VOLITIONRX LIMITED The following discussion of our financial condition and results of operations
should be read together with our consolidated financial statements in Part II
within this Report. This discussion includes an analysis of our financial
condition and results of operations for the years ended
Company Overview
Volition is a multi-national epigenetics company powered by Nu.Q®, its proprietary nucleosome quantification platform. Through its subsidiaries, Volition is developing simple, easy to use, cost-effective blood tests to help diagnose and monitor a range of life-altering diseases, including some cancers and diseases associated with NETosis, such as sepsis and COVID-19. Early diagnosis and monitoring have the potential to not only prolong the life of patients, but also improve their quality of life.
The tests are based on the science of Nucleosomics™, which is the practice of identifying and measuring nucleosomes in the bloodstream or other bodily fluids, since changes in these parameters are an indication that disease is present.
We have five key pillars of focus, all of which use the same proprietary Nu.Q® platform to commercialize in different areas.
· Nu.Q® Vet - cost-effective, easy-to-use cancer screening blood test for
dogs and other animals.
· Nu.Q® NETs - monitoring the immune system to save lives.
· Nu.Q® Cancer - detecting cancer early to save lives.
· Nu.Q® Capture - capturing and concentrating samples for more accurate
diagnosis.
· Nu.Q® Discover - a complete solution to profiling nucleosomes.
Our research, product development and manufacturing activities are centered in
We have identified the specific processes and resources required to achieve the near and medium-term objectives of our business plan, including personnel, facilities, equipment, research and testing materials including antibodies and clinical samples, and the protection of intellectual property. To date, operations have proceeded satisfactorily in relation to our business plan. However, it is possible that some resources will not readily become available in a suitable form or on a timely basis or at an acceptable cost. It is also possible that the results of some processes may not be as expected, and that modifications of procedures and materials may be required. Such events could result in delays to the achievement of the near and medium-term objectives of our business plan, in particular the progression of clinical validation studies and regulatory approval processes for the purpose of bringing products to the IVD market.
Our future as an operating business will depend on our ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain our operations. Management plans to address the above as needed by: (a) securing additional grant funds; (b) obtaining additional equity or debt financing; (c) granting licenses to third parties in exchange for specified up-front and/or back end payments; and (d) developing and commercializing our products on an accelerated timeline. Management continues to exercise tight cost controls to conserve cash.
Our ability to continue as a going concern is dependent upon our accomplishment of the plans described in the preceding paragraph and eventually to attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. If we are unable to obtain adequate capital, we could be forced to cease operations.
Developments-COVID-19 Pandemic
Due to the continued evolution of the COVID-19 pandemic since
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The extent of the impact of the COVID-19 pandemic on our business remains uncertain and subject to change. If there is a subsequent outbreak of COVID-19 in the future, we may experience significant delays in our clinical development timelines, which would adversely affect our business, financial condition, and results of operations.
Liquidity and Capital Resources
We have financed our operations since inception primarily through private
placements and public offerings of our common stock. As of
Net cash used in operating activities was
Net cash used in investing activities was
Net cash provided by financing activities after associated costs was
This compares with
For additional information on our "at the market facilities," refer to Note 7, Common Stock - Equity Distribution Agreements, of the Notes to consolidated financial statements.
The following table summarizes our approximate contractual payments due by year
as of
Approximate Payments (Including Interest) Due by Year
Total 2023 2024 - 2027 2028 +
Description $ $ $ $
Financing lease liabilities 541,162 57,726 230,902 252,534
Operating lease liabilities and
short-term lease 696,702 291,868 404,834 -
Grants repayable 462,302 49,283 149,126 263,893
Long-term debt 4,319,826 1,268,528 2,604,499 446,799
Collaborative agreements
obligations 879,805 798,032 81,773 -
Total 6,899,797 2,465,437 3,471,134 963,226
We intend to use our cash reserves to predominantly fund further research and development activities. We do not have any substantial source of revenues and expect to rely on additional future financing, through the sale of equity or debt securities, or the sale of licensing or distribution rights, to provide sufficient funding to execute our strategic plan. There is no assurance that we will be successful in raising further funds.
In the event additional financing is delayed, we will prioritize the maintenance
of our research and development personnel and facilities, primarily in
We have not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive activities. For these reasons, our auditors
included in their report on our audited financial statements for the year ended
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Results of Operations
Comparison of the Years Ended
The following table sets forth our results of operations for the years ended on
Percentage
Increase Increase
2022 2021 (Decrease) (Decrease)
$ $ $ $
Royalty 2,911 - 2,911 >100 %
Service 92,488 - 92,488 >100 %
Product 210,993 90,035 120,958 >100 %
Total Revenues 306,392 90,035 216,357 >100 %
Research and development 14,572,532 13,022,411 1,550,121 12 %
General and
administrative 10,937,686 11,676,446 (738,760 ) (6 %)
Sales and marketing 6,576,246 3,724,257 2,851,989 77 %
Total Operating Expenses 32,086,464 28,423,114 3,663,350 13 %
Grant income 1,229,425 1,522,533 293,108 (19 %)
Loss on disposal of
fixed assets - (26,166 ) 26,166 <(100 %)
Interest income 125,265 2,734 122,531 >100 %
Interest expense (173,087 ) (155,803 ) 17,284 11 %
Total Other Income
(Expenses) 1,181,603 1,343,298 (161,695 ) (12 %)
Net Loss (30,598,469 ) (26,989,781 ) 3,608,688 13 %
Revenues
Our operations are still transitioning from a research and development stage to
a commercialization stage. Revenue for the year ended
Operating Expenses
Total operating expenses increased to
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Research and Development Expenses
Research and development expenses increased to
2022 2021 Change
$ $ $
Personnel expenses 7,125,017 5,335,333 1,789,684
Stock based compensation 652,653 1,361,989 (709,336 )Direct research and development expenses 5,662,957 5,055,411 607,546 Other research and development
292,292 730,491 (438,199 )
Depreciation and amortization 839,613 539,187 300,426
Total research and development expenses 14,572,532 13,022,411 1,550,121
General and Administrative Expenses
General and administrative expenses decreased to$10.9 million from$11.7 million for the years endedDecember 31, 2022 andDecember 31, 2021 , respectively. The decrease in overall general and administrative expenditures during 2022 was primarily due to lower stock-based compensation in relation to modification of options, offset by higher personnel expenses. The FTE personnel number within this division increased by nine to twenty-two in 2022 compared to the prior year period. 2022 2021 Change $ $ $ Personnel expenses 5,047,242 3,944,454 1,102,788 Stock-based compensation 1,393,784 2,984,253 (1,590,469 ) Legal and professional fees 2,715,255 2,696,164 19,091 Other general and administrative 1,486,722 1,477,186 9,536 Depreciation and amortization 294,683 574,389 (279,706 )
Total general and administrative expenses 10,937,686 11,676,446 (738,760 )
Sales and Marketing Expenses
Sales and marketing expenses increased to
2022 2021 Change
$ $ $
Personnel expenses 4,400,092 2,203,745 2,196,347
Stock-based compensation 1,068,222 774,404 293,818Other Sales & Marketing expenses 1,053,807 746,108 307,699 Depreciation and amortization
54,125 - 54,125
Total sales and marketing expenses 6,576,246 3,724,257 2,851,989
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Other Income (Expenses)
For the year ended
Net Loss
For the year ended
Going Concern
We have not attained profitable operations and are dependent upon obtaining external financing to continue to pursue our operational and strategic plans. For these reasons, management has determined that there is substantial doubt that the business will be able to continue as a going concern without further financing.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Equity or Debt Financings
We may seek to obtain additional capital through the sale of debt or equity
securities if we deem it desirable or necessary. These sales may include the
sale of equity securities from time to time through our "at the market facility"
with
Critical Accounting Policies and Estimates
Our consolidated financial statements and accompanying notes have been prepared
in accordance with
We also regularly evaluate 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.
We base our estimates and assumptions on current facts, historical experiences, information from third party professionals 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. Actual results may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.
We regularly evaluate the accounting policies that we use to prepare our consolidated financial statements. A complete summary of these policies is included in the Notes to our consolidated financial statements.
We have determined that for the periods reported in this Report the following accounting policies are critical in understanding our financial condition and results of operations:
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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 are valued based on the closing stock price on the date of grant, refer to Note 8 of the consolidated financial statements for further details.
Impairment of Long-Lived Assets
In accordance with ASC 360, "Property Plant and Equipment", the Company tests
long-lived assets or asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to:
significant decreases in the market price of the asset; significant adverse
changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition or
construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than
not be sold or disposed of significantly before the end of its estimated useful
life. Recoverability is assessed based on the carrying amount of the asset and
its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An
impairment loss is recognized when the carrying amount is not recoverable and
exceeds fair value. Impairment losses of $nil and $nil were recognized during
the years ended
Foreign Currency Translation
The Company has functional currencies in Euros,
Recently Issued Accounting Pronouncements
The Company has implemented all applicable new accounting pronouncements that are in effect. The Company does not believe that there are any other applicable new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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