Volition(VNRX) - 2023 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the unaudited financial statements and management's discussion of the company's financial condition and operational results Item 1. Financial Statements (Unaudited) This section presents VolitionRx Limited's unaudited condensed consolidated financial statements, highlighting a significant net loss and a 'going concern' warning Condensed Consolidated Balance Sheets As of September 30, 2023, the company reported $10.8 million in cash, $18.0 million in total assets, and a $2.9 million stockholders' deficit Condensed Consolidated Balance Sheet Highlights (in USD) | Balance Sheet Item | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,808,747 | $10,867,050 | | Total Current Assets | $12,197,319 | $12,172,145 | | Total Assets | $18,040,868 | $18,295,054 | | Liabilities & Equity | | | | Deferred revenue | $10,000,000 | $10,000,000 | | Total Current Liabilities | $17,654,144 | $17,386,087 | | Total Liabilities | $20,892,177 | $21,422,016 | | Total Stockholders' Equity (Deficit) | ($2,851,309) | ($3,126,962) | Condensed Consolidated Statements of Operations and Comprehensive Loss For the nine months ended September 30, 2023, revenues increased to $531,329, but operating expenses and net loss also rose significantly Statement of Operations Summary (in USD) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Total Revenues | $531,329 | $186,677 | | Research and development | $15,007,623 | $11,202,902 | | Total Operating Expenses | $27,778,450 | $23,956,085 | | Operating Loss | ($27,247,121) | ($23,769,408) | | Net Loss | ($26,877,374) | ($23,262,281) | | Net Loss Per Share (Basic & Diluted) | ($0.39) | ($0.42) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly increased to $24.5 million, while financing activities provided $25.2 million, resulting in stable cash balances Cash Flow Summary (Nine Months Ended Sep 30, in USD) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net Cash Used In Operating Activities | ($24,510,735) | ($9,474,055) | | Net Cash Used In Investing Activities | ($775,027) | ($991,430) | | Net Cash Provided By Financing Activities | $25,212,215 | $6,012,068 | | Net change in cash and cash equivalents | ($58,303) | ($4,165,244) | | Cash and cash equivalents – End of Period | $10,808,747 | $16,416,069 | Notes to the Condensed Consolidated Financial Statements The notes detail accounting policies, 'going concern' issues, equity transactions, and significant future commitments, including deferred revenue and public offerings - The company has incurred losses of $193.9 million since inception and has had negative cash flows from operations, which raises substantial doubt about its ability to continue as a going concern[75] - The company received a $10.0 million upfront payment from Heska Corporation in 2022, which is recorded as deferred revenue as of September 30, 2023[49][51] - In 2023, the company raised approximately $25.6 million in net proceeds from two underwritten public offerings of its common stock[94][95] - As of September 30, 2023, the company has significant future commitments, including $3.7 million for long-term debt, $1.3 million for collaborative agreements, and $0.6 million for lease liabilities[197] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's commercialization strategy across five key pillars, highlighting increased revenues and operating expenses, and reliance on future financing Company Overview and Commercialization Strategy VolitionRx, an epigenetics company, focuses on monetizing its IP through licensing and distribution partnerships for its blood tests, including agreements with Heska and IDEXX - The company's focus is on five key pillars: Cancer detection, Nu.Q® Vet, Nu.Q® NETs (immune system monitoring), Nu.Q® Capture (sample concentration), and Nu.Q® Discover (nucleosome profiling)[180][185] - A key part of the strategy is forming partnerships, such as the master license and supply agreement with Heska Corporation, which included a $10 million upfront payment and potential for $18 million in milestones[187] - The company also has a licensing and supply agreement with IDEXX Laboratories to commercialize its Nu.Q® technology for companion animals through IDEXX's global reference laboratory network[188] Liquidity and Capital Resources The company held $10.8 million in cash, with significant cash used in operations offset by financing activities, and faces 'going concern' doubts due to reliance on future funding - Cash and cash equivalents were approximately $10.8 million as of September 30, 2023[192] - Net cash used in operating activities increased to $24.5 million for the nine months ended Sep 30, 2023, from $9.5 million in the prior year period, largely because a $10.0 million payment from Heska was received in 2022[193] - The company's auditors have expressed substantial doubt about its ability to continue as a going concern due to its history of losses and reliance on external financing[199] Results of Operations Revenues grew over 180% due to product sales, but R&D expenses increased by 34%, widening the net loss for both the nine and three-month periods Comparison of Nine Months Ended September 30 (in USD) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $531,329 | $186,677 | >100% | | Research and development | $15,007,623 | $11,202,902 | 34% | | Total Operating Expenses | $27,778,450 | $23,956,085 | 16% | | Net Loss | ($26,877,374) | ($23,262,281) | 16% | - The increase in R&D expenses was primarily driven by costs associated with clinical trials with DXOCRO and higher personnel expenses[217] Comparison of Three Months Ended September 30 (in USD) | Metric | 2023 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $165,211 | $32,714 | >100% | | Research and development | $4,650,658 | $4,002,212 | 16% | | Total Operating Expenses | $8,818,266 | $8,025,670 | 10% | | Net Loss | ($8,453,188) | ($7,812,271) | 8% | Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, VolitionRx is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, VolitionRx is not required to disclose quantitative and qualitative information about market risk[232] Item 4. Controls and Procedures Management concluded that disclosure controls were ineffective due to material weaknesses in internal control over financial reporting, with remediation steps underway and planned - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting[235] - Remediation steps taken include hiring specialists, changing reporting lines to improve segregation of duties, engaging additional resources for control design, and implementing additional month-end review procedures[237][241] - Future remediation plans include hiring additional finance resources and strengthening internal processes and documentation[238][241] PART II - OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other disclosures, and exhibits Item 1. Legal Proceedings The company is not aware of any material, existing, or pending legal proceedings against it - The company knows of no material, existing or pending legal proceedings against it[245] Item 1A. Risk Factors There have been no material changes to the company's risk factors since its last Annual Report on Form 10-K - There have been no material changes in the company's assessment of risk factors since its last Annual Report[246] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[247] Item 5. Other Information The company reported no other information under this item for the period - None[250] Item 6. Exhibits This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and Inline XBRL documents - Key exhibits filed include Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002[251][252] Signatures This section contains the official signatures authorizing the report - The report was duly signed and authorized by the Chief Financial Officer and Treasurer[254]