VOLITIONRX LTD

Note 1 – Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of VolitionRx Limited (the “Company” or “VolitionRx”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all the information and footnotes required by GAAP for complete financial statements. The December 31, 2023 consolidated balance sheet data was derived from audited financial statements but do not include all disclosures required by GAAP. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 25, 2024 (the “Annual Report”). The interim unaudited condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Annual Report. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Reclassifications

Certain reclassifications within operating expenses have been made to the prior period’s financial statements to conform to the current period financial statement presentation. There is no impact in total to the results of operations and cash flows in all periods presented.

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. These amendments are to be applied retrospectively. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which enhances the transparency and decision usefulness of income tax disclosures by requiring; (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. These amendments are to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact this standard will have on its condensed consolidated financial statements.

The Company currently believes there are no other issued and not yet effective accounting standards that are materially relevant to its condensed consolidated financial statements.

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

Fair Value Measurements

Pursuant to ASC 820, “Fair Value Measurements and Disclosures,” an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the assets or liabilities such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The financial instruments of the Company consist primarily of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, debt, and a warrant liability. These items are considered Level 1 due to their short-term nature and their market interest rates, except for the warrant liability, which is considered Level 2 and is recorded at fair value at the end of each reporting period.

Included in the following table are the Company’s major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2024.

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies (continued)

As of December 31, 2023, the warrant liability was $126,649. The following table provides a roll-forward of the warrant liability measured at fair value on a recurring basis for the six months ended June 30, 2024, as follows:

Basic and Diluted Net Loss Per Share

The Company computes net loss per share in accordance with ASC 260, “Earnings Per Share,” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statement of operations and comprehensive loss. Basic EPS is computed by dividing net loss available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. As of June 30, 2024,9,297,073 potential common shares equivalents from warrants, options, and restricted stock units (“RSUs”) were excluded from the diluted EPS calculations as their effect is anti-dilutive.

Note 2 – Liquidity and Going Concern Assessment

The Company's condensed consolidated financial statements are prepared using GAAP applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Management assesses liquidity and going concern uncertainty in the Company’s consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the financial statements are issued, which is referred to as the “look-forward period,” as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management considered various scenarios, forecasts, projections, estimates and made certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors.

For the six months ended June 30, 2024, the Company incurred a net loss of $15.5 million and used cash flows in operating activities of $15.1 million. As of June 30, 2024, the Company had cash and cash equivalents of $6.0 million and an accumulated deficit of $217.9 million.

The Company has generated operating losses and has experienced negative cash flows from operations since inception. The Company has not generated significant revenues and expects to incur further losses in the future, particularly from continued development of its clinical-stage diagnostic tests and commercialization activities. The future of the Company as an operating business will depend on its ability to obtain sufficient capital contributions, financing and/or generate revenues as may be required to sustain its operations. Management plans to address the above as needed by, (a) granting licenses and/or distribution rights to third parties in exchange for specified up-front and/or back-end payments, (b) obtaining additional financing through debt or equity transactions, (c) securing additional grant funds, and (d) developing and commercializing its products in an efficient manner. Management continues to exercise tight cost controls to conserve cash. As part of the Company’s cash conservation efforts, directors and certain employees have elected to exchange a portion of their salary for RSUs in the Company for a period of up to six months.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and to eventually attain profitable operations.

Management assessed the mitigating effect of its plans to determine if it is probable that the plans would be effectively implemented within one year after the condensed consolidated financial statements are issued and when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. These plans are subject to market conditions and reliance on third parties, and there is no assurance that effective implementation of the Company’s plans will result in the necessary funding to continue current operations and satisfy current and expected debt obligations. The Company has implemented short-term cash preservation and cost-saving initiatives to conserve cash. The Company concluded that these plans do not alleviate the substantial doubt about the Company’s ability to continue as a going concern beyond one year from the date the condensed consolidated financial statements are issued.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

** VOLITIONRX LIMITED**

Note 3 - Property and Equipment

The Company’s property and equipment consisted of the following amounts as of June 30, 2024 and December 31, 2023:

During the six-month periods ended June 30, 2024 and June 30, 2023, the Company recognized $545,128 and $517,921, respectively, in depreciation expense.

Note 4 - Intangible Assets

The Company’s intangible assets consist of patents, mainly acquired in the acquisition of Belgian Volition. The patents are being amortized over the assets’ estimated useful lives, which range from 8 to 20 years.

During the six-month periods ended June 30, 2024 and June 30, 2023, the Company recognized $(12,624) and $42,392, respectively, in amortization expense.

The Company amortizes the patents and licenses on a straight-line basis with terms ranging from 8 to 20 years. The annual estimated amortization schedule over the next five years is as follows:

The Company periodically reviews its long-lived assets to ensure that their carrying value does not exceed their fair market value. The Company carried out such a review in accordance with ASC 360 “Property, Plant and Equipment,” as of December 31, 2023. The result of this review confirmed that the ongoing value of the patents was not impaired as of December 31, 2023.

No****te 5 - Related-Party Transactions

See Note 6,Common Stock, for common stock issued to related parties and Note 7,Stock-Based Compensation, for stock options, warrants and RSUs issued to related parties. The Company has agreements with related parties for the purchase of consultancy services which are accrued under management and directors’ fees payable (see condensed consolidated balance sheets).

** VOLITIONRX LIMITED**

Note 6 - Common Stock

As of June 30, 2024, the Company was authorized to issue 100 million shares of common stock, par value $0.001 per share, of which 82,928,314 and 81,898,321 shares were issued and outstanding as of June 30, 2024 and December 31, 2023, respectively.

Stock Option Exercises

During the six months ended June 30, 2024, no shares of common stock were issued pursuant to the exercise of stock options.

Stock Options****Expired / Cancelled

On April 16, 2024,36,821 vested stock options previously granted to an employee were cancelled and returned as authorized shares under the 2015 Plan on the expiration of the exercise period following the resignation of such employee.

RSU Settlements

Below is a table summarizing the RSUs vested and settled during the six months ended June 30, 2024, all of which were issued pursuant to the 2015 Plan.

Warrants Issued in Equity Capital Raise

In connection with the June 2023 underwritten public offering of the Company’s common stock pursuant to the underwriting agreement with Prime Executions, Inc. dba Freedom Capital Markets (“Freedom”) dated June 1, 2023, the Company issued Freedom warrants to purchase an aggregate of 448,500 shares of Company common stock at an exercise price of $2.00 per share. The Company evaluated the warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and applicable authoritative guidance in ASC 480 and ASC 815-40. The Company determined the warrants issued to Freedom failed the indexation guidance under ASC 815-40, specifically, the warrants provide for a Black-Scholes value calculation in the event of certain transactions (“Fundamental Transactions”), which includes a floor on volatility utilized in the value calculation at 100% or greater. The Company has determined that this provision introduces leverage to the holders of the warrants that could result in a value that would be greater than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares. Accordingly, pursuant to ASC 815-40, the Company has classified the fair value of the warrants as a liability upon issuance and marked to market each reporting period in the Company’s consolidated statement of operations until their exercise or expiration.

Note 6 - Common Stock (continued)

Warrants Issued in Equity Capital Raise (continued)

The fair value of the warrants as of June 30, 2024, and December 31, 2023, were $101,097 and $126,649 respectively. The warrant liability was estimated using the Black-Scholes pricing model with the following assumptions.

The fair value of the warrants deemed to be a liability, due to certain contingent put features, was determined using the Black-Scholes option pricing model, which was deemed to be an appropriate model due to the terms of the warrants issued, including a fixed term and exercise price.

Common Stock Issued for EpiCypher License Agreement

On March 12, 2024, the Company issued 129,132 shares of restricted common stock to EpiCypher, Inc. at a price of $0.97 per share as partial consideration for license rights in connection with a License Agreement between EpiCypher and Belgian Volition.

Equity** **Distribution Agreement

On May 20, 2022, the Company entered into an equity distribution agreement (the “2022 EDA”) with Jefferies LLC (“Jefferies”) to sell shares of the Company’s common stock, with an aggregate offering price of up to $25.0 million, from time to time through an “at the market” offering pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-259783) effective November 8, 2021) (the “2021 Form S-3”) through Jefferies acting as the Company’s agent and/or principal. The Company is not obligated to sell any shares under the 2022 EDA.

During the six months ended June 30, 2024, the Company raised aggregate net proceeds (net of broker commissions and fees) of approximately $605,221 under the 2022 EDA through the sale of 747,505 shares of its common stock. As of June 30, 2024, the Company has raised aggregate net proceeds (net of broker commissions and fees) of approximately $2.1 million under the 2022 EDA through the sale of 1,378,037 shares of its common stock.

Note 7 – Stock-Based Compensation

a**) Warrants**

The following table summarizes the changes in warrants of the Company outstanding during the six-month period ended June 30, 2024.

Below is a table summarizing the warrants issued and outstanding as of June 30, 2024, which have an aggregate weighted average remaining contractual life of 3.33 years.

Stock-based compensation expense related to warrants of $5,238 and $20,320 was recorded in the six months ended June 30, 2024 and June 30, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested warrants is $nil. As of June 30, 2024, the total intrinsic value of warrants outstanding was $nil.

b) Options

The following table summarizes the changes in options outstanding of the Company during the six-month period ended June 30, 2024.

b**) Options (continued)**

Below is a table summarizing the options issued and outstanding as of June 30, 2024, all of which were issued pursuant to the Company’s 2011 Equity Incentive Plan (for option issuances prior to 2016) or the 2015 Stock Incentive Plan (the “2015 Plan”) (for option and RSU issuances commencing in 2016)and which have an aggregate weighted average remaining contractual life of 3.71 years. As of June 30, 2024, an aggregate of 9,700,000 shares of common stock were authorized for issuance under the 2015 Plan, of which 354,782 shares of common stock remained available for future issuance thereunder.

Stock-based compensation expense related to stock options of $nil and $235,368 was recorded in the six months ended June 30, 2024 and June 30, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested stock options is $nil. As of June 30, 2024, the total intrinsic value of stock options outstanding was $nil.

c**) Restricted Stock Units**

Below is a table summarizing the RSUs issued and outstanding as of June 30, 2024, all of which were issued pursuant to the 2015 Plan.

Below is a table summarizing the RSUs granted during the six months ended June 30, 2024, all of which were issued pursuant to the 2015 Plan. The RSUs vest equally over periods stated on the dates noted, subject to the recipient’s continued service to the Company, and will result in the RSU compensation expense stated. On June 1, 2024, the Company granted 297,340 RSUs of common stock to certain directors and employees in exchange for their election to reduce their cash compensation for a period of three months for services provided to the Company. These RSUs will vest on May 1, 2025, subject to continued service by the recipient.

Below is a table summarizing the RSUs vested and settled during the six months ended June 30, 2024, all of which were issued pursuant to the 2015 Plan.

Below is a table summarizing the RSUs cancelled during the six months ended June 30, 2024, all of which were originally issued pursuant to the 2015 Plan.

Below is a table summarizing the RSUs issued and outstanding as of June 30, 2024 and which have an aggregate weighted average remaining contractual life of 1.37 years.

Stock-based compensation expense related to RSUs of $614,028 and $1,030,143 was recorded in the six months ended June 30, 2024 and June 30, 2023, respectively. Total remaining unrecognized compensation cost related to non-vested RSUs is $1,256,598.

Note 8 – Commitments and Contingencies

a) Finance Lease Obligations

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 June 30, 2024.

b) Operating Lease Right-of-Use Obligations

Operating leases as of June 30, 2024, and December 31, 2023, consisted of the following:

During the six months ended June 30, 2024, cash paid for amounts included for the measurement of lease liabilities was $125,313 and the Company recorded operating lease expense of $126,217.

Note 8 – Commitments and Contingencies

b) Operating Lease Right-of-Use Obligations (continued)

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 June 30, 2024.

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 six months ended June 30, 2024, the Company recognized $40,334 in short-term lease costs associated with office space leases. The annual payments remaining for short-term office leases were as follows:

**c)**Grants Repayable

As of June 30, 2024, the total grant balance repayable was $464,108 and the payments remaining were as follows:

d) Long-Term Debt

As of June 30, 2024, the total balance for long-term debt payable was $4,908,499 and the payments remaining were as follows:

e) Collaborative Agreement Obligations

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for athree-year research period for a cost to the Company of up to $2.55 million payable over such period. As of June 30, 2024, $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 $449,406. As of June 30, 2024, $449,406 is still to be paid by the Company under this agreement. As of June 30, 2024, $204,087 is due by the Company under this agreement.

In July 2023, the Company entered into a research agreement with Xenetic Biosciences Inc and CLS Therapeutics Ltd to evaluate the anti-tumoral effects of Nu.Q® CAR T cells for a cost to the Company of $107,589. As of June 30, 2024, $81,447 is still to be paid by the Company under this agreement and as of June 30, 2024, $26,142 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 Nu.Q®H3.1 nucleosome levels in adult patients with sepsis to facilitate early diagnosis and prognostication for a cost to the Company of $164,235. As of June 30, 2024, $164,235 is still to be paid by the Company under this agreement. As of June 30, 2024, $nil is due by the Company under this agreement.

In January 2024, the Company entered into an agreement with the University Medical Centre Amsterdam (“UMC”). UMC will perform a retrospective study to evaluate the diagnostic potential of the Nu.Q® H3.1 nucleosomes as diagnostic, prognostic and phenotyping biomarkers in sepsis for a cost to the Company of $138,653. As of June 30, 2024, $138,653 is still to be paid by the Company under this agreement. As of June 30, 2024, $46,218 is due by the Company under this agreement.

e) Collaborative Agreement Obligations (continued)

As of June 30, 2024, the total amount to be paid for future research and collaboration commitments was $1,343,741 and the payments remaining were as follows:

f) Other Commitments

Volition Germany

As of June 30, 2024, $209 is payable under the royalty agreement with the founder of Volition’s former German subsidiary based on sales to date towards the Company’s aggregate minimum royalty obligation of $117,761.

Volition America

Effective February 10, 2024 the Company and Diagnostic Oncology CRO, LLC (“DXOCRO”) further amended and restated the August 2022 amended and restated Master Agreement by and between the Company and DXOCRO to expand the scope of DXOCRO’s consultant services provided thereunder (the “Second A&R Master Agreement”). The Second A&R Master Agreement requires DXOCRO to conduct a prospective optimization/range finding study of Volition’s Nu.Q® H3.1 in vitro diagnostic test proposed for use in sepsis. The study is an extension of the sepsis monitoring clinical trial that was previously covered under a separate exhibit. The Company anticipates DXOCRO’s additional services under this agreement will be completed by the end of the third quarter of 2024 at a total additional cost to the Company of up to $0.7 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 Second A&R Master Agreement terminates on the later of December 31, 2025 or the date upon which all services have been completed. As of June 30, 2024, $146,221 is payable under the Second A&R Master Agreement, and up to $363,778 may be payable by the Company in future periods for services rendered.

VolitionRx

On February 5, 2024, the Company entered into a 9-month loan agreement with First Insurance Funding for a maximum of $294,603 with fixed interest rate of 8.42%, maturing in November 2024. As of June 30, 2024, the maximum has been drawn down under this agreement and the principal balance payable was $163,668. The agreement is in relation to the directors and officers insurance policy.

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

As of June 30, 2024, the Company has recognized total compensation expense of $1,291,594 of which $527,940 is in relation to RSUs from grants in 2022 that vested in 2023, $451,490 is in relation to RSUs from such grants that will vest in 2024, and $312,164 is in relation to RSUs from such grants that will vest in 2025. The Company has unrecognized compensation expense of $282,823 in relation to such RSUs, based on the outcomes related to the prescribed performance targets on the outstanding awards.

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. Pursuant to the terms of the grants, 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 to the Company, 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 June 30, 2024, the Company has accrued compensation expense of $536,535 in relation to cash bonuses payable on the achievement of specified corporate goals based on the expected outcomes related to the prescribed performance targets. To the extent this is payable, this cash bonus compensation payment has currently been deferred indefinitely.

As of June 30, 2024, the Company had recognized total compensation expense of $335,013. The Company has unrecognized compensation expense of $390,276 in relation to the RSUs from grants in 2023, of which $59,290 is in relation to RSUs that will vest in 2024, $150,277 in relation to RSUs that will vest in 2025, and $180,709 in relation to RSUs that will vest in 2026 based on the outcomes related to the prescribed performance targets on the outstanding awards.

Note 9 – Subsequent Events

Settlement of RSUs

On July 13, 2024,4,667 RSUs previously granted to various employees vested and resulted in the issuance of 3,165 shares of common stock.1,502 shares of common stock were withheld for taxes and returned to the 2015 Plan.

RSUs Granted

Effective July 1, 2024, the Company granted RSUs of 38,198 shares of common stock to an employee of the Company in exchange their valid election to reduce their cash compensation for a period of three months for services provided to the Company. These RSUs will vest on June 1, 2025, subject to continued service by the employee.

Effective July 8, 2024, the Company granted RSUs of 21,583 shares of common stock to an advisor of the Company and/or its subsidiaries in exchange for services provided to the Company and/or its subsidiaries. These RSUs vest upon the achievement of advisory services set out in the agreement with 21,583 vesting on January 1, 2025, subject to continued service, and will result in total compensation expense of $13,209.

RSUs Cancelled

On July 12, 2024,19,666 RSUs previously granted to an employee were cancelled and returned as authorized and unissued shares under the 2015 Plan upon termination of employment prior to vesting.

On August 4, 2024,46,333 RSUs previously granted to an employee were cancelled and returned as authorized and unissued shares under the 2015 Plan upon termination of employment prior to vesting.

Increase in Authorised Capital

At the Annual Meeting on July 2, 2024, the Company’s stockholders approved a Certificate of Amendment of the Second Amended and Restated Certificate of Incorporation providing for an increase in authorized shares from one hundred million (100,000,000) to one hundred seventy-five million (175,000,000) shares, consisting of one hundred seventy-five million (175,000,000) shares of common stock, par value $0.001 per share.

Equity Capital Raise

On August 8, 2024, the Company entered into a securities purchase agreement with a purchaser pursuant to which the Company issued and sold to such purchaser, in a registered direct offering under the 2021 Form S-3, an aggregate of 9,170,000 shares of the Company’s common stock, pre-funded warrants to purchase up to 3,557,273 shares of the Company’s common stock (the “Pre-Funded Warrants”), Series A common stock warrants to purchase up to 12,727,273 shares of the Company’s common stock (the “Series A Warrants”) and Series B common stock warrants to purchase up to 12,727,273 shares of the Company’s common stock (the “Series B Warrants” and, together with the Series A Warrants, the “Common Warrants”). The exercise prices of the Pre-Funded Warrants and the Common Warrants are $0.001 per share and $0.57 per share, respectively. H.C. Wainwright & Co. acted as the exclusive placement agent for the Company in the offering. The combined offering price for a share of common stock and accompanying Common Warrants was $0.55 and the combined offering price for a Pre-Funded Warrant and accompanying Common Warrants was $0.549. The net proceeds received by the Company for the issuance and sale of the shares of Common Stock, the Pre-Funded Warrants and the Common Warrants (collectively, the “Securities”) was $6.4 million, before deducting offering expenses of $0.1 million paid by the Company. In addition, the Company issued warrants to purchase an aggregate of 381,818 shares of Company common stock to the placement agent, on substantially the same terms as the Series B Warrants at an exercise price of $0.6875 per share. The net proceeds above assumes the exercise of the Pre-Funded Warrants but excludes any proceeds arising from the exercise of the Common Warrants or the Placement Agent Warrants.

END NOTES TO FINANCIALS