What changed in this filing

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Item 1A. Risk Factors

2024-04-01 compared with 2023-03-27 · 464 added, 507 removed, 1229 unchanged (44% of the section changed)

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others, the following key risks:

face substantial risks 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 or no value.

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

war between Russia and Ukraine could materially adversely affect our business, results of operations, and financial condition.

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

We may continue to incur net losses

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

Adverse developments affecting financial institutions, companies in the

financial services industry or the financial services industry generally, including those we do business with, could adversely affect

our operations and liquidity.

depend on sales and reimbursements from our clinical services for all 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.

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.

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.

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

private equity firms and their affiliates’ control, on an as-converted basis, an aggregate of 64.5% of our outstanding shares

of common stock through their holdings of our Series B Preferred Stock, which has a liquidation preference in the event of a sale

of the Company, 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,

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.

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

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

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.

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.

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

we are unable to compete successfully in the markets our clinical services operate in, we may be unable to increase or sustain our

revenue or achieve profitability.

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.

failure to comply with federal and state laws and regulations pertaining to our payment practices could result in substantial penalties.

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.

delisting of our common stock from Nasdaq and subsequent trading on OTCQX ® has adversely affected our common stock

and business and financial condition.

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.

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.

have a history of operating losses;

expectations of future revenues, expenditures, capital or other funding requirements;

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;

ability to continue to perform, bill and receive reimbursement for our PancraGEN ® molecular test long-term under the

existing local coverage determination (“LCD”), given that such LCD is currently under review by Novitas, the Company’s

Medicare administrative contractor (“Novitas”);

secured lenders have the right to foreclose on substantially all of our assets if we are unable to timely repay our outstanding obligations;

dependence on sales and reimbursements from our clinical services for all of our revenue;

ability to continue to generate sufficient revenue from our clinical service products and other products and/or solutions that we

develop in the future is important for our ability to meet our financial and other targets;

ability to finance our business on acceptable terms in the future, which may limit the ability to grow our business, develop and

commercialize products and services, develop and commercialize new molecular clinical service solutions and technologies;

obligations to make royalty and milestone payments to our licensors;

dependence on third parties for the supply of some of the materials used in our clinical services tests;

potential adverse impact of current and future laws, licensing requirements and governmental regulations upon our business operations,

including but not limited to the evolving U.S.

regulatory environment related to laboratory developed tests (“LDTs”),

pricing of our tests and services and patient access limitations;

reliance on our sales and marketing activities for future business growth and our ability to continue to expand our sales and marketing

being subject to the controlling interests of our two private equity investors who control, on an as-converted basis, an aggregate

of 64.2% 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;

delisting of our common stock from Nasdaq has adversely affected and may continue to adversely affect our common stock and business and

financial condition;

and other economic and political conditions or events (such as the wars in Ukraine and Israel/Gaza);

ability to implement our business strategy;

potential impact of existing and future contingent liabilities on our financial condition.

Related to our Business

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liquidity to pay our current obligations and if we are unable to continue our business, our shares may have little or no value.

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.

the fiscal year ended December 31, 2022, we had an operating loss from continuing operations of $3.6 million.

ability to maintain being a profitable operating company is dependent upon our ability to continue to generate revenues and/or obtain

financing adequate to support our cost structure.

the fiscal year ended December 31, 2023, we had operating income from continuing operations of $2.8 million.

As of December 31, 2023,

we had cash and cash equivalents of $3.5 million and current liabilities of $17.5 million.

The Company must fund its operating

deficit until a sustainable level of revenue is achieved.

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, investing in our securities may be an

unattractive investment for potential investors.

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, investing in our securities

may be an unattractive investment for potential investors.

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

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

continuing impact that the COVID-19 virus 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

The coronavirus may continue to spread globally, adversely affecting global economies and financial markets, has and may

materially and adversely impact our operations including, without limitation, the functioning of our laboratory, the availability of

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

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

virus could continue to adversely impact our results of operations, cash flows and financial condition in the future.

At this time, the

Biden Administration does not plan to renew the COVID-19 national and public health emergencies when they expire on May 11, which has

been extended every 90 days since they were established in 2020.

This decision, therefore, appears to represent a de-escalation in the

way the government treats the pandemic, as well as a perception that most people have either been vaccinated or have recovered from a

COVID-19 infection (or both), Despite this anticipated change in policy, COVID-19 is still with us and as the virus continues to reproduce

and mutate, the Administration’s policy may need be adjusted.

In any event, it is likely that we will still need to make adjustments

to our operating plans in reaction to developments that are beyond our control.

war between Russia and Ukraine could materially adversely affect our business, results of operations, and financial condition.

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 51% of our revenue for the fiscal year ended

December 31, 2023.

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.

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 ® v2 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 ® v2 (0018U) tests has been retroactively reversed to January 1, 2022.

CMS was reimbursing the Company for one

of its two thyroid tests, and had agreed to retroactively reimburse for the second test once they had completed their internal administrative

We were notified by CMS/NCCI that processing of claims for dates of service after January 1, 2022 would be completed beginning

July 1, 2022.

As of the date of this filing the Company has no remaining outstanding collections regarding this matter and is fully up

to date with CMS.

Effective January 1, 2023, the gapfill price for ThyGeNEXT ® was set at $1,266.07.

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

ThyGeNEXT ® , ThyraMIR ® v2, 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.

Further, along with many laboratories,

we may be affected by the Proposed LCD DL39365, which is currently under consideration by our local Medicare Administrative Contractor,

If finalized, this Proposed LCD, which governs “Genetic Testing for Oncology,” could impact the existing Medicare

coverage for one of our molecular tests, PancraGEN ® .

On June 5, 2023 we announced that Novitas issued the final LCD of

Genetic Testing for Oncology (L39365) which, if finalized, would have established non-coverage for the Company’s widely used PancraGEN ®

test effective July 17, 2023.

On July 6, 2023, Novitas announced that it would not be implementing the final Genetic Testing for

Oncology LCD (L39365) as scheduled on July 17, 2023.

Novitas then issued a new virtually identical proposed LCD affecting the same companies

and tests and reaching the same conclusions as noted in the previously rescinded LCD on July 27, 2023.

In response, the Company participated

in a public meeting presentation and submitted detailed written comments supporting the use of PancraGEN ® .

The timing and

content of any final implemented LCD is uncertain at this time;

the process could potentially take a year or longer from issuance of the

updated proposed LCD to reach a conclusion.

As a result, we are able to continue offering PancraGEN ® and the related Point2 ®

fluid chemistry tests for amylase, CEA, and glucose.

In the event Novitas ultimately restricts coverage for the PancraGEN ®

test, the Company’s liquidity could be negatively impacted.

PancraGEN ® , ThyraMIR ® v2 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.

war between Russia and Ukraine or the war between Israel and Hamas could materially adversely affect our business, results of operations,

and financial condition.

February 2022, Russian military forces invaded Ukraine, and although the length, impact, and outcome of the ongoing war in Ukraine is

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resulting government reactions, are rapidly developing and beyond our control.

The extent and duration of the war, sanctions, and resulting

market disruptions could be significant and could potentially have a substantial impact on the global economy and our business for an

unknown period of time.

Any of the above-mentioned factors could materially adversely affect our business, financial condition, and results

of operations.

Any such disruptions may also magnify the impact of other risks described in this “Risk Factors” section and

elsewhere in this Annual Report on Form 10-K.

on October 7, 2023, Hamas, a U.S.

designated Foreign Terrorist Organization, launched terrorist attacks against Israel.

Israel then declared

war on Hamas and there is currently an armed conflict in Israel and the Gaza Strip as well as elsewhere in the Middle East.

and duration of the wars in Ukraine and Israel/Gaza expanding geopolitical tensions and any resulting market disruptions could be significant

and could potentially have a substantial impact on the global economy and our business for an unknown period of time.

Any of the above-mentioned

factors could materially adversely affect our business, financial condition, and results of operations.

are also monitoring other macro-economic and geopolitical developments such as inflation and cybersecurity risks so that the Company

can be prepared to react to new developments as they arise.

developments affecting financial institutions, companies in the financial services industry or the financial services industry generally,

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We may continue 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.

the next several years, we expect to 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, and (ii) 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.

the foreseeable future and may never sustain profitability.

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

Over the next several years, we expect to 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,

and (ii) develop and acquire additional products and services.

However, although we achieved profitability in 2023, our business may

not sustain profitability, and our failure to 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.

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

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stock-based compensation and awards;

to market fluctuations in the valuation of our warrant liabilities;

in valuation for contingent consideration related to acquired assets;

in R&D, business development and spending for clinical trials;

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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 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.

may need to finance our business 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.

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, 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.

The Comerica 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.

In May 2022, the Company issued

a Convertible Note to BroadOak, pursuant to which BroadOak funded a term loan in the aggregate principal amount of $2 million.

2022, the Convertible Note was converted into a subordinated term loan and was added to the outstanding BroadOak loan balance discussed

will need additional funding to repay the Comerica and BroadOak borrowings, which have maturity dates of September 2023 and October 2024,

respectively, as well as to continue operations.

The Comerica agreement was

repaid in full in 2023 and the agreement was terminated in February 2024.

The Comerica loan agreement contained affirmative and negative

restrictive covenants that were applicable whether or not any amounts are outstanding under the Comerica loan agreement.

These restrictive

covenants, which included restrictions on certain mergers, acquisitions, investments, encumbrances, etc., could have adversely affected

our ability to conduct our business.

The Comerica loan agreement also contained financial covenants requiring specified minimum liquidity

and minimum revenue thresholds and also contains customary events of default.

In May 2022, the Company issued a Convertible Note to BroadOak,

pursuant to which BroadOak funded a term loan in the aggregate principal amount of $2 million.

In August 2022, the Convertible Note was

converted into a subordinated term loan and was added to the outstanding BroadOak loan balance discussed above.

may need additional funding to repay the BroadOak loan, which has a maturity date of June 30, 2025, as well as to continue operations.

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

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

Any public 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 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.

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 and have maturity dates of September 2023 and October 2024, respectively.

In May 2022, the Company

issued a Convertible Note to BroadOak, pursuant to which BroadOak funded a term loan in the aggregate principal amount of $2 million.

In August 2022, the Convertible Note was converted into a subordinated term loan and was added to the outstanding BroadOak loan balance

discussed above.

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.

If we seek to raise funds by issuing additional equity

securities, dilution to our stockholders could result.

Any public 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

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 lender will have the right to foreclose on our assets.

October 2021, the Company entered into an $8.0 million term loan with BroadOak, which is secured by all of our assets and has a maturity

date of June 30, 2025.

In May 2022, the Company issued a Convertible Note to BroadOak, pursuant to which BroadOak funded a term loan in

the aggregate principal amount of $2 million.

In August 2022, the Convertible Note was converted into a subordinated term loan and was

added to the outstanding BroadOak loan balance discussed above.

We may need additional funding to repay these outstanding obligations

as well as to continue operations.

Additional 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

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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.

As previously disclosed in Current Reports on Form 8-K filed with the

SEC on November 16, 2023 and December 12, 2023, Edward Chan, a director designated by 1315 Capital, and Robert Gorman, a director designated

by Ampersand, resigned from the Board on November 15, 2023 and December 7, 2023, respectively.

Following these resignations, 1315 Capital

and Ampersand have two designated directors out of the five directors currently serving on the 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.

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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, 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 45% of our revenue for the fiscal year ended

December 31, 2022.

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.

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 ® v2 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 ® v2 (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 no remaining outstanding collections regarding

this matter and is fully up to date with CMS.

Effective January 1, 2023, the gapfill price for ThyGeNEXT ® was set at

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

ThyGeNEXT ® , ThyraMIR ® v2, 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.

Novitas restricts coverage for PancraGEN ® , our liquidity could be negatively impacted beginning in Fiscal 2023.

PancraGEN ® , ThyraMIR ® v2 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

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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

we may not maintain profitability.

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.

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

In addition, our assays are performed at our laboratory 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.

In addition, our assays are performed at our laboratory 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.

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.

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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.

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

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

However, premiums for many of the plans participating

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to make certain related royalty payments to CPRIT.

The Asuragen obligation regarding royalty payments expires in August 2024.

performing the ThyraMIR ® v2 test, we use products supplied by Exiqon A/S (now a part of Qiagen), subject to a license agreement

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

The Asuragen royalty obligation expires in August 2024.

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

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to alternative suppliers in a timely manner.

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

diagnostic tests.

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.

rely on sole suppliers for certain materials that we use to perform our tests and services for our endocrine cancer diagnostic tests.

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 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

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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.

clearance or approval and comply with applicable pre- and 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

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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 offered as LDTs are currently subject to enforcement discretion by the FDA.

LDTs are defined by FDA as

IVDs that are intended for clinical use and are designed, manufactured, and used within a single CLIA-certified, high-complexity clinical

the history of attempts by FDA and Congress to regulate LDTs over the past decade, there is substantial uncertainty concerning whether

FDA’s enforcement discretion policy will continue.

we are required to submit applications to FDA for our currently-marketed clinical 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 warning letters, civil monetary penalties, injunctions, criminal prosecution, recall

or seizure, operating restrictions, partial suspension or total shutdown of operations, and denial of or challenges to applications for

clearance or approval, as well as significant adverse publicity.

Any other regulatory or legislative proposals that would increase general

FDA oversight of clinical laboratories or 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

In the meantime, we maintain our CLIA accreditation and state licenses, which permit 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.

in vitro diagnostics or “IVDs”), specimen collection kits, analyte specific reagents (ASRs), and instruments used

in conducting diagnostic testing as medical devices.

Most tests offered as LDTs are currently subject to enforcement discretion by the

LDTs are defined by FDA as IVDs that are intended for clinical use and are designed, manufactured, and used within a single CLIA-certified,

high-complexity clinical laboratory.

the history of attempts by FDA and Congress to regulate LDTs, there is substantial uncertainty concerning whether FDA’s enforcement

discretion policy will continue.

Most recently, on September 29, 2023, the FDA published a proposed rule on LDTs, in which FDA proposes

to end enforcement discretion for virtually all LDTs in five stages over a four-year period from the date FDA publishes a final rule.

In Phase 1 (effective one year post-finalization), laboratories would be required to comply with medical device (adverse event) reporting

and correction/removal reporting requirements.

In Phase 2 (effective two years post-finalization), laboratories would be required to

comply with all other device requirements ( e.g.

, registration/listing, labeling, investigational use), except for quality systems

and premarket review.

In Phase 3 (effective three years post-finalization), laboratories would be required to comply with quality systems

requirements.

In Phase 4 (effective three and a half years post-finalization, but not before October 1, 2027), laboratories would be

required to comply with premarket review requirements for high-risk tests ( i.e.

, tests subject to premarket approval (PMA) requirement).

Finally, in Phase 5 (effective four years post-finalization, but not before April 1, 2028), laboratories would be required comply with

premarket review requirements for moderate- and low-risk tests ( i.e.

, tests subject to de novo or 510(k) requirement).

Unlike previous proposals, the proposed rule does not “grandfather” existing tests.

The content and timing of any final rule

on LDTs is uncertain at this time.

we are required to submit applications to FDA for our currently-marketed clinical tests and any tests that we may develop in the future,

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.

comply with applicable regulatory requirements can result in enforcement action by the FDA, such as warning letters, civil monetary penalties,

injunctions, criminal prosecution, recall or seizure, operating restrictions, partial suspension or total shutdown of operations, and

denial of or challenges to applications for clearance, authorization or approval, as well as significant adverse publicity.

regulatory or legislative proposals that would increase general FDA oversight of clinical laboratories or 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

and state licenses, which permit the use of LDTs for diagnostic purposes.

notwithstanding any change in existing enforcement policies, if the FDA seeks to enforce the applicable medical device regulations against

our clinical services tests, 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, authorization or clearance through the Premarket Approval

(PMA) , de novo or 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.

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

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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 100 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 others in key management positions.

In September 2022

our chief financial officer entered into a Severance and Consulting Agreement and General Release whereby he would continue to act as

the principal financial officer for up to six (6) months from the date of date of termination.

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.

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.

a small company with approximately 110 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 others in key management 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

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

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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

or reimposed could negatively impact our ability to obtain raw materials needed for manufacture of our clinical services testing, our

ability to provide testing to patients, our financial condition and our results of operations.

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

At this time, the Biden Administration does not plan to renew the COVID-19 national and public health emergencies when they

expire on May 11, which has been extended every 90 days since they were established in 2020.

This decision, therefore, appears to represent

a de-escalation in the way the government treats the pandemic, as well as a perception that most people have either been vaccinated or

have recovered from a COVID-19 infection (or both), Despite this anticipated change in policy, COVID-19 is still with us and as the virus

continues to reproduce and mutate, the Administration’s policy may need be adjusted.

In any event, it is likely that we will still

need to make adjustments to our operating plans in reaction to developments that are beyond our control.

disasters, including earthquakes, flooding, power outages, and health epidemics or pandemics, 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 may result in the loss of customers or harm our reputation, and we may be unable to regain those customers in the future.

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.

we use hazardous materials in a manner that causes contamination or injury, we could be liable for resulting damages.

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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 100 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

are a small company with approximately 110 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.

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We may need to

reduce the size of our organization in order to become profitable and we may experience difficulties in managing these reductions.

reduce the size of our organization in order to maintain profitability and we may experience difficulties in managing these reductions.

Related to Regulation within our Markets

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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

Act of the PPACA and are therefore not subject to the disclosure 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,

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however, the U.S.

Supreme Court upheld the law in 2021.

Supreme Court upheld the surviving portions of 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

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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.

CLFS was based on data collected from January 1 through June 30, 2016, and 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,

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PAMA (as revised) calls for further revisions of the Medicare Clinical Laboratory Fee Schedule for years after 2024,

based on future surveys of market rates.

based on surveys of market rates.

Further reductions in reimbursement may result from such revisions.

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

as amended by the Protecting Medicare and American Farmers from Sequester Cuts Act, among other laws, 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, 2025 through

March 31, 2025, 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 2025 through 2027.

Payments will not be reduced for 2021 through 2024 for CDLTs.

cannot predict whether future healthcare initiatives will be implemented at the federal or state level or in countries outside of the

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and Medicaid billing and payment regulations applicable to clinical laboratories;

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 program;

Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which, among other things, 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, among other things, 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 health

care 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

a physician from making a referral for, and an entity receiving the referral from billing for, certain designated health services

covered by the Medicare program, including clinical laboratory 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 establishes 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

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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;

information of consumers, make certain disclosures about our data privacy and security practices to the public and certain state

or federal regulators, minimize our use of personal information of consumers, 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

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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

Act, and similar state laws that require 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 certain payments

and other transfers of value, directly or indirectly, to physicians (defined to include doctors of medicine, osteopathy, dentists,

optometrists, podiatrists and chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered

nurse anesthetists, anesthesiologist assistants, and certified nurse midwives, and teaching hospitals, and ownership and investment

interests held by physicians and their immediate family members;

21st Century Cures Act information blocking provision prohibiting certain covered actors (including laboratories) from engaging in

certain practices that are likely to interfere with the access, exchange, or use of electronic health information;

federal and state fraud and abuse laws, prohibitions on self-referral and kickbacks, fee-splitting restrictions, prohibitions on

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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;

Protecting Access to Medicare Act of 2014, as amended, 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 among other requirements, 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 if the test is performed by a physician who does not “share a practice” with the billing

physician or other supplier;

laws that prohibit other specified practices related to billing such as billing physicians for testing that they order, waiving coinsurance,

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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.

Many of these bodies

have all issued subpoenas and other requests for information to conduct investigations of, and commenced civil or 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.

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liability under federal and state laws.

Under existing laws, all arrangements must be commercially reasonable and compensation must be

fair market value.

Under existing laws, arrangements generally must be commercially reasonable and often 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

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 laboratory 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.

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

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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.

of items or services for free or for other than fair market value, unless an exception applies.

Entities found in violation may be liable

for civil monetary penalties of up to $24,164 for each wrongful act, adjusted for inflation.

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.

2018, the U.S.

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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.

criminal offense to, among other things, pay any remuneration to induce referrals to, or in exchange for, an individual 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.

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.

EKRA does not clearly protect incentive compensation to sales employees, a practice that is common in the industry.

A failure to comply

with EKRA could result in substantial penalties and other adverse consequences that adversely affect our business, financial condition

and results of operations.

business activities may be subject to the Foreign Corrupt Practices Act, or FCPA, and similar anti-bribery and anti-corruption laws.

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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.

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,

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ability to use our net operating loss carryforwards may be limited and may result in increased future tax liability to us.

have incurred net losses since 2015 and may never achieve or sustain profitability.

As of the fiscal year ended December 31, 2022, we

incurred net losses from 2015-2022 and may never achieve sustained profitability.

As of the fiscal year ended December 31, 2023, we had

federal and state net operating losses, or NOLs, of approximately $125.8 million and $60.8 million, respectively.

the final two sentences of this paragraph, the federal and state NOL carryforwards will begin to expire, if not utilized, beginning in

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.

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.

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.

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

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 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 $56.0 million of NOLs incurred post July 15, 2019 are not subject to any annual limitation and can be carried

forward indefinitely.

federal 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 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 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 for ownership changes and the Company is utilizing $1.0 million during the current year.

The remaining $55.6

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.

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

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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

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or trading volume, include, among others:

volatility in the trading markets;

impact of the delisting of our common stock from Nasdaq and listing on the OTCQX;

research and development results;

fluctuations in our quarterly operating results;

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 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;

announcements

regarding our business or the business of our competitors;

announcements

regarding our equity offerings;

actions by us or our competitors, such as acquisitions or restructurings;

and/or regulatory developments;

in revenue mix;

in revenue and revenue growth rates for us and for the industries in which we operate;

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;

market and economic conditions.

general volatility in the trading markets;

the impact of the delisting of our common stock from Nasdaq;

adverse research and development results;

significant fluctuations in our quarterly operating results;

significant changes in our cash and cash equivalent reserves;

our liquidity and ability to obtain additional capital, including the market’s reaction to any announced capital-raising transactions;

market assessments of any announced strategic transaction, including the likelihood that it would be completed and the timing for completion;

potential 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;

sales 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 regarding our business or the business of our competitors;

announcements regarding our equity offerings;

strategic actions by us or our competitors, such as acquisitions or restructurings;

industry and/or regulatory developments;

changes in revenue mix;

changes in revenue and revenue growth rates for us and for the industries in which we operate;

changes in accounting standards, policies, guidance, interpretations or principles;

statements 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;

general market and economic conditions.

issuance of additional shares of our common stock in any future offerings could be dilutive to stockholders.

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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.

delisting of our common stock from Nasdaq and potential delisting from 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 ®

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which could harm our business and future prospects.

January 5, 2023, we received notice from the OTCQX indicating that the Company’s market capitalization has been below the

required $5 million for 30 consecutive calendar days preceding the date of such notice, and that the Company no longer meets the

standards for continued qualification for the OTCQX U.S.

December 28, 2023, we received notice from the OTCQX indicating that the Company’s market capitalization has been below the required

$5 million for 30 consecutive calendar days preceding the date of such notice, and that the Company no longer meets the standards for

continued qualification for the OTCQX U.S.

tier under the OTCQX Rules for U.S.

Companies section 3.2.b.2.

has been provided 180 calendar days from the date of such notice, or until July 3, 2023, to maintain a market capitalization of $5

million for ten consecutive trading days.

If the Company cannot meet this requirement, its common stock will be removed from the

In such event, the Company may be eligible for the OTCQB market.

On March 20, 2024 we received notice from the OTCQX indicating that the Company’s market capitalization has

stayed above the required $5 million for ten consecutive trading days preceding the date of such notice, and that the Company currently

satisfies the standards for continued qualification for the OTCQX U.S.

tier under the OTCQX Rules for U.S.

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

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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,

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, such as the material weakness described in Item 9A of this report, 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.

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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.

a public company, we are required to maintain internal control over financial reporting and to report any material weaknesses in

such internal control.

See the material weakness described in Item 9A.

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 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 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

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

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than the exercise price.

weakness in our disclosure controls and procedures and our internal controls could have a material adverse effect on us .

discussed in “Item 9A-Controls and Procedures,” our senior management has identified material weaknesses in our disclosure

controls and procedures and our internal controls over financial reporting.

We cannot assure you that additional material weaknesses

will not be identified in the future.

Any such failure could adversely affect our ability to report financial results on a timely and

accurate basis, which could have other material effects on our business, reputation, results of operations, financial condition or liquidity.

Material weaknesses in internal controls over financial reporting or disclosure controls and procedures could also cause investors to

lose confidence in our reported financial information which could have an adverse effect on the trading price of our securities.

have anti-takeover defenses that could delay or prevent an acquisition and could adversely affect the price of our common stock.

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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.

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 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 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.

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.

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 issued in

may be subject to securities litigation, which is expensive and could divert our management’s attention.

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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