Interim Results

August 8, 2018

Verseon Corporation

("Verseon" or the "Company")

Interim Results

Fremont, Calif.- Verseon (AIM:VSN), a technology-based pharmaceutical company employing a computer-driven platform to develop a diverse drug pipeline, today announces its Interim Results for the six months ended June 30, 2018. The report and accounts are available for download from the Company's website (www.verseon.com).

Highlights

Precision oral anticoagulants (PROACs)

Targeting long-term therapy in combination with antiplatelet therapy

· Submitted phase I protocol for lead PROAC, VE-1902, and expecting first-in-human trials to start in Q3 2018.

· Successfully validated biomarkers for use in phase I trial in ex vivo studies.

· Second PROAC, VE-2851, is in CMC scale-up for kgs of material and is expected to enter clinical trials in 2019.

Oral diabetic macular edema drugs

Replacing or complementing current eye injections

ü Demonstrated oral bioavailability and efficacy for VE-4840 in preclinical studies.

Oral hereditary angioedema drugs

Providing an alternative to current injections

ü Demonstrated oral bioavailability and efficacy for VE-4062 in preclinical studies.

Next-generation chemotherapy agents

Addressing multidrug resistant cancers

ü Presented candidates that are largely unaffected by common modes of drug resistance to scientific community.

Conference presentations

Presenting our pipeline to the scientific, medical, and pharmaceutical community

ü American Association for Cancer Research annual meeting, Chicago/IL (oncology).

ü Association for Research in Vision and Ophthalmology 2018 annual meeting, Honolulu/HI (DME).

ü BIO 2018, Boston/MA (anticoagulation).

Finance

Results for the six months ended June 30, 2018:

· As of June 30, 2018, total assets on the balance sheet stood at $68.3 million, including cash, cash equivalents, and short-term investments of $19.2 million, compared to $54.2 million and $11.6 million, respectively, at December 31, 2017.

· Operating expenses totaled $10.2 million for the six months ended June 30, 2018, compared to $9.5 million for the six months ended June 30, 2017.

· The resultant net loss was $10.2 million or $0.07 per basic share for the six months ended June 30, 2018, compared to a net loss of $8.8 million or $0.06 per basic share for the six months ended June 30, 2017.

· Closed $22.2 million mortgage for the Company's laboratory and administrative facility, converting a portion of the value of the facility to cash.

About Verseon

Verseon Corporation (www.verseon.com, AIM: VSN) is a technology-based pharmaceutical company that pairs a proprietary, computational drug discovery platform with a comprehensive in-house chemistry and biology workflow to develop novel therapeutics that are unlikely to be found using conventional methods. The Company is applying its platform to a growing drug pipeline and currently has four active drug programs in the areas of anticoagulation, diabetic macular edema, hereditary angioedema, and oncology.

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Forward-Looking Statements

This press release contains forward-looking statements, which are generally statements that are not historical facts. Forward-looking statements can be identified by the words "expects," "anticipates," "believes," "intends," "estimates," "plans," "will," "outlook," and similar expressions. Forward-looking statements are based on management's current plans, estimates, assumptions, and projections, and speak only as of the date they are made. We undertake no obligation to update any forward-looking statement in light of new information or future events, except as otherwise required by law. Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and are generally beyond our control. Actual results or outcomes may differ materially from those implied by the forward-looking statements as a result of the impact of a number of factors.

Precision oral anticoagulants (PROACs)

We are developing first-in-class precision oral anticoagulants (PROACs) with the potential to treat major cardiovascular diseases.

In particular, our PROACs may be suitable for co-administration with antiplatelet drugs to prevent stroke or heart attack in the many patients with acute coronary syndrome and those with both non-valvular atrial fibrillation and coronary artery disease. No current anticoagulant is suitable for such long-term anticoagulant-antiplatelet combination therapy due to their high bleeding risk.

Outstanding preclinical profile

In preclinical testing, PROACs modulate the coagulation cascade more precisely than current novel oral anticoagulants (NOACs): They prevent thrombus formation while leaving thrombin-mediated platelet activation largely unaffected. This provides a rationale for their significantly lower bleeding risk in preclinical studies.

If this profile is confirmed in clinical trials, PROACs may provide physicians with a new precision medicine approach, allowing them to regulate platelet function and fibrinogen cleavage independently in long-term anticoagulant-antiplatelet combination therapy. Such therapy could benefit millions of patients worldwide.

Lead PROAC ready for the clinic

In July, we submitted a phase I application to the Bellberry Human Research Ethics Committee for our first PROAC clinical candidate, VE-1902. We plan to initiate participant recruitment shortly after approval of our phase I proposal.

VE-1902 was well tolerated with wide therapeutic window in regulatory toxicology studies and 28-day repeat dosing. In addition, the drug candidate showed no signs of genotoxicity or QT prolongation in GLP studies. VE-1902 also demonstrated lower renal clearance than NOACs in preclinical testing, a desirable property for the many elderly patients suffering from impaired kidney function.

Clinical trial strategy

We have developed our clinical trial strategy for VE-1902 together with Verseon's Cardiovascular Clinical Advisory Board and other key opinion leaders. The goal is to generate compelling clinical data for VE‑1902 that demonstrates the advantages of our PROACs over existing NOACs,1 and in particular, to show the suitability of PROACs for long-term combination therapy with antiplatelet agents.

We aim to establish VE-1902's safety and tolerability in healthy human volunteers in a randomized, double-blinded, placebo-controlled phase I trial. Our study will comprise single- and multiple-ascending doses and also study how food affects the concentration of the drug. In addition, pharmacodynamic biomarkers will be used to capture surrogate indications of efficacy and to provide preliminary clinical evidence of VE-1902's precision anticoagulation profile.

Biomarkers for use in clinical trials

Biomarkers are often used as surrogates to assess efficacy in early clinical trials in healthy volunteers, and the data can then be used to inform dose selection for phase II studies. Later stage studies, such as phase II and III studies, directly measure the incidence of major adverse cardiac events such as stroke, myocardial infarction, and cardiovascular death over a large number of patients.

The thrombin generation assay is a well-established biomarker that measures a subject's clotting capability and can also be used to assess the efficacy of an anticoagulant. In preclinical studies, PROACs show a clear differentiation in this assay from NOACs: PROACS do not introduce a delay before peak thrombin production while till reducing endogenous thrombin potential.

Furthermore, we use flow cytometry to measure platelet activation as a biomarker for bleeding risk. PROACs a are significantly weaker inhibitors of platelet activation than NOACs at their respective efficacious concentrations, likely explaining the reduced bleeding seen in in vivo studies of PROACs compared to NOACs.

At the recent BIO International Convention, we presented first ex vivo results from testing VE-1902 in healthy human volunteer blood in both of these biomarkers assays. These ex vivo findings support our prior in vitro and in vivo findings and further differentiate the unique anticoagulant properties of PROACs from the NOACs. We expect these ex vivo results to be commensurate with the results from the clinical trial.

A second PROAC heading to the clinic

Our second PROAC development candidate, VE-2851, is a different chemotype but has the same distinctive pharmacological profile as VE-1902. Notably, this candidate is significantly more potent than VE-1902, which may allow for lower dosing in the clinic.

Currently, VE-2851 is in preliminary toxicology studies and is also undergoing CMC scale-up to kg quantities, with the goal to advance the candidate into phase I trials in 2019. Due to their similar preclinical profiles, VE-2851 will follow a similar clinical strategy to VE-1902.

1 NOACs: novel oral anticoagulants

Oral diabetic macular edema drugs

In our diabetic macular edema (DME) program, we are developing small-molecule drug candidates suitable for oral dosing to replace or complement recurrent eye injections. An oral DME drug would not only be more convenient and better tolerated for patients, but would also be well-suited for ongoing DME prophylaxis in the steadily growing global diabetic population.

Small-molecule plasma kallikrein inhibitors

We have designed multiple small-molecule plasma kallikrein (KLKB1) inhibitors with single-digit nanomolar potency and high selectivity against related serine proteases. In addition, our KLKB1 inhibitors show favorable pharmacokinetics and are well-suited for oral dosing as prodrugs.

A promising candidate

One of our most advanced drug candidates is VE-4840. In addition to excellent oral pharmacokinetics, this candidate also effectively prevents retinal thickening in the preclinical human plasma-kallikrein injection model, is stable in human whole blood and hepatocytes, and is safe in various in vitro toxicity tests, including CYP and hERG inhibition.

Moving toward nominating a development candidate

We are currently advancing a number of promising compounds for this program. Our goal is to nominate the first development candidate in Q4 2018, followed by IND-enabling studies.

Oral drugs for hereditary angioedema

Oral small-molecule plasma kallikrein (KLKB1) inhibitors could not only lead to more convenient treatments for diabetic eye disease but are also promising for treating hereditary angioedema (HAE). HAE is an orphan genetic disease characterized by recurring episodes of swelling, which can be life-threatening if they affect the airways.

Plasma kallikrein inhibitors for HAE

Current HAE drugs rely on subcutaneous or intravenous injection and target different mediators in the HAE pathway. In particular, successful macromolecule plasma kallikrein inhibitors have provided evidence that plasma kallikrein is an important target central to the HAE pathway.

Our orally dosed small-molecule KLKB1 inhibitors could have a positive impact on patients' lives as a convenient alternative to current injectable therapies.

Verseon is developing oral KLKB1 inhibitors

We currently have several potent and selective KLKB1 inhibitors spanning multiple chemotypes for the treatment of HAE in development.

Our candidates show good pharmacokinetics suitable for oral dosing as well as efficacy in the preclinical carrageenan-induced paw edema (CPE) model.

We are continuing to optimize the pharmacokinetic profiles of our candidates and test a number of compounds for in vivo efficacy.

Next-generation chemotherapy agents

We have developed a novel class of small-molecule tubulin inhibitors for the treatment of multidrug resistant cancers. In preclinical testing, our drug candidates show nanomolar in vitro potency against a range of cancer cell lines.

Multidrug resistance

While chemotherapy remains the first line of treatment against most cancers, over time many tumors develop resistance to chemotherapy agents decreasing their efficacy, and therefore limiting utility.

A common way for cancer cells to render drugs ineffective is by triggering an overproduction of transporter proteins (efflux pumps) that expel many chemicals, including chemotherapy agents. Another mechanism of resistance is for the cell to upregulate β‑III tubulin, a different isoform of tubulin that may make the tubulin inhibitor ineffective.

Verseon candidates evade common modes of drug resistance

While marketed chemotherapies such as doxorubicin, paclitaxel, and vincristine can show up to 2,000-fold reduced potency in cell lines overexpressing major efflux pumps (MDR1, MRP1, and BCRP), preclinical studies show that our drug candidates are only weakly affected by these transporters (typically less than several-fold).

In cancer cells overexpressing β‑III tubulin, our in vitro data show Verseon's drug candidates are able to maintain potency, just as they are unaffected with cell lines over-expressing transporters.

These results suggest that Verseon's chemotherapy agents can be used to treat multidrug resistant tumors effectively.

Good pharmacokinetic profiles demonstrated

At the AACR conference, we also presented pharmacokinetics for one of our tubulin inhibitors. Our data indicates that the drug candidate is suitable for infusion, a standard mode of administration for chemotherapy regimens.

In addition, the candidate was well tolerated in a preclinical repeat-dosing study over five days with intraperitoneal injections.

We continue to optimize several candidates with both low nanomolar activity against various cancer cell lines and insensitivity to major tumor resistance mechanisms, with emphasis on improving their pharmaockinetic properties. A scale-up of the most promising candidates will allow us to perform further testing, including in vivo tolerability and efficacy studies.

Finance review

During the six months ended June 30, 2018, Verseon has continued to fund its drug programs in anticoagulation, diabetic macular edema, hereditary angioedema, and oncology.

In parallel, the Company made substantial investments in an infrastructure buildout that includes new facilities, laboratory equipment, and a high-performance computing cluster.

Results as of and for the six months ended June 30, 2018:

· Total assets on the balance sheet stood at $68.3 million, compared to $54.2 million as of December 31, 2017.

· Cash, cash equivalents, and short-term investments stood at $19.2 million, compared to $11.6 million as of December 31, 2017.

· Property, equipment, buildings and land totaled $47.4 million, compared to $40.7 million as of December 31, 2017.

· Research and development expenses were $7.0 million for the six months ended June 30, 2018, compared to $6.6 million for the six months ended June 30, 2017, which is primarily attributed to an acceleration of our drug programs and preparation for clinical trials.

· General and administrative expenses were $3.2 million, compared to $3.0 million for the six months ended June 30, 2017.

· Non-cash expenses include stock-based compensation of $0.6 million, compared to $0.1 million for the six months ended June 30, 2017, and also a currency exchange loss of $0.0 million, compared to a gain of $0.4 million for the six months ended June 30, 2017.

· Net loss was $10.2 million or $0.07 per basic share, compared to a net loss of $8.8 million or $0.06 per basic share for the first six months of 2017.

Capital structure

At June 30, 2018, Verseon's issued share capital consisted of 151,557,053 shares of common stock and the Company held 42,917 shares in treasury, as compared to 151,489,789 shares of common stock outstanding with 42,917 shares in treasury at December 31, 2017.

Risks and uncertainties

Research and development risks

Drug development projects are subject to numerous external influences, including economic and regulatory environments, that are outside our control.

We cannot be certain that our current or future drug development efforts will result in drug candidates that progress into human trials and subsequently into the marketplace.

The market for pharmaceuticals is highly competitive and our drug candidates may not become adopted by the medical community and may not become profitable.

Risks related to operations

We may not be able to find, attract, and retain personnel.

Unfavorable global economic conditions, natural disasters, and other factors outside our control may adversely affect us.

We rely on third parties for a portion of our scientific work as well as for manufacturing of drugs and other supplies for our clinical trials. If this work does not meet sufficient quality standards or if one of those third parties fails to live up to their obligations, operations might be negatively impacted.

Our growth may require significant capital expenditures and can experience unexpected delays that could impact various aspects of operations.

Risks related to intellectual property

Competitors may infringe upon our patents and other intellectual property and force us to defend our intellectual property by legal means.

Other companies could develop or market drug candidates with comparable treatment capabilities, reducing the market potential of our drugs.

Financial risks

Our Common Stock is settled in pound sterling, but our operations are in the United States, and, to date, we use US dollars to fund our operations. We hold funds in both currencies and are susceptible to currency fluctuations.

We have initiated clinical operations in Australia, which requires payment of vendors and contractors in Australian dollars. Currency fluctuations relating to the Australian dollar may also affect our net operating losses.

The net losses we incur may fluctuate significantly from half-year to half-year and year to year. In any particular reporting period, our operating results could be below the expectations of securities analysts or investors, which could cause the stock price to decline.

To date, we have financed our operations primarily through the sale of equity securities, convertible debt, and the mortgage loan on our freehold building signed in June 2018. The amount of our future net losses and sustainability will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financing, strategic collaborations, or out-licensing of one or more of our product candidates to potential partners.

We have not yet generated revenue and cannot be certain of securing revenue-generating agreements and profits in the future.

Risks related to securities

Even though our Common Stock is listed on AIM, a liquid market for it may not develop or be sustained.

Company operations are based in the United States, and we are incorporated under the laws of the State of Delaware, United States. Accordingly, some of the legislation in England and Wales regulating the operation of companies may not apply to us.

Independent auditor's report

To the Directors of Verseon Corporation

Report on the audit of the non-statutory financial statements

Opinion

In our opinion the non-statutory financial statements:

· present fairly, in all material respects, the state of the group's affairs as of June 30, 2018 and of its loss for the period then ended; and

· have been properly prepared in accordance with accounting principles generally accepted in the United States of America

We have audited the non-statutory financial statements of Verseon Corporation and its subsidiaries (together the 'group') which comprise:

· the Consolidated balance sheets;

· the Consolidated statements of operations and comprehensive loss;

· the Consolidated statements of cash flows;

· the Consolidated statements of stockholders' equity;

· the Summary of significant accounting policies; and

· the related notes 1 to 17

The financial reporting framework that has been applied in their preparation is accounting principles generally accepted in the United States of America ("US GAAP").

Basis for opinion

We conducted our non-statutory audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the non-statutory financial statements section of our report.

We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the non-statutory financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Summary of our audit approach

The key audit matters that we identified in the current period were related to the accounting treatment of share based payment arrangements and allocation of costs relating to the new premises within the VRH1 LLC subsidiary.

The materiality that we used in the current period was $0.4m which was determined based on a blend of benchmarks including total expenses, total assets and net assets.

We have performed full scope audits on all significant entities within the group; Verseon Corporation, Nirog Therapeutics LLC and VRH1 LLC. The classification of the PACE loan is not considered a key audit matter in the current year as this risk around classification was concluded in the prior year and not expected to changed year on year.

Conclusions relating to going concern

We are required by ISAs (UK) to report in respect of the following matters where:

· the directors' use of the going concern basis of accounting in preparation of the non-statutory financial statements is not appropriate; or

· the directors have not disclosed in the non-statutory financial statements any identified material uncertainties that may cast significant doubt about the group's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the non-statutory financial statements are authorised for issue.

We have nothing to report in respect of these matters.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the non-statutory financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the non-statutory financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The classification of the PACE loan is not considered a key audit matter in the current year as this risk around classification was concluded in the prior year and not expected to changed year on year.

Our application of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality to be $0.40m for the group, which is determined based on a blend of multiple of benchmarks including total expenses, total assets and net assets.

Total expenses and asset related benchmarks have been chosen as the basis for materiality as this is the measure by which stakeholders and the market assess the progress of the group in its research activities.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of $0.02m, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the group and its environment and assessing the risks of material misstatement at the group level. All subsidiaries are managed from the company's head office in Fremont, California and subject to a common control environment. All audit work was performed by the group engagement team, which included visiting the group's US headquarters.

Based on that assessment, we have performed full scope audits for all Verseon Corporation, Nirog Therapeutics LLC and VRH LLC, which represents 99.5% of expenses, 99.9% of total assets and 99.8% of total liabilities. Our audit work on these entities was executed at levels of materiality applicable to each individual company ranging from $0.09m to $0.39m, which were lower than group materiality. At the parent entity level we also tested the consolidation process including assessment of all entries posted at that stage.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the non-statutory financial statements and our auditor's report thereon.

Our opinion on the non-statutory financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the non-statutory financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the non-statutory financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the non-statutory financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in respect of these matters.

Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the non-statutory financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the non-statutory financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the non-statutory financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these non-statutory financial statements.

A further description of our responsibilities for the audit of the non-statutory financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Other matter

As the group did not have an audit performed for the six months ended 30 June 2017, we have not audited the corresponding amounts in the Consolidated statement of operations and comprehensive loss, Consolidated statement of cash flow and Consolidated statement of stockholders' equity for that period.

Use of our report

This report is made solely to the company's Directors, as a body, in accordance with our engagement letter dated 27 July 2018, and to comply with the AIM listing rules. Our audit work has been undertaken so that we might state to the company's Directors those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's Directors as a body, for our audit work, for this report, or for the opinions we have formed.

The engagement partner on the audit resulting in this independent auditor's report is Simon Olsen.

Deloitte LLP

Reading, United Kingdom

8 August 8, 2018

Consolidated balance sheets

As of June 30, 2018 and December 31, 2017

See accompanying notes to consolidated financial statements.

These financial statements were approved by the Board of Directors August 8, 2018.

Adityo Prakash

Chief Executive Officer

Consolidated statements of operations and comprehensive loss

For the six months ended June 30, 2018 and 2017

Consolidated statements of cash flows

For the six months ended June 30, 2018 and 2017

Interest payment was $92 thousand in 2018 and $0 thousand in 2017.

No income taxes were paid in 2018 and 2017.

See accompanying notes to consolidated financial statements.

Consolidated statements of stockholders' equity

For the six months ended June 30, 2018, 2017

* Amount less than $1,000 and insignificant after rounding.

See accompanying notes to consolidated financial statements.

Consolidated statements of stockholders' equity

For the six months ended June 30, 2018 and year ended December 31, 2017 (continued)

See accompanying notes to consolidated financial statements.

Notes to consolidated financial statements

A. Basis of presentation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The financial information is presented in United States Dollars ("$"). All intercompany accounts and transactions have been eliminated in consolidation.

The accounting policies applied are consistent with those that were applied to the consolidated financial statements for the year ended December 31, 2017.

B. History and organization of the Company

The Company was established as Verseon LLC on July 18, 2002 in the state of Delaware. In August 2007, the Company incorporated as a general corporation in the state of Delaware. The Company is headquartered in Fremont, California. It completed its initial public offering ("IPO") on May 7, 2015 on the Alternative Investment Market ("AIM") of the London Stock Exchange.

The Company has formed Verseon India Private Limited ("VIPL") together with a Mauritius based private equity investor. VIPL was incorporated in Andhra Pradesh, India in March 2006 to manage and maintain the Company's supercomputing cluster. The Company has since closed this operation in 2009 and is in the process of dissolving the legal entity.

Nirog Therapeutics LLC ("Nirog") was formed on September 23, 2009 as a Delaware limited liability company. Nirog was established as a vehicle to fund the research and development of the Company's anticoagulation program and the Company owned 80.7% and 79.9% of Nirog as of June 30, 2018 and December 31, 2017, respectively.

In August 2015, the Company acquired a property in Fremont, California with approximately 85,000 square feet of office and laboratory space for $8.7 million through its wholly-owned subsidiary, VRH1 LLC, in the state of California. The redeveloped facility will house the Company's drug discovery and development operations as well as the corporate headquarters.

On October 13, 2017, VCR1, a wholly owned subsidiary of Verseon, was incorporated in Australia. VCR1 conducts clinical trials on behalf of Verseon.

These consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. The Company is financed substantially through equity and debt funding, upon which the company is reliant to fund its operations until positive cash flow is generated from ongoing business operations. A successful public offering was made on May 7, 2015. In addition the Company has received additional financing in the amount of $21.7 million secured against the facility and $5.5 million from PACE financing. As such, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for a period of no less than 12 months from the date of signing these consolidated financial statements. Thus, the Directors continue to adopt the going concern basis of preparation.

These consolidated financial statements do not include any adjustments to the carrying value or classification of recorded asset amounts and carrying value or classification of liabilities that might be necessary, should the Company be unable to continue as a going concern.

C. Description of business

Verseon is an emerging pharmaceutical company that uses a proprietary platform to design and develop new drug candidates. Verseon has created a proprietary computational platform that can model molecular interactions with sufficient accuracy to drive the drug discovery process. For any disease program, the platform first generates vast numbers of novel drug-like, synthesizable compounds which are then computationally tested against a disease-causing protein to identify the best binders, i.e., drug candidates that could potentially treat the disease. These computationally designed candidates are synthesized and sent through a series of disease specific in vitro and in vivo tests to identify the best candidates for clinical testing in humans. The Verseon process is disease agnostic and can systematically yield drug candidates that cannot be found with other current methods.

D. Summary of significant accounting policies

a. Basis of preparation and principles of consolidation: The accompanying consolidated financial statements include the accounts of the Company, consolidated with the accounts of all of its subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. These consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The financial information is presented in United States Dollars ("$"). All intercompany amounts have been eliminated.

b. Use of estimates: The preparation of the financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as on the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ materially from those estimates.

c. Research and development expenses: The Company's research and development expenses include, but are not limited to, wages and related benefits, including stock-based compensation, facilities, supplies, external services, and other expenses that are directly related to its research and development activities. Research and development costs are expensed as they occur. When payments for research and development services are made prior to the services being rendered, those amounts are recorded as prepaid assets on the consolidated balance sheet and are expensed as the services are provided. For the six months ended June 30, 2018 and 2017, research and development expenses were $7.0 million and $6.6 million, respectively.

d. Foreign currency: The Company records foreign currency transaction gains and losses, realized and unrealized, and foreign exchange gains and losses due to re-measurement of monetary assets and liabilities denominated in foreign currency as currency exchange gains or losses in the consolidated statements of operations and comprehensive loss. For the six months ended June 30, 2018 and 2017, the Company recorded a loss of $0.0 million and $0.4 million respectively.

e. Cash equivalents and investments: The Company considers investments in highly liquid instruments that are purchased with original maturities of three months or less to be cash equivalents. The Company limits its concentration of risk by diversifying its investments among a variety of issuers. All investments are classified as available for sale and are recorded at fair value based on quoted prices in active markets or based upon other observable inputs, with unrealized gains and losses excluded from earnings and reported in other comprehensive loss. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the consolidated statement of operations. The cost of securities sold is based on the specific-identification method.

f. Fair value of financial instruments: The carrying amounts of certain of the Company's financial instruments, including cash equivalents and short-term investments, approximate their fair value. Fair value is considered to be the price at which an asset could be exchanged or a liability transferred in an orderly transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where available, fair value is based on or derived from observable market prices or other observable inputs. Where observable prices or inputs are not available, valuation models are applied. The valuation techniques involve estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments' complexity.

g. Concentration of credit risk: The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

h. Property and equipment, net: Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives. The estimated useful lives of assets are as follows:

i. Impairment of long-lived assets: The Company reviews long-lived assets, including property and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset over its respective fair value. To date, the Company has not recorded any impairment losses.

j. Leased assets: Under ASC 842, the Company as a lessee recognizes a "right-of-use" asset and lease liabilities in the balance sheet measured at the present value of the unavoidable future lease payments. The "right-of-use" asset is amortized and interest on lease liabilities is recognized over the lease term. For a lease classified as a finance lease the "right-of-use" asset is generally depreciated on a straight-line basis over the lease term and the interest expense is recognized on an effective interest expense method, which results in the aggregate income statement charge being front-loaded. For a lease classified as an operating lease the total lease expense is recognized on a straight-line basis so that as the interest expense declines over the lease term the amortization of the right-of-use asset increases in order to provide a constant expense profile.The Company has elected to not apply ASC 842 to short-term leases defined as one with a term of 12 months or less that does not include a purchase option that the Company is reasonably likely to exercise. For such short-term leases the Company recognizes the lease payments on a straight-line basis over the lease term.

k. Loans: The Company capitalizes the issuance costs incurred and amortizes them over the term of the loan. The loan balances are presented net of unamortized issuance costs.

l. Income taxes: Income taxes are accounted for under the asset and liability method.

i. Current income taxes: The Company assesses its current income tax expense based upon the taxes due in each of its operating tax jurisdictions, which are comprised of the U.S., Australia and India. The Company has its Indian subsidiary, VIPL, which is dormant and not incurring any taxes. The Company is located in the United States with all of its operating expenses occurring within this tax jurisdiction. Payments of advance taxes and income taxes payable in the same tax jurisdictions are offset.

ii. Deferred income taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial information carrying amounts of assets and liabilities and their respective tax basis, operating loss carry forwards, and tax credits. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Operations in the period of change.

Uncertain tax positions are recognized using the more-likely-than-not threshold determined solely based on technical merits that the tax positions will be sustained upon examination by a taxing authority that has full knowledge of all relevant information. Tax positions that meet the recognition threshold are measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.

m. Property Assessed Clean Energy ("PACE") program: Under the terms of the PACE agreement, the amount is repayable through annual property tax assessment over 25 years. The annual property tax liability arises once the annual assessment is received and will be treated as property tax expense. The PACE outstanding balance will be reduced by the property tax expense recognized.

n. Net loss per share: In accordance with the provisions of ASC Topic 260, "Earnings per Share", basic loss per share is computed by dividing the net loss attributable to stockholders of the Company by the weighted average number of shares outstanding during the period. Diluted earnings per share are computed on the basis of the weighted average number of common and dilutive common equivalent shares outstanding during the period. Potentially dilutive shares are excluded when the effect would be to increase diluted earnings per share or reduce diluted losses per share. The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti- dilutive effect:

o. Stock-based compensation: The Company accounts for stock-based compensation using the Black-Scholes pricing model to determine the fair value of stock option and warrant grants. The stock-based compensation cost is generally recognized over the vesting period of the equity grant. For grants to employees, the cost is recognized over the requisite service period.

The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, including the expected stock-price volatility, the expected term of the grants, risk-free interest rate, and expected dividends, which play a significant role in determining the fair value of stock-based awards. As sufficient trading history does not yet exist for our Common Stock, our estimate of the expected stock-price volatility is based on various factors including the volatility of the shares of comparable publicly traded companies in the industry. The expected term of the grants is based on the vesting date and the contractual term. The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected term of the grants. The Company has no history or expectation of paying dividends on its Common Stock.

Total stock-based compensation expense recognized associated with stock options, warrants and restricted stock units was as follows:

p. Recently issued accounting standards: In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 "Revenue from Contracts with Customers (Topic 606)." The standard's core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB decided to postpone the effective date of the new standard by one year. The standard was effective for the Company in the first quarter of 2018. Since the Company has yet to report revenue, the adoption of this standard did not impact its consolidated financial statements.

The FASB issued ASU No. 2016-02, ASU No. 2018-10 and ASU No. 2018-11 "Leases (Topic 842)", which establishes the principles to report transparent and economically neutral information about the assets and liabilities that arise from leases. It requires lessees to recognize the lease assets and lease liabilities that arise from leases in the statement of financial position and to disclose qualitative and quantitative information about lease transactions, such as information about variable lease payments and options to renew and terminate leases. The new standard will be effective for the fiscal year 2019 and annual periods and interim periods thereafter, however the Company has elected to early adopt Topic 842.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which aims to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. It replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard is effective for the fiscal year 2020 and annual periods and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09 and ASU 2018-07 (ASC Topic 718), "Stock Compensation: Scope of Modification Accounting". The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The Company is required to adopt the guidance in the first quarter of fiscal year 2019. Early adoption is permitted. The Company is in the process of assessing the impact of this ASU on its consolidated interim report.

Only the updates that the Company believes are relevant to its operations have been included here.

E. Notes to financial information

1. Cash, cash equivalents, and short term investments

The amortized cost and fair value of cash equivalents and investments at June 30, 2018 and December 31, 2017 were as follows:

* Cash and cash equivalents at June 30, 2018 of $19,242 thousand comprises cash of $19,241 thousand and cash equivalents of $1 thousand, as compared to cash and cash equivalents of $3,290 thousand at December 31, 2017, which comprises cash of $3,290 thousand and cash equivalents of $0 thousand.

All available-for-sale securities held as of June 30, 2018 and December 31, 2017 had contractual maturities of less than two years and high quality investment grade ratings. Realized gains on available-for-sale securities for the six months ended June 30, 2018 were $10 thousand and were recorded as interest income, as compared to the realized gains on available-for-sale securities of $163 thousand for the year ended December 31, 2017.

In accordance with the guidance of Accounting Standards Codification ("ASC") Top 820, "Fair Value Measurement", fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1-Quoted prices in active markets for identical assets or liabilities.

Level 2-Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3-Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability.

The Company's financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements are as follows as of June 30, 2018 and December 31, 2017:

2. Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of:

3. Fixed Assets

Depreciation expense was $0.4 million and $0.2 million for the six months ended June 30, 2018 and 2017, respectively.

4. Lease

In March 2018, the Company entered into a Finance Lease agreement with a vendor in respect of laboratory equipment. The agreement entails financing of equipment costing $0.55 million, with a 20% deposit. The financing carries a fixed 5.8% interest for 2 years, with an option to purchase the equipment for $1 at the end of the lease period. The lease is determined to be a finance lease under ASC 842.

5. Nirog

The consolidated financial statements presented include financial position and performance of Nirog Therapeutics LLC ("Nirog"), a Delaware limited liability company. Nirog was established in September 2009 as a vehicle to fund the research and development of the Company's anticoagulation program. The Company has been investing in Nirog and as a consequence owned 80.1% and 79.9% of the outstanding equity of Nirog as of June 30, 2018 and December 31, 2017, respectively.

6. Accrued liabilities

Accrued liabilities consist of:

7. Debts

In September 2017, VRH1, a wholly owned subsidiary of Verseon, secured financing for energy-related upgrades to its property via the Property Assessed Clean Energy (PACE) program in the amount of up to $8.65 million subject to achievement of certain milestones. PACE is a state-legislated framework providing long-term financing for energy efficiency, renewable energy, and water conservation projects that is repaid through property assessments. PACE is non-recourse financing that is also non-accelerating and transferable upon property sale. The financing carries a fixed 6.50% interest for 25 years and the term of the property assessment is 25 years. These funds will be used for building and installation of a natural gas plant and solar power panels along with other energy efficiency upgrades, all of which will allow the Company to significantly reduce its ongoing power-related operational costs. As of June 30, 2018 and December 31, 2017, based on milestones achieved to date, the Company had received a payment of $5.1 million and $2.6million respectively which is net of charges incurred of $0.4m to be amortized over the life of the loan.

On June 13, 2018, VRH1 closed a $22.7 million financing (the "Financing") with MCREIF SubREIT LLC (t/a Money 360) secured on the Company's custom-built research, development, and operations facility in Fremont, California (the "Facility"). Of the total amount of the Financing, $21.7 million has been received on closing, with an additional $1 million available to be drawn at a future date for facilities-related expenses. Charges incurred of $0.7 million have been netted against the loan and will be amortized over the life of the loan

The Financing is an interest-only mortgage facility which carries an annual interest rate of 8.0 percent and is repayable after 24 months, with an option to extend for up to a further 12 months. The documentation entered into in relation to the Financing contains customary financial covenants and is based on a loan-to-value of approximately 50 percent. The proceeds of the Financing will be used for Verseon's drug programs and operations.

The components of the debt are as follows:

8. Income taxes

The Company did not record a federal or state current or deferred income tax provision or benefit for the six months ended June 30, 2018 and year ended December 31, 2017 due to the losses incurred in the corresponding periods, as well as the Company's continued maintenance of full valuation allowance against its net deferred tax assets. The Company's income tax provision of $nil in said periods represents an effective tax rate of 0%.

At June 30, 2018, the Company had federal and state Net Operating Loss ("NOL") carry forwards of approximately $62.9 million and $64.2 million, respectively, which expire at various dates through 2037 if not utilized. At June 30, 2018 the Company had federal and state research credit carry forwards that totaled $2.3 million and $1.8 million, respectively, which expire at various dates through 2037 if not utilized.

During the six months ended June 30, 2018, the only change in the balance of gross uncertain tax benefits was an increase of $0.1 million related to current year and prior year tax positions. At June 30, 2018, the balance of gross uncertain tax benefits was $1.3 million as compared to $1.2 million as of December 31, 2017. All of the unrecognized tax benefits would, if recognized, reduce the Company's annual effective tax rate. The Company currently has a full valuation allowance against its net deferred tax assets which would impact the timing of the effective tax benefit should any of the uncertain tax positions be favorably settled in the future.

The components of the Deferred Tax Assets were calculated using the federal statutory income tax rate of 21% and the state statutory income tax rate of 7% for both 2018 and 2017 respectively. The Company's deferred tax assets differ from deferred income tax assets computed by applying the federal statutory income tax rate of 21% to the loss before income taxes principally due to the effect of (i) stock based compensation expenses of $0.6 million (2017: $0.2 million) for which there is no associated income tax deduction; (ii) losses in Nirog not attributable to the Company; and (iii) the effect of losses incurred by the Company for which the potential deferred tax asset has a full valuation allowance.

The components of the deferred tax assets are as follows:

Based on available objective evidence, management believes it is likely that the deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets at June 30, 2018 and December 31, 2017.

The Tax Reform Act of 1986 limits the use of net operating loss carry forwards in certain situations where changes occur in the stock ownership of the Company. In the event that the Company has had a change in ownership, utilization of net operating loss carry forwards would be limited.

The tax years 2007 to 2017 remain open to regular examination of their income tax returns and other related tax-fillings by the Internal Revenue Service and state tax authorities. There are no prior or current year tax returns under audit by tax authorities, and management is not aware of any impending audits.

The net impact of the corporate tax rate reduction resulting from the Tax Cuts and Jobs Act of 2017 was a reduction in net deferred tax asset of $4.2 million.

9. Net loss per share

Basic net loss per share is computed by dividing net loss by the average number of shares outstanding each period. The Company calculates the dilutive effects of both the warrants and stock options utilizing the treasury stock method. All warrants and options were anti-dilutive in all the periods presented. The weighted average shares for basic earnings per share calculation consists of the following:

The components of basic and diluted earnings per share were as follows:

* Diluted earnings per share are the same as basic earnings per share since the impact of the dilutive instruments on earnings per share is antidilutive.

10. Segment reporting

ASC Topic 280 "Segment reporting" establishes standards for the way that public business enterprises report information about business segments and related disclosures about products and services, geographical areas, and major customers.

The Chief Executive Officer ("CEO") of the Company has been identified as the Chief Operating Decision Maker as defined by ASC Topic 280. The CEO of the Company allocates resources based upon information related to its one operating segment, pharmaceutical research based in the United States. Accordingly, the Company has concluded they have one reportable segment.

11. Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk principally consist of cash, cash equivalents, short-term and long-term investments.

All cash, cash equivalents, and marketable securities investments are held in the United States as of June 30, 2018 and December 31, 2017. All marketable securities investments as of June 30, 2018 had high quality investment grade ratings. At times, cash balances may exceed federally insured amounts and potentially subject the Company to a concentration of credit risk. To limit the credit risk, the Company invests its excess cash primarily in high quality securities such as money market funds. Management believes that no significant concentration of credit risk exists with respect to these cash and marketable securities investment balances because of its assessment of the credit worthiness and financial viability of the respective financial institutions.

12. Related-party transactions

"Loan receivable from stockholders" refers to employees and consultants of the Company who purchased their shares through the issuance of promissory notes by the Company. Total loan receivable from stockholders at June 30, 2018 and December 31, 2017 were $15.2 million and $15.1 million, respectively.

During 2017, one of Nirog Therapeutics' Board member Ronald Kass exercised Nirog 7,812 Preferred B2 Warrants (previously granted before January 2017), exercised 6,513 Verseon Common Warrants and 14,044 Verseon Class Z Warrants.

13. Stockholder's equity

As of June 30, 2018 and December 31, 2017, the Company had 151,557,053 shares and 151,489,789 shares of Common Stock outstanding, not including 42,917 shares and 42,917 shares in treasury, for the respective periods, and no shares of Preferred Stock outstanding.

2015 Equity incentive plan

In April 2015, the Company adopted the Verseon Corporation 2015 Equity Incentive Plan (the "2015 Plan"). The 2015 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, cash-based awards, and other stock-based awards to non-employee directors, officers, employees, advisors, consultants, and independent contractors. An aggregate of 15,000,000 shares of Common Stock was initially available for grant pursuant to awards under the 2015 Plan. The 2015 Plan contains a provision that provides annual increases in the number of Common Stock available for delivery pursuant to awards on each January 1st beginning January 1, 2016, and ending on (and including) January 1, 2025. Such annual increase equals to 2% of the total shares of Common Stock outstanding on December 31st of the preceding calendar year; provided that the Board decides, prior to the first day of any calendar year, that there will be no increase or a lesser increase for such calendar year. In September 2015, the plan was amended to limit the annual increase of incentive stock option shares available for grant to a maximum of 3,000,000 shares. A total of 17,731,387 and 17,760,825 shares were available for grant under the 2015 Plan as of six months ended June 30, 2018 and December 31, 2017, respectively.

Loan receivable from stockholders

The Company issued promissory notes to employees and consultants to purchase shares of the Company's stock and recorded them as "Loan receivable from stockholders." Total loan receivable from stockholders at June 30, 2018 and December 31, 2017 were $15.2 million and $15.1 million, respectively.

14. Restricted Stock Units (RSU)

In 2015, the Company began issuing RSU to certain employees and consultants under the 2015 Plan. The RSU are valued at the closing price of the Company's Common Stock on the date of grant. The restricted stock unit activity for the six months ended June 30, 2018 and year ended December 31, 2017 is summarized as follows:

A total of $0.05 million and $0.07 million was recorded as stock-based compensation expenses in for the six months ended June 30, 2018 and 2017 respectively for RSU granted. As of June 30, 2018, there was $0.1 million of unrecognized compensation expense associated with unvested RSUs, which is expected to be recognized over a weighted-average period of 1.2 years as compared to $0.2 million of unrecognized compensation expense associated with unvested RSU with a weighted-average period of 1.4 years in 2017.

*Includes 24,096 shares vested in 2017 that were admitted to AIM in January 2018.

15. Warrants

In April 2015, all outstanding warrants were amended to be exercisable for shares of the Company's Common Stock from Class A, Class B Preferred Stock, and Class Z Common Stock. There was no Class C Preferred Stock outstanding. Common Warrants and Common Z Warrants are exercisable into one share of Common Stock. Preferred A Warrants and Preferred B Warrants are exercisable into two shares of Common Stock.

A total of $0.06 million and $0.06million was recorded as stock-based compensation expenses in six months ended June 30, 2018 and 2017 for warrants.

A total of 21,052 Preferred A Warrants was outstanding and exercisable at June 30, 2018 at a weighted-average exercise price of $0.95 per share and with weighted-average remaining life of 3.7 years. There was no Preferred A Warrant activity in 2018 and 2017. A total of 71,302 Preferred B Warrants was outstanding and exercisable at June 30, 2018 at a weighted-average exercise price of $2.54 per share and with weighted-average remaining life of 0.7 years. There was no Preferred B Warrant activity in 2018 and 2017.

The following is a summary of the status of the Company's outstanding stock warrants as of June 30, 2018 and December 31, 2017 and changes that occurred during each time period:

Nirog

Nirog did not issue any warrants during the six months ended June 30, 2018. There were no Common Z Warrants or Preferred A Warrants outstanding as of June 30, 2018 and December 31, 2017.

A total of 47,447 Preferred B2 Warrants was outstanding and exercisable at June 30, 2018 at a weighted-average exercise price of $0.80 per share and with weighted-average remaining life of 0.58 years. In 2018 there was no Preferred B2 Warrant activity. In 2017, 7,812 Preferred B2 Warrants were exercised with a weighted-average exercise price of $0.80, respectively. In 2017, 2,468 Preferred B2 Warrants were cancelled. A total of 102,128 Preferred C1 Warrants was outstanding and exercisable at June 30, 2018 at a weighted-average price of $0.90 per share and with weighted-average remaining life of 0.6 years. There was no Preferred C1 Warrant activity in 2017 and 2018. A total of 5,250 Preferred C2 Warrants was outstanding and exercisable at June 30, 2018 at a weighted-average exercise price of $1.00 per share and with weighted-average remaining life of 0.85 years. There was no Preferred C2 Warrant activity in 2018 and 2017.

On December 31, 2017, Nirog appointed Ronald Kass as a Director. Nirog did not issue any warrants during the six months ended June 30, 2018 and year ended December 31, 2017.

16. Stock options and stock grants

Verseon

The activity in the Company's option grants during the six months ended June 30, 2018 and year ended on December 31, 2017 are set out in the table below:

In the six months ended June 30th 2018 and 2017, stock based compensation expense for stock options was $0.5 million and $0.02 million, respectively. The weighted average grant date fair value of the Common Stock options granted in 2018 was $0.83 per share, as compared to $0.89 per share in 2017.

For details of the variables used by the Company in the Black-Scholes option pricing model for the six months ended on June 30, 2018 and the year ended on December 31, 2017, see the following table:

Nirog

The Nirog Unit Option Plan provides for both incentive and non-qualified unit options. Unit option grants generally vest over a two-year period from the unit option grant date. In December 2017, Nirog adopted a new Stock Option Plan and 5,000,000 shares were allocated. No options were issued in 2018 and 2017.As of June 30, 2018 and December 31 2017, there were 5,130,667 unit options available for grant.

17. Subsequent events

As at August 8, 2018, the date the accounts were available to be issued, there were no reportable subsequent events.