The estimated fair value of these awards will be recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. (iv) The Company granted an aggregate of 3,000 RSUs on November 29, 2022 as an employment inducement award. These RSUs are subject to time-based vesting and subject to the continued service of each recipient. Below is a table summarizing the RSUs vested during the year ended December 31, 2023, all of which were issued pursuant to the 2015 Plan. Equity Incentive Plan RSUs # Vest Date Shares Issued Shares Withheld for Taxes 2015 4,000 Feb 8, 2023 2,369 1,631 2015 15,000 Mar 1, 2023 9,609 5,391 2015 15,000 Mar 25, 2023 15,000 - 2015 2,500 Apr 4, 2023 1,759 741 2015 13,500 Apr 4, 2023 7,995 5,505 2015 35,000 Apr 4, 2023 22,610 12,390 2015 50,000 May 1, 2023 35,707 14,293 2015 4,000 Jun 1, 2023 2,270 1,730 2015 7,500 Jun 1, 2023 4,257 3,243 2015 208,809 Aug 3, 2023 167,809 41,000 2015 34,102 Aug 15, 2023 23,764 10,338 2015 12,000 Sep 7, 2023 7,046 4,954 2015 12,500 Sep 21, 2023 7,434 5,066 2015 357,346 Oct 4, 2023 298,738 58,608 2015 19,904 Oct 4, 2023 6,883 13,021 2015 21,583 Oct 13, 2023 21,583 - 2015 21,750 Nov 1, 2023 21,750 - 2015 334 Nov 29, 2023 334 - 2015 2,000 Dec 15, 2023 1,185 815 836,828 658,102 178,726 F-65 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) c ) Restricted Stock Units (RSUs) (continued) Below is a table summarizing the RSUs vested during the year ended December 31, 2022, all of which were issued pursuant to the 2015 Plan. Equity Incentive Plan RSUs # Vest Date Shares Issued Shares Withheld for Taxes 2015 15,000 Mar 25, 2022 15,000 - 2015 26,250 Apr 13, 2022 21,712 4,538 2015 50,000 May 1, 2022 35,000 15,000 2015 230,102 Aug 3, 2022 191,992 38,110 2015 12,000 Sep 7, 2022 7,038 4,962 2015 19,905 Oct 4, 2022 13,022 6,883 2015 21,750 Nov 1, 2022 12,344 9,406 2015 2,000 Dec 15, 2022 1,181 819 377,007 297,289 79,718 Below is a table summarizing the RSUs cancelled during the year ended December 31, 2023, all of which were originally issued pursuant to the 2015 Plan. Equity Incentive Plan RSUs # Cancellation Date RSUs Cancelled 2015 23,000 Apr 30, 2023 23,000 2015 21,000 May 5, 2023 21,000 2015 2,000 Jun 15, 2023 2,000 2015 17,343 Jun 28, 2023 17,343 2015 14,000 Jul 28, 2023 14,000 2015 10,000 Sep 22, 2023 10,000 2015 2,667 Oct 4, 2024 2,667 2015 19,000 Oct 20, 2024 19,000 109,010 109,010 Below is a table summarizing the RSUs cancelled during the year ended December 31, 2022, all of which were originally issued pursuant to the 2015 Plan. Equity Incentive Plan RSUs # Cancellation Date RSUs Cancelled 2015 33,000 May 31, 2022 33,000 2015 1,365 Aug 18, 2022 1,365 2015 17,572 Nov 18, 2022 17,572 2015 11,000 Nov 21, 2022 11,000 62,937 62,937 F-66 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 8 - Stock-based Compensation (continued) c ) Restricted Stock Units (RSUs) (continued) Below is a table summarizing the RSUs issued and outstanding as of December 31, 2023 of which the last to vest have a remaining contractual life of 2.87 years. Weighted Average Weighted Average Grant date Remaining Number Fair Value Contractual Life Outstanding $ (Years) 40,000 0.58 1.87 450,000 0.68 3.30 450,000 0.69 2.26 1,569,000 0.70 1.75 34,000 1.31 1.70 35,582 1.32 1.16 719,987 1.46 0.84 36,392 1.58 1.02 12,500 1.69 0.73 102,325 1.72 1.00 29,000 2.01 0.62 666 2.15 0.94 11,500 2.45 0.42 9,000 2.81 0.17 85,000 2.95 0.51 50,000 3.31 0.33 3,634,952 Stock-based compensation expense related to RSUs of $ 1,971,607 and $ 1,903,054 was recorded in the years ended December 31, 2023, and December 31, 2022, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $ 1,925,613 . F-67 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 9 - Income Taxes The Company has estimated net operating losses for the years ended December 31, 2023 and 2022 of $ 33.1 million and $ 28.6 million, respectively, available to offset taxable income in future years. The significant components of deferred income taxes and assets as of December 31, 2023 and December 31, 2022 are as follows: Net Deferred Tax Liability December 31, 2023 December 31, 2022 $ $ Excess of tax over book depreciation and amortization ( 71,391 ) ( 46,001 ) ROU Asset ( 108,326 ) ( 117,134 ) Lease Liability 113,834 122,279 Accrued expenses 8,933 5,655 Capitalized research expenses 2,723,982 1,237,122 Stock-based compensation 322,177 321,956 Net Operating Losses carry-forward 33,092,721 28,556,992 Research and development tax credits 1,033,416 769,317 Gross deferred tax assets 37,115,346 30,850,186 Valuation allowance ( 37,115,346 ) ( 30,850,186 ) Net deferred tax asset - - Change in Valuation Allowance ( 6,265,160 ) Summary Rate Reconciliation December 31, 2023 December 31, 2022 % % Federal statutory rate 21.0 21.0 Permanent Differences ( 3.3 ) ( 0.6 ) Stock-based compensation ( 0.8 ) ( 0.3 ) Federal Research & Development Credits 0.7 0.7 Foreign taxes ( 0.2 ) ( 0.1 ) Federal Deferred Rate Decrease - 0.5 Change in Valuation Allowance ( 17.5 ) ( 21.2 ) Total ( 0.1 ) - Disclosure Amounts December 31, 2023 Net Operating Losses - United States 41,344,440 Net Operating Losses - Foreign 103,744,933 Credit Carryforward - United States - Credit Carryforward - Foreign 1,033,416 Increase in Valuation Allowance 6,265,160 F-68 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 - Commitments and Contingencies a) Finance Lease Obligations 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, 2023, the balance payable was $ 448,592 . 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, 2023, the balance payable was $ 0 . 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, 2023. 2024 $ 59,374 2025 $ 59,374 2026 $ 59,376 2027 $ 59,375 2028 $ 59,375 Greater than 5 years $ 200,376 Total $ 497,250 Less: Amount representing interest $ ( 48,658 ) Present value of minimum lease payments $ 448,592 b) Operating Lease Right-of-Use Liabilities As of December 31, 2023, operating lease right-of-use assets and liabilities arising from operating leases were $ 549,504 and $ 577,377 , respectively. During the year ended December 31, 2023, cash paid for amounts included for the measurement of lease liabilities was $ 259,098 and the Company recorded operating lease expense of $ 261,005 . Our weighted average discount rate is 2.38 % and the weighted average remaining lease term is 25 months. 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, 2023. 2024 $ 223,398 2025 $ 170,676 2026 $ 143,176 2027 $ 70,784 2028 $ 5,258 Total Operating Lease Obligations $ 613,292 Less: Amount representing interest $ ( 35,915 ) Present Value of minimum lease payments $ 577,377 F-69 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 10 – Commitments and Contingencies (continued) b) Operating Lease Right-of-Use Liabilities (continued) 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, 2023, $ 72,542 was recognized in short-term lease costs associated with the office space leases in Singapore and Nevada. The annual payments remaining for such short-term office leases as of December 31, 2023, were as follows: 2024 $ 33,370 Total Operating Lease Liabilities $ 33,370 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 € 1,048,020 . 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, 2023, the grant balance repayable was $ 27,597 . 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, 2023, the grant balance repayable was $ 102,128 . In 2020, the Company entered into an agreement with the Walloon Region government in Belgium for a research grant for € 495,000 . Per the terms of the agreement, € 148,500 of the grant is to be repaid by installments over 10 years commencing in 2023. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 2.89% 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 €148,500 and the 2.89% royalty on revenue, is equal to the amount of funding received . As of December 31, 2023, the grant balance repayable was $ 94,600 . In 2020, the Company entered into an agreement with the Walloon Region government in Belgium for a research grant for € 929,433 . Per the terms of the agreement, € 278,830 of the grant is to be repaid by instalments over 15 years commencing in 2022. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 4.34% 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 €278,830 and the 4.34% royalty on revenue, is equal to the amount of funding received . As of December 31, 2023, the grant balance repayable was $ 254,237 . F-70 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) c) Grants Repayable (continued) As of December 31, 2023, the balance repayable was $ 478,562 and the annual payments remaining were as follows: 2024 $ 55,855 2025 $ 37,436 2026 $ 45,120 2027 $ 50,093 2028 $ 53,569 Greater than 5 years $ 236,489 Total Grants Repayable $ 478,562 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, 2023, the principal balance payable was $ 0 . 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, 2023, the principal balance payable was $ 175,055 . 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, 2023, €1 million has been drawn down under this agreement and the principal balance payable was $ 275,974 . 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, 2023, the principal balance payable was $ 126,186 . In 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 2031 . As of December 31, 2023, the amount that has been drawn down under this agreement was € 633,719 , representing a principal balance payable of $ 699,560 . On November 23, 2021, the Company entered into a 3 ½ year loan agreement with SOFINEX for a maximum of € 450,000 with fixed interest rate of 5.00 %, maturing June 2025 . As of December 31, 2023, the amount that has been drawn down under this agreement was € 450,000 , representing a principal balance payable of $ 289,773 . On August 16, 2022, the Company entered into a 4 -year loan agreement with Namur Invest for a maximum of € 1,000,000 with fixed interest rate of 6.00 %, maturing July 2026 . As of December 31, 2023, the amount that has been drawn down under this agreement was € 1,000,000 , representing a principal balance payable of $ 836,745 . F-71 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) d) Long-Term Debt (continued) On November 18, 2022, the Company entered into a 4 -year loan agreement with Namur Invest for a maximum of € 500,000 with fixed interest rate of 5.45 %, maturing December 2027 . As of December 31, 2023, the amount that has been drawn down under this agreement was € 500,000 , representing a principal balance payable of $ 551,949 . In June 2023, the Company entered into a 4 -year loan agreement with Namur Invest for a maximum of € 400,000 with fixed interest rate of 7.00 %, maturing June 2027 . As of December 31, 2023, € 200,000 had been drawn down under this agreement and the principal balance payable was $ 220,780 . On December 1, 2023, the Company entered into a 5 -year loan agreement with Wallonie Entreprendre S.A. for a maximum of € 2.5 million with fixed interest rate of 7.68 %, maturing December 2028 . As of December 31, 2023, € 1,500,000 had been drawn down under this agreement and the principal balance payable was $ 1,655,845 . As of December 31, 2023, the total balance for long-term debt payable was $ 4,831,867 and the payments remaining were as follows: 2024 $ 1,481,023 2025 $ 922,911 2026 $ 692,557 2027 $ 452,470 2028 $ 1,918,778 Greater than 5 years $ 323,802 Total $ 5,791,541 Less: Amount representing interest $ ( 959,674 ) Total Long-Term Debt $ 4,831,867 F-72 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) e) Collaborative Agreement Obligations 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, 2023, $ 510,000 is still to be paid by the Company under this agreement. In 2022, the Company entered into a sponsored research agreement with The University of Texas MD Anderson Cancer Center to evaluate the role of neutrophil extracellular traps ("NETs") in cancer patients with sepsis for a cost to the Company of $ 449,406 . As of December 31, 2023, $ 449,406 is still to be paid by the Company under this agreement. In August 2023, the Company entered into a project research agreement with Guy’s and St Thomas’ NHS Foundation Trust to evaluate the practical clinical utility of the Nu.Q ® H3.1 nucleosome levels in adult patients with sepsis to facilitate early diagnosis and prognostication for a cost to the Company of £ 162,338 . As of December 31, 2023, $ 206,697 is still to be paid by the Company under this agreement and as of December 31, 2023, $ 41,339 is due by the Company under this agreement. In July 2023, the Company entered into a research agreement with Xenetic Biosciences Inc and CLS Therapeutics Ltd to evaluate the anti-tumoral effects of Nu.Q ® CAR T cells for a cost to the Company of $ 107,589 . As of December 31, 2023, $ 107,589 is still to be paid by the Company under this agreement and as of December 31, 2023, $ 26,142 is due by the Company under this agreement. As of December 31, 2023, the total amount to be paid for future research and collaboration commitments was approximately $ 1,273,692 and the annual payments remaining were as follows: 2024 $ 1,110,146 2025 - 2028 $ 163,546 Total Collaborative Agreement Obligations $ 1,273,692 F-73 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) f) Other Commitments 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, 2023, 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”). In connection with the transaction agreement, the Company entered into 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 five years post-closing. As of December 31, 2023, $ 216 is payable under the 6 % royalty agreement on sales to date towards the Company’s aggregate minimum royalty obligation of $ 121,429 . Volition America On November 3, 2020, the Company entered into a professional services master agreement (the “Master Agreement”) with Diagnostic Oncology CRO, LLC (“DXOCRO”) to conduct a pivotal clinical trial and provide regulatory submission and reimbursement related services. On August 8, 2022, the Company and DXOCRO amended and restated the Master Agreement to expand the scope of DXOCRO’s consultant services provided thereunder (the “A&R Master Agreement”). The A&R Master Agreement requires DXOCRO to support development and clinical validation studies for the Company’s Nu.Q® product portfolio in the United States, including by conducting large-scale finding studies across multiple sites in the U.S. using Nu.Q® NETs and Nu.Q® Cancer tests to determine clinical utility in sepsis and non-Hodgkin’s lymphoma. The Company anticipates DXOCRO’s services under this agreement will be completed by the end of the first quarter 2024 at a total cost to the Company of up to $4.2 million . The Company’s payment obligations accrue upon delivery of projects under the agreement. The Company may terminate the agreement or any project thereunder upon at least 30 days’ prior written notice. Unless earlier terminated, the A&R Master Agreement terminates on the later of December 31, 2025 or the date upon which all services have been completed. As of December 31, 2023, $ 90,862 is payable under the A&R Master Agreement, and up $ 208,320 maybe payable by Company in future periods for services rendered. See Note 11 for additional details regarding the A&R Master Agreement subsequent to December 31, 2023. g) Legal Proceedings There are no legal proceedings which the Company believes will have a material adverse effect on its financial position. F-74 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) h) Commitments in Respect of Corporate Goals and Performance-Based Awards In August 2021 and October 2021 the Compensation Committee of the Board of Directors approved the granting of equity-based awards under the 2015 Plan as well as cash bonuses, each of which vests upon achievement of certain corporate goals focused around product development and commercialization, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries. On June 23, 2022, the Compensation Committee of the Board of Directors approved the achievement of all of the remaining outstanding corporate goals related to the August 2021 and October 2021 awards, resulting in the payment of the cash bonus awards and the vesting of the remaining rights to the equity-based awards, which equity-based awards remain subject to time-based vesting in equal installments on each of August 3, 2022 and August 3, 2023 (with the exception of October 4, 2022 and October 4, 2023 for one award) and the continuous service of the award recipient through the applicable vesting date. In October 2022, the Compensation Committee of the Board of Directors approved the granting of RSUs under the 2015 Plan to various employees in exchange for services provided to the Company. These RSUs vest upon the achievement of certain corporate goals focused around product development and commercialization with further time based vesting over three years, and subject to continued service. In October 2022, the Compensation Committee of the Board of Directors approved the granting of RSUs under the 2015 Plan to various employees in exchange for services provided to the Company. These RSUs vest upon the share price closing above $ 5.00 per share for a minimum of ten consecutive trading days within a period of three years from the date of grant, with further time-based vesting in a single installment six months after the timely achievement of the target, if at all, and subject to continued service. In October 2022 the Compensation Committee of the Board of Directors approved the granting of cash bonuses, payable upon achievement of various corporate goals focused around product development, manufacturing, financing and commercialization, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries. Conditional upon the achievement by January 1, 2023 and July 1, 2023 of all specified corporate goals as set forth in the minutes of the Compensation Committee, as well as continued service by the award recipients, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer paid a cash bonus to such award recipients. An aggregate of 1,144,000 RSUs were issued under the 2015 Plan in connection with the October 2022 grants and an aggregate of 1,000,000 stock options and 500,000 RSUs were issued under the 2015 Plan in connection with the August 2021 and October 2021 grants. As of December 31, 2023, the Company has recognized compensation expense of $ 901,410 in relation to the options from the 2021 grants that vested in 2023. The Company has no unrecognized compensation expense in relation to such stock options, based on the outcomes related to the prescribed performance targets on the outstanding awards. Total Amortized Amortized Amortized Un-Amortized Award 2023 2022 2021 2023 $ $ $ $ $ 969,593 - 580,412 389,181 - 901,410 270,547 450,090 180,773 - F-75 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) h) Commitments in Respect of Corporate Goals and Performance-Based Awards (continued) As of December 31, 2023, the Company has recognized compensation expense of $ 759,039 in relation to RSUs from the 2021 grants that have vested in 2023. The Company has no unrecognized compensation expense in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards. Total Amortized Amortized Amortized Un-Amortized Award 2023 2022 2021 2023 $ $ $ $ $ 822,149 - 493,207 328,942 - 759,039 228,109 379,191 151,739 - As of December 31, 2023, the Company has recognized total compensation expense of $ 1,077,417 of which $ 527,940 is in relation to RSUs from the 2022 grants that have vested in 2023, $ 325,207 is in relation to RSUs from such grants that will vest in 2024, and $ 224,270 is in relation to RSUs from such grants that will vest in 2025. The Company has unrecognized compensation expense of $ 507,679 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards. Total Vesting Amortized Amortized Award Year 2023 2022 Un-Amortized $ $ $ $ 527,940 2023 393,853 134,087 - 521,493 2024 260,119 65,088 196,286 535,663 2025 177,584 46,686 311,393 1,585,096 831,556 245,861 507,679 In September 2023, the Compensation Committee of the Board of Directors approved the granting of cash bonuses, payable upon achievement of various corporate goals focused around revenue, operations and regulatory, to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries. Conditional upon the achievement by December 31, 2023, and June 30, 2024 of specified corporate goals as set forth in the minutes of the Compensation Committee, as well as continued service by the award recipients, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer would pay a cash bonus to such award recipients. As of December 31, 2023, the Company has accrued compensation expense of $ 1,071,198 in relation to the cash bonuses to be paid upon achievement of the specified corporate goals based on the expected outcomes related to the prescribed performance targets. In September 2023, the Compensation Committee of the Board of Directors approved the granting of an aggregate of 1,569,000 RSUs under the 2015 Plan to various personnel including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries in exchange for services provided to the Company. These RSUs vest upon the achievement of certain corporate goals focused around revenue, operations and regulatory targets as of December 31, 2023, and June 30, 2024, as set forth in the minutes of the Compensation Committee, with further time based vesting over three years, and subject to continued service by the award recipient. The achievement of the corporate goals is to be determined by the Compensation Committee in its sole discretion. F-76 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) No te 10 – Commitments and Contingencies (continued) h) Commitments in Respect of Corporate Goals and Performance-Based Awards (continued) In September 2023, the Compensation Committee of the Board of Directors approved the granting of an aggregate of 450,000 RSUs under the 2015 Plan to various employees in exchange for services provided to the Company. These RSUs have an effective date of grant of October 19, 2023, vest upon the share price closing above $ 5.00 per share for a minimum of 30 consecutive trading days within a period of three years from the effective date of grant and ending October 19, 2026, with further time-based vesting in a single installment six months after the timely achievement of the target, if at all, and subject to continued service by the award recipients. The estimated fair value of the RSUs that include a market vesting condition will be measured on the grant date using a Monte Carlo Simulation of a Geometric Brownian Motion stock path model and incorporating the probability of vesting occurring. The estimated fair value of these awards will be recognized over the derived service period (as determined by the valuation model), with such recognition occurring regardless of whether the market condition is met. As of December 31, 2023, the Company had recognized total compensation expense of $ 173,986 . The Company has unrecognized compensation expense of $ 924,313 in relation to the RSUs from the 2023 grants, of which $ 271,342 in relation to RSUs that will vest in 2024, $ 318,588 in relation to RSUs that will vest in 2025, and $ 334,383 in relation to RSUs that will vest in 2026. based on the outcomes related to the prescribed performance targets on the outstanding awards. Total Vesting Amortized Award Year 2023 Un-Amortized $ $ $ 366,112 2024 94,770 271,342 366,101 2025 47,513 318,588 366,086 2026 31,703 334,383 1,098,299 173,986 924,313 Conditional upon the achievement by January 1, 2023 and July 1, 2023 of all specified corporate goals as set forth in the minutes of the Compensation Committee, as well as continued service by the award recipients, the Company at the sole discretion of the Chief Executive Officer and the Chief Financial Officer paid a cash bonus to such award recipients. As of December 31, 2023, the Company has paid compensation expense of $ 1.1 million in relation to the July 1, 2023 specified corporate goals based on the actual outcomes related to the prescribed performance targets. F-77 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 11 - Subsequent Events Equity Distribution Agreement During the period from January 1, 2024 through March 15, 2024, the Company sold 13,350 shares of common stock for aggregate proceeds (net of broker commissions and fees) of approximately $ 15,733 under the 2022 EDA. RSUs Vesting On January 13, 2024, 21,582 RSUs previously granted to a contractor vested and resulted in the issuance of 21,582 shares of common stock. On March 1, 2024, 9,000 RSUs previously granted to employees vested and resulted in the issuance of 6,057 shares of common stock. An aggregate of 2,943 shares of common stock were withheld as taxes and returned to the 2015 Plan. RSUs Granted Effective February 22, 2024, the Company granted RSUs of 14,000 shares of common stock to an employee of the Company in exchange for services provided to the Company. These RSUs vest over 3 years , with one-third vesting on each of February 22, 2025, February 22, 2026 and February 22, 2027, subject to continued service by the employee, and will result in total compensation expense of $ 13,590 . Issuance of Shares See the reference below under “ License Agreement” regarding the issuance of 129,132 shares of restricted common stock to EpiCypher. RSUs Cancellations On January 16, 2024, 36,000 RSUs previously granted to an employee were cancelled and returned as authorized shares under the 2015 Plan upon cessation of employment of such employee prior to vesting. On February 9, 2024, 2,000 RSUs previously granted to an employee were cancelled and returned as authorized shares under the 2015 Plan upon the cessation of employment of such employee prior to vesting. Cash Bonus Payments On January 24, 2024, the Compensation Committee of the Board of Directors approved the achievement of certain of the corporate milestones related to the September 28, 2023 authorization for the payment of cash bonuses to various personnel, including directors, executives, members of management, consultants and employees of the Company and/or its subsidiaries, upon the achievement of certain corporate goals focused around revenue, operations and regulatory, resulting in the vesting and payment of 85% of the cash bonuses. License Agreement On January 18. 2024, Belgian Volition entered into a License Agreement with EpiCypher, Inc., pursuant to which the Company may research, develop, manufacture and commercialize products and services using method covered by certain patents of EpiCypher. In addition to license fees and royalty payments, the Company issued shares of its restricted common stock to EpiCypher effective March 12, 2024, in a private placement. F-78 Table of Contents VOLITIONRX LIMITED Notes to Consolidated Financial Statements For Years Ended December 31, 2023 and 2022 ($ expressed in United States Dollars) Note 11 - Subsequent Events (continued) Diagnostic Oncology CRO, LLC Second A&R Master Agreement Effective February 10, 2024 the Company and DXOCRO further amended and restated the A&R Master Agreement to expand the scope of DXOCRO’s consultant services provided thereunder (the “Second A&R Master Agreement”). The Second A&R Master Agreement requires DXOCRO to conduct a prospective optimization/range finding study of Volition’s Nu.Q® H3.1 in vitro diagnostic (IVD) test proposed for use in sepsis. The study is an extension of the sepsis monitoring clinical trial that was previously covered under a separate exhibit. The Company anticipates DXOCRO’s additional services under this Agreement will be completed by the end of the third quarter of 2024 at a total additional cost to the Company of up to $ 0.7 million. The Company’s payment obligations accrue upon delivery of projects under the Agreement. The Company may terminate the Agreement or any project thereunder upon at least 30 days’ prior written notice. Unless earlier terminated, the Second A&R Master Agreement terminates on the later of December 31, 2025 or the date upon which all services have been completed. Employment Agreement On March 19, 2024, Volition Diagnostics entered into a Contract of Employment with Dr. Andrew Retter pursuant to which Dr. Retter will serve as Chief Medical Officer commencing April 1, 2024. The term of the Contract of Employment is perpetual until terminated upon at least 12 weeks’ prior notice (or such greater period as required by statute) and provides for an annual base salary of £ 180,000 payable monthly in arrears as well as contributions towards Dr. Retter’s pension. END NOTES TO FINANCIALS F-79 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.