INTERPACE BIOSCIENCES, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management identified a material weakness in the Company’s internal control over financial reporting in the fourth quarter of 2023 related to properly identifying the timing of when revenue should be recognized as stated in the revenue recognition policy . Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Annual Report on Form 10-K as a result of the identified material control weakness. Remediation Plan - The Company plans to amend its control activities designed to mitigate the significant risk identified, including updating its procedures regarding the testing of revenue recognition, specifically to review the procedures identifying the timing differences to ensure revenue is recorded in the period earned. The Company believes implementation of these processes and appropriate testing of their effectiveness will remediate this material control weakness. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 72 As of December 31, 2023, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective based on those criteria. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting during the fourth quarter of the fiscal year ended December 31, 2023. ITEM 9B. OTHER INFORMATION On March 29, 2024, the Company entered into a Third Amendment to Loan and Security Agreement with BroadOak. The primary changes to the Second Amendment to Loan and Security Agreement were as follows: ● The maturity date was extended to June 30, 2025. ● Beginning April 1, 2024, the Company will make $500,000 monthly payments with the remaining loan balance due on the new maturity date. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information relating to directors and executive officers of the registrant that is responsive to Item 10 of this Annual Report on Form 10-K will be included in an amendment hereto or will be included in our Proxy Statement for our 2024 annual meeting of stockholders and such information is incorporated by reference herein. ITEM 11. EXECUTIVE COMPENSATION Information relating to executive compensation of the registrant that is responsive to Item 11 of this Annual Report on Form 10-K will be included in an amendment hereto or will be included in our Proxy Statement for our 2024 annual meeting of stockholders and such information is incorporated by reference herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information relating to security ownership of certain beneficial owners and management of the registrant that is responsive to Item 12 of this Annual Report on Form 10-K will be included in an amendment hereto or will be included in our Proxy Statement for our 2024 annual meeting of stockholders and such information is incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information relating to certain relationships and related transactions of the registrant that is responsive to Item 13 of this Annual Report on Form 10-K will be included in an amendment hereto or will be included in our Proxy Statement for our 2024 annual meeting of stockholders and such information is incorporated by reference herein. 73 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Information relating to principal accounting fees and services of the registrant that is responsive to Item 14 of this Annual Report on Form 10-K will be included in an amendment hereto or will be included in our Proxy Statement for our 2024 annual meeting of stockholders and such information is incorporated by reference herein. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Form 10-K: (1) Financial Statements – See Index to Financial Statements on page F-1 of this Form 10-K. (2) Financial Statement Schedule Schedule II: Valuation and Qualifying Accounts All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) Exhibits Exhibit No. Description 2.1 Asset Purchase Agreement, dated August 13, 2014, by and between Interpace Diagnostics, LLC and Asuragen, Inc., incorporated by reference to Exhibit 2.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 5, 2014. 2.2 Asset Purchase Agreement, dated August 31, 2022 by and among Interpace Biosciences, Inc., Interpace Pharma Solutions, Inc. and Flagship Biosciences, Inc., incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 7, 2022. 3.1+ Conformed version of Certificate of Incorporation of Interpace Biosciences, Inc., as amended by the Certificate of Amendment, effective January 15, 2020, and the Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, filed January 17, 2020, incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on April 22, 2020, as amended from time to time. 3.2 Amended and Restated Bylaws of Interpace Biosciences, Inc., incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2019. 4.1 Description of Securities, incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2021. 4.2 Specimen Certificate Representing the Common Stock, incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-3 (File No. 333-227728), filed with the SEC on October 5, 2018. 10.1* Amended and Restated 2004 Stock Award and Incentive Plan, incorporated by reference to Annex A of the Company’s definitive proxy statement, filed with the SEC on August 14, 2017. 10.2* Form of Restricted Stock Unit Agreement for Employees, incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 15, 2018. 74 Exhibit No. Description 10.3* Form of Restricted Stock Unit Agreement for Directors, incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 15, 2018. 10.4* Form of Non-Qualified Stock Option Agreement, incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 15, 2018. 10.5* Form of Incentive Stock Option Agreement, incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 15, 2018. 10.6* Interpace Diagnostics Group, Inc. 2019 Equity Incentive Plan, incorporated by reference to Exhibit 4.1 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 14, 2019. 10.7* Amendment to the Interpace Biosciences, Inc. 2019 Equity Incentive Plan, incorporated by reference to Exhibit 10.8 of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on June 26, 2020. 10.8* Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the 2019 Equity Incentive Plan, incorporated by reference to Exhibit 4.3 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 14, 2019. 10.9* Form of Interpace Biosciences, Inc. 2019 Equity Incentive Plan Restricted Stock Unit And Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.9 of the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on June 26, 2020. 10.10* Form of Stock Option Grant Notice and Stock Option Agreement under the 2019 Equity Incentive Plan, incorporated by reference to Exhibit 4.4 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 14, 2019. 10.11* Interpace Diagnostics Group, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit 4.2 of the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2019, filed with the SEC on November 14, 2019. 10.12* Incentive Stock Option Agreement between Interpace Diagnostics Group, Inc. and Jack E. Stover, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October 20, 2016. 10.13* Employment Agreement, dated November 23, 2020, between Thomas W. Burnell and Interpace Biosciences, Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on November 25, 2020. 10.14* Employment Agreement, dated July 24, 2023, between Christopher McCarthy and Interpace Biosciences, Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 2, 2023. 10.15* Form of Indemnification Agreement by and between Interpace Diagnostics Group, Inc. and its directors and executive officers, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on August 8, 2016. 10.16* Form of Indemnification Agreement by and between Interpace Biosciences, Inc. and Indemnitee, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on January 17, 2020. 10.17* Agreement, dated January 21, 2022, between Dr. Vijay Aggarwal and Interpace Biosciences, Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 27, 2022. 10.18 License Agreement, dated August 13, 2014, by and between Interpace Diagnostics, LLC and Asuragen, Inc., incorporated by reference to Exhibit 10.31 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 5, 2014. 75 Exhibit No. Description 10.19 CPRIT License Agreement, dated August 13, 2014, by and between Interpace Diagnostics, LLC and Asuragen, Inc., incorporated by reference to Exhibit 10.32 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 5, 2014. 10.20 Supply Agreement, dated August 13, 2014, by and between Interpace Diagnostics, LLC and Asuragen, Inc., incorporated by reference to Exhibit 10.33 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 5, 2014. 10.21 Guaranty, dated August 13, 2014 by the Company in favor of Asuragen, Inc., incorporated by reference to Exhibit 10.34 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 5, 2014. 10.22 Lease Agreement, dated March 31, 2017, by and between Saddle Lane Realty, LLC and the Company, incorporated by reference to Exhibit 10.53 of the Company’s Registration Statement on Form S-1 (333-218140), as amended on June 13, 2017. 10.23 First Amendment, dated September 26, 2017, by and between Saddle Lane Realty, LLC and Interpace Diagnostics Corporation, incorporated by reference to Exhibit 10.36 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on April 22, 2020, as amended from time to time. 10.24 Amendment No. 2 to Lease, dated March 15, 2018, between Saddle Lane Realty, LLC and Interpace Diagnostics Corporation, incorporated by reference to Exhibit 10.45 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 23, 2018. 10.25 Fourth Lease Amendment (the “Amendment”) by and between Interpace Biosciences, Inc. and Saddle Lane Realty, LLC, dated as of October 31, 2022, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on November 4, 2022. 10.26 Securities Purchase Agreement, dated July 15, 2019, by and between Interpace Diagnostics Group, Inc. and Ampersand 2018 Limited Partnership, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on July 19, 2019. 10.27 Form of Voting Agreement, incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K, filed with the SEC on July 19, 2019. 10.28 Securities Purchase and Exchange Agreement, dated January 10, 2020, by and among Interpace Biosciences, Inc., 1315 Capital II, L.P. and Ampersand 2018 Limited Partnership, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 14, 2020. 10.29 Amended and Restated Investor Rights Agreement, dated as of January 15, 2020, by and among Interpace Biosciences, Inc., 1315 Capital II, L.P. and Ampersand 2018 Limited Partnership, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 17, 2020. 10.30 Support Agreement, dated April 2, 2020, by and between 1315 Capital II, L.P. and Interpace Biosciences, Inc., incorporated by reference to Exhibit 10.2 of the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC on October 19, 2020. 76 Exhibit No. Description 10.31 Loan and Security Agreement by and between Comerica Bank, Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated October 13, 2021, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October 19, 2021. 10.32 Subordination Agreement by and between Ampersand 2018 Limited Partnership, 1315 Capital II. L.P., Comerica Bank Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated October 13, 2021, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on October 19, 2021. 10.33 Loan and Security Agreement by and between BroadOak Fund V, L.P., Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated October 29, 2021, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on November 3, 2021. 10.34 Second Amendment to Loan and Security Agreement by and between BroadOak Fund V, L.P., Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated October 24, 2023, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October 27, 2023. 10.35 First Amendment to Loan and Security Agreement by and between Comerica Bank, Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated November 1, 2021, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on November 3, 2021. 10.36 Subordination and Intercreditor Agreement by and between Comerica Bank, BroadOak Fund V, L.P., Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated as of November 1, 2021, incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed with the SEC on November 3, 2021. 10.37* Amendment to the Interpace Biosciences, Inc. 2019 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on November 15, 2022. 10.38* Amendment to the Interpace Biosciences, Inc. Employee Stock Purchase Plan, incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K, filed with the SEC on November 15, 2022. 10.39+ Third Amendment to Loan and Security Agreement by and between BroadOak Fund V, L.P., Interpace Biosciences, Inc., Interpace Diagnostics Corporation, Interpace Diagnostics, LLC and Interpace Pharma Solutions, Inc., dated March 29, 2024. 16.1 Letter from BDO USA, LP dated April 13, 2022, incorporated by reference to Exhibit 16.1 of the Company’s Current Report on Form 8-K, filed with the SEC on April 14, 2022. 21.1 Subsidiaries of the Registrant, incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on April 22, 2020, as amended from time to time. 23.1 Consent of EisnerAmper, LLP, filed herewith. 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith. 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith. 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith. 101 INS Inline XBRL Instance Document 101 SCH Inline XBRL Taxonomy Extension Schema Document 101 CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101 DEF Inline XBRL Taxonomy Extension ‌Definition Linkbase Document 101 LAB Inline XBRL Taxonomy Extension ‌Label Linkbase Document 101 PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101) * Denotes compensatory plan, compensation arrangement or management contract. + Filed herewith. ITEM 16. Form 10-K Summary The Company has opted to not provide a summary. 77 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERPACE BIOSCIENCES, INC. Date: April 1, 2024 /s/ Thomas W. Burnell Thomas W. Burnell President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated. Name Title Date /s/ Thomas W. Burnell President, Chief Executive Officer and Director April 1, 2024 Thomas W. Burnell (Principal Executive Officer) /s/ Christopher McCarthy Chief Financial Officer April 1, 2024 Christopher McCarthy (Principal Financial and Accounting Officer) /s/ Stephen J. Sullivan Director April 1, 2024 Stephen J. Sullivan /s/ Joseph Keegan Director April 1, 2024 Joseph Keegan /s/ Vijay Aggarwal Director April 1, 2024 Vijay Aggarwal /s/ Fortunato Ron Rocca Director April 1, 2024 Fortunato Ron Rocca 78 Interpace Biosciences, Inc. Index to Consolidated Financial Statements and Financial Statement Schedules Page Report of Independent Registered Public Accounting Firm (EisnerAmper LLP; Philadelphia, PA; PCAOB ID # 274 ) F-2 Consolidated Financial Statements Consolidated Balance Sheets at December 31, 2023 and 2022 F-3 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 F-6 Notes to Consolidated Financial Statements F-7 Schedule II. Valuation and Qualifying Accounts F-30 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Interpace Biosciences, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Interpace Biosciences, Inc. and Subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years then ended, and the related notes and the financial statement schedule identified in Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and 2022, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Variable Consideration in Revenue As described in Note 1 to the consolidated financial statements, the Company’s clinical services derive revenue from the performance of its proprietary assays or tests. The Company’s performance obligation is fulfilled upon the completion, review and release of test results to the customer. The Company subsequently bills third-party payers or direct-bill payers for the tests performed. Revenue is recognized based on the estimated transaction price or net realizable value, which is determined based on historical collection rates by each payer category for each proprietary test offered by the Company. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience. We identified the estimation of the variable consideration as a critical audit matter due to the significant judgement and estimation required by management in their assessment. This led to a high degree of auditor subjectivity and significant audit effort was required in performing our procedures and evaluating audit evidence relating to estimates and assumptions made by management. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our procedures included, among other things, (i) obtaining an understanding of management’s process and evaluating the design of controls related to revenue recognition; (ii) assessing the reasonableness of management’s estimates of variable consideration utilizing the expected value method based on its historical experience; (iii) comparing the Company’s estimates of variable consideration to the history of cash ultimately received from its payors; and (iv) testing the historical accuracy of cash collections used in the Company’s assumptions relating to variable consideration. /s/ EisnerAmper LLP We have served as the Company’s auditor since 2022. EISNERAMPER LLP Philadelphia, Pennsylvania April 1, 2024 F- 2 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, December 31, 2023 2022 ASSETS Current assets: Cash and cash equivalents $ 3,498 $ 4,828 Accounts receivable 4,983 5,032 Other current assets 1,841 2,294 Total current assets 10,322 12,154 Property and equipment, net 790 480 Other intangible assets, net - 861 Operating lease right of use assets 1,864 2,439 Other long-term assets 45 45 Total assets $ 13,021 $ 15,979 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,544 $ 1,050 Accrued salary and bonus 1,969 1,456 Other accrued expenses 8,201 8,419 Note payable at fair value, current 5,100 - Line of credit - current - 2,500 Current liabilities of discontinued operations 660 858 Total current liabilities 17,474 14,283 Contingent consideration - 518 Operating lease liabilities, net of current portion 1,472 1,848 Note payable at fair value 4,243 11,165 Other long-term liabilities 4,968 4,701 Total liabilities 28,157 32,515 Commitments and contingencies (Note 11) - - Redeemable preferred stock, $ .01 par value; 5,000,000 shares authorized, 47,000 shares Series B issued and outstanding 46,536 46,536 Stockholders’ deficit: Common stock, $ .01 par value; 100,000,000 shares authorized; 4,447,489 and 4,367,830 shares issued, respectively; 4,351,445 and 4,296,710 shares outstanding, respectively 405 405 Additional paid-in capital 188,146 187,516 Accumulated deficit ( 248,215 ) ( 249,017 ) Treasury stock, at cost ( 96,044 and 71,120 shares, respectively) ( 2,008 ) ( 1,976 ) Total stockholders’ deficit ( 61,672 ) ( 63,072 ) Total liabilities and stockholders’ deficit ( 33,515 ) ( 30,557 ) Total liabilities, preferred stock and stockholders’ deficit $ 13,021 $ 15,979 The accompanying notes are an integral part of these consolidated financial statements F- 3 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data) 2023 2022 For The Years Ended December 31, 2023 2022 Revenue, net $ 40,214 $ 31,838 Cost of revenue 16,310 13,607 Gross profit 23,904 18,231 Operating expenses: Sales and marketing 10,233 9,125 Research and development 636 703 General and administrative 9,363 10,973 Acquisition related amortization expense 861 1,270 Change in fair value of contingent consideration 7 ( 223 ) Total operating expenses 21,100 21,848 Operating income (loss) from continuing operations 2,804 ( 3,617 ) Interest accretion expense ( 112 ) ( 158 ) Note payable interest expense ( 896 ) ( 850 ) Other expense, net ( 667 ) ( 1,211 ) Income (loss) from continuing operations before tax 1,129 ( 5,836 ) Provision for income taxes 17 29 Income (loss) from continuing operations 1,112 ( 5,865 ) Loss from discontinued operations, net of tax ( 310 ) ( 16,093 ) Net income (loss) $ 802 $ ( 21,958 ) Basic net income (loss) per share of common stock: From continuing operations $ 0.26 $ ( 1.38 ) From discontinued operations ( 0.07 ) ( 3.80 ) Net income (loss) per basic share of common stock $ 0.19 $ ( 5.18 ) Diluted net income (loss) per share of common stock: From continuing operations $ 0.25 $ ( 1.38 ) From discontinued operations ( 0.07 ) ( 3.80 ) Net income (loss) per diluted share of common stock $ 0.18 $ ( 5.18 ) Weighted average number of common shares and common share equivalents outstanding: Basic 4,317 4,238 Diluted 4,364 4,238 The accompanying notes are an integral part of these consolidated financial statements F- 4 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in thousands) Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -December 31, 2021 4,228,169 $ 403 32,757 $ ( 1,868 ) $ 186,106 $ ( 227,059 ) $ ( 42,418 ) Issuance of common stock 139,652 2 - - 106 - 108 Treasury stock purchased - 38,363 ( 108 ) - - ( 108 ) Exercise of warrants 9 - - - - - - Stock-based compensation expense - - - - 1,304 - 1,304 Net loss - - - - - ( 21,958 ) ( 21,958 ) Balance -December 31, 2022 4,367,830 $ 405 71,120 $ ( 1,976 ) $ 187,516 $ ( 249,017 ) $ ( 63,072 ) Balance 4,367,830 $ 405 71,120 $ ( 1,976 ) $ 187,516 $ ( 249,017 ) $ ( 63,072 ) Issuance of common stock 79,659 - - - - - - Treasury stock purchased - 24,924 ( 32 ) - - ( 32 ) Stock-based compensation expense - - - - 630 - 630 Net income - - - - - 802 802 Net income (loss) - - - - - 802 802 Balance -December 31, 2023 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 248,215 ) $ ( 61,672 ) Balance 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 248,215 ) $ ( 61,672 ) The accompanying notes are an integral part of these consolidated financial statements F- 5 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2023 2022 For The Years Ended December 31, 2023 2022 Cash Flows From Operating Activities Net income (loss) $ 802 $ ( 21,958 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 1,026 2,560 Interest accretion expense 112 158 Goodwill impairment - 8,433 Intangible asset impairment - 3,964 Amortization of deferred financing fees 42 60 Stock-based compensation 630 1,258 Amortization on operating lease right of use asset 575 942 ESPP expense - 46 Change in fair value of note payable 678 1,223 Deferred income taxes - ( 93 ) Change in fair value of contingent consideration 7 ( 223 ) Other gains and expenses, net - ( 71 ) Other changes in operating assets and liabilities: Accounts receivable 49 ( 133 ) Other current assets ( 89 ) ( 216 ) Other long-term assets - 34 Accounts payable 489 ( 735 ) Accrued salaries and bonus 513 ( 1,421 ) Accrued liabilities ( 936 ) ( 549 ) Operating lease liabilities ( 376 ) ( 1,142 ) Long-term liabilities 267 171 Net cash provided by (used in) operating activities 3,789 ( 7,692 ) Cash Flows From Investing Activity Proceeds from sale of Interpace Pharma Solutions, net 383 6,528 Purchase of property and equipment ( 470 ) ( 322 ) Net cash (used in) provided by investing activities ( 87 ) 6,206 Cash Flows From Financing Activities Issuance of common stock, net of expenses - 108 Payment of BroadOak terminal payment ( 2,500 ) - Proceeds from convertible debt issuance - 2,000 Payments on line of credit ( 2,500 ) - Borrowings on line of credit - 1,000 Cash paid for repurchase of restricted shares ( 32 ) ( 108 ) Net cash (used in) provided by financing activities ( 5,032 ) 3,000 Net (decrease) increase in cash and cash equivalents ( 1,330 ) 1,514 Cash and cash equivalents from continuing operations – beginning 4,828 2,922 Cash and cash equivalents from discontinued operations – beginning - 392 Cash and cash equivalents – beginning $ 4,828 $ 3,314 Cash and cash equivalents from continuing operations – ending $ 3,498 $ 4,828 Cash and cash equivalents from discontinued operations – ending - - Cash and cash equivalents – ending $ 3,498 $ 4,828 The accompanying notes are an integral part of these consolidated financial statements F- 6 1. Nature of Business and Significant Accounting Policies Nature of Business Interpace Biosciences, Inc. (“Interpace” or the “Company”) is a company that provides molecular diagnostics, bioinformatics and pathology services for evaluation of risk of cancer by leveraging the latest technology in personalized medicine for improved patient diagnosis and management. The Company develops and commercializes 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. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The consolidated financial statements include the accounts of Interpace Biosciences, Inc. fka Interpace Diagnostics Group, Inc., Interpace Diagnostics Corporation, and Interpace Diagnostics, LLC. Discontinued operations include the Company’s wholly-owned subsidiaries: Group DCA, LLC (“Group DCA”), InServe Support Solutions (Pharmakon), TVG, Inc. (TVG, dissolved December 31, 2014) its Commercial Services (“CSO”) business unit and its Interpace Pharma Solutions business (“Pharma Solutions”) which was sold on August 31, 2022. All significant intercompany balances and transactions have been eliminated in consolidation. The Company has one reporting segment: the Company’s clinical services business. The Company’s current reporting segment structure is reflective of the way the Company’s management views the business, makes operating decisions and assesses performance. This structure allows investors to better understand Company performance, better assess prospects for future cash flows, and make more informed decisions about the Company. Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include accounting for valuation allowances related to deferred income taxes, contingent consideration, notes payable, allowances for doubtful accounts and notes, revenue recognition, and unrecognized tax benefits. The Company periodically reviews these matters and reflects changes in estimates as appropriate. Actual results could materially differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include unrestricted cash accounts, money market investments and highly liquid investment instruments with original maturity of three months or less at the date of purchase. Accounts Receivable, Net The Company’s accounts receivables represent unconditional rights to consideration and are generated using its proprietary tests. The Company’s clinical services are fulfilled upon completion of the test, review and release of the test results. In conjunction with fulfilling these services, the Company bills the third-party payer or direct-bill payer. Contractual adjustments represent the difference between the list prices and the reimbursement rates set by third party payers, including Medicare, commercial payers, and amounts billed to direct-bill payers. Specific accounts may be written off after several appeals, which in some cases may take longer than twelve months. No allowance for credit losses has been recorded during the periods presented. The opening accounts receivable balance as of January 1, 2022, was $ 4.7 million. F- 7 Other current assets Other current assets consisted of the following as of December 31, 2023 and 2022: Schedule of Other Current Assets December 31, 2023 December 31, 2022 Lab supplies $ 1,227 $ 1,224 Prepaid expenses 590 390 Funds in escrow - 500 Other 24 180 Total other current assets $ 1,841 $ 2,294 Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is recognized on a straight-line basis, using the estimated useful lives of: five to twelve years for furniture and fixtures; two to five years for office and computer equipment; three to twelve years for lab equipment; and leasehold improvements are amortized over the shorter of the estimated service lives or the terms of the related leases which are currently one to five years . Repairs and maintenance are charged to expense as incurred. Upon disposition, the asset and related accumulated depreciation and amortization are removed from the related accounts and any gains or losses are reflected in operations. Software Costs Internal-Use Software - It is the Company’s policy to capitalize certain costs incurred in connection with developing or obtaining internal-use software. Capitalized software costs are included in property and equipment on the consolidated balance sheet and amortized over the software’s useful life, generally three to seven years . Software costs that do not meet capitalization criteria are expensed immediately. See Note 6, Property and Equipment , for further information. Long-Lived Assets, including Finite-Lived Intangible Assets Finite-lived intangible assets are stated at cost less accumulated amortization. Amortization of finite-lived acquired intangible assets is recognized on a straight-line basis, using the estimated useful lives of the assets of approximately two years to ten years in acquisition related amortization expense in the Consolidated Statements of Operations. The Company reviews 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 related asset group, an impairment loss is recognized by reducing the recorded value of the asset group to its fair value. 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. There were no asset impairment losses recorded in 2023 and the Company recorded an impairment charge of $ 3.8 million for finite-lived intangible assets associated with the Company’s sale of its Pharma Solutions business in 2022. Contingencies In the normal course of business, the Company is 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 is reasonably estimable, 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 the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company 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, the Company 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. The Company is not currently involved in any legal proceedings of a material nature and, accordingly, the Company has not accrued estimated costs related to any legal claims. F- 8 Revenue Recognition We derive our revenues from the performance of proprietary assays or tests. The Company’s performance obligation is fulfilled upon the completion, review and release of test results to the customer. The Company subsequently bills third-party payers or direct-bill payers for the tests performed. Under Accounting Standards Codification 606, revenue is recognized based on the estimated transaction price or net realizable value, which is determined based on historical collection rates by each payer category for each proprietary test offered by the Company. To the extent the transaction price includes variable consideration, for all third party and direct-bill payers and proprietary tests, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience. We regularly review the ultimate amounts received from the third-party and direct-bill payers and related estimated reimbursement rates and adjust the net realizable values (“NRV’s”) and related contractual allowances accordingly. If actual collections and related NRV’s vary significantly from our estimates, we will adjust the estimates of contractual allowances, which affects net revenue in the period such variances become known. Financing and Payment For non-Medicare claims, our payment terms vary by payer category. Payment terms for direct-payers in our clinical services are typically thirty days and in our pharma services, up to sixty days. Commercial third-party-payers are required to respond to a claim within a time period established by their respective state regulations, generally between thirty to sixty days. However, payment for commercial third-party claims may be subject to a denial and appeal process, which could take up to two years in some instances where multiple appeals are submitted. The Company generally appeals all denials from commercial third-party payers. We bill Medicare directly for tests performed for Medicare patients and must accept Medicare’s fee schedule for the covered tests as payment in full. Cost of revenue Cost of revenue consists primarily of the costs associated with operating our laboratories and other costs directly related to our tests. Personnel costs, which constitute the largest portion of cost of services, include all labor related costs, such as salaries, bonuses, fringe benefits and payroll taxes for laboratory personnel. Other direct costs include, but are not limited to, laboratory supplies, certain consulting expenses, royalty expenses, and facility expenses. Stock-Based Compensation The compensation cost associated with the granting of stock-based awards is based on the grant date fair value of the stock award. The Company recognizes the compensation cost, net of estimated forfeitures, over the shorter of the vesting period or the period from the grant date to the date when retirement eligibility is achieved. Forfeitures are initially estimated based on historical information and subsequently updated over the life of the awards to ultimately reflect actual forfeitures. As a result, changes in forfeiture activity can influence the amount of stock compensation cost recognized from period to period. The Company primarily uses the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards is made on the date of grant and is affected by the Company’s stock price as well as assumptions made regarding a number of complex and subjective variables. These assumptions include: expected stock price volatility over the term of the awards; actual and projected employee stock option exercise behaviors; the risk-free interest rate; and expected dividend yield. The fair value of restricted stock units, or RSUs, and restricted shares is equal to the closing stock price on the date of grant. See Note 14, Stock-Based Compensation, for further information. F- 9 Treasury Stock Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock. Upon reissuance of shares, the Company records any difference between the weighted-average cost of such shares and any proceeds received as an adjustment to additional paid-in capital. Leases The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 8, Leases . Income taxes Income taxes are based on income for financial reporting purposes calculated using the Company’s annual tax rate and reflect a current tax liability or asset for the estimated taxes payable or recoverable on the current year tax return and expected annual changes in deferred taxes. Any interest or penalties on income tax are recognized as a component of income tax expense. The Company accounts for income taxes using the asset and liability method. This method requires recognition of deferred tax assets and liabilities for expected future tax consequences of temporary differences that currently exist between tax basis and financial reporting basis of the Company’s assets and liabilities based on enacted tax laws and rates. Deferred tax expense (benefit) is the result of changes in the deferred tax asset and liability. A valuation allowance is established, when necessary, to reduce the deferred income tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The Company operates in multiple tax jurisdictions and pays or provides for the payment of taxes in each jurisdiction where it conducts business and is subject to taxation. The breadth of the Company’s operations and the complexity of the tax law require assessments of uncertainties and judgments in estimating the ultimate taxes the Company will pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of proposed assessments arising from federal and state audits. Uncertain tax positions are recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that a position taken or expected to be taken in a tax return would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. The Company adjusts accruals for unrecognized tax benefits as facts and circumstances change, such as the progress of a tax audit. However, any adjustments made may be material to the Company’s consolidated results of operations or cash flows for a reporting period. Penalties and interest, if incurred, would be recorded as a component of current income tax expense. Significant judgment is also required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. Deferred tax assets are regularly reviewed for recoverability. The Company currently has significant deferred tax assets resulting from net operating loss carryforwards and deductible temporary differences, which should reduce taxable income in future periods, if generated. The realization of these assets is dependent on generating future taxable income. F- 10 Income (Loss) per Share Basic earnings per common share are computed by dividing net income by the weighted average number of shares outstanding during the year including any unvested share-based payment awards that contain nonforfeitable rights to dividends. Diluted earnings per common share are computed by dividing net income by the sum of the weighted average number of shares outstanding and dilutive common shares under the treasury method. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid), are participating securities and are included in the computation of earnings per share pursuant to the two-class method. As a result of the losses incurred in 2022, the potentially dilutive common shares have been excluded from the earnings per share computation for this period because its inclusion would have been anti-dilutive. Additionally, preferred shares have been excluded in the denominator of the earnings per share computation, on an if-converted basis, as such shares would have been anti-dilutive. Reclassifications The Company reclassified certain prior period balances to conform to the current year presentation. 2. Recent Accounting Standards Accounting Pronouncements Adopted The FASB issued new guidance under ASC Topic 326, Financial Instruments Credit Losses. The guidance changes the allowance on accounts receivable from an incurred method to an expected method. The Company adopted ASC Topic 326 on January 1, 2023 which requires the Company to look at its history of write-offs to come up with an expected loss rate and apply that to its current accounts receivable balance. It had no material effect on the consolidated financial statements. Accounting Pronouncements Pending In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40), (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU 2020-06 amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect this will have any impact on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact the adoption of this standard on its financial statements. 3. Liquidity In October 2021, the Company entered into a $ 7.5 million revolving credit facility with Comerica Incorporated (“Comerica”) (the “Comerica Loan Agreement”). See Note 18, Revolving Line of Credit, and Note 20, Subsequent Events for more details and for updates to the revolving credit facility. Also in October 2021, the Company entered into an $ 8.0 million term loan with BroadOak Fund V, L.P. (“BroadOak”) (the “BroadOak Loan Agreement”), the proceeds of which were used to repay in full at their maturity the existing secured promissory note with Ampersand Capital Partners (“Ampersand”) (the “Ampersand Note”) and 1315 Capital II, L.P (“1315 Capital”) (the “1315 Capital Note”). In May 2022, the Company entered into a Subordinated Convertible Promissory Note agreement with BroadOak for an additional $ 2.0 million (the “Convertible Note”), which was converted into a subordinated term loan and was added to the outstanding BroadOak Loan Agreement balance. See Note 13, Notes Payable, for more details. At December 31, 2023, the Company has a $ 10 million principal balance of notes payable that required the principal to be paid on or before the maturity date of October 31, 2024 . In March 2024, the Company had the terms of the Loan Agreement updated. See Note 20, Subsequent Events , for more details. F- 11 Along with many laboratories, the Company may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which is currently under consideration by 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 the Company 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, the Company is 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. For the year ended December 31, 2023, the Company had operating income from continuing operations of $ 2.8 million. As of December 31, 2023, the Company had cash and cash equivalents of $ 3.5 million, total current assets of $ 10.3 million and current liabilities of $ 17.5 million. As of March 22, 2024, the Company had approximately $ 2.8 million of cash on hand. The Company intends to meet its ongoing capital needs by using its 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. The Company continues to explore various strategic alternatives, dilutive and non-dilutive sources of funding, including equity and debt financings, strategic alliances, business development and other sources in order to provide additional liquidity. With the delisting of its common stock from Nasdaq in February 2021, the Company’s ability to raise additional capital on terms acceptable to it has been adversely impacted. There can be no assurance that the Company will be successful in obtaining such funding on terms acceptable to it. With the improvement in operating cash flows associated with the disposition of the Pharma Solutions business, and the Company’s improved operating performance, 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 from the date of issuance of the consolidated financial statements. 4. Discontinued Operations On August 31, 2022, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Flagship Biosciences, Inc. (the “Purchaser”) pursuant to which the Purchaser agreed to (i) acquire substantially all of the assets of Interpace Pharma Solutions, Inc. used in its business of complex molecular analysis for the early diagnosis and treatment of cancer and supporting the development of targeted therapeutics (the “Business”) and (ii) assume and pay certain liabilities related to the purchased assets (collectively, the “Transaction”). The Transaction closed on August 31, 2022. As consideration for the Transaction, Interpace received a total sale price of approximately $ 6.2 million after working capital and other adjustments ($ 0.5 million of which has been deposited into escrow). In addition, the Purchaser paid the Company an earnout of approximately $ 1.0 million based on revenue for the period beginning September 1, 2021 and ending August 31, 2022. In the third quarter of 2023, the $ 0.5 million funds in escrow were released to the Company. The Purchase Agreement includes a one-year commitment of Interpace not to compete with the Business, recruit or hire any former employees of the Subsidiary who accept employment with the Purchaser in connection with the Transaction, or divert or attempt to divert from Purchaser any business to be performed from any of the contracts or agreements with customers as set forth in the Purchase Agreement. The Purchase Agreement also contains customary representations and warranties, post-closing covenants and mutual indemnification obligations for, among other things, any inaccuracy or breach of any representation or warranty and any breach or non-fulfillment of any covenant. F- 12 In connection with the Transaction, on August 31, 2022, Interpace and Purchaser entered into a Shared Services Agreement (the “Shared Services Agreement”) pursuant to which Interpace agreed to provide, or cause its affiliates to provide, to the Purchaser certain services set forth in the Shared Services Agreement on a transitional basis and subject to the terms and conditions set forth in the Shared Services Agreement (the “Services”). As consideration for the Services provided by Interpace, Purchaser will pay Interpace the amounts specified for each Service as set forth in the Shared Services Agreement. The Company’s obligations to provide the Services will terminate with respect to each Service as set forth in the Shared Services Agreement. The Purchaser is identified as a related party as an affiliate of Ampersand and an affiliate of BroadOak and have each provided equity financing to the Purchaser. Collectively, they own a majority of the Purchaser’s outstanding equity securities and are represented on its Board of Directors. The Company intends to use the remaining net proceeds to fund its future business activities and for general working capital purposes. As a result of the sale, the gain on sale and all operations from Interpace Pharma Solutions have been classified as discontinued operations for all periods presented. A reconciliation of the accounting for the Company’s Pharma Solutions business in 2023 and 2022 is as follows: Schedule of Sale of Business 2023 2022 Gain (loss) on Sale 2023 2022 Purchase price $ - $ 7,000 Earnout received - 1,043 Working capital adjustment, net ( 117 ) ( 766 ) Less: transaction costs - ( 307 ) Total net consideration $ ( 117 ) $ 6,970 Assets and liabilities disposed of, net (1) - ( 6,970 ) Gain (loss) on sale $ ( 117 ) $ - (1) includes goodwill and intangible assets written down prior to the Transaction. The goodwill write-down was approximately $ 8.4 million and the write-down of intangible assets was approximately $ 3.8 million. The components of assets and liabilities classified as discontinued operations consist of the following as of December 31, 2023 and December 31, 2022: Schedule of Components of Assets and Liabilities and Revenue Classified as Discontinued Operations December 31, December 31, 2023 2022 Accrued salary and bonus $ - $ 92 Other (1) 660 766 Current liabilities of discontinued operations 660 858 (1) Includes $ 660 and $ 766 of liabilities related to the former Commercial Services business unit for the periods ending December 31, 2023 and December 31, 2022, respectively. F- 13 The table below presents the significant components of its former Pharma Solutions and Commercial Services business units’ results included within loss from discontinued operations, net of tax in the consolidated statements of operations for the years ended December 31, 2023 and 2022. 2023 2022 For The Years Ended December 31, 2023 2022 Revenue, net $ - $ 5,678 Loss from discontinued operations ( 43 ) ( 15,968 ) Income tax expense 267 125 Loss from discontinued operations, net of tax $ ( 310 ) $ ( 16,093 ) The income tax expense for the years ended December 31, 2023 and December 31, 2022 primarily pertained to the interest accrued on uncertain tax position liabilities. Cash used from discontinued operations, operating activities, for the year ended December 31, 2023 was approximately $ 0.1 million. There was cash provided by discontinued operations, investing activities, for the year ended December 31, 2023 of $ 0.4 million which pertained to the net proceeds released from escrow for the Pharma Solutions sale net of final working capital adjustments. Cash used from discontinued operations, operating activities, for the year ended December 31, 2022 was approximately $ 2.8 million. There was cash provided by discontinued operations, investing activities, for the year ended December 31, 2022 of $ 6.5 million which pertained to the net proceeds received from the Pharma Solutions sale. Depreciation and amortization expense within discontinued operations for the year ended December 31, 2022 was $ 1.1 million. There was no depreciation and amortization expense within discontinued operations for the year ended December 31, 2023. 5. Fair Value Measurements Cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their relative short-term nature. The Company’s financial liabilities reflected at fair value in the consolidated financial statements include contingent consideration and notes payable. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities. Level 3: Valuations for assets and liabilities include certain unobservable inputs in the assumptions and projections used in determining the fair value assigned to such assets or liabilities. F- 14 In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation methodologies used for the Company’s financial instruments measured on a recurring basis at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below. Schedule of Financial Instrument Measured On Recurring Basis Fair Value Measurements As of December 31, 2023 As of December 31, 2023 Carrying Amount Fair Value Level 1 Level 2 Level 3 Liabilities: Contingent consideration: Asuragen (1) $ 453 $ 453 $ - $ - $ 453 Note payable: BroadOak loan 10,000 9,343 - - 9,343 $ 10,453 $ 9,796 $ - $ - $ 9,796 Fair Value Measurements As of December 31, 2022 As of December 31, 2022 Carrying Amount Fair Value Level 1 Level 2 Level 3 Liabilities: Contingent consideration: Asuragen (1) $ 1,088 $ 1,088 $ - $ - $ 1,088 Note payable: BroadOak loan 10,000 11,165 - - 11,165 $ 11,088 $ 12,253 $ - $ - $ 12,253 (1) (2) See Note 10, Accrued Expenses and Other Long-Term Liabilities In connection with the acquisition of certain assets from Asuragen, the Company recorded contingent consideration related to contingent payments and other revenue-based payments. The Company determined the fair value of the contingent consideration based on a probability-weighted income approach derived from revenue estimates. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. F- 15 The Company records the BroadOak loan at fair value. The fair value of the loan is determined by a probability-weighted approach regarding the loan’s change in control feature. See Note 13, Notes Payable, for more details. The fair value measurement is based on the estimated probability of a change in control and thus represents a Level 3 measurement. Schedule of Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation Adjustment December 31, 2022 Payments Transferred to Accrued Expenses Accretion/ Interest Accrued to Fair Value/ Mark to Market December 31, 2023 Asuragen $ 1,088 $ - $ ( 754 ) $ 112 $ 7 $ 453 BroadOak loan 11,165 ( 2,500 ) - - 678 9,343 $ 12,253 $ ( 2,500 ) $ ( 754 ) $ 112 $ 685 $ 9,796 Certain of the Company’s non-financial assets, such as other intangible assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized. 6. Property and Equipment Property and equipment consisted of the following as of December 31, 2023 and 2022: Schedule of Property and Equipment 2023 2022 December 31, 2023 2022 Furniture and fixtures $ 69 $ 69 Lab and office equipment 2,510 2,243 Computer equipment 233 233 Internal-use software 253 139 Leasehold improvements 269 175 Property and equipment 3,334 2,859 Less accumulated depreciation and amortization ( 2,544 ) ( 2,379 ) Net property and equipment $ 790 $ 480 Depreciation and amortization expense from continuing operations was approximately $ 0.2 million for the years ended December 31, 2023 and 2022, respectively. There was zero internal-use software amortization expense included in depreciation and amortization expense in 2023 and 2022, and $ 0.1 million of internal use unamortized software costs at December 31, 2023 and zero at December 31, 2022. The costs were unamortized as they were not in use at December 31, 2023. F- 16 7. Intangible Assets The net carrying value of the identifiable intangible assets from all acquisitions within continuing operations as of December 31, 2023 and December 31, 2022 are as follows: Schedule of Identifiable Intangible Assets Carrying Value As of December 31, 2023 As of December 31, 2022 Life Carrying Carrying (Years) Amount Amount Asuragen acquisition: Thyroid 9 $ 8,519 $ 8,519 RedPath acquisition: Pancreas test 7 16,141 16,141 Barrett’s test 9 6,682 6,682 CLIA Lab 2.3 609 609 Total $ 31,951 $ 31,951 Accumulated Amortization ( 31,951 ) ( 31,090 ) Net Carrying Value $ - $ 861 Amortization expense from continuing operations was approximately $ 0.9 million and $ 1.3 million for the years ended December 31, 2023 and 2022, respectively. The Company’s identifiable intangible assets were fully amortized as of December 31, 2023. 8. Leases The Company leases facilities and certain equipment under agreements classified as operating leases, which expire at various dates through June 2028. Substantially all of the property leases provide for increases based upon use of utilities and landlord’s operating expenses as well as pre-defined rent escalations. Total operating lease expense from continuing operations under these agreements for the years ended December 31, 2023 and 2022 was approximately $ 0.8 million and $ 0.9 million, respectively. Total cash paid under these agreements for the years ended December 31, 2023 and 2022 was approximately $ 0.8 million and $ 0.9 million, respectively. The table below presents the lease-related assets and liabilities recorded in the Consolidated Balance Sheet: Schedule of Lease related Assets and Liabilities Classification on the Balance Sheet December 31, 2023 December 31, 2022 Assets Operating lease assets Operating lease right of use assets 1,864 2,439 Total lease assets $ 1,864 $ 2,439 Liabilities Current Operating lease liabilities Other accrued expenses 377 578 Total current lease liabilities $ 377 $ 578 Noncurrent Operating lease liabilities Operating lease liabilities, net of current portion 1,472 1,848 Total long-term lease liabilities 1,472 1,848 Total lease liabilities $ 1,849 $ 2,426 F- 17 The weighted average remaining lease term for the Company’s operating leases was 4.3 years as of December 31, 2023 and 5.0 years as of December 31, 2022 and the weighted average discount rate for those leases was 11.8 % and 11.7 % as of December 31, 2023 and December 31, 2022, respectively. The Company’s operating lease expenses are recorded within “Cost of revenue” and “General and administrative expenses.” The table below reconciles the undiscounted cash flows to the lease liabilities recorded on the Company’s Consolidated Balance Sheet as of December 31, 2023: Schedule of Maturities of Operating Lease Liabilities Operating Leases 2024 $ 575 2025 450 2026 550 2027-2028 825 Total minimum lease payments 2,400 Less: amount of lease payments representing effects of discounting 551 Present value of future minimum lease payments 1,849 Less: current obligations under leases 377 Long-term lease obligations $ 1,472 9. Retirement Plans The Company offers an employee 401(k) saving plan. Under the Interpace Biosciences, Inc. 401(k) Plan, employees may contribute up to 50 % of their pre- or post-tax base compensation. The Company currently offers a safe harbor matching contribution equal to 100 % of the first 3 % of the participant’s contributed base salary plus 50 % of the participant’s base salary contributed exceeding 3 % but not more than 5 %. Participants are not allowed to invest any of their 401(k) funds in the Company’s common stock. The Company’s total contribution expense from continuing operations related to the 401(k) plan for the years ended December 31, 2023 and December 31, 2022 was approximately $ 0.3 million in both periods. 10. Accrued Expenses and Other Long-Term Liabilities Other accrued expenses consisted of the following as of December 31, 2023 and 2022: Schedule of Other Accrued Expenses December 31, 2023 December 31, 2022 Accrued royalties $ 6,268 $ 4,909 Contingent consideration 453 569 Operating lease liability 377 578 Accrued sales and marketing - diagnostics 43 40 Accrued lab costs - diagnostics 68 167 Accrued professional fees 241 641 Taxes payable 261 262 Unclaimed property 35 565 All others 455 688 Total other accrued expenses $ 8,201 $ 8,419 Other long-term liabilities consisted of uncertain tax positions as of December 31, 2023 and 2022. F- 18 11. Commitments and Contingencies Litigation From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the recorded liability includes probable and estimable legal costs associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. There is no pending litigation involving the Company at this time. Due to the nature of the businesses in which the Company is engaged, it is subject to certain risks. Such risks include, among others, risk of liability for personal injury or death to persons using products or services that the Company promotes or commercializes. There can be no assurance that substantial claims or liabilities will not arise in the future due to the nature of the Company’s business activities. There is also the risk of employment related litigation and other litigation in the ordinary course of business. The Company could also be held liable for errors and omissions of its employees in connection with the services it performs that are outside the scope of any indemnity or insurance policy. The Company could be materially adversely affected if it were required to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnification agreement; if the indemnity, although applicable, is not performed in accordance with its terms; or if the Company’s liability exceeds the amount of applicable insurance or indemnity. 12. Mezzanine Equity Redeemable Preferred Stock On January 10, 2020, the Company entered into a Securities Purchase and Exchange Agreement (the “Securities Purchase and Exchange Agreement”) with 1315 Capital and Ampersand (collectively, the “Investors”) pursuant to which the Company agreed to sell to the Investors an aggregate of $ 20.0 million in Series B Preferred Stock of the Company, at an issuance price per share of $ 1,000 (“New Investment Shares”). Pursuant to the Securities Purchase and Exchange Agreement, 1315 Capital agreed to purchase 19,000 shares of Series B Preferred Stock at an aggregate purchase price of $ 19.0 million and Ampersand agreed to purchase 1,000 shares of Series B Preferred Stock at an aggregate purchase price of $ 1.0 million. In addition, the Company agreed to exchange $ 27.0 million of the Company’s existing Series A convertible preferred stock, par value $ 0.01 per share, held by Ampersand (the “Series A Preferred Stock”), represented by 270 shares of Series A Preferred Stock with a stated value of $ 100,000 per share, which represents all of the Company’s issued and outstanding Series A Preferred Stock, for 27,000 newly issued shares of Series B Preferred Stock (such shares of Series B Preferred Stock, the “Exchange Shares” and such transaction, the “Exchange”). Following the Exchange, no shares of Series A Preferred Stock remained designated, authorized, issued or outstanding. The Series B Preferred Stock has a conversion price of $ 6.00 . Voting On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series B Preferred Stock will be entitled to cast the number of votes equal to the number of whole shares of the Company’s common stock into which the shares of Series B Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (the “Certificate of Designation”), holders of Series B Preferred Stock will vote together with the holders of common stock as a single class and on an as-converted to common stock basis. F- 19 Director Designation Rights The Certificate of Designation also provides each Investor with the following director designation rights: for so long such Investor holds at least sixty percent (60%) of the Series B Preferred Stock issued to it on the Issuance Date (as defined therein), such Investor will be entitled to elect two directors to the Company’s Board of Directors (the “Board”), provided that one of the directors qualifies as an “independent director” under Rule 5605(a)(2) of the listing rules of the Nasdaq Stock Market (or any successor rule or similar rule promulgated by another exchange on which the Company’s securities are then listed or designated) (“Independent Director”). However, if at any time such Investor holds less than sixty percent (60%), but at least forty percent (40%), of the Series B Preferred Stock issued to them on the Issuance Date, such Investor would only be entitled to elect one director to the Board. Any director elected pursuant to the terms of the Certificate of Designation may be removed without cause by, and only by, the affirmative vote of the holders of Series B Preferred Stock. A vacancy in any directorship filled by the holders of Series B Preferred Stock may be filled only by vote or written consent in lieu of a meeting of such holders of Series B Preferred Stock or by any remaining director or directors elected by such holders of Series B Preferred Stock . On November 15, 2023, Edward Chan, a director designated by 1315 Capital to the Board, provided notice to the Company of his resignation from the Board, effective immediately. Further, on December 7, 2023, Robert Gorman, a director designated by Ampersand to the Board, provided notice to the Company of his resignation as a director and as Chairman of the Board, effective immediately. Conversion The Certificate of Designation provides that from and after the Issuance Date and subject to the terms of the Certificate of Designation, each share of Series B Preferred Stock is convertible, at any time and from time to time, at the option of the holder into a number of shares of common stock equal to dividing the amount equal to the greater of the Stated Value of such Series B Preferred Stock, plus any dividends declared but unpaid thereon, or such amount per share as would have been payable had each such share been converted into common stock immediately prior to a liquidation, by six dollars ($ 6.00 ) (subject to adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting such shares). The aggregate number of shares of common stock that may be issued through conversion of all of the New Investment Shares and Exchange Shares is 7,833,334 shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares). Mandatory Conversion If the Company consummates the sale of shares of common stock to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act pursuant to which the price of the common stock in such offering is at least equal to twelve dollars ($ 12.00 ) (subject to adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting such shares) and such offering does not include warrants (or any other convertible security) and results in at least $ 25,000,000.00 in proceeds, net of the underwriting discount and commissions, to the Company, and the common stock continues to be listed for trading on the Nasdaq Capital Market or another exchange, all outstanding shares of Series B Preferred Stock will automatically be converted into shares of common stock, at the then effective Series B Conversion Ratio (as defined in the Certificate of Designation). Liquidation Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation (as defined in the Certificate of Designation) (a “Liquidation”), the holders of shares of Series B Preferred Stock then outstanding will be entitled to be paid out of the assets of the Company available for distribution to its stockholders (on a pari passu basis with the holders of any class or series of preferred stock ranking on liquidation on a parity with the Series B Preferred Stock), and before any payment will be made to the holders of common stock or any other class or series of preferred stock ranking on liquidation junior to the Series B Preferred Stock by reason of their ownership thereof, an amount per share of Series B Preferred Stock equal to the greater of (i) the Stated Value of such share of Series B Preferred Stock, plus any dividends declared but unpaid thereon, or (ii) such amount per share as would have been payable had each such share been converted into common stock immediately prior to such Liquidation. F- 20 As of December 31, 2023 and December 31, 2022, there were 47,000 Series B issued and outstanding shares of preferred stock, respectively. 13. Notes Payable BroadOak Loan On October 29, 2021, the Company and its subsidiaries entered into the BroadOak Loan Agreement, providing for a term loan in the aggregate principal amount of $ 8,000,000 (the “Term Loan”). Funding of the Term Loan took place on November 1, 2021. 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’ assets and was subordinate to the Company’s $ 7,500,000 revolving credit facility with Comerica Bank. See Note 18, Revolving Line of Credit. The Term Loan had an origination fee of 3 % of the Term Loan amount, and a terminal payment equal to (i) 15% of the original principal amount of the Term Loan if the change of control occurs on or prior to the first anniversary of the funding of the Term Loan, (ii) 20% of the original principal amount of the Term Loan if the change of control occurs after the first anniversary but on or prior to the second anniversary of the funding of the Term Loan and (iii) 30% of the original principal amount of the Term Loan if the change of control occurs after the second anniversary of the funding of the Term Loan, or if the Term Loan is repaid on its maturity date . The BroadOak Loan Agreement contains affirmative and negative restrictive covenants that are applicable from and after the date of the Term Loan advance. These restrictive covenants, which include restrictions on certain mergers, acquisitions, investments, encumbrances, etc., could adversely affect our ability to conduct our business. The BroadOak Loan Agreement also contains customary events of default. In connection with the BroadOak Loan Agreement, the Company and its subsidiaries entered into that certain First Amendment to Loan and Security Agreement and Consent with Comerica, dated as of November 1, 2021 (the “Comerica Amendment”), pursuant to which Comerica consented to the Company’s and its subsidiaries’ entry into the BroadOak Loan Agreement, and amended that certain Loan and Security Agreement among Comerica, the Company and its subsidiaries (the “Comerica Loan Agreement”) to, among other things, permit the indebtedness, liens and encumbrances contemplated by the BroadOak Loan Agreement. As a condition for BroadOak to extend the Term Loan to the Company and its subsidiaries, the Company’s existing creditor, Comerica, and BroadOak entered into that certain Subordination and Intercreditor Agreement, dated as of November 1, 2021, pursuant to which BroadOak agreed to subordinate all of the indebtedness and obligations of the Company and its subsidiaries owing to BroadOak to all of the indebtedness and obligations of the Company and its subsidiaries owing to Comerica (the “Intercreditor Agreement”). BroadOak further agreed to subordinate all of its respective security interests in assets or property of the Company and its subsidiaries to Comerica’s security interests in such assets or property. The Intercreditor Agreement provides that it is solely for the benefit of BroadOak and Comerica and is not for the benefit of the Company or any of its subsidiaries. The Company concluded that the Note met the definition of a “recognized financial liability” which is an acceptable financial instrument eligible for the fair value option under ASC 825-10-15-4, and did not meet the definition of any of the financial instruments listed within ASC 825-10-15-5 that are not eligible for the fair value option. The Note is not convertible and does not have any component recorded to shareholders’ equity. Accordingly, the Company elected the fair value option for the Note. On October 24, 2023, the Company entered into a Second Amendment to Loan and Security Agreement (“Amendment”) with BroadOak. The primary changes to the original BroadOak Loan Agreement were as follows: ● The 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 above regarding the Terminal Payment. ● Effective November 1, 2023, the interest rate under the BroadOak Loan Agreement was 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”). F- 21 ● The 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 Date. If BroadOak agrees to the extension, the Loan Maturity Date would automatically be extended. The Second Amendment was treated as a debt modification which is accounted for prospectively. Since the BroadOak Loan is carried at fair value under the fair value option, the Second Amendment did not result in any extinguishment gain or loss upon amendment, and the impact of the revised terms was incorporated into the Company’s fourth quarter 2023 fair value calculation. In March 2024, the Company entered into a Third Amendment of the BroadOak Loan Agreement. See Note 20, Subsequent Events , for more details. 14. Stock-Based Compensation The Company’s stock-incentive program is a long-term retention program that is intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. Currently, the Company is able to grant options, stock appreciation rights (“SARs”) and restricted shares from the Interpace Biosciences, Inc. 2019 Equity Incentive Plan. No new grants may be made under the Company’s prior stock incentive plan, the Interpace Diagnostics Group, Inc. (now known as Interpace Biosciences, Inc.) Amended and Restated 2004 Stock Award and Incentive Plan (the “2004 Plan”). Unless earlier terminated by action of the Company’s board of directors, the 2004 Plan will remain in effect until such time as no stock remains available for delivery and the Company has no further rights or obligations under the 2004 Plan with respect to outstanding awards thereunder. Historically, stock options have been granted with an exercise price equal to the market value of the common stock on the date of grant, expire 10 years from the date they are granted, and generally vested over a one to three-year period for employees and members of the Board. Upon exercise, new shares will be issued by the Company. The restricted shares and restricted stock units (“RSUs”) granted to employees generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances. Restricted shares and RSUs granted to Board members generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances. The Company primarily uses the Black-Scholes option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. Expected volatility is based on historical volatility. As there is no trading volume for the Company’s options, implied volatility is not representative of the Company’s current volatility so the historical volatility of the Company’s common stock is determined to be more indicative of the Company’s expected future stock performance. The expected life is determined using the safe-harbor method. The Company expects to use this simplified method for valuing employee options until more detailed information about exercise behavior becomes available over time. The Company bases the risk-free interest rate on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company estimates forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. The Company recognizes compensation cost, net of estimated forfeitures, arising from the issuance of stock options on a straight-line basis over the vesting period of the grant. The Company began an employee stock purchase plan in 2020 and recognized approximately $ 46,000 in expense related to that plan for the year ended December 31, 2022. The Company suspended its plan in July 2022 as there were no shares available in the original authorized shares pool. In November 2022, the shareholders approved an increase to the pool of an additional one million shares. As of December 31, 2023, we have reserved 692,688 shares of our common stock for issuance under our 2019 Equity Incentive Plan, 1,000,007 shares of our common stock for issuance under our Employee Stock Purchase Plan and 1,677,248 additional shares available for future grants of awards under our 2019 Equity Incentive Plan. F- 22 The estimated compensation cost associated with the granting of restricted stock and restricted stock units is based on the fair value of the Company’s common stock on the date of grant. The Company recognizes the compensation cost, net of estimated forfeitures, arising from the issuance of restricted stock and restricted stock units on a straight-line basis over the shorter of the vesting period or the period from the grant date to the date when retirement eligibility is achieved. There were no stock options granted in 2023. The following table provides the weighted average assumptions used in determining the fair value of the stock options granted during the year ended December 31, 2022: Schedule of Stock Options, Valuation Assumptions December 31, 2022 Risk-free interest rate 1.75 % Expected life 6.0 years Expected volatility 129.88 % Dividend yield - The weighted-average fair value of stock options granted during the year ended December 31, 2022 was estimated to be $ 4.50 . There were no options exercised in 2023 or 2022. Stock-based compensation from continuing operations for the years ended December 31, 2023 and 2022 is as follows: Schedule of Share-Based Compensation Arrangements by Share-Based Payment Award 2023 2022 RSUs and restricted stock $ 313 $ 498 Performance-based awards 58 71 Options 259 622 Total stock-based compensation expense $ 630 $ 1,191 A summary of stock option activity for the year ended December 31, 2023, and changes during such year, is presented below: Schedule of Stock Option Activity Weighted- Weighted-Average Average Remaining Aggregate Grant Contractual Intrinsic Shares Price Period (in years) Value Outstanding at January 1, 2023 527,844 $ 6.46 7.57 $ - Granted - - - - Forfeited or expired ( 72,000 ) 6.07 - - Outstanding at December 31, 2023 455,844 6.52 6.47 - Exercisable at December 31, 2023 336,826 6.95 6.29 - Vested and expected to vest 376,509 6.79 6.45 - F- 23 A summary of the change in of the Company’s non-vested options for the year ended December 31, 2023 is presented below: Schedule of Non Vested Option Activity Shares Weighted- Average Grant Date Fair Value Nonvested at January 1, 2023 257,764 $ 4.63 Granted - - Vested ( 129,574 ) 4.70 Forfeited ( 9,172 ) 4.56 Nonvested at December 31, 2023 119,018 $ 4.55 The aggregate fair value of options vested during the years ended December 31, 2023 and 2022 was $ 0.6 million and $ 0.7 million, respectively. The weighted-average grant date fair value of options vested during the year ended December 31, 2022 was $ 5.02 . A summary of the Company’s non-vested shares of restricted stock and restricted stock units for the year ended December 31, 2023, and changes during such year, is presented below: Schedule of Share-Based Compensation, Restricted Stock and Restricted Stock Units Activity Weighted- Average Average Remaining Aggregate Grant Date Vesting Intrinsic Shares Fair Value Period (in years) Value Nonvested at January 1, 2023 249,005 $ 3.47 0.98 $ 258,965 Granted 87,500 1.32 - - Vested ( 79,659 ) 4.30 - - Forfeited ( 20,002 ) 6.52 - - Nonvested at December 31, 2023 236,844 $ 2.14 0.84 $ 255,792 The aggregate fair value of restricted stock units vested during each of the years ended December 31, 2023 and 2022 was $ 0.3 million and $ 0.6 million, respectively. As of December 31, 2023, there was approximately $ 0.3 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested stock options and restricted stock units which will be expensed over the next three years. 15. Revenue Sources The Company’s clinical services customers consist primarily of physicians, hospitals and clinics. Its revenue channels include Medicare, Medicare Advantage, Medicaid, Client Billings (hospitals, etc.), and commercial payers. The following sets forth the net revenue generated by revenue channel accounting for more than 10% of the Company’s revenue from continuing operations during the years ended December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and December 31, 2022, revenue from Medicare was approximately 37 % and 45 % of total revenue, respectively. Schedule of Revenue by Major Customers Years Ended December 31, Customer 2023 2022 Medicare $ 14,830 $ 14,413 Commercial Payors $ 11,797 $ 7,154 Client Billings $ 7,711 $ 5,679 Medicare Advantage $ 5,512 $ 4,384 F- 24 16. Income Taxes The provision for income taxes on continuing operations for the years ended December 31, 2023 and 2022 is comprised of the following: Schedule of Components of Income Tax Expense (Benefit) 2023 2022 Current: Federal $ - $ - State 17 29 Total current 17 29 Deferred: Federal - - State - - Total deferred - - Provision for income taxes $ 17 $ 29 The Company performs an analysis each year to determine whether the expected future income will more likely than not be sufficient to realize the deferred tax assets. The Company’s recent operating results and projections of future income weighed heavily in the Company’s overall assessment. As a result of this analysis, the Company continues to maintain a full valuation allowance against its federal and state net deferred tax assets at December 31, 2023 as the Company believes that it is more likely than not that these assets will not be realized. The tax effects of significant items comprising the Company’s deferred tax assets and (liabilities) as of December 31, 2023 and 2022 are as follows: Schedule of Deferred Tax Assets and Liabilities 2023 2022 Deferred tax assets: Federal net operating loss carryforwards $ 26,429 $ 26,713 State net operating loss carryforwards 3,780 3,639 Compensation 2,021 2,059 Allowances and reserves 421 395 Intangible assets 3,201 3,584 State taxes 1,049 987 Credit carryforward 1 1 163(j) interest 1,411 1,279 Deferred revenue 94 94 Capitalized 174 268 158 Valuation allowance ( 38,654 ) ( 38,256 ) Gross deferred tax assets 21 653 Deferred tax liability: Property and equipment ( 17 ) ( 650 ) Leases ( 4 ) ( 3 ) Deferred tax liability-net valuation allowance $ - $ - F- 25 The Company’s deferred tax asset and deferred tax liabilities are included within Other long-term liabilities , within the consolidated balance sheet as of December 31, 2023 and 2022. Federal tax attribute carryforwards at December 31, 2023, consist primarily of approximately $ 125.8 million of federal net operating losses. In addition, the Company has approximately $ 60.8 million of state net operating losses carryforwards post 382 ownership change. The utilization of the federal carryforwards as an available offset to future taxable income is subject to limitations under federal income tax laws. 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, and current state net operating losses not utilized begin to expire this year. The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL, and 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 Internal Revenue Code of 1986, as amended, or 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 March 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 Internal Revenue Code due to the multiple ownership changes. The Company has adjusted their NOL carryforwards to address the impact of the 382 ownership change. 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. A reconciliation of the difference between the federal statutory tax rates and the Company’s effective tax rate from continuing operations is as follows: Schedule of Effective Income Tax Rate Reconciliation 2023 2022 Federal statutory rate 21.0 % 21.0 % State income tax rate, net of Federal tax benefit 1.4 % 3.6 % Meals and entertainment 2.1 % ( 0.4 %) Valuation allowance ( 23.0 %) ( 24.7 %) Effective tax rate 1.5 % ( 0.5 %) The following table summarizes the change in uncertain tax benefit reserves for the two years ended December 31, 2023: Schedule of Unrecognized Tax Benefits Reserves Roll Forward Unrecognized Tax Benefits Balance of unrecognized benefits as of January 1, 2022 $ 877 Additions for tax positions of prior years - Balance as of January 1, 2023 $ 877 Additions for tax positions of prior years - Balance as of December 31, 2023 $ 877 As of both December 31, 2023 and 2022, the total amount of gross unrecognized tax benefits was $ 0.9 million. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of both December 31, 2023 and 2022 was $ 0.9 million. F- 26 The Company recognized interest and penalties of $ 0.2 million related to uncertain tax positions in income tax expense during each of the years ended December 31, 2023 and 2022. At December 31, 2023 and 2022, accrued interest and penalties, net were $ 4.0 million and $ 3.8 million, respectively, and are included in the Other long-term liabilities in the consolidated balance sheets. The Company and its subsidiaries file a U.S. Federal consolidated income tax return and consolidated and separate income tax returns in numerous states and local tax jurisdictions. The following tax years remain subject to examination as of December 31, 2023: Schedule of Tax Years Subject to Examination Jurisdiction Tax Years Federal 2019 – 2023 State and Local 2018 – 2023 To the extent there was a failure to file a tax return in a previous year; the statute of limitation will not begin until the return is filed. There were no examinations in process by the Internal Revenue Service as of December 31, 2023. 17. Basic and Diluted Net Income (Loss) per Share A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the years ended December 31, 2023 and 2022 are as follows (rounded to thousands): Schedule of Weighted Average Number of Shares Years Ended December 31, 2023 2022 Basic weighted average number of common shares 4,317 4,238 Potential dilutive effect of stock-based awards 47 - Diluted weighted average number of common shares 4,364 4,238 The Company’s Series B Preferred Stock, on an as converted basis of 7,833,334 shares and the following outstanding stock-based awards were excluded from the computation of the effect of dilutive securities on loss per share for the following periods as they would have been anti-dilutive (rounded to thousands): Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share Years Ended December 31, 2023 2022 Options 456 528 Restricted stock units (RSUs) 237 249 693 777 18. Revolving Line of Credit On October 13, 2021, the Company and its subsidiaries 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 may use the proceeds of the Credit Facility for working capital and other general corporate purposes. The 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. F- 27 In April 2022, Comerica waived certain covenants specifically relating to the Company receiving financial statements with a going concern comment or qualification. In April 2022 and August 2022, Comerica waived certain covenants specifically relating to failure to maintain bank accounts outside of Comerica in an aggregate amount not to exceed $ 0.5 million during the transition period. Additionally, in August 2022, Comerica waived certain covenants relating to failure to segregate collections made from government account debtors from collections made from all other account debtors and customers. 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 contained financial covenants requiring specified minimum liquidity and minimum revenue thresholds, which the Company was in compliance with as of December 31, 2023, and also contained customary events of default. As of December 31, 2023, the balance of the revolving line was zero . On 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 . This agreement was originally scheduled to expire on September 30, 2024 but has since been terminated. The Company could have used the proceeds of the Credit Facility for working capital and other general corporate purposes. The amount that could have been borrowed under the Credit Facility was the lower of (i) the revolving limit of $ 5,000,000 and (ii) 80 % of the Company’s eligible accounts receivable plus up to but not exceeding $ 1.5 million in the Company’s Medicare accounts (excluding Medicare Advantage thyroid accounts). Borrowings on the Revolving Line were subject to an interest rate equal to the Term Secured Overnight Financing Rate (“SOFR”) Screen Rate plus one-tenth of one percent. The Fifth Amendment to 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 adjusted EBITDA thresholds. Pursuant to the Fifth Amendment to the Comerica Loan Agreement, Comerica consented to waive a covenant constituting an event of default under the Comerica Loan Agreement regarding a going concern qualification issued in connection with the Company’s 2022 fiscal year audit. See Note 20, Subsequent Events, for updates on the current status of the Comerica line. F- 28 19. Supplemental Cash Flow Information Supplemental Disclosure of Other Cash Flow Information (in thousands) Supplemental Cash Flow Information Years Ended December 31, 2023 2022 Cash paid for taxes $ 270 $ 251 Cash paid for interest $ 1,092 $ 971 Supplemental Disclosures of Non Cash Activities (in thousands) Years Ended December 31, 2023 2022 Purchase of property and equipment included in accounts payable $ 5 $ - Conversion of convertible debt into notes payable - 2,000 20. Subsequent Events Line of Credit In February 2024, the Company ended the Comerica Loan Agreement. The Company did not owe anything outstanding on the Line at the time of termination and does not owe anything further to Comerica Bank. BroadOak Amendment On March 29, 2024, the Company entered into a Third Amendment to Loan and Security Agreement with BroadOak. The primary changes to the Second Amendment to Loan and Security Agreement were as follows: ● The maturity date was extended to June 30, 2025 . ● Beginning April 1, 2024, the Company will make $ 500,000 monthly payments with the remaining loan balance due on the new maturity date. F- 29 INTERPACE BIOSCIENCES, INC. VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 2023 AND 2022 ($ in thousands) Additions Balance at (Reductions) (1) Balance at Beginning Charged to Deductions end Description of Period Operations Other of Period 2022 Allowance for doubtful accounts $ 72 - ( 72 ) $ - Allowance for doubtful notes $ 869 - - $ 869 Tax valuation allowance $ 33,170 - 5,086 $ 38,256 2023 Allowance for doubtful notes $ 869 - - $ 869 Tax valuation allowance $ 38,256 - 398 $ 38,654 (1) Includes payments and actual write offs, as well as changes in estimates in the reserves. F- 30