What changed in this filing

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Item 1A. Risk Factors

2025-03-27 compared with 2024-03-29 · 217 added, 142 removed, 650 unchanged (36% of the section changed)

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● We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations.

● We have incurred losses since our inception and expect to incur losses for the foreseeable future.

● We have incurred losses since our inception and may incur losses in the foreseeable future.

We cannot be certain that we will achieve or sustain profitability

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● We have been, and may continue to be, subject to costly litigation.

● Failure to Comply with Insider Trading Regulations and Policies Could Result in Significant Legal and Reputational Consequences.

● The commercial success of our products, including those we are developing, will depend upon the degree of market acceptance of these products among physicians, patients, health care payers and the medical community and on our ability to successfully market our products.

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If we are unable to establish marketing and sales capabilities and retain the proper talent to execute on our sales and marketing strategy, we may not be able to generate product revenue.

● We are subject to stringent and changing laws, regulations and standards, and contractual obligations relating to privacy, data protection, and data security.

The actual or perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or criminal penalties), fines and sanctions, private litigation and/or adverse publicity and could negatively affect our operating results and business.

● Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.

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● The issuance of our common stock to creditors or litigants may cause significant dilution to our stockholders and cause the price of our common stock to fall.

● Improper timing of equity awards could result in regulatory scrutiny and reputational harm.

Risks Related to Our Business and Strategy

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Our consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business.

We have incurred substantial operating losses and

have used cash in our operating activities for the past few years.

For the year ended December 31, 2023, the Company had a net loss of $5.8 million and net cash used in operating activities of $3.6 million.

As of December 31, 2023, the Company had an accumulated deficit of $98.2 million and working capital of $0.5 million.

We have incurred substantial operating losses and have used cash in our operating activities for the past few years.

For the year ended December 31, 2024, the Company had a net loss of $4.3 million and net cash provided by operating activities of $0.4 million.

As of December 31, 2024, the

Company had an accumulated deficit of $102.4 million and a working capital deficit of $0.8 million.

Our consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

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To date, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services.

We expect to incur net losses through at least 2024 as we further develop and commercialize our diagnostic technology.

We expect to incur net losses through at least the first half of 2025 as we further develop and commercialize our diagnostic technology.

We also expect that our selling, general and administrative expenses will increase due to the additional costs associated with market development activities and expanding our staff to sell and support our products.

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We may require significant additional financing to sustain our operations and without it we will not be able to continue operations.

At December 31, 2023, we had working capital of $0.5 million.

For the year ended December 31, 2023, we had an operating cash flow deficit of $3.6 million and a net loss of $5.8 million.

At December 31, 2024, we had a working capital deficit of $0.8 million.

For the year ended December 31, 2024, we had an operating cash flow of $0.4 million and a net loss of $4.3 million.

We do not currently have sufficient financial resources to fund our operations or those of our subsidiaries.

Therefore, we need additional funds to continue these operations.

Our primary sources of funds to meet our liquidity and capital requirements include cash on hand, funds generated from operations, funding pursuant to a sales agreement with A.G.P./Alliance Global Partners (“AGP”) and possible sales of certain receivables under our receivable factoring agreement.

Therefore, we may need additional funds to continue these operations.

Our primary sources of funds to meet our liquidity and capital requirements include cash on hand, funds generated from operations and funding pursuant to a sales agreement with A.G.P./Alliance Global Partners (“AGP”).

To facilitate ongoing operations and product development, on April 14, 2023, we entered into a sales agreement with AGP, pursuant to which we may offer and sell our common stock, par value $0.01 per share (the “Common Stock”) (the “Shares”), having aggregate sales proceeds of up to $5.8 million, to or through AGP, as sales agent (the “AGP 2023 Sales Agreement”), from time to time, in an “at the market offering” (as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended) of the Shares (the “2023 ATM Offering”).

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Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, the consequences could be a material adverse effect on our business, operating results, financial condition and prospects.

From April 14, 2023 through the date the consolidated financial statements were issued, we received approximately $0.1

million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 10,192 shares of common stock.

From April 14, 2023 through the date the consolidated financial statements were issued, we received approximately $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 11,847 shares of common stock.

We have approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.

On January 19, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $865,889 of shares of our common stock.

On April 8, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $1,061,478

of shares of our common stock.

We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement.

On March 27, 2023, we entered into a receivables factoring agreement (the “Factoring Agreement”) with Culain Capital Funding LLC (“Culain”).

Under the terms of this agreement, we may offer for sale, and Culain in its sole discretion may purchase eligible receivables of the Company (the “Purchased Accounts”).

Upon purchase, Culain becomes the absolute owner of the Purchased Accounts, which are payable directly to Culain, subject to certain repurchase obligations of the Company.

The willingness of Culain to make advances to us by purchasing eligible accounts receivable is subject to customary conditions for financings of this nature.

If we are unable to satisfy those conditions, Culain could refrain from providing financing to us, and we might not have sufficient cash on hand to fund our ongoing operations.

As of the date of this report, we have not used the Factoring Agreement to fund any of our ongoing operations.

We may have to raise significant additional capital or obtain additional credit to fund our operations in the future.

The failure to raise significant capital, or obtain credit when needed, on acceptable terms, could have a material adverse effect on our business, prospects, financial condition and results of operations, and we may not be able to continue our business as currently contemplated or may be required to seek protection under United States federal bankruptcy law.

Substantially all of our consolidated assets are subject to a security interest in favor of Culain under our Factoring Agreement.

Our obligations under certain accounts receivable financing arrangements are secured by a lien on substantially all our consolidated tangible and intangible assets, including receivables from the operations of our business and outstanding ownership interests in each of our direct and indirect subsidiaries.

Pursuant to the Factoring Agreement with Culain, we are advanced funds against future accounts receivable.

We remain responsible for collecting the accounts receivable.

If we are unable to meet our payment obligations under this arrangement, including as the result of failure to collect accounts receivable, Culain would have the right to liquidate our assets to pay off the amounts owed.

If any of our assets were to be liquidated, our business could be materially and adversely affected.

As of the date of issuance of this Annual Report on Form 10-K, we did not have any receivables outstanding under these arrangements.

We may need to raise substantial additional capital to commercialize our diagnostic technology, and our failure to obtain funding when needed may force us to delay, reduce or eliminate our product development programs or collaboration efforts or force us to restrict or cease operations.

As of December 31, 2023, we had cash of $1.5 million and we had working capital of $0.5 million.

Due to our recurring losses from operations and the expectation that we will continue to incur losses in the future, we may be required to raise additional capital to complete the development and commercialization of our current product candidates and to pay off our obligations.

As of December 31, 2024, we had cash of $1.4 million and we had a working capital deficit of $0.8 million.

Due to our recurring losses from operations and that we may continue to incur losses in the future, we may be required to raise additional capital to complete the development and commercialization of our current product candidates and to pay off our obligations.

To date, to fund our operations and develop and commercialize our products, we have relied primarily on equity and debt financings.

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If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development and/or commercialization of one or more of our product candidates, restrict or cease our operations or obtain funds by entering into agreements on unattractive terms.

We have incurred losses since our inception and expect to incur losses for the foreseeable future.

We have incurred losses since our inception and may incur losses in the foreseeable future.

We cannot be certain that we will achieve or sustain profitability.

We have incurred losses since our inception and expect to incur losses in the future.

At December 31, 2023, we had working capital of $0.5 million.

For the year ended December 31, 2023, we had an operating cash flow deficit of $3.6 million and a net loss of $5.8 million.

For the year ended December 31, 2023, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and

building a sales force to market our products and services.

We expect to incur substantial net losses through at least 2024 as we further develop and commercialize our diagnostic technology.

We have incurred losses since our inception and may incur losses in the future.

At December 31, 2024, we had a working capital deficit of $0.8 million.

For the year ended December 31, 2024, we had operating cash flow of $0.4 million and a net loss of $4.3 million.

For the year ended December 31, 2024, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services.

We may incur substantial net losses through at least the first half of 2025 as we further develop and commercialize our diagnostic technology.

We also expect that our selling, general and administrative expenses will continue to increase due to the additional costs associated with market development activities and expanding our staff to sell and support our products.

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We have had several customers who, from time to time, have individually represented 10% or more of our total revenue, or whose accounts receivable balances individually represented 10% or more of our total accounts receivable.

For the years ended December 31, 2023 and 2022, one and no customers individually represented 10% or more of our total revenue, respectively.

For both the years ended December 31, 2024 and 2023, one customer individually represented 10% or more of our total revenue.

We expect to maintain ongoing relationships with our customers, however, the loss of, or significant decrease in demand from, any of our top customers could have a material adverse effect on our business, results of operations and financial condition.

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Additionally, the loss of any of our top customers, whether through competition or consolidation, or a disruption in sales to such a customer, could result in a decrease of the Company’s future sales, earnings and cash flows.

Generally, we do not require collateral or other securities to support our accounts receivable and while we are directly affected by the financial condition of our customers, management does not believe significant credit risks exist at December 31, 2023.

Generally, we do not require collateral or other securities

to support our accounts receivable and while we are directly affected by the financial condition of our customers, management does not believe significant credit risks exist at December 31, 2024.

We have been, and may continue to be, subject to costly litigation.

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For more information related to this risk factor, see Legal Proceedings under Item 3 in this Annual Report.

Failure to Comply with Insider Trading Regulations and Policies Could Result in Significant Legal and Reputational Consequences.

Precipio, Inc.

is subject to federal and state securities laws, including regulations prohibiting insider trading.

Any failure by our directors, officers, employees, or affiliates to comply with these laws and our internal policies could lead to civil and criminal penalties, regulatory scrutiny, and reputational harm that could negatively impact our business, financial condition, and stockholder value.

To mitigate these risks, the Company has implemented a comprehensive Insider Trading Policy, which:

prohibits trading in the Company’s securities while in possession of material nonpublic information;

restricts trading by directors, executive officers, and designated employees during blackout periods that typically commence 15 days before the end of each fiscal quarter and continue until two full trading days after earnings are publicly disclosed;

requires pre-clearance of trades for directors, officers, and certain employees to prevent inadvertent violations;

bans hedging, pledging, short sales, and speculative transactions involving the Company’s stock;

and establishes procedures for Rule 10b5-1 trading plans to allow compliant trading activity.

Despite these safeguards, there can be no assurance that insider trading violations will not occur.

Any breach of these laws or our policy—whether intentional or inadvertent—could lead to regulatory investigations, shareholder litigation, and significant financial and reputational damage to the Company and the individuals involved.

For additional details, refer to our Insider Trading Policy, which is filed as Exhibit 19 to this Form 10-K.

The information required by Item 408(a) regarding insider trading plans is incorporated by reference to the Company’s definitive proxy statement to be filed within 120 days of our fiscal year-end.

The commercial success of our diagnostic products, including those we are developing, will depend upon the degree of market acceptance of these products among physicians, patients, health care payers and the medical community and on our ability to successfully market our products.

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We face significant competition from competitors ranging in size from diversified global companies with significant research and development resources to small, specialized firms whose narrower product lines may allow them to be more effective in deploying related PCR technology in the genetic diagnostic industry.

Our closest competitors fall largely into two groups, consisting of companies that specialize in oncology and offer directly competing services to our diagnostic services, offering their services to oncologists and pathology departments within hospitals, as well as large commercial companies that offer a wide variety of laboratory tests that range from simple chemistry tests to complex genetic testing.

Our closest competitors fall largely into three groups, the first consisting of companies that specialize in oncology and offer directly competing services to our diagnostic services, the second offering their services to oncologists and pathology departments within hospitals, and the third consisting of large commercial companies that offer a wide variety of laboratory tests that range from simple chemistry tests to complex genetic testing.

The technologies associated with the molecular diagnostics industry are evolving rapidly and there is intense competition within such industry.

Certain molecular diagnostics companies have established technologies that may be competitive to our product candidates and any future tests that we develop.

Certain molecular diagnostics companies have established technologies that may be competitive to our diagnostic product candidates and any future tests that we develop.

Some of these tests may use different approaches or means to obtain diagnostic results, which could be more effective or less expensive than our tests for similar indications.

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It is critical to our success that we anticipate changes in technology and customer requirements and successfully introduce new, enhanced and competitive technologies to meet our customers’ and prospective customers’ needs on a timely and cost-effective basis.

At the same time, however, we must carefully manage the introduction of new products.

If customers believe that such products will

offer enhanced features or be sold for a more attractive price, they may delay purchases until such products are available.

time, however, we must carefully manage the introduction of new products.

If customers believe that such products will offer enhanced features or be sold for a more attractive price, they may delay purchases until such products are available.

We may also have excess or obsolete inventory of older products as we transition to new products and our experience in managing product transitions is very limited.

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There may be a risk of delay in placing such products on the market and, once on the market, a risk of review and challenges to certain certified statuses.

On May 24, 2022, we received CE-IVD approval for the sale of HemeScreen® reagents in the UK and the EU in accordance with the requirements of the EU IVDD.

However, the new EU IVDR, came into effect on May 26, 2022 and repealed the IVDD.

The transitional provisions under the IVDR allow for devices with a notified body certificate issued under the IVDD and which are placed on the EU market prior to May 26, 2022 to continue to be placed on the market in the EU until May 26, 2025.

Our device will need to be re-certified under the IVDR by such date in order to remain on the EU market, which will include evaluation by an EU notified body to confirm whether our device meets the general safety and performance requirements under the IVDR.

On May 12, 2022, we received CE-IVD marking for our HemeScreen® reagents in the EU in accordance with the requirements of the EU IVDD (Directive 98/79/EC).

The new EU IVDR (Regulation 2017/746), came into effect on May 26, 2022 and replaced the IVDD.

The transitional provisions under the IVDR allow for devices with valid CE marking under the IVDD that were placed on the EU market prior to May 26, 2022 to continue to be placed on the market in the EU until deadlines ranging from December 2027 to December 2029, depending on risk classification, provided the manufacturer complies with post-market surveillance, vigilance, and registration requirements under the IVDR.

Our device will need to be re-certified under the IVDR in order to remain on the EU market beyond the deadlines for transition, which will include evaluation by an EU notified body to confirm whether our device meets the general safety and performance requirements under the IVDR.

There is no guarantee that our device will be determined to be compliant with such requirements.

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Changes to the UK regulations may require additional review of our devices and there is a risk our devices may not be compliant with any revised UK regulations.

Now that the UK has left the EU, the new UKCA mark will replace the EU CE mark in Great Britain, (“GB”).

Now that the UK has left the EU, the new UK Conformity Assessed (“UKCA”) mark will replace the EU CE mark in Great Britain (“GB”).

The EU legal framework remains applicable in Northern Ireland (indeed any products placed on the market in Northern Ireland must be compliant with EU law).

EU CE marks will continue to be recognized in GB for in-vitro diagnostic devices that are compliant with the EI IVDR until June 30, 2030.

EU CE marks will continue to be recognized in GB for in-vitro diagnostic devices that are compliant with the EU IVDD or EU IVDR until June 30, 2030 (except for general in-vitro diagnostic devices where the conformity assessment under the EU IVDD and EU IVDR does not involve a notified body).

In addition, all devices must now be registered with the MHRA in order to be placed on the GB market.

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Our results of operations could be adversely affected by general conditions in the global economy and financial markets.

A severe or prolonged economic downturn or increase in inflation rates could result in a variety of risks to our business, including weakened demand for our products and services and our ability to raise additional capital when needed on favorable terms, if at all.

A weak declining or inflationary economy could strain our collaborators and suppliers, possibly resulting in supply disruption, or cause delays in their payments to us.

In addition, the Company’s operations and access to capital may be impacted by disruptions to the banking system and financial market volatility resulting from bank failures, particularly in light of the recent events that have occurred with respect to Silicon Valley Bank (“SVB”) and other financial institutions.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

A severe or prolonged economic downturn or increase in inflation rates, or increased U.S.

trade tariffs and trade disputes with other countries, could result in a variety of risks to our business, including weakened demand for our products and services and our ability to raise additional capital when needed on favorable terms, if at all.

A weak declining or inflationary economy, or increased U.S.

trade tariffs, could also strain our collaborators and suppliers, possibly resulting in supply disruption, or cause delays in their payments to us.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect the Company’s current and projected business operations and its financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past

and may in the future lead to market-wide liquidity problems.

For example, on March 10 and March 12, 2023, the Federal Deposit Insurance Corporation took control and was appointed receiver of SVB, and Signature Bank and Silvergate Capital Corp.

(“Silvergate Capital”), respectively, after each bank was unable to continue their operations.

Since then, additional financial institutions have experienced similar failures and have been placed into receivership.

It is possible that other banks will face similar difficulty in the future.

These events exposed vulnerabilities in the banking sector, including legal uncertainties, significant volatility and contagion risk, and caused market prices of regional bank stocks to plummet.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.

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Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws and otherwise have a material adverse impact on our business.

Failure to obtain and retain new customers, the loss of existing customers or material contracts, or a reduction in services or tests ordered or specimens submitted by existing customers, or the inability to retain existing and/or create new relationships with health systems could impact our ability to successfully grow its business.

To maintain and grow our business, we need to obtain and retain new customers and business partners.

In addition, a reduction in tests ordered or specimens submitted by existing customers, a decrease in demand for our services from existing customers, or the loss of existing contracts, without offsetting growth in its customer base, could impact our ability to successfully grow its business and could have a material adverse effect on our revenues and profitability.

Our failure to successfully compete with our competitors could result in the loss of existing customers, an inability to gain new customers, and reduced or stagnant growth of our business.

Global climate change could negatively affect our business.

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There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty.

Any future regulations aimed at mitigating climate change

may negatively impact the prices of raw materials and energy as well as the demand for certain of our customer’s products which could in turn impact demand for our products and impact our results of operations.

Any future regulations aimed at mitigating climate change may negatively impact the prices of raw materials and energy as well as the demand for certain of our customer’s products which could in turn impact demand for our products and impact our results of operations.

The costs of compliance and any changes to our operations mandated by new or amended laws, may be significant.

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Such losses could lead to an increase in the deductibles or cost of insurance for those facilities, a reduction of insurance available to us, or the unavailability of insurance on terms that are acceptable to us.

Significant political, trade, regulatory developments, and other circumstances beyond our control, could have a material adverse effect on our financial condition or results of operations.

We operate globally and sell our products in countries throughout the world.

Significant political, trade, or regulatory developments in the jurisdictions in which we sell our products, such as those stemming from the change in U.S.

federal administration, are difficult to predict and may have a material adverse effect on us.

Similarly, changes in U.S.

federal policy that affect the geopolitical landscape could give rise to circumstances outside our control that could have negative impacts on our business operations.

For example, during the prior Trump administration, increased tariffs were implemented on goods imported into the U.S., particularly from China, Canada, and Mexico.

On February 1, 2025, the U.S.

imposed a 25% tariff on imports from Canada and Mexico, which were subsequently suspended for a period of one month, and a 10% additional tariff on imports from China.

Historically, tariffs have led to increased trade and political

tensions, between not only the U.S.

and China, but also between the U.S.

and other countries in the international community.

In response to tariffs, other countries have implemented retaliatory tariffs on U.S.

Political tensions as a result of trade policies could reduce trade volume, investment, technological exchange and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets.

Any changes in political, trade, regulatory, and economic conditions, including U.S.

trade policies, could have a material adverse effect on our financial condition or results of operations.

Congress, the Trump administration, or any new administration may make substantial changes to fiscal, tax, and other federal policies that may adversely affect our business.

In 2017, the U.S.

Congress and the Trump administration made substantial changes to U.S.

policies, which included comprehensive corporate and individual tax reform referred to as the Taxes Cuts and Jobs Act.

Under current law, a number of such changes to U.S.

tax law are set to expire after December 31, 2025.

In addition, the Trump administration called for significant changes to U.S.

trade, healthcare, immigration and government regulatory policy.

Changes to U.S.

policy occurred under the Biden administration and have continued at a rapid pace under the Trump Administration in 2025, making further changes likely.

Any such changes to U.S.

policy implemented by the U.S.

Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S.

and global economy, international trade relations, unemployment, immigration, healthcare, taxation (including in respect of extending the changes from the Taxes Cuts and Jobs Act, which are set to expire and any other potentially forthcoming tax reform), the U.S.

regulatory environment, inflation and other areas.

Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.

Until we know what policy changes are made, whether those policy changes are challenged and subsequently upheld by the court system and how those changes impact our business and the business of our competitors over the long term, we will not know if, overall, we will benefit from them or be negatively affected by them.

We depend upon a limited number of key personnel, and if we are not able to retain them or recruit additional qualified personnel, the execution of our strategy, management of our business and commercialization of our product candidates could be delayed or negatively impacted.

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We have limited experience in marketing our products and services.

We intend to continue to develop our in-house marketing organization and sales force, which will require significant capital expenditures, management resources and time.

We intend to continue to develop our in-house marketing capabilities and sales force, which will require significant capital expenditures, management resources and time.

We will have to compete with other companies to recruit, hire, train and retain marketing and sales personnel.

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We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates.

We are subject to stringent and changing laws, regulations and standards, and contractual obligations relating to privacy, data protection, and data security.

We are subject to U.S.

federal, state, and foreign data protection laws and regulations, such as laws and regulations that address privacy and data security.

For additional details on our US and EU/UK GDPR compliance obligations, see the “ Privacy Laws ” sub-section in the Business section of this Annual Report on Form 10-K.

In the U.S., numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws, govern the collection, use, disclosure, and protection of health-related and other personal information.

For example, at the federal level, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its respective implementing regulations, imposes requirements on certain covered healthcare providers, health plans, and healthcare clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information.

In addition, certain state laws govern privacy and security of personal information, including health information specifically.

These various privacy and security laws may impact our business activities,

including our identification of research subjects, relationships with business partners and ultimately the marketing and distribution of our products.

State laws are changing rapidly and there are discussions in the U.S.

Congress of new comprehensive federal data privacy laws to which we could become subject to, if enacted.

In Europe, with respect to the collection and processing of personal data from the UK and EEA, we are subject to stringent data protection obligations under the GDPR and other applicable data protection laws which require significant compliance effort and will increase our costs.

These obligations include strict rules on transferring personal data to countries outside of the UK and EEA that do not ensure an adequate level of protection, including in certain circumstances, the U.S.

Any inability to transfer personal data from the UK or EEA to the U.S.

or to our service providers outside these regions may impede our operations and may adversely affect our business and financial position.

Failure to comply with GDPR obligations could expose us to substantial fines, regulatory scrutiny, private legal claims, and reputational harm.

Following the UK’s exit from the EU (Brexit) there will be increasing scope for divergence in application, interpretation and enforcement of the data protection laws between these jurisdictions which present additional risk.

The UK has introduced the Data (Use and Access) Bill into its legislative process, which, if enacted, may alter the UK’s data protection regime and potentially threaten its adequacy decision from the European Commission—a development that could complicate cross-border data flows and increase compliance burdens.

The uncertainty surrounding future UK data protection laws and their interaction with those of the EEA may add legal risk, operational complexity, and additional cost to our privacy and security compliance programs, potentially requiring us to implement different compliance measures for the UK and EEA.

With respect to the collection and processing of personal data in the UK and EEA, we are subject to stringent data protection obligations under the GDPR and other applicable laws.

These include strict rules on transferring personal data outside these jurisdictions to countries, such as the United States, that may not be deemed to provide an adequate level of protection.

Any inability to lawfully transfer personal data from the UK or EEA to the United States or our service providers outside these regions could disrupt our operations, increase compliance costs, and adversely affect our business and financial position.

Failure to comply with GDPR obligations could expose us to substantial fines, regulatory scrutiny, private legal claims, and reputational harm.

Following Brexit, diverging legal frameworks between the UK and the EU present additional risks.

The UK has introduced the Data (Use and Access) Bill, which, if enacted, may alter the UK’s data protection regime and potentially threaten its adequacy decision from the European Commission—a development that could complicate cross-border data flows and increase compliance burdens.

The uncertainty surrounding future UK data protection laws and their interaction with the EEA framework may add legal risk, operational complexity, and additional costs to our privacy and security compliance programs, potentially requiring different compliance measures for the UK and EEA.

All of these evolving compliance and operational requirements impose significant costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants and legal advisors, which are likely to increase over time.

In addition, such requirements may require us to modify our data processing practices and policies, utilize management’s time and/or divert resources from other initiatives and projects.

Any failure or perceived failure by us to comply with any applicable federal, state or foreign laws and regulations relating to data privacy and security could result in damage to our reputation, as well as proceedings or litigation by governmental agencies or other third parties, including class action privacy litigation in certain jurisdictions, which would subject us to significant fines, sanctions, awards, injunctions, penalties or judgments.

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

Our use of new and evolving technologies, such as artificial intelligence, may present risks and challenges that can impact our business, including by posing cybersecurity and other risks to our confidential and/or proprietary information, including personal information, and as a result we may be exposed to reputational harm and liability.

We may use and integrate artificial intelligence into our business processes.

Use of this technology presents risks and challenges that could affect our business.

If we enable or use solutions that draw controversy due to perceived or actual negative societal impact, we may experience brand or reputational harm, competitive harm or legal liability.

The rapid evolution of artificial intelligence will require the application of significant resources to design, develop, test and maintain such systems to help ensure that artificial intelligence is implemented in accordance with

applicable law and regulation and in a socially responsible manner and to minimize any real or perceived unintended harmful impacts.

Our vendors may in turn incorporate artificial intelligence tools into their offerings, and the providers of these artificial intelligence tools may not meet existing or rapidly evolving regulatory or industry standards, including with respect to privacy and data security.

Further, bad actors around the world use increasingly sophisticated methods, including the use of artificial intelligence, to engage in illegal activities involving the theft and misuse of personal information, confidential information and intellectual property.

Any of these effects could damage our reputation, result in the loss of valuable property and information, cause us to breach applicable laws and regulations, and adversely impact our business.

Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer.

Cybersecurity refers to the combination of technologies, processes and procedures established to protect information technology systems and data from unauthorized access, misuse, attack, or damage.

We rely on our information systems to provide security for processing, transmission and storage of confidential information about our patients, customers and personnel, such as names, addresses and other individually identifiable information protected by the Health Insurance Portability and Accountability Act, (“HIPAA”), other privacy laws.

We rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or incidents.

We rely on our information systems to provide security for processing, transmission and storage of confidential information and personal information about our patients, customers and personnel and rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies, data breaches or cybersecurity incidents.

We also rely on our employees and consultants to safeguard their security credentials and follow our policies and procedures regarding use and access of computers and other devices that may contain our sensitive information.

If we or our third-party providers fail to maintain or protect our information technology systems and data integrity effectively or fail to anticipate, plan for or manage significant disruptions to our information technology systems, we or our third-party providers could have difficulty preventing, detecting and controlling such cyberattacks and any such attacks could result in losses described above, as well as disputes with physicians, patients and our partners, regulatory sanctions or penalties, increases in operating expenses, expenses or lost revenues or other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition, prospects and cash flows.

Any failure by such third parties to prevent or mitigate security breaches or improper access to, misuse of, or disclosure of such

information could have similarly adverse consequences for us.

If we are unable to prevent or mitigate the impact of such security or data privacy breaches or other incidents, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.

Any failure by such third - parties to prevent or mitigate cybersecurity incidents, data breaches or improper access to, misuse of, or disclosure of such information could have similarly adverse consequences for us.

If we are unable to prevent or mitigate the impact of such cybersecurity incidents, data breaches or other adverse events, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business.

Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.

Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data security, confidentiality, integrity and availability.

Cyberattacks could include wrongful conduct by hostile foreign governments, intentional or inadvertent wrongful conduct by insider employees or vendors, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful ransomware, malware, denial-of-service attacks, social engineering fraud (including phishing attacks) or other means to threaten data security, confidentiality, integrity and availability.

A successful cyberattack could cause serious negative consequences for us, including, without limitation, the disruption of operations, the misappropriation of confidential business information, including financial information, trade secrets, financial loss and the disclosure of corporate strategic plans.

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Compliance with changes in privacy and information security laws and with rapidly evolving industry standards may result in our incurring significant expense due to increased investment in technology and the development of new operational processes.

We have not experienced any known attacks on our information technology systems that compromised any confidential information.

Like other companies in our industry, we, and our third party vendors, have experienced threats and cybersecurity incidents relating to our information technology systems and infrastructure.

We maintain our information technology systems with safeguards designed to protect against cyberattacks including passive intrusion protection, firewalls and virus detection software.

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Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not prevent the systems’ improper functioning or damage or the improper access or disclosure of personally identifiable information such as in the event of cyberattacks.

Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar incidents can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information.

If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a security breach, we may incur significant costs to notify and mitigate potential harm to the affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.

In addition, a security breach of or other incident affecting our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition and results of operations.

Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information.

If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a cyber security incident or data breach, we may incur significant costs to notify impacted stakeholders (including affected individuals, investors and regulators) and mitigate potential harm

to affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.

In addition, a cyber security incident, data breach of or other adverse event affecting our information systems could damage our reputation, subject us to liability claims or regulatory penalties for compromised personal information and could have a material adverse effect on our business, financial condition and results of operations.

Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our privacy and data security obligations.

Further, although we maintain cyber liability insurance, this insurance may not provide adequate coverage against potential liabilities related to any experienced cybersecurity incident or data breach.

Changes in tax law could adversely affect our business and financial condition.

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In recent years, many such changes have been made, and changes are likely to continue to occur in the future.

For example, under Section 174 of the Internal Revenue Code, as amended, currently, in taxable years beginning after December 31, 2021, expenses that are incurred for research and development in the U.S.

will be capitalized and amortized, which may have an adverse effect on our cash flow.

More recently, however, there have been proposals to retroactively reinstate deductibility under Code Section 174.

Furthermore, as we expand the scale of our business activities, any changes in the U.S.

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The state NOLs expire on various dates.

Under current law, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.

Under current law, federal NOLs generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.

NOLs generated prior to December 31, 2017, however, have a 20-year carryforward period, but are not subject to the 80% limitation.

federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended.

In general, an ownership change will occur if there is a cumulative change in a corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period, including changes in ownership arising from new issuances of stock.

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All of our diagnostic technology development and our clinical services are performed at two laboratories, and in the event either or both of these facilities were to be affected by a termination of the lease or a man-made or natural disaster, our operations could be severely impaired.

Laboratory and R&D facilities located in New Haven, Connecticut and Omaha, Nebraska house development teams that collaborate on new products and services.

The Company operates CLIA laboratories in both the New Haven, Connecticut and Omaha, Nebraska locations providing essential blood cancer diagnostics to office-based oncologists in many states nationwide.

Our laboratory and research and development facilities located in New Haven, Connecticut and Omaha, Nebraska house development teams that collaborate on new products and services.

The Company’s laboratories in both New Haven, Connecticut and Omaha, Nebraska are CLIA compliant and provide essential blood cancer diagnostics to office-based oncologists in many states nationwide.

Despite precautions taken by us, any future natural or man-made disaster at these laboratories, such as a fire, earthquake or terrorist activity, could cause substantial delays in our operations, damage or destroy our equipment and testing samples or cause us to incur additional expenses.

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This could harm our operating results and financial condition .

Further, if we have to use a substitute laboratory while our facilities were shut down, we could only use another facility with established state licensure and accreditation under CLIA.

Further, if we have to use a substitute laboratory in the event our facilities are shut down, we could only use another facility with established state licensure and accreditation under CLIA.

We may not be able to find another CLIA-certified facility and comply with applicable procedures, or find any such laboratory that would be willing to perform the tests for us on commercially reasonable terms.

Additionally, any new laboratory opened by us would be subject to certification under CLIA and licensure by various states, which would take a significant amount of time and result in delays in our ability to continue our operations.

Additionally, any new laboratory opened by us would be subject to recertification under CLIA and licensure by various states, which would take a significant amount of time and result in delays in our ability to continue our operations.

An impairment in the carrying value of our intangible assets could negatively affect our results of operations.

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These changes in federal, state, local, and third-party payer regulations or policies may decrease our revenues and adversely affect our results of operations and our financial condition.

Occasionally, legislative pauses and changes impact our products that are reimbursed under the Medicare Physician Fee Schedule (“MPFS”), or the Clinical Laboratory Fee Schedule (“CLFS”).

Occasionally, legislative pauses

and changes impact our products that are reimbursed under the Medicare Physician Fee Schedule (“MPFS”), or the Clinical Laboratory Fee Schedule (“CLFS”).

Further, CMS and state Medicaid agencies may adopt regulations and policies that change, limit or exclude coverage for our products and services.

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Our laboratories require ongoing CLIA certification, and we cannot guarantee that our laboratories will pass all future certification inspections.

The Clinical Laboratory Improvement Amendments of 1988, (“CLIA”), extended federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency.

The CLIA requires that all clinical laboratories meet quality assurance, quality control and personnel standards.

CLIA extended federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency.

CLIA requires that all clinical laboratories meet quality assurance, quality control and personnel standards.

Laboratories must also undergo proficiency testing and are subject to inspections.

The sanctions for failure to comply with the CLIA requirements include suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties.

The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes in the CLIA law or regulations (or interpretation of the law or regulations) could have a material adverse effect on us.

The sanctions for failure to comply with CLIA requirements include suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties.

The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes to CLIA or regulations (or interpretation of the law or regulations) could have a material adverse effect on us.

We believe that we are in compliance with all applicable laboratory requirements, but no assurances can be given that our laboratories will pass all future certification inspections.

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Obtaining the requisite marketing authorizations can be expensive and may involve considerable delay.

Moreover, if the FDA believed we inappropriately labeled our products as RUO products, it could allege that we had misbranded or adulterated our RUO products.

Moreover, if the FDA believed we

inappropriately labeled our products as RUO products, it could allege that we had misbranded or adulterated our RUO products.

If the FDA asserts that our RUO products are subject to marketing authorization, or that our RUO products are adulterated or misbranded, our business, financial condition or results of operations could be adversely affected .

Additionally, our CLIA laboratory offers testing utilizing our laboratory-developed tests (LDTs).

Historically, the FDA has exercised enforcement discretion with respect to most LDTs and has not required laboratories that offer LDTs to comply with the FDA’s requirements for medical devices, such as the FDA’s requirements pertaining to marketing authorization, establishment registration, device listing, the Quality System Regulation, and other post-market controls.

However, the FDA has stated it intends to end its policy of enforcement discretion and to actively regulate LDTs.

For example, on October 3, 2014, the FDA issued two draft guidance documents, entitled “Framework for Regulatory

Oversight of Laboratory Developed Tests (LDTs)” and “FDA Notification and Medical Device Reporting for Regulatory Oversight of Laboratory Developed Tests (LDTs)”, that set forth a proposed risk-based regulatory framework that would apply varying levels of FDA oversight to LDTs.

The draft guidance documents have not been finalized.

In January 2017, the FDA issued a “Discussion Paper on Laboratory Developed Tests (LDTs),” which includes a possible approach to LDT oversight that is intended to advance public discussion on the topic.

Additionally, legislative proposals have been introduced in Congress or have been publicly circulated.

Such proposals would implement differing approaches to the regulation of LDTs, including in certain instances to require marketing authorization from the FDA.

We cannot predict whether any of these legislative proposals will be enacted into law or the impact such new legal requirements would have on our business.

On October 3, 2023, the FDA published a proposed rule on LDTs, in which the FDA proposes to end enforcement discretion for virtually all LDTs in five stages over a four-year period from the date the FDA publishes a final rule.

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

In Phase 2 (effective two years post-finalization), laboratories would be required to comply with all other device requirements (e.g., registration/listing, labeling, investigational use), except for quality systems and premarket review.

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

In Phase 4 (effective three and a half years post-finalization, but not before October 1, 2027), laboratories would be required to comply with premarket review requirements for high-risk tests (i.e., tests subject to the PMA requirement).

Finally, in Phase 5 (effective four years post-finalization, but not before April 1, 2028), laboratories would be required to comply with premarket review requirements for moderate- and low-risk tests (i.e., tests subject to de novo or the 510(k) requirement).

Unlike previous proposals, the proposed rule does not provisions that would allow for “grandfathering” of existing tests.

The content and timing of any final rule on LDTs is uncertain at this time.

If the FDA asserts that our RUO products and/or LDTs are subject to marketing authorization, or that our RUO products and/or LDTs are adulterated or misbranded, our business, financial condition or results of operations could be adversely affected.

However, at various points in recent years, the FDA has stated it intends to end its policy of enforcement discretion and to actively regulate LDTs.

Most recently, on April 29, 2024, the FDA published a final rule on LDTs, in which FDA outlines its plans to end enforcement discretion for many LDTs in five stages over a four-year period.

● In Phase 1 (effective May 6, 2025), clinical laboratories would be required to comply with medical device reporting, correction/removal reporting, and certain quality systems complaint handling requirements.

● In Phase 2 (effective May 6, 2026), clinical laboratories would be required to comply with all other device requirements (e.g., establishment registration and device listing, labeling, investigational use requirements), except for remaining quality systems requirements and premarket review requirements.

● In Phase 3 (effective May 6, 2027), clinical laboratories would be required to comply with all remaining applicable quality systems requirements.

● In Phase 4 (effective November 6, 2027), clinical laboratories would be required to comply with premarket submission requirements for high-risk tests (i.e., tests subject to FDA’s premarket approval (PMA) requirement).

● In Phase 5 (effective May 6, 2028), clinical laboratories would be required to comply with premarket submission requirements for moderate- and low-risk tests (i.e., tests subject to de novo classification or the 510(k) requirement).

The final rule potentially extends enforcement discretion for certain tests, such as LDTs approved by the New York State Department of Health and LDTs first marketed prior to May 6, 2024 which are not modified or are modified in certain limited ways, from certain FDA regulatory requirements, provided certain important limitations have been met.

We are actively reviewing the final rule to evaluate its applicability to our operations, and the extent to which we may be required to modify our operations to comply with its requirements.

On May 29, 2024, the American Clinical Laboratory Association filed a lawsuit challenging the FDA’s authority to regulate LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act.

Subsequently, on August 19, 2024, the Association for Molecular Pathology filed a lawsuit similarly challenging FDA’s final rule on LDTs.

The outcome of these lawsuits are uncertain at this time.

If the FDA were to determine that certain tests offered by us as LDTs are no longer eligible for enforcement discretion for any reason, including new rules, policies or guidance, or due to changes in statute, our test may become subject to extensive FDA requirements and our business, financial condition or results of operations may be adversely affected.

If required, the regulatory marketing authorization process required to bring our current or future LDTs into compliance may involve, among other things, successfully completing additional clinical validations and submitting to and obtaining clearance, authorization or approval from the FDA.

Furthermore, pending legislative proposals, if enacted, could create new or different regulatory and compliance burdens on us and could have a negative effect on our ability to keep products on the market or develop new products, which could have a material effect on our business.

In the event that the FDA requires marketing authorization of our LDTs in the future, the FDA may not ultimately grant any clearance, authorization or approval requested by us in a timely manner, may limit our indication in a way that is not commercially desirable, or refuse to provide such marketing authorization at all.

In addition, if the FDA inspects our laboratory in relation to the marketing of any FDA-authorized test, any enforcement action the FDA takes might not be limited to the FDA-authorized test carried by us and could encompass our other testing services.

Failure to comply with HIPAA could be costly.

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We could also incur liabilities from third party claims.

A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation of HIPAA.

Our failure to comply with any applicable government laws and regulations or otherwise respond to claims relating to improper handling, storage or disposal of hazardous chemicals that we use may adversely affect our results of operations.

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There are several federal laws addressing fraud and abuse that apply to businesses that receive reimbursement from a federal health care program.

There are also a number of similar state laws covering fraud and abuse with respect

to, for example, private payers, self-pay and insurance.

There are also a number of similar state laws covering fraud and abuse with respect to, for example, private payers, self-pay and insurance.

Currently, we receive a substantial percentage of our revenue from private payers and from Medicare.

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A federal law commonly referred to as the “Anti-Kickback Statute” prohibits the knowing and willful offer, payment, solicitation or receipt of remuneration, directly or indirectly, in return for the referral of patients or arranging for the referral of patients, or in return for the recommendation, arrangement, purchase, lease or order of items or services that are covered, in whole or in part, by a federal healthcare program such as Medicare or Medicaid.

The term “remuneration” has been broadly interpreted to include anything of value such as gifts, discounts, rebates, waiver of payments or providing anything at less than its fair market value.

The term “remuneration” has been broadly interpreted to include anything of value such as gifts, discounts, rebates, waiver of payments or providing

anything at less than its fair market value.

The PPACA amended the intent requirement of the Anti-Kickback Statute such that a person or entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate the statute.

Further, the PPACA now provides that claims submitted in violation of the Anti-Kickback Statute constitute false or fraudulent claims for purposes of the federal False Claims Act (“FCA”), including the failure to timely return an overpayment.

Violations are subject to civil and criminal fines and penalties for each violation, plus up to three times the remuneration involved, imprisonment, and exclusion from government healthcare programs.

In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act or federal civil monetary penalties.

Many states have adopted similar prohibitions against kickbacks and other practices that are intended to influence the purchase, lease or ordering of healthcare items and services reimbursed by a governmental health program or state Medicaid program.

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(2) knowingly making, using or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the federal government;

or (3) knowingly making, using or causing to be made or used, a false record

or statement to avoid, decrease or conceal an obligation to pay money to the federal government.

or (3) knowingly making, using or causing to be made or used, a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government.

Manufacturers can be held liable under the federal False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims.

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The PPACA also provides that claims submitted in connection with patient referrals that result from violations of the Anti-Kickback Statute constitute false claims for the purpose of the FCA, and some courts have held that a violation of the Stark law can result in FCA liability, as well.

In addition, a number of states have adopted their own false claims and whistleblower provisions whereby a private party may file a civil lawsuit in state court.

In addition, a number of states have adopted their own false claims and whistleblower provisions whereby a private

party may file a civil lawsuit in state court.

We are required to provide information to our employees and certain contractors about state and federal false claims laws and whistleblower provisions and protections.

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Our intellectual property portfolio with respect to certain aspects of our technology and product candidates is at an early stage.

We have one company-owned, pending international patent application directed to our HemeScreen test.

This international patent application is not eligible to become an issued patent until, among other things, we file national and/or regional stage applications in individual countries and/or regions by the appropriate deadline.

Any failure to file one or more national and/or regional stage patent applications within this timeline could cause us to lose the ability to obtain patent protection for the inventions disclosed in the associated international patent application.

We own pending patent applications in the United States and Europe directed to our HemeScreen test.

We cannot be certain that these pending applications will issue as patents .

If any of our owned patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively.

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We cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents and patent applications at a reasonable cost or in

a timely manner.

Disruptions at the United States Patent and Trademark Office (USPTO) or other government agencies may also slow the time necessary for patent applications to be reviewed by the USPTO, which could adversely affect our patent portfolio.

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As a result, we could lose our trade secrets.

Enforcing a claim

against a third party that illegally obtained and is using our trade secrets, like patent litigation, is expensive and time-consuming and the outcome is unpredictable.

Enforcing a claim against a third party that illegally obtained and is using our trade secrets, like patent litigation, is expensive and time- consuming and the outcome is unpredictable.

Moreover, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties.

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In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.

If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates,

constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.

If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.

Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy or patient selection methods, the holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable.

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Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both.

In any patent infringement

proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.

In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.

There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly or decide that we do not have the right to stop the other party from using the invention at issue on the grounds that our patent claims do not cover the invention.

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In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained.

Depending on decisions by the Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

Depending on decisions by Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

For example, in the case, Assoc.

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This could enable third parties to seek revocation of a European patent in a single proceeding at the UPC rather than through multiple proceedings in each of the jurisdictions in which the European patent is validated.

Although we do not currently own any European patents or applications, if we obtain such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.

If our pending European patent application issues, and if we obtain other such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.

Moreover, the controlling laws and regulations of the UPC will develop over time, and may adversely affect our ability to enforce or defend the validity of any European patents we may obtain.

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If certain formalities and requirements are not met, however, such European patents and patent applications could be challenged for non-compliance and brought under the jurisdiction of the UPC.

We cannot be certain that future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC.

We cannot be certain that our pending European patent application and future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC.

Third parties may assert ownership or commercial rights to inventions we develop.

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Because our unrestricted public float has been small relative to other issuers, previous short selling efforts have impacted, and may in the future continue to impact, the value of our stock in an extreme and volatile manner to our detriment and the detriment of our stockholders.

Efforts by certain market participants to manipulate the price of our common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.

Efforts by certain market participants to manipulate the price of our

common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.

If we cannot continue to satisfy Nasdaq listing maintenance requirements and other rules, our securities may be delisted, which could negatively impact the price of our securities.

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Our management and other personnel devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations, and as a result of the new corporate governance and executive compensation related rules, regulations, and guidelines prompted by the Dodd-Frank Act, and further regulations and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance programs and rules.

These rules and regulations will

cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

These rules and regulations will cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.

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Our current controls and any new controls that we develop may become inadequate, and weaknesses in our internal control over financial reporting may be discovered in the future.

Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting, which we may be required to include in our periodic reports that we file with the SEC under Section 404 of the Sarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in a restatement of our prior period financial statements.

prior period financial statements.

If we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results, and the price of our common stock could decline.

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We are required to comply with certain of the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an

annual management report on the effectiveness of our internal control over financial reporting.

This assessment needs to include the disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm.

During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting or if we are unable to complete our evaluation, testing, and any required remediation in a timely fashion, we will be unable to assert that our internal control over financial reporting is effective.

These developments could make it more difficult for us to retain qualified members of our Board of Directors, or qualified executive officers.

We are presently evaluating and monitoring regulatory developments and cannot estimate the timing or magnitude of additional costs we may incur as a result.

To the extent these costs are significant, our general and administrative expenses are likely to increase

We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future.

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Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities.

This risk is especially relevant for us because biotechnology stocks have experienced significant stock price volatility in recent years.

This risk is especially relevant for us because biotechnology stocks, such as ours, have experienced significant stock price volatility in recent years.

If we were to be sued, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

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The Company has an additional $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.

On January 19, 2024, we

filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $865,889 of shares of our common stock.

On April 8, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $1,061,478 of shares of our common stock.

We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement.

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Such issuances may cause significant dilution to our stockholders and cause the price of our common stock to fall.

Improper timing of equity awards could result in regulatory scrutiny and reputational harm.

We grant stock options and other equity-based awards to executives and employees as part of our compensation program.

The timing of these grants is subject to SEC disclosure rules under Item 402(x), which require transparency regarding whether awards are made in proximity to the release of material nonpublic information.

While we maintain policies to ensure that equity grants are not made during blackout periods or near material announcements, there can be no assurance that all grants will be perceived as free from opportunistic timing concerns.

If the timing of option grants were ever questioned by regulators, investors, or other stakeholders, we could face SEC or other regulatory scrutiny, leading to potential enforcement actions;

shareholder litigation alleging improper stock option practices and reputational damage, which could negatively impact investor confidence and stock performance.

To mitigate these risks, we have adopted strict governance procedures, requiring that equity grants be (i) approved by the Compensation Committee on pre-scheduled dates (ii) will not be issued four trading days before or after material disclosures and be subject to internal review to ensure compliance with SEC regulations.

Despite these safeguards, if regulatory agencies or investors perceive equity awards as improperly timed, the Company’s financial condition and stockholder value could be negatively affected.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

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Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions.

If the current equity and credit markets deteriorate, or do not improve, it

may make any necessary debt or equity financing more difficult, more costly, and more dilutive.

If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive.

Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay, scale back or discontinue the development and commercialization of one or more of our product candidates or delay our pursuit of potential in- licenses or acquisitions.

In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.

In addition, there is a risk that one or more of our current service providers, manufacturers and

other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.

Our amended and restated bylaws, as amended, designate specific courts in as the exclusive forum for certain litigation that may be initiated by the Company’s stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

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● advance notice requirements for stockholder proposals and nominations for election to our board of directors;

● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than a majority he shares then entitled to vote generally for the election of directors;

● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than a majority of the shares then entitled to vote generally for the election of directors;

● the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors