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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2023
Commitments and Contingencies |
Commitments And Contingencies | Note 8 – Commitments and Contingencies a) Finance Lease Obligations In 2016, the Company entered into a capital lease with ING Asset Finance Belgium S.A. (“ING”) to purchase a property located in Belgium for €1.12 million, maturing in May 2031 with implicit interest of 2.62%. As of September 30, 2023, the balance payable was $441,669. The following is a schedule showing the future minimum lease payments under finance leases by years and the present value of the minimum payments as of September 30, 2023.
2023 |  | $ | 14,236 |
2024 |  | $ | 56,941 |
2025 |  | $ | 56,941 |
2026 |  | $ | 56,942 |
2027 |  | $ | 56,943 |
Greater than 5 years |  | $ | 249,107 |
Total |  | $ | 491,110 |
Less: Amount representing interest |  | $ | (49,441 | )
Present value of minimum lease payments |  | $ | 441,669 |
b) Operating Lease Right-of-Use Obligations As of September 30, 2023, operating lease right-of-use assets and liabilities arising from operating leases were $490,468 and $518,729, respectively. During the nine months ended September 30, 2023, cash paid for amounts included for the measurement of lease liabilities was $190,825 and the Company recorded operating lease expense of $192,030. The Company’s weighted average discount rate is 2.63% and the weighted average remaining lease term is 24 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 September 30, 2023.
2023 |  | $ | 73,862 |
2024 |  | $ | 178,601 |
2025 |  | $ | 136,305 |
2026 |  | $ | 109,110 |
2027 |  | $ | 40,943 |
2028 |  | $ | 5,042 |
Total Operating Lease Obligations |  | $ | 543,863 |
Less: Amount representing interest |  | $ | (25,134 | )
Present Value of minimum lease payments |  | $ | 518,729 |
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 nine months ended September 30, 2023, the Company recognized $53,077 in short-term lease costs associated with office space leases. The annual payments remaining for short-term office leases were as follows:
2023 |  | $ | 18,415 |
2024 |  | $ | 32,376 |
Total Operating Lease Liabilities |  | $ | 50,791 |
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 €1.05 million. 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. 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 6.00% royalty on revenue, is equal to twice the amount of funding received. As of September 30, 2023, the grant balance repayable was $26,467. 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 installments 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 September 30, 2023, the grant balance repayable was $105,823. 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 installments 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 September 30, 2023, the grant balance repayable was $253,345. 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 September 30, 2023, the grant balance repayable was $97,200. As of September 30, 2023, the total grant balance repayable was $482,835 and the payments remaining were as follows:
2023 |  | $ | 50,349 |
2024 |  | $ | 27,100 |
2025 |  | $ | 35,902 |
2026 |  | $ | 43,271 |
2027 |  | $ | 48,039 |
Greater than 5 years |  | $ | 278,174 |
Total Grants Repayable |  | $ | 482,835 |
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 in December 2023. As of September 30, 2023, the principal balance payable was $27,619. 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 in December 2031. As of September 30, 2023, the principal balance payable was $172,523. 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 in September 2024. As of September 30, 2023, €1 million had been drawn down under this agreement and the principal balance payable was $317,599. In 2019, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 with a fixed interest rate of 4.80%, maturing in September 2024. As of September 30, 2023, the principal balance payable was $173,421. 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 September 30, 2023, the principal balance payable was $697,313. In 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 September 30, 2023, the principal balance payable was $317,599. In 2022, the Company entered into a 4 year loan agreement with Namur Invest for a maximum of €1.0 million with fixed interest rate of 6.00%, maturing in July 2026. As of September 30, 2023, the principal balance payable was $897,254. In 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 September 30, 2023, the principal balance payable was $529,332. 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 September 30, 2023, €200,000 had been drawn down under this agreement and the principal balance payable was $211,733. As of September 30, 2023, the total balance for long-term debt payable was $3,344,393 and the payments remaining were as follows:
2023 |  | $ | 467,217 |
2024 |  | $ | 1,191,157 |
2025 |  | $ | 763,132 |
2026 |  | $ | 542,217 |
2027 |  | $ | 294,892 |
Greater than 5 years |  | $ | 440,735 |
Total |  | $ | 3,699,350 |
Less: Amount representing interest |  | $ | (354,957 | )
Total Long-Term Debt |  | $ | 3,344,393 |
e) Collaborative Agreement Obligations In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a three-year research period for a cost to the Company of up to $2.55 million payable over such period. As of September 30, 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 $582,135. As of September 30, 2023, $nil is due 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 NuQ® H3.1 nucleosome levels in adult patients with sepsis to facilitate early diagnosis and prognostication for a cost to the Company of $198,042. As of September 30, 2023, $nil is due by the Company under this agreement. As of September 30, 2023, the total amount to be paid for future research and collaboration commitments was approximately $ 1,290,177 and the payments remaining were as follows:
2023 |  | $ | 671,388 |
2024 - 2027 |  | $ | 618,789 |
Total Collaborative Agreement Obligations |  | $ | 1,290,177 |
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 September 30, 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 September 30, 2023, $207 is payable under the 6% royalty agreement on sales to date towards the Company’s aggregate minimum royalty obligation of $116,453. 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 the agreement will be completed by the end of the fourth quarter 2023 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 September 30, 2023, $428,669 is payable under the A&R Master Agreement, and up to $354,850 may be payable by Company in future periods for services rendered. VolitionRx On February 27, 2023, the Company entered into a 9-month loan agreement with First Insurance Funding for a maximum of $356,258 with fixed interest rate of 7.42%, maturing November 2023. As of September 30, 2023, the maximum has been drawn down under this agreement and the principal balance payable was $79,168. g) Legal Proceedings In the ordinary course of business, the Company may be subject to claims, counter claims, lawsuits and other litigation of the type that generally arise from the conduct of its business. The Company knows of no legal proceedings which the Company believes will have a material adverse effect on its financial position. 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 September 30, 2023, the Company has recognized compensation expense of $901,059 in relation to the options from the 2021 grants that have vested in 2023. The Company has unrecognized compensation expense of $350 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 |  |  |  | - |
| 901,409 |  |  |  | 270,196 |  |  |  | 450,090 |  |  |  | 180,773 |  |  |  | 350 |
As of September 30, 2023, the Company has recognized compensation expense of $758,708 in relation to RSUs from the 2021 grants that have vested in 2023. The Company has unrecognized compensation expense of $331 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 |  |  |  | 227,778 |  |  |  | 379,191 |  |  |  | 151,739 |  |  |  | 331 |
As of September 30, 2023, the Company has recognized total compensation expense of $961,535 of which $522,195 is in relation to RSUs from the 2022 grants that will vest in 2023, $260,249 is in relation to RSUs from such grants that will vest in 2024, and $179,091 is in relation to RSUs from such grants that will vest in 2025. The Company has unrecognized compensation expense of $623,561 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards.
Total |  |  | Vesting |  | Amortized |  |  | Amortized |  |  | Un-Amortized |
Award |  |  | Year |  | 2023 |  |  | 2022 |  |  |  |
$ |  |  |  |  | $ |  |  | $ |  |  | $ |
| 527,940 |  |  | 2023 |  |  | 388,108 |  |  |  | 134,087 |  |  |  | 5,745 |
| 521,493 |  |  | 2024 |  |  | 195,161 |  |  |  | 65,088 |  |  |  | 261,244 |
| 535,663 |  |  | 2025 |  |  | 132,405 |  |  |  | 46,686 |  |  |  | 356,572 |
| 1,585,096 |  |  |  |  |  | 715,674 |  |  |  | 245,861 |  |  |  | 623,561 |
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 September 30, 2023, the Company has accrued compensation expense of $603,465 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. 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 September 30, 2023, the Company had recognized total compensation expense of $5,494. The Company has unrecognized compensation expense of $1,092,806 in relation to the RSUs from the 2023 grants, of which $363,120 in relation to RSUs that will vest in 2024, $364,601 in relation to RSUs that will vest in 2025, and $365,085 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 |  |  | Un-Amortized |
Award |  |  | Year |  | 2023 |  |  |  |
$ |  |  |  |  | $ |  |  | $ |
| 366,113 |  |  | 2024 |  |  | 2,993 |  |  |  | 363,120 |
| 366,101 |  |  | 2025 |  |  | 1,500 |  |  |  | 364,601 |
| 366,086 |  |  | 2026 |  |  | 1,001 |  |  |  | 365,085 |
| 1,098,300 |  |  |  |  |  | 5,494 |  |  |  | 1,092,806 |

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