What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-01 compared with 2023-03-27 · 244 added, 291 removed, 309 unchanged (63% of the section changed)

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The Transaction closed on August 31, 2022.

consideration for the Transaction, under the Purchase Agreement, the Company received a total purchase price of approximately $6.2

million after working capital and other adjustments ($0.5 million of which was deposited into escrow), subject to the assumption by the Purchaser of certain specified liabilities.

addition, subject to the terms and conditions set forth in the Purchase Agreement, Purchaser was obligated to pay the Company an

earnout of up to $2.0 million based on revenue for the period beginning September 1, 2021 and ending August 31, 2022.

received an earnout payment of approximately $1.0 million in September 2022 which is the fully settled amount and there will be no

further earnout payments in the future.

consideration for the Transaction, under the Purchase Agreement, the Company received a total purchase price of approximately $6.2 million

after working capital and other adjustments ($0.5 million of which was deposited into escrow), subject to the assumption by the Purchaser

of certain specified liabilities.

In addition, subject to the terms and conditions set forth in the Purchase Agreement, Purchaser was

obligated to pay the Company an earnout of up to $2.0 million based on revenue for the period beginning September 1, 2021 and ending

August 31, 2022.

The Company received an earnout payment of approximately $1.0 million in September 2022 which is the fully settled amount

and there will be no further earnout payments in the future.

In the third quarter of 2023, the $0.5 million funds in escrow were released

to the Company.

Purchase Agreement includes a one-year commitment of the Company not to compete with the Business, recruit or hire any former employees

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obligations to provide the Services will terminate with respect to each Service as set forth in the Shared Services Agreement.

Purchaser is identified as a related party of the Company and is as an affiliate of both Ampersand 2018 Limited Partnership (“Ampersand”),

a private equity investor in the Company, and BroadOak Fund V, L.P.

(“BroadOak”), a secured lender to the Company.

and BroadOak have each provided equity financing to the Purchaser, collectively own a majority of the Purchaser’s outstanding equity

securities and are represented on its Board of Directors.

Purchaser is identified as a related party of the Company and is as an affiliate of both Ampersand, a private equity investor in the

Company, and BroadOak, a secured lender to the Company.

Ampersand and BroadOak have each provided equity financing to the Purchaser,

collectively own a majority of the Purchaser’s outstanding equity securities and are represented on its Board of Directors.

Company is using the remaining net proceeds of the Transaction to fund its future business activities and for general working capital

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first quarter of 2022.

The Company estimated the ThyGeNEXT ® pricing change would negatively impact Fiscal 2022 revenue

by approximately $5.0 million.

During July 2022, the Company began implementing cost-savings initiatives including a reduction in headcount

and incidental expenses and a freeze on all non-essential travel and hiring.

In August 2022, the Company sold its pharma business.

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

along with many laboratories, we may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which was

posted on June 9, 2022 with comments extended to September 6, 2022 due to changes made to the related draft and is currently under consideration

by our local Medicare Administrative Contractor, Novitas.

If finalized, this Proposed LCD, which governs “Genetic

Testing for Oncology,” could impact the existing LCD for one of our molecular tests, PancraGEN ® .

If Novitas restricts

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

of COVID-19 Pandemic

in the first quarter of 2021, there has been a trend in many parts of the world of increasing availability and administration of vaccines

against COVID-19, as well as an easing of restrictions on social, business, travel and government activities and functions.

hand, infection rates and regulations continue to fluctuate in various regions and there are ongoing global impacts resulting from the

pandemic, including challenges and increases in costs for logistics and supply chains.

We have also previously been affected by temporary

laboratory closures, employment and compensation adjustments and impediments to administrative activities.

The level and nature of the

disruption caused by COVID-19 is unpredictable, may be cyclical and long-lasting and may vary from location to location.

addition, we have experienced and are experiencing varying levels of inflation resulting in part from various supply chain disruptions,

increased shipping and transportation costs, increased raw material and labor costs and other disruptions caused by the COVID-19 pandemic

and general global economic conditions.

continuing impact that the COVID-19 pandemic will have on our operations, including duration, severity and scope, remains highly uncertain

and cannot be fully predicted at this time.

While we believe we have generally recovered from the adverse impact that the COVID-19 pandemic

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

cash flows and financial condition in the future.

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.

continue to monitor the COVID-19 pandemic and the guidance that is being provided by relevant federal, state and local public health

authorities and may take additional actions based upon their recommendations.

It is possible that we may have to make adjustments to

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

of the ongoing military conflict between Russia and Ukraine.

During July 2022, the Company began implementing cost-savings initiatives including a reduction in headcount and

incidental expenses and a freeze on all non-essential travel and hiring.

In August 2022, the Company sold its Pharma Solutions business.

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

along with many laboratories, we may be affected by the Proposed LCD DL39365, which is currently under consideration by our local Medicare

Administrative Contractor, Novitas.

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.

of the ongoing military conflict between Russia and Ukraine and the war between Israel and Hamas.

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 Annual Report on Form 10-K.

clinical services provide clinically useful molecular diagnostic tests, bioinformatics and pathology services for evaluating cancer risk

by leveraging the latest technology in personalized medicine for improved patient diagnosis and management.

We develop and commercialize

genomic tests and related first line assays principally focused on early detection of patients with indeterminate biopsies and at high

risk of cancer using the latest technology to help personalized medicine and improve patient diagnosis and management.

Our tests and

services provide mutational analysis of genomic material contained in suspicious cysts, nodules and lesions with the goal of better informing

treatment decisions in patients at risk of thyroid, pancreatic, and other cancers.

The laboratory developed molecular diagnostic tests

we offer are designed to enable healthcare providers to better assess cancer risk, helping to avoid unnecessary surgical treatment in

patients at low risk.

We currently have five commercialized molecular diagnostic tests in the marketplace:

PancraGEN ® ,

which is a pancreatic cyst and pancreaticobiliary solid lesion genomic test for the diagnosis and prognosis of pancreatic cancer;

a “molecular only” version of PancraGEN ® that provides physicians a snapshot of a limited number of factors

enabling physicians to better assess risk of pancreaticobiliary cancers using our proprietary PathFinderTG® platform; ThyGeNEXT ® ,

which is an expanded oncogenic mutation panel that helps identify malignant thyroid nodules; ThyraMIR ® v2, which assesses

thyroid nodules for risk of malignancy utilizing a proprietary microRNA gene expression assay;

and RespriDx ® , which is

a genomic test that helps physicians differentiate metastatic or recurrent lung cancer from the presence of newly formed primary lung

cancer and which also utilizes our PathFinderTG® platform to compare the genomic fingerprint of two or more sites of lung cancer.

In addition, BarreGEN ® , a molecular based assay that helps resolve the risk of progression of Barrett’s Esophagus

to esophageal cancer, is currently in a clinical evaluation program (CEP) whereby we gather information from physicians using BarreGEN ®

to assist us in gathering clinical evidence relative to the safety and performance of the test.

We currently have a multicenter

study underway to further assess the ability of BarreGEN ® to accurately predict progression to high grade dysplasia or

cancer and to assist us in positioning our product for full launch, partnering, and potentially supporting reimbursement with payers.

mission is to provide personalized medicine through genomics-based diagnostics and innovation to advance patient care based on rigorous

Our laboratory is licensed pursuant to federal law under CLIA and are accredited by CAP and New York State.

leverage our laboratory to develop and commercialize our assays and products.

We aim to provide physicians and patients with diagnostic

options for detecting genomic and other molecular alterations that are associated with gastrointestinal, endocrine, and lung cancers.

Our customers consist primarily of physicians, hospitals and clinics.

global molecular diagnostics market is estimated to be $23.2 billion (USD) in 2022 and is expected to grow to $30.2 billion (USD) by

2027 with a CAGR of 5.4% between 2022 and 2027, according to Markets and Markets’s Molecular Diagnostics Market report (Report

MD 2521, published May 2022).

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 and elsewhere in the Middle East.

The extent 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.

clinical services business commercializes clinically useful molecular diagnostic tests and molecular pathology services.

We commercialize

genomic tests and related first-line assays principally focused on risk-stratification of cancer using the latest technology to help

personalize medicine and improve patient diagnosis and management.

Our tests and services provide mutational analysis of genomic material

contained in suspicious cysts, nodules, and lesions with the goal of better informing surgery or surveillance treatment decisions in

patients suspected of thyroid, pancreatic, and other cancers.

The molecular diagnostic tests we offer enable healthcare providers to

stratify cancer risk, helping to avoid unnecessary surgical treatment in patients at low risk, while also helping to identify patients

that would benefit from increased surveillance or surgical intervention.

mission is to assist healthcare providers in the diagnosis, triage, and treatment of patients through advanced diagnostics.

Our laboratory

is licensed pursuant to federal law under Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) and are accredited

by College of American Pathologists (“CAP”) and our products are approved by New York State.

We are leveraging our laboratory

to refine and commercialize our assays and products.

We aim to provide physicians and patients with diagnostic options for detecting

genomic and other molecular alterations that are associated with gastrointestinal, endocrine, and other cancers.

Our customers consist

primarily of physicians, hospitals, and clinics.

currently have five commercialized molecular diagnostic tests in the marketplace:

PancraGEN ® , a pancreatic cyst and pancreaticobiliary

solid lesion genomic test that helps physicians better risk-stratify pancreaticobiliary cancers using our proprietary PathFinderTG ®

platform and full integration of clinical factors; PanDNA ® , an alternate reporting option of the PathFinderTG

platform, which provides physicians the “molecular only” information provided within PancraGEN;

ThyGeNEXT ® ,

an expanded oncogenic mutation panel that helps “rule-in” and “rule-out” malignancy in thyroid nodules;

ThyraMIR ® v2, used in combination with ThyGeNEXT ® , which further stratifies thyroid nodules for malignancy

risk utilizing a proprietary microRNA gene expression classifier;

and RespriDx ® a genomic test that also utilizes our

PathFinderTG ® platform, to help physicians differentiate metastatic or recurrent lung cancer from the presence of newly

formed primary lung cancer.

global esoteric molecular diagnostics market is estimated to be $25.9 billion (USD) in 2023 and is expected to grow to $54.9 billion

(USD) by 2030 with a Compound Annual Growth rate or CAGR of 11.3% between 2023 and 2030, according to Coherent Market Insights (Report

CMI6261, published November 2023).

believe that the molecular diagnostics market offers significant growth and strong patient value given the substantial opportunity it

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extensions, as well as expanding our business by developing and promoting synergistic products in our markets.

We also believe that BarreGEN ®

is a potentially significant pipeline product, and we are providing necessary resources to accelerate our development process.

Further, we believe BarreGEN ® is synergistic with our capabilities in the gastrointestinal market, which is one of the

sectors in which we operate.

January 2022, we announced that CMS issued a new billing policy whereby CMS will no longer reimburse for the use of our ThyGeNEXT ®

and ThyraMIR ® v2 tests when billed together by the same provider/supplier for the same beneficiary on the same date

On February 28, 2022, we 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

As of the date of this filing, we have no remaining outstanding collections regarding this matter and are fully up to date with

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

February 16, 2021, the Company received a delisting determination letter (the “Letter”) from the Listing Qualifications Department

(the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Staff had determined to delist the Company’s

common stock from Nasdaq due to the Company’s failure to regain compliance with the Nasdaq Capital Market’s minimum $2,500,000

stockholders’ equity requirement for continued listing as set forth in Nasdaq Listing Rule 5550(b) (the “Rule”) and

the Company’s failure to timely execute its plan to regain compliance under the Rule.

commenced with delisting the Company’s common stock from the Nasdaq Capital Market and suspended trading in the Company’s

common stock effective at the open of business on February 25, 2021.

February 24, 2021, the Company was approved to have its common stock quoted on the OTCQX ® Best Market tier of the OTC

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common stock commenced on OTCQX at the open of business on February 25, 2021 under the trading symbol IDXG.

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

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

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Companies section 3.2.b.2.

The Company is 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 OTCQX to the OTCQB.

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.

OF REPORTING SEGMENTS

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See Note 8, Leases .

Assets, including Finite-Lived Intangible Assets

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

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

If the sum of the expected future undiscounted cash flows is less than

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

by future discounted cash flows.

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

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

Such estimates are critical in determining whether any

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

Contingencies

the normal course of business, we are subject to various contingencies.

Contingencies are recorded in the consolidated financial statements

when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated, or otherwise disclosed,

in accordance with ASC 450, Contingencies.

Significant judgment is required in both the determination of probability and the determination

as to whether a loss is reasonably estimable.

In the event we determine that a loss is not probable, but is reasonably possible, and

it becomes possible to develop what we believe to be a reasonable range of possible loss, then we will include disclosures related to

such matter as appropriate and in compliance with ASC 450.

To the extent there is a reasonable possibility that the losses could exceed

the amounts already accrued, we will, when applicable, adjust the accrual in the period the determination is made, disclose an estimate

of the additional loss or range of loss, indicate that the estimate is immaterial with respect to its financial statements as a whole

or, if the amount of such adjustment cannot be reasonably estimated, disclose that an estimate cannot be made.

We are currently a party

to legal proceedings that are incidental to our business.

As required, we have accrued our estimate of the probable costs for the resolution

of these claims.

These estimates are developed in consultation with outside counsel and are based upon an analysis of potential results,

assuming a combination of litigation and settlement strategies.

Predicting the outcome of claims and litigation, and estimating related

costs and exposures, involves substantial uncertainties that could cause actual costs to vary materially from estimates.

taxes are based on income for financial reporting purposes calculated using our expected annual effective rate and reflect a current

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NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

tax credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership

interest of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Code as

well as similar state tax provisions.

The amount of the annual limitation, if any, will be determined based on the value of our

company immediately prior to an ownership change.

tax credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest

of significant stockholders over a three year period in excess of 50%, as defined under Sections 382 and 383 of the Code as well as similar

state tax provisions.

The amount of the annual limitation, if any, will be determined based on the value of our company immediately prior

to an ownership change.

Subsequent ownership changes may further affect the limitation in future years.

Additionally, U.S.

tax laws limit the time during which these carry forwards may be applied against future taxes, therefore, we may

not be able to take full advantage of these carry forwards for federal income tax purposes.

During 2021, the Company completed a

382 assessment of the available NOLs under Section 382 and determined that the Company underwent an ownership change on September

30, 2017 and July 15, 2019, 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 multiple ownership changes.

The Company has adjusted their NOL carryforwards to

address the impact of the 382 ownership change.

tax laws limit

the time during which these carry forwards may be applied against future taxes, therefore, we may not be able to take full advantage

of these carry forwards for federal income tax purposes.

During 2021, the Company completed a 382 assessment of the available NOLs under

Section 382 and determined that the Company underwent an ownership change on September 30, 2017 and July 15, 2019, 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 multiple

ownership changes.

The Company has adjusted their NOL carryforwards to address the impact of the 382 ownership change.

Compensation Costs

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General and administrative

Transition expense

Loss on DiamiR transaction

Acquisition related amortization expense

Change in fair value of contingent consideration

related amortization expense

in fair value of contingent consideration

Total operating expenses

Operating loss

Operating income (loss)

Interest accretion expense

Related party interest

Note payable interest

Note payable interest expense

Other expense, net

Loss from continuing operations before tax

Provision (benefit) for income taxes

Loss from continuing operations

Income (loss) from continuing operations before tax

Provision for income taxes

Income (loss) from continuing operations

Loss from discontinued operations, net of tax

revenue for the year ended December 31, 2022 decreased by $1.3 million, or 4%, to $31.8 million, compared to $33.1 million for the year

Net income (loss)

revenue for the year ended December 31, 2023 increased by $8.4 million, or 26%, to $40.2 million, compared to $31.8 million for the year

ended December 31, 2022.

The decrease in net revenue was largely driven by the NRV adjustment related to the Medicare pricing change

on ThyGeNEXT ® discussed in “Impact of Our Reliance on CMS and Novitas” above.

cost of revenue for the year ended December 31, 2022 decreased by $0.7 million, or 5%, to $13.6 million, compared to $14.3 million for

The increase in net revenue was largely driven by increased test volumes as compared to the prior year as well

as improved collections.

cost of revenue for the year ended December 31, 2023 increased by $2.7 million, or 20%, to $16.3 million, compared to $13.6 million for

the year ended December 31, 2022.

This decrease was primarily driven by lower employee costs.

gross profit for the year ended December 31, 2022 decreased $0.6 million, or 3%, to $18.2 million, compared to $18.8 million for the

This increase was primarily driven by the increased test volumes discussed above.

gross profit for the year ended December 31, 2023 increased $5.7 million, or 31%, to $23.9 million, compared to $18.2 million for the

year ended December 31, 2022.

The decrease can be attributed to the decrease in revenue.

The increase can be attributed to the increase in revenue.

and marketing expense

and marketing expense was $10.2 million for the year ended December 31, 2023 and $9.1 million for the year ended December 31, 2022.

a percentage of revenue, sales and marketing expense increased to 29% from 28% in the comparable prior year period due to the lower revenue

for the year ended December 31, 2022.

a percentage of revenue, sales and marketing expense decreased to 25% from 29% in the comparable prior year period due to the higher

revenue for the year ended December 31, 2023.

and development

and development expense was $0.7 million for the year ended December 31, 2022 and $1.5 million for the year ended December 31, 2021 due

to lower professional services and employee costs.

As a percentage of revenue, research and development expense decreased to 2% for the

year ended December 31, 2022 from 5% in the comparable prior year period.

and development expense was $0.6 million for the year ended December 31, 2023 and $0.7 million for the year ended December 31, 2022.

As a percentage of revenue, research and development expense decreased to 1.6% from 2.2% in the prior year period.

and administrative

and administrative expense for the year ended December 31, 2023 was $9.4 million as compared to $11.0 million for the year ended December

The increase can be primarily attributed to an increase in employee compensation costs and an increase in professional fees.

As a percentage of net revenue, general and administrative expense was 34% for the year ended December 31, 2022 as compared to 32% for

the year ended December 31, 2021.

expense was approximately $0.9 million for the year ended December 31, 2021.

In 2021, these expenses were related to one-time legal expenses

and employee severance costs.

on DiamiR transaction

the year ended December 31, 2021, there was a loss of $13,000 on the disposition of the New Haven, CT laboratory to DiamiR in April 2021.

The decrease can be primarily attributed to a decrease in employee compensation costs compared to the prior year.

As a percentage

of net revenue, general and administrative expense was 23% for the year ended December 31, 2023 as compared to 34% for the year ended

December 31, 2022.

related amortization expense

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in fair value of contingent consideration

the year ended December 31, 2022, there was a $0.2 million decrease in the contingent consideration liability.

During the year ended

December 31, 2021, there was a $0.3 million decrease in the contingent consideration liability related thereto.

were consolidated operating losses from continuing operations of $3.6 million and $6.3 million during the years ended December 31, 2022

and 2021, respectively.

The decrease in operating loss was primarily attributable to the decrease in acquisition related amortization

the year ended December 31, 2023, there was a $7,000 increase in the contingent consideration liability.

During the year ended December

31, 2022, there was a $0.2 million decrease in the contingent consideration liability.

income (loss)

income from continuing operations was $2.8 million for the year ended December 31, 2023 as compared to an operating loss of $3.6 million

for the year ended December 31, 2022.

The operating income was primarily attributable to the increases in revenue and gross profit discussed

the years ended December 31, 2023 and December 31, 2022, there were other expenses, net of approximately $0.7 million and $1.2 million,

respectively.

The increase was primarily related to the $1.2 million in fair value adjustments recorded on the note payable.

(benefit) for income taxes

tax expense of $29,000 for the year ended December 31, 2022 was primarily driven by minimum state and local taxes.

The income tax benefit

was approximately $0.7 million for the year ended December 31, 2021 which primarily pertained to the Company’s sale of NOLs of

approximately $0.7 million under the State of New Jersey’s Technology Business Tax Certificate Transfer Program.

The amounts are primarily related to the fair value adjustments recorded on the note payable.

for income taxes

tax expense was approximately $17,000 for the year ended December 31, 2023 and $29,000 for the year ended December 31, 2022.

expense for both periods was primarily driven by Texas Gross Receipts Tax.

from discontinued operations, net of tax

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operations of $16.1 million for the year ended December 31, 2022.

The increased loss for the year ended December 31, 2022 was primarily

attributed to the impairment of goodwill and intangible assets associated with the disposition of the Pharma business in August 2022.

The loss for the year ended December 31, 2022 was primarily attributed

to the impairment of goodwill and intangible assets associated with the disposition of the Pharma business in August 2022 as well as

eight months of Pharma operating losses before the disposition.

Financial Measures

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acquisition related expenses, non-cash stock-based compensation, interest and taxes, and other non-cash expenses including asset impairment

costs, goodwill impairment, change in fair value of contingent consideration, change in fair value of notes payable, and warrant liability.

The table below includes a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

costs, change in fair value of contingent consideration, change in fair value of notes payable, and warrant liability.

The table below

includes a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure.

Reconciliation

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in thousands)

from continuing operations (GAAP Basis)

on DiamiR transaction

and amortization

expense/(benefit)

accretion expense

interest and related costs

to market on warrant liability

in fair value of note payable

in fair value of contingent consideration

Income (loss) from continuing operations (GAAP Basis)

Depreciation and amortization

Stock-based compensation

Interest accretion expense

Financing interest and related costs

Interest income

Mark to market on warrant liability

Change in fair value of note payable

Change in fair value of contingent consideration

Adjusted EBITDA

AND CAPITAL RESOURCES

October 2021, we entered into the Comerica Loan Agreement with Comerica, providing for a revolving credit facility of up to $7,500,000

(the “Credit Facility”).

The Company is using the proceeds of the Credit Facility for working capital and other general corporate

amount that may be borrowed under the Credit Facility is the lower of (i) the revolving limit of $7,500,000 (the “Revolving Line”)

and (ii) 80% of the Company’s eligible accounts receivable plus an applicable non-formula amount consisting of $2,000,000 of additional

availability at close not based upon the Company’s eligible accounts receivable, with such additional availability reducing by

$250,000 per quarter beginning with the quarter ending June 30, 2022.

Borrowings on the Credit Facility are limited to $5,000,000 until

80% of the Company’s and its subsidiaries’ customers are paying into a collection account or segregated governmental account

with Comerica.

The Revolving Line can also include, at the Company’s option, credit card services with a sublimit of $300,000.

Borrowings on the Revolving Line are subject to an interest rate equal to prime plus 0.50%, with prime being the greater of (x) Comerica’s

stated prime rate or (y) the sum of (A) the daily adjusting LIBOR rate plus (B) 2.5% per annum.

The Company is also required to pay an

unused facility fee quarterly in arrears in an amount equal to 0.25% per annum on the average unused but available portion of the Revolving

Line for such quarter.

See Note 18, Revolving Line of Credit , for more details.

Comerica has a first priority security interest

in substantially all of the Company’s and its subsidiaries’ assets.

As of March 17, 2023 the Company owed $2.3 million on the line of credit

and had approximately $1.5 million available to borrow on the line.

addition, also in October 2021, the Company entered into the BroadOak Loan Agreement with BroadOak, providing for a term loan in the

aggregate principal amount of $8,000,000 (the “Term Loan”).

October 2021, the Company entered into a Loan and Security Agreement with BroadOak, providing for a term loan in the aggregate principal

amount of $8,000,000 (the “Term Loan” or “BroadOak Loan Agreement”).

Funding of the Term Loan took place on November

Term Loan matures upon the earlier of (i) October 31, 2024 or (ii) the occurrence of a change in control, and bears interest at the rate

of 9% per annum.

The Term Loan was scheduled to mature upon the earlier of (i) October 31, 2024 or (ii) the occurrence of a change in control, and bears interest

at the rate of 9% per annum.

The Term Loan is secured by a security interest in substantially all of the Company’s and its subsidiaries’

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See Note 13, Notes Payable , for more details.

October 24, 2023, the Company entered into a Second Amendment to the Loan and Security Agreement with BroadOak.

The primary changes

to the original agreement were as follows:

Company made a one-time payment in an aggregate amount equal to $2,500,000, on October 30, 2023 and applied the payment in full

satisfaction of the $3,000,000 Terminal Payment (as defined in the BroadOak Loan Agreement).

See Note 13, Notes Payable , regarding

the Terminal Payment.

November 1, 2023, the interest rate under the BroadOak Loan Agreement is to be reduced from 9% to 8% through the maturity date of

October 31, 2024 or earlier, upon the occurrence of a change in control (“Loan Maturity Date”).

Company has the option to request an extension of the Loan Maturity Date in writing no less than sixty days prior to the Loan Maturity

If BroadOak agrees to the extension, the Loan Maturity Date would automatically be extended.

On March 29, 2024, the Company

entered into a Third Amendment to the Loan and Security Agreement with BroadOak, extending the loan maturity date to June 30, 2025.

See Note 20, Subsequent Events , for more details.

BroadOak Loan Agreement contains affirmative and negative restrictive covenants, including restrictions on certain mergers, acquisitions,

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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.

Loan Agreement also contains financial covenants requiring specified minimum liquidity and minimum revenue thresholds and also contains

customary events of default.

However, if we are unable to meet the financial covenants under the Comerica Loan Agreement, the revolving

line of credit and notes payable will become due and payable immediately.

January 2022, the Company’s registration statement for a rights offering filed with the Securities and Exchange Commission (SEC)

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

October 2021, we entered into the Comerica Loan Agreement with Comerica, providing for a revolving credit facility of up to $7,500,000

(the “Credit Facility”).

The Company is using the proceeds of the Credit Facility for working capital and other general corporate

amount that could be borrowed under the Credit Facility was the lower of (i) the revolving limit of $7,500,000 (the “Revolving

Line”) and (ii) 80% of the Company’s eligible accounts receivable plus an applicable non-formula amount consisting of $2,000,000

of additional availability at close not based upon the Company’s eligible accounts receivable, with such additional availability

reducing by $250,000 per quarter beginning with the quarter ending June 30, 2022.

Borrowings on the Credit Facility were limited to $5,000,000

until 80% of the Company’s and its subsidiaries’ customers are paying into a collection account or segregated governmental

account with Comerica.

The Revolving Line also included, at the Company’s option, credit card services with a sublimit of $300,000.

Borrowings on the Revolving Line were subject to an interest rate equal to prime plus 0.50%, with prime being the greater of (x) Comerica’s

stated prime rate or (y) the sum of (A) the daily adjusting LIBOR rate plus (B) 2.5% per annum.

The Company was also required to pay

an unused facility fee quarterly in arrears in an amount equal to 0.25% per annum on the average unused but available portion of the

Revolving Line for such quarter.

See Note 18, Revolving Line of Credit , for more details.

Comerica had a first priority security

interest in substantially all of the Company’s and its subsidiaries’ assets.

October 6, 2023, effective September 30, 2023, the Company entered into a Fifth Amendment to its Loan and Security Agreement (the “Fifth

Amendment to the Comerica Loan Agreement”) with Comerica Bank providing for a revolving credit facility of up to $5,000,000.

agreement was terminated in February 2024.

Fifth Amendment to the Comerica Loan Agreement contained affirmative and negative restrictive covenants that are 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.

The Comerica Loan Agreement also contained financial covenants requiring specified

minimum liquidity and minimum adjusted EBITDA thresholds.

As of December 31, 2023 the Company had a zero balance on the line of credit.

August 31, 2022, the Company closed on the sale of its Pharma Solutions business for a total sale price of $6.2 million after a post-closing

working capital adjustment.

In addition, we received the earnout payment of $1,043,000.

See Note 4, Discontinued Operations .

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

As of year ended December 31,

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

As of the year ended December 31,

2023, we had cash and cash equivalents of $3.5 million, total current assets of $10.3 million, net of restricted cash, and current liabilities

of $17.5 million.

As of March 17, 2023, we had approximately $5.7 million of cash on hand,

net of restricted cash.

the year ended December 31, 2022, net cash used in operating activities was $7.7 million.

The main component of cash used in operating

activities was our net loss of $22.0 million, partially offset by depreciation and amortization expense of $2.6 million and non-cash

impairment charges of $12.4 million.

During the year ended December 31, 2021, net cash used in operating activities was $8.7 million.

The main component of cash used in operating activities was our net loss of $14.9 million which was partially offset by non-cash depreciation,

amortization and stock compensation expenses of $6.6 million.

the year ended December 31, 2022, net cash provided from investing activities was $6.2 million, which primarily pertained to the net

proceeds received from the sale of our Pharma Solutions business unit.

During the year ended December 31, 2021, net cash used in investing

activities was $0.3 million, primarily related to the purchase of lab equipment.

As of March 22, 2024, we had approximately $2.8 million of cash on hand, net of restricted cash.

the year ended December 31, 2023, net cash provided by operating activities was $3.8 million.

The main component of cash provided by

operating activities was net income of $0.8 million, and non-cash expenses of $2.5 million.

During the year ended December 31, 2022,

net cash used in operating activities was $7.7 million.

The main component of cash used in operating activities was our net loss of $22.0

million, partially offset by depreciation and amortization expense of $2.6 million and non-cash impairment charges of $12.4 million.

the year ended December 31, 2023, there was net cash used in investing activities of $0.1 million.

During the year ended December 31,

2022, net cash provided from investing activities was $6.2 million, which primarily pertained to the net proceeds received from the sale

of our Pharma Solutions business unit.

the year ended December 31, 2023, cash used in financing activities was $5.0 million, of which $2.5 million was from the repayment on

the Revolving Line and $2.5 million was the terminal payment made to BroadOak.

See Note 13, Notes Payable, for more details.

the year ended December 31, 2022, cash provided from financing activities was $3.0 million, of which $1.0 million was from the drawdown

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for more details.

For the year ended December 31 ,

2021, cash provided from financing activities was $9.0 million, of which $7.7 million were the net proceeds from the BroadOak loan and

$1.5 million borrowed under our line of credit.

See Note 14, Notes Payable, for more details.

did not generate positive cash flows from operations for the year ending December 31, 2022.

We intend to meet our ongoing capital needs

by using our available cash and availability under the Comerica Loan Agreement, as well as through targeted margin improvement;

of accounts receivable;

generated positive cash flows from operations for the year ending December 31, 2023.

We intend to meet our ongoing capital needs by using

our available cash as well as through targeted margin improvement;

collection of accounts receivable;

containment of costs;

and the potential use of other financing options and other strategic alternatives.

if we are unable to meet the financial covenants under the Comerica Loan Agreement, the revolving line of credit and notes payable will

become due and payable immediately.

and the potential

use of other financing options and other strategic alternatives.

Company continues to explore various strategic alternatives, dilutive and non-dilutive sources of funding, including equity and debt

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With the Company’s

delisting of its common stock from Nasdaq in February 2021, its ability to raise additional capital on terms acceptable to the Company

delisting of its common stock from Nasdaq in February 2021, our ability to raise additional capital on terms acceptable to the Company

has been adversely impacted.

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to the Company.

along with many laboratories, we may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which was

posted on June 9, 2022 and is currently under consideration by our local Medicare Administrative Contractor, Novitas

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

molecular tests, PancraGEN ® .

If Novitas restricts coverage for PancraGEN ® , our liquidity could be negatively

impacted beginning in Fiscal 2023.

along with many laboratories, we may be affected by the Proposed LCD DL39365, which is currently under consideration by our local Medicare

Administrative Contractor, Novitas.

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.

of December 31, 2023, contractual obligations with terms exceeding one year and estimated minimum future rental payments required by

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Operating lease obligations

With the proceeds received from the sale of the Pharma Solutions business, as well as the expected improvement in future operating cash

flows associated with the disposition, as of the date of this filing, the Company anticipates that current cash and cash equivalents

and forecasted cash receipts will be sufficient to meet its anticipated cash requirements through the next twelve months.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 7. Management’s Discussion and Analysis