Volition(VNRX) - 2020 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents unaudited financial statements highlighting a 'going concern' issue, recent equity raises, and significant subsequent events Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $20,927,729 | $16,966,168 | | Total Current Assets | $22,164,523 | $17,556,279 | | Total Assets | $26,087,571 | $21,291,292 | | Liabilities & Equity | | | | Total Current Liabilities | $4,317,909 | $3,859,874 | | Total Liabilities | $7,126,160 | $7,092,726 | | Total Stockholders' Equity | $18,961,411 | $14,198,566 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Nine Months ended Sep 30, 2020 | Nine Months ended Sep 30, 2019 | | :--- | :--- | :--- | | Total Revenues | $6,313 | $17,096 | | Research and development | $10,567,988 | $7,596,097 | | Total Operating Expenses | $15,595,009 | $12,335,037 | | Net Loss | ($15,238,380) | ($12,541,749) | | Net Loss Per Share | ($0.34) | ($0.33) | - The company has incurred losses of $105.0 million since inception and has negative cash flows from operations, raising substantial doubt about its ability to continue as a going concern[42] - In May 2020, the company completed a public offering, issuing approximately 5 million shares for aggregate gross proceeds of $13.8 million, resulting in net proceeds of $12.7 million[61] - Subsequent to the quarter end, the company raised approximately $471,600 under its equity distribution agreement, borrowed $973,000, and entered a new $25 million "at the market" offering program[122][123][129] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial results, noting increased R&D spending and a higher net loss, while highlighting liquidity from equity offerings and a going concern warning Company Overview, Developments, and Liquidity Details the company's epigenetics platform, cash position of $20.9 million, operating cash burn, and the auditors' going concern warning - The company applies its Nucleosomics platform to develop simple, cost-effective blood tests to help diagnose a range of cancers and other diseases[136] - As of September 30, 2020, the company held cash and cash equivalents of approximately $20.9 million[140] - Net cash used in operating activities increased to $13.7 million for the nine months ended September 30, 2020, from $10.1 million in the prior-year period, mainly due to higher R&D expenditures[141] - Net cash provided by financing activities was $18.5 million for the nine months ended September 30, 2020, primarily from a public offering and an Equity Distribution Agreement[145] - Auditors issued a going concern warning in their report for the year ended December 31, 2019, due to the company's history of not attaining profitable operations[150] Results of Operations Compares quarterly and nine-month results, showing a widening net loss driven by a significant increase in R&D expenses Comparison of Operations - Three Months Ended September 30 | Metric | 2020 | 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $575 | $17,096 | ($16,521) | (97%) | | R&D Expenses | $3,180,177 | $2,642,610 | $537,567 | 20% | | G&A Expenses | $1,080,308 | $1,354,992 | ($274,684) | (20%) | | Net Loss | ($4,335,948) | ($4,180,805) | $155,143 | 4% | Comparison of Operations - Nine Months Ended September 30 | Metric | 2020 | 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,313 | $17,096 | ($10,783) | (63%) | | R&D Expenses | $10,567,988 | $7,596,097 | $2,971,891 | 39% | | G&A Expenses | $4,292,666 | $4,020,893 | $271,773 | 7% | | Net Loss | ($15,238,380) | ($12,541,749) | $2,696,631 | 22% | - The increase in R&D expenses for the nine-month period was primarily related to higher antibody costs, sample costs, laboratory expenses, and personnel expenses[167] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as a smaller reporting company - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this item[181] Item 4. Controls and Procedures Management concludes disclosure controls were ineffective due to material weaknesses in financial reporting, with a remediation plan underway - Management concluded that the company's disclosure controls and procedures were not effective as of September 30, 2020[183] - Material weaknesses were identified due to insufficient segregation of duties in Finance, inadequate oversight in Information Technology, and a lack of monitoring controls for complex transactions[189] - The company is implementing a remediation plan that includes selecting a new financial reporting system to automate processes and strengthen controls[185] PART II - OTHER INFORMATION Item 1. Legal Proceedings The company is not aware of any material existing or pending legal proceedings - The company knows of no material, existing or pending legal proceedings against it[192] Item 1A. Risk Factors No material changes to risk factors have occurred since previous filings - There have been no material changes in the company's assessment of risk factors affecting its business since those presented in its Annual Report and the Q1 2020 Form 10-Q[193] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[194] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported - None[195] Item 4. Mine Safety Disclosures Mine safety disclosures are not applicable to the company's operations - Not applicable[196] Item 5. Other Information Discloses significant subsequent events, including a new CEO consulting agreement and a $25 million 'at the market' offering program - On November 10, 2020, the company entered into a new consulting services agreement for its Group Chief Executive Officer, Cameron Reynolds, with a monthly fee of $35,650[197] - On November 12, 2020, the company entered into an Equity Distribution Agreement to sell up to $25,000,000 of its common stock through an "at the market" offering program[199] Item 6. Exhibits Lists all exhibits filed with the report, including key agreements and officer certifications - The report includes several exhibits, notably the Equity Distribution Agreement (1.1), a legal opinion (5.1), a consulting services agreement (10.1), and certifications from the CEO and CFO (31.1, 31.2, 32.1)[202]