Volitionrx Ltd: Form 10-Q for the period ended Mar 31, 2025

The following discussion and analysis of our financial condition and results of operations should be read together with our Unaudited Condensed Consolidated Financial Statements and the related notes included elsewhere in this Report and in our Annual Report. This discussion and analysis contains forward-looking statements that are based on our current expectations and reflect our plans, estimates and anticipated future financial performance. These statements involve numerous risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those set forth in the section entitled “Risk Factors” in this Report and in our Annual Report, as well as our other public filings with the SEC. Please refer to the section of this Report entitled “Cautionary Note Regarding Forward-Looking Statements” for additional information.

Overview

Imagine a world where diseases like cancer and sepsis can be diagnosed early and monitored easily using routine blood tests. That’s the world Volition is trying to build by developing its innovative family of simple, easy to use, cost-effective blood tests.

Volition is a multi-national epigenetics company. It has patented technologies that use chromosomal structures, such as nucleosomes, and transcription factors as biomarkers in cancer and other diseases. The tests in the Company’s product portfolio detect certain characteristic changes that occur from the earliest stages of disease, enabling early detection and offering a better way to monitor disease progression and a patient’s response to treatment.

The tests offered by Volition and its subsidiaries are designed to detect and monitor a range of life-altering diseases, including certain cancers and diseases associated with NETosis, such as sepsis. Early diagnosis and monitoring have the potential to not only prolong the life of patients but also improve their quality of life.

We have several key pillars of focus:

• Nu.Q® Vet - cost-effective, easy-to-use blood tests for dogs and other companion animals. The Nu.Q® Vet Cancer Test is commercially available as a cancer screening test in dogs.
• Nu.Q® NETs - detects diseases associated with NETosis such as sepsis.
• Nu.Q® Discover - a complete solution to profiling nucleosomes.
• Nu.Q® Cancer - from screening, diagnosis and staging, therapy decision, planning and treatment to monitoring response to treatment and disease progression.
• Capture-PCR™ - isolating and capturing circulating tumor-derived DNA from plasma samples for early cancer detection.

Commercialization Strategy

We are guided by three underlying principles to our commercialization strategy – ensuring our products:

• Result in low capital expenditures for licensors and end users and low operating expenses for Volition,
• Are affordable, and
• Are accessible worldwide.

The principles above inform our overall commercialization strategy for our products, which is driven by the following:

• Conducting R&D in-house and through our research partners;
• Monetizing our IP with upfront payments, milestone payments, royalties, and sales of kits and key components; and
• Commercializing our products via global players and in fragmented markets through regional companies.

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We aim to partner with established diagnostic companies and/or liquid biopsy companies to market, sell, and process our tests, leveraging their networks and expertise.

We believe, given the global prevalence of cancer and diseases associated with NETosis, and the low-cost, accessible and routine nature of our tests, they could potentially be used throughout the world.

We aim to remain an IP powerhouse in the epigenetic space and expect to monetize our IP and technologies through licensing and distribution contracts with companies that have established distribution networks and expertise on a worldwide or regional basis, in both human and animal care across platforms (centralized labs and point-of-care / in-house diagnostics).

To this end, on March 28, 2022, Volition entered into a master license and product supply agreement with Heska, now an Antech Company. In exchange for granting Heska exclusive worldwide rights to sell our Nu.Q® Vet Cancer Test at the point of care for companion animals, Volition received a $10.0 million upfront payment upon signing, received $13.0 million based upon the achievement of two milestones and is eligible to receive up to an additional $5.0 million based upon the achievement of a final milestone upon the earlier of the first commercial sale by or on behalf of Heska of a screening or monitoring test for lymphoma in felines, or the nine-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. In addition, Volition has granted Heska non-exclusive rights to sell the Nu.Q® Vet Cancer Test in kit format for companion animals through Heska’s network of central reference laboratories.

We also entered into a licensing and supply agreement with IDEXX in October 2022. This contract provides worldwide customer reach through IDEXX’s global reference laboratory network as we continue to commercialize our transformational Nu.Q® technology within the companion animal healthcare sector and capitalize on the significant opportunities available. IDEXX launched the IDEXX Nu.Q® Canine Cancer Test in January 2023.

In November 2023, we launched the Nu.Q® Vet Cancer Test in the UK and Ireland through our distributor, the Veterinary Pathology Group, and in the UK through Nationwide Laboratories.

In July 2024, we launched the Nu.Q® Vet Cancer Test in Japan with Fujifilm Vet Systems Co. Ltd.

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Recent Developments

On May 15, 2025, we entered into a Securities Purchase Agreement (the “SPA”) with Lind Global Asset Management XII LLC, a Delaware limited liability company (“Lind”). Under the SPA, within ten (10) business days of signing, and subject to the satisfaction of certain closing conditions, we will receive $6,250,000 in funding from Lind in exchange for the issuance to Lind of a Senior Secured Convertible Promissory Note in the amount of $7,500,000 (the “Lind Note”) and a Common Stock Purchase Warrant for the purchase of 13,020,834 shares of our common stock at a price of $0.672 per share, subject to adjustment, and exercisable for 5 years (the “Lind Warrant”). As additional consideration to Lind, we have agreed to pay a commitment fee in the amount of $218,750, which shall be paid by deduction from the funding to be received. The Lind Note, which does not accrue interest, shall be repaid in eighteen (18) consecutive monthly installments in the amount of $416,666 beginning six months from the issuance date. The Lind Note may be converted by Lind from time to time at a price of $0.72 per share, subject to adjustment.

Liquidity and Capital Resources

We have financed our operations since inception primarily through private placements and public offerings of our common stock. As of March 31, 2025, we had cash and cash equivalents of approximately $2.6 million.

Net cash used in operating activities was $4.3 million for the three months ended March 31, 2025 and $8.3 million for the three months ended March 31, 2024, respectively. The decrease in cash used in operating activities for the period ended March 31, 2025 when compared to the same period in 2024 can be attributed to less expenditure on clinical trials.

Net cash used in investing activities was $0.0 million and $0.1 million for the three months ended March 31, 2025 and March 31, 2024, respectively. The decrease was due to a reduction in purchases of laboratory equipment in the period ended March 31, 2025, as compared to the same period in 2024 as well as the purchase of a license in the prior year period.

Net cash provided by financing activities was $3.7 million for the three months ended March 31, 2025 and net cash used in financing activities was $0.2 million for the comparable period ended March 31, 2024. The increase in cash provided by financing activities for the period ended March 31, 2025 when compared to same period in 2024 was primarily due to $2.4 million in cash, before deducting offering expenses of $0.1 million, from the issuance and sale of shares of common stock and warrants in a registered direct offering that closed in March 2025, and $0.3 million in net cash received from the issuance of shares of common stock under our “at-the-market” facility during the period ended March 31, 2025.

For additional information on our “at the market facility,” and the March 2025 registered direct offering, refer to Note 6, Common Stock – Equity Distribution Agreement and – 2025 Equity Capital Raise, of the notes to the condensed consolidated financial statements included within this Report.

The following table summarizes our approximate contractual payments due by year as of March 31, 2025.

Approximate Payments (Including Interest) Due by Year

We intend to use our cash reserves to predominantly fund further research and development, and commercialization activities. We do not have any substantial source of revenues and expect to rely on additional future financing, through the sale of licensing or distribution rights, grant funding and the sale of equity or debt securities 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 completion of clinical validation studies for the purpose of the sale of licensing or distribution rights, and the maintenance of our patent rights. In the event of an ongoing lack of financing, it may be necessary to discontinue operations, which will adversely affect the value of our common stock.

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 December 31, 2024, an explanatory paragraph regarding factors that raise substantial doubt that we will be able to continue as a going concern.

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Results of Operations

Comparison of the Three-Months Ended March 31, 2025 and March 31, 2024

The following table sets forth our results of operations for the three months ended on March 31, 2025, and March 31, 2024, respectively.

Revenues

Our operations are transitioning from a research and development focused stage to a commercialization stage. Revenues during the three-months ended March 31, 2025 were $246,385, compared with $171,535 for the three-months ended March 31, 2024. Our main source of revenue during the three months ended March 31, 2025 and March 31, 2024 was product revenues from sales of the Nu.Q® Vet Cancer Test. There was a significant increase in service revenue during the three months ended March 31, 2025 as compared to the same period in 2024.

Operating Expenses

Total operating expenses decreased to $5.8 million for the three months ended March 31, 2025 from $8.6 million for the three months ended March 31, 2024, as a result of the factors described below.

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Research and Development Expenses

Research and development expenses decreased to $2.6 million from $4.6 million for the three-months ended March 31, 2025, and March 31, 2024, respectively. This decrease was primarily related to decreased direct research and development expenses due to completion of clinical trials with DXOCRO in 2024 and lower personnel expenses. The number of full-time equivalent (“FTE”) personnel we employed in this division decreased by 14 to 52 compared to the prior year period.

General and Administrative Expenses

General and administrative expenses decreased to $2.2 million from $2.3 million for the three-months ended March 31, 2025, and March 31, 2024, respectively. The reduction is due to lower other general and administrative expenses offset by increased stock-based compensation during the period. The FTE personnel number within this division decreased by 1 to 19 compared to the prior year period.

Sales and Marketing Expenses

Sales and marketing expenses decreased to $0.9 million from $1.7 million for the three-months ended March 31, 2025, and March 31, 2024, respectively. The decrease was primarily due to lower personnel expenses, direct marketing and professional fees and stock-based compensation during the period. The FTE personnel number within this division decreased by 11 to 11 compared to the prior year period.

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Other Income (Expenses)

For the three-months ended March 31, 2025, the Company’s other income was $45,093 compared to other expenses of $87,501 for the three-months ended March 31, 2024. This increase in other income was due to grant income earned during the three-month period ended March 31, 2025.

Net Loss

For the three-months ended March 31, 2025, the Company’s net loss was $5.5 million, a decrease of approximately $3.0 million in comparison to a net loss of $8.5 million for the three-months ended March 31, 2024. The change was a result of the factors described above.

Going Concern

We have not attained profitable operations on an ongoing basis 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

There have been no material changes to our 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 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 an “at the market offering program” under our Capital On DemandTM Sales Agreement. See Note 9, Subsequent Events – 2025 ATM Sales Agreement, of the notes to the condensed consolidated financial statements included within this Report. However, we may be unable to obtain such additional capital when needed, or on terms favorable to us or our stockholders, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or such equity securities may provide for rights, preferences or privileges senior to those of the holders of our common stock. If additional funds are raised through the issuance of debt securities, the terms of such securities may place restrictions on our ability to operate our business.

Critical Accounting Policies and Estimates

Our interim condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles, or GAAP, applied on a consistent basis. The preparation of financial statements in conformity with 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 periods.

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 we believe 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 and estimates that we use to prepare our financial statements. A summary of these policies is included in the notes to our financial statements. There have been no material changes to the critical accounting policies and key estimates and assumptions disclosed in the section titled “Critical Accounting Policies and Estimates” in Part II, Item 7 within our Annual Report.

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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Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded, as they previously concluded as of December 31, 2024, that our disclosure controls and procedures were not effective as of March 31, 2025, because of material weaknesses in our internal control over financial reporting, as referenced below and described in detail in our Annual Report.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We identified a material weakness in our internal controls over financial reporting. In particular we do not have sufficient written documentation of our internal control policies and procedures, including written policies and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.

Notwithstanding the material weakness, we believe that our financial statements contained in this Report fairly present our financial position, results of operations and cash flows for the periods covered by this Report in all material respects.

Our management, with the oversight of our audit committee, has initiated steps and plans to take additional measures to remediate the underlying causes of the material weakness, which we currently believe will be primarily through revising precision level management review controls and gaining additional assurance regarding our outside service providers’ quality control procedures. It is possible that we may determine that additional remediation steps will be necessary in the future.

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Planned Remediation of Material Weakness

Our management has been actively engaged in developing and implementing remediation plans to address material weakness described above. These remediation efforts are ongoing and include or are expected to include:

• replacing our outside service providers to centralize the accounting function in-house;
• engaging internal control consultants to assist us in performing a financial reporting risk assessment as well as identifying and designing our system of internal controls necessary to mitigate the risks identified;
• preparation of written documentation of our internal control policies and procedures; and
• we have engaged external consultants to provide support and to assist us in our evaluation of more complex applications of GAAP.

We continue to enhance corporate oversight over process-level controls and structures to ensure that there is appropriate assignment of authority, responsibility, and accountability to enable remediation of our material weakness. We believe that our remediation plan will be sufficient to remediate the identified material weakness and strengthen our internal control over financial reporting. As we continue to evaluate, and work to improve, our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary.

Changes in Internal Control over Financial Reporting

Except for the ongoing remediation of the material weakness in internal controls over financial reporting noted above, no changes in our internal control over financial reporting were made during the three months ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations of the Effectiveness of Disclosure Controls and Internal Controls

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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There have been no material changes in our assessment of risk factors affecting our business since those presented in Part I, Item 1A of our Annual Report.