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, 2024. 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 SEC’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 2024 related to the Company’s royalty accrual. It was determined that the Company should not have been accruing royalty expense with respect to certain royalty agreements and therefore had materially misstated their financial statements in prior periods. Management notes that the root cause of the royalty error was a design control failure as there was a lack of process related to communication between the Company’s science team, such as the Chief Scientific Officer, management of the Company, including the Chief Executive Officer (“CEO”), and the accounting team, including the Chief Financial Officer (“CFO”). At the time the initial accrual was made and as the royalty continued to be accrued since that point, there was a lack of control whereby the accounting team was not aware that the Company’s revenue sources, ThyraMIR and ThyGeNEXT, did not utilize the technology covered under the royalty agreements. 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 material weakness identified, including updating its procedures regarding the review of significant, complex agreements, to include the retention of outside subject matter experts specifically to review the agreements and any complexities that may arise. In addition, the Company plans to establish a quarterly meeting between members of management, including the CEO and CFO, as well as members from the Company’s science team to ensure that management, including those responsible for financial reporting, understand the agreements which are disclosed within the financial statements to ensure proper accounting for these agreements. 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. As of December 31, 2024, 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, 2024, our internal control over financial reporting was not effective based on those criteria. Changes in Internal Control over Financial Reporting During the fourth quarter ended December 31, 2024 management believes that it has completed its remediation plan to address the material weakness that existed at the end of 2023 and through the first three quarters of 2024 related to the timing of revenue recognition. The Company had adopted a remediation plan and updated its procedures regarding the testing of revenue recognition and review the procedures which ensure that revenue is recorded in the period in which it is earned. Other than the completion of this remediation plan there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 73 ITEM 9B. OTHER INFORMATION None . 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 2025 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 2025 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 2025 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 2025 annual meeting of stockholders and such information is incorporated by reference herein. 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 2025 annual meeting of stockholders and such information is incorporated by reference herein. 74 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 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 most recently by the Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, effective October 11, 2024, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed with the SEC on November 8, 2024. 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. 75 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. 76 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. 77 Exhibit No. Description 10.26 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. 10.27 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. 10.28* 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. 10.29* 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. 10.30 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, incorporated by reference to Exhibit 10.39 of the Company’s Annual Report on Form 10-K, filed with the SEC on April 1, 2024. 10.31 Series C Preferred Stock Exchange Agreement, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on October 15, 2024. 10.32 Amended and Restated Investor Rights Agreement, dated as of October 10, 2024, by and among Interpace Biosciences, Inc., 1315 Capital II, L.P. 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 October 15, 2024. 10.33 Termination of Support Agreement, dated October 14, 2024, by and between 1315 Capital II, L.P. and Interpace Biosciences, Inc., incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K, filed with the SEC on October 15, 2024. 10.34 Fourth Amendment to Loan and Security Agreement with BroadOak Fund V, L.P., dated January 17, 2025, incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed with the SEC on January 21, 2025. 19.1+ Insider Trading Policy 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. 78 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: March 31, 2025 /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 March 31, 2025 Thomas W. Burnell (Principal Executive Officer) /s/ Christopher McCarthy Chief Financial Officer March 31, 2025 Christopher McCarthy (Principal Financial and Accounting Officer) /s/ Stephen J. Sullivan Director March 31, 2025 Stephen J. Sullivan /s/ Joseph Keegan Director March 31, 2025 Joseph Keegan /s/ Vijay Aggarwal Director March 31, 2025 Vijay Aggarwal /s/ Fortunato Ron Rocca Director March 31, 2025 Fortunato Ron Rocca 79 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, 2024 and 2023 F-4 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023 F-5 Consolidated Statements of Stockholders’ Deficit for the years ended December 31, 2024 and 2023 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 F-7 Notes to Consolidated Financial Statements F-8 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, 2024 and 2023, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years then ended, and the related notes (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, 2024 and 2023, 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. Restatement As discussed in Note 2 to the financial statements, the 2023 financial statements have been restated to correct a misstatement. 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. F- 2 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 March 31, 2025 F- 3 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, December 31, 2024 2023 (as restated) ASSETS Current assets: Cash and cash equivalents $ 1,461 $ 3,498 Accounts receivable 8,544 5,078 Other current assets 1,768 1,841 Total current assets 11,773 10,417 Property and equipment, net 1,361 790 Operating lease right of use assets 1,613 1,864 Other long-term assets 45 45 Total assets $ 14,792 $ 13,116 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,659 $ 1,544 Accrued salary and bonus 2,207 1,969 Other accrued expenses 1,799 2,163 Note payable at fair value, current 4,290 5,100 Current liabilities of discontinued operations 660 660 Total current liabilities 10,615 11,436 Operating lease liabilities, net of current portion 1,183 1,472 Note payable at fair value - 4,243 Other long-term liabilities 5,211 4,968 Total liabilities 17,009 22,119 Commitments and contingencies (Note 11) - - Redeemable preferred stock, $ .01 par value; 5,000,000 shares authorized, 0 and 47,000 shares Series B issued and outstanding, respectively - 46,536 Stockholders’ deficit: Redeemable preferred stock, $ .01 par value; 5,000,000 shares authorized, 47,000 and 0 shares Series C issued and outstanding, respectively - - Common stock, $ .01 par value; 100,000,000 shares authorized; 4,539,663 and 4,447,489 shares issued, respectively; 4,409,323 and 4,351,445 shares outstanding, respectively 406 405 Common stock, $.01 par value; 100,000,000 shares authorized; 4,539,663 and 4,447,489 shares issued, respectively; 4,409,323 and 4,351,445 shares outstanding, respectively 406 405 Additional paid-in capital 234,811 188,146 Accumulated deficit ( 235,380 ) ( 242,082 ) Treasury stock, at cost ( 130,340 and 96,044 shares, respectively) ( 2,054 ) ( 2,008 ) Total stockholders’ deficit ( 2,217 ) ( 55,539 ) Total liabilities and stockholders’ deficit 14,792 ( 33,420 ) Total liabilities, preferred stock and stockholders’ deficit $ 14,792 $ 13,116 The accompanying notes are an integral part of these consolidated financial statements F- 4 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for per share data) 2024 2023 For The Years Ended December 31, 2024 2023 (as restated) Revenue, net $ 46,926 $ 40,036 Cost of revenue 17,001 14,980 Gross profit 29,925 25,056 Operating expenses: Sales and marketing 11,655 10,233 Research and development 676 636 General and administrative 9,486 9,363 Acquisition related amortization expense - 861 Change in fair value of contingent consideration - 7 Total operating expenses 21,817 21,100 Operating income from continuing operations 8,108 3,956 Interest accretion expense ( 34 ) ( 112 ) Note payable interest expense ( 625 ) ( 896 ) Other expense, net ( 499 ) ( 667 ) Income from continuing operations before tax 6,950 2,281 Provision for income taxes 4 17 Income from continuing operations 6,946 2,264 Loss from discontinued operations, net of tax ( 244 ) ( 310 ) Net income 6,702 1,954 Less adjustment for preferred stock deemed dividend ( 464 ) - Net income attributable to common stockholders $ 6,238 $ 1,954 Basic net income (loss) per share of common stock: From continuing operations $ 1.48 $ 0.52 From discontinued operations ( 0.06 ) ( 0.07 ) Net income (loss) per basic share of common stock $ 1.42 $ 0.45 Diluted net income (loss) per share of common stock: From continuing operations $ 0.41 $ 0.52 From discontinued operations ( 0.02 ) ( 0.07 ) Net income (loss) per diluted share of common stock $ 0.40 $ 0.45 Weighted average number of common shares and common share equivalents outstanding: Basic 4,387 4,317 Diluted 15,734 4,364 The accompanying notes are an integral part of these consolidated financial statements F- 5 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT (in thousands) Shares Amount Shares Amount Shares Amount Capital Deficit Total Additional Preferred Stock Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Shares Amount Capital Deficit Total Balance -December 31, 2022 as restated - $ - 4,367,830 $ 405 71,120 $ ( 1,976 ) $ 187,516 $ ( 244,036 ) $ ( 58,091 ) Issuance of common stock - - 79,659 - - - - - - Treasury stock purchased - - - 24,924 ( 32 ) - - ( 32 ) Stock-based compensation expense - - - - - - 630 - 630 Net income - - - - - - - 1,954 1,954 Balance -December 31, 2023 as restated - $ - 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 242,082 ) $ ( 55,539 ) Balance - $ - 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 242,082 ) $ ( 55,539 ) Issuance of common stock - - 92,174 1 - - ( 1 ) - - Issuance of Series C preferred stock, net of issuance costs 47,000 - - - - - 46,375 - 46,375 Treasury stock purchased - - - - 34,296 ( 46 ) - - ( 46 ) Stock-based compensation expense - - - - - - 291 - 291 Net income - - - - - - - 6,702 6,702 Balance -December 31, 2024 47,000 - 4,539,663 $ 406 130,340 $ ( 2,054 ) $ 234,811 $ ( 235,380 ) $ ( 2,217 ) Balance 47,000 - 4,539,663 $ 406 130,340 $ ( 2,054 ) $ 234,811 $ ( 235,380 ) $ ( 2,217 ) The accompanying notes are an integral part of these consolidated financial statements F- 6 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2024 2023 ` For The Years Ended December 31, 2024 2023 (as restated) Cash Flows From Operating Activities Net income $ 6,702 $ 1,954 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 300 1,026 Interest accretion expense 34 112 Amortization of deferred financing fees - 42 Stock-based compensation 291 630 Amortization on operating lease right of use asset 448 575 Change in fair value of note payable 547 678 Change in fair value of contingent consideration - 7 Other changes in operating assets and liabilities: Accounts receivable ( 3,466 ) 227 Other current assets 73 ( 89 ) Accounts payable 120 489 Accrued salaries and bonus 238 513 Accrued liabilities ( 404 ) ( 2,266 ) Operating lease liabilities ( 480 ) ( 376 ) Long-term liabilities 243 267 Net cash provided by operating activities 4,646 3,789 Cash Flows From Investing Activity Proceeds from sale of Interpace Pharma Solutions, net - 383 Purchase of property and equipment ( 876 ) ( 470 ) Net cash used in investing activities ( 876 ) ( 87 ) Cash Flows From Financing Activities Payments made on note payable ( 5,600 ) - Series C Preferred stock issuance costs ( 161 ) - Payment of BroadOak terminal payment - ( 2,500 ) Payments on line of credit - ( 2,500 ) Cash paid for repurchase of restricted shares ( 46 ) ( 32 ) Net cash used in financing activities ( 5,807 ) ( 5,032 ) Net decrease in cash and cash equivalents ( 2,037 ) ( 1,330 ) Cash and cash equivalents from continuing operations – beginning 3,498 4,828 Cash and cash equivalents from discontinued operations – beginning - - Cash and cash equivalents – beginning $ 3,498 $ 4,828 Cash and cash equivalents from continuing operations – ending $ 1,461 $ 3,498 Cash and cash equivalents from discontinued operations – ending - - Cash and cash equivalents – ending $ 1,461 $ 3,498 The accompanying notes are an integral part of these consolidated financial statements F- 7 1. Nature of Business and Significant Accounting Policies Nature of Business Interpace Biosciences, Inc. (“Interpace” or the “Company”) is a company that provides esoteric molecular diagnostic testing, and pathology services to aid physicians in their evaluation of cancer risk in patients with indeterminate biopsies and a perceived high risk of cancer from clinical features. We develop and commercialize genomic tests and related first-line assays that can personalize medicine to help improve patient diagnosis and management. 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, notes payable, stock-based compensation, 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. The opening accounts receivable balance, as restated, as of January 1, 2023 was $ 5.1 million. F- 8 Other current assets Other current assets consisted of the following as of December 31, 2024 and 2023: Schedule of Other Current Assets December 31, 2024 December 31, 2023 (as restated) Lab supplies $ 1,211 $ 1,227 Prepaid expenses 535 590 Other 22 24 Total other current assets $ 1,768 $ 1,841 Property and Equipment, net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are 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; two 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 7, Property and Equipment , for further information. 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- 9 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. 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- 10 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. 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. F- 11 2. Restatement of Previously Issued Consolidated Financial Statements We have restated herein our audited consolidated financial statements as of December 31, 2023 and for the year ended December 31, 2023 as well as unaudited financial statements for the periods as of and the periods ending March 31, 2023, June 30, 2023, September 30, 2023, March 31, 2024, June 30, 2024 and September 30, 2024. We have also restated impacted amounts within the accompanying footnotes to the consolidated financial statements which have been noted as such. As a result of a review of the Company’s existing royalty agreements it was determined that the Company should not have been accruing royalty expenses on certain agreements. As a result, the Company determined that prior period financial statements should be restated. On February 28, 2025, the Company’s management concluded and subsequently confirmed with the Audit Committee of the Company’s Board of Directors that (1) the royalty accrual was materially misstated and should be reversed; (2) the consolidated financial statements contained in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2015 through December 31, 2023, as well as the consolidated financial statements contained in the Quarterly Reports on Form 10-Q for each quarterly period within those fiscal years as well as the quarterly periods ended March 31, 2024, June 30, 2024, and September 30, 2024 should no longer be relied upon. As a result, the Company is restating its consolidated financial statements for the year ended December 31, 2023, and the quarterly periods for 2023 and 2024. The following tables present reconciliation from our prior periods as previously reported to the restated values for the consolidated financial statements. A description of misstatements is listed below: a) Royalty expense - We recorded royalty expense with respect to certain royalty agreements through September 30, 2024. The reversal of that expense will be reflected in the financial statements below. b) Revenue adjustments – Adjustments related to the timing on which revenue is recognized as per our revenue recognition policy. The Company identified a material control weakness in 2023 related to these adjustments. F- 12 The following tables present a reconciliation of the as previously reported consolidated financial statements to the restated amounts as of and for the year ended December 31, 2023. Schedule of Restatement Consolidated Financial Statements INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (in thousands, except share and per share data) December 31, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 3,498 $ - $ 3,498 Accounts receivable 4,983 95 (b) 5,078 Other current assets 1,841 1,841 Total current assets 10,322 95 10,417 Property and equipment, net 790 - 790 Operating lease right of use assets 1,864 - 1,864 Other long-term assets 45 - 45 Total assets $ 13,021 $ 95 $ 13,116 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,544 $ - $ 1,544 Accrued salary and bonus 1,969 - 1,969 Other accrued expenses 8,201 ( 6,038 ) (a) 2,163 Note payable at fair value, current 5,100 - 5,100 Current liabilities of discontinued operations 660 - 660 Total current liabilities 17,474 ( 6,038 ) 11,436 Operating lease liabilities, net of current portion 1,472 - 1,472 Note payable at fair value 4,243 - 4,243 Other long-term liabilities 4,968 - 4,968 Total liabilities 28,157 ( 6,038 ) 22,119 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 shares issued and 4,351,445 shares outstanding; 405 - 405 Common stock, $.01 par value; 100,000,000 shares authorized;4,447,489 shares issued and 4,351,445 shares outstanding; 405 - 405 Additional paid-in capital 188,146 - 188,146 Accumulated deficit ( 248,215 ) 6,133 (a) (b) ( 242,082 ) Treasury stock, at cost ( 96,044 shares) ( 2,008 ) - ( 2,008 ) Total stockholders’ deficit ( 61,672 ) 6,133 ( 55,539 ) Total liabilities and stockholders’ deficit ( 33,515 ) 95 ( 33,420 ) Total liabilities, preferred stock and stockholders’ deficit $ 13,021 $ 95 $ 13,116 The accompanying notes are an integral part of these condensed consolidated financial statements F- 13 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated For the Year Ended December 31, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 40,214 $ ( 178 ) (b) $ 40,036 Cost of revenue 16,310 ( 1,330 ) (a) 14,980 Gross profit 23,904 1,152 25,056 Operating expenses: Sales and marketing 10,233 - 10,233 Research and development 636 - 636 General and administrative 9,363 - 9,363 Acquisition related amortization expense 861 - 861 Change in fair value of contingent consideration 7 - 7 Total operating expenses 21,100 - 21,100 Operating income from continuing operations 2,804 1,152 3,956 Interest accretion expense ( 112 ) - ( 112 ) Note payable interest expense ( 896 ) - ( 896 ) Other expense, net ( 667 ) - ( 667 ) Income from continuing operations before tax 1,129 1,152 2,281 Provision for income taxes 17 - 17 Income from continuing operations 1,112 1,152 2,264 Loss from discontinued operations, net of tax ( 310 ) - ( 310 ) Net income $ 802 $ 1,152 $ 1,954 Basic net income (loss) per share of common stock: From continuing operations $ 0.26 $ 0.27 $ 0.52 From discontinued operations ( 0.07 ) - ( 0.07 ) Net income (loss) per basic share of common stock $ 0.19 $ 0.27 $ 0.45 Diluted net income (loss) per share of common stock: From continuing operations $ 0.25 $ 0.26 $ 0.52 From discontinued operations ( 0.07 ) - ( 0.07 ) Net income (loss) per diluted share of common stock $ 0.18 $ 0.26 $ 0.45 Weighted average number of common shares and common share equivalents outstanding: Basic 4,317 4,317 4,317 Diluted 4,364 4,364 4,364 The accompanying notes are an integral part of these condensed consolidated financial statements F- 14 Consolidated Statement of Stockholders’ Deficit Shares Amount Shares Amount Capital Deficit Total Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -December 31, 2023 as reported 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 248,215 ) $ ( 61,672 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 4,981 4,981 Cumulative adjustments to net income - - - - - 1,152 1,152 Balance -December 31, 2023 as restated 4,447,489 $ 405 96,044 $ ( 2,008 ) $ 188,146 $ ( 242,082 ) $ ( 55,539 ) F- 15 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Year Ended December 31, 2023 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 802 $ 1,152 (a) (b) $ 1,954 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 1,026 - 1,026 Interest accretion expense 112 - 112 Amortization of deferred financing fees 42 - 42 Amortization on operating lease right of use asset 575 575 Stock-based compensation 630 - 630 Credit loss expense - - - Change in fair value of note payable 678 - 678 Change in fair value of contingent consideration 7 7 Other changes in operating assets and liabilities: Accounts receivable 49 178 (b) 227 Other current assets ( 89 ) - ( 89 ) Accounts payable 489 - 489 Accrued salaries and bonus 513 - 513 Other accrued expenses ( 936 ) ( 1,330 ) (a) ( 2,266 ) Operating lease liabilities ( 376 ) ( 376 ) Long-term liabilities 267 - 267 Net cash provided by operating activities 3,789 - 3,789 Cash Flows From Investing Activity Proceeds from sale of Interpace Pharma Solutions, net 383 383 Purchase of property and equipment ( 470 ) - ( 470 ) Net cash used in investing activities ( 87 ) - ( 87 ) Cash Flows From Financing Activities Payment of BroadOak terminal payment ( 2,500 ) ( 2,500 ) Payments on line of credit ( 2,500 ) ( 2,500 ) Cash paid for repurchase of restricted shares ( 32 ) - ( 32 ) Net cash used in financing activities ( 5,032 ) - ( 5,032 ) Net decrease in cash and cash equivalents ( 1,330 ) - ( 1,330 ) Cash and cash equivalents from continuing operations– beginning 4,828 - 4,828 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 4,828 $ - $ 4,828 Cash and cash equivalents from continuing operations– ending $ 3,498 $ - $ 3,498 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 3,498 $ - $ 3,498 F- 16 3. Recent Accounting Standards Accounting Pronouncements Adopted 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. This was adopted on January 1, 2024 and there was no impact upon adoption. In November 2023, the FASB modified authoritative guidance within the codification’s Segment Reporting topic (ASC 280), which enhanced the disclosure requirements for significant segment expenses and other segment items. The authoritative guidance will become effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard for the year ended December 31, 2024 did not have a material impact on the Company’s consolidated financial results, but resulted in enhanced disclosures as included in Note 15, Segments . Accounting Pronouncements Pending 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 but does not expect it to be material. 4. Liquidity In October 2021, the Company entered into a $ 7.5 million revolving credit facility with Comerica Bank (“Comerica”) (the “Comerica Loan Agreement”). In February 2024, the Company terminated the Comerica Loan Agreement. The Company did not owe anything outstanding on the line of credit at the time of termination and does not owe anything further to Comerica. See Note 19, Revolving Line of Credit . Also in October 2021, the Company entered into an $ 8.0 million term loan with BroadOak Fund V, L.P. (“BroadOak”) (the “Term Loan”), the proceeds of which were used to repay in full at their maturity the existing secured promissory note with Ampersand Capital Partners (“Ampersand”) and 1315 Capital II, L.P (“1315 Capital”). 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 Term Loan balance. The Term Loan has been subsequently amended. See Note 13, Notes Payable , for more details. At December 31, 2024, the Company has a $ 4.4 million principal balance of notes payable that required the principal to be paid on or before the maturity date of June 30, 2025. In January 2025, the Company had the terms of the Loan Agreement updated. See Note 21, Subsequent Events , for more details. Further, along with many laboratories, the Company may be affected by the Proposed Local Coverage Determination (“LCD”) DL39365, which is currently under consideration by our local Medicare Administrative Contractor, Novitas. If finalized, this Proposed LCD, which governs “Genetic Testing for Oncology,” could impact the existing Medicare coverage for one of our molecular tests, PancraGEN ® . On June 5, 2023, 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 ® . On July 29, 2024, the Company announced that the Center for Medicare and Medicaid Services (“CMS”) granted Novitas an undefined extension to the final decision for the LCD. As a result, the Company was able to continue offering PancraGEN ® and the related Point2 ® fluid chemistry tests for amylase, CEA, and glucose for all of 2024. F- 17 On January 9, 2025, the Company announced the new LCD established non-coverage for its PancraGEN ® test, and it would stop offering the test and would not accept specimens for first-line fluid chemistry and PancraGEN ® testing after February 7, 2025. As a result of the established non-coverage for PancraGEN ® , the Company announced, in January 2025, that its board of directors had approved a restructuring and cost-savings plan to reduce operating costs and better align its workforce with the loss of PancraGEN ® (the “Restructuring Plan”). On January 27, 2025, the Company announced that CMS had directed its Medicare Administrative Contractors, Novitas and First Coast Service Options, Inc., to delay implementation of the Genetic Testing for Oncology LCD (L39365), from February 23, 2025 until April 24, 2025. The Company stated that this change of effective date will allow the Trump administration time to fully review the proposed policy changes, re-evaluate for themselves the supporting clinical evidence for the PancraGEN ® assay, and fully assess the negative impact on patient care if the currently proposed LCD comes into effect. As a result of CMS’ determination to delay implementation of the Genetic Testing for Oncology LCD (L39365), the Company is re-evaluating certain parts of the Restructuring Plan and will determine what parts will or will not be postponed or cancelled. For the year ended December 31, 2024, the Company had operating income from continuing operations of $ 8.1 million. As of December 31, 2024, the Company had cash and cash equivalents of $ 1.5 million, total current assets of $ 11.8 million and current liabilities of $ 10.6 million. As of March 21, 2025, the Company had approximately $ 1.3 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. The Company may seek an uplisting of its common stock to Nasdaq, but no assurances can be given that a Nasdaq listing will be achieved. 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. 5. Discontinued Operations Liabilities classified as discontinued operations as of both December 31, 2024 and December 31, 2023 consists of accrued expenses which are liabilities related to the former Commercial Services business unit. F- 18 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, 2024 and 2023. Schedule of Components of Assets and Liabilities and Revenue Classified as Discontinued 2024 2023 For The Years Ended December 31, 2024 2023 (as restated) Revenue, net $ - $ - Loss from discontinued operations - ( 43 ) Income tax expense 244 267 Loss from discontinued operations, net of tax $ ( 244 ) $ ( 310 ) The income tax expense for the years ended December 31, 2024 and December 31, 2023 primarily pertained to the interest accrued on uncertain tax position liabilities. There were no cash flows associated with discontinued operations in 2024. 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. There was no depreciation and amortization expense within discontinued operations for the years ended December 31, 2024 and December 31, 2023. 6. 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. 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. F- 19 Schedule of Financial Instrument Measured On Recurring Basis As of December 31, 2024 Fair Value Measurements Carrying Fair As of December 31, 2024 Amount Value Level 1 Level 2 Level 3 Liabilities: Note payable: BroadOak loan $ 4,400 $ 4,290 $ - $ - $ 4,290 $ 4,400 $ 4,290 $ - $ - $ 4,290 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 (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. This liability was settled in 2024. 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 to Fair Value/ December 31, 2023 Payments Accretion/Interest Accrued Mark to Market December 31, 2024 Asuragen $ 453 $ ( 487 ) $ 34 $ - $ - BroadOak loans 9,343 ( 5,600 ) - 547 4,290 $ 9,796 $ ( 6,087 ) $ 34 $ 547 $ 4,290 F- 20 7. Property and Equipment Property and equipment consisted of the following as of December 31, 2024 and 2023: Schedule of Property and Equipment 2024 2023 December 31, 2024 2023 Furniture and fixtures $ 83 $ 69 Lab and office equipment 3,126 2,510 Computer equipment 261 233 Internal-use software 253 253 Leasehold improvements 483 269 Property and equipment 4,206 3,334 Less accumulated depreciation and amortization ( 2,845 ) ( 2,544 ) Net property and equipment $ 1,361 $ 790 Depreciation and amortization expense from continuing operations was approximately $ 0.3 million and $ 0.2 million for the years ended December 31, 2024 and 2023, respectively. There was $ 20,000 and zero internal-use software amortization expense included in depreciation and amortization expense in 2024 and 2023, respectively, and $ 0.1 million of internal use unamortized software costs at December 31, 2024 and December 31, 2023, respectively. 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, 2024 and 2023 was approximately $ 0.7 million and $ 0.8 million, respectively. Total cash paid under these agreements for the years ended December 31, 2024 and 2023 was approximately $ 0.7 million and $ 0.8 million, respectively. The table below presents the lease-related assets and liabilities recorded in the Consolidated Balance Sheets: Schedule of Lease related Assets and Liabilities Classification on the Balance Sheet December 31, 2024 December 31, 2023 Assets Operating lease assets Operating lease right of use assets 1,613 1,864 Total lease assets $ 1,613 $ 1,864 Liabilities Current Operating lease liabilities Other accrued expenses 383 377 Total current lease liabilities Other accrued expenses $ 383 $ 377 Noncurrent Operating lease liabilities Operating lease liabilities, net of current portion 1,183 1,472 Total long-term lease liabilities 1,183 1,472 Total lease liabilities $ 1,566 $ 1,849 F- 21 The weighted average remaining lease term for the Company’s operating leases was 3.5 years as of December 31, 2024 and 4.3 years as of December 31, 2023 and the weighted average discount rate for those leases was 12.0 % and 11.8 % as of December 31, 2024 and December 31, 2023, 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, 2024: Schedule of Maturities of Operating Lease Liabilities Operating Leases 2025 $ 550 2026 550 2027 550 2028 275 Total minimum lease payments 1,925 Less: amount of lease payments representing effects of discounting 359 Present value of future minimum lease payments 1,566 Less: current obligations under leases 383 Long-term lease obligations $ 1,183 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, 2024 and December 31, 2023 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, 2024 and 2023: Schedule of Other Accrued Expenses December 31, 2024 December 31, 2023 (as restated) Accrued royalties $ - $ 230 Contingent consideration - 453 Operating lease liability 383 377 Accrued sales and marketing 22 43 Accrued lab costs 173 68 Accrued professional fees 458 241 Taxes payable 262 261 Unclaimed property 35 35 All others 466 455 Total other accrued expenses $ 1,799 $ 2,163 Other long-term liabilities consisted of uncertain tax positions as of December 31, 2024 and 2023. F- 22 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. Preferred Stock 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 had a conversion price of $ 6.00 . On October 10, 2024, the Company and the Investors entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which the Investors exchanged (the “Exchange”) an aggregate of 47,000 shares of the Company’s Series B Preferred Stock, comprised of 28,000 shares of Series B Preferred Stock held by Ampersand and 19,000 shares of Series B Preferred Stock held by 1315 Capital, which represented all of the Company’s issued and outstanding Series B Preferred Stock, for 47,000 newly created shares of Series C Preferred Stock, at an issuance price per share of $ 1,000 . In the Exchange, Ampersand received 28,000 shares of Series C Preferred Stock and 1315 received 19,000 shares of Series C Preferred Stock. The Company recorded approximately $ 0.2 million in issuance costs related to this transaction. F- 23 The Series C Preferred Stock is convertible into the Company’s common stock at a conversion price of $ 2.02 per share of common stock (subject to further adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization affecting such shares) which was the closing price of the common stock on the date of the Exchange Agreement. The Series C Preferred Stock does not have a liquidation preference over the common stock in the event of a sale or dissolution of the Company, does not have director designation rights and includes limited customary protective provisions. The Series B Preferred Stock had a conversion price of $ 6.00 per share of common stock and included additional protective provisions not applicable to the Series C Preferred Stock, including (i) limitations on the Board to declare dividends, (ii) director designation rights for each of the Investors, (iii) liquidation rights of holders upon “deemed liquidation” events, including a liquidation preference over the common stock, (iv) limitations on the ability to authorize, issue or create debt securities, (v) limitations on the ability to enter into mergers or acquisitions and (vi) limitations on the ability to conduct public offerings of the Company’s common stock. 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 C Preferred Stock will be entitled to cast the number of votes equal to the number of whole shares of Common Stock, into which the shares of Series C 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, holders of Series C Preferred Stock will vote together with the holders of Common Stock as a single class and on an as-converted to Common Stock basis. Director Designation Rights The Series C Preferred Stock does not have director designation rights. 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 C 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 the product of the Series C Conversion Ratio (the “Series C Conversion Ratio”) and the number of shares of Series C Preferred Stock to be converted. The Series C Conversion Ratio is calculated by dividing the Stated Value per share of Series C Preferred Stock by the Series C Conversion Price. The Series C Conversion Ratio is subject to adjustment in the event of any stock dividend, stock split, combination, or other similar recapitalization which results in the adjustment of the Series C Conversion Price. The aggregate number of shares of Common Stock that may be issued through conversion of all of the Exchange Shares is 23,267,326 shares (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization affecting such shares). Mandatory Conversion Immediately prior to the Company’s listing of Common Stock on The Nasdaq Stock Market, all outstanding shares of Series C Preferred Stock shall automatically convert into a number of shares of Common Stock equal to the product of the Series C Conversion Ratio and the number of shares of Series C Preferred Stock owned by each holder. F- 24 Liquidation Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series C Preferred Stock then outstanding will be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders on a pari passu basis with the holders of the Common Stock of the Company. As of December 31, 2024, there were 47,000 Series C Preferred Stock issued and outstanding and as of December 31, 2023, there were 47,000 Series B Preferred Stock issued and outstanding. 13. Notes Payable BroadOak Loan On October 29, 2021, the Company and its subsidiaries entered into the Term Loan with BroadOak, providing for a term loan in the aggregate principal amount of $ 8,000,000 . 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 19, 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 Term Loan 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 Term Loan also contains customary events of default. The Company concluded that the Term Loan 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 stockholders’ deficit. Accordingly, the Company elected the fair value option for the Note. In May 2022, the Company issued a convertible note to BroadOak, pursuant to which BroadOak funded a term loan in the aggregate principal amount of $ 2.0 million, which was converted into a subordinated term loan and was added to the outstanding balance of the Term Loan. On October 24, 2023, the Company entered into a Second Amendment to Loan and Security Agreement (the “Second Amendment”) with BroadOak. The primary changes to the original Term Loan 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 Term Loan). See above regarding the Terminal Payment. ● Effective November 1, 2023, the interest rate under the Term Loan 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”). ● The Company had 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 agreed to the extension, the Loan Maturity Date would automatically be extended. F- 25 The Second Amendment was treated as a debt modification which is accounted for prospectively. Since the Term 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. On March 29, 2024, the Company entered into a Third Amendment to Loan and Security Agreement with BroadOak (the “Third Amendment”). The primary changes to the Second Amendment were as follows: ● The maturity date was extended to June 30, 2025. ● Beginning April 1, 2024, the Company made $ 500,000 monthly payments with the remaining loan balance due on the new maturity date. The Third Amendment was treated as a debt modification which is accounted for prospectively. Since the Term Loan is carried at fair value under the fair value option, the Third 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 first quarter 2024 fair value calculation. The balance of the loan outstanding at December 31, 2024 was $ 4.4 million. In January 2025, the Company entered into a Fourth Amendment of the Term Loan. See Note 21, 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. F- 26 The Company began an employee stock purchase plan in 2020. 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, 2024, the Company has reserved 481,494 shares of its common stock for issuance under our 2019 Equity Incentive Plan, 1,000,007 shares of its common stock for issuance under our Employee Stock Purchase Plan and 1,796,268 additional shares available for future grants of awards under its 2019 Equity Incentive Plan. 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 2024 or 2023. There were no options exercised in 2024 or 2023. Stock-based compensation from continuing operations for the years ended December 31, 2024 and 2023 is as follows: Schedule of Share-Based Compensation Arrangements by Share-Based Payment Award 2024 2023 RSUs and restricted stock $ 199 $ 313 Performance-based awards - 58 Options 92 259 Total stock-based compensation expense $ 291 $ 630 A summary of stock option activity for the year ended December 31, 2024, 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, 2024 455,844 $ 6.52 6.47 $ - Granted - - - - Forfeited or expired ( 179,020 ) 5.50 - - Outstanding at December 31, 2024 276,824 7.18 5.49 - Exercisable at December 31, 2024 264,484 7.28 5.42 - Vested and expected to vest 276,523 7.19 5.49 - F- 27 A summary of the change in of the Company’s non-vested options for the year ended December 31, 2024 is presented below: Schedule of Non Vested Option Activity Shares Weighted- Average Grant Date Fair Value Nonvested at January 1, 2024 119,018 $ 4.55 Granted - - Vested ( 29,344 ) 4.77 Forfeited ( 77,334 ) 4.47 Nonvested at December 31, 2024 12,340 $ 4.50 The aggregate fair value of options vested during the years ended December 31, 2024 and 2023 was $ 0.1 million and $ 0.6 million, respectively. The weighted-average grant date fair value of options vested during the year ended December 31, 2023 was $ 4.70 . 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, 2024 236,844 $ 2.14 0.84 $ 255,792 Granted 60,000 1.04 - - Vested ( 92,174 ) 2.47 - - Forfeited - - - - Nonvested at December 31, 2024 204,670 $ 1.66 0.79 $ 552,609 The aggregate fair value of restricted stock units vested during each of the years ended December 31, 2024 and 2023 was $ 0.2 million and $ 0.3 million, respectively. As of December 31, 2024, there was approximately $ 0.1 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. Segments The Company operates and manages its business as a single reporting segment. The business provides esoteric molecular diagnostic testing, and pathology services to aid physicians in their evaluation of cancer risk in patients with indeterminate biopsies and a perceived high risk of cancer from clinical features. We develop and commercialize genomic tests and related first-line assays that can personalize medicine to help improve patient diagnosis and management. The Company’s chief operating decision maker (“CODM”) is the chief executive officer. The CODM assesses performance for the segment and decides how to allocate resources based on consolidated net income that is also reported on the consolidated statements of operations. The monitoring of budgeted versus actual results is used in assessing performance of the segment and in establishing resource allocation across the organization. F- 28 The measure of segment assets is reported on the consolidated balance sheet as total consolidated assets. All the Company’s long-lived assets are located in the United States. The accounting policies of the segment are the same as those described in Note 1, Nature of Business and Significant Accounting Policies included in this Annual Report on Form 10-K. The following table presents reportable segment profit and loss, including significant expense categories, attributable to the Company’s reportable segment for the periods presented: Schedule of Reconciliation of Profit (Loss) from Segments to Consolidated 2024 2023 For The Years Ended December 31, 2024 2023 (as restated) Revenue, net: $ 46,926 $ 40,036 Less: Cost of revenue: Fixed 6,790 5,763 Variable 10,211 9,217 Sales and marketing 11,655 10,233 Research and development 676 636 General and administrative 9,486 9,363 Other operating expenses - 868 Interest & other expense, net 1,158 1,675 Provision for income taxes 4 17 Segment net income 6,946 2,264 Reconciliation of profit or loss: Loss on discontinued operations ( 244 ) ( 310 ) Consolidated net income $ 6,702 $ 1,954 Adjusted EBITDA, a non-GAAP financial measure, is a metric used by the CODM to measure cash flow of the ongoing business. Adjusted EBITDA is defined as income or loss from continuing operations, plus depreciation and amortization, non-cash stock-based compensation, interest and taxes, and other non-cash expenses including asset impairment costs, change in fair value of contingent consideration, and change in fair value of notes payable. The table below includes a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure. F- 29 Reconciliation of Adjusted EBITDA (Unaudited) ($ in thousands) Schedule of Reconciliation of Adjusted EBITDA 2024 2023 Years Ended December 31, 2024 2023 (as restated) Income from continuing operations (GAAP Basis) $ 6,946 $ 2,264 Depreciation and amortization 300 1,026 Stock-based compensation 291 630 Tax expense 4 17 Interest accretion expense 34 112 Financing interest and related costs 625 896 Interest income ( 48 ) ( 53 ) Change in fair value of note payable 547 678 Change in fair value of contingent consideration - 7 Adjusted EBITDA $ 8,699 $ 5,577 16. 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, 2024 and 2023, respectively. For the years ended December 31, 2024 and December 31, 2023, revenue from Medicare was approximately 36 % and 41 % of total revenue, respectively. Schedule of Revenue by Major Customers Years Ended December 31, Customer 2024 2023 (as restated) Medicare $ 17,008 $ 16,415 Commercial Payors $ 10,782 $ 9,529 Client Billings $ 10,951 $ 8,167 Medicare Advantage $ 7,556 $ 5,605 F- 30 17. Income Taxes The provision for income taxes on continuing operations for the years ended December 31, 2024 and 2023 is comprised of the following: Schedule of Components of Income Tax Expense (Benefit) 2024 2023 Current: Federal $ - $ - State 4 17 Total current 4 17 Deferred: Federal - - State - - Total deferred - - Provision for income taxes $ 4 $ 17 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, 2024 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, 2024 and 2023 are as follows: Schedule of Deferred Tax Assets and Liabilities 2024 2023 (as restated) Deferred tax assets: Federal net operating loss carryforwards $ 24,148 $ 25,006 State net operating loss carryforwards 3,288 3,541 Compensation 2,034 2,021 Allowances and reserves 474 421 Intangible assets 2,624 3,201 State taxes 1,094 1,049 Credit carryforward 1 1 163(j) interest 1,130 1,326 Deferred revenue 92 94 Capitalized 174 350 268 Valuation allowance ( 35,067 ) ( 36,907 ) Gross deferred tax assets 168 21 Deferred tax liability: Property and equipment ( 156 ) ( 17 ) Leases ( 12 ) ( 4 ) Deferred tax liability-net valuation allowance $ - $ - The Company’s deferred tax asset and deferred tax liabilities as of both December 31, 2024 and 2023 periods was $ 0 as they are fully offset by a valuation allowance. The NOL carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. During 2021, the Company completed a Section 382 analysis of the available NOLs under Section 382 of the Internal Revenue Code and determined that the Company underwent an ownership change on March 30, 2017 and July 15, 2019. As a result, NOLs attributable to the pre-ownership change are subject to a substantial annual limitation under Section 382. The Company has approximately $ 115.0 million of federal net operating losses after adjusting for the impact of the Section 382 ownership change. Federal Net Operating Losses of $ 66.5 million are subject to annual limitation for ownership changes and the Company is utilizing $ 4.0 million of the available amount during the current year. The remaining $ 52.5 million of NOLs incurred post July 15, 2019 may be subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period. These NOLs can be carried forward indefinitely, but the deductibility of such federal NOLs are limited to 80% of Federal Taxable Income. The Company has approximately $ 55.1 million of state net operating losses carryforwards after adjusting for the impact of the Section 382 ownership change. Current state net operating losses not utilized begin to expire this year. F- 31 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 2024 2023 (as restated) Federal statutory rate 21.0 % 21.0 % State income tax rate, net of Federal tax benefit 3.0 % 2.8 % Meals and entertainment 0.5 % 1.0 % Valuation allowance ( 24.5 )% ( 24.1 )% Effective tax rate 0.0 % 0.7 % The following table summarizes the change in uncertain tax benefit reserves for the two years ended December 31, 2024: Schedule of Unrecognized Tax Benefits Reserves Roll Forward Unrecognized Tax Benefits Balance of unrecognized benefits as of January 1, 2023 $ 877 Additions for tax positions of prior years - Balance as of December 31, 2023 $ 877 Additions for tax positions of prior years - Balance as of December 31, 2024 $ 877 As of both December 31, 2024 and 2023, 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, 2024 and 2023 was $ 0.9 million. F- 32 The Company recognized interest and penalties of $ 0.4 million, and a release of $ 0.2 million related to uncertain tax positions in income tax expense during the year ended December 31, 2024. The Company recognized interest and penalties of $ 0.2 million, and there was no release related to uncertain tax positions in income tax expense during the year ended December 31, 2023. At December 31, 2024 and 2023, accrued interest and penalties, net were $ 4.2 million and $ 4.0 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, 2024: Schedule of Tax Years Subject to Examination Jurisdiction Tax Years Federal 2020 – 2024 State and Local 2019 – 2024 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, 2024. 18. 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, 2024 and 2023 are as follows (rounded to thousands): Schedule of Basic and Diluted Net Loss Per Share 2024 2023 Years Ended December 31, 2024 2023 Basic weighted average number of common shares 4,387 4,317 Potential dilutive effect of stock-based awards 35 47 Dilutive effect of preferred stock 11,312 - Diluted weighted average number of common shares 15,734 4,364 The following outstanding stock-based awards were excluded from the computation of the effect of dilutive securities on income 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 2024 2023 Years Ended December 31, 2024 2023 Options 277 456 Restricted stock units (RSUs) 169 237 Anti-dilutive securities 446 693 19. 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 could use the proceeds of the Credit Facility for working capital and other general corporate purposes. F- 33 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 providing for a revolving credit facility of up to $ 5,000,000 . In February 2024, the Company terminated the Comerica Loan Agreement. The Company did not owe anything outstanding on the line of credit at the time of termination and does not owe anything further to Comerica. 20. Supplemental Cash Flow Information Supplemental Disclosure of Other Cash Flow Information (in thousands) Supplemental Cash Flow Information Years Ended December 31, 2024 2023 Cash paid for taxes $ 274 $ 270 Cash paid for interest $ 625 $ 1,092 Supplemental Disclosures of Non Cash Activities (in thousands) 2024 2023 Years Ended December 31, 2024 2023 Purchase of property and equipment included in accounts payable $ - $ 5 Lease remeasurement 177 - Conversion of preferred shares from Series B to Series C 46,375 - 21. Subsequent Events LCD Update On January 9, 2025, the Company announced the new LCD established non-coverage for its PancraGEN ® test, and it would stop offering the test and would not accept specimens for first-line fluid chemistry and PancraGEN ® testing after February 7, 2025. As a result of the established non-coverage for PancraGEN ® , the Company announced that its board of directors had approved a restructuring and cost-savings plan to reduce operating costs and better align the Company workforce with the loss of PancraGEN ® . On January 27, 2025, the Company announced that CMS had directed its Medicare Administrative Contractors, Novitas and First Coast Service Options, Inc., to delay implementation of the Genetic Testing for Oncology LCD (L39365), from February 23, 2025 until April 24, 2025. The Company stated that this change of effective date will allow the Trump administration time to fully review the proposed policy changes, re-evaluate for themselves the supporting clinical evidence for the PancraGEN ® assay, and fully assess the negative impact on patient care if the currently proposed LCD comes into effect. F- 34 BroadOak Amendment On January 14, 2025, the Company entered into a Fourth Amendment to the Loan and Security Agreement with BroadOak, extending the loan maturity date to December 31, 2025. The primary changes to the Third Amendment were as follows: ● The maturity date was extended to December 31, 2025. ● Beginning July 1, 2025, and continuing through December 1, 2025, the Company will make monthly interest-only payments with the remaining loan balance due on the new maturity date. 22. Restatement of Unaudited Quarterly Results The financial results data, presented on a quarterly basis for the years ended December 31, 2024 and 2023 are unaudited. This data has been prepared in accordance with U.S. GAAP for interim financial information and, in the opinion of management, reflect all adjustments necessary for a fair statement of the results of operations for the periods presented. We have restated herein our previously issued unaudited quarterly financial results for the quarters ended March 31, 2024 and 2023, June 30, 2024 and 2023 and September 30, 2024 and 2023. The information has been prepared on the same basis as the consolidated financial statements. The related adjustments to the unaudited quarterly financial information resulting from similar adjustments discussed in Note 2 are also presented below. See Note 2 for descriptions of the misstatements in each category of restatements referenced by (a) and (b). Presented below are the restated condensed consolidated balance sheets, condensed consolidated statements of operations, consolidated statements of stockholders’ deficit and condensed consolidated statements of cash flows for each of the interim periods within the years ended December 31, 2024 and 2023. F- 35 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) Schedule of Restatement Unaudited Quarterly Results As Previously Reported Restatement Amount Restatement Reference As Restated March 31, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 5,596 $ - $ 5,596 Accounts receivable 4,715 102 (b) 4,817 Other current assets 2,173 - 2,173 Total current assets 12,484 102 12,586 Property and equipment, net 506 - 506 Other intangible assets, net 544 - 544 Operating lease right of use assets 2,298 - 2,298 Other long-term assets 45 - 45 Total assets $ 15,877 $ 102 $ 15,979 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,582 $ - $ 1,582 Accrued salary and bonus 888 - 888 Other accrued expenses 8,323 ( 5,042 ) (a) 3,281 Note payable at fair value, current Line of credit - current 2,200 - 2,200 Current liabilities of discontinued operations 858 - 858 Total current liabilities 13,851 ( 5,042 ) 8,809 Contingent consideration 368 - 368 Operating lease liabilities, net of current portion 1,748 - 1,748 Note payable at fair value 11,132 - 11,132 Other long-term liabilities 4,780 - 4,780 Total liabilities 31,879 ( 5,042 ) 26,837 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; 4,390,826 shares issued and 4,311,414 shares outstanding; 405 - 405 Additional paid-in capital 187,708 - 187,708 Accumulated deficit ( 248,666 ) 5,144 (a) (b) ( 243,522 ) Treasury stock, at cost ( 79,412 shares) ( 1,985 ) - ( 1,985 ) Total stockholders’ deficit ( 62,538 ) 5,144 ( 57,394 ) Total liabilities and stockholders’ deficit ( 30,659 ) 102 ( 30,557 ) Total liabilities, preferred stock and stockholders’ deficit $ 15,877 $ 102 $ 15,979 The accompanying notes are an integral part of these condensed consolidated financial statements F- 36 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended March 31, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 9,826 $ ( 171 ) (b) $ 9,655 Cost of revenue 3,848 ( 334 ) (a) 3,514 Gross profit 5,978 163 6,141 Operating expenses: Sales and marketing 2,342 - 2,342 Research and development 149 - 149 General and administrative 2,494 - 2,494 Acquisition related amortization expense 318 - 318 Total operating expenses 5,303 - 5,303 Operating income from continuing operations 675 163 838 Interest accretion expense ( 35 ) - ( 35 ) Note payable interest expense ( 225 ) - ( 225 ) Other expense, net 19 - 19 Income from continuing operations before tax 434 163 597 Provision for income taxes 4 - 4 Income from continuing operations 430 163 593 Loss from discontinued operations, net of tax ( 79 ) - ( 79 ) Net income $ 351 $ 163 $ 514 Basic net income (loss) per share of common stock: From continuing operations $ 0.10 $ 0.04 $ 0.14 From discontinued operations ( 0.02 ) - ( 0.02 ) Net income (loss) per basic share of common stock $ 0.08 $ 0.04 $ 0.12 Diluted net income (loss) per share of common stock: From continuing operations $ 0.10 $ 0.04 $ 0.14 From discontinued operations ( 0.02 ) - ( 0.02 ) Net income (loss) per diluted share of common stock $ 0.08 $ 0.04 $ 0.12 Weighted average number of common shares and common share equivalents outstanding: Basic 4,307 4,307 4,307 Diluted 4,308 4,308 4,308 The accompanying notes are an integral part of these condensed consolidated financial statements F- 37 Consolidated Statements of Stockholders’ Deficit (unaudited) Additional Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2023 as reported 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 248,666 ) $ ( 62,538 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 4,981 4,981 Cumulative adjustments to net income - - - - - 163 163 Balance -March 31, 2023 as restated 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 243,522 ) $ ( 57,394 ) F- 38 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Three Months Ended March 31, 2023 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 351 $ 163 (a) (b) $ 514 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 356 - 356 Interest accretion expense 35 - 35 Amortization of deferred financing fees 14 - 14 Stock-based compensation 192 - 192 Bad debt expense reversal Credit loss expense Change in fair value of note payable ( 33 ) - ( 33 ) Amortization on operating lease right of use asset Other changes in operating assets and liabilities: - Accounts receivable 317 171 (b) 488 Other current assets 107 - 107 Operating lease right of use assets Accounts payable 532 - 532 Accrued salaries and bonus ( 568 ) - ( 568 ) Other accrued expenses ( 249 ) ( 334 ) (a) ( 583 ) Operating lease liabilities Long-term liabilities 79 - 79 Net cash provided by operating activities 1,133 - 1,133 Cash Flows From Investing Activity Proceeds from sale of Interpace Pharma Solutions, net Working capital adjustment on sale of Interpace Pharma Solutions Purchase of property and equipment ( 65 ) - ( 65 ) Net cash used in investing activities ( 65 ) - ( 65 ) Cash Flows From Financing Activities Payments made on note payable Payments on line of credit ( 300 ) - ( 300 ) Net cash (used in) provided by financing activities ( 300 ) - ( 300 ) Net increase in cash and cash equivalents 768 - 768 Cash and cash equivalents from continuing operations– beginning 4,828 - 4,828 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 4,828 $ - $ 4,828 Cash and cash equivalents from continuing operations– ending $ 5,596 $ - $ 5,596 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 5,596 $ - $ 5,596 F- 39 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) As Previously Reported Restatement Amount Restatement Reference As Restated June 30, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 5,079 $ - $ 5,079 Accounts receivable 5,529 121 (b) 5,650 Other current assets 2,367 - 2,367 Total current assets 12,975 121 13,096 Property and equipment, net 606 - 606 Other intangible assets, net 226 - 226 Operating lease right of use assets 2,090 - 2,090 Other long-term assets 45 - 45 Total assets $ 15,942 $ 121 $ 16,063 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,689 $ - $ 1,689 Accrued salary and bonus 1,127 - 1,127 Other accrued expenses 8,391 ( 5,407 ) (a) 2,984 Line of credit - current 1,500 - 1,500 Current liabilities of discontinued operations 858 - 858 Total current liabilities 13,565 ( 5,407 ) 8,158 Contingent consideration 231 - 231 Operating lease liabilities, net of current portion 1,646 - 1,646 Note payable at fair value 11,307 - 11,307 Other long-term liabilities 4,863 - 4,863 Total liabilities 31,612 ( 5,407 ) 26,205 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; 4,390,826 shares issued and 4,311,414 shares outstanding; 405 - 405 Additional paid-in capital 187,865 - 187,865 Accumulated deficit ( 248,491 ) 5,528 (a) (b) ( 242,963 ) Treasury stock, at cost ( 79,412 shares) ( 1,985 ) - ( 1,985 ) Total stockholders’ deficit ( 62,206 ) 5,528 ( 56,678 ) Total liabilities and stockholders’ deficit ( 30,594 ) 121 ( 30,473 ) Total liabilities, preferred stock and stockholders’ deficit $ 15,942 $ 121 $ 16,063 The accompanying notes are an integral part of these condensed consolidated financial statements F- 40 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended June 30, 2023 For the Six Months Ended June 30, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 11,026 $ 19 (b) $ 11,045 $ 20,853 $ ( 152 ) (b) $ 20,701 Cost of revenue 4,191 ( 365 ) (a) 3,826 8,039 ( 699 ) (a) 7,340 Gross profit 6,835 384 7,219 12,814 547 13,361 Operating expenses: Sales and marketing 2,605 - 2,605 4,947 - 4,947 Research and development 186 - 186 335 - 335 General and administrative 2,894 - 2,894 5,389 - 5,389 Acquisition related amortization expense 318 - 318 635 - 635 Total operating expenses 6,003 - 6,003 11,306 - 11,306 Operating income from continuing operations 832 384 1,216 1,508 547 2,055 Interest accretion expense ( 31 ) - ( 31 ) ( 66 ) - ( 66 ) Note payable interest expense ( 228 ) - ( 228 ) ( 453 ) - ( 453 ) Other expense, net ( 174 ) - ( 174 ) ( 156 ) - ( 156 ) Income from continuing operations before tax 399 384 783 833 547 1,380 Provision for income taxes 4 - 4 8 - 8 Income from continuing operations 395 384 779 825 547 1,372 Loss from discontinued operations, net of tax ( 220 ) - ( 220 ) ( 299 ) - ( 299 ) Net income $ 175 $ 384 $ 559 $ 526 $ 547 $ 1,073 Basic net income (loss) per share of common stock: From continuing operations $ 0.09 $ 0.09 $ 0.18 $ 0.19 $ 0.13 $ 0.32 From discontinued operations ( 0.05 ) - ( 0.05 ) ( 0.07 ) - ( 0.07 ) Net income (loss) per basic share of common stock $ 0.04 $ 0.09 $ 0.13 $ 0.12 $ 0.13 $ 0.25 Diluted net income (loss) per share of common stock: From continuing operations $ 0.09 $ 0.09 $ 0.18 $ 0.19 $ 0.13 $ 0.32 From discontinued operations ( 0.05 ) - ( 0.05 ) ( 0.07 ) - ( 0.07 ) Net income (loss) per diluted share of common stock $ 0.04 $ 0.09 $ 0.13 $ 0.12 $ 0.13 $ 0.25 Weighted average number of common shares and common share equivalents outstanding: Basic 4,311 4,311 4,311 4,309 4,309 4,309 Diluted 4,316 4,316 4,316 4,313 4,313 4,313 The accompanying notes are an integral part of these condensed consolidated financial statements F- 41 Consolidated Statements of Stockholders’ Deficit (unaudited) Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2023 as reported 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 248,666 ) $ ( 62,538 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 4,981 4,981 Cumulative adjustments to net income - - - - - 163 163 Balance -March 31, 2023 as restated 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 243,522 ) $ ( 57,394 ) Balance -June 30, 2023 as reported 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,865 $ ( 248,491 ) $ ( 62,206 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 5,144 5,144 Cumulative adjustments to net income - - - - - 384 384 Balance -June 30, 2023 as restated 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,865 $ ( 242,963 ) $ ( 56,678 ) F- 42 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Six Months Ended June 30, 2023 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 526 $ 547 (a) (b) $ 1,073 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 714 - 714 Interest accretion expense 66 - 66 Amortization of deferred financing fees 28 - 28 Stock-based compensation 349 - 349 Change in fair value of note payable 142 - 142 Other changes in operating assets and liabilities: - Accounts receivable ( 497 ) 152 (b) ( 345 ) Other current assets ( 101 ) - ( 101 ) Operating lease right of use assets 349 - 349 Accounts payable 610 - 610 Accrued salaries and bonus ( 329 ) - ( 329 ) Other accrued expenses ( 138 ) ( 699 ) (a) ( 837 ) Operating lease liabilities ( 337 ) ( 337 ) Long-term liabilities 162 - 162 Net cash provided by operating activities 1,544 - 1,544 Cash Flows From Investing Activity Working capital adjustment on sale of Interpace Pharma Solutions ( 117 ) - ( 117 ) Purchase of property and equipment ( 176 ) - ( 176 ) Net cash used in investing activities ( 293 ) - ( 293 ) Cash Flows From Financing Activities Payments on line of credit ( 1,000 ) - ( 1,000 ) Net cash used in financing activities ( 1,000 ) - ( 1,000 ) Net increase in cash and cash equivalents 251 - 251 Cash and cash equivalents from continuing operations– beginning 4,828 - 4,828 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 4,828 $ - $ 4,828 Cash and cash equivalents from continuing operations– ending $ 5,079 $ - $ 5,079 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 5,079 $ - $ 5,079 F- 43 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) As Previously Reported Restatement Amount Restatement Reference As Restated September 30, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 5,032 $ - $ 5,032 Accounts receivable 4,830 246 (b) 5,076 Other current assets 1,576 - 1,576 Total current assets 11,438 246 11,684 Property and equipment, net 762 - 762 Other intangible assets, net 27 - 27 Operating lease right of use assets 1,978 - 1,978 Other long-term assets 45 - 45 Total assets $ 14,250 $ 246 $ 14,496 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,352 $ - $ 1,352 Accrued salary and bonus 1,299 - 1,299 Other accrued expenses 8,815 ( 5,710 ) (a) 3,105 Current liabilities of discontinued operations 858 - 858 Total current liabilities 12,324 ( 5,710 ) 6,614 Operating lease liabilities, net of current portion 1,556 - 1,556 Note payable at fair value 11,565 - 11,565 Other long-term liabilities 4,949 - 4,949 Total liabilities 30,394 ( 5,710 ) 24,684 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; 4,407,492 shares issued and 4,321,772 shares outstanding; 405 - 405 Additional paid-in capital 188,017 - 188,017 Accumulated deficit ( 249,105 ) 5,956 (a) (b) ( 243,149 ) Treasury stock, at cost ( 85,720 shares) ( 1,997 ) - ( 1,997 ) Total stockholders’ deficit ( 62,680 ) 5,956 ( 56,724 ) Total liabilities and stockholders’ deficit ( 32,286 ) 246 ( 32,040 ) Total liabilities, preferred stock and stockholders’ deficit $ 14,250 $ 246 $ 14,496 The accompanying notes are an integral part of these condensed consolidated financial statements F- 44 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended September 30, 2023 For the Nine Months Ended September 30, 2023 As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 9,078 $ 125 (b) $ 9,203 $ 29,931 $ ( 27 ) (b) $ 29,904 Cost of revenue 4,124 ( 303 ) (a) 3,821 12,163 ( 1,002 ) (a) 11,161 Gross profit 4,954 428 5,382 17,768 975 18,743 Operating expenses: Sales and marketing 2,498 - 2,498 7,444 - 7,444 Research and development 149 - 149 484 - 484 General and administrative 2,124 - 2,124 7,515 - 7,515 Acquisition related amortization expense 199 - 199 834 - 834 Total operating expenses 4,970 - 4,970 16,277 - 16,277 Operating (loss) income from continuing operations ( 16 ) 428 412 1,491 975 2,466 Interest accretion expense ( 26 ) - ( 26 ) ( 92 ) - ( 92 ) Note payable interest expense ( 230 ) - ( 230 ) ( 682 ) - ( 682 ) Other expense, net ( 252 ) - ( 252 ) ( 408 ) - ( 408 ) Loss (income) from continuing operations before tax ( 524 ) 428 ( 96 ) 309 975 1,284 Provision for income taxes 4 - 4 12 - 12 (Loss) income from continuing operations ( 528 ) 428 ( 100 ) 297 975 1,272 Loss from discontinued operations, net of tax ( 86 ) - ( 86 ) ( 385 ) - ( 385 ) Net (loss) income $ ( 614 ) $ 428 $ ( 186 ) $ ( 88 ) $ 975 $ 887 Basic net income (loss) per share of common stock: From continuing operations $ ( 0.12 ) $ 0.10 $ ( 0.02 ) $ 0.07 $ 0.23 $ 0.29 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.09 ) - ( 0.09 ) Net income (loss) per basic share of common stock $ ( 0.14 ) $ 0.10 $ ( 0.04 ) $ ( 0.02 ) $ 0.23 $ 0.21 Diluted net income (loss) per share of common stock: From continuing operations $ ( 0.12 ) $ 0.10 $ ( 0.02 ) $ 0.07 $ 0.22 $ 0.29 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.09 ) - ( 0.09 ) Net income (loss) per diluted share of common stock $ ( 0.14 ) $ 0.10 $ ( 0.04 ) $ ( 0.02 ) $ 0.22 $ 0.20 Weighted average number of common shares and common share equivalents outstanding: Basic 4,319 4,319 4,319 4,313 4,313 4,313 Diluted 4,319 4,319 4,319 4,355 4,355 4,355 The accompanying notes are an integral part of these condensed consolidated financial statements F- 45 Consolidated Statement of Stockholders’ Deficit (unaudited) Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2023 as reported 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 248,666 ) $ ( 62,538 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 4,981 4,981 Cumulative adjustments to net income - - - - - 163 163 Balance -March 31, 2023 as restated 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,708 $ ( 243,522 ) $ ( 57,394 ) Balance -June 30, 2023 as reported 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,865 $ ( 248,491 ) $ ( 62,206 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 5,144 5,144 Cumulative adjustments to net income - - - - - 384 384 Balance -June 30, 2023 as restated 4,390,826 $ 405 79,412 $ ( 1,985 ) $ 187,865 $ ( 242,963 ) $ ( 56,678 ) Balance -September 30, 2023 as reported 4,407,492 $ 405 85,720 $ ( 1,997 ) $ 188,017 $ ( 249,105 ) $ ( 62,680 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 5,528 5,528 Cumulative adjustments to net income - - - - - 428 428 Balance -September 30, 2023 as restated 4,407,492 $ 405 85,720 $ ( 1,997 ) $ 188,017 $ ( 243,149 ) $ ( 56,724 ) F- 46 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Nine Months Ended September 30, 2023 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net (loss) income $ ( 88 ) $ 975 (a) (b) $ 887 Adjustments to reconcile net (loss) income to net cash used in operating activities: Depreciation and amortization 954 - 954 Interest accretion expense 92 - 92 Amortization of deferred financing fees 42 - 42 Stock-based compensation 501 - 501 Change in fair value of note payable 400 - 400 Other changes in operating assets and liabilities: - Accounts receivable 202 27 (b) 229 Other current assets 176 - 176 Operating lease right of use assets 461 - 461 Accounts payable 228 - 228 Accrued salaries and bonus ( 157 ) - ( 157 ) Other accrued expenses ( 118 ) ( 1,002 ) (a) ( 1,120 ) Operating lease liabilities ( 292 ) ( 292 ) Long-term liabilities 248 - 248 Net cash provided by operating activities 2,649 - 2,649 Cash Flows From Investing Activity Proceeds from sale of Interpace Pharma Solutions, net 500 - 500 Working capital adjustment on sale of Interpace Pharma Solutions ( 117 ) - ( 117 ) Purchase of property and equipment ( 328 ) - ( 328 ) Net cash provided by investing activities 55 - 55 Cash Flows From Financing Activities Payments on line of credit ( 2,500 ) - ( 2,500 ) Net cash used in financing activities ( 2,500 ) - ( 2,500 ) Net increase in cash and cash equivalents 204 - 204 Cash and cash equivalents from continuing operations– beginning 4,828 - 4,828 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 4,828 $ - $ 4,828 Cash and cash equivalents from continuing operations– ending $ 5,032 $ - $ 5,032 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 5,032 $ - $ 5,032 F- 47 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) As Previously Reported Restatement Amount Restatement Reference As Restated March 31, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 2,812 $ - $ 2,812 Accounts receivable 5,006 - 5,006 Other current assets 1,598 - 1,598 Total current assets 9,416 - 9,416 Property and equipment, net 925 - 925 Operating lease right of use assets 1,756 - 1,756 Other long-term assets 45 - 45 Total assets $ 12,142 $ - $ 12,142 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,363 $ - $ 1,363 Accrued salary and bonus 878 - 878 Other accrued expenses 8,574 ( 6,373 ) (a) 2,201 Note payable at fair value, current 7,498 - 7,498 Current liabilities of discontinued operations 660 - 660 Total current liabilities 18,973 ( 6,373 ) 12,600 Operating lease liabilities, net of current portion 1,359 - 1,359 Note payable at fair value 1,343 - 1,343 Other long-term liabilities 5,072 - 5,072 Total liabilities 26,747 ( 6,373 ) 20,374 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; 4,487,157 shares issued and 4,376,398 shares outstanding; 406 - 406 Additional paid-in capital 188,224 - 188,224 Accumulated deficit ( 247,747 ) 6,373 (a) ( 241,374 ) Treasury stock, at cost ( 110,759 shares) ( 2,024 ) - ( 2,024 ) Total stockholders’ deficit ( 61,141 ) 6,373 ( 54,768 ) Total liabilities and stockholders’ deficit ( 34,394 ) - ( 34,394 ) Total liabilities, preferred stock and stockholders’ deficit $ 12,142 $ - $ 12,142 The accompanying notes are an integral part of these condensed consolidated financial statements F- 48 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended March 31, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 10,273 $ ( 95 ) (b) $ 10,178 Cost of revenue 4,202 ( 335 ) (a) 3,867 Gross profit 6,071 240 6,311 Operating expenses: Sales and marketing 2,821 - 2,821 Research and development 137 - 137 General and administrative 2,239 - 2,239 Total operating expenses 5,197 - 5,197 Operating income from continuing operations 874 240 1,114 Interest accretion expense ( 19 ) - ( 19 ) Note payable interest expense ( 197 ) - ( 197 ) Other expense, net ( 82 ) - ( 82 ) Income from continuing operations before tax 576 240 816 Provision for income taxes 4 - 4 Income from continuing operations 572 240 812 Loss from discontinued operations, net of tax ( 104 ) - ( 104 ) Net income $ 468 $ 240 $ 708 Basic net income (loss) per share of common stock: From continuing operations $ 0.13 $ 0.05 $ 0.19 From discontinued operations ( 0.02 ) - ( 0.02 ) Net income (loss) per basic share of common stock $ 0.11 $ 0.05 $ 0.16 Diluted net income (loss) per share of common stock: From continuing operations $ 0.13 $ 0.05 $ 0.19 From discontinued operations ( 0.02 ) - ( 0.02 ) Net income (loss) per diluted share of common stock $ 0.11 $ 0.05 $ 0.16 Weighted average number of common shares and common share equivalents outstanding: Basic 4,370 4,370 4,370 Diluted 4,384 4,384 4,384 The accompanying notes are an integral part of these condensed consolidated financial statements F- 49 Consolidated Statement of Stockholders’ Deficit (unaudited) Shares Amount Shares Amount Capital Deficit Total Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2024 as reported 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,747 ) $ ( 61,141 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,133 6,133 Cumulative adjustments to net income - - - - - 240 240 Balance -March 31, 2024 as restated 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,507 ) $ ( 54,768 ) F- 50 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Three Months Ended March 31, 2024 2024 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 468 $ 240 $ 708 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 52 - 52 Interest accretion expense 19 - 19 Bad debt expense reversal ( 100 ) - ( 100 ) Stock-based compensation 79 - 79 Credit loss expense 26 - 26 Change in fair value of note payable 98 - 98 Amortization on operating lease right of use asset 108 108 Other changes in operating assets and liabilities: - Accounts receivable ( 49 ) 95 (b) 46 Other current assets 343 - 343 Accounts payable ( 176 ) - ( 176 ) Accrued salaries and bonus ( 1,091 ) - ( 1,091 ) Other accrued expenses 176 ( 335 ) (a) ( 159 ) Operating lease liabilities ( 115 ) ( 115 ) Long-term liabilities 104 - 104 Net cash used in operating activities ( 58 ) - ( 58 ) Cash Flows From Investing Activity Purchase of property and equipment ( 28 ) - ( 28 ) Net cash used in investing activities ( 28 ) - ( 28 ) Cash Flows From Financing Activities Payments made on note payable ( 600 ) - ( 600 ) Net cash used in financing activities ( 600 ) - ( 600 ) Net decrease in cash and cash equivalents ( 686 ) - ( 686 ) Cash and cash equivalents from continuing operations– beginning 3,498 - 3,498 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 3,498 $ - $ 3,498 Cash and cash equivalents from continuing operations– ending $ 2,812 $ - $ 2,812 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 2,812 $ - $ 2,812 F- 51 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) As Previously Reported Restatement Amount Restatement Reference As Restated June 30, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 2,019 $ - $ 2,019 Accounts receivable 6,206 - 6,206 Other current assets 1,941 - 1,941 Total current assets 10,166 - 10,166 Property and equipment, net 1,126 - 1,126 Operating lease right of use assets 1,635 - 1,635 Other long-term assets 45 - 45 Total assets $ 12,972 $ - $ 12,972 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,761 $ - $ 1,761 Accrued salary and bonus 1,243 - 1,243 Other accrued expenses 8,582 ( 6,748 ) (a) 1,834 Note payable at fair value, current 6,784 - 6,784 Current liabilities of discontinued operations 660 - 660 Total current liabilities 19,030 ( 6,748 ) 12,282 Operating lease liabilities, net of current portion 1,286 - 1,286 Other long-term liabilities 5,146 - 5,146 Total liabilities 25,462 ( 6,748 ) 18,714 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; 4,487,157 shares issued and 4,376,398 shares outstanding; 406 - 406 Additional paid-in capital 188,277 - 188,277 Accumulated deficit ( 245,685 ) 6,748 (a) ( 238,937 ) Treasury stock, at cost ( 110,759 shares) ( 2,024 ) - ( 2,024 ) Total stockholders’ deficit ( 59,026 ) 6,748 ( 52,278 ) Total liabilities and stockholders’ deficit ( 33,564 ) - ( 33,564 ) Total liabilities, preferred stock and stockholders’ deficit $ 12,972 $ - $ 12,972 The accompanying notes are an integral part of these condensed consolidated financial statements F- 52 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended June 30, 2024 For the Six Months Ended June 30, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 12,042 $ - $ 12,042 $ 22,314 $ ( 95 ) (b) $ 22,219 Cost of revenue 4,611 ( 375 ) (a) 4,236 8,812 ( 710 ) (a) 8,102 Gross profit 7,431 375 7,806 13,502 615 14,117 Operating expenses: Sales and marketing 2,887 - 2,887 5,707 - 5,707 Research and development 146 - 146 283 - 283 General and administrative 2,141 - 2,141 4,381 - 4,381 Total operating expenses 5,174 - 5,174 10,371 - 10,371 Operating income from continuing operations 2,257 375 2,632 3,131 615 3,746 Interest accretion expense ( 12 ) - ( 12 ) ( 30 ) - ( 30 ) Note payable interest expense ( 176 ) - ( 176 ) ( 373 ) - ( 373 ) Other expense, net 71 - 71 ( 12 ) - ( 12 ) Income from continuing operations before tax 2,140 375 2,515 2,716 615 3,331 Provision for income taxes 4 - 4 8 - 8 Income from continuing operations 2,136 375 2,511 2,708 615 3,323 Loss from discontinued operations, net of tax ( 74 ) - ( 74 ) ( 178 ) - ( 178 ) Net income $ 2,062 $ 375 $ 2,437 $ 2,530 $ 615 $ 3,145 Basic net income (loss) per share of common stock: From continuing operations $ 0.49 $ 0.09 $ 0.57 $ 0.62 $ 0.14 $ 0.76 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.04 ) - ( 0.04 ) Net income (loss) per basic share of common stock $ 0.47 $ 0.09 $ 0.56 $ 0.58 $ 0.14 $ 0.72 Diluted net income (loss) per share of common stock: From continuing operations $ 0.49 $ 0.09 $ 0.57 $ 0.62 $ 0.14 $ 0.76 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.04 ) - ( 0.04 ) Net income (loss) per diluted share of common stock $ 0.47 $ 0.09 $ 0.55 $ 0.58 $ 0.14 $ 0.72 Weighted average number of common shares and common share equivalents outstanding: Basic 4,376 4,376 4,376 4,373 4,373 4,373 Diluted 4,401 4,401 4,401 4,393 4,393 4,393 The accompanying notes are an integral part of these condensed consolidated financial statements F- 53 Consolidated Statement of Stockholders’ Deficit (unaudited) Shares Amount Shares Amount Capital Deficit Total Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2024 as reported 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,747 ) $ ( 61,141 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,133 6,133 Cumulative adjustments to net income - - - - - 240 240 Balance -March 31, 2024 as restated 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,507 ) $ ( 54,768 ) Balance -June 30, 2024 as reported 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,277 $ ( 245,685 ) $ ( 59,026 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,373 6,373 Cumulative adjustments to net income - - - - - 375 375 Balance -June 30, 2024 as restated 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,277 $ ( 245,310 ) $ ( 52,278 ) F- 54 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Six Months Ended June 30, 2024 2024 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 2,530 $ 615 (a) $ 3,145 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 119 - 119 Interest accretion expense 30 - 30 Bad debt expense reversal ( 100 ) - ( 100 ) Stock-based compensation 132 - 132 Credit loss expense 26 - 26 Change in fair value of note payable 41 - 41 Amortization on operating lease right of use asset 229 229 Other changes in operating assets and liabilities: - Accounts receivable ( 1,249 ) 95 (b) ( 1,154 ) Other current assets - - - Accounts payable ( 13 ) - ( 13 ) Accrued salaries and bonus ( 726 ) - ( 726 ) Other accrued expenses 337 ( 710 ) (a) ( 373 ) Operating lease liabilities ( 188 ) ( 188 ) Long-term liabilities 178 - 178 Net cash provided by operating activities 1,346 - 1,346 Cash Flows From Investing Activity Purchase of property and equipment ( 225 ) - ( 225 ) Net cash used in investing activities ( 225 ) - ( 225 ) Cash Flows From Financing Activities Payments made on note payable ( 2,600 ) - ( 2,600 ) Net cash used in financing activities ( 2,600 ) - ( 2,600 ) Net decrease in cash and cash equivalents ( 1,479 ) - ( 1,479 ) Cash and cash equivalents from continuing operations– beginning 3,498 - 3,498 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 3,498 $ - $ 3,498 Cash and cash equivalents from continuing operations– ending $ 2,019 $ - $ 2,019 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 2,019 $ - $ 2,019 The accompanying notes are an integral part of these condensed consolidated financial statements F- 55 INTERPACE BIOSCIENCES, INC. CONSOLIDATED BALANCE SHEET (unaudited, in thousands, except share and per share data) As Previously Reported Restatement Amount Restatement Reference As Restated September 30, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated ASSETS Current assets: Cash and cash equivalents $ 2,113 $ - $ 2,113 Accounts receivable 7,293 - 7,293 Other current assets 1,704 - 1,704 Total current assets 11,110 - 11,110 Property and equipment, net 1,352 - 1,352 Operating lease right of use assets 1,532 - 1,532 Other long-term assets 45 - 45 Total assets $ 14,039 $ - $ 14,039 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,701 $ - $ 1,701 Accrued salary and bonus 1,687 - 1,687 Other accrued expenses 9,033 ( 7,144 ) (a) 1,889 Note payable at fair value, current 5,688 - 5,688 Current liabilities of discontinued operations 660 - 660 Total current liabilities 18,769 ( 7,144 ) 11,625 Operating lease liabilities, net of current portion 1,189 - 1,189 Other long-term liabilities 5,227 - 5,227 Total liabilities 25,185 ( 7,144 ) 18,041 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; 4,532,991 shares issued and 4,404,795 shares outstanding; 406 - 406 Additional paid-in capital 188,363 - 188,363 Accumulated deficit ( 244,405 ) 7,144 (a) ( 237,261 ) Treasury stock, at cost ( 128,196 shares) ( 2,046 ) - ( 2,046 ) Total stockholders’ deficit ( 57,682 ) 7,144 ( 50,538 ) Total liabilities and stockholders’ deficit ( 32,497 ) - ( 32,497 ) Total liabilities, preferred stock and stockholders’ deficit $ 14,039 $ - $ 14,039 The accompanying notes are an integral part of these condensed consolidated financial statements F- 56 INTERPACE BIOSCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATION (unaudited, in thousands, except for per share data) As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated For the Three Months Ended September 30, 2024 For the Nine Months Ended September 30, 2024 As Previously Reported Restatement Amount Restatement Reference As Restated As Previously Reported Restatement Amount Restatement Reference As Restated Revenue, net $ 12,295 $ - $ 12,295 $ 34,610 $ ( 95 ) (b) $ 34,515 Cost of revenue 4,789 ( 396 ) (a) 4,393 13,602 ( 1,106 ) (a) 12,496 Gross profit 7,506 396 7,902 21,008 1,011 22,019 Operating expenses: Sales and marketing 2,864 - 2,864 8,571 - 8,571 Research and development 199 - 199 483 - 483 General and administrative 2,538 - 2,538 6,918 - 6,918 Total operating expenses 5,601 - 5,601 15,972 - 15,972 Operating income from continuing operations 1,905 396 2,301 5,036 1,011 6,047 Interest accretion expense ( 4 ) - ( 4 ) ( 34 ) - ( 34 ) Note payable interest expense ( 141 ) - ( 141 ) ( 514 ) - ( 514 ) Other expense, net ( 394 ) - ( 394 ) ( 406 ) - ( 406 ) Income from continuing operations before tax 1,366 396 1,762 4,082 1,011 5,093 Provision for income taxes 4 - 4 12 - 12 Income from continuing operations 1,362 396 1,758 4,070 1,011 5,081 Loss from discontinued operations, net of tax ( 82 ) - ( 82 ) ( 260 ) - ( 260 ) Net income $ 1,280 $ 396 $ 1,676 $ 3,810 $ 1,011 $ 4,821 Basic net income (loss) per share of common stock: From continuing operations $ 0.31 $ 0.09 $ 0.40 $ 0.93 $ 0.23 $ 1.16 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.06 ) - ( 0.06 ) Net income (loss) per basic share of common stock $ 0.29 $ 0.09 $ 0.38 $ 0.87 $ 0.23 $ 1.10 Diluted net income (loss) per share of common stock: From continuing operations $ 0.31 $ 0.09 $ 0.40 $ 0.92 $ 0.23 $ 1.15 From discontinued operations ( 0.02 ) - ( 0.02 ) ( 0.06 ) - ( 0.06 ) Net income (loss) per diluted share of common stock $ 0.29 $ 0.09 $ 0.38 $ 0.87 $ 0.23 $ 1.09 Weighted average number of common shares and common share equivalents outstanding: Basic 4,393 4,393 4,393 4,380 4,380 4,380 Diluted 4,423 4,423 4,423 4,404 4,404 4,404 The accompanying notes are an integral part of these condensed consolidated financial statements F- 57 Consolidated Statement of Stockholders’ Deficit (unaudited) Shares Amount Shares Amount Capital Deficit Total Additional Common Stock Treasury Stock Paid in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance -March 31, 2024 as reported 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,747 ) $ ( 61,141 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,133 6,133 Cumulative adjustments to net income - - - - - 240 240 Balance -March 31, 2024 as restated 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,224 $ ( 247,507 ) $ ( 54,768 ) Balance -June 30, 2024 as reported 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,277 $ ( 245,685 ) $ ( 59,026 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,373 6,373 Cumulative adjustments to net income - - - - - 375 375 Balance -June 30, 2024 as restated 4,487,157 $ 406 110,759 $ ( 2,024 ) $ 188,277 $ ( 245,310 ) $ ( 52,278 ) Balance -September 30, 2024 as reported 4,532,991 $ 406 128,196 $ ( 2,046 ) $ 188,363 $ ( 244,405 ) $ ( 57,682 ) Cumulative adjustments to accumulated deficit in prior years - - - - - 6,748 6,748 Cumulative adjustments to net income - - - - - 396 396 Balance -September 30, 2024 as restated 4,532,991 $ 406 128,196 $ ( 2,046 ) $ 188,363 $ ( 244,009 ) $ ( 50,538 ) F- 58 INTERPACE BIOSCIENCES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands) As Previously Reported Restatement Amount Restatement Reference As Restated For The Nine Months Ended September 30, 2024 2023 As Previously Reported Restatement Amount Restatement Reference As Restated Cash Flows From Operating Activities Net income $ 3,810 $ 1,011 (a) $ 4,821 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 205 - 205 Interest accretion expense 34 - 34 Bad debt expense reversal ( 100 ) - ( 100 ) Credit loss expense 26 - 26 Stock-based compensation 218 - 218 Change in fair value of note payable 445 - 445 Amortization on operating lease right of use asset 332 332 Other changes in operating assets and liabilities: - Accounts receivable ( 2,336 ) 95 (b) ( 2,241 ) Other current assets 237 - 237 Accounts payable 137 - 137 Accrued salaries and bonus ( 320 ) - ( 320 ) Other accrued expenses 870 ( 1,106 ) (a) ( 236 ) Operating lease liabilities ( 355 ) ( 355 ) Long-term liabilities 259 - 259 Net cash provided by (used in) operating activities 3,462 - 3,462 Cash Flows From Investing Activity Purchase of property and equipment ( 747 ) - ( 747 ) Net cash provided by investing activities ( 747 ) - ( 747 ) Cash Flows From Financing Activities Payments made on note payable ( 4,100 ) - ( 4,100 ) Net cash used in financing activities ( 4,100 ) - ( 4,100 ) Net decrease in cash and cash equivalents ( 1,385 ) - ( 1,385 ) Cash and cash equivalents from continuing operations– beginning 3,498 - 3,498 Cash and cash equivalents from discontinued operations– beginning - - - Cash and cash equivalents – beginning $ 3,498 $ - $ 3,498 Cash and cash equivalents from continuing operations– ending $ 2,113 $ - $ 2,113 Cash and cash equivalents from discontinued operations– ending - - - Cash and cash equivalents – ending $ 2,113 $ - $ 2,113 The accompanying notes are an integral part of these condensed consolidated financial statements F- 59