What changed in this filing

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Item 1A. Risk Factors

2022-03-31 compared with 2021-04-01 · 1725 added, 1852 removed, 231 unchanged (94% of the section changed)

addition to the other information provided in this Annual Report on Form 10-K, including our financial statements and the related

notes in Part II - Item 8, you should carefully consider the following factors in evaluating our business, operations and financial

Additional risks and uncertainties not presently known to us, which we currently deem immaterial or that are similar

to those faced by other companies in our industry or businesses in general, such as competitive conditions, may also impair our

business operations.

The occurrence of any of the following risks could have a material adverse effect on our business, financial

condition, results of operations or cash flows.

addition to the other information provided in this Annual Report on Form 10-K, including our financial statements and the related notes

in Part II - Item 8, you should carefully consider the following factors in evaluating our business, operations and financial condition.

Additional risks and uncertainties not presently known to us, which we currently deem immaterial or that are similar to those faced by

other companies in our industry or businesses in general, such as competitive conditions, may also impair our business operations.

occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations

or cash flows.

of Risk Factors

business is subject to numerous risks and uncertainties, discussed in more detail in the following section.

These risks include,

among others, the following key risks:

COVID-19 global pandemic may continue to materially and adversely impact our business, financial condition and results of

is substantial doubt about our ability to continue as a going concern.

we are unable to timely repay our outstanding promissory notes, their holders will have the right to foreclose on our assets.

have and may continue to experience intangible asset impairment charges.

have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and

to assess our future viability.

These risks include, among

others, the following key risks:

operating history of net losses, negative working capital and insufficient cash flows, and

lack of liquidity to pay our current obligations raise doubts about our ability to continue

as a going concern.

COVID-19 global pandemic may continue to materially and adversely impact our business, financial condition and results of operations.

have and may continue to experience intangible asset or other long-lived asset impairment charges.

have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess

our future viability.

to how we recognize revenue, our quarterly revenue and operating results are likely to fluctuate.

deterioration in the collectability of our accounts receivable could have a material adverse effect on our business, financial

condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

depend on sales and reimbursements from our clinical services for more than 50% of our revenue, and we will need to generate

sufficient revenue from these and other products and/or solutions that we develop or acquire to grow our business.

private equity firms and their affiliates’

control, on an as-converted basis, an aggregate of 66% of our outstanding

shares of common stock through their holdings of our Series B Preferred Stock, and this concentration of ownership along with

their authority for designation rights for a majority of our directors and their right to approve certain of our actions has

a substantial influence on our decisions.

for our clinical services tests is complex, and we must dedicate substantial time and resources to the billing process to

be paid for our clinical services tests.

depend on a few payers for a significant portion of our revenue for our clinical services, and if one or more significant

payers stops providing reimbursement or decreases the amount of reimbursement for our tests, or if we are unable to successfully

negotiate additional reimbursement contracts for our clinical services tests, our revenue could decline and our commercial

success could be compromised.

deterioration in the collectability of our accounts receivable could have a material adverse effect on our business, financial condition

and results of operations.

depend on sales and reimbursements from our clinical services for more than 50% of our revenue, and we will need to generate sufficient

revenue from these and other products and/or solutions that we develop or acquire to grow our business.

private equity firms and their affiliates’ control, on an as-converted basis, an aggregate of 65% of our outstanding

shares of common stock through their holdings of our Series B Preferred Stock, and this concentration of ownership along with their

authority for designation rights for a majority of our directors and their right to approve certain of our actions has a substantial

influence on our decisions.

Our secured lenders have the right to foreclose on substantially

all of our assets if we are unable to timely repay our outstanding obligations.

for our clinical services tests is complex, and we must dedicate substantial time and resources to the billing process to be paid

for our clinical services tests.

depend on a few payers for a significant portion of our revenue for our clinical services, and if one or more significant payers,

including CMS, stops providing reimbursement or decreases the amount of reimbursement for our tests, or if we are unable to successfully

negotiate additional reimbursement contracts for our clinical services tests, our revenue could decline and our commercial success

could be compromised.

Our reliance on Medicare reimbursement for our clinical services and our being subject to decisions of the

Center for Medicare and Medicaid Services (“CMS”) regarding reimbursement and pricing of our clinical services which

could have a material adverse effect on our business and financial results, which has temporarily had a material adverse effect on

our business due to a new billing policy issued by CMS in January 2022 whereby CMS stated they would no longer reimburse for the

use of the Company’s ThyGeNEXT ® and ThyraMIR ® tests when billed together by the same provider/supplier

for the same beneficiary on the same date of service;

while this decision was subsequently reversed in February 2022, the Company

has not yet realized the full cash collection benefit of current and retroactive Thyroid testing and such cash collections may be

temporarily reduced or delayed until we resolved the matter with CMS;

rely on third-parties to process and transmit claims to payers for our clinical services, and any delay in processing or transmitting

could have an adverse effect on our revenue and financial condition.

may experience a decline in demand for our clinical services tests and/or our pharma services products, which may result in

a reduction in revenue.

we are unable to increase sales of our clinical services and the tests and services in our pharma services, we may be unable

to achieve profitability.

profitability will be impaired by our obligations to make royalty and milestone payments to our licensors for our clinical

services tests.

depend on third parties for the supply of some of the materials used in our clinical and pharma services tests, and we may

not be able to find replacements or transition to alternative suppliers in a timely manner.

markets that our clinical services and pharma services operate in is competitive, and our ability to compete successfully

in this market depends on a variety of reasons, including our ability to keep up with rapid technological, medical, and scientific

changes or our ability to enter into new clinical study collaborations.

If we are unable to compete successfully in the markets

our clinical services and pharma services operate in, we may be unable to increase or sustain our revenue or achieve profitability.

Food and Drug Administration changes its enforcement policy as to laboratory developed tests (LDTs) or disagrees

with our position that our clinical services tests are LDTs covered by the FDA’s current enforcement discretion policy,

we could be subject to a number of enforcement actions, any of which could have a material adverse effect on our clinical

services and/or incur substantial costs and delays associated with trying to obtain pre-market clearance or approval and comply

with applicable post-market requirements.

failure to comply with federal and state laws and regulations, including but not limited to those laws related to billing

practices, fraud, abuse, and payer regulations, could result in our being excluded from participation in Medicare, Medicaid

or other governmental payer programs and/or significant monetary fines, and additionally may decrease our revenues and adversely

affect our results of operations and financial condition for our clinical services.

may not realize all of the anticipated benefits of the acquisition of our pharma services or those benefits may take longer

to realize than expected.

Biosciences, Inc.

Report on Form 10-K

may experience a decline in demand for our clinical services tests and/or our pharma services products, which may result in a reduction

we are unable to increase sales of our clinical services and the tests and services in our pharma services, we may be unable to achieve

profitability.

profitability will be impaired by our obligations to make royalty and milestone payments to our licensors for our clinical services

depend on third parties for the supply of some of the materials used in our clinical and pharma services tests, and we may not be

able to find replacements or transition to alternative suppliers in a timely manner.

markets that our clinical services and pharma services operate in is competitive, and our ability to compete successfully in this

market depends on a variety of reasons, including our ability to keep up with rapid technological, medical, and scientific changes

or our ability to enter into new clinical study collaborations.

If we are unable to compete successfully in the markets our clinical

services and pharma services operate in, we may be unable to increase or sustain our revenue or achieve profitability.

the FDA changes its enforcement policy as to laboratory developed tests (LDTs) or disagrees with our position that our clinical services

tests are LDTs covered by the FDA’s current enforcement discretion policy, we could be subject to a number of enforcement actions,

any of which could have a material adverse effect on our clinical services and/or incur substantial costs and delays associated with

trying to obtain pre-market clearance or approval and comply with applicable post-market requirements.

failure to comply with federal and state laws and regulations, including but not limited to those laws related to billing practices,

fraud, abuse, and payer regulations, could result in our being excluded from participation in Medicare, Medicaid or other governmental

payer programs and/or significant monetary fines, and additionally may decrease our revenues and adversely affect our results of

operations and financial condition for our clinical services.

may not realize all of the anticipated benefits of the acquisition of our pharma services or those benefits may take longer to realize

than expected.

we are unable to successfully utilize, integrate, and/or promote our pharma services in the market, we may be unable to generate

sufficient revenue to sustain our pharma services.

we fail to perform our pharma services in accordance with contractual and regulatory requirements, and ethical considerations,

we could be subject to significant costs, legal liabilities and could experience a decline in revenue.

loss of members of our senior management team or our inability to attract and retain key personnel could adversely affect

our business.

we fail to comply with federal, state and foreign laboratory licensing requirements, we could lose the ability to perform

our tests or experience disruptions to our business.

we fail to perform our pharma services in accordance with contractual and regulatory requirements, and ethical considerations, we

could be subject to significant costs, legal liabilities and could experience a decline in revenue.

loss of members of our senior management team or our inability to attract and retain key personnel could adversely affect our business.

we fail to comply with federal, state and foreign laboratory licensing requirements, we could lose the ability to perform our tests

or experience disruptions to our business.

reforming the U.S.

healthcare system may have a material adverse effect on our financial condition and operations.

we do not increase our revenues and successfully manage the size of our operations, our business, financial condition and

results of operations could be materially and adversely affected.

risks associated with penny stock classification could affect the marketability of the Company’s common stock and stockholders

we do not increase our revenues and successfully manage the size of our operations, our business, financial condition and results

of operations could be materially and adversely affected.

risks associated with penny stock classification could affect the marketability of the Company’s common stock and stockholders

could find it difficult to sell their shares.

cannot predict the extent to which the delisting of our common stock from Nasdaq and trading on OTCQX®

will adversely

affect our common stock and business and financial condition.

we are unable to maintain and implement effective internal controls over financial reporting, investors may lose confidence

in the accuracy and completeness of our reported financial information and the market price of our common stock may be negatively

believe the delisting of our common stock from Nasdaq and trading on OTCQX ® has adversely affected trading in our

common stock and our ability to seek financing.

we are unable to maintain and implement effective internal controls over financial reporting, investors may lose confidence in the

accuracy and completeness of our reported financial information and the market price of our common stock may be negatively affected.

Related to our Business

Impact of Coronavirus (COVID-19) Pandemic

world is currently suffering a coronavirus (COVID-19) pandemic which is resulting in social distancing, travel bans and quarantines.

Our second quarter Fiscal 2020 revenues were impacted by lower than expected clinical service volume which we believe resulted

from the pandemic-related temporary reduction in non-essential testing procedures.

Our pharma services business also softened

during the second quarter.

During the third and fourth quarters, our clinical services business recovered to levels prior to the

pandemic and our pharma services business was also recovering, but more slowly.

The extent to which the COVID-19 pandemic

impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and

include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak.

particular, the continued spread of the coronavirus globally is adversely affecting global economies and financial markets resulting

in an economic downturn which has materially and adversely impacted our operations including, without limitation, the functioning

of our laboratories, the availability of supplies including reagents, the progress and data collection of our pharma services,

demand for our services and travel, customer demand and employee health and availability.

Additionally, laying off or furloughing

employees may result in our losing critical employees that we will need to replace when our business returns as expected.

furloughing personnel before volume drops or if volume drops more than expected may mean that we are not able to reduce cost quickly

enough to meet our plans or preserve cash.

Further, the impact of the COVID-19 pandemic in part caused us to reevaluate the carrying

charge of our intangible assets and led us to restate certain of our financial statements to record impairment charges and amortization

The COVID-19 pandemic has had and will likely continue to have an adverse impact on our revenue, results of operations

and financial condition.

Biosciences, Inc.

Report on Form 10-K

is substantial doubt relating to our ability to continue as a going concern.

have recurring net losses, which have resulted in an accumulated deficit of $211.8 million as of December 31, 2020.

We have incurred

a net loss of $26.5 million for the fiscal year ended December 31, 2020.

At December 31, 2020, we had cash and cash equivalents

of $2.8 million.

We have concluded that these factors raise substantial doubt about our ability to continue as a going concern

for one year from the issuance of the financial statements contained in this Report.

In addition, the report from our independent

registered public accounting firm for the year ended December 31, 2020 includes an explanatory paragraph stating that our significant

losses and needs to raise additional funds to meet our obligations and sustain operations raise substantial doubt about our ability

to continue as a going concern.

will continue to seek to raise additional working capital through public equity, private equity or debt financings.

to raise additional working capital, or do so on commercially unfavorable terms, it would materially and adversely affect our

business, prospects, financial condition and results of operations, and we may be unable to continue as a going concern.

reports from our independent registered public accounting firm may also contain statements expressing substantial doubt about

our ability to continue as a going concern.

If we seek additional financing to fund our business activities in the future and

there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be

unwilling to provide additional funding to us on commercially reasonable terms, if at all.

we are unable to timely repay our outstanding promissory notes, their holders will have the right to foreclose on our assets.

January 7, 2021, we entered into promissory notes (“Notes”) with our two private equity investors in the aggregate

amount of $5 million with a maturity date of June 30, 2021, which are secured by all of our assets.

We will need additional funding

to repay the Notes as well as to continue operations.

Additional funding may not be available to us on acceptable terms, or at

If we are unable to timely repay the Notes, the private equity investors will have the right to foreclose on substantially

all of our assets.

that we are taking to restructure our business to strengthen the Company’s profile, enhance shareholder values, and increase

There are substantial

doubts about our ability to continue as a going concern due to our operating history of net losses, negative working capital and insufficient

cash flows, and lack of liquidity to pay our current obligations and if we are unable to continue our business, our shares may have little

Our ability to become a profitable

operating company is dependent upon our ability to generate revenues and/or obtain financing adequate to support our cost structure.

We do not currently have enough cash on hand to meet our obligations over the next twelve months, and we cannot provide our stockholders

any assurance that we will be able to raise sufficient funding from the generation of revenue, the sale of our common stock, or through

financing to sustain us over the next twelve months.

For the fiscal year ended

December 31, 2021, we had an operating loss of $14.0 million.

As of December 31, 2021, we had cash and cash equivalents of $3.1 million

and current liabilities of $15.7 million.

The Company must fund its operating deficit until a sustainable level of revenue is achieved.

These factors have raised substantial doubts about our ability to continue as a going concern.

We may need to attempt to raise additional

equity capital by selling shares of common stock or other dilutive or non-dilutive means, if necessary.

However, the doubts raised, relating

to our ability to continue as a going concern, may make investing in our securities an unattractive investment for potential investors.

These factors, among others, may make it difficult to raise any additional capital.

results of operations have been adversely affected and, in the future, could be materially adversely impacted by the coronavirus (COVID-19)

world is currently suffering a COVID-19 pandemic which has resulted in governments around the world implementing stringent measures to

help control the spread of the virus, including stay-at-home orders, temporarily closing businesses, restricting gatherings, restricting

travel, and mandating social distancing and face coverings.

The continuing impact that the COVID-19 pandemic will have on our operations,

including duration, severity and scope, remains highly uncertain and cannot be fully predicted at this time.

Such impact is a function

of the scope of any new virus mutations and outbreaks, the nature of government public health guidelines and the public’s adherence

to those guidelines, the rate of individuals becoming fully vaccinated, the public’s adherence to guidelines to receive booster shots,

the success of business and economic recovery as the pandemic recedes, unemployment levels, the extent to which new shutdowns may be

needed and the impact of any further government economic relief on the U.S.

In particular, the continued spread of the coronavirus

globally is adversely affecting global economies and financial markets which has materially and adversely impacted our operations including,

without limitation, the functioning of our laboratories, the availability of supplies including reagents, the progress and data collection

of our pharma services, demand for our services and travel, customer demand and employee health and availability.

Further, the impact

of the COVID-19 pandemic in part caused us to reevaluate the carrying charge of our intangible assets and led us to restate certain of

our financial statements to record impairment charges and amortization expense.

While we believe we have generally recovered from the

adverse impact that the COVID-19 pandemic had on our business during 2020, we believe that the COVID-19 pandemic could continue to adversely

impact our results of operations, cash flows and financial condition in the future.

ongoing military conflict between Russia and Ukraine has caused geopolitical instability, economic uncertainty, financial markets volatility

and capital markets disruption.

Our business, financial condition and results of operations may be materially adversely affected by any

negative impact on the capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

late February 2022, Russia invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia and other countries

in the region and in the west, including the U.S.

Russia’s invasion, the responses of countries and political bodies to Russia’s

actions, the larger overarching tensions, and Ukraine’s military response and the potential for wider conflict have resulted in

financial market volatility and capital markets disruption, potentially increasing in magnitude, and could have severe adverse effects

on regional and global economic markets and international relations.

The extent and duration of the military action, sanctions and resulting

market disruptions are impossible to predict, but could be substantial.

Russia’s actions, various countries, including the U.S., Canada and the United Kingdom, as well as the European Union, issued broad-ranging

economic sanctions against Russia.

Such sanctions included, among other things, a prohibition on doing business with certain Russian

companies, officials and oligarchs;

a commitment by certain countries and the European Union to remove selected Russian banks from the

Society for Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally;

Russian oil and gas imports to the U.S.;

and restrictive measures to prevent the Russian Central Bank from undermining the impact of

the sanctions.

The current sanctions (and potential further sanctions in response to continued Russian military activity) and other actions

may have adverse effects on regional and global economic markets and lead to instability and lack of liquidity in capital markets, potentially

making it more difficult for us to obtain additional funds and increasing the volatility of our stock price.

Any of the abovementioned

factors could affect our business, prospects, financial condition, and operating results.

that we have taken to restructure our business to strengthen the Company’s profile, enhance shareholder values, and increase

revenue growth may not be as effective as anticipated.

are in the process of implementing certain restructuring and reprioritization plans to strengthen the Company’s profile,

enhance shareholder values, and increase revenue growth, by engaging in actions that includes, but are not limited to, corporate

reprioritization efforts and implementing various cost saving measures.

While we expect to realize cost-saving benefits from these

initiatives, these actions may not be successful and may not bring the cost saving benefits that we anticipate.

Fiscal 2020 and 2021, we implemented certain restructuring

and reprioritization plans to strengthen the Company’s profile, enhance shareholder values, and increase revenue growth, by engaging

in actions that included, but were not limited to, corporate reprioritization efforts and implementation of various

cost saving measures.

These plans included the transition of pharma activities from the Rutherford, NJ facility to our Morrisville,

NC facility in order to optimize the operations of laboratory operations within our pharma services.

We invested several million dollars

to facilitate this relocation which was completed in March 2021, including but not limited to the transfer of personnel, expansion of

the Morrisville facility and validation of transferred processes.

While we expect to realize cost-saving benefits from these initiatives,

these actions may not be successful and may not bring the cost saving benefits that we anticipate.

have a history of operating losses, and our clinical and pharma services have generated limited revenue.

We expect to incur net

losses for the foreseeable future and may never achieve or sustain profitability.

We expect to incur net losses

for the foreseeable future and may never achieve or sustain profitability.

we expect our revenue to grow in the future, there can be no assurance that we will achieve revenue sufficient to offset expenses.

Over the next several years, we expect to (i) continue to devote resources to increase adoption of, and reimbursement for, our

clinical services tests and assays and to use our bioinformatics data to develop and enhance our clinical services products and

services, (ii) leverage and invest in our pharma services to expand and enhance our pharma services and (iii) develop and acquire

additional products and services.

However, our business may never achieve or sustain profitability, and our failure to achieve

and sustain profitability in the future could have a material adverse effect on our business, financial condition and results

of operations, as well as cause the market price of our common stock to decline.

Biosciences, Inc.

Report on Form 10-K

the next several years, we expect to (i) continue to devote resources to increase adoption of, and reimbursement for, our clinical services

tests and assays and to use our bioinformatics data to develop and enhance our clinical services products and services, (ii) leverage

and invest in our pharma services to expand and enhance our pharma services and (iii) develop and acquire additional products and services.

However, our business may never achieve or sustain profitability, and our failure to achieve and sustain profitability in the future

could have a material adverse effect on our business, financial condition and results of operations, as well as cause the market price

of our common stock to decline.

have and may continue to experience intangible asset impairment charges.

are required to evaluate the carrying value of intangibles at least annually, and between annual tests if events or circumstances

warrant such a test.

We review the recoverability of long-lived assets and finite-lived intangible assets whenever events or changes

in circumstances indicate that the carrying value of such assets may not be recoverable.

If the sum of the expected future undiscounted

cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value of the

asset to its fair value measured by future discounted cash flows.

This analysis requires estimates of the amount and timing of

projected cash flows and, where applicable, judgments associated with, among other factors, the appropriate discount rate.

estimates are critical in determining whether any impairment charge should be recorded and the amount of such charge if an impairment

loss is deemed to be necessary.

Writing down or reserving for other intangible assets or impairments has had and would have a

negative and unexpected impact on our net worth.

January 2021, we filed restated financial statements contained in the Company’s Annual Report on Form 10-K for the

years ended December 31, 2014 through 2019 as well as the financial statements contained in the Quarterly Reports on Form 10-Q

for each quarterly period within those fiscal years as well as the quarterly periods ended March 31, 2020 and June 30, 2020.

restatements reflected a non-cash impairment charge and amortization expense related to our Barrett intangible asset of approximately

have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess

our future viability.

are required to evaluate the carrying value of intangibles at least annually, and between annual tests if events or circumstances warrant

We review the recoverability of long-lived assets and finite-lived intangible assets whenever events or changes in circumstances

indicate that the carrying value of such assets may not be recoverable.

If the sum of the expected future undiscounted cash flows is

less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value of the asset to its fair

value measured by future discounted cash flows.

This analysis requires estimates of the amount and timing of projected cash flows and,

where applicable, judgments associated with, among other factors, the appropriate discount rate.

Such estimates are critical in determining

whether any impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary.

down or reserving for other intangible assets or impairments has had and would have a negative and unexpected impact on our net worth.

January 2021, we filed restated financial statements contained in the Company’s Annual Report on Form 10-K for the years ended

December 31, 2014 through 2019 as well as the financial statements contained in the Quarterly Reports on Form 10-Q for each quarterly

period within those fiscal years as well as the quarterly periods ended March 31, 2020 and June 30, 2020.

Such restatements reflected

a non-cash impairment charge and amortization expense related to our Barrett’s intangible asset of approximately $18 million.

have a limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our

future viability.

began commercial sales of our molecular diagnostic tests in late 2014.

On July 15, 2019, we acquired the pharma services business.

We conduct our business through our wholly-owned subsidiaries, Interpace Diagnostics, LLC, which was formed in Delaware in 2013,

Interpace Diagnostics Corporation (formerly known as RedPath Integrated Pathology, Inc.), which was formed in Delaware in 2007,

and Interpace BioPharma, Inc., which was formed in Delaware in 2019.

On November 12, 2019 we changed the name of Interpace Diagnostics

to Interpace Biosciences, Inc.

conduct our business through our wholly-owned subsidiaries, Interpace Diagnostics, LLC, which was formed in Delaware in 2013, Interpace

Diagnostics Corporation (formerly known as RedPath Integrated Pathology, Inc.), which was formed in Delaware in 2007, and Interpace BioPharma,

Inc., which was formed in Delaware in 2019.

On November 12, 2019 we changed the name of Interpace Diagnostics Group, Inc.

Biosciences, Inc.

and that of our newly-formed subsidiary, Interpace BioPharma, Inc.

to Interpace Pharma

Solutions, Inc.

Consequently, any evaluations about our future success, performance or viability may not be as accurate as they

could be if we had a longer operating history.

to Interpace Pharma Solutions, Inc.

Consequently,

any evaluations about our future success, performance or viability may not be as accurate as they could be if we had a longer operating

quarterly and annual revenues and operating results may vary which may cause the price of our common stock to fluctuate.

3 unchanged sentences

or lack of progress in developing and commercializing tests and services;

or unfavorable decisions about our tests or services from government regulators, insurances companies, customers, or other

their party payers;

or unfavorable decisions about our tests or services or reimbursement rates from government regulators, insurances companies,

customers, or other third party payers;

commencement, delay, cancellation or completion of sales and marketing programs;

2 unchanged sentences

in our relationships with key collaborators, suppliers, customers and third parties;

Biosciences, Inc.

Report on Form 10-K

in net revenue due to changes in the valuation of our patient accounts;

5 unchanged sentences

in regulations related to diagnostics, pharmaceutical, biotechnology and healthcare companies.

believe that quarterly, and in certain instances annual, comparisons of our financial results are not necessarily meaningful and

should not be relied upon as an indication of future performance.

Fluctuations in quarterly and annual results could materially

and adversely affect the market price of our common stock in a manner unrelated to our long-term operating performance.

believe that quarterly, and in certain instances annual, comparisons of our financial results are not necessarily meaningful and should

not be relied upon as an indication of future performance.

Fluctuations in quarterly and annual results could materially and adversely

affect the market price of our common stock in a manner unrelated to our long-term operating performance.

depend on sales and reimbursements from our clinical services for more than 50% of our revenue, and we will need to generate sufficient

2 unchanged sentences

We have molecular diagnostics tests and complimentary service extensions

that are in development, but there can be no assurance that we will be able to successfully commercialize or sufficiently grow

that are in development, but there can be no assurance that we will be able to successfully commercialize or sufficiently increase revenues

from those tests.

If we are unable to increase sales of our molecular diagnostic tests, expand reimbursement for these tests, or successfully

develop and commercialize other molecular diagnostic tests, our revenue and our ability to achieve and sustain profitability would

be impaired, and this could have a material adverse effect on our business, financial condition and results of operations, and

the market price of our common stock could decline.

develop and commercialize other molecular diagnostic tests, our revenue and our ability to achieve and sustain profitability would be

impaired, and this could have a material adverse effect on our business, financial condition and results of operations, and the market

price of our common stock could decline.

rely on third-parties to process and transmit claims to payers for our clinical services, and any delay in processing or transmitting

could have an adverse effect on our revenue and financial condition.

rely on third-parties to provide overall processing of claims and to transmit actual claims to payers based on specific payer

billing formats.

In 2019, we transitioned to a new third-party processor and there can be no assurance that we will not experience

interruptions or collection delays with our future billings, an occurrence of which may adversely impact our revenue and financial

If claims for our clinical services are not submitted to payers on a timely basis, or if we are again required to switch

to a different third-party processor to handle claim submissions, we may experience delays in our ability to process claims and

receive payment from payers, which could have a material adverse effect on our business, financial condition and results of operations.

rely on third-parties to provide overall processing of claims and to transmit actual claims to payers based on specific payer billing

In 2019, we transitioned to a new third-party processor and there can be no assurance that we will not experience interruptions

or collection delays with our future billings, an occurrence of which may adversely impact our revenue and financial condition.

for our clinical services are not submitted to payers on a timely basis, or if we are again required to switch to a different third-party

processor to handle claim submissions, we may experience delays in our ability to process claims and receive payment from payers, which

could have a material adverse effect on our business, financial condition and results of operations.

to how we recognize revenue, our quarterly revenue and operating results are likely to fluctuate.

adopted Financial Accounting Standards Board (“FASB”) ASU 2014-09, “Revenue from Contracts with Customers (Topic

(or “ASC 606”) effective January 1, 2018.

As of this date, all revenue is recognized on the accrual basis,

based upon actual collection histories for tests and services and respective payers or payer groups.

Due to this change in accounting

and the estimations required under ASC 606, our quarterly revenue and operating results are likely to fluctuate.

As we recognize

revenue from payers under ASC 606, we may subsequently determine that certain judgments underlying estimated reimbursement change,

or that the estimates we used at the time we accrued such revenue vary materially from the actual reimbursements subsequently

realized, and our financial results could be negatively impacted in future quarters.

We experienced an adjustment in our estimate

for variable consideration under ASC 606 during the fourth quarter of 2019 which resulted in a $5.2 million reduction in revenue

recognized year to date.

Biosciences, Inc.

Report on Form 10-K

a result, comparing our operating results on a period-to-period basis may be difficult due to fluctuations resulting from the

estimation process under ASC 606 and such comparisons may not be meaningful.

You should not rely on our past results as an indication

of our future performance.

In addition, these fluctuations in revenue may make it difficult in the near term for us, research

analysts and investors to accurately forecast our revenue and operating results.

If our revenue or operating results fall below

consensus expectations, the price of our common stock would likely decline.

deterioration in the collectability of our accounts receivable could have a material adverse effect on our business, financial

condition and results of operations.

adopted Financial Accounting Standards Board (“FASB”) ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”

(or “ASC 606”) effective January 1, 2018.

As of this date, all revenue is recognized on the accrual basis, based upon actual

collection histories for tests and services and respective payers or payer groups.

Due to this change in accounting and the estimations

required under ASC 606, our quarterly revenue and operating results are likely to fluctuate.

As we recognize revenue from payers under

ASC 606, we may subsequently determine that certain judgments underlying estimated reimbursement change, or that the estimates we used

at the time we accrued such revenue vary materially from the actual reimbursements subsequently realized, and our financial results could

be negatively impacted in future quarters.

We experienced an adjustment in our estimate for variable consideration under ASC 606 during

the fourth quarter of 2019 which resulted in a $5.2 million reduction in revenue recognized year to date;

however there have been no

such adjustments since then.

a result, comparing our operating results on a period-to-period basis may be difficult due to fluctuations resulting from the estimation

process under ASC 606 and such comparisons may not be meaningful.

You should not rely on our past results as an indication of our future

In addition, these fluctuations in revenue may make it difficult in the near term for us, research analysts and investors

to accurately forecast our revenue and operating results.

If our revenue or operating results fall below consensus expectations, the

price of our common stock would likely decline.

deterioration in the collectability of our accounts receivable could have a material adverse effect on our business, financial condition

and results of operations.

of accounts receivable from third-party payers and clients is critical to our operating performance.

Our primary collection risks

are (i) the risk of overestimating our net revenue at the time of billing, which may result in us receiving less than the recorded

receivable, (ii) the risk of non-payment as a result of denied claims, (iii) in certain states, the risk that clients will fail

to remit insurance payments to us when the commercial insurance company pays out-of-network claims directly to the client and

(iv) resource and capacity constraints that may prevent us from handling the volume of billing and collection issues in a timely

Additionally, our ability to hire and retain experienced personnel affects our ability to bill and collect accounts in

a timely manner.

We routinely review accounts receivable balances in conjunction with these factors and other economic conditions

that might ultimately affect the collectability of the client accounts and factor them into our estimation of collectability as

Significant changes in business operations, payer mix or economic conditions, including changes resulting from legislation

or other health reform efforts (including to repeal or significantly change the Affordable Care Act), could affect our collection

of accounts receivable, cash flows and results of operations.

In addition, increased client concentration in states that permit

commercial insurance companies to pay out-of-network claims directly to the client instead of the provider, could adversely affect

our collection of receivables.

Unexpected changes in reimbursement rates by third-party payers could have a material adverse effect

on our business, financial condition and results of operations.

inability to finance our business on acceptable terms in the future may limit our ability to develop and commercialize products

and services and grow our business.

Our primary collection risks are

(i) the risk of overestimating our net revenue at the time of billing, which may result in us receiving less than the recorded receivable,

(ii) the risk of non-payment as a result of denied claims, (iii) in certain states, the risk that clients will fail to remit insurance

payments to us when the commercial insurance company pays out-of-network claims directly to the client and (iv) resource and capacity

constraints that may prevent us from handling the volume of billing and collection issues in a timely manner.

Additionally, our ability

to hire and retain experienced personnel affects our ability to bill and collect accounts in a timely manner.

We routinely review accounts

receivable balances in conjunction with these factors and other economic conditions that might ultimately affect the collectability of

the client accounts and factor them into our estimation of collectability as warranted.

Significant changes in business operations, payer

mix or economic conditions, including changes resulting from legislation or other health reform efforts (including to repeal or significantly

change the Affordable Care Act), could affect our collection of accounts receivable, cash flows and results of operations.

increased client concentration in states that permit commercial insurance companies to pay out-of-network claims directly to the client

instead of the provider, could adversely affect our collection of receivables.

Unexpected changes in reimbursement rates by third-party

payers could have a material adverse effect on our business, financial condition and results of operations.

Our business is substantially

dependent on third-party reimbursement.

Any change in the overall health care reimbursement system may adversely impact our business.

Our revenues are substantially

dependent on third-party reimbursement.

We are paid directly by private insurers and governmental agencies, often on a fixed fee basis.

If the average fees allowable by private insurers or governmental agencies were reduced, the negative impact on revenues could have a

material effect on our business, financial condition, results of operations and cash flows.

Also, if amounts owed to us by payors are

reduced or not paid on a timely basis, we may be required to increase our concessions and/or decrease our revenues.

Changes to the health

care reimbursement system that favor other technologies or treatment regimens and reduce our reimbursements may adversely affect our

ability to market our services profitably.

Overall, such dependency and potential changes could materially and adversely affect our business,

financial condition, results of operations and cash flows.

inability to finance our business on acceptable terms in the future may limit our ability to develop and commercialize products and services

and grow our business.

business is not currently operating on a cash flow breakeven or positive basis, and as a result, we may need to finance our business

in the future through collaborations, equity offerings, debt financings, licensing arrangements or other dilutive or non-dilutive

On January 7, 2021, we entered into promissory notes (“Notes”) with our two private equity investors in the

aggregate amount of $5 million with a maturity date of June 30, 2021 which are secured by all of our assets.

We will need additional

funding to repay the Notes as well as to continue operations.

Additional funding may not be available to us on acceptable terms,

in the future through collaborations, equity offerings, debt financings, licensing arrangements or other dilutive or non-dilutive means.

On January 7, 2021, we entered into promissory notes (“Notes”) with our two private equity investors in the aggregate amount

of $5 million with a maturity date of June 30, 2021 which were secured by all of our assets.

In October 2021, the Company entered into

a $7.5 million revolving credit facility with Comerica Bank (“Comerica”).

In addition, also in October 2021, the Company

entered into an $8.0 million term loan with BroadOak Fund V, L.P.

(“BroadOak”), the proceeds of which were used to repay

in full at their maturity the Notes extended by our two private equity investors.

The BroadOak loan agreement contains affirmative

and negative restrictive covenants, including restrictions on certain mergers, acquisitions, investments and encumbrances which could

adversely affect our ability to conduct our business.

The BroadOak loan agreement also contains customary events of default.

loan agreement contains affirmative and negative restrictive covenants that are applicable whether or not any amounts are outstanding

under the Comerica loan agreement.

These restrictive covenants, which include restrictions on certain mergers, acquisitions, investments,

encumbrances, etc., could adversely affect our ability to conduct our business.

The Comerica loan agreement also contains financial covenants

requiring specified minimum liquidity and minimum revenue thresholds and also contains customary events of default.

We will need additional funding to repay the Comerica

and BroadOak borrowings as well as to continue operations.

Additional funding may not be available to us on acceptable terms, or at all.

If we seek to raise funds by issuing additional equity securities, dilution to our stockholders could result.

offering of equity securities must be approved by the holders of our Series B Preferred Stock who are our private equity investors.

In addition, we are currently ineligible to use a Form S-3 shelf registration statement.

If we are unable to timely repay the

Notes, the private equity investors will have the right to foreclose on our assets.

The incurrence of additional indebtedness

or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive

covenants, such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability

to acquire or license intellectual property rights, limitations on our ability to enter into mergers or acquisition of assets,

and other operating restrictions that could adversely affect our ability to conduct our business.

Any public offering of

equity securities must be approved by the holders of our Series B Preferred Stock who are our private equity investors.

we are currently ineligible to use a Form S-3 shelf registration statement.

If we are unable to timely repay the Comerica and BroadOak

borrowings when due, Comerica and BroadOak will have the right to foreclose on our assets (BroadOak being subordinated to Comerica).

The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations

and could also result in restrictive covenants, such as limitations on our ability to incur additional debt or issue additional equity,

limitations on our ability to acquire or license intellectual property rights, limitations on our ability to enter into mergers or acquisition

of assets, and other operating restrictions that could adversely affect our ability to conduct our business.

we are unable to timely repay our outstanding obligations, our secured lenders will have the right to foreclose on our assets.

In October 2021, the Company

entered into a $7.5 million revolving credit facility with Comerica and an $8.0 million term loan with BroadOak, which are secured by

all of our assets.

We will need additional funding to repay these outstanding obligations as well as to continue operations.

funding may not be available to us on acceptable terms, or at all.

If we are unable to timely repay these outstanding obligations, our

secured lenders will have the right to foreclose on substantially all of our assets.

Related to our Preferred Stock

have issued and may issue additional preferred stock in the future, and the terms of the preferred stock may reduce the value

of our common stock.

have issued and may issue additional preferred stock in the future, and the terms of the preferred stock may reduce the value of our

common stock.

are authorized to issue up to five million shares of preferred stock in one or more series.

Our Board may determine the terms

of future preferred stock offerings without further action by our stockholders.

If we issue additional preferred stock, it could

affect stockholder rights or reduce the market value of our outstanding common stock.

In particular, specific rights granted to

future holders of preferred stock may include voting rights, preferences as to dividends and liquidation, conversion and redemption

rights, sinking fund provisions, and restrictions on our ability to merge with or sell our assets to a third party.

20, 2021, we have designated, issued and sold an aggregate of 47,000 outstanding shares of Series B Preferred Stock.

Biosciences, Inc.

Report on Form 10-K

private equity firms and their affiliate’s control, on an as-converted basis, an aggregate of 66% of our outstanding shares

of common stock through their holdings of our Series B Preferred Stock, and this concentration of ownership along with their authority

for designation rights for a majority of our directors and their right to approve certain of our actions has a substantial influence

on our decisions.

Capital Partners (“Ampersand”) holds 28,000 shares of our Series B Preferred Stock and 1315 Capital holds 19,000 shares

of our Series B Preferred Stock.

Accordingly, as of March 26, 2021, on an as converted basis, Ampersand and its affiliates

beneficially own 39.1% of the Company’s outstanding common stock of 4,112,055 and 1315 Capital and its affiliates

beneficially own 26.5%.

The conversion and sale by such holders of one or more large blocks of our common stock could have a negative

impact on the market price of our common stock.

stockholders, acting together, have control over the outcome of matters submitted to our stockholders for approval, including

the election of directors and any merger, consolidation or sale of all or substantially all of our assets.

Holders of Series B

Preferred Stock were granted director designation rights over a majority of our Board.

Accordingly, these stockholders, acting

together, have significant influence over our management and affairs.

This concentration of ownership might harm the market price

of our common stock by delaying, deterring or preventing a change in control, making some transactions more difficult or impossible

to complete without the support of these shareholders, regardless of the impact of this transaction on our other shareholders.

Such ownership interests could effectively deter a third party from making an offer to buy us, which might involve a premium over

our current stock price or other benefits for our stockholders, or otherwise prevent changes in the control or management.

example, this concentration of ownership may have the effect of impeding a merger, consolidation, takeover or other business combination

involving us or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

Our Board may determine the terms of future

preferred stock offerings without further action by our stockholders.

If we issue additional preferred stock, it could affect stockholder

rights or reduce the market value of our outstanding common stock.

In particular, specific rights granted to future holders of preferred

stock may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights, sinking fund provisions,

and restrictions on our ability to merge with or sell our assets to a third party.

We have designated, issued and sold an aggregate of

47,000 outstanding shares of Series B Preferred Stock.

private equity firms and their affiliate’s control, on an as-converted basis, an aggregate of 65% of our outstanding shares of

common stock through their holdings of our Series B Preferred Stock, and this concentration of ownership along with their authority for

designation rights for a majority of our directors and their right to approve certain of our actions has a substantial influence on our

holds 28,000 shares of our Series B Preferred Stock and 1315 Capital holds 19,000 shares of our Series B Preferred Stock.

on an as converted basis, Ampersand and its affiliates beneficially own 38.7% of the Company’s outstanding common stock of 4,217,063

and 1315 Capital and its affiliates beneficially own 26.3%.

The conversion and sale by such holders of one or more large blocks of our

common stock could have a negative impact on the market price of our common stock.

stockholders, acting together, have control over the outcome of matters submitted to our stockholders for approval, including the election

of directors and any merger, consolidation or sale of all or substantially all of our assets.

Holders of Series B Preferred Stock were

granted director designation rights over a majority of our Board.

Accordingly, these stockholders, acting together, have significant

influence over our management and affairs.

This concentration of ownership might harm the market price of our common stock by delaying,

deterring or preventing a change in control, making some transactions more difficult or impossible to complete without the support of

these shareholders, regardless of the impact of this transaction on our other shareholders.

Such ownership interests could effectively

deter a third party from making an offer to buy us, which might involve a premium over our current stock price or other benefits for

our stockholders, or otherwise prevent changes in the control or management.

For example, this concentration of ownership may have the

effect of impeding a merger, consolidation, takeover or other business combination involving us or discouraging a potential acquirer

from making a tender offer or otherwise attempting to obtain control of us.

holders of our Series B Preferred Stock have preferential rights that may be adverse to holders of our common stock.

holders of our Series B Preferred Stock have preferential rights with respect to distributions upon a liquidation of the Company,

including certain business combinations or sales of assets deemed to be a liquidation.

Accordingly, no distributions upon liquidation

may be made to the holders of common stock until the holders of the Series B Preferred Stock have been paid their liquidation

As a result, it is possible that, on a liquidation event and depending on the price thereof, all amounts available

for the holders of equity of the Company would be paid to the holders of Series B Preferred Stock, and that the holders of common

stock would not receive any payment.

In addition, the holders of Series B Preferred Stock have the right to approve certain actions

of the Company.

April 2020, 1315 Capital consented to, and agreed to vote (by proxy or otherwise) their Series B Preferred Stock in favor of any

“Fundamental Action”

taken by the Company as determined by the Company’s Board of Directors.

“Fundamental

Actions”

include the Company’s ability to a) authorize, create or issue any debt securities for borrowed money or

b) merge with or acquire all or substantially all of the assets of one or more other companies or entities with a

value in excess of $20 million;

c) transfer, by sale, exclusive license or otherwise, material intellectual property rights of

the Company or any of its direct or indirect subsidiaries, other than those accomplished in the ordinary course of business;

declare or pay any cash dividend or make any cash distribution on any equity interests of the Company other than the Series B

d) incur any additional individual debt, indebtedness for borrowed money or other additional liabilities;

and e) change

any accounting methods or practices of the Company, except for those changes required by GAAP or applicable regulatory agencies

or authorities.

Biosciences, Inc.

Report on Form 10-K

holders of our Series B Preferred Stock have preferential rights with respect to distributions upon a liquidation of the Company, including

certain business combinations or sales of assets deemed to be a liquidation.

Accordingly, no distributions upon liquidation may be made

to the holders of common stock until the holders of the Series B Preferred Stock have been paid their liquidation preference.

it is possible that, on a liquidation event and depending on the price thereof, all amounts available for the holders of equity of the

Company would be paid to the holders of Series B Preferred Stock, and that the holders of common stock would not receive any payment.

In addition, the holders of Series B Preferred Stock have the right to approve certain actions of the Company.

April 2020, 1315 Capital consented to, and agreed to vote (by proxy or otherwise) their Series B Preferred Stock in favor of any “Fundamental

Action” taken by the Company as determined by the Company’s Board of Directors.

“Fundamental Actions” include

the Company’s ability to a) authorize, create or issue any debt securities for borrowed money or funded debt;

b) merge with or

acquire all or substantially all of the assets of one or more other companies or entities with a value in excess of $20 million;

by sale, exclusive license or otherwise, material intellectual property rights of the Company or any of its direct or indirect subsidiaries,

other than those accomplished in the ordinary course of business;

d) declare or pay any cash dividend or make any cash distribution on

any equity interests of the Company other than the Series B Shares;

e) incur any additional individual debt, indebtedness for borrowed

money or other additional liabilities;

and f) change any accounting methods or practices of the Company, except for those changes required

by GAAP or applicable regulatory agencies or authorities.

Related to our Clinical Services

for our clinical services tests is complex, and we must dedicate substantial time and resources to the billing process to be paid

for our clinical services tests.

for our clinical services tests is complex, and we must dedicate substantial time and resources to the billing process to be paid for

our clinical services tests.

for clinical services is complex, time consuming and expensive.

Depending on the billing arrangement and applicable law, we bill

various payers, including Medicare, insurance companies and patients, all of which have different billing requirements.

extent laws or contracts require us to bill patient co-payments or co-insurance, we must also comply with these requirements.

We may also face increased risk in our collection efforts, including write-offs of doubtful accounts and long collection cycles,

which could have a material adverse effect on our clinical services, results of operations and financial condition.

Among others,

the following factors make the billing process complex:

Depending on the billing arrangement and applicable law, we bill various

payers, including Medicare, insurance companies and patients, all of which have different billing requirements.

To the extent laws or

contracts require us to bill patient co-payments or co-insurance;

we must also comply with these requirements.

We may also face

increased risk in our collection efforts, including write-offs of doubtful accounts and long collection cycles, which could have a material

adverse effect on our clinical services, results of operations and financial condition.

Among others, the following factors make the

billing process complex:

between the list price for our molecular diagnostic tests and the reimbursement rates of payers;

with complex federal and state regulations related to billing Medicare;

in billing policy reimbursement by CMS;

among payers as to which party is responsible for payment;

6 unchanged sentences

overall performance and effectiveness of our billing service providers.

we grow and introduce new clinical services tests and other services, we will likely need to add new codes to our billing process

as well as our financial reporting systems.

Failure or delays in effecting these changes in external billing and internal systems

and processes could negatively affect our revenue and cash flow from our clinical services.

Additionally, our billing activities

require us to implement compliance procedures and oversight, train and monitor our employees or contractors, challenge coverage

and payment denials, assist patients in appealing claims, and undertake internal audits to evaluate compliance with applicable

laws and regulations as well as internal compliance policies and procedures.

Payers also conduct external audits to evaluate payments,

which add further complexity to the billing process.

These billing complexities, and the related uncertainty in obtaining payment

for our diagnostic solutions, could negatively affect our revenue and cash flow, our ability to achieve profitability, and the

consistency and comparability of our results of operations.

depend on a few payers for a significant portion of our revenue for our clinical services, and if one or more significant payers

stops providing reimbursement or decreases the amount of reimbursement for our tests, our revenue could decline.

for clinical services tests performed on patients covered by Medicare was approximately 50% of our revenue for the fiscal year

ended December 31, 2020.

The percentage of our revenue derived from significant payers for our clinical services tests is expected

to fluctuate from period to period as our revenue increases, as additional payers provide reimbursement for such tests, and in

the event that one or more payers were to stop reimbursing for our clinical services tests or change their reimbursement amounts.

Solutions has been and is the current regional MAC that handles claims processing for Medicare services with jurisdiction for

PancraGEN ®

, ThyGeNEXT ®

, ThyraMIR ®

, and RespriDx ®

On a five-year rotational

basis, Medicare requests bids for its regional MAC services.

Any future changes in the MAC processing or coding for Medicare claims

for our molecular diagnostic tests could result in a change in the coverage or reimbursement rates for such molecular diagnostic

tests, or the loss of coverage.

Biosciences, Inc.

Report on Form 10-K

PancraGEN ®

, ThyraMIR ®

and ThyGeNEXT ®

tests are reimbursed by Medicare based on applicable

RespriDx ®

is currently only covered by the Medicare Advantage program and our BarreGEN ®

assay is not reimbursed at all.

Any future reductions from the current reimbursement rates for our clinical services tests would

have a material adverse effect on business and results of operations.

we have entered into contracts with certain third-party payers which establish allowable rates of reimbursement for our clinical

services tests, payers may suspend or discontinue reimbursement at any time, may require or increase co-payments from patients,

or may reduce the reimbursement rates paid to us.

Any such actions could have a negative effect on our revenue for our clinical

services tests.

payers do not provide reimbursement, rescind or modify their reimbursement policies or delay payments for clinical services, or

if we are unable to successfully negotiate additional reimbursement contracts for our clinical services tests, our commercial

success could be compromised.

we grow and introduce new clinical services tests and other services, we will likely need to add new codes to our billing process as

well as our financial reporting systems.

Failure or delays in effecting these changes in external billing and internal systems and processes

could negatively affect our revenue and cash flow from our clinical services.

Additionally, our billing activities require us to implement

compliance procedures and oversight, train and monitor our employees or contractors, challenge coverage and payment denials, assist patients

in appealing claims, and undertake internal audits to evaluate compliance with applicable laws and regulations as well as internal compliance

policies and procedures.

Payers also conduct external audits to evaluate payments, which add further complexity to the billing process.

These billing complexities, and the related uncertainty in obtaining payment for our diagnostic solutions, could negatively affect our

revenue and cash flow, our ability to achieve profitability, and the consistency and comparability of our results of operations.

We depend on a few payers

for a significant portion of our revenue for our clinical services, and if one or more significant payers, including CMS, stops

providing reimbursement or decreases the amount of reimbursement for our tests, or if we are unable to successfully negotiate additional

reimbursement contracts for our clinical services tests, our revenue could decline and our commercial success could be compromised.

for clinical services tests performed on patients covered by Medicare was approximately 54% of our revenue for the fiscal year ended

December 31, 2021.

The percentage of our revenue derived from significant payers for our clinical services tests is expected to fluctuate

from period to period as our revenue increases, as additional payers provide reimbursement for such tests, and in the event that one

or more payers were to stop reimbursing for our clinical services tests or change their reimbursement amounts.

In January 2022, the Company

announced that CMS issued a new billing policy whereby CMS will no longer reimburse for the use of the Company’s ThyGeNEXT ®

and ThyraMIR ® tests when

billed together by the same provider/supplier for the same beneficiary on the same date of service.

On February 28, 2022, the Company

announced that the National Correct Coding Initiative (NCCI) program issued a response on behalf of CMS stating that the January 2022

billing policy reimbursement change for ThyGeNEXT ® (0245U) and ThyraMIR® (0018U) tests has been retroactively reversed

to January 1, 2022.

CMS is currently reimbursing the Company for one of its two thyroid tests, and has agreed to retroactively reimburse

for the second test once they have completed their internal administrative adjustments.

We have been notified by CMS/NCCI that processing of claims for dates

of service after January 1, 2022 will be completed beginning July 1, 2022.

As of the date of this filing, the Company has not yet realized the full cash collection

benefit of current and retroactive Thyroid testing and such cash collections may be temporarily reduced or delayed until we resolved

the matter with CMS.

Solutions has been and is the current regional MAC that handles claims processing for Medicare services with jurisdiction for PancraGEN ® ,

ThyGeNEXT ® , ThyraMIR ® , and RespriDx ® .

On a five-year rotational basis, Medicare requests

bids for its regional MAC services.

Any future changes in the MAC processing or coding for Medicare claims for our molecular diagnostic

tests could result in a change in the coverage or reimbursement rates for such molecular diagnostic tests, or the loss of coverage.

PancraGEN ® , ThyraMIR ® and ThyGeNEXT ® tests are reimbursed by Medicare based on applicable

RespriDx ® is currently only covered by the Medicare Advantage program and our BarreGEN ® assay

is not reimbursed at all.

Any future reductions from the current reimbursement rates for our clinical services tests would have a material

adverse effect on business and results of operations.

we have entered into contracts with certain third-party payers which establish allowable rates of reimbursement for our clinical services

tests, payers may suspend or discontinue reimbursement at any time, may require or increase co-payments from patients, or may reduce

the reimbursement rates paid to us.

Any such actions could have a negative effect on our revenue for our clinical services tests.

payers do not provide reimbursement, rescind or modify their reimbursement policies or delay payments for clinical services, or if we

are unable to successfully negotiate additional reimbursement contracts for our clinical services tests, our commercial success could

be compromised.

may generally not order our clinical services tests unless payers reimburse a substantial portion of the test price.

uncertainty concerning third-party reimbursement of any test incorporating new molecular diagnostic technology.

Reimbursement

by a payer may depend on a number of factors, including a payer’s determination that tests such as our molecular diagnostic

(a) not experimental or investigational;

There is uncertainty

concerning third-party reimbursement of any test incorporating new molecular diagnostic technology.

Reimbursement by a payer may depend

on a number of factors, including a payer’s determination that tests such as our molecular diagnostic tests are:

(a) not experimental

or investigational;

(b) pre-authorized and appropriate for the patient;

supported by peer-reviewed publications;

(d) supported by peer-reviewed publications;

and (e) included in clinical practice guidelines.

Since each payer generally makes its

own decision as to whether to establish a policy or enter into a contract to reimburse our clinical services tests, seeking these

approvals is a time-consuming and costly process.

Although we have contracted rates of reimbursement with certain payers, which

establishes allowable rates of reimbursement for our PancraGEN ®

, ThyGeNEXT ®

, ThyraMIR ®

and RespriDx ®

assays, payers may suspend or discontinue reimbursement at any time, may require or increase

co-payments from patients, may impose pre-authorization requirements or may reduce the reimbursement rates paid to us.

actions could have a negative effect on our revenue for our clinical services tests.

have contracted rates of reimbursement with select payers for PancraGEN ®

, ThyGeNEXT ®

and ThyraMIR ®

and to a limited extent, RespriDx ®

Without a contracted rate for reimbursement, claims may be denied upon

submission, and we may need to appeal the claims.

Since each payer generally makes its own decision as to whether to establish a policy

or enter into a contract to reimburse our clinical services tests, seeking these approvals is a time-consuming and costly process.

we have contracted rates of reimbursement with certain payers, which establishes allowable rates of reimbursement for our PancraGEN ® ,

ThyGeNEXT ® , ThyraMIR ® and RespriDx ® assays, payers may suspend or discontinue reimbursement

at any time, may require or increase co-payments from patients, may impose pre-authorization requirements or may reduce the reimbursement

rates paid to us.

Any such actions could have a negative effect on our revenue for our clinical services tests.

have contracted rates of reimbursement with select payers for PancraGEN ® , ThyGeNEXT ® and ThyraMIR ®

and to a limited extent, RespriDx ® .

Without a contracted rate for reimbursement, claims may be denied upon submission,

and we may need to appeal the claims.

The appeals process is time consuming and expensive, and may not result in payment.

We expect to continue to focus resources on increasing adoption of and coverage and reimbursement for our molecular diagnostic

We cannot, however, predict whether, under what circumstances, or at what payment levels payers will reimburse us for our

molecular diagnostic tests, if at all.

In addition to our current commercial products on the market and in our pipeline, the launch

of any new molecular diagnostic tests in the future may require that we expend substantial time and resources in order to obtain

and retain reimbursement.

Also, payer consolidation can create uncertainty as to whether coverage and contracts with existing

payers will even remain in effect.

Finally, commercial payers may tie their allowable rates to Medicare rates, and should Medicare

reduce their rates, we may be negatively impacted.

If we fail to establish broad adoption of and reimbursement for our assays,

or if we are unable to maintain existing reimbursement from payers, our ability to generate revenue for our clinical services

tests could be harmed and this could have a material adverse effect on our business, financial condition and results of operations.

continue to focus resources on increasing adoption of and coverage and reimbursement for our molecular diagnostic tests.

We cannot, however,

predict whether, under what circumstances, or at what payment levels payers will reimburse us for our molecular diagnostic tests, if

In addition to our current commercial products on the market and in our pipeline, the launch of any new molecular diagnostic

tests in the future may require that we expend substantial time and resources in order to obtain and retain reimbursement.

consolidation can create uncertainty as to whether coverage and contracts with existing payers will even remain in effect.

Finally, commercial

payers may tie their allowable rates to Medicare rates, and should Medicare reduce their rates, we may be negatively impacted.

fail to establish broad adoption of and reimbursement for our assays, or if we are unable to maintain existing reimbursement from payers,

our ability to generate revenue for our clinical services tests could be harmed and this could have a material adverse effect on our

business, financial condition and results of operations.

may experience a reduction in revenue if physicians decide not to order our clinical services tests.

we are unable to create or maintain sufficient demand for our clinical services tests or if we are unable to expand our product

offerings, we may not become profitable.

To generate demand, we will need to continue to educate physicians and the medical community

on the value and benefits of our clinical services tests in order to change clinical practices through clinical trials, published

papers, presentations at scientific conferences and one-on-one education by our commercial sales force, which are costly and time-consuming.

In addition, our ability to obtain and maintain adequate reimbursement from third-party payers for our clinical services tests

will be critical to generating revenue.

Biosciences, Inc.

Report on Form 10-K

many cases, practice guidelines in the United States have recommended therapies or surgery to determine if a patient’s condition

we are unable to create or maintain sufficient demand for our clinical services tests or if we are unable to expand our product offerings,

we may not become profitable.

To generate demand, we will need to continue to educate physicians and the medical community on the value

and benefits of our clinical services tests in order to change clinical practices through clinical trials, published papers, presentations

at scientific conferences and one-on-one education by our commercial sales force, which are costly and time-consuming.

In addition, our

ability to obtain and maintain adequate reimbursement from third-party payers for our clinical services tests will be critical to generating

many cases, practice guidelines in the United States have recommended therapies or surgery to determine if a patient’s condition

is malignant or benign.

Accordingly, physicians may be reluctant to order a diagnostic test that may suggest surgery is unnecessary.

In addition, our assays are performed at our laboratories rather than by a pathologist in a local laboratory, so pathologists

may be reluctant to support our tests.

Moreover, guidelines for the diagnosis and treatment of thyroid nodules may change to recommend

another type of treatment protocol, and these changes may result in medical practitioners deciding not to use our molecular diagnostic

These facts may make physicians reluctant to use our assays, which could limit our ability to generate revenue from our

clinical services tests and achieve profitability, which could have a material adverse effect on our business, financial condition

and results of operations.

In addition, our assays are performed at our laboratories rather than by a pathologist in a local laboratory, so pathologists may be

reluctant to support our tests.

Moreover, guidelines for the diagnosis and treatment of thyroid nodules may change to recommend another

type of treatment protocol, and these changes may result in medical practitioners deciding not to use our molecular diagnostic tests.

These facts may make physicians reluctant to use our assays, which could limit our ability to generate revenue from our clinical services

tests and achieve profitability, which could have a material adverse effect on our business, financial condition and results of operations.

may experience a reduction in revenue if patients decide not to use our clinical services tests.

patients may decide not to use our clinical services tests due to price, all or part of which may be payable directly by the patient

if the patient’s insurer denies reimbursement in full or in part.

Many insurers seek to shift more of the cost of healthcare

to patients in the form of higher deductibles, co-payments, or premiums.

In addition, the economic environment in the United States

may result in the loss of healthcare coverage.

Implementation of provisions of PPACA provided coverage for patients, particularly

in the individual market, who were previously either uninsured or faced high premiums.

However, premiums for many of the plans

participating in the exchanges established as part of this legislation have increased and some health plans have chosen to drop

out of these networks in specific markets or the program altogether.

In 2018, Congress passed legislation revising certain provisions

of PPACA and federal agencies also have issued final rules to repeal or revise regulations governing the implementation of certain

provisions of PPACA which may negatively impact our revenues.

Also in 2018, in Texas v.

U.S., states and individual plaintiffs

sued the federal government seeking to have the PPACA struck down.

The trial court held that the provision related to individual

coverage requirements or the individual mandate was unconstitutional.

In December 2019, the U.S.

Court of Appeals for the 5 th

Circuit affirmed the trial court’s decision and sent the case back to the trial court.

In the interim, parties supporting

the PPACA sought expedited review by the U.S.

Supreme Court;

however, the Court did not expedite the case, and it remains unknown

whether it will consider the case in its next term in the fall of 2020.

Overall, the scope and timing of any further legislation,

judicial action or federal regulations to limit, revise, or replace PPACA or regulations governing its implementation is uncertain,

but if enacted could have a significant impact on the U.S.

if the patient’s insurer denies reimbursement in full or in part.

Many insurers seek to shift more of the cost of healthcare to

patients in the form of higher deductibles, co-payments, or premiums.

In addition, the economic environment in the United States may

result in the loss of healthcare coverage.

Implementation of provisions of PPACA provided coverage for patients, particularly in the

individual market, who were previously either uninsured or faced high premiums.

However, premiums for many of the plans participating

in the exchanges established as part of this legislation have increased and some health plans have chosen to drop out of these networks

in specific markets or the program altogether.

In 2018, Congress passed legislation revising certain provisions of PPACA and federal

agencies also have issued final rules to repeal or revise regulations governing the implementation of certain provisions of PPACA which

may negatively impact our revenues.

Overall, the scope and timing of any further legislation, judicial action or federal regulations

to limit, revise, or replace PPACA or regulations governing its implementation is uncertain, but if enacted could have a significant

impact on the U.S.

healthcare system and our revenues.

These events may result in an increase

of uninsured patients, increases in premiums, and reductions in coverage for some patients.

Patients may therefore delay or forego

medical checkups or treatment due to their inability to pay for our clinical services tests, which could have a negative effect

on our revenues.

We do have a Patient Assistance Program that allows eligible patients to apply for assistance in covering a portion

of their out of pocket obligation or all costs for claims denied as non-covered for our clinical services tests if they meet the

criteria for participation.

our clinical services tests do not perform as expected, we may not be able to achieve widespread market adoption among physicians,

which would cause our operating results, reputation, and business to suffer.

success depends on the market’s confidence that we can provide reliable, high-quality molecular information products.

These events may result in an increase of uninsured patients, increases in premiums,

and reductions in coverage for some patients.

Patients may therefore delay or forego medical checkups or treatment due to their inability

to pay for our clinical services tests, which could have a negative effect on our revenues.

We do have a Patient Assistance Program that

allows eligible patients to apply for assistance in covering a portion of their out of pocket obligation or all costs for claims denied

as non-covered for our clinical services tests if they meet the criteria for participation.

our clinical services tests do not perform as expected, we may not be able to achieve widespread market adoption among physicians, which

would cause our operating results, reputation, and business to suffer.

success depends in part on the market’s confidence that we can provide reliable, high-quality molecular information products.

is no guarantee that the accuracy and reproducibility we have demonstrated to date will continue, particularly for clinical samples,

as our test volume increases.

We believe that our customers are likely to be particularly sensitive to product defects and errors,

including if our products fail to detect genomic alterations with high accuracy from clinical specimens or if we fail to list,

or inaccurately include, certain treatment options and available clinical trials in our product reports.

As a result, the failure

of our products to perform as expected would significantly impair our operating results and our reputation.

We may be subject

to legal claims arising from any defects or errors in our clinical services tests.

profitability will be impaired by our obligations to make royalty and milestone payments to our licensors for our clinical services

connection with our acquisition of certain assets of Asuragen in 2014, we currently license certain patents and know-how from

Asuragen relating to (i) miR Inform ®

thyroid and pancreas cancer diagnostic tests and other tests in development

for thyroid cancer (the “Asuragen License Agreement”), and (ii) the sale of diagnostic devices and the performance

of certain services relating to thyroid cancer (the “CPRIT License Agreement”).

Pursuant to the Asuragen License Agreement

and the CPRIT License Agreement, we are obligated to make certain royalty and milestone payments to Asuragen and the Cancer Prevention

& Research Institute of Texas, or CPRIT.

Under the Asuragen License Agreement, we are obligated to pay royalties on the future

net sales of tests utilizing the miR Inform ®

thyroid platform (i.e.

ThyGeNEXT ®

), potentially

on certain other thyroid diagnostics tests and potentially on other tests in development for thyroid cancer.

A similar obligation

exists if we elect to launch any molecular tests utilizing the miR Inform ®

pancreas platform.

required by the CPRIT License Agreement with Asuragen to make certain related royalty payments to CPRIT.

Biosciences, Inc.

Report on Form 10-K

performing the ThyraMIR ®

test, we use products supplied by Exiqon A/S (now a part of Qiagen), subject to a license

agreement with Exiqon A/S.

The license agreement obligates us to pay royalties on the future net sales of our assays that utilize

licensed patents and know-how obtained from Exiqon A/S.

Our profitability will be impaired by our obligations to make royalty

payments to our licensors.

Although we believe, under such circumstances, that the increase in revenue will exceed the corresponding

royalty payments, our obligations to our licensors could have a material adverse effect on our business, financial condition and

results of operations if we are unable to manage our operating costs and expenses at profitable levels.

we breach certain agreements with Asuragen, it could have a material adverse effect on our sales and commercialization efforts

for our thyroid cancer diagnostic tests as well as any potential tests in development for thyroid cancer utilizing their technology

and the sale of diagnostic devices and the performance of certain services relating to thyroid cancer.

the CPRIT License Agreement, we are obligated to pay 5% of net sales on sales of certain diagnostic devices and the performance

of services relating to thyroid cancer that incorporate technology developed and funded under an agreement between Asuragen and

the Cancer Prevention and Research Institute of Texas, subject to a maximum deduction of 3.5% for royalties paid to third parties.

Both of the Asuragen License Agreement and the CPRIT License Agreement continue until terminated by (i) mutual agreement of the

parties or (ii) either party in the event of a material breach of the respective agreement by the other party.

we materially breach or fail to perform any provision under the CPRIT License Agreement, Asuragen will have the right to terminate

our license from CPRIT, and upon the effective date of such termination, our right to practice the licensed technology would end.

To the extent such licensed technology rights relate to our molecular diagnostic tests currently on the market, we would expect

to exercise all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve

our rights under the technology licensed to us, but we may not be able to do so in a timely manner, at an acceptable cost to us

Any uncured, material breach under these license agreements could result in our loss of rights to practice the technology

licensed to us under these license agreements, and to the extent such rights and other technology relate to our molecular diagnostic

tests currently on the market, it could have a material adverse effect on our sales and commercialization efforts for NGS-based

thyroid and pancreatic cancer molecular diagnostic tests and other tests in development for thyroid cancer, and the sale of molecular

diagnostic tests and the performance of certain services relating to thyroid cancer.

the agreement, neither party will be held responsible for a default or breach for failure or delay in performing its obligations

when such failure or delay is caused by or results from events beyond reasonable control of the non-performing party, including

fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics or pandemics, quarantines war, acts of war, etc.

utility studies are important in demonstrating to both customers and payers a molecular diagnostic test’s clinical relevance

If we are unable to identify collaborators willing to work with us to conduct clinical utility studies, or the results

of those studies do not demonstrate that a molecular diagnostic test provides clinically meaningful information and value, commercial

adoption of such test may be slow, which would negatively impact our business.

utility studies show when and how to use a molecular diagnostic clinical test and describe the particular clinical situations

or settings in which it can be applied and the expected results.

Clinical utility studies also show the impact of the molecular

diagnostic test results on patient care and management.

Clinical utility studies are typically performed with collaborating oncologists

or other physicians at medical centers and hospitals, analogous to a clinical trial, and generally result in peer-reviewed publications.

Sales and marketing representatives use these publications to demonstrate to customers how to use a molecular diagnostic clinical

test, as well as why they should use it.

These publications are also used with payers to obtain coverage for a molecular diagnostic

test, helping to assure there is appropriate reimbursement.

We will need to conduct additional studies for our molecular diagnostic

tests and other diagnostic tests we plan to introduce, to increase the market adoption and obtain coverage and adequate reimbursement.

Should we not be able to perform these studies, should the costs or length of time required for these studies exceed their value,

or should their results not provide clinically meaningful data and value for oncologists and other physicians, adoption of our

molecular diagnostic tests could be impaired, and we may not be able to obtain coverage and adequate reimbursement for them.

Biosciences, Inc.

Report on Form 10-K

rely on sole suppliers for some of the materials used in our tests and services, and we may not be able to find replacements or

transition to alternative suppliers in a timely manner.

rely on sole suppliers for certain materials that we use to perform our tests and services, including Asuragen, for our endocrine

cancer diagnostic tests pursuant to our supply agreement with them.

We also purchase reagents used in our tests and services from

sole-source suppliers.

While we have developed alternate sourcing strategies for these materials and vendors, we cannot be certain

whether these strategies will be effective or the alternative sources will be available in a timely manner.

If these suppliers

can no longer provide us with the materials we need to perform our tests and services, if the materials do not meet our quality

specifications, or if we cannot obtain acceptable substitute materials, an interruption in test processing and services could

Any such interruption may directly impact our revenue and cause us to incur higher costs.

In particular, the continued

spread of the coronavirus globally could materially and adversely impact our operations including without limitation our supply

chain, which may have a material and adverse effect on our business, financial condition and results of operations.

may experience problems in scaling our operations, or delays or reagent and supply shortages for our tests and services that could

limit the growth of our revenue.

we encounter difficulties in scaling our operations as a result of, among other things, quality control and quality assurance

issues and availability of reagents and raw material supplies, we will likely experience reduced sales of our tests and services,

increased repair or re-engineering costs, and defects and increased expenses due to switching to alternate suppliers, any of which

would reduce our revenues and gross margins.

Although we attempt to match our capabilities to estimates of marketplace demand,

to the extent demand materially varies from our estimates, we may experience constraints in our operations and delivery capacity,

which could adversely impact revenue in a given fiscal period.

Should our need for raw materials and reagents used in our tests

and services fluctuate, we could incur additional costs associated with either expediting or postponing delivery of those materials

we are unable to support demand for our tests and services, or any of our future tests, services or solutions, our business could

demand for our tests and services grow, we will also need to continue to scale up our testing capacity and processing technology,

expand customer service, billing and systems processes and enhance our internal quality assurance program.

We will also need additional

certified laboratory scientists and other scientific and technical personnel to process higher volumes of our tests and services.

We cannot assure you that increases in scale, related improvements and quality assurance will be implemented successfully or that

appropriate personnel will be available.

Failure to implement necessary procedures, transition to new processes or hire the necessary

personnel could result in higher costs of processing tests or inability to meet demand.

There can be no assurance that we will

be able to perform our testing and services on a timely basis at a level consistent with demand, or that our efforts to scale

our operations will not negatively affect the quality of test results.

If we encounter difficulty meeting market demand or quality

standards, our reputation could be harmed and our future prospects and our business could suffer, causing a material adverse effect

on our business, financial condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

new tests and related services and solutions involves a lengthy and complex process, and we may not be able to commercialize on

a timely basis, or at all, other tests, assays, services and solutions under development.

new tests, services and solutions will require us to devote considerable resources to research and development.

We may face challenges

obtaining sufficient numbers of samples to validate a newly acquired or developed test or service.

In order to develop and commercialize

new tests and services, we need to:

We believe that our customers are likely to be particularly sensitive to product defects and errors, including

if our products fail to detect genomic alterations with high accuracy from clinical specimens or if we fail to list, or inaccurately

include, certain treatment options and available clinical trials in our product reports.

As a result, the failure of our products to

perform as expected would significantly impair our operating results and our reputation.

We may be subject to legal claims arising from

any defects or errors in our clinical services tests.

profitability will be impaired by our obligations to make royalty and milestone payments to our licensors for our clinical services tests.

connection with our acquisition of certain assets of Asuragen in 2014, we currently license certain patents and know-how from Asuragen

relating to (i) miR Inform ® thyroid and pancreas cancer diagnostic tests and other tests in development for thyroid

cancer (the “Asuragen License Agreement”), and (ii) the sale of diagnostic devices and the performance of certain services

relating to thyroid cancer (the “CPRIT License Agreement”).

Pursuant to the Asuragen License Agreement and the CPRIT License

Agreement, we are obligated to make certain royalty and milestone payments to Asuragen and the Cancer Prevention & Research Institute

of Texas, or CPRIT.

Under the Asuragen License Agreement, we are obligated to pay royalties on the future net sales of tests utilizing

the miR Inform ® thyroid platform (i.e., ThyGeNEXT ® ), potentially on certain other thyroid

diagnostics tests and potentially on other tests in development for thyroid cancer.

A similar obligation exists if we elect to launch

any molecular tests utilizing the miR Inform ® pancreas platform.

We are also required by the CPRIT License Agreement

with Asuragen to make certain related royalty payments to CPRIT.

performing the ThyraMIR ® test, we use products supplied by Exiqon A/S (now a part of Qiagen), subject to a license agreement

with Exiqon A/S.

The license agreement obligates us to pay royalties on the future net sales of our assays that utilize licensed patents

and know-how obtained from Exiqon A/S.

Our profitability will be impaired by our obligations to make royalty payments to our licensors.

Although we believe, under such circumstances, that the increase in revenue will exceed the corresponding royalty payments, our obligations

to our licensors could have a material adverse effect on our business, financial condition and results of operations if we are unable

to manage our operating costs and expenses at profitable levels.

we breach certain agreements with Asuragen, it could have a material adverse effect on our sales and commercialization efforts for our

thyroid cancer diagnostic tests as well as any potential tests in development for thyroid cancer utilizing their technology and the sale

of diagnostic devices and the performance of certain services relating to thyroid cancer.

the CPRIT License Agreement, we are obligated to pay 5% of net sales on sales of certain diagnostic devices and the performance of services

relating to thyroid cancer that incorporate technology developed and funded under an agreement between Asuragen and the Cancer Prevention

and Research Institute of Texas, subject to a maximum deduction of 3.5% for royalties paid to third parties.

Both of the Asuragen License

Agreement and the CPRIT License Agreement continue until terminated by (i) mutual agreement of the parties or (ii) either party in the

event of a material breach of the respective agreement by the other party.

we materially breach or fail to perform any provision under the CPRIT License Agreement, Asuragen will have the right to terminate our

license from CPRIT, and upon the effective date of such termination, our right to practice the licensed technology would end.

extent such licensed technology rights relate to our molecular diagnostic tests currently on the market, we would expect to exercise

all rights and remedies available to us, including attempting to cure any breach by us, and otherwise seek to preserve our rights under

the technology licensed to us, but we may not be able to do so in a timely manner, at an acceptable cost to us or at all.

material breach under these license agreements could result in our loss of rights to practice the technology licensed to us under these

license agreements, and to the extent such rights and other technology relate to our molecular diagnostic tests currently on the market,

it could have a material adverse effect on our sales and commercialization efforts for NGS-based thyroid and pancreatic cancer molecular

diagnostic tests and other tests in development for thyroid cancer, and the sale of molecular diagnostic tests and the performance of

certain services relating to thyroid cancer.

the agreement, neither party will be held responsible for a default or breach for failure or delay in performing its obligations when

such failure or delay is caused by or results from events beyond reasonable control of the non-performing party, including fires, floods,

earthquakes, hurricanes, embargoes, shortages, epidemics or pandemics, quarantines war, acts of war, etc.

utility studies are important in demonstrating to both customers and payers a molecular diagnostic test’s clinical relevance and

If we are unable to identify collaborators willing to work with us to conduct clinical utility studies, or the results of those

studies do not demonstrate that a molecular diagnostic test provides clinically meaningful information and value, commercial adoption

of such test may be slow, which would negatively impact our business.

utility studies show when and how to use a molecular diagnostic clinical test and describe the particular clinical situations or settings

in which it can be applied and the expected results.

Clinical utility studies also show the impact of the molecular diagnostic test results

on patient care and management.

Clinical utility studies are typically performed with collaborating oncologists or other physicians at

medical centers and hospitals, analogous to a clinical trial, and generally result in peer-reviewed publications.

Sales and marketing

representatives use these publications to demonstrate to customers how to use a molecular diagnostic clinical test, as well as why they

should use it.

These publications are also used with payers to obtain coverage for a molecular diagnostic test, helping to assure there

is appropriate reimbursement.

We will need to conduct additional studies for our molecular diagnostic tests and other diagnostic tests

we plan to introduce, to increase the market adoption and obtain coverage and adequate reimbursement.

Should we not be able to perform

these studies, should the costs or length of time required for these studies exceed their value, or should their results not provide

clinically meaningful data and value for oncologists and other physicians, adoption of our molecular diagnostic tests could be impaired,

and we may not be able to obtain coverage and adequate reimbursement for them.

rely on sole suppliers for some of the materials used in our tests and services, and we may not be able to find replacements or transition

to alternative suppliers in a timely manner.

rely on sole suppliers for certain materials that we use to perform our tests and services, including Asuragen, for our endocrine cancer

diagnostic tests pursuant to our supply agreement with them.

We also purchase reagents used in our tests and services from sole-source

While we have developed alternate sourcing strategies for these materials and vendors, we cannot be certain whether these

strategies will be effective or the alternative sources will be available in a timely manner.

If these suppliers can no longer provide

us with the materials we need to perform our tests and services, if the materials do not meet our quality specifications, or if we cannot

obtain acceptable substitute materials, an interruption in test processing and services could occur.

Any such interruption may directly

impact our revenue and cause us to incur higher costs.

In particular, the continued spread of the coronavirus globally could materially

and adversely impact our operations including without limitation our supply chain, which may have a material and adverse effect on our

business, financial condition and results of operations.

may experience problems in scaling our operations, or delays or reagent and supply shortages for our tests and services that could limit

the growth of our revenue.

we encounter difficulties in scaling our operations as a result of, among other things, quality control and quality assurance issues

and availability of reagents and raw material supplies, we will likely experience reduced sales of our tests and services, increased

repair or re-engineering costs, and defects and increased expenses due to switching to alternate suppliers, any of which would reduce

our revenues and gross margins.

Although we attempt to match our capabilities to estimates of marketplace demand, to the extent demand

materially varies from our estimates, we may experience constraints in our operations and delivery capacity, which could adversely impact

revenue in a given fiscal period.

Should our need for raw materials and reagents used in our tests and services fluctuate, we could incur

additional costs associated with either expediting or postponing delivery of those materials or reagents.

we are unable to support demand for our tests and services, or any of our future tests, services or solutions, our business could suffer.

demand for our tests and services grow, we will also need to continue to scale up our testing capacity and processing technology, expand

customer service, billing and systems processes and enhance our internal quality assurance program.

We will also need additional certified

laboratory scientists and other scientific and technical personnel to process higher volumes of our tests and services.

We cannot assure

you that increases in scale, related improvements and quality assurance will be implemented successfully or that appropriate personnel

will be available.

Failure to implement necessary procedures, transition to new processes or hire the necessary personnel could result

in higher costs of processing tests or inability to meet demand.

There can be no assurance that we will be able to perform our testing

and services on a timely basis at a level consistent with demand, or that our efforts to scale our operations will not negatively affect

the quality of test results.

If we encounter difficulty meeting market demand or quality standards, our reputation could be harmed and

our future prospects and our business could suffer, causing a material adverse effect on our business, financial condition and results

of operations.

new tests and related services and solutions involves a lengthy and complex process, and we may not be able to commercialize on a timely

basis, or at all, other tests, assays, services and solutions under development.

new tests, services and solutions will require us to devote considerable resources to research and development, which we may not be

in a position to do.

We may face challenges obtaining sufficient numbers of samples to validate a newly acquired or developed test

In order to develop and commercialize new tests and services, we need to:

significant funds to conduct substantial research and development;

2 unchanged sentences

and maintain the commercial infrastructure to market and sell new tests and services.

few research and development projects result in commercial products, and success in early clinical studies often is not replicated

in later studies.

few research and development projects result in commercial products, and success in early clinical studies often is not replicated in

later studies.

At any point, we may abandon development of a test, service or solutions or we may be required to expend considerable

resources repeating clinical studies, which would adversely affect the timing for generating revenue from such test, service or

If a clinical validation study fails to demonstrate the prospectively defined endpoints of the study or if we fail to

sufficiently demonstrate analytical validity, we might choose to abandon the development of the test, service or solution which

could harm our business.

In addition, competitors may develop and commercialize new competing tests, services and solutions faster

than us or at a lower cost, which could have a material adverse effect on our business, financial condition and results of operations.

we are unable to develop or acquire tests, services and solutions to keep pace with rapid technological, medical and scientific

change, our operating results and competitive position in the market could be affected.

there have been numerous advances in technologies relating to diagnostics, particularly diagnostics that are based on genomic

These advances require us to continuously develop our technology and to work to develop new solutions to keep pace

with evolving standards of care.

Our clinical services and pharma services could become obsolete unless we continually innovate

and expand our product offerings to include new clinical applications.

If we are unable to develop or acquire new tests, services

and solutions or to demonstrate the applicability of our tests and services for other diseases, our sales could decline and our

competitive position could be harmed.

resources repeating clinical studies, which would adversely affect the timing for generating revenue from such test, service or solution.

If a clinical validation study fails to demonstrate the prospectively defined endpoints of the study or if we fail to sufficiently demonstrate

analytical validity, we might choose to abandon the development of the test, service or solution which could harm our business.

competitors may develop and commercialize new competing tests, services and solutions faster than us or at a lower cost, which could

have a material adverse effect on our business, financial condition and results of operations.

we are unable to develop or acquire tests, services and solutions to keep pace with rapid technological, medical and scientific change,

our operating results and competitive position in the market could be affected.

there have been numerous advances in technologies relating to diagnostics, particularly diagnostics that are based on genomic information.

These advances require us to continuously develop our technology and to work to develop new solutions to keep pace with evolving standards

Our clinical services and pharma services could become obsolete unless we continually innovate and expand our product offerings

to include new clinical applications.

If we are unable to develop or acquire new tests, services and solutions or to demonstrate the

applicability of our tests and services for other diseases, our sales could decline and our competitive position could be harmed.

we cannot enter into new clinical study collaborations, our product development and subsequent commercialization could be delayed.

the past, we have entered into clinical study collaborations related to our tests and services, and our success in the future

depends in part on our ability to enter into additional collaborations with highly regarded institutions.

This can be difficult

due to internal and external constraints placed on these organizations.

Some organizations may limit the number of collaborations

they have with any one company so as to not be perceived as biased or conflicted.

Organizations may also have insufficient administrative

and related infrastructure to enable collaboration with many companies at once, which can extend the time it takes to develop,

negotiate and implement a collaboration.

Moreover, it may take longer to obtain the samples we need which could delay our trials,

publications, and product launches and reimbursement.

Additionally, organizations often insist on retaining the rights to publish

the clinical data resulting from the collaboration.

The publication of clinical data in peer-reviewed journals is a crucial step

in commercializing and obtaining reimbursement for our diagnostic tests, and our inability to control when and if results are

published may delay or limit our ability to derive sufficient revenue from them.

Biosciences, Inc.

Report on Form 10-K

Food and Drug Administration changes its enforcement policy as to laboratory developed tests (LDTs) or disagrees with

our position that our clinical services tests are LDTs covered by the FDA’s current enforcement discretion policy, we could

be subject to a number of enforcement actions, any of which could have a material adverse effect on our clinical services and/or

incur substantial costs and delays associated with trying to obtain pre-market clearance or approval and comply with applicable

post-market requirements.

laboratory tests like our clinical services tests are regulated under CLIA as well as by applicable state laws and may also be

subject to FDA regulation, depending on how the test is classified.

For example, the FDA regulates in vitro diagnostic

tests (also called in vitro devices or “IVDs”), specimen collection kits, analyte specific reagents (ASRs),

and instruments used in conducting diagnostic testing.

Tests that qualify as LDTs are currently subject to enforcement discretion

by the FDA, but there is substantial uncertainty regarding the scope of the FDA’s enforcement discretion policy and the

proper interpretation of the definition of LDTs (as set forth in the 2014 draft guidance described below, which defines LDTs as

“those in vitro diagnostic devices (IVD) that are intended for clinical use and are designed, manufactured and used

within a single laboratory”).

In October 2014, the FDA issued two draft guidance documents:

“Framework for Regulatory

Oversight of Laboratory Developed Tests,”

which provides an overview of how the FDA would regulate LDTs through a risk-based

approach, and “FDA Notification and Medical Device Reporting for Laboratory Developed Tests”, which provides guidance

on how the FDA intends to collect information on existing LDTs, including adverse event reports.

Pursuant to the Framework for

Regulatory Oversight draft guidance, LDT manufacturers will be subject to medical device registration, listing, and adverse event

reporting requirements.

LDT manufacturers will be required to either submit a pre-market application and receive the FDA’s

approval before an LDT may be marketed or submit a pre-market notification in advance of marketing.

The Framework for Regulatory

Oversight draft guidance states that within six months after the guidance documents are finalized, all laboratories will be required

to give notice to the FDA and provide basic information concerning the nature of the LDTs offered.

November 18, 2016, however, the FDA announced that it would not release final versions of these guidance documents and would instead

continue to work with stakeholders, the new administration and Congress to determine the right approach.

On January 13, 2017,

the FDA released a discussion paper on LDTs outlining a possible risk-based approach for FDA and Centers for Medicare & Medicaid

Services, or CMS, oversight of LDTs.

According to the 2017 discussion paper, previously marketed LDTs would not be expected to

comply with most or all FDA oversight requirements (grandfathering), except for adverse event and malfunction reporting.

certain new and significantly modified LDTs would not be expected to comply with pre-market review unless the agency determines

certain tests could lead to patient harm.

Since LDTs currently on the market would be grandfathered in, pre-market review of new

and significantly modified LDTs could be phased-in over a four-year period, as opposed to the nine years proposed in the Framework

for Regulatory Oversight draft guidance.

In addition, tests introduced after the effective date, but before their phase-in date,

could continue to be offered during pre-market review.

the past, we have entered into clinical study collaborations related to our tests and services, and our success in the future depends

in part on our ability to enter into additional collaborations with highly regarded institutions.

This can be difficult due to internal

and external constraints placed on these organizations.

Some organizations may limit the number of collaborations they have with any

one company so as to not be perceived as biased or conflicted.

Organizations may also have insufficient administrative and related infrastructure

to enable collaboration with many companies at once, which can extend the time it takes to develop, negotiate and implement a collaboration.

Moreover, it may take longer to obtain the samples we need which could delay our trials, publications, and product launches and reimbursement.

Additionally, organizations often insist on retaining the rights to publish the clinical data resulting from the collaboration.

The publication

of clinical data in peer-reviewed journals is a crucial step in commercializing and obtaining reimbursement for our diagnostic tests,

and our inability to control when and if results are published may delay or limit our ability to derive sufficient revenue from them.

the FDA changes its enforcement policy as to LDTs or disagrees with our position that our clinical services tests are LDTs covered by

the FDA’s current enforcement discretion policy, we could be subject to a number of enforcement actions, any of which could have

a material adverse effect on our clinical services and/or incur substantial costs and delays associated with trying to obtain pre-market

clearance or approval and comply with applicable post-market requirements.

laboratory tests like our clinical services tests are regulated under CLIA as well as by applicable state laws and may also be subject

to FDA regulation, depending on how the test is classified.

For example, the FDA regulates in vitro diagnostic tests (also called

in vitro devices or “IVDs”), specimen collection kits, analyte specific reagents (ASRs), and instruments used in conducting

diagnostic testing.

Most tests that qualify as LDTs are currently subject to enforcement discretion by the FDA, but there is substantial

uncertainty regarding the scope of the FDA’s enforcement discretion policy and the proper interpretation of the definition of LDTs

(as set forth in the 2014 draft guidance described below, which defines LDTs as “those in vitro diagnostic devices (IVD)

that are intended for clinical use and are designed, manufactured and used within a single laboratory”).

In July 2014, the FDA

issued two draft guidance documents:

“Framework for Regulatory Oversight of Laboratory Developed Tests,” which provides an

overview of how the FDA would regulate LDTs through a risk-based approach, and “FDA Notification and Medical Device Reporting for

Laboratory Developed Tests”, which provides guidance on how the FDA intends to collect information on existing LDTs, including

adverse event reports.

Pursuant to the Framework for Regulatory Oversight draft guidance, LDT manufacturers will be subject to medical

device registration, listing, and adverse event reporting requirements.

LDT manufacturers will be required to either submit a pre-market

application and receive the FDA’s approval before an LDT may be marketed or submit a pre-market notification in advance of marketing

unless subject to continued enforcement discretion.

The Framework for Regulatory Oversight draft guidance states that within six months

after the guidance documents are finalized, all laboratories will be required to give notice to the FDA and provide basic information

concerning the nature of the LDTs offered.

January 13, 2017, the FDA released a discussion paper on LDTs outlining a possible, substantially-revised risk-based approach for FDA

and Centers for Medicare & Medicaid Services, or CMS, oversight of LDTs.

According to the 2017 discussion paper, most previously

marketed LDTs would not be expected to comply with most or all FDA oversight requirements (grandfathering), except for adverse event

and malfunction reporting.

In addition, certain new and significantly modified LDTs would not be expected to comply with pre-market review

unless the agency determines certain tests could lead to patient harm.

Since many LDTs currently on the market would be grandfathered

in, pre-market review of new and significantly modified LDTs could be phased-in over a four-year period, as opposed to the nine years

proposed in the Framework for Regulatory Oversight draft guidance.

In addition, tests introduced after the effective date, but before

their phase-in date, could continue to be offered during pre-market review.

discussion paper notes that the FDA will focus on analytical and clinical validity as the basis for marketing authorization.

FDA anticipates laboratories that already conduct proper validation should not be expected to experience new costs for validating

their tests to support marketing authorization and laboratories that conduct appropriate evaluations would not have to collect

additional data to demonstrate analytical validity for FDA clearance or approval.

This goal would be achieved through a precertification

The evidence of the analytical and clinical validity of all LDTs will be made publicly available.

LDTs are encouraged

to submit prospective change protocols in their pre-market submission that outline specific types of anticipated changes, the

procedures that will be followed to implement them and the criteria that will be met prior to implementation.

March 2017, a draft bill “The Diagnostics Accuracy and Innovation Act”

(DAIA) was introduced in Congress.

sought to establish a new regulatory framework for the oversight of in vitro clinical tests (“IVCTs”) which include

In 2020, Congress introduced “The Verifying Accurate, Leading-edge IVCT Development Act”

(VALID) of 2020.

risk-based approach will be used to regulate IVCTs while grandfathering existing IVCTs.

The new regulatory framework will include

quality control and post-market reporting requirements.

anticipates laboratories that already conduct proper validation should not be expected to experience new costs for validating their tests

to support marketing authorization and laboratories that conduct appropriate evaluations would not have to collect additional data to

demonstrate analytical validity for FDA clearance or approval.

The evidence of the analytical and clinical validity of all LDTs would

be made publicly available.

LDTs would be encouraged to submit prospective change protocols in their pre-market submission that outline

specific types of anticipated changes, the procedures that will be followed to implement them and the criteria that will be met prior

to implementation.

March 2017, members of Congress posted a discussion draft of “The Diagnostics Accuracy and Innovation Act” (DAIA).

The discussion

draft included language that, if enacted, would have established a new regulatory framework for the oversight of in vitro clinical tests

(“IVCTs”) which include LDTs.

In 2020, members of Congress introduced “The Verifying Accurate, Leading-edge IVCT Development

(VALID) Act”;

this bill was re-introduced in substantially similar form in June 2021.

If enacted, VALID would create a risk-based

approach to regulate IVCTs while grandfathering many existing IVCTs.

The new regulatory framework will include quality control and post-market

reporting requirements.

Each test will be classified as high-risk or low-risk.

Pre-market review

will be required for high-risk tests.

To market a high-risk IVCT, reasonable assurance of analytical and clinical validity for

the intended use must be established.

Under VALID, a precertification process would be established which will allow a laboratory

to establish that the facilities, methods, and controls used in the development of its IVCTs meet quality system requirements.

If pre-certified, low-risk IVCTs it develops will not be subject to pre-market review.

The new regulatory framework will include

quality control and post-market reporting requirements.

The FDA will have the authority to withdraw from the market IVCTs that

present an unreasonable and substantial risk of severe illness or injury when used as intended.

We cannot predict whether this

draft bill will become law or the ultimate impact of its passage, or other legislative or regulatory changes, would have on our

If the FDA implements a new framework for enforcement of its regulations against LDTs, our existing products that are

classified as LDTs, if any, and/or any of our future LDTs we seek to develop and market for clinical use, we may be required to

obtain pre-certification or approval before continuing to market such tests in the U.S.

We may not be able to obtain such pre-certifications

or approvals on a timely basis or at all.

Our business could be negatively impacted as a result of commercial delay that may be

caused by any new requirements.

Biosciences, Inc.

Report on Form 10-K

we are required to submit applications for our currently-marketed clinical services tests, we may be required to conduct additional

studies, which may be time-consuming and costly and could result in our currently-marketed tests being withdrawn from the market.

Continued compliance with the FDA’s regulations would increase the cost of conducting our clinical services, and subject

us to heightened regulation by the FDA and penalties for failure to comply with these requirements.

Failure to comply with applicable

regulatory requirements can result in enforcement action by the FDA, such as fines, product suspensions, warning letters, recalls,

injunctions and other civil and criminal sanctions.

Any other regulatory or legislative proposals that would increase general

FDA oversight of clinical laboratories and LDTs could negatively impact our business if additional requirements are imposed.

are monitoring developments and anticipate that our clinical services products will be able to comply with requirements that are

ultimately imposed by the FDA.

In the meantime, we maintain our CLIA accreditation, which permits the use of LDTs for diagnostics

notwithstanding any change in existing enforcement policies, if the FDA determines that any of our clinical services tests are

IVDs, rather than LDTs and, accordingly, seeks to enforce the applicable medical device regulations against us, we could be subject

to a wide range of penalties and would likely be prohibited from continuing to offer the applicable tests in interstate commerce

until we have obtained FDA approval or clearance through the Premarket Approval (PMA) process or the 510(k) process, respectively,

as applicable.

Additionally, we could be subject to enforcement for noncompliance with the FDA’s regulations on marketing

and promotional communications, manufacturing, quality and safety standards, labeling, storage, registration and listing, recordkeeping,

adverse event reporting, and any other regulations applicable to IVDs.

Any adverse enforcement action against us may have a material

adverse effect on our clinical services and results of operations.

we are sued for product liability or errors and omissions liability related to our tests and services, we could face substantial

liabilities that exceed our resources.

marketing, sale and use of our tests and services could lead to product liability claims if someone were to allege that the test

or service failed to perform as it was designed.

We may also be subject to liability for errors in the results we provide to physicians

or for a misunderstanding of, or inappropriate reliance upon, the information we provide.

A product liability or errors and omissions

liability claim could result in substantial damages and be costly and time consuming for us to defend.

Although we maintain product

liability and errors and omissions insurance, we cannot be certain that our insurance would fully protect us from the financial

impact of defending against these types of claims or any judgments, fines or settlement costs arising out of such claims.

product liability or errors and omissions liability claim brought against us, with or without merit, could increase our insurance

rates or prevent us from securing insurance coverage in the future.

Additionally, any product liability lawsuit could cause injury

to our reputation or cause us to suspend sales of our products and solutions.

The occurrence of any of these events could have

a material adverse effect on our business, financial condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

failure to comply with fraud and abuse laws or payer regulations could result in our being excluded from participation in Medicare,

Medicaid, or other governmental payer programs, subject to fines, penalties, and repayment obligations, decrease our revenues

and adversely affect our results of operations and financial condition for our clinical services.

Medicare program is administered by CMS, which, like the states that administer their respective state Medicaid programs, imposes

extensive and detailed requirements on diagnostic services providers, including, but not limited to, rules that govern how we

structure our relationships with physicians, how and when we submit reimbursement claims and how we provide our specialized diagnostic

In addition, federal and state laws prohibit fraudulent billing and provide for the recovery of overpayments.

In particular,

if we fail to comply with federal and state documentation, coding and billing rules, we could be subject to liability under the

federal False Claims Act, including criminal and/or civil penalties, loss of licenses and exclusion from the Medicare and Medicaid

The False Claims Act prohibits individuals and companies from knowingly submitting false claims for payments to, or

improperly retaining overpayments from, the government.

Private payers also have complex documentation, coding, and billing rules,

and can bring civil actions against laboratories.

Our failure to comply with applicable Medicare, Medicaid and other third party

payer rules could result in liability under the False Claims Act, our inability to participate in a governmental payer program,

recoupment or returning funds already paid to us, civil monetary penalties, criminal penalties and/or limitations on the operational

function of our laboratory, all of which could adversely affect our results of operations and financial condition.

Pre-market review will be required for high-risk tests.

To market a high-risk IVCT, reasonable assurance of analytical and clinical validity for the intended use must be established.

VALID, a precertification process would be established which will allow a laboratory to establish that the facilities, methods, and controls

used in the development of certain IVCTs meet quality system requirements.

If pre-certified, low-risk IVCTs it develops will not be subject

to pre-market review.

The new regulatory framework will include quality control and post-market reporting requirements.

have the authority to withdraw from the market IVCTs if it is reasonably possible that such tests will cause serious adverse health consequences

(among other criteria).

We cannot predict whether this bill will become law or the ultimate impact of its passage, or other legislative

or regulatory changes, would have on our business.

If the FDA implements a new framework for enforcement of its regulations against LDTs,

our existing products that are classified as LDTs, if any, and/or any of our future LDTs we seek to develop and market for clinical use,

we may be required to obtain pre-certification or approval before continuing to market such tests in the U.S.

We may not be able to obtain

such pre-certifications or approvals on a timely basis or at all.

Our business could be negatively impacted as a result of commercial

delay that may be caused by any new requirements.

we are required to submit applications for our currently-marketed clinical services tests, we may be required to conduct additional studies,

which may be time-consuming and costly and could result in our currently-marketed tests being withdrawn from the market.

Continued compliance

with the FDA’s regulations would increase the cost of conducting our clinical services, and subject us to heightened regulation

by the FDA and penalties for failure to comply with these requirements.

Failure to comply with applicable regulatory requirements can

result in enforcement action by the FDA, such as fines, product suspensions, warning letters, recalls, injunctions and other civil and

criminal sanctions.

Any other regulatory or legislative proposals that would increase general FDA oversight of clinical laboratories

and LDTs could negatively impact our business if additional requirements are imposed.

We are monitoring developments and anticipate that

our clinical services products will be able to comply with requirements that are ultimately imposed by the FDA.

In the meantime, we maintain

our CLIA accreditation, which permits the use of LDTs for diagnostics purposes.

notwithstanding any change in existing enforcement policies, if the FDA determines that any of our clinical services tests are IVDs,

rather than LDTs and, accordingly, seeks to enforce the applicable medical device regulations against us, we could be subject to a wide

range of penalties and would likely be prohibited from continuing to offer the applicable tests in interstate commerce until we have

obtained FDA approval or clearance through the Premarket Approval (PMA) process or the 510(k) process, respectively, as applicable.

Additionally,

we could be subject to enforcement for noncompliance with the FDA’s regulations on marketing and promotional communications, manufacturing,

quality and safety standards, labeling, storage, registration and listing, recordkeeping, adverse event reporting, and any other regulations

applicable to IVDs.

Any adverse enforcement action against us may have a material adverse effect on our clinical services and results

of operations.

we are sued for product liability or errors and omissions liability related to our tests and services, we could face substantial liabilities

that exceed our resources.

marketing, sale and use of our tests and services could lead to product liability claims if someone were to allege that the test or service

failed to perform as it was designed.

We may also be subject to liability for errors in the results we provide to physicians or for a

misunderstanding of, or inappropriate reliance upon, the information we provide.

A product liability or errors and omissions liability

claim could result in substantial damages and be costly and time consuming for us to defend.

Although we maintain product liability and

errors and omissions insurance, we cannot be certain that our insurance would fully protect us from the financial impact of defending

against these types of claims or any judgments, fines or settlement costs arising out of such claims.

Any product liability or errors

and omissions liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing

insurance coverage in the future.

Additionally, any product liability lawsuit could cause injury to our reputation or cause us to suspend

sales of our products and solutions.

The occurrence of any of these events could have a material adverse effect on our business, financial

condition and results of operations.

failure to comply with fraud and abuse laws or payer regulations could result in our being excluded from participation in Medicare, Medicaid,

or other governmental payer programs, subject to fines, penalties, and repayment obligations, decrease our revenues and adversely affect

our results of operations and financial condition for our clinical services.

Medicare program is administered by CMS, which, like the states that administer their respective state Medicaid programs, imposes extensive

and detailed requirements on diagnostic services providers, including, but not limited to, rules that govern how we structure our relationships

with physicians, how and when we submit reimbursement claims and how we provide our specialized diagnostic services.

In addition, federal

and state laws prohibit fraudulent billing and provide for the recovery of overpayments.

In particular, if we fail to comply with federal

and state documentation, coding and billing rules, we could be subject to liability under the federal False Claims Act, including criminal

and/or civil penalties, loss of licenses and exclusion from the Medicare and Medicaid programs.

The False Claims Act prohibits individuals

and companies from knowingly submitting false claims for payments to, or improperly retaining overpayments from, the government.

payers also have complex documentation, coding, and billing rules, and can bring civil actions against laboratories.

Our failure to comply

with applicable Medicare, Medicaid and other third party payer rules could result in liability under the False Claims Act, our inability

to participate in a governmental payer program, recoupment or returning funds already paid to us, civil monetary penalties, criminal

penalties and/or limitations on the operational function of our laboratory, all of which could adversely affect our results of operations

and financial condition.

Related to our Pharma Services

may not realize all of the anticipated benefits of the acquisition of our pharma services business or those benefits may take

longer to realize than expected.

We may also encounter significant unexpected difficulties in integrating the Biopharma business.

ability to realize the anticipated benefits of the acquisition of the Biopharma business depends, to a large extent, on our ability

may not realize all of the anticipated benefits of the acquisition of our pharma services business or those benefits may take longer

to realize than expected.

We may also encounter significant unexpected difficulties in integrating the pharma services business.

ability to realize the anticipated benefits of the acquisition of the pharma services business depends, to a large extent, on our ability

to integrate it successfully.

The combination and integration of two independent operations is a complex, costly and time-consuming

As a result, we have been required and are continuing to devote significant management attention and resources to integrating

the business practices and operations of our pharma services with our clinical services practices and operations.

The integration

process, which includes consolidating and/or moving laboratory and headquarter locations, may disrupt the operations and, if implemented

ineffectively or if impacted by unforeseen negative economic or market conditions or other factors, we may not realize the full

anticipated benefits of the acquisition.

Our failure to meet the challenges involved in integrating the two operations to realize

the anticipated benefits of such acquisition could cause an interruption of, or a loss of momentum in, our activities and could

adversely affect our results of operations.

The combination and integration of two independent operations is a complex, costly and time-consuming process.

As a result, we have been required and are continuing to devote significant management attention and resources to integrating the business

practices and operations of our pharma services with our clinical services practices and operations.

The integration process, which includes

moving laboratory locations, may disrupt the operations and, if implemented ineffectively or if impacted by unforeseen negative economic

or market conditions or other factors, we may not realize the full anticipated benefits of the acquisition.

Our failure to meet the challenges

involved in integrating the two operations to realize the anticipated benefits of such acquisition could cause an interruption of, or

a loss of momentum in, our activities and could adversely affect our results of operations.

addition, the overall integration of the operations may result in material unanticipated problems, expenses, liabilities, competitive

responses, loss of customer relationships, and diversion of management’s attention.

The difficulties of combining the operations

include but are not limited to:

of management’s attention from the management of daily operations to integration matters;

in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining our pharma services

2 unchanged sentences

in the integration of operations and systems;

or delays in consolidating and/or moving laboratory and headquarter locations;

in the assimilation of employees and in the retention of key employees;

in retaining employees who may be vital to the integration of departments, information technology systems, including accounting

systems, technologies, books and records, and procedures, and maintaining uniform standards, such as internal accounting controls,

procedures, and policies;

Biosciences, Inc.

Report on Form 10-K

in retaining employees who may be vital to the integration of departments, information technology systems, including accounting systems,

technologies, books and records, and procedures, and maintaining uniform standards, such as internal accounting controls, procedures,

and policies;

in the assimilation of different corporate cultures and business practices;

6 unchanged sentences

of these factors are outside of our control and any one of them could result in increased costs, decreases in the amount of expected

revenues and diversion of management’s time and energy, which could materially impact the business, financial condition

and our results of operations.

In addition, even if the operations of our clinical services operations and our pharma services

are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings or

sales or growth opportunities that we expect.

revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and our

results of operations.

In addition, even if the operations of our clinical services operations and our pharma services are integrated

successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings or sales or growth opportunities

that we expect.

These benefits may not be achieved within the anticipated time frame, or at all.

additional unanticipated costs which may be incurred in the continuing integration of operations or unanticipated increases in

expenses unrelated to the acquisition of our pharma services may offset the expected benefits from the acquisition of our pharma

In addition, our acquisition of the pharma services business has resulted in the incurrence of additional amortization

expenses related to intangible assets, which could have a material adverse effect on the Company’s financial condition,

operating results, and cash flow.

Further, the acquisition of the pharma services business resulted in the Company recording significant

goodwill and other assets, and we may be required to incur impairment charges, which could adversely affect our consolidated financial

position and results of operations.

All of these factors could decrease or delay the expected accretive effect of the pharma services

business acquisition and negatively impact our business, financial condition and results of operations.

As a result, we cannot

be certain that the integration process and resulting combined operations will result in the realization of the full benefits

anticipated from the acquisition.

we are unable to increase sales of the tests and services in our pharma services or to successfully develop and commercialize

other proprietary tests in our pharma services, we may be unable to achieve profitability.

pharma services provide pharmaceutical and biotech companies, universities and contract research organizations performing clinical

trials with lab testing services for patient stratification and treatment selection through an extensive suite of molecular- and

biomarker-based testing services, DNA- and RNA- extraction and customized assay development and trial design consultation.

is unclear whether we will be able to maintain and grow the number of customers who will avail themselves of our tests and services,

or how regular a flow of business we will be able to obtain from existing customers.

If we are unable to increase sales of our

tests and services or to successfully develop, validate and commercialize other diagnostic tests and services, our pharma services

may not produce sufficient revenues to become profitable.

pharmaceutical and biotech companies, universities and contract research organizations performing clinical trials decide not to

use our diagnostic tests and services, we may be unable to generate sufficient revenue to sustain our pharma services.

additional unanticipated costs which may be incurred in the continuing integration of operations or unanticipated increases in expenses

unrelated to the acquisition of our pharma services may offset the expected benefits from the acquisition of our pharma services.

addition, our acquisition of the pharma services business has resulted in the incurrence of additional amortization expenses related

to intangible assets, which could have a material adverse effect on the Company’s financial condition, operating results, and cash

Further, the acquisition of the pharma services business resulted in the Company recording significant goodwill and other assets,

and we may be required to incur impairment charges, which could adversely affect our consolidated financial position and results of operations.

Since the acquisition, we have also undergone several cost-cutting initiatives with our pharma services business, including reductions

in headcount.

Further, during Fiscal 2021, the Company experienced a fairly significant decrease in volume within pharma services.

decrease in revenue within pharma services was approximately 32% from the comparable prior year period.

Such revenue headwinds may continue

in future periods.

As such, all of these factors could decrease or delay the expected accretive effect of the pharma services business

acquisition and negatively impact our business, financial condition and results of operations.

As a result, we cannot be certain that

the integration process and resulting combined operations will result in the realization of the full benefits anticipated from the acquisition.

we are unable to increase sales of the tests and services in our pharma services or to successfully develop and commercialize other proprietary

tests in our pharma services, we may be unable to achieve profitability.

pharma services provide pharmaceutical and biotech companies, universities and contract research organizations performing clinical trials

with lab testing services for patient stratification and treatment selection through an extensive suite of molecular- and biomarker-based

testing services, DNA- and RNA- extraction and customized assay development and trial design consultation.

It is unclear whether we will

be able to maintain and grow the number of customers who will avail themselves of our tests and services, or how regular a flow of business

we will be able to obtain from existing customers.

If we are unable to increase sales of our tests and services or to successfully develop,

validate and commercialize other diagnostic tests and services, our pharma services may not produce sufficient revenues to become profitable.

pharmaceutical and biotech companies, universities and contract research organizations performing clinical trials decide not to use our

diagnostic tests and services, we may be unable to generate sufficient revenue to sustain our pharma services.

generate demand for our pharma services, we need to educate pharmaceutical and biotech companies, universities and contract research

organizations performing clinical trials on the utility of our tests and services to improve the outcomes of clinical trials for

new oncology drugs and more rapidly advance targeted therapies through the clinical development process through published papers,

presentations at scientific conferences and one-on-one education sessions by members of our sales force.

We may need to hire additional

commercial, scientific, technical and other personnel to support this process.

If we cannot convince pharmaceutical and biotech

companies, universities and contract research organizations performing clinical trials to order our diagnostic tests and services

or other future tests and services we develop, we will likely be unable to create demand for our tests and services in sufficient

volume for us to achieve sustained profitability of our pharma services.

Biosciences, Inc.

Report on Form 10-K

a result of our pharma services, our quarterly operating results may be subject to significant fluctuations and may be difficult

nature of the services of our pharma services is that they tend to come in relatively large projects but episodically, rather

than providing steady sources of revenues.

The timing, size and duration of our contracts with our customers depend on the size,

pace and duration of such customer’s clinical trial, over which we have no control and sometimes limited visibility.

addition, our expense levels are based, in part, on expectation of future revenue levels.

A shortfall in expected revenue could,

therefore, result in a disproportionate decrease in our net income.

As a result, our quarterly operating results may be subject

to significant fluctuations and may be difficult to forecast.

we fail to perform our pharma services in accordance with contractual and regulatory requirements, and ethical considerations,

we could be subject to significant costs or liability.

organizations performing clinical trials on the utility of our tests and services to improve the outcomes of clinical trials for new

oncology drugs and more rapidly advance targeted therapies through the clinical development process through published papers, presentations

at scientific conferences and one-on-one education sessions by members of our sales force.

We may need to hire additional commercial,

scientific, technical and other personnel to support this process.

If we cannot convince pharmaceutical and biotech companies, universities

and contract research organizations performing clinical trials to order our diagnostic tests and services or other future tests and services

we develop, we will likely be unable to create demand for our tests and services in sufficient volume for us to achieve sustained profitability

of our pharma services.

a result of our pharma services, our quarterly operating results may be subject to significant fluctuations and may be difficult to forecast.

nature of the services of our pharma services is that they tend to come in relatively large projects but episodically, rather than providing

steady sources of revenues.

The timing, size and duration of our contracts with our customers depend on the size, pace and duration of

such customer’s clinical trial, over which we have no control and sometimes limited visibility.

In addition, our expense levels

are based, in part, on expectation of future revenue levels.

A shortfall in expected revenue could, therefore, result in a disproportionate

decrease in our net income.

As a result, our quarterly operating results may be subject to significant fluctuations and may be difficult

we fail to perform our pharma services in accordance with contractual and regulatory requirements, and ethical considerations, we could

be subject to significant costs or liability.

our pharma services offerings, we contract with pharmaceutical and biotech companies, universities and contract research organizations

performing clinical trials to perform lab testing services for patient stratification and treatment selection through an extensive

suite of molecular- and biomarker-based testing services, DNA- and RNA- extraction and customized assay development and trial

design consultation.

performing clinical trials to perform lab testing services for patient stratification and treatment selection through an extensive suite

of molecular- and biomarker-based testing services, DNA- and RNA- extraction and customized assay development and trial design consultation.

Such services are complex and subject to contractual requirements, regulatory standards and ethical considerations.

If we fail to perform our services in accordance with these requirements, standards, and considerations regulatory authorities

may take action against us or our customers.

Such actions may include failure of such regulatory authority to grant marketing

approval of our customers’

products, imposition of holds or delays, suspension or withdrawal of clearances or approvals,

rejection of data collected, laboratory license revocation, product recalls, operational restrictions, civil or criminal penalties

or prosecutions, damages or fines.

Any such action could have a material adverse effect on our business, financial condition,

and results of operations.

If we fail to perform

our services in accordance with these requirements, standards, and considerations regulatory authorities may take action against us or

our customers.

Such actions may include failure of such regulatory authority to grant marketing approval of our customers’ products,

imposition of holds or delays, suspension or withdrawal of clearances or approvals, rejection of data collected, laboratory license revocation,

product recalls, operational restrictions, civil or criminal penalties or prosecutions, damages or fines.

Any such action could have

a material adverse effect on our business, financial condition, and results of operations.

Related to our Operations

loss of members of our senior management team or our inability to attract and retain key personnel could adversely affect our

a small company with less than 200 employees, the success of our business depends largely on the skills, experience and performance

of members of our senior management team, including our chief executive officer and chief commercial officer, and others in key

management positions.

During the last four months, we have experienced turnover in our chief executive officer and chief financial

officer positions.

The efforts of these persons will be critical to us as we continue to grow our clinical services and develop

and/or acquire additional molecular diagnostic tests, and increase or maintain pharma services tests and service revenue or to

successfully develop and commercialize other pharma services proprietary tests and services.

If we were to lose one or more of

these key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our

business strategy.

In addition, our commercial laboratory operations depend on our ability to attract and retain highly skilled

scientists, including licensed clinical laboratory scientists.

We may not be able to attract or retain qualified scientists and

technicians in the future due to the competition for qualified personnel, and we may have to pay higher salaries to attract and

retain qualified personnel.

We may also be at a disadvantage in recruiting and retaining key personnel as our small size, limited

resources, and limited liquidity may be viewed as providing a less stable environment, with fewer opportunities than would be

the case at one of our larger competitors.

If we are not able to attract and retain the necessary personnel to accomplish our

business objectives, we may experience constraints that could adversely affect our ability to support our clinical laboratory

and commercialization.

we lose the support of key opinion leaders or KOL’s, it may limit our revenue growth from our tests or services and our

ability to achieve profitability.

loss of members of our senior management team or our inability to attract and retain key personnel could adversely affect our business .

a small company with less than 200 employees, the success of our business depends largely on the skills, experience and performance of

members of our senior management team, including our chief executive officer and chief financial officer, and others in key management

During January and February 2021, we experienced turnover in our chief executive officer and chief financial officer positions.

The efforts of these persons will be critical to us as we continue to grow our clinical services and develop and/or acquire additional

molecular diagnostic tests, and increase or maintain pharma services tests and service revenue or to successfully develop and commercialize

other pharma services proprietary tests and services.

If we were to lose one or more of these key employees, we may experience difficulties

in competing effectively, developing our technologies and implementing our business strategy.

In addition, our commercial laboratory

operations depend on our ability to attract and retain highly skilled scientists, including licensed clinical laboratory scientists.

We may not be able to attract or retain qualified scientists and technicians in the future due to the competition for qualified personnel,

and we may have to pay higher salaries to attract and retain qualified personnel.

We may also be at a disadvantage in recruiting and

retaining key personnel as our small size, limited resources, and limited liquidity may be viewed as providing a less stable environment,

with fewer opportunities than would be the case at one of our larger competitors.

If we are not able to attract and retain the necessary

personnel to accomplish our business objectives, we may experience constraints that could adversely affect our ability to support our

clinical laboratory and commercialization.

we lose the support of key opinion leaders or KOL’s, it may limit our revenue growth from our tests or services and our ability

to achieve profitability.

have established relationships with leading oncology opinion leaders at premier cancer institutions and oncology networks.

these key opinion leaders determine that our existing products and services or other products and services that we develop are

not clinically effective, that alternative technologies are more effective, or if they elect to use internally developed products,

we would encounter significant difficulty validating our testing platform, driving adoption, or establishing our tests as a standard

of care, which would limit our revenue growth and our ability to achieve profitability.

Biosciences, Inc.

Report on Form 10-K

we cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical companies to leverage our

bioinformatics data, we may be unable to recognize revenues from biopharmaceutical companies and our product development could

have limited experience in marketing and selling our products, and if we are unable to expand our direct sales and marketing force

to adequately address our customer’s needs, our business may be adversely affected.

we have been selling commercial products since 2014, genomic diagnostics and pharma services are new areas of science, and we

continue to focus and refine our efforts to sell, market and receive reimbursement for our clinical service products and to leverage

our bioinformatics data.

We may not be able to market, sell, or distribute our existing products or services or other products

or services we may develop effectively enough to support our planned growth.

future sales will depend in large part on our ability to develop, and substantially expand, our sales force and to increase the

scope of our marketing efforts.

opinion leaders determine that our existing products and services or other products and services that we develop are not clinically effective,

that alternative technologies are more effective, or if they elect to use internally developed products, we would encounter significant

difficulty validating our testing platform, driving adoption, or establishing our tests as a standard of care, which would limit our

revenue growth and our ability to achieve profitability.

we cannot maintain our current relationships, or enter into new relationships, with biopharmaceutical companies to leverage our bioinformatics

data, we may be unable to recognize revenues from biopharmaceutical companies and our product development could be delayed.

have limited experience in marketing and selling our products, and if we are unable to expand our direct sales and marketing force to

adequately address our customer’s needs, our business may be adversely affected.

we have been selling commercial products since 2014, genomic diagnostics and pharma services are new areas of science, and we continue

to focus and refine our efforts to sell, market and receive reimbursement for our clinical service products and to leverage our bioinformatics

We may not be able to market, sell, or distribute our existing products or services or other products or services we may develop

effectively enough to support our planned growth.

future sales will depend in large part on our ability to develop, and substantially expand, our sales force and to increase the scope

of our marketing efforts.

Our target market of physicians is a large and diverse market.

As a result, we believe it is necessary

to develop a sales force that includes sales representatives with specific technical backgrounds.

We will also need to attract

and develop marketing personnel with industry expertise.

As a result, we believe it is necessary to develop

a sales force that includes sales representatives with specific technical backgrounds.

We will also need to attract and develop marketing

personnel with industry expertise.

Competition for such employees is intense.

We may not be able to attract

and retain personnel or be able to build an efficient and effective sales and marketing force, which could negatively impact sales

and market acceptance of our products and services and limit our revenue growth and potential profitability.

expected future growth will impose significant added responsibilities on members of management, including the need to identify,

recruit, maintain, and integrate additional employees.

Our future financial performance and our ability to commercialize our products

and leverage our data and to compete effectively will depend in part on our ability to manage this potential future growth effectively,

without compromising quality.

our sales force is less successful than anticipated, our business expansion plans could suffer and our ability to generate revenues

could be diminished.

In addition, we have limited history selling our clinical services tests on a direct basis and operating

our pharma services, and leveraging our bioinformatics data and our limited history makes forecasting difficult.

our sales force is not successful, or new additions to our sales team fail to gain traction among our customers, we may not be

able to increase market awareness and sales of our molecular diagnostic tests and pharma services.

If we fail to establish our

clinical services tests and pharma services in the marketplace, it could have a negative effect on our ability to sell subsequent

products or services and hinder the desired expansion of our business.

We have growing, however limited, historical experience

forecasting the direct sales of our clinical services products, and no prior history operating our pharma services before our

acquisition of pharma services in 2019.

Our ability to produce product quantities that meet customer demand is dependent upon

our ability to forecast accurately and plan production accordingly.

we are unable to compete successfully in the markets our clinical services and pharma services operate in, we may be unable to

increase or sustain our revenue or achieve profitability.

compete with physicians and the medical community who use traditional methods to diagnose gastrointestinal, endocrine and lung

cancers and to conduct clinical trials.

In many cases, practice guidelines in the United States have recommended non molecular

testing like cytology or diagnostic surgery to determine if a patient’s condition is malignant or benign.

As a result, we

believe that we will need to continue to educate physicians and the medical community on the value and benefits of our clinical

services tests in order to impact clinical practices.

In addition, we face competition from other companies that offer diagnostic

Specifically, in regard to our thyroid diagnostic tests, Veracyte has thyroid nodule cancer diagnostic tests which are

currently on the market that compete with our ThyGeNEXT ®

and ThyraMIR ®

Quest currently offers

Veracyte’s tests via a co-marketing agreement, and CBL is offering a diagnostic test performed via the University of Pittsburgh

Medical Center (UPMC) that analyzes genetic alterations using next-generation sequencing mutation panel for pancreatic cysts.

While we do not believe we currently have significant direct competition for PancraGEN ®

in the gastrointestinal

market, technology such as a next-generation sequencing mutation panel could in the future lead to increased competition.

Biosciences, Inc.

Report on Form 10-K

is also possible that we face future competition from laboratory developed tests, or LDTs, developed by commercial laboratories

such as Quest and/or other diagnostic companies developing new molecular diagnostic tests or technologies.

Furthermore, we may

be subject to competition as a result of the new, unforeseen technologies that can be developed by our competitors in the gastrointestinal

and endocrine cancer molecular diagnostic testing space.

To compete successfully, we must be able to demonstrate, among other

things, that our test results are accurate and cost effective, and we must secure a meaningful level of reimbursement for our

Since our clinical services began in 2014, many of our potential competitors have stronger brand recognition and greater

financial capabilities than we do.

Others may develop a test with a lower price than ours that could be viewed by physicians and

payers as functionally equivalent to our molecular diagnostic tests or offer a test at prices designed to promote market penetration,

which could force us to lower the price of our clinical services tests and affect our ability to achieve and maintain profitability.

If we are unable to compete successfully against current and future competitors, we may be unable to increase market acceptance

of our clinical services tests and overall sales, which could prevent us from increasing our revenue or achieving profitability

and cause the market price of our common stock to decline.

As we add new clinical services tests and other products and services,

we will likely face many of these same competitive risks that we do currently.

respect to our pharma services, we also face competition from companies that currently offer or are developing products to profile

genes, gene expression or protein biomarkers in various cancers.

Precision medicine is a new area of science, and we cannot predict

what tests others will develop that may compete with or provide results superior to the results we are able to achieve with the

tests we develop.

We may not be able to attract and retain personnel or be

able to build an efficient and effective sales and marketing force, which could negatively impact sales and market acceptance of our

products and services and limit our revenue growth and potential profitability.

expected future growth will impose significant added responsibilities on members of management, including the need to identify, recruit,

maintain, and integrate additional employees.

Our future financial performance and our ability to commercialize our products and leverage

our data and to compete effectively will depend in part on our ability to manage this potential future growth effectively, without compromising

our sales force is less successful than anticipated, our business expansion plans could suffer and our ability to generate revenues could

be diminished.

In addition, we have limited history selling our clinical services tests on a direct basis and operating our pharma services,

and leveraging our bioinformatics data and our limited history makes forecasting difficult.

our sales force is not successful, or new additions to our sales team fail to gain traction among our customers, we may not be able to

increase market awareness and sales of our molecular diagnostic tests and pharma services.

If we fail to establish our clinical services

tests and pharma services in the marketplace, it could have a negative effect on our ability to sell subsequent products or services

and hinder the desired expansion of our business.

We have growing, however limited, historical experience forecasting the direct sales

of our clinical services products, and no prior history operating our pharma services before our acquisition of pharma services in 2019.

Our ability to produce product quantities that meet customer demand is dependent upon our ability to forecast accurately and plan production

we are unable to compete successfully in the markets our clinical services and pharma services operate in, we may be unable to increase

or sustain our revenue or achieve profitability.

compete with physicians and the medical community who use traditional methods to diagnose gastrointestinal, endocrine and lung cancers

and to conduct clinical trials.

In many cases, practice guidelines in the United States have recommended non-molecular testing

like cytology or diagnostic surgery to determine if a patient’s condition is malignant or benign.

As a result, we believe that

we will need to continue to educate physicians and the medical community on the value and benefits of our clinical services tests in

order to impact clinical practices.

In addition, we face competition from other companies that offer diagnostic tests.

Specifically,

in regard to our thyroid diagnostic tests, Veracyte has thyroid nodule cancer diagnostic tests which are currently on the market that

compete with our ThyGeNEXT ® and ThyraMIR ® tests.

Quest currently offers Veracyte’s tests via a co-marketing

agreement, and CBL is offering a diagnostic test performed via the University of Pittsburgh Medical Center (UPMC) that analyzes genetic

alterations using next-generation sequencing mutation panel for pancreatic cysts.

While we do not believe we currently have significant

direct competition for PancraGEN ® in the gastrointestinal market, technology such as a next-generation sequencing mutation

panel could in the future lead to increased competition.

is also possible that we face future competition from laboratory developed tests, or LDTs, developed by commercial laboratories such

as Quest and/or other diagnostic companies developing new molecular diagnostic tests or technologies.

Furthermore, we may be subject

to competition as a result of the new, unforeseen technologies that can be developed by our competitors in the gastrointestinal and endocrine

cancer molecular diagnostic testing space.

To compete successfully, we must be able to demonstrate, among other things, that our test

results are accurate and cost effective, and we must secure a meaningful level of reimbursement for our tests.

Since our clinical services

began in 2014, many of our potential competitors have stronger brand recognition and greater financial capabilities than we do.

may develop a test with a lower price than ours that could be viewed by physicians and payers as functionally equivalent to our molecular

diagnostic tests or offer a test at prices designed to promote market penetration, which could force us to lower the price of our clinical

services tests and affect our ability to achieve and maintain profitability.

If we are unable to compete successfully against current

and future competitors, we may be unable to increase market acceptance of our clinical services tests and overall sales, which could

prevent us from increasing our revenue or achieving profitability and cause the market price of our common stock to decline.

new clinical services tests and other products and services, we will likely face many of these same competitive risks that we do currently.

respect to our pharma services, we also face competition from companies that currently offer or are developing products to profile genes,

gene expression or protein biomarkers in various cancers.

Precision medicine is a new area of science, and we cannot predict what tests

others will develop that may compete with or provide results superior to the results we are able to achieve with the tests we develop.

Our competitors for our pharma services include public companies such as NeoGenomics and many private companies.

we cannot license rights to use third-party technologies on reasonable terms, we may not be able to commercialize new products

or services in the future.

we cannot license rights to use third-party technologies on reasonable terms, we may not be able to commercialize new products or services

in the future.

the future, we may license third-party technology to develop or commercialize new products or offer new services.

In return for

the use of a third-party’s technology, we may agree to pay the licensor royalties based on sales of our solutions.

are a component of cost of revenue and affect the margins on our solutions.

We may also need to negotiate licenses to patents

and patent applications after introducing a commercial product.

Our business may suffer if we are unable to enter into the necessary

licenses on acceptable terms, or at all, if any necessary licenses are subsequently terminated, if the licensors fail to abide

by the terms of the license or fail to prevent infringement by third parties, or if the licensed patents or other rights are found

to be invalid or unenforceable.

In return for the use

of a third-party’s technology, we may agree to pay the licensor royalties based on sales of our solutions.

Royalties are a component

of cost of revenue and affect the margins on our solutions.

We may also need to negotiate licenses to patents and patent applications

after introducing a commercial product.

Our business may suffer if we are unable to enter into the necessary licenses on acceptable terms,

or at all, if any necessary licenses are subsequently terminated, if the licensors fail to abide by the terms of the license or fail

to prevent infringement by third parties, or if the licensed patents or other rights are found to be invalid or unenforceable.

results of legal proceedings could have a material adverse effect on our business, financial condition and results of operations.

are subject to various legal proceedings and claims that arise in or outside the ordinary course of business.

The results of legal

proceedings cannot be predicted with certainty.

Regardless of merit, litigation may be both time-consuming and disruptive to our

operations and cause significant expense and diversion of management attention.

If we do not prevail in the legal proceedings,

we may be faced with significant monetary damages or injunctive relief against us that could have a material adverse effect on

our business, financial condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

a catastrophe strikes any of our laboratories or if any of our laboratories becomes inoperable for any other reason, we will be

unable to perform our testing and pharma services and our business will be harmed.

laboratories and equipment we use to perform our tests and services would be costly to replace and could require substantial lead

time to replace and qualify for use if they became inoperable.

Our facilities may be harmed or rendered inoperable by natural

or man-made disasters, including earthquakes, flooding, power outages, and health epidemics or pandemics, including the outbreak

of Coronavirus (COVID-19), which may render it difficult or impossible for us to perform our testing or services for some period

of time or to receive and store samples.

The inability to perform our tests or services for even a short period of time, including

due to disruption in staffing, supplies, distribution, or transport or temporary closures related to an outbreak of disease such

as Coronavirus (COVID-19), may result in the loss of customers or harm our reputation, and we may be unable to regain those customers

in the future.

Although we maintain insurance for damage to our property and the disruption of our business, this insurance may

not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.

In December 2019, a novel strain of the Coronavirus or COVID-19 emerged in China.

The virus has now spread to other countries,

including the United States, and has materially and adversely impacted our operations.

Additionally, continued spread of the COVID-19

globally and resulting travel and other restrictions that may be imposed could negatively impact our ability to obtain raw materials

needed for manufacture of our clinical services testing, our ability to provide testing and our pharma services to patients, our

financial condition and our results of operation.

The extent to which the COVID-19 and global efforts to contain its spread will

impact our operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, and

include the duration, severity and scope of the outbreak and the actions taken to contain or treat the COVID-19 outbreak.

The results of legal proceedings

cannot be predicted with certainty.

Regardless of merit, litigation may be both time-consuming and disruptive to our operations and cause

significant expense and diversion of management attention.

If we do not prevail in the legal proceedings, we may be faced with significant

monetary damages or injunctive relief against us that could have a material adverse effect on our business, financial condition and results

of operations.

a catastrophe strikes any of our laboratories or if any of our laboratories becomes inoperable for any other reason, we will be unable

to perform our testing and pharma services and our business will be harmed.

laboratories and equipment we use to perform our tests and services would be costly to replace and could require substantial lead time

to replace and qualify for use if they became inoperable.

Our facilities may be harmed or rendered inoperable by natural or man-made

disasters, including earthquakes, flooding, power outages, and health epidemics or pandemics, including the outbreak of Coronavirus (COVID-19),

which may render it difficult or impossible for us to perform our testing or services for some period of time or to receive and store

The inability to perform our tests or services for even a short period of time, including due to disruption in staffing, supplies,

distribution, or transport or temporary closures related to an outbreak of disease such as COVID-19, may result in the loss of customers

or harm our reputation, and we may be unable to regain those customers in the future.

Although we maintain insurance for damage to our

property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue

to be available to us on acceptable terms, if at all.

In addition, COVID-19 has materially and adversely impacted our operations particularly

during portions of 2020.

Further continued spread of COVID-19 globally and resulting travel and other restrictions that may be imposed

could negatively impact our ability to obtain raw materials needed for manufacture of our clinical services testing, our ability to provide

testing and our pharma services to patients, our financial condition and our results of operation.

The extent to which COVID-19 and global

efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain and cannot be

predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the COVID-19

we use hazardous materials in a manner that causes contamination or injury, we could be liable for resulting damages.

are subject to federal, state and local laws, rules and regulations governing the use, discharge, storage, handling and disposal

of biological material, chemicals and waste.

We cannot eliminate the risk of accidental contamination or injury to employees or

third parties from the use, storage, handling or disposal of these materials.

In the event of contamination or injury, we could

be held liable for any resulting damages, remediation costs and any related penalties or fines, and any liability could exceed

our resources or any applicable insurance coverage we may have.

The cost of compliance with these laws and regulations may become

significant, and our failure to comply may result in substantial fines or other consequences, and either could have a significant

impact on our operating results.

breaches, loss of data and other disruptions to us or our third-party service providers could compromise sensitive information

related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect

our business and our reputation.

business requires that we and our third-party service providers collect and store sensitive data, including legally protected

health information, personally identifiable information about patients, credit card information, and our proprietary business

and financial information.

As a covered entity, we must comply with the HIPAA privacy and security regulations, which may increase

our operational costs.

Furthermore, the privacy and security regulations provide for significant fines and other penalties for

wrongful use or disclosure of protected health information, or PHI, including potential civil and criminal fines and penalties.

We face a number of risks relative to our protection of, and our service providers’

protection of, this critical information,

including loss of access, fraudulent modifications, inappropriate disclosure and inappropriate access, as well as risks associated

with our ability to identify and audit such events.

The secure processing, storage, maintenance and transmission of this critical

information is vital to our operations and business strategy, and we devote significant resources to protecting such information.

are subject to federal, state and local laws, rules and regulations governing the use, discharge, storage, handling and disposal of biological

material, chemicals and waste.

We cannot eliminate the risk of accidental contamination or injury to employees or third parties from

the use, storage, handling or disposal of these materials.

In the event of contamination or injury, we could be held liable for any resulting

damages, remediation costs and any related penalties or fines, and any liability could exceed our resources or any applicable insurance

coverage we may have.

The cost of compliance with these laws and regulations may become significant, and our failure to comply may result

in substantial fines or other consequences, and either could have a significant impact on our operating results.

breaches, loss of data and other disruptions to us or our third-party service providers could compromise sensitive information related

to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business

and our reputation.

business requires that we and our third-party service providers collect and store sensitive data, including PHI, personally identifiable information such as genetic information or credit card information about patients or other individuals,

and our proprietary business and financial information.

We must comply with the HIPAA and HITECH privacy, security, and breach notification

regulations with respect to PHI in our capacity as a covered entity and business associate, and with consumer protection and consumer

privacy laws that apply to our processing of this sensitive data, which may increase our operational costs.

Furthermore, the privacy,

security, and breach notification regulations implemented under HIPAA and HITECH as well as other federal and state consumer protection

and consumer privacy laws and regulations that may apply to us provide for significant fines and other penalties, including potential

civil and criminal fines and penalties, for non-compliance.

We face a number of risks relative to our protection of, and our service

providers’ protection of, this critical information, other personally identifiable information, and our proprietary business and

financial information, including loss of access, fraudulent modifications, inappropriate disclosure and inappropriate access, as well

as risks associated with our ability to identify and audit such events.

The secure processing, storage, maintenance and transmission

of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such

Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology

and infrastructure may be vulnerable to attacks by hackers or viruses or otherwise breached due to employee error, malfeasance

or other activities.

If such event would occur and cause interruptions in our operations, our networks would be compromised and

the information we store on those networks could be accessed by unauthorized parties, publicly disclosed, modified without our

knowledge, lost or stolen.

and infrastructure may be vulnerable to attacks by hackers or viruses or otherwise breached due to employee error, malfeasance or other

If such event would occur and cause interruptions in our operations, our networks would be compromised and the information

we store on those networks could be accessed by unauthorized parties, publicly disclosed, modified without our knowledge, lost or stolen.

In 2017, we discovered malware installed on certain servers.

After an internal investigation, we do

not believe that any PHI or other sensitive data on the affected servers was accessed or compromised.

We removed the malware,

and enhanced our cybersecurity procedures.

Biosciences, Inc.

Report on Form 10-K

After an internal investigation, we do not believe that any PHI or other

sensitive data on the affected servers was accessed or compromised.

We removed the malware, and enhanced our cybersecurity procedures.

Additionally,

we share PHI with third-party contractors who are contractually obligated to safeguard and maintain the confidentiality of PHI.

Unauthorized persons may be able to gain access to PHI stored in such third-party contractors’

computer networks.

use or disclosure of PHI by us or our third-party contractors, including disclosure due to data theft or unauthorized access to

our or our third-party contractors’

computer networks, could subject us to fines or penalties that could adversely affect

our business and results of operations.

Although the HIPAA statute and regulations do not expressly provide for a private right

of damages, we also could incur damages under state laws to private parties for the wrongful use or disclosure of confidential

health information or other private personal information by us or our third-party contractors.

Unauthorized access, loss, modification

or dissemination could disrupt our operations, including our ability to process tests, provide test results, bill payers or patients,

process claims, provide customer assistance services, conduct research and development activities, collect, process and prepare

company financial information, provide information about our solution and other patient and physician education and outreach efforts

through our website, manage the administrative aspects of our business and damage our reputation, any of which could adversely

affect our business.

In addition, the interpretation and application of consumer, health-related and data protection laws in the

United States are often uncertain, contradictory and in flux.

It is possible that these laws may be interpreted and applied in

a manner that is inconsistent with our practices.

Complying with these various laws could cause us to incur substantial costs

or require us to change our business practices, systems and compliance procedures in a manner adverse to our business.

we engage third-party contractors who, insofar as they are our business associates, are contractually and legally obligated to safeguard

and maintain the confidentiality of any PHI that they create, receive, maintain, transmit, use, or disclose on our behalf.

persons may be able to gain access to PHI stored by such third-party contractors, including in their computer networks.

use or disclosure of PHI by us or our third-party contractors, including disclosure due to data theft or unauthorized access to our or

our third-party contractors’ computer networks, could subject us to fines or penalties that could adversely affect our business

and results of operations.

Although HIPAA and HITECH and their implementing regulations do not expressly provide for a private right

of damages, they permit state attorneys general to bring civil actions and obtain damages on behalf of state residents for violations,

and enjoin further violations, of the privacy and security regulations implemented under HIPAA.

We also could incur damages under state

laws to private parties for the wrongful use or disclosure of confidential health information or other private personal information by

us or our third-party contractors.

Unauthorized access, loss, modification or dissemination could disrupt our operations, including our

ability to process tests, provide test results, bill payers or patients, process claims, provide customer assistance services, conduct

research and development activities, collect, process and prepare company financial information, provide information about our solution

and other patient and physician education and outreach efforts through our website, or manage the administrative aspects of our business

and damage our reputation, any of which could adversely affect our business.

In addition, the interpretation and application of consumer,

health-related or other data protection laws in the United States are often uncertain, contradictory and in flux, particularly as more

states enact comprehensive consumer privacy laws.

It is possible that these various laws may be interpreted and applied in a manner that

is inconsistent with our practices.

Complying with these various laws could cause us to incur substantial costs or require us to change

our business practices, systems and compliance procedures in a manner adverse to our business.

may need to increase the size of our organization, and we may experience difficulties in managing this growth.

are a small company with less than 200 employees.

We may increase the number of employees in the future depending on the progress

and growth of our business.

Future growth will impose significant added responsibilities on members of management, including the

need to identify, attract, retain, motivate and integrate additional employees with the necessary skills to support the growing

complexities of our business.

We may increase the number of employees in the future depending on the progress and

growth of our business.

Future growth will impose significant added responsibilities on members of management, including the need to

identify, attract, retain, motivate and integrate additional employees with the necessary skills to support the growing complexities

of our business.

Rapid and significant growth may place strain on our administrative, financial and operational infrastructure.

Our future financial performance and our ability to sell or promote our existing tests and services and develop and commercialize

new tests and services and to compete effectively will depend, in part, on our ability to manage any future growth effectively.

To that end, we must be able to:

financial performance and our ability to sell or promote our existing tests and services and develop and commercialize new tests and

services and to compete effectively will depend, in part, on our ability to manage any future growth effectively.

To that end, we must

our clinical studies effectively;

3 unchanged sentences

may not be able to accomplish these tasks, and our failure to accomplish any of them could harm our financial results.

need to reduce the size of our organization in order to become profitable and we may experience difficulties in managing these

We may need to

reduce the size of our organization in order to become profitable and we may experience difficulties in managing these reductions.

Related to Regulation within our Markets

we fail to comply with federal, state and foreign laboratory licensing requirements, we could lose the ability to perform our

tests or experience disruptions to our business.

are subject to CLIA regulations, a Federal law that regulates clinical laboratories that perform testing on specimens derived

from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease.

CLIA regulations mandate

specific personnel qualifications, facilities administration, quality systems, inspections and proficiency testing.

CLIA certification

is also required in order for us to be eligible to bill federal and state healthcare programs, as well as many private third-party

payers, for our molecular diagnostic tests.

To renew these certifications, we are subject to survey and inspection every two years.

we fail to comply with federal, state and foreign laboratory licensing requirements, we could lose the ability to perform our tests or

experience disruptions to our business.

are subject to CLIA regulations, a Federal law that regulates clinical laboratories that perform testing on specimens derived from humans

for the purpose of providing information for the diagnosis, prevention or treatment of any disease, or impairment of, or the assessment

of the health of, human beings.

CLIA regulations mandate specific personnel qualifications, facilities administration, quality systems,

inspections and proficiency testing.

CLIA certification is also required in order for us to be eligible to bill federal and state healthcare

programs, as well as many private third-party payers, for our molecular diagnostic tests.

To renew these certifications, we are subject

to survey and inspection every two years.

Moreover, CLIA inspectors may make random inspections of our clinical reference laboratories.

We are also required to maintain

State licenses to conduct testing in our New Haven, Connecticut and Pittsburgh, Pennsylvania laboratories.

Connecticut and Pennsylvania

laws require that we maintain a license, and establish standards for the day-to-day operation of our clinical reference laboratories

in New Haven, Connecticut and Pittsburgh, Pennsylvania.

In addition, our Pittsburgh and New Haven laboratories are required to

be licensed on a test-specific basis by certain states, including California, Maryland, New York and Rhode Island.

Maryland, New York and Rhode Island laws also mandate proficiency testing for laboratories licensed under the laws of each respective

State regardless of whether such laboratories are located in California, Maryland, New York or Rhode Island.

If we were unable

to obtain or maintain our CLIA certificate for our laboratories, whether as a result of revocation, suspension or limitation,

we would no longer be able to perform our current clinical services and pharma services, which could have a material adverse effect

on our business, financial condition and results of operations.

If we were to lose our licenses issued by States where we are

required to hold licenses, if such licenses expired or were not renewed, or if we failed to obtain and maintain a State license

that we are required to hold, we may be subject to significant fines, penalties and liability, and may be forced to cease testing

specimens from those States, which could have a material adverse effect on our business, financial condition and results of operations.

New molecular diagnostic tests and pharma services we may develop may be subject to new requirements by governmental bodies, including

state governments, and we may not be able to offer our new molecular diagnostic tests or pharma services in such jurisdictions

We are also required to maintain State licenses to conduct testing in our Pittsburgh, Pennsylvania laboratory.

Pennsylvania law requires

that we maintain a license, and establish standards for the day-to-day operation of our clinical reference laboratory in Pittsburgh,

Pennsylvania.

In addition, our Pittsburgh laboratory is required to be licensed by certain states, including California, Maryland, New

York and Rhode Island.

New York law requires us to obtain test-specific approval before offering our tests as LDT.

California, Maryland,

New York and Rhode Island laws also mandate proficiency testing for laboratories licensed under the laws of each respective State regardless

of whether such laboratories are located in California, Maryland, New York or Rhode Island.

If we were unable to obtain or maintain our

CLIA certificate for our laboratories, whether as a result of revocation, suspension or limitation, we would no longer be able to perform

our current clinical services and pharma services, which could have a material adverse effect on our business, financial condition and

results of operations.

If we were to lose our licenses issued by States where we are required to hold licenses, if such licenses expired

or were not renewed, or if we failed to obtain and maintain a State license that we are required to hold, we may be subject to significant

fines, penalties and liability, and may be forced to cease testing (if Pennsylvania) or cease testing specimens from those States (if

California, New York, Maryland, or Rhode Island), which could have a material adverse effect on our business, financial condition and

results of operations.

New molecular diagnostic tests and pharma services we may develop may be subject to new requirements by governmental

bodies, including state governments, and we may not be able to offer our new molecular diagnostic tests or pharma services in such jurisdictions

until such requirements are met.

Biosciences, Inc.

Report on Form 10-K

reforming the U.S.

1 unchanged sentence

made changes that significantly affected the pharmaceutical, medical device and clinical laboratory industries.

For example, PPACA

include coordination and promotion of research on comparative clinical effectiveness of different technologies and procedures,

initiatives to revise Medicare payment methodologies, such as bundling of payments across the continuum of care by providers and

physicians, and initiatives to promote quality indicators in payment methodologies.

PPACA also includes significant new fraud

and abuse measures, including required disclosures of financial arrangements with physicians, lower thresholds for violations

and increasing potential penalties for such violations.

The effect of PPACA and any potential changes that may be necessitated

by the legislation is uncertain, any of which may potentially affect our business.

current position is that we do not meet the definition of an “Applicable Manufacturer”

under the Physician Payments

Sunshine Act of the PPACA and are therefore not subject to the disclosure or tax requirements contained in PPACA.

If the government

were to reach a different conclusion, our failure to disclose could result in significant monetary penalties and potential claims

from certain third parties.

as well as other healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage

criteria, new payment methodologies and in additional downward pressure on the price that we receive for any approved product

or service, and could seriously harm our future revenues.

Any reduction in reimbursement from Medicare or other government programs

may result in a similar reduction in payments from private payers.

The implementation of cost containment measures or other healthcare

reforms may compromise our ability to generate revenue, attain profitability or commercialize our products.

At the same time,

there have been significant ongoing efforts to repeal, revise, or replace PPACA

PPACA has also been subject to challenges in the courts.

On December 14, 2018, a Texas U.S.

District Court Judge ruled that the

Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

On December 18, 2019, the Fifth Circuit U.S.

Court of Appeals held that the individual mandate is unconstitutional and remanded

the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable Care Act.

An appeal was taken

Supreme Court which heard oral arguments in the case on November 10, 2020.

A ruling is expected in 2021.

changes to the PPACA remain possible, although the new Administration under President Biden has signaled that it plans to build

on the Affordable Care Act and expand the number of people who are eligible for subsidies under it.

President Biden indicated

that he intends to use executive orders to undo changes to the PPACA made by the Trump administration and would advocate for legislation

to build on the PPACA.

It is unknown what form any such changes or any law would take, and how or whether it may affect our business

in the future.

We expect that changes or additions to the PPACA, the Medicare and Medicaid programs, and changes stemming from

other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states,

For example, PPACA includes

coordination and promotion of research on comparative clinical effectiveness of different technologies and procedures, initiatives to

revise Medicare payment methodologies, such as bundling of payments across the continuum of care by providers and physicians, and initiatives

to promote quality indicators in payment methodologies.

PPACA also includes significant new fraud and abuse measures, including required

disclosures of financial arrangements with physicians, lower thresholds for violations and increasing potential penalties for such violations.

The effect of PPACA and any potential changes that may be necessitated by the legislation is uncertain, any of which may potentially

affect our business.

current position is that we do not meet the definition of an “Applicable Manufacturer” under the Physician Payments Sunshine

Act of the PPACA and are therefore not subject to the disclosure or tax requirements contained in PPACA.

If the government were to reach

a different conclusion, our failure to disclose could result in significant monetary penalties and potential claims from certain third

as well as other healthcare reform measures that have been and may be adopted in the future, may result in more rigorous coverage criteria,

new payment methodologies and in additional downward pressure on the price that we receive for any approved product or service, and could

seriously harm our future revenues.

Any reduction in reimbursement from Medicare or other government programs may result in a similar

reduction in payments from private payers.

The implementation of cost containment measures or other healthcare reforms may compromise

our ability to generate revenue, attain profitability or commercialize our products.

At the same time, there have been significant ongoing

efforts to repeal, revise, or replace PPACA;

however, the U.S.

Supreme Court upheld the law in 2021.

Biden has used executive orders to undo certain changes to the PPACA made by the Trump administration and has indicated it will advocate

for legislation to build on the PPACA.

It is unknown what form any such changes or any law would take, and how or whether it may affect

our business in the future.

We expect that changes or additions to the PPACA, the Medicare and Medicaid programs, and changes stemming

from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states,

could have a material adverse effect on the healthcare industry.

Biosciences, Inc.

Report on Form 10-K

addition to PPACA, the effect of which cannot presently be fully quantified, various healthcare reform proposals have periodically

emerged from federal and state governments.

For example, in February 2012, Congress passed the Middle Class Tax Relief and Job

Creation Act of 2012, which reduced the clinical laboratory payment rates on the Medicare Clinical Laboratory Fee Schedule, or

CLFS by 2% in 2013.

In addition, a further reduction of 2% was implemented under the Budget Control Act of 2011, which is to be

in effect for dates of service on or after April 1, 2013 until fiscal year 2024.

Reductions resulting from the Congressional sequester

are applied to total claim payments made;

however, they do not currently result in a rebasing of the negotiated or established

Medicare or Medicaid reimbursement rates.

example, Medicare payment rates have been – and in the future, will continue to be, to varying extents, subject to sequestration.

Reductions resulting from the Congressional sequester are applied to total claim payments made;

however, they do not currently result

in a rebasing of the negotiated or established Medicare or Medicaid reimbursement rates.

legislation on reimbursement applies to Medicaid reimbursement and Managed Medicaid reimbursement rates within that state.

states have passed or proposed legislation that would revise reimbursement methodology for clinical laboratory payment rates under

those Medicaid programs.

April 2014, President Obama signed the Protecting Access to Medicare Act, or PAMA, which included a substantial new payment system

for clinical laboratory tests under the CLFS.

Under PAMA, CLFS payment rates are based upon the weighted median of private payor

rates for each type of laboratory test.

To calculate these rates, PAMA requires CLIA-certified laboratories that receive a majority

of their Medicare revenue from payments made under the CLFS and the Physician Fee Schedule, and receive at least $12,5000 in CLFS

revenue, within a 6-month period, to report private payor rates and volumes for their tests with specific CPT codes based on final

payments made during a 6-month period of data collection (from January 1 through June 30 of the applicable year).

For most laboratory

tests, the CLFS is updated every three years, but rates are updated annually for Advanced Diagnostic Laboratory Tests, or ADLTs.

The first private payor rate-based CLFS was based on data collected from January 1 through June 30, 2016, and, following an initial,

one-year delay became effective on January 1, 2018.

have passed or proposed legislation that would revise reimbursement methodology for clinical laboratory payment rates under those Medicaid

April 2014, President Obama signed the Protecting Access to Medicare Act, or PAMA, which included a substantial new payment system for

clinical laboratory tests under the CLFS.

Under PAMA, CLFS payment rates are based upon the weighted median of private payor rates for

each type of laboratory test.

To calculate these rates, PAMA requires CLIA-certified laboratories that receive a majority of their Medicare

revenue from payments made under the CLFS and the Physician Fee Schedule, and receive at least $12,500 in CLFS revenue, within the 6-month

reporting period, to report private payor rates and volumes for their tests with specific CPT codes based on final payments made during

a 6-month period of data collection (from January 1 through June 30 of the applicable year).

For most laboratory tests, the CLFS is updated

every three years, but rates are updated annually for Advanced Diagnostic Laboratory Tests, or ADLTs.

The first private payor rate-based

CLFS was based on data collected from January 1 through June 30, 2016, and, following an initial, one-year delay became effective on

January 1, 2018.

CMS published final rules implementing these changes in 2016 and 2018.

the revised Medicare Clinical Laboratory Fee Schedule, reimbursement for clinical laboratory testing was reduced for most tests

in 2018, 2019, and 2020.

PAMA calls for further revisions of the Medicare Clinical Laboratory Fee Schedule for years after 2021,

the revised Medicare Clinical Laboratory Fee Schedule, reimbursement for clinical laboratory testing was reduced for most tests in 2018,

2019, and 2020.

PAMA (as revised) calls for further revisions of the Medicare Clinical Laboratory Fee Schedule for years after 2022,

based on future surveys of market rates.

Further reductions in reimbursement may result from such revisions.

Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, revised payment reductions and the data

reporting schedule for CDLTs that are not ADLTs.

Under the CARES Act, the next data reporting period is January 1, 2022 through

March 31, 2022, and will be based upon the data collected during the January 1, 2019 to June 30, 2019 period.

Any reductions to

payment rates resulting from the new methodology are limited to 10% per test per year in each of the years 2018 through 2020 and

to 15% per test per year in each of the years 2022 through 2024.

Payments will not be reduced for 2021 for CDLTs.

cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside

of the United States in which we may do business, or the effect any future legislation or regulation will have on us.

additional uncertainty in light of the new Presidential administration.

The taxes imposed by federal legislation, cost reduction

measures and the expansion in the role of the U.S.

government in the healthcare industry may result in decreased revenue, lower

reimbursement by payers for our tests or reduced medical procedure volumes, all of which may adversely affect our business, financial

condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

with numerous statutes and regulations pertaining to our clinical and pharma services is an expensive and time-consuming process,

and any failure to comply could result in substantial penalties.

Coronavirus Aid, Relief, and Economic Security (CARES) Act, as amended by the Protecting Medicare and American Farmers from Sequester

Cuts Act, revised payment reductions and the data reporting schedule for CDLTs that are not ADLTs.

Under these laws, the next data reporting

period is January 1, 2023 through March 31, 2023, and will be based upon the data collected during the January 1, 2019 to June 30, 2019

Any reductions to payment rates resulting from the new methodology are limited to 10% per test per year in each of the years

2018 through 2020 and to 15% per test per year in each of the years 2023 through 2025.

Payments will not be reduced for 2021 or 2022

cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the

United States in which we may do business, or the effect any future legislation or regulation will have on us.

There is additional uncertainty

in light of the current Presidential administration.

The taxes imposed by federal legislation, cost reduction measures and the expansion

in the role of the U.S.

government in the healthcare industry may result in decreased revenue, lower reimbursement by payers for our

tests or reduced medical procedure volumes, all of which may adversely affect our business, financial condition and results of operations.

with numerous statutes and regulations pertaining to our clinical and pharma services is an expensive and time-consuming process, and

any failure to comply could result in substantial penalties.

are subject to regulation by both the federal government and the governments of the states in which we conduct our operations.

The federal and state laws which may apply to us include, but are not limited to:

and state laws which may apply to us include, but are not limited to:

Food, Drug and Cosmetic Act, as supplemented by various other statutes;

Prescription Drug Marketing Act of 1987, the amendments thereto, and the regulations promulgated thereunder and contained

Parts 203 and 205;

and state licensing requirements;

3 unchanged sentences

Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which prohibits the solicitation, receipt, payment or offer of any remuneration

(including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for

referring a patient or patronage to a recovery home, clinical treatment facility, or laboratory for services covered by both

government and private payers;

Federal Anti-Kickback Statute (and state equivalents), which prohibits knowingly and willfully offering, paying, soliciting,

or receiving remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the

furnishing, arranging for, or recommending of an item or service that is reimbursable, in whole or in part, by a federal healthcare

Federal physician self-referral law, commonly referred to as the “Stark Law,”

(and state equivalents), which prohibits

a physician from making a referral for certain designated health services covered by the Medicare program, including laboratory

and pathology services, if the physician or an immediate family member has a financial relationship with the entity providing

the designated health services, unless the financial relationship falls within an applicable exception to the prohibition;

which established comprehensive federal standards with respect to the privacy and security of protected health information

and requirements for the use of certain standardized electronic transactions, and amendments made in 2013 to HIPAA under the

Health Information Technology for Economic and Clinical Health Act, which strengthen and expand HIPAA privacy and security

compliance requirements, increase penalties for violators, extend enforcement authority to state attorneys general, and impose

requirements for breach notification;

(including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, in return for referring

a patient or patronage to a recovery home, clinical treatment facility, or laboratory for services covered by both government and

private payers;

Federal Anti-Kickback Statute (and state equivalents), which prohibits knowingly and willfully offering, paying, soliciting, or receiving

remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing, arranging

for, or recommending of an item or service that is reimbursable, in whole or in part, by a federal healthcare program;

Federal physician self-referral law, commonly referred to as the “Stark Law,” (and state equivalents), which prohibits

a physician from making a referral for certain designated health services covered by the Medicare program, including laboratory and

pathology services, if the physician or an immediate family member has a financial relationship with the entity providing the designated

health services, unless the financial relationship falls within an applicable exception to the prohibition;

which established comprehensive federal standards with respect to the privacy and security of PHI and requirements for the

use of certain standardized electronic transactions, and amendments made in 2013 to HIPAA under the Health Information Technology

for Economic and Clinical Health Act, which strengthen and expand HIPAA privacy and security compliance requirements, increase penalties

for violators, extend enforcement authority to state attorneys general, and impose requirements for breach notification;

FTC Act and various state consumer privacy laws, which require regulated entities to take reasonable steps to safeguard the personal

information of consumers, minimize its use and provide consumers with certain rights as to their personal data such as the right

to correct or delete their personal information;

Federal Civil Monetary Penalties Law, which prohibits, among other things, the offering or transfer of remuneration to a Medicare

or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s

selection of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program,

unless an exception applies;

Federal False Claims Act (and state equivalents), which imposes liability on any person or entity that, among other things,

knowingly presents, or causes to be presented, a false or fraudulent claim for payment to the federal government;

federal transparency requirements under the PPACA, including the provisions commonly referred to as the Physician Payments

Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable

under Medicare, Medicaid or Children’s Health Insurance Program to report annually to CMS information related to payments

and other transfers of value to physicians and teaching hospitals, and ownership and investment interests held by physicians

and their immediate family members;

federal and state fraud and abuse laws, prohibitions on self-referral and kickbacks, fee-splitting restrictions, prohibitions

on the provision of products at no or discounted cost to induce physician or patient adoption, and false claims acts, transparency,

reporting, and disclosure requirements, which may extend to services reimbursable by any third-party payer, including private

Biosciences, Inc.

Report on Form 10-K

prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare

claims to any other party;

Protecting Access to Medicare Act of 2014, which requires us to report private payer rates and test volumes for specific CPT

codes on a triennial basis and imposes penalties for failures to report, omissions, or misrepresentations;

rules regarding billing for diagnostic tests reimbursable by the Medicare program, which prohibit a physician or other supplier

from marking up the price of the technical component or professional component of a diagnostic test ordered by the physician

or other supplier and supervised or performed by a physician who does not “share a practice”

with the billing

physician or supplier;

laws that prohibit other specified practices related to billing such as billing physicians for testing that they order, waiving

coinsurance, co-payments, deductibles, and other amounts owed by patients, and billing a State Medicaid program at a price

that is higher than what is charged to other payers.

or state healthcare program beneficiary if the person knows or should know it is likely to influence the beneficiary’s selection

of a particular provider, practitioner, or supplier of services reimbursable by Medicare or a state healthcare program, unless an

exception applies;

Federal False Claims Act (and state equivalents), which imposes liability on any person or entity that, among other things, knowingly

presents, or causes to be presented, a false or fraudulent claim for payment to the federal government;

federal transparency requirements under the PPACA, including the provisions commonly referred to as the Physician Payments Sunshine

Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare,

Medicaid or Children’s Health Insurance Program to report annually to CMS information related to payments and other transfers

of value to physicians and teaching hospitals, and ownership and investment interests held by physicians and their immediate family

federal and state fraud and abuse laws, prohibitions on self-referral and kickbacks, fee-splitting restrictions, prohibitions on

the provision of products at no or discounted cost to induce physician or patient adoption, and false claims acts, transparency,

reporting, and disclosure requirements, which may extend to services reimbursable by any third-party payer, including private insurers;

prohibition on reassignment of Medicare claims, which, subject to certain exceptions, precludes the reassignment of Medicare claims

to any other party;

Protecting Access to Medicare Act of 2014, which requires us to report private payer rates and test volumes for specific CPT codes

on a triennial basis and imposes penalties for failures to report, omissions, or misrepresentations;

rules regarding billing for diagnostic tests reimbursable by the Medicare program, which prohibit a physician or other supplier from

marking up the price of the technical component or professional component of a diagnostic test ordered by the physician or other

supplier and supervised or performed by a physician who does not “share a practice” with the billing physician or supplier;

laws that prohibit other specified practices related to billing such as billing physicians for testing that they order, waiving coinsurance,

co-payments, deductibles, and other amounts owed by patients, and billing a State Medicaid program at a price that is higher than

what is charged to other payers.

recent years U.S.

Attorneys’

Offices have increased scrutiny of the healthcare industry, as have Congress, the Department

of Justice, the Department of Health and Human Services’

Office of the Inspector General and the Department of Defense.

These bodies have all issued subpoenas and other requests for information to conduct investigations of, and commenced civil and

criminal litigation against, healthcare companies based on financial arrangements with health care providers, regulatory compliance,

product promotional practices and documentation, and coding and billing practices.

Whistleblowers have filed numerous qui tam

lawsuits against healthcare companies under the federal and state False Claims Acts in recent years, in part because the whistleblower

can receive a portion of the government’s recovery under such suits.

Attorneys’ Offices have increased scrutiny of the healthcare industry, as have Congress, the Department of Justice,

the Department of Health and Human Services’ Office of the Inspector General and the Department of Defense.

These bodies have all

issued subpoenas and other requests for information to conduct investigations of, and commenced civil and criminal litigation against,

healthcare companies based on financial arrangements with health care providers, regulatory compliance, product promotional practices

and documentation, and coding and billing practices.

Whistleblowers have filed numerous qui tam lawsuits against healthcare companies

under the federal and state False Claims Acts in recent years, in part because the whistleblower can receive a portion of the government’s

recovery under such suits.

growth of our business may increase the potential of violating these laws, regulations or our internal policies and procedures.

The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many have

not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Violations of federal or state regulations may incur investigation or enforcement action by the FDA, Department of Justice, State

agencies, or other legal authorities, and may result in substantial civil, criminal, or other sanctions.

Any action brought against

us for violation of these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant

legal expenses and divert our management’s attention from the operation of our business.

If our operations are found to

be in violation of any of these laws and regulations, we may be subject to civil and criminal penalties, damages and fines, we

could be required to refund payments received by us, we could face possible exclusion from Medicare, Medicaid and other federal

or state healthcare programs and we could even be required to cease our operations.

Any of the foregoing consequences could have

a material adverse effect on our business, financial condition and results of operations.

failure to comply with federal and state laws and regulations pertaining to our payment practices could result in substantial

retain healthcare practitioners as key opinion leaders providing consultation in various aspects of our business, maintain a sales

force, and contract for marketing services.

These arrangements, like any arrangement that includes compensation to a healthcare

provider or potential referral source, may trigger federal or state anti-kickback, Stark Law liability, and False Claims Act liability.

There are no guarantees that the federal or state governments will find that these arrangements are designed properly or that

they do not trigger liability under federal and state laws.

Under existing laws, all arrangements must be commercially reasonable

and compensation must be fair market value.

of our being found in violation of these or other laws and regulations is further increased by the fact that many have not been fully

interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations.

Violations of

federal or state regulations may incur investigation or enforcement action by the FDA, Department of Justice, State agencies, or other

legal authorities, and may result in substantial civil, criminal, or other sanctions.

Any action brought against us for violation of

these or other laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and

divert our management’s attention from the operation of our business.

If our operations are found to be in violation of any of

these laws and regulations, we may be subject to civil and criminal penalties, damages and fines, we could be required to refund payments

received by us, we could face possible exclusion from Medicare, Medicaid and other federal or state healthcare programs and we could

even be required to cease our operations.

Any of the foregoing consequences could have a material adverse effect on our business, financial

condition and results of operations.

failure to comply with federal and state laws and regulations pertaining to our payment practices could result in substantial penalties.

retain healthcare practitioners as key opinion leaders providing consultation in various aspects of our business, maintain a sales force,

and contract for marketing services.

These arrangements, like any arrangement that includes compensation to a healthcare provider or

potential referral source, may trigger federal or state anti-kickback, Stark Law liability, and False Claims Act liability.

no guarantees that the federal or state governments will find that these arrangements are designed properly or that they do not trigger

liability under federal and state laws.

Under existing laws, all arrangements must be commercially reasonable and compensation must be

fair market value.

These terms require some subjective analysis.

Safe harbors in the anti-kickback laws

do not necessarily equate to exceptions in the Stark Law, and there is no guarantee that the government will agree with our payment

practices with respect to the relationships between our laboratories and the healthcare providers, sales force members, or other

A failure to comply with Federal and State laws and regulations pertaining to our payment practices could result in substantial

penalties and adversely affect our business, financial condition and results of operations.

Biosciences, Inc.

Report on Form 10-K

addition, federal law prohibits any entity from offering or transferring to a Medicare or Medicaid beneficiary any remuneration

that the entity knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner

or supplier of Medicare or Medicaid payable items or services, including waivers of copayments and deductible amounts (or any

part thereof) and transfers of items or services for free or for other than fair market value.

Entities found in violation may

be liable for civil monetary penalties of up to $10,000 for each wrongful act.

Further, federal and state anti-kickback statutes

or similar laws may be implicated by arrangements with patients to waive, reduce, or limit copays or other payment amounts, such

as our Patient Assistance Program.

Third-party payers, including commercial payers and government payers, may prohibit, limit,

or restrict certain financial arrangements with patients.

Violation of these laws or payment policies could result in significant

fines, penalties, liability, recoupment, and exclusion from Medicare and Medicaid, which could have a material adverse effect

on our business, results of operations, financial condition and cash flows.

Safe harbors in the anti-kickback laws do not necessarily equate to

exceptions in the Stark Law, and there is no guarantee that the government will agree with our payment practices with respect to the

relationships between our laboratories and the healthcare providers, sales force members, or other parties.

A failure to comply with

Federal and State laws and regulations pertaining to our payment practices could result in substantial penalties and adversely affect

our business, financial condition and results of operations.

addition, federal law prohibits any entity from offering or transferring to a Medicare or Medicaid beneficiary any remuneration that

the entity knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier

of Medicare or Medicaid payable items or services, including waivers of copayments and deductible amounts (or any part thereof) and transfers

of items or services for free or for other than fair market value.

Entities found in violation may be liable for civil monetary penalties

of up to $10,000 for each wrongful act.

Further, federal and state anti-kickback statutes or similar laws may be implicated by arrangements

with patients to waive, reduce, or limit copays or other payment amounts, such as our Patient Assistance Program.

Third-party payers,

including commercial payers and government payers, may prohibit, limit, or restrict certain financial arrangements with patients.

of these laws or payment policies could result in significant fines, penalties, liability, recoupment, and exclusion from Medicare and

Medicaid, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

2018, the U.S.

enacted the Eliminating Kickbacks in Recovery Act, or EKRA, as part of the Substance Use-Disorder Prevention that

Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act).

EKRA is an all-payer anti-kickback law

that makes it a criminal offense to pay any remuneration to induce referrals to, or in exchange for, patients using the services

of a recovery home, a substance use clinical treatment facility, or laboratory.

Although it appears that EKRA was intended to

reach patient brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in

EKRA is broadly written.

The term “laboratory”

is defined broadly and without reference to any connection to substance

use disorder treatment.

EKRA is a criminal statute and violations can result in fines of up to $200,000, up to 10 years in prison,

or both, per violation.

As drafted, EKRA prohibits incentive compensation to sales employees, a practice that is common in the

business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery and anti-corruption

business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other

countries in which we operate, including the U.K.

The FCPA generally prohibits offering, promising, giving, or authorizing

others to give anything of value, either directly or indirectly, to a non-U.S.

government official in order to influence official

action, or otherwise obtain or retain business.

The FCPA also requires public companies to make and keep books and records that

accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting

Our business is heavily regulated and therefore involves significant interaction with public officials, potentially

including officials of non-U.S.

Additionally, in many other countries, the health care providers who prescribe pharmaceuticals

are employed by their government, and the purchasers of pharmaceuticals are government entities;

therefore, our dealings with

these prescribers and purchasers are subject to regulation under the FCPA.

Recently, the SEC and Department of Justice have increased

their FCPA enforcement activities with respect to pharmaceutical companies.

There is no certainty that all of our employees, agents,

contractors, or collaborators, or those of our affiliates, will comply with all applicable laws and regulations, particularly

given the high level of complexity of these laws.

Violations of these laws and regulations could result in fines, criminal sanctions

against us, our officers, or our employees, the closing down of our facilities, requirements to obtain export licenses, cessation

of business activities in sanctioned countries, implementation of compliance programs, and prohibitions on the conduct of our

Any such violations could include prohibitions on our ability to offer our products in one or more countries and could

materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees,

and our business, prospects, operating results, and financial condition.

enacted the Eliminating Kickbacks in Recovery Act, or EKRA, as part of the Substance Use-Disorder Prevention that Promotes

Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act).

EKRA is an all-payer anti-kickback law that makes it a

criminal offense to pay any remuneration to induce referrals to, or in exchange for, patients using the services of a recovery home,

a substance use clinical treatment facility, or laboratory.

Although it appears that EKRA was intended to reach patient brokering and

similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written.

The term “laboratory”

is defined broadly and without reference to any connection to substance use disorder treatment.

EKRA is a criminal statute and violations

can result in fines of up to $200,000, up to 10 years in prison, or both, per violation.

As drafted, EKRA prohibits incentive compensation

to sales employees, a practice that is common in the industry.

business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery and anti-corruption laws.

business activities may be subject to the FCPA and similar anti-bribery or anti-corruption laws, regulations or rules of other countries

in which we operate, including the U.K.

The FCPA generally prohibits offering, promising, giving, or authorizing others

to give anything of value, either directly or indirectly, to a non-U.S.

government official in order to influence official action, or

otherwise obtain or retain business.

The FCPA also requires public companies to make and keep books and records that accurately and fairly

reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls.

is heavily regulated and therefore involves significant interaction with public officials, potentially including officials of non-U.S.

Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government,

and the purchasers of pharmaceuticals are government entities;

therefore, our dealings with these prescribers and purchasers are subject

to regulation under the FCPA.

Recently, the SEC and Department of Justice have increased their FCPA enforcement activities with respect

to pharmaceutical companies.

There is no certainty that all of our employees, agents, contractors, or collaborators, or those of our

affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws.

of these laws and regulations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down

of our facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of

compliance programs, and prohibitions on the conduct of our business.

Any such violations could include prohibitions on our ability to

offer our products in one or more countries and could materially damage our reputation, our brand, our international expansion efforts,

our ability to attract and retain employees, and our business, prospects, operating results, and financial condition.

in governmental regulation could negatively impact our business operations and increase our costs.

1 unchanged sentence

Significant changes

in these regulations affecting our business could result in the imposition of additional restrictions on our business, additional

costs to us in providing our tests or services to our customers or otherwise negatively impact our business operations.

in governmental regulations mandating price controls and limitations on patient access to our products could also reduce, eliminate

or otherwise negatively impact our sales.

Additional changes may be forthcoming in light of the new Presidential administration.

Biosciences, Inc.

Report on Form 10-K

in these regulations affecting our business could result in the imposition of additional restrictions on our business, additional costs

to us in providing our tests or services to our customers or otherwise negatively impact our business operations.

Changes in governmental

regulations mandating price controls and limitations on patient access to our products could also reduce, eliminate or otherwise negatively

impact our sales.

Additional changes may be forthcoming in light of the current Presidential administration.

Relating To Our Intellectual Property

we are unable to protect our intellectual property effectively, our business would be harmed.

rely on patent protection as well as trademark, trade secret and other intellectual property rights protection and contractual

restrictions to protect our proprietary technology.

If we fail to protect our intellectual property, third parties may be able

to compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use

of our intellectual property.

While we apply for patents covering our products and technologies and uses thereof, we may fail

to apply for patents on important products and technologies in a timely fashion or at all, or we may fail to apply for patents

in relevant jurisdictions.

Others could seek to design around our current or future patented technologies.

We may not be successful

in defending any challenges made against our patents or patent applications.

On January 16, 2018, we were notified that an Opposition

had been filed against EP patent #2772550 alleging that the patent is invalid.

On February 25, 2019, the European Patent Office

Opposition Division issued a decision revoking the patent on grounds that the claims were not supported by a valid basis.

25, 2019 we filed a Notice of Appeal challenging the European Patent Office Opposition Division and we are waiting for the appeal

to be decided.

Any successful third-party challenge to our patents could result in the unenforceability or invalidity of such

patents and increased competition to our business.

The outcome of patent litigation, such as oppositions or post-grant reviews

can be uncertain and any attempt by us to enforce our patent rights against others may not be successful, or, if successful, may

take substantial time and result in substantial cost, and may divert our efforts and attention from other aspects of our business.

unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will

be, adequate.

If we were to enforce a claim that a third-party had illegally obtained and was using our trade secrets, it would

be expensive and time consuming, and the outcome would be unpredictable.

Further, competitors could willfully infringe our intellectual

property rights, design around our protected technology or develop their own competitive technologies that arguably fall outside

of our intellectual property rights.

Others may independently develop similar or alternative products and technologies or replicate

any of our products and technologies.

If our intellectual property does not adequately protect us against competitors’

and methods, our competitive position could be adversely affected, as could our business and the results of our operations.

the extent our intellectual property offers inadequate protection, or is found to be invalid or unenforceable, we would be exposed

to a greater risk of competition.

If our intellectual property does not provide adequate coverage of our competitors’

our competitive position could be adversely affected, as could our overall business.

Both the patent application process and the

process of managing patent disputes can be time consuming and expensive.

rely on patent protection as well as trademark, trade secret and other intellectual property rights protection and contractual restrictions

to protect our proprietary technology.

If we fail to protect our intellectual property, third parties may be able to compete more effectively

against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.

we apply for patents covering our products and technologies and uses thereof, we may fail to apply for patents on important products

and technologies in a timely fashion or at all, or we may fail to apply for patents in relevant jurisdictions.

Others could seek to design

around our current or future patented technologies.

We may not be successful in defending any challenges made against our patents or

patent applications.

On January 16, 2018, we were notified that an Opposition had been filed against EP patent #2772550 alleging that

the patent is invalid.

On February 25, 2019, the European Patent Office Opposition Division issued a decision revoking the patent on

grounds that the claims were not supported by a valid basis.

On April 25, 2019, we filed a Notice of Appeal challenging the European

Patent Office Opposition Division and we are waiting for the appeal to be decided.

Any successful third-party challenge to our patents

could result in the unenforceability or invalidity of such patents and increased competition to our business.

The outcome of patent litigation,

such as oppositions or post-grant reviews can be uncertain and any attempt by us to enforce our patent rights against others may not

be successful, or, if successful, may take substantial time and result in substantial cost, and may divert our efforts and attention

from other aspects of our business.

unauthorized disclosure is difficult, and we do not know whether the steps we have taken to prevent such disclosure are, or will be,

If we were to enforce a claim that a third-party had illegally obtained and was using our trade secrets, it would be expensive

and time consuming, and the outcome would be unpredictable.

Further, competitors could willfully infringe our intellectual property rights,

design around our protected technology or develop their own competitive technologies that arguably fall outside of our intellectual property

Others may independently develop similar or alternative products and technologies or replicate any of our products and technologies.

If our intellectual property does not adequately protect us against competitors’ products and methods, our competitive position

could be adversely affected, as could our business and the results of our operations.

To the extent our intellectual property offers

inadequate protection, or is found to be invalid or unenforceable, we would be exposed to a greater risk of competition.

If our intellectual

property does not provide adequate coverage of our competitors’ products, our competitive position could be adversely affected,

as could our overall business.

Both the patent application process and the process of managing patent disputes can be time consuming

and expensive.

patent law could diminish the value of patents in general, thereby impairing our ability to protect our molecular diagnostic

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on obtaining and enforcing patents.

Obtaining and enforcing patents of molecular diagnostics tests, like our molecular diagnostic

tests in our PancraGEN ®

and miR Inform ®

platforms (including ThyGeNEXT ®

both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.

From time-to-time the

Supreme Court, other Federal courts, the U.S.

Congress or the United States Patent and Trademark Office, or the USPTO, may

change the standards of patentability and any such changes could have a negative impact on our business.

For instance, on October

30, 2008, the Court of Appeals for the Federal Circuit issued a decision that methods or processes cannot be patented unless they

are tied to a machine or involve a physical transformation.

Obtaining and enforcing patents of molecular diagnostics tests, like our molecular diagnostic tests

in our PancraGEN ® and miR Inform ® platforms (including ThyGeNEXT ® ), involves both

technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain.

From time-to-time the U.S.

Court, other Federal courts, the U.S.

Congress or the United States Patent and Trademark Office, or the USPTO, may change the standards

of patentability and any such changes could have a negative impact on our business.

For instance, on October 30, 2008, the Court of Appeals

for the Federal Circuit issued a decision that methods or processes cannot be patented unless they are tied to a machine or involve a

physical transformation.

Supreme Court later reversed that decision in Bilski v.

Kappos , finding that the “machine-or-transformation”

test is not the only test for determining patent eligibility.

The Court, however, declined to specify how and when processes are

The Court, however, declined to specify how and when processes are patentable.

On March 30, 2012, in the case Mayo Collaborative Services v.

Prometheus Laboratories, Inc.

Court reversed the Federal Circuit’s application of Bilski and invalidated a patent focused on a process for identifying

a proper dosage for an existing therapeutic because the patent claim embodied a law of nature.

On July 3, 2012, the USPTO released

a memorandum entitled “2012 Interim Procedure for Subject Matter Eligibility Analysis of Process Claims Involving Laws of

Nature,”

with guidelines for determining patentability of diagnostic or other processes in line with the Mayo decision.

On June 13, 2013, in Association for Molecular Pathology v.

Myriad Genetics , the Supreme Court held that a naturally occurring

DNA segment is a product of nature and not patent eligible merely because it has been isolated.

The Supreme Court did not address

the patentability of any innovative method claims involving the manipulation of isolated genes.

On March 4, 2014, the USPTO released

a memorandum entitled “2014 Procedure for Subject Matter Eligibility Analysis Of Claims Reciting Or Involving Laws Of Nature/Natural

Principles, Natural Phenomena, And/Or Natural Products.”

This memorandum provides guidelines for the USPTO’s new examination

procedure for subject matter eligibility under 35 U.S.C.

101 for claims embracing natural products or natural principles.

Biosciences, Inc.

Report on Form 10-K

Supreme Court reversed the

Federal Circuit’s application of Bilski and invalidated a patent focused on a process for identifying a proper dosage for an existing

therapeutic because the patent claim embodied a law of nature.

On July 3, 2012, the USPTO released a memorandum entitled “2012

Interim Procedure for Subject Matter Eligibility Analysis of Process Claims Involving Laws of Nature,” with guidelines for determining

patentability of diagnostic or other processes in line with the Mayo decision.

On June 13, 2013, in Association for Molecular Pathology

Myriad Genetics , the Supreme Court held that a naturally occurring DNA segment is a product of nature and not patent eligible

merely because it has been isolated.

The Supreme Court did not address the patentability of any innovative method claims involving the

manipulation of isolated genes.

On March 4, 2014, the USPTO released a memorandum entitled “2014 Procedure for Subject Matter Eligibility

Analysis Of Claims Reciting Or Involving Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products.” This memorandum

provides guidelines for the USPTO’s new examination procedure for subject matter eligibility under 35 U.S.C.

§ 101 for claims

embracing natural products or natural principles.

June 12, 2015, the Federal Circuit issued a decision in Ariosa v.

Sequenom holding that a method for detecting a paternally

inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female were unpatentable

as directed to a naturally occurring phenomenon.

On July 30, 2015, the USPTO released a Federal Register Notice entitled, “July

2015 Update on Subject Matter Eligibility,”

This Notice updated the USPTO guidelines for the USPTO’s procedure for

subject matter eligibility under 35 U.S.C.

Sequenom holding that a method for detecting a paternally inherited

nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female were unpatentable as directed to a

naturally occurring phenomenon.

On July 30, 2015, the USPTO released a Federal Register Notice entitled, “July 2015 Update on Subject

Matter Eligibility,” This Notice updated the USPTO guidelines for the USPTO’s procedure for subject matter eligibility under

§ 101 for claims embracing natural products or natural principles phenomenon.

On May 4, 2016, the USPTO released life science examples that were intended to be used in conjunction with the USPTO guidance

on subject matter eligibility.

Although the guidelines and examples do not have the force of law, patent examiners have been instructed

to follow them.

On February 6, 2019, the Federal Circuit for Court of Appeals issued a decision in Athena Diagnostics, Inc.

Mayo Collaborative Servs., LLC , which relied on the decisions from Mayo and Ariosa, to find a claim directed to a method

for diagnosing neurotransmission or developmental disorders related to muscle specific tyrosine kinase not eligible for patenting

under 35 U.S.C.

What constitutes a law of nature and a sufficient inventive concept continues to remain uncertain,

and it is possible that certain aspects of diagnostic tests will continue to be considered natural laws and, therefore, ineligible

for patent protection.

aspects of our technology involve processes that may be subject to this evolving standard and we cannot guarantee that any of

our pending or issued claims will be patentable or upheld as valid as a result of such evolving standards.

In addition, patents

we own or license that issued before these recent cases may be subject to challenge in court or before the USPTO in view of these

current legal standards.

Accordingly, the evolving interpretation and application of patent laws in the United States governing

the eligibility of diagnostics for patent protection may adversely affect our ability to obtain patents and may facilitate third-party

challenges to any owned and licensed patents.

Changes in either the patent laws or in interpretations and application of patent

laws may also diminish the value of our existing intellectual property or intellectual property that we continue to develop.

cannot predict the breadth of claims that may be allowed or enforceable in our patents or in third-party patents.

may be involved in litigation related to intellectual property, which could be time-intensive and costly and may adversely affect

our business, operating results or financial condition.

may receive notices of claims of direct or indirect infringement or misappropriation or misuse of other parties’

rights from time to time and some of these claims may lead to litigation.

We cannot assume that we will prevail in such actions,

or that other actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party

patents and trademarks or other rights, or the validity of our patents, trademarks or other rights, will not be asserted or prosecuted

We might not have been the first to make the inventions covered by each of our pending patent applications and we

might not have been the first to file patent applications for these inventions.

No assurance can be given that other patent applications

will not have priority over our patent applications.

If third parties bring these proceedings against our patents, we could incur

significant costs and experience management distraction.

Litigation may be necessary for us to enforce our patents and proprietary

rights or to determine the scope, coverage and validity of the proprietary rights of others.

Defending any litigation, and particularly

patent litigation, is expensive and time-consuming, and the outcome of any litigation or other proceeding is inherently uncertain

and might not be favorable to us.

It is also possible that we might not be able to obtain licenses to technology that we require

on acceptable terms or at all.

In addition, if we resort to legal proceedings to enforce our intellectual property rights or to

determine the validity, scope and coverage of the intellectual property or other proprietary rights of others, the proceedings

could be burdensome and expensive, even if we were to prevail.

Any litigation that may be necessary in the future could result

in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition

and operating results.

Biosciences, Inc.

Report on Form 10-K

the event of a successful claim of infringement against us, we may be required to pay damages and ongoing royalties, and obtain

one or more licenses from third parties, or be prohibited from selling our products.

We may not be able to obtain these licenses

on acceptable terms, if at all.

We could incur substantial costs related to royalty payments for licenses obtained from third

parties, which could negatively affect our financial results.

In addition, our agreements with some of our customers, suppliers

or other entities with whom we do business require us to defend or indemnify these parties to the extent they become involved

in infringement claims, including the types of claims described above.

If we are required or agree to defend or indemnify third

parties in connection with any infringement claims, we could incur significant costs and expenses that could have a material adverse

effect on our business, financial condition, and results of operations.

On May 4, 2016, the USPTO released life

science examples that were intended to be used in conjunction with the USPTO guidance on subject matter eligibility.

Although the guidelines

and examples do not have the force of law, patent examiners have been instructed to follow them.

On February 6, 2019, the Federal Circuit

for Court of Appeals issued a decision in Athena Diagnostics, Inc.

Mayo Collaborative Servs., LLC , which relied on the decisions

from Mayo and Ariosa, to find a claim directed to a method for diagnosing neurotransmission or developmental disorders related to muscle

specific tyrosine kinase not eligible for patenting under 35 U.S.C.

What constitutes a law of nature and a sufficient inventive

concept continues to remain uncertain, and it is possible that certain aspects of diagnostic tests will continue to be considered natural

laws and, therefore, ineligible for patent protection.

aspects of our technology involve processes that may be subject to this evolving standard and we cannot guarantee that any of our pending

or issued claims will be patentable or upheld as valid as a result of such evolving standards.

In addition, patents we own or license

that issued before these recent cases may be subject to challenge in court or before the USPTO in view of these current legal standards.

Accordingly, the evolving interpretation and application of patent laws in the United States governing the eligibility of diagnostics

for patent protection may adversely affect our ability to obtain patents and may facilitate third-party challenges to any owned and licensed

Changes in either the patent laws or in interpretations and application of patent laws may also diminish the value of our existing

intellectual property or intellectual property that we continue to develop.

We cannot predict the breadth of claims that may be allowed

or enforceable in our patents or in third-party patents.

may be involved in litigation related to intellectual property, which could be time-intensive and costly and may adversely affect our

business, operating results or financial condition.

may receive notices of claims of direct or indirect infringement or misappropriation or misuse of other parties’ proprietary rights

from time to time and some of these claims may lead to litigation.

We cannot assume that we will prevail in such actions, or that other

actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks

or other rights, or the validity of our patents, trademarks or other rights, will not be asserted or prosecuted against us.

not have been the first to make the inventions covered by each of our pending patent applications and we might not have been the first

to file patent applications for these inventions.

No assurance can be given that other patent applications will not have priority over

our patent applications.

If third parties bring these proceedings against our patents, we could incur significant costs and experience

management distraction.

Litigation may be necessary for us to enforce our patents and proprietary rights or to determine the scope, coverage

and validity of the proprietary rights of others.

Defending any litigation, and particularly patent litigation, is expensive and time-consuming,

and the outcome of any litigation or other proceeding is inherently uncertain and might not be favorable to us.

It is also possible that

we might not be able to obtain licenses to technology that we require on acceptable terms or at all.

In addition, if we resort to legal

proceedings to enforce our intellectual property rights or to determine the validity, scope and coverage of the intellectual property

or other proprietary rights of others, the proceedings could be burdensome and expensive, even if we were to prevail.

Any litigation

that may be necessary in the future could result in substantial costs and diversion of resources and could have a material adverse effect

on our business, financial condition and operating results.

the event of a successful claim of infringement against us, we may be required to pay damages and ongoing royalties, and obtain one or

more licenses from third parties, or be prohibited from selling our products.

We may not be able to obtain these licenses on acceptable

terms, if at all.

We could incur substantial costs related to royalty payments for licenses obtained from third parties, which could

negatively affect our financial results.

In addition, our agreements with some of our customers, suppliers or other entities with whom

we do business require us to defend or indemnify these parties to the extent they become involved in infringement claims, including the

types of claims described above.

If we are required or agree to defend or indemnify third parties in connection with any infringement

claims, we could incur significant costs and expenses that could have a material adverse effect on our business, financial condition,

and results of operations.

Risks Related to our Business

1 unchanged sentence

have incurred net losses since 2015 and may never achieve or sustain profitability.

As of the fiscal year ended December 31, 2020,

federal and state net operating losses, or NOLs, of approximately $81.0 million and $48.3 million which

have been updated to reflect the 382 limitation for NOLs sustained post 382 ownership change, respectively.

Subject to the

final two sentences of this paragraph, the federal and state NOL carryforwards will begin to expire, if not utilized, beginning

in 2028 for certain states.

These NOL carryforwards could expire unused and be unavailable to offset future income tax

Under current federal income tax law, federal NOLs incurred in tax years beginning after December 31, 2017 may be

carried forward indefinitely, but the deductibility of such federal NOLs is limited to 80% of Federal taxable income.

As of the fiscal year ended December 31, 2021, we

federal and state net operating losses, or NOLs, of approximately $118.6 million and $56.3 million respectively.

Subject to the final two sentences of this paragraph, the federal and state NOL carryforwards will begin to expire, if not utilized,

beginning in 2028 for certain states.

These NOL carryforwards could expire unused and be unavailable to offset future income tax liabilities.

Under current federal income tax law, federal NOLs incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely,

but the deductibility of such federal NOLs is limited to 80% of Federal taxable income.

the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any.

We may be limited in the portion of NOL and tax credit carryforwards that we can use in the future to offset taxable income for

federal and state income tax purposes.

Sections 382 and 383 of Internal Revenue Code limit the use of NOLs and tax credits

may be limited in the portion of NOL and tax credit carryforwards that we can use in the future to offset taxable income for U.S.

and state income tax purposes.

Sections 382 and 383 of Internal Revenue Code of 1986, or the Code, limit the use of NOLs and tax credits

after a cumulative change in corporate ownership of more than 50% occurs within a three-year period.

The limitation could prevent

us from using some or all of our NOLs and tax credits, as it places a formula limit of how much of our NOL and tax credit carryforwards

The limitation could prevent us

from using some or all of our NOLs and tax credits, as it places a formula limit of how much of our NOL and tax credit carryforwards

we would be permitted to use in a tax year.

The amount of the annual limitation, if any, will be determined based on the value

of our company immediately prior to an ownership change.

During the periods 2017 through 2019, the company experienced greater

than 50% changes in ownership and as a result, NOLs attributable to the pre-ownership change are subject to a substantial annual

limitation under Section 382 of the Internal Revenue Code due to the ownership changes.

The Company has adjusted their NOL carryforwards

to address the impact of the 382 ownership change.

Subsequent ownership changes may further affect the limitation in future

In the event we have undergone or will undergo an ownership change under Section 382 of the Internal Revenue Code, if we

earn net taxable income, our ability to use our pre-change NOL carryforwards to offset U.S.

federal taxable income may become

subject to these limitations, which could potentially result in increased future tax liability to us.

The amount of the annual limitation, if any, will be determined based on the value of our

company immediately prior to an ownership change.

During the periods 2017 through 2019, the company experienced greater than 50% changes

in ownership and as a result, NOLs attributable to the pre-ownership change are subject to a substantial annual limitation under Section

382 of the Code due to the ownership changes.

The Company has adjusted their NOL carryforwards to address the impact of the Section 382

ownership changes.

Federal Net Operating Losses of $71.2 million are subject to annual limitation as of the ownership changes for ownership

The remaining $47.4 million of NOLs incurred post July 15, 2019 are not subject to any annual limitation and can be carried

forward indefinitely.

Subsequent ownership changes may further affect the limitation in future years.

In the event we have undergone

or will undergo an ownership change under Section 382 of the Code, if we earn net taxable income, our ability to use our pre-change NOL

carryforwards to offset U.S.

federal taxable income may become subject to these limitations, which could potentially result in increased

future tax liability to us.

Comprehensive

tax reform could adversely affect our business and financial condition.

government enacted comprehensive tax legislation, commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA”),

that includes significant changes to the taxation of business entities.

These changes include, among others, (i) a permanent reduction

to the corporate income tax rate, (ii) a partial limitation on the deductibility of business interest expense, (iii) a shift of

taxation of multinational corporations from a tax on worldwide income to a territorial system (along with certain rules

designed to prevent erosion of the U.S.

income tax base) and (iv) a one-time tax on accumulated offshore earnings held in cash

and illiquid assets, with the latter taxed at a lower rate.

Notwithstanding the reduction in the corporate income tax rate, the

overall impact of this tax reform is uncertain, and our business and financial condition could be adversely affected.

it is uncertain if and to what extent various states will conform to the newly enacted federal tax law.

TCJA reduced the U.S.

corporate income tax rate from 35% to 21%, effective January 1, 2018.

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 reverse.

As a result of the reduction in the U.S.

corporate income tax rate from 35% to 21% under the TCJA, we revalued

deferred tax assets, net as of December 31, 2017.

The tax impact of revaluation of the deferred tax assets, net was $20,509,193,

which was wholly offset by a corresponding reduction in our valuation allowance of $20,509,193 resulting in a no net impact to

our income tax expense.

Biosciences, Inc.

Report on Form 10-K

TCJA provided for a one-time transition tax on the deemed repatriation of post-1986 undistributed foreign subsidiary earnings

The Company did not have consolidated accumulated earnings and profits attributable to it foreign subsidiaries, accordingly,

the Company did not record any income tax expense related to the transition tax.

Due to the timing of the new tax law and the

substantial changes it brings, the staff of the Securities and Exchange Commission (the “SEC”) issued Staff Accounting

118 (“SAB 118”), which provides registrants a measurement period to report the impact of the new US tax

During the measurement period, provisional amounts for the effects of the law are recorded to the extent a reasonable estimate

To the extent that all information necessary is not available, prepared or analyzed, companies may recognize provisional

estimated amounts for a period of up to one year following enactment of the TCJA.

The Company did not record any provisional amounts

under SAB 118.

in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect our reported

operating results.

generally accepted accounting principles (“GAAP”) is subject to interpretation by the FASB, the SEC, and various bodies

formed to promulgate and interpret appropriate accounting principles.

A change in accounting standards or practices can have a

significant effect on our reported results and may even affect our reporting of transactions completed before the change is effective.

New accounting pronouncements and varying interpretations of accounting pronouncements have occurred and may occur in the future.

Changes to existing rules or the questioning of current practices may adversely affect our reported financial results or the way

we conduct our business.

For example, the FASB and the International Accounting Standards Board are working to converge certain

accounting principles and facilitate more comparable financial reporting between companies that are required to follow U.S.

and those that are required to follow International Financial Reporting Standards, or IFRS.

we do not increase our revenues and successfully manage the size of our operations, our business, financial condition and results

of operations could be materially and adversely affected.

majority of our operating expenses are personnel-related costs such as employee compensation and benefits, reagents and disposable

supplies as well as the cost of infrastructure to support our operations, including facility space and equipment.

We continuously

review our personnel to determine whether we are fully utilizing their services.

If we believe we are not in a position to fully

utilize our personnel, we may make reductions to our workforce.

If we are unable to achieve revenue growth in the future or fail

to adjust our cost infrastructure to the appropriate level to support our revenues, our business, financial condition and results

of operations could be materially and adversely affected.

may acquire businesses or assets or make investments in other companies or testing, service or solution technologies that could

harm our operating results, dilute our stockholders’

ownership, increase our debt or cause us to incur significant expense.

income, sales and use or other tax laws or regulations could be enacted at any time, which could adversely affect our business operations

and financial performance.

Further, existing tax laws and regulations could be interpreted, modified or applied adversely to us.

events could require us to pay additional taxes on a prospective or retroactive basis, as well as penalties, interest and other costs

for past amounts deemed to be due.

New laws, or laws that are changed, modified or newly interpreted or applied, also could increase

our compliance, operating and other costs, as well as the costs of our products.

For example, the Tax Cuts and Jobs Act of 2017 enacted

many significant changes to the U.S.

tax laws, some of which were further modified by the Coronavirus Aid, Relief, and Economic Security

Act, and may be modified in the future by the current or a future presidential administration.

In addition, it is uncertain if and to

what extent various states will conform to current federal law, or any newly enacted federal tax legislation.

Changes in corporate tax

rates, the realization of net operating losses, and other deferred tax assets relating to our operations, the taxation of foreign earnings,

and the deductibility of expenses could have a material impact on the value of our deferred tax assets and could increase our future

we do not increase our revenues and successfully manage the size of our operations, our business, financial condition and results of

operations could be materially and adversely affected.

majority of our operating expenses are personnel-related costs such as employee compensation and benefits, reagents and disposable supplies

as well as the cost of infrastructure to support our operations, including facility space and equipment.

We continuously review our personnel

to determine whether we are fully utilizing their services.

If we believe we are not in a position to fully utilize our personnel, we

may make reductions to our workforce.

If we are unable to achieve revenue growth in the future or fail to adjust our cost infrastructure

to the appropriate level to support our revenues, our business, financial condition and results of operations could be materially and

adversely affected.

may acquire businesses or assets or make investments in other companies or testing, service or solution technologies that could harm

our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.

part of our strategy, we may pursue acquisitions of synergistic businesses or other related assets.

1 unchanged sentence

we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent

Any future acquisition by us also could result in significant write-offs or the incurrence of debt and contingent

liabilities, any of which could harm our operating results and financial condition.

Integration of an acquired company or business

will also likely require management resources that otherwise would be available for ongoing development of our existing business.

We may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize

the anticipated benefits of any acquisition.

To finance any acquisitions or investments, we may choose to issue shares of our

common stock as consideration, which would dilute the ownership of our stockholders.

If the price of our common stock is low or

volatile, we may not be able to acquire other companies for stock.

Alternatively, it may be necessary for us to raise additional

funds for these activities through public or private financings.

Additional funds may not be available on terms that are favorable

to us, or at all.

If these funds are raised through the sale of equity or convertible debt securities, dilution to our stockholders

could result.

The holders of our Series B Preferred Stock have the right to approve any public offering.

Consummating an acquisition

poses a number of risks including:

Biosciences, Inc.

Report on Form 10-K

Any future acquisition by us also could result in significant write-offs or the incurrence of debt and contingent liabilities,

any of which could harm our operating results and financial condition.

Integration of an acquired company or business will also likely

require management resources that otherwise would be available for ongoing development of our existing business.

We may not identify

or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits

of any acquisition.

To finance any acquisitions or investments, we may choose to issue shares of our common stock as consideration, which

would dilute the ownership of our stockholders.

If the price of our common stock is low or volatile, we may not be able to acquire other

companies for stock.

Alternatively, it may be necessary for us to raise additional funds for these activities through public or private

Additional funds may not be available on terms that are favorable to us, or at all.

If these funds are raised through the

sale of equity or convertible debt securities, dilution to our stockholders could result.

The holders of our Series B Preferred Stock

have the right to approve any public offering.

Consummating an acquisition poses a number of risks including:

may not be able to accurately estimate the financial impact of an acquisition on our overall business;

1 unchanged sentence

dilutive to our stockholders or spend significant cash, or may negatively affect our operating results and financial condition;

we spend significant funds or incur additional debt or other obligations, our ability to obtain financing for working capital

or other purposes could decline;

we spend significant funds or incur additional debt or other obligations, our ability to obtain financing for working capital or

other purposes could decline;

than expected performance of an acquired business may result in the impairment of intangible assets;

6 unchanged sentences

may fail to combine product offerings and product lines of our acquired businesses timely and efficiently;

acquisition may involve unexpected costs or liabilities, including as a result of pending and future shareholder lawsuits

relating to acquisitions or exercise by stockholders of their statutory appraisal rights, or the effects of purchase accounting

may be different from our expectations;

acquisition may involve unexpected costs or liabilities, including as a result of pending and future shareholder lawsuits relating

to acquisitions or exercise by stockholders of their statutory appraisal rights, or the effects of purchase accounting may be different

from our expectations;

acquisition may involve significant contingent payments that may adversely affect our future liquidity or capital resources;

for contingent payments requires significant judgment and changes to the assumptions used in determining the fair value of

our contingent payments could lead to significant volatility in earnings;

for contingent payments requires significant judgment and changes to the assumptions used in determining the fair value of our contingent

payments could lead to significant volatility in earnings;

and subsequent integration of these companies may disrupt our business and distract our management from other responsibilities;

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additional transaction and integration-related costs;

or operations of acquired businesses in remote locations and the inherent risks of operating in unfamiliar legal and regulatory

environments;

or operations of acquired businesses in remote locations and the inherent risks of operating in unfamiliar legal and regulatory environments;

products, including the risk that any underlying intellectual property associated with such products may not have been adequately

protected or that such products may infringe on the proprietary rights of others.

Biosciences, Inc.

Report on Form 10-K

our information technology or communications systems fail or we experience a significant interruption in their operation, our

reputation, business and results of operations could be materially and adversely affected.

our information technology or communications systems fail or we experience a significant interruption in their operation, our reputation,

business and results of operations could be materially and adversely affected.

efficient operation of our business is dependent on our information technology and communications systems.

Increasingly, we are

also dependent upon our ability to electronically interface with our customers.

The failure of these systems to operate as anticipated

could disrupt our business and result in decreased revenue and increased overhead costs.

In addition, we do not have complete

redundancy for all of our systems and our disaster recovery planning cannot account for all eventualities.

Our information technology

and communications systems, including the information technology systems and services that are maintained by third party vendors,

are vulnerable to damage or interruption from natural disasters, fire, terrorist attacks, epidemics, pandemics including the COVID-19,

malicious attacks by computer viruses or hackers, power loss, failure of computer systems, Internet, telecommunications or data

In 2017, we discovered malware installed on certain clinical services servers.

We do not believe that any data on the

affected servers was accessed or compromised.

Increasingly, we are also

dependent upon our ability to electronically interface with our customers.

The failure of these systems to operate as anticipated could

disrupt our business and result in decreased revenue and increased overhead costs.

In addition, we do not have complete redundancy for

all of our systems and our disaster recovery planning cannot account for all eventualities.

Our information technology and communications

systems, including the information technology systems and services that are maintained by third party vendors, are vulnerable to damage

or interruption from natural disasters, fire, terrorist attacks, epidemics, pandemics including COVID-19, malicious attacks by computer

viruses or hackers, power loss, failure of computer systems, Internet, telecommunications or data networks.

In 2017, we discovered malware

installed on certain clinical services servers.

We do not believe that any data on the affected servers was accessed or compromised.

We removed the malware, and enhanced our cybersecurity procedures.

Additionally,

our clinical services and pharma services are largely dependent on our partially internally developed and partially purchased

Laboratory Information Management Systems or LIMS, which is our automated basis of managing operations and storing data and customer

If these systems or services become unavailable or suffer a security breach, or are uneconomical or impossible to

update and modify, we may expend significant resources to address these problems, and our reputation, business and results of

operations could be materially and adversely affected.

Additionally, our clinical services and pharma services are largely

dependent on our partially internally developed and partially purchased Laboratory Information Management Systems or LIMS, which is our

automated basis of managing operations and storing data and customer information.

If these systems or services become unavailable or

suffer a security breach, or are uneconomical or impossible to update and modify, we may expend significant resources to address these

problems, and our reputation, business and results of operations could be materially and adversely affected.

Related To Our Common Stock Price

price and trading volume of our common stock may be highly volatile and could be further affected by events not within our control,

and an investment in our common stock could suffer a decline in value.

price and trading volume of our common stock may be highly volatile and could be further affected by events not within our control, and

an investment in our common stock could suffer a decline in value.

2021, our common stock traded at a low of $2.98 and a high of $10.51.

During 2019, our common stock traded at a low of $3.80 and

a high of $11.20 (adjusted for reverse stock split).

Volatility in our stock price or trading volume may be in response to various

factors, some of which may be beyond our control.

In addition to the other factors discussed or incorporated by reference herein,

factors that may cause fluctuations in our stock price or trading volume, include, among others:

During 2020, our common stock traded at a low of $2.57 and a high

Volatility in our stock price or trading volume may be in response to various factors, some of which may be beyond our control.

In addition to the other factors discussed or incorporated by reference herein, factors that may cause fluctuations in our stock price

or trading volume, include, among others:

volatility in the trading markets;

3 unchanged sentences

changes in our cash and cash equivalent reserves;

liquidity and ability to obtain additional capital, including the market’s reaction to any announced capital-raising

transactions;

assessments of any announced strategic transaction, including the likelihood that it would be completed and the timing for

liquidity and ability to obtain additional capital, including the market’s reaction to any announced capital-raising transactions;

assessments of any announced strategic transaction, including the likelihood that it would be completed and the timing for completion;

negative market reaction to the terms or volume of any issuance of shares of our common stock, preferred stock or other securities

to new investors, pursuant to strategic or capital-raising transactions or to employees, directors or other service providers;

of substantial amounts of our common stock, or the perception that substantial amounts of our common stock may be sold, by

stockholders in the public market;

Biosciences, Inc.

Report on Form 10-K

of substantial amounts of our common stock, or the perception that substantial amounts of our common stock may be sold, by stockholders

in the public market;

announcements

7 unchanged sentences

in accounting standards, policies, guidance, interpretations or principles;

or changes in opinions, ratings or earnings estimates made, or the failure to make, by brokerage firms or industry analysts

relating to the markets in which we operate or expect to operate;

or changes in opinions, ratings or earnings estimates made, or the failure to make, by brokerage firms or industry analysts relating

to the markets in which we operate or expect to operate;

market and economic conditions.

price dilution.

issuance of additional shares of our common stock in any future offerings could be dilutive to stockholders.

In order to raise

additional capital, such securities may be at prices that are not the same as the price per share in previous offerings.

assure investors that we will be able to sell shares or other securities in any other offering at a price per share that is equal

to or greater than the price per share paid by investors in previous offerings, and investors purchasing shares or other securities

in the future could have rights superior to existing stockholders,.

Moreover, to the extent that we issue options or warrants

to purchase, or securities convertible into or exchangeable for, shares of our common stock in the future, (including our Series

B Preferred Stock) and those options, warrants or other securities are exercised, converted or exchanged, stockholders may experience

further dilution.

cannot predict the extent to which the delisting of our common stock from Nasdaq and subsequent trading on OTCQX®

will adversely

affect our common stock and business and financial condition.

February 25, 2020, our common stock was delisted from the Nasdaq Capital Market (“Nasdaq”) and commenced trading on

the OTCQX®

issuance of additional shares of our common stock in any future offerings could be dilutive to stockholders.

In order to raise additional

capital, such securities may be at prices that are not the same as the price per share in previous offerings.

We cannot assure investors

that we will be able to sell shares or other securities in any other offering at a price per share that is equal to or greater than the

price per share paid by investors in previous offerings, and investors purchasing shares or other securities in the future could have

rights superior to existing stockholders.

Moreover, to the extent that we issue options or warrants to purchase, or securities convertible

into or exchangeable for, shares of our common stock in the future (including our Series B Preferred Stock), and those options, warrants

or other securities are exercised, converted or exchanged, stockholders may experience further dilution.

delisting of our common stock from Nasdaq and subsequent trading on OTCQX ® has adversely affected our common stock and

business and financial condition.

February 25, 2020, our common stock was delisted from the Nasdaq Capital Market (“Nasdaq”) and commenced trading on the OTCQX ®

Best Market tier of the OTC Markets Group Inc.

(the “OTCQX”), an electronic quotation service operated

by OTC Markets Group Inc.

in stock quoted on the OTCQX is often thin, volatile, and characterized by wide fluctuations in trading prices, due to many factors

that may have little to do with the issuer’s operations, results or business prospects.

The availability of buyers and sellers

represented by this volatility could lead to a market price for our Common Stock that is unrelated to operating performance.

the OTCQX is not a stock exchange, and trading of securities quoted on the OTCQX is often more volatile than the trading of securities

listed on a stock exchange like Nasdaq or NYSE.

(the “OTCQX”), an electronic quotation service operated by OTC Markets

in stock quoted on the OTCQX is often thin, volatile, and characterized by wide fluctuations in trading prices, due to many factors that

may have little to do with the issuer’s operations, results or business prospects.

The availability of buyers and sellers represented

by this volatility could lead to a market price for our Common Stock that is unrelated to operating performance.

Moreover, the OTCQX

is not a stock exchange, and trading of securities quoted on the OTCQX is often more volatile than the trading of securities listed on

a stock exchange like Nasdaq or the New York Stock Exchange.

The OTCQX quotation system may provide less liquidity than Nasdaq.

We cannot predict

the extent to which a trading market will develop or how liquid that market might become.

for securities traded solely on the OTCQX quotation system may be difficult to obtain, and holders of our common stock may be

unable to resell their shares at or near their original acquisition price or at any price.

Further, our delisting from Nasdaq

and commencement of trading on the OTCQX has and may continue to have negative implications, including an adverse effect on the

price of our common stock, increased volatility in our common stock, the loss of federal preemption of state securities laws,

greater difficulty in raising capital through the public or private sale of equity securities, deterring broker-dealers from making

a market in or otherwise seeking or generating interest in our common stock, a loss of current or future coverage by certain sell-side

analysts, deterring certain institutions and persons from investing in our securities at all and a loss of confidence of our customers,

collaborators, vendors, suppliers and employees, which could harm our business and future prospects.

Biosciences, Inc.

Report on Form 10-K

risks associated with penny stock classification could affect the marketability of the Company’s common stock and stockholders

for securities traded solely on the OTCQX quotation system may be difficult to obtain, and holders of our common stock may be unable

to resell their shares at or near their original acquisition price or at any price.

Further, our delisting from Nasdaq and commencement

of trading on the OTCQX has and may continue to have negative implications, including an adverse effect on the price of our common stock,

increased volatility in our common stock, the loss of federal preemption of state securities laws, greater difficulty in raising capital

through the public or private sale of equity securities, deterring broker-dealers from making a market in or otherwise seeking or generating

interest in our common stock, a loss of current or future coverage by certain sell-side analysts, deterring certain institutions and

persons from investing in our securities at all and a loss of confidence of our customers, collaborators, vendors, suppliers and employees,

which could harm our business and future prospects.

risks associated with penny stock classification could affect the marketability of the Company’s common stock and stockholders

could find it difficult to sell their shares.

the Company’s shares of Common Stock do not maintain a trading price of $5.00 or more per share, the Company’s common

stock will be subject to “penny stock”

rules as defined in Exchange Act Rule 3a51-1.

The SEC adopted rules that regulate

broker-dealer practices in connection with transactions in penny stocks.

Transaction costs associated with purchases and sales

of penny stocks are likely to be higher than those for other securities.

Penny stocks generally are equity securities with a price

of less than $5.00.

penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver

a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the

penny stock market.

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock,

the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market

value of each penny stock held in the customer’s account.

The bid and offer quotations, and the broker-dealer and salesperson

compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given

to the customer in writing before or with the customer’s confirmation.

the Company’s shares of Common Stock do not maintain a trading price of $5.00 or more per share, the Company’s common stock

will be subject to “penny stock” rules as defined in Exchange Act Rule 3a51-1.

The SEC adopted rules that regulate broker-dealer

practices in connection with transactions in penny stocks.

Transaction costs associated with purchases and sales of penny stocks are

likely to be higher than those for other securities.

Penny stocks generally are equity securities with a price of less than $5.00.

penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a

standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock

The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation

of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock

held in the customer’s account.

The bid and offer quotations, and the broker-dealer and salesperson compensation information, must

be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before

or with the customer’s confirmation.

addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules;

broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive

the purchaser’s written agreement to the transaction.

These disclosure requirements may have the effect of reducing the

level of trading activity in the secondary market for the Company’s common stock and stockholders may find it more difficult

to sell their shares.

the broker-dealer

must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s

written agreement to the transaction.

These disclosure requirements may have the effect of reducing the level of trading activity in

the secondary market for the Company’s common stock and stockholders may find it more difficult to sell their shares.

Relating to Being a Public Company

will continue to incur increased costs and demands on management as a result of compliance with laws and regulations applicable

to public companies, which could harm our operating results.

will continue to incur increased costs and demands on management as a result of compliance with laws and regulations applicable to public

companies, which could harm our operating results.

a public company, we are incurring significant legal, accounting and other expenses.

In addition to being required to comply with

certain requirements of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act), we are required to comply with certain requirements

of the Dodd Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by

the SEC, including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance

We expect that compliance with these requirements will continue to increase our legal and financial compliance costs

and will make some activities more time consuming and costly.

In addition, we expect that our management and other personnel will

continue to need to divert attention from operational and other business matters to devote substantial time to these public company

requirements.

example, in 2020, our Audit Committee conducted an independent investigation in accordance with Section 10A of the Exchange Act

into complaints of certain employment and billing and compliance matters and concluded that the allegations made in the complaints

were unsubstantiated and that there was no evidence of any illegal acts.

The completion of the investigation caused us to be late

in filing our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

also recently spent considerable management time in connection with our restatement of previously issued financial statements

contained in our Annual Reports on Form 10-K for the years ended December 31, 2014 through 2019 as well as the financial statements

contained in the Quarterly Reports on Form 10-Q for each quarterly period within those fiscal years as well as the quarterly periods

ended March 31, 2020 and June 30, 2020.

This was due to evaluating and recording an impairment charge and amortization expense

relating to our BarreGen asset.

Biosciences, Inc.

Report on Form 10-K

the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and

disclosure controls and procedures.

In particular, we must perform system and process evaluation and testing of our internal control

over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting,

as required by Section 404 of the Sarbanes-Oxley Act.

In addition, if we lose our status as a “smaller reporting company,”

we will be required to have our independent registered public accounting firm attest to the effectiveness of our internal control

over financial reporting.

Our compliance with Section 404 of the Sarbanes-Oxley Act, as applicable, requires us to incur substantial

accounting expense and expend significant management efforts.

We currently do not have an internal audit group, and we will need

to continue to hire additional accounting and financial staff with appropriate public company experience and technical accounting

If we or our independent registered public accounting firm identify deficiencies in our internal control over financial

reporting that are deemed to be material weaknesses, like those disclosed in Item 9A of this Report and in our restated financial

statements referred to above, the market price of our stock could decline and we could be subject to sanctions or investigations

by the SEC or other regulatory authorities, which would require additional financial and management resources.

we are unable to maintain and implement effective internal controls over financial reporting, investors may lose confidence in

the accuracy and completeness of our reported financial information and the market price of our common stock may be negatively

a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses

in such internal control.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness

of our internal control over financial reporting and provide a management report on our internal controls on an annual basis.

If we have material weaknesses in our internal control over financial reporting, like those disclosed in Item 9A of this Report

and as a result of our recent restatement of financial statements from 2014 through 2020 to record impairment charges and amortization

expenses, we may not detect errors on a timely basis and our financial statements may be materially misstated.

We will need to

maintain and enhance these processes and controls as we grow, and we will require additional management and staff resources to

Additionally, even if we conclude our internal controls are effective for a given period, we may in the future identify

one or more material weaknesses in our internal controls, in which case our management will be unable to conclude that our internal

In addition to being required to comply with certain

requirements of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act), we are required to comply with certain requirements of the Dodd

Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC, including

the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.

that compliance with these requirements will continue to increase our legal and financial compliance costs and will make some activities

more time consuming and costly.

In addition, we expect that our management and other personnel will continue to need to divert attention

from operational and other business matters to devote substantial time to these public company requirements.

example, in 2020, our Audit Committee conducted an independent investigation in accordance with Section 10A of the Exchange Act into

complaints of certain employment and billing and compliance matters and concluded that the allegations made in the complaints were unsubstantiated

and that there was no evidence of any illegal acts.

The completion of the investigation caused us to be late in filing our Quarterly

Report on Form 10-Q for the quarter ended June 30, 2020.

also recently spent considerable management time in connection with our restatement of previously issued financial statements contained

in our Annual Reports on Form 10-K for the years ended December 31, 2014 through 2019 as well as the financial statements contained in

the Quarterly Reports on Form 10-Q for each quarterly period within those fiscal years as well as the quarterly periods ended March 31,

2020 and June 30, 2020.

This was due to evaluating and recording an impairment charge and amortization expense relating to our BarreGen

asset, as disclosed in Item 9A of our Report on Form 10-K for the fiscal year 2021.

the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure

controls and procedures.

In particular, we must perform system and process evaluation and testing of our internal control over financial

reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section

404 of the Sarbanes-Oxley Act.

In addition, if we lose our status as a “smaller reporting company,” we will be required to

have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting.

Our compliance with Section 404 of the Sarbanes-Oxley Act, as applicable, requires us to incur substantial accounting expense and expend

significant management efforts.

We currently do not have an internal audit group, and we will need to continue to hire additional accounting

and financial staff with appropriate public company experience and technical accounting knowledge.

If we or our independent registered

public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses,

the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities,

which would require additional financial and management resources.

we are unable to maintain and implement effective internal controls over financial reporting, investors may lose confidence in the accuracy

and completeness of our reported financial information and the market price of our common stock may be negatively affected.

a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in such

internal control.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal

control over financial reporting and provide a management report on our internal controls on an annual basis.

If we have material weaknesses

in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially

We will need to maintain and enhance these processes and controls as we grow, and we will require additional management and

staff resources to do so.

Additionally, even if we conclude our internal controls are effective for a given period, we may in the future

identify one or more material weaknesses in our internal controls, in which case our management will be unable to conclude that our internal

control over financial reporting is effective.

Even if our management concludes that our internal control over financial reporting

is effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to

our internal controls or the level at which our internal controls are documented, designed, implemented or reviewed.

we are unable to conclude that our internal control over financial reporting is effective, investors could lose confidence in

the accuracy and completeness of our financial disclosures, which could cause the price of our common stock to decline.

of compliance with Section 404, any failure of our internal control over financial reporting could have a material adverse effect

on our reported operating results and harm our reputation.

Internal control deficiencies could also result in a restatement of

our financial results.

Biosciences, Inc.

Report on Form 10-K

Even if our management concludes that our internal control over financial reporting is

effective, our independent registered public accounting firm may conclude that there are material weaknesses with respect to our internal

controls or the level at which our internal controls are documented, designed, implemented or reviewed.

we are unable to conclude that our internal control over financial reporting is effective, investors could lose confidence in the accuracy

and completeness of our financial disclosures, which could cause the price of our common stock to decline.

Irrespective of compliance

with Section 404, any failure of our internal control over financial reporting could have a material adverse effect on our reported operating

results and harm our reputation.

Internal control deficiencies could also result in a restatement of our financial results.

Relating to Our Corporate Structure and Our Common Stock

have a substantial number of authorized common and preferred shares available for future issuance that could cause dilution of

our stockholders’

interest, adversely impact the rights of holders of our common stock and cause our stock price to decline.

have a substantial number of authorized shares of common and preferred stock available for future issuance that could cause dilution

of our stockholders’ interest, adversely impact the rights of holders of our common stock and cause our stock price to decline.

have a total of 100,000,000 shares of common stock and 5,000,000 shares of preferred stock authorized for issuance.

As of December 31,

2021, we had 95,771,831 shares of common stock and 4,953,000 shares of preferred stock available for issuance.

As of March 1, 2021, we have reserved 994,045 shares of our common stock for issuance under our 2019 Equity Incentive

Plan and 64,277 shares of our common stock for issuance under our Employee Stock Purchase Plan and 691,173 additional

shares available for future grants of awards under our stock incentive plan as well as warrants for 1,419,648 shares of our common

stock outstanding at prices ranging from $9.40 to $46.90 per warrant share.

Provided that we have a sufficient number of unreserved

authorized capital stock available, we may seek financing that could result in the issuance of additional shares of our capital

stock and/or rights to acquire additional shares of our capital stock.

We may also make acquisitions that result in issuances

of additional shares of our capital stock.

Those additional issuances of capital stock could result in substantial dilution of

our existing stockholders.

Furthermore, the book value per share of our common stock may be reduced.

This reduction would occur

if the exercise price of any issued warrants, the conversion price of any convertible notes or the conversion ratio of any issued

preferred stock is lower than the book value per share of our common stock at the time of such exercise or conversion.

Additionally,

new investors in any subsequent issuances of our securities could gain rights, preferences and privileges senior to those of holders

of common stock.

addition of a substantial number of shares of our common stock into the market or the registration of any of our other securities

under the Securities Act may significantly and negatively affect the prevailing market price for our common stock.

sales of shares of our common stock issuable upon the exercise of outstanding warrants and options may have a depressive effect

on the market price of our common stock, as such warrants and options would be more likely to be exercised at a time when the

price of our common stock is greater than the exercise price.

As of December

31, 2021, we have reserved 961,450 shares of our common stock for issuance under our 2019 Equity Incentive Plan and 25,715 shares

of our common stock for issuance under our Employee Stock Purchase Plan and 602,077 additional shares available for future grants of

awards under our 2019 Equity Incentive Plan as well as warrants for 1,404,648 shares of our common stock outstanding at prices ranging

from $9.40 to $46.90 per warrant share.

As of December 31, 2021, the aggregate number of shares of common stock that may be issued through

conversion of all of the outstanding Series B Preferred Stock is 7,833,334.

Provided that we have a sufficient number of unreserved authorized

capital stock available, we may seek financing that could result in the issuance of additional shares of our capital stock and/or rights

to acquire additional shares of our capital stock.

We may also make acquisitions that result in issuances of additional shares of our

capital stock.

Those additional issuances of capital stock could result in substantial dilution of our existing stockholders.

the book value per share of our common stock may be reduced.

This reduction would occur if the exercise price of any issued warrants,

the conversion price of any convertible notes or the conversion ratio of any issued preferred stock is lower than the book value per

share of our common stock at the time of such exercise or conversion.

Additionally, new investors in any subsequent issuances of our

securities could gain rights, preferences and privileges senior to those of holders of common stock.

addition of a substantial number of shares of our common stock into the market or the registration of any of our other securities under

the Securities Act may significantly and negatively affect the prevailing market price for our common stock.

The future sales of shares

of our common stock issuable upon the exercise of outstanding warrants and options may have a depressive effect on the market price of

our common stock, as such warrants and options would be more likely to be exercised at a time when the price of our common stock is greater

than the exercise price.

have anti-takeover defenses that could delay or prevent an acquisition and could adversely affect the price of our common stock.

certificate of incorporation, as amended, and amended and restated bylaws include provisions, such as providing for three classes

of directors, which may make it more difficult to remove our directors and management and may adversely affect the price of our

common stock.

In addition, our certificate of incorporation, as amended, authorizes the issuance of “blank check”

preferred stock, which allows our Board to create one or more classes of preferred stock with rights and preferences greater than

those afforded to the holders of our common stock without separate shareholder approval.

This provision could have the effect

of delaying, deterring or preventing a future takeover or a change in control, unless the takeover or change in control is approved

by our Board.

We are also subject to laws that may have a similar effect.

For example, Section 203 of the General Corporation

Law of the State of Delaware prohibits us from engaging in a business combination with an interested stockholder for a period

of three years from the date the person became an interested stockholder unless certain conditions are met.

As a result of the

foregoing, it will be difficult for another company to acquire us and, therefore, could limit the price that possible investors

might be willing to pay in the future for shares of our common stock.

In addition, the rights of our common stockholders are subject

to, and may be adversely affected by, the rights of holders of our Series B Preferred Stock as well as any class or series of

preferred stock that may be issued in the future and by the rights of holders of warrants currently outstanding or issued in the

have not declared any cash dividends on our common stock and do not intend to declare or pay any cash dividends in the foreseeable

certificate of incorporation, as amended, and amended and restated bylaws include provisions, such as providing for three classes of

directors, which may make it more difficult to remove our directors and management and may adversely affect the price of our common stock.

In addition, our certificate of incorporation, as amended, authorizes the issuance of “blank check” preferred stock, which

allows our Board to create one or more classes of preferred stock with rights and preferences greater than those afforded to the holders

of our common stock without separate shareholder approval.

This provision could have the effect of delaying, deterring or preventing

a future takeover or a change in control, unless the takeover or change in control is approved by our Board.

We are also subject to laws

that may have a similar effect.

For example, Section 203 of the General Corporation Law of the State of Delaware prohibits us from engaging

in a business combination with an interested stockholder for a period of three years from the date the person became an interested stockholder

unless certain conditions are met.

As a result of the foregoing, it will be difficult for another company to acquire us and, therefore,

could limit the price that possible investors might be willing to pay in the future for shares of our common stock.

In addition, the

rights of our common stockholders are subject to, and may be adversely affected by, the rights of holders of our Series B Preferred Stock

as well as any class or series of preferred stock that may be issued in the future and by the rights of holders of warrants currently

outstanding or issued in the future.

have not declared any cash dividends on our common stock and do not intend to declare or pay any cash dividends in the foreseeable future.

Future earnings, if any, will be used to finance the future operation and growth of our business.

As a result, capital

appreciation, if any, will be your sole source of gain.

As a result, capital appreciation,

if any, will be your sole source of gain.

have never paid cash dividends on our common stock.

We do not currently anticipate paying cash dividends on our common stock in

the foreseeable future and we may not have sufficient funds legally available to pay dividends.

We are prohibited from paying

dividends on our common stock without the approval of the holders of the Series B Preferred Stock for so long as 30% of the Series

B Preferred Stock outstanding as of January 15, 2020 remains outstanding.

We do not currently anticipate paying cash dividends on our common stock in the foreseeable

future and we may not have sufficient funds legally available to pay dividends.

We are prohibited from paying dividends on our common

stock without the approval of the holders of the Series B Preferred Stock for so long as 30% of the Series B Preferred Stock outstanding

as of January 15, 2020 remains outstanding.

We presently intend to retain all earnings for our operations.

As a result, capital appreciation, if any, of our common stock will be an investor’s sole source of gain for the foreseeable

Biosciences, Inc.

Report on Form 10-K

As a result, capital appreciation,

if any, of our common stock will be an investor’s sole source of gain for the foreseeable future.

securities or industry analysts issue an adverse opinion regarding our stock or do not publish research or reports about our company,

our stock price and trading volume could decline.

trading market for our common stock will depend in part on the research and reports that equity research analysts publish about

us, our business and our competitors.

We do not control these analysts or the content and opinions or financial models included

in their reports.

Securities analysts may elect not to provide research coverage of our company, and such lack of research coverage

may adversely affect the market price of our common stock.

The price of our common stock could also decline if one or more equity

research analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports

about us or our business.

If one or more equity research analysts cease coverage of our company, we could lose visibility in the

market, which in turn could cause our stock price to decline.

may be subject to securities litigation, which is expensive and could divert our management’s attention.

market price of our securities may be volatile, and in the past companies that have experienced volatility in the market price

of their securities have been subject to securities class action litigation.

We may be the target of this type of litigation in

Securities litigation against us could result in substantial costs and divert our management’s attention from

other business concerns, which could seriously harm our business.

indemnification rights provided to our directors, officers and employees may result in substantial expenditures by us and may

discourage lawsuits against its directors, officers, and employees.

certificate of incorporation, as amended, contains provisions permitting us to enter into indemnification agreements with our

directors, officers, and employees.

The foregoing indemnification obligations could result in us incurring substantial expenditures

to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.

These provisions

and resultant costs may also discourage us from bringing a lawsuit against our directors and officers for breaches of their fiduciary

duties and may similarly discourage the filing of derivative litigation by our stockholders against our directors and officers

even though such actions, if successful, might otherwise benefit us and our stockholders.

trading market for our common stock will depend in part on the research and reports that equity research analysts publish about us, our

business and our competitors.

We do not control these analysts or the content and opinions or financial models included in their reports.

Securities analysts may elect not to provide research coverage of our company, and such lack of research coverage may adversely affect

the market price of our common stock.

The price of our common stock could also decline if one or more equity research analysts downgrade

our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

or more equity research analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our

stock price to decline.

may be subject to securities litigation, which is expensive and could divert our management’s attention.

market price of our securities may be volatile, and in the past companies that have experienced volatility in the market price of their

securities have been subject to securities class action litigation.

We may be the target of this type of litigation in the future.

litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which

could seriously harm our business.

indemnification rights provided to our directors, officers and employees may result in substantial expenditures by us and may discourage

lawsuits against its directors, officers, and employees.

certificate of incorporation, as amended, contains provisions permitting us to enter into indemnification agreements with our directors,

officers, and employees.

The foregoing indemnification obligations could result in us incurring substantial expenditures to cover the

cost of settlement or damage awards against directors and officers, which we may be unable to recoup.

These provisions and resultant

costs may also discourage us from bringing a lawsuit against our directors and officers for breaches of their fiduciary duties and may

similarly discourage the filing of derivative litigation by our stockholders against our directors and officers even though such actions,

if successful, might otherwise benefit us and our stockholders.

STAFF COMMENTS

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors