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You should consider carefully the risks and uncertainties described below, together with all of the other information included in this Annual Report, including our financial statements and related notes and "Management’s Discussion and Analysis of Financial Condition and Results of Operations," before making an investment decision to purchase or sell shares of our common stock.
−Removed: If any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
+Added: any of the following risks are realized, our business, financial condition, results of operations and prospects could be materially and adversely affected.
In that event, the trading price of our common stock could decline, and you could lose part or all of your investment.
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• Our commercial success depends on attaining and maintaining significant market acceptance of our testing products among rheumatologists, patients, third-party payors and others in the medical community;
−Removed: • We rely on sole suppliers for some of the reagents, equipment and other materials used in our testing products, and a sole third-party fulfillment center used to supply healthcare providers with our testing products, and we may not be able to fund replacements or transition to alternative suppliers or fulfillment centers;
+Added: • We rely on sole suppliers for some of the reagents, equipment and other materials used in our testing products, and we may not be able to fund replacements or transition to alternative suppliers;
• If we are unable to support demand for our current testing products or any of our future testing products or solutions, our business could suffer;
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• If our sole clinical laboratory facility becomes damaged or inoperable, we are required to vacate our existing facility or we are unable to expand our existing facility as needed, we will be unable to perform our testing services and our business will be harmed;
+Added: • Changes in U.S.
+Added: trade policy and the impact of tariffs may have a material adverse effect on our business, results of operations and financial condition.
+Added: • Our term loan contains restrictions that limit our flexibility in operating our business, and if we fail to comply with the covenants and other obligations under our loan agreement, the lenders may be able to accelerate amounts owed under the facility and may foreclose upon the assets securing our obligations.
• We may require substantial additional capital to finance our planned operations, which may not be available to us on acceptable terms or at all.
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We have incurred net losses since our inception.
−Removed: For the years ended December 31, 2024 and 2023, we incurred net losses of $15.1 million and $23.7 million, respectively, and we expect to incur additional losses in 2025 and in future periods.
+Added: For the years ended December 31, 2025 and 2024, we incurred net losses of $20.0 million and $15.1 million, respectively, and we expect to continue to incur additional losses in 2026 and in future periods.
As of December 31, 2025, we had an accumulated deficit of $314.3 million.
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Third-party payors and other entities also conduct technology assessments of new medical tests and devices and provide and/or sell the results of their assessments to other parties.
−Removed: These assessments may be and have been used by third-party payors and healthcare providers as grounds to deny coverage for or refuse to use a test or procedure, including our tests.
+Added: These assessments may be and have been
+Added: used by third-party payors and healthcare providers as grounds to deny coverage for or refuse to use a test or procedure, including our tests.
In addition, third-party payors have increased their efforts to control the cost, utilization and delivery of healthcare services.
These measures have resulted in reduced payment rates and decreased utilization for the diagnostics industry.
−Removed: Effective April 25, 2012, Palmetto GBA, the Medicare MolDx Program, assigned the AVISE ® MTX assay a unique identifier and determined that the test meets the applicable Medicare coverage criteria to support dose optimization and therapeutic decision making for patients diagnosed with RA on methotrexate.
−Removed: Our current Medicare Administrative Contractor, Noridian, has adopted this coverage policy.
−Removed: In addition, and effective April 1, 2022, CMS agreed to recognize a new PLA code for our protein-based test, AVISE ® Lupus.
−Removed: Noridian priced this PLA code at $1,085 per test.
−Removed: To determine pricing beyond 2022, CMS recommended crosswalking AVISE ® Lupus (0312U) to Vectra (81490) at a rate of $840.65 per test.
−Removed: This pricing was finalized on the 2023 CLFS and is effective from January 1, 2023 through December 31, 2025.
−Removed: A pricing determination is not synonymous with a coverage determination.
−Removed: Having a price associated with the PLA code for any particular test does not secure coverage or reimbursement for that PLA code from Medicare or any other third-party payor.
−Removed: So, in an effort to improve transparency regarding Medicare support of AVISE ® Lupus, we submitted a formal request to Noridian for coverage of our AVISE ® Lupus test under the new PLA Code.
−Removed: On September 27, 2022, we received notice that Noridian has deemed our application for an LCD to be valid, but our application is still pending.
−Removed: Ultimately receiving a favorable LCD is uncertain and may be time-consuming, resource intensive and require multiple quarterly or annual periods to complete.
−Removed: We have faced and may again face or continue to face challenges relating to commercial payor claim processing and revenue with our tests.
Other third-party payors make their own decisions as to whether to establish a policy to reimburse our testing products.
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There are many third-party payors who have not yet established a coverage policy applicable to our testing products.
−Removed: In addition, several commercial payors issued non-coverage policies with respect to AVISE ® Lupus, determining that AVISE ® Lupus does not meet the medical criteria for coverage and is considered investigational and/or experimental.
+Added: In addition, several commercial payors issued non-coverage policies with respect to certain of our testing products, determining that these products do not meet the medical criteria for coverage and are considered investigational and/or experimental.
While our testing products are reimbursed by a number of third-party payors, we do not currently have contracts with significant private payors.
We have in the past, and will likely in the future, experience delays and temporary interruptions in the receipt of payments from third-party payors due to changes in their internal processes, documentation requirements and other issues, which could cause our revenue to fluctuate from period to period.
−Removed: If we are not successful in reversing existing non-coverage policies, or if other third-party payors issue negative coverage policies, these policies could have a material adverse effect on our business and operations.
+Added: If we are not successful in reversing existing non-coverage policies, or if other third-party payors issue negative coverage (or continue to issue negative coverage policies), these policies could have a material adverse effect on our business and operations.
Even if many third-party payors currently reimburse for our testing products, such payors have in the past and may again withdraw coverage at any time, review and adjust the rate of reimbursement, require co-payments from patients or stop paying for our testing products altogether, any of which could materially reduce our revenue.
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Our quarterly and annual operating results may fluctuate significantly, which makes it difficult for us to predict our future operating results.
−Removed: The estimated time in which we may achieve positive Adjusted EBITDA and profitability and
−Removed: fluctuations in our operating results may vary from period to period due to a variety of factors, many of which are beyond our control.
+Added: The estimated time in which we may achieve positive Adjusted EBITDA and profitability and fluctuations in our operating results may vary from period to period due to a variety of factors, many of which are beyond our control.
These factors include, but are not limited to:
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• our ability to increase the average selling price for our AVISE ® testing products;
−Removed: • our ability to successfully commercialize new testing products and to do so in the timelines in which we expect, including the January 2025 launch of AVISE ® CTD incorporating our new T-Cell Biomarkers and RA Sub-Profile Biomarkers;
−Removed: • the extent to which the T-Cell Biomarkers and RA Sub-Profile Biomarkers are reimbursed by third-party payors;
+Added: • our ability to successfully launch and commercialize new testing products and to do so in the timelines in which we expect;
• the extent to which our current testing and future testing products, if any, are eligible for coverage and reimbursement from third-party payors;
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The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results and could cause our estimates regarding positive Adjusted EBITDA profitability to ultimately be incorrect.
−Removed: For instance during 2024, our quarterly operating results varied due, in part, to our efforts regarding revenue cycle management.
+Added: In particular, our quarterly operating results have and may continue to vary due, in part, to our efforts regarding revenue cycle management.
As a result, comparing our operating results on a period-to-period basis may not be meaningful.
Investors should not rely on our past results as an indication of our future performance.
−Removed: This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
+Added: This variability and unpredictability has and could again result in our failing to meet the expectations of industry or financial analysts or investors for a period.
If our revenue, Adjusted EBITDA, profitability estimates or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, this could have a material adverse effect on our business, financial condition and results of operations and/or cause the market price of our common stock to decline.
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In the near term, we expect to continue to derive a majority of our revenue from sales of AVISE ® CTD.
−Removed: We are in various stages of commercialization and research and development with respect to other testing products that we may offer, but there can be no assurance that we will be able to successfully develop or commercialize these testing products.
+Added: We are in various stages of commercialization and research and development with respect to other testing products that we may offer, but there can be no assurance that we will be able to successfully develop or commercialize these testing products or generate substantial revenue from these testing products.
The demand for our testing products may decrease or may not continue to increase at historical rates for a number of reasons.
In addition, at any point in time we may decide to no longer commercialize any of our testing products for any number of reasons.
−Removed: While we have experienced revenue growth from the sale of our testing products, we
−Removed: may not be able to sustain this growth or maintain existing revenue levels.
+Added: While we have experienced revenue growth from the sale of our testing products in certain quarterly and annual periods, we may not be able to sustain this growth or maintain existing revenue levels.
Further, we cannot ensure the continued availability of our testing products in commercial quantities at acceptable costs.
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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
−Removed: Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics, political instability, acts of war, including the current conflicts in Ukraine and the Middle East, and other natural or manmade disasters (which may be exacerbated due to climate change) or business interruptions, for which we are predominantly self-insured.
+Added: Our operations could be subject disruptions, including, but not limited to, earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics, political instability, including the impact of tensions in Asia on the global economy, trade policy uncertainty, acts of war, including the current conflicts in Ukraine and the Middle East, and other natural or manmade disasters (which may be exacerbated due to climate change) or business interruptions, for which we are predominantly self-insured.
We rely on third-party manufacturers to produce our testing products.
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If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
−Removed: Pursuant to Section 404 of Sarbanes-Oxley, our management is required to report upon the effectiveness of our internal control over financial reporting.
+Added: Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), our management is required to report upon the effectiveness of our internal control over financial reporting.
When we reach an accelerated filer threshold, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting.
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and/or hire additional accounting and finance staff as we grow.
−Removed: If we or, if required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
+Added: required, our auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.
Our management has previously identified material weaknesses in our internal controls that we believe have been remediated, however we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.
Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.
−Removed: If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market LLC, the SEC or other regulatory authorities.
+Added: If we are again unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market LLC, the SEC or other regulatory authorities.
Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.
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In addition, if we or our future partners have to withdraw a product from the market, it could harm our business and/or impact market acceptance of our other testing products.
−Removed: Further, our AVISE ® testing products consist of various biomarkers, any of which could independently encounter issues with manufacturing, supply or overall quality.
−Removed: If any of the biomarkers in our AVISE ® CTD test were to encounter any issues, we may experience an impact in the overall success of AVISE ® CTD as a whole, including a reduction in ASP or overall revenue, until such time as it can be remedied.
−Removed: Moreover, if our testing products do not achieve an adequate level of acceptance by rheumatologists, hospitals, third-party payors or patients, we may not generate sufficient revenue from that testing product and may not become or remain profitable.
+Added: Further, our biomarker testing products rely on reagents and assays for various biomarkers, any of which could independently encounter manufacturing, supply, or quality issues.
+Added: Moreover, if our testing products do not achieve an adequate level of acceptance by rheumatologists, hospitals, third-party payors or patients, we may not generate sufficient revenue from that testing product and may
+Added: not become or remain profitable.
Our efforts to educate the medical community and third-party payors regarding the benefits of our testing products may require significant resources and may never be successful.
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To generate increased demand, we will need to continue to educate healthcare providers about the benefits of our testing products through publications in peer-reviewed medical journals, presentations at medical conferences and other similar means.
−Removed: For example, in the fourth quarter of 2024, we were featured in five scientific presentations at the 2024 ACR annual meeting.
−Removed: We will also need to generate demand for our testing products through one-on-one education by our sales force.
−Removed: We also plan to focus on educating patients about the benefits of these testing products, which we believe will be necessary to generate further demand.
+Added: We will also need to continue to generate demand for our testing products through one-on-one education by our sales force.
+Added: We also focus on educating patients about the benefits of our testing products, which we believe is necessary to generate further demand.
In addition, our inability to obtain and maintain coverage and adequate reimbursement from third-party payors may limit adoption by healthcare providers, as well as third-party payors exerting pressure on healthcare providers to order in-network testing products which could adversely affect our revenue.
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These include, without limitation, the number of patients with autoimmune and autoimmune-related diseases and the assumed prices at which we can sell testing products and our partners can sell therapeutics in markets that have not been established.
−Removed: While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive
−Removed: accuracy of these underlying factors.
+Added: While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.
As a result, our estimates of the annual total addressable market for our current and potential future testing products may prove to be incorrect.
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If we do not accurately evaluate the commercial potential or target market for a potential testing product, we may forego other similar arrangements which would have been more advantageous for us to pursue.
−Removed: We rely on sole suppliers for some of the reagents, equipment and other materials used in our testing products, and a sole third-party fulfillment center used to supply healthcare providers with our testing products, and we may not be able to find replacements or transition to alternative suppliers or fulfillment centers.
+Added: We rely on sole suppliers for some of the reagents, equipment and other materials used in our testing products, and we may not be able to find replacements or transition to alternative suppliers.
We rely on sole suppliers for critical supply of reagents, equipment and other materials that we use to perform the tests that comprise our testing products.
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Additionally, if we are unable to remedy future potential quality issues with unique reagent suppliers, or otherwise find a supplier for future biomarkers with issues, we may experience difficulties obtaining market acceptance for our products.
−Removed: Moreover, any issues with quality may result in a change from time to time of the composition of our tests, including our AVISE ® CTD test, which could impact the average selling price and revenues received from sales of such test.
+Added: Moreover, any issues with quality may result in a change from time to time of the composition of our tests, which could impact the average selling price and revenues received from sales of such tests.
In addition, if we should encounter delays or difficulties in securing the quality and quantity of equipment we require for our testing products, we may need to reconfigure our test processes, which could result in an interruption in sales.
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In addition, in order to mitigate these risks, we may need to maintain inventories of these supplies at higher levels than would be the case if multiple sources of supply were available.
−Removed: We rely on a third-party as our sole fulfillment center in Georgia to supply healthcare providers with our testing products.
−Removed: Our sole fulfillment center could be harmed or rendered inoperable by natural or man-made disasters, including fire, earthquake, hurricane, flooding, pandemics or other disease outbreaks and power outages, which may render it difficult or impossible for us to supply healthcare providers with our testing products for some period of time.
−Removed: The inability to supply healthcare providers with our testing products or the backlog of tests that could develop if our sole fulfillment center is inoperable for even a short period of time, may result in the loss of customers or harm to our reputation or business relationships, and we may be unable to regain those customers or repair our reputation in the future.
−Removed: Furthermore, our sole fulfillment center could be costly and time-consuming to repair or replace.
−Removed: If our sole fulfillment center is destroyed or otherwise rendered inoperable, we may have difficulty replacing this fulfillment center and there can be no assurance we could do so in a timely manner, on terms favorable to us or at all.
+Added: We directly supply healthcare providers with our testing products.
+Added: Our warehouse facility could be harmed or rendered inoperable by natural or man-made disasters, including fire, earthquake, hurricane, flooding, pandemics or other disease outbreaks and power outages, which may render it difficult or impossible for us to supply healthcare providers with our testing products for some period of time.
+Added: The inability to supply healthcare providers with our testing products or the backlog of tests that could develop if our warehouse facility is inoperable for even a short period of time, may result in the loss of customers or harm to our reputation or business relationships, and we may be unable to regain those customers or repair our reputation in the future.
+Added: Furthermore, our warehouse facility could be costly and time-consuming to repair or replace.
+Added: If our warehouse facility is destroyed or otherwise rendered inoperable, we may have difficulty replacing it and there can be no assurance we could do so in a timely manner, on terms favorable to us or at all.
If we are unable to support demand for our current testing products or any of our future testing products or solutions, our business could suffer.
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We may also need additional certified laboratory scientists and other scientific and technical personnel to process higher volumes of our testing products.
−Removed: We cannot assure you that any increases in scale, related improvements and quality assurance will be successfully implemented or
−Removed: that appropriate personnel will be available.
−Removed: We will also need to purchase additional equipment, some of which can take several months or more to procure, setup and validate, and increase our software and computing capacity to meet increased demand.
+Added: We cannot assure you that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available.
+Added: We will also need to purchase additional equipment, some of which can take several months or more to procure, set up and validate, and increase our software and computing capacity to meet increased demand.
Failure to implement necessary procedures, transition to new processes, hire the necessary personnel, obtain any necessary additional equipment and increase software and computing capacity could result in higher costs of processing tests or inability to meet demand.
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Such errors can occur with claims submission, third-party transmission or in the processing of the claim by the payor.
−Removed: Claim adjudication errors may result in a delay in payment processing or a reduction in the amount of the payment received.
+Added: Claim adjudication errors typically result in a delay in payment processing or a reduction in the amount of the payment received.
As we introduce new testing products, we will need to add new codes to our billing process as well as our financial reporting systems.
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These changes have in the past and may again result in uneven cash flow or impact the timing of revenue recognized with these payors.
−Removed: With respect to payments received from government healthcare programs, factors such as a prolonged
−Removed: government shutdown could cause significant regulatory delays or could result in attempts to reduce payments made to us by federal healthcare programs.
+Added: With respect to payments received from government healthcare programs, factors such as a prolonged government shutdown could cause significant regulatory delays or could result in attempts to reduce payments made to us by federal healthcare programs.
In addition, third-party payors may refuse to ultimately make payment if their processes and requirements have not been met on a timely basis.
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In 2025, Noridian posted the calendar year 2026 Medicare Physician Fee Schedule (MPFS), and CLFS, which establishes the reimbursement rates to be paid by Medicare for our jurisdiction for services performed on or after January 1, 2026.
−Removed: PAMA and changes to the MPFS and CLFS are not expected to have a significant impact to Medicare reimbursement for AVISE ® CTD in 2025 compared to levels experienced in 2024.
Revenue from Medicare comprised 24% and 25% of our revenue for the years ended December 31, 2025 and 2024, respectively.
−Removed: Revenue from the sale of our AVISE ® CTD test comprised 91% and 88% of our revenue for the years ended December 31, 2024 and 2023, respectively.
+Added: Revenue from the sale of our AVISE ® CTD test comprised 91% of our revenue for each of the years ended December 31, 2025 and 2024.
We also rely on a third-party provider to provide revenue cycle management software systems for certain processing and collection functions.
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We sell our testing products through our own specialized sales force.
−Removed: Our testing products compete in a concentrated specialty market of autoimmune and autoimmune-related diseases, and utilizing a specialized sales force is integral to our strategy.
+Added: Our testing products compete in a concentrated specialty market of autoimmune and autoimmune-related diseases, and utilizing a specialized sales
+Added: force is integral to our strategy.
As such, we believe it is necessary to maintain a sales force that includes sales representatives with specific technical backgrounds and industry expertise and expect to continue to evaluate the reach and frequency with rheumatologists, including as we launch our pipeline products.
−Removed: We may be required to expand our specialized sales force as our company grows.
−Removed: Training of additional sales representatives can be costly and time consuming, particularly given the level of experience and sophistication we seek in our sales force.
−Removed: If we are unable to effectively retain, train and integrate additional sales representatives, as needed, it may adversely affect our ability to effectively market and sell our testing products.
+Added: We expect to expand our sales territories in a measured fashion where we believe there is a high likelihood of profitable revenue growth.
+Added: Training of sales representatives can be costly and time consuming, particularly given the level of experience and sophistication we seek in our sales force.
+Added: If we are unable to effectively retain, train and integrate sales representatives, as needed, it may adversely affect our ability to effectively market and sell our testing products.
In addition, competition for highly specialized sales personnel is intense, and we may not be able to attract and retain personnel or be able to maintain an efficient and effective sales and marketing force.
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and Quest Diagnostics Incorporated, all of which have existing infrastructures to support the commercialization of diagnostic services.
−Removed: Large, multispecialty group medical clinics, health systems
−Removed: and academic medical university-based clinics may provide in-house clinical laboratories offering autoimmune and autoimmune-related disease testing services.
+Added: Large, multispecialty group medical clinics, health systems and academic medical university-based clinics may provide in-house clinical laboratories offering autoimmune and autoimmune-related disease testing services.
Additionally, we compete against regional clinical laboratories providing testing in the autoimmune and autoimmune-related disease field, including Aqtual, Inc.
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Developing new testing products involves a lengthy and complex process, and we may not be able to commercialize on a timely basis, or at all, other testing products we are developing.
−Removed: We may not be able to develop testing products with the clinical utility necessary to be useful and commercially successful.
+Added: We may not be able to develop testing products, including those testing products in our pipeline, with the clinical utility necessary to be useful and commercially successful.
There are certain products for which a commercial launch would trigger additional payment obligations to licensors of the technology.
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Our testing product development efforts may fail for many reasons, including:
−Removed: • failure to identify additional biomarkers to incorporate into our testing products;
+Added: • failure to identify additional biomarkers to incorporate into our testing products or an inability to obtain intellectual property protection for testing products targeting new biomarkers;
• failure or sub-optimal performance of the testing product at the research or development stage;
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Typically, few research and development projects result in commercial products, and success in early clinical studies often is not replicated in later studies.
−Removed: At any point, we may abandon development of a testing product candidate or we may be required to expend considerable resources repeating clinical studies, which would
−Removed: adversely affect the timing for generating potential revenue from a new testing product and our ability to invest in other products in our pipeline.
+Added: At any point, we may abandon development of a testing product candidate or we may be required to expend considerable resources repeating clinical studies, which would adversely affect the timing for generating potential revenue from a new testing product and our ability to invest in other products in our pipeline.
In addition, as we develop testing products, we may have to make significant investments in product development, marketing and selling resources.
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If we cannot enter into new clinical study collaborations, our product development and subsequent commercialization could be delayed.
−Removed: In the past, we have entered into clinical study collaborations, and our success in the future depends in part on our ability to enter into additional collaborations with highly regarded institutions.
+Added: We have entered into clinical study collaborations, and our success in the future depends in part on our ability to enter into additional collaborations with highly regarded institutions.
This can be difficult due to internal and external constraints placed on these organizations.
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We also may pursue strategic alliances that leverage our core technology and industry experience to expand our offerings or distribution, make investments in other companies or acquire ownership rights to therapeutics that are synergistic with our testing products.
−Removed: To date, other than our acquisition of the medical diagnostics division of Cypress Bioscience, Inc.
−Removed: in 2010, we have not acquired other companies or therapeutics and we have limited experience with respect to the formation of strategic alliances and joint ventures.
−Removed: If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities.
+Added: We have limited experience acquiring other companies or therapeutics and with respect to the formation of strategic alliances and joint ventures.
+Added: If we make any acquisitions, we may not be able to integrate
+Added: these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities.
Any future acquisitions by us also could result in significant write-offs or the incurrence of debt and contingent liabilities, any of which could harm our operating results.
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To finance any acquisitions or investments, we may choose to issue shares of our stock, or stock equivalents, as consideration, which would dilute the ownership of our stockholders.
−Removed: If the price of our common stock is low or volatile, we may not be able to acquire other companies for stock.
+Added: If the price of our common stock is low or volatile, we may not be able to acquire other companies for equity.
Alternatively, it may be necessary for us to raise additional funds for these activities through public or private financings or through the issuance of debt.
−Removed: Additional funds may not be available on terms that are favorable to us, or at all, and any debt financing may involve covenants limiting or restricting our ability to take certain actions.
+Added: This debt financing may involve covenants limiting or restricting our ability to take certain actions.
+Added: Future acquisitions or dispositions could also result in potentially dilutive issuances of our equity securities, the assumption of contingent liabilities, or amortization expenses or write-offs of goodwill, any of which could harm our financial condition.
+Added: Additional funds may not be available on terms that are favorable to us, or at all.
Also, the anticipated benefit of any strategic alliance, joint venture or acquisition may not materialize or such strategic alliance, joint venture or acquisition may be prohibited.
In addition, our loan agreement restricts our ability to pursue certain mergers, acquisitions, amalgamations or consolidations that we may believe to be in our best interest.
−Removed: Additionally, future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition.
We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions might have on our operating results.
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We may also be subject to similar types of claims related to testing products we may develop in the future.
−Removed: Any errors or omissions or professional liability claim could result in substantial damages and be costly and time consuming for us to defend.
+Added: These errors or omissions or professional liability claims could result in material damages and be costly and time consuming for us to defend.
Although we maintain professional liability insurance, we cannot assure you that our insurance would fully protect us from the financial impact of defending against these types of claims or any judgments, fines or settlement costs arising out of any such claims.
1 unchanged sentence
Additionally, any product liability lawsuit could cause material injury to our reputation or cause us to suspend sales of our testing products.
−Removed: Similarly, any product liability lawsuit affecting our partners could also cause injury to our reputation.
+Added: Similarly, any product liability lawsuit affecting our partners could also cause material injury to our reputation.
We may also initiate a correction or removal for one of our testing products, issue a safety alert or undertake a field action or recall to reduce a risk to health posed by potential failure of our products to perform as designed, which could lead to increased costs and lead to increased scrutiny by regulatory authorities and our customers regarding the quality and safety of our testing products and to negative publicity, including safety alerts, press releases or administrative or judicial actions.
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We may not be able to attract or retain qualified scientists and technicians in the future due to the intense competition for qualified personnel among life science businesses, particularly in Southern California.
−Removed: Because it is expected that there will be a shortage of clinical laboratory scientists in coming years, it may become more difficult to hire sufficient numbers of qualified personnel.
+Added: It may become more difficult to hire sufficient numbers of qualified personnel.
We also face competition from universities and public and private research institutions in recruiting and retaining highly qualified scientific personnel.
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Additionally, any new clinical reference laboratory facility opened by us would be subject to certification under CLIA and licensing by several states, including, as applicable, California and New York, which could take a significant amount of time and result in delays in our ability to begin operations.
−Removed: We believe we have the capacity to meet our projected needs for at least the next 12 months, although we may grow at a rate that is faster than we expect.
+Added: We believe we have the capacity to meet our expected business needs for at least the next 12 months, although we may grow at a rate that is faster than we expect.
We may need to further expand our laboratory space in the future.
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Patient specimens degrade and become unusable generally within 48 hours of collection.
−Removed: Therefore, if we do not have other sufficient properly functioning flow cytometers due to
−Removed: failure to meet specifications or they otherwise become inoperable, our ability to process patient specimens in the required timeframe would be compromised and our business could be harmed.
+Added: Therefore, if we do not have other sufficient properly functioning flow cytometers due to failure to meet specifications or they otherwise become inoperable, our ability to process patient specimens in the required timeframe would be compromised and our business could be harmed.
Failure in our information technology, telephone or other systems could significantly disrupt our operations and adversely affect our business and financial condition.
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Additionally, the adoption of AI technologies may further heighten the risk of cyber-attacks.
−Removed: Leveraging AI capabilities to potentially improve internal functions and operations presents further risks and challenges, including the possibility of creating new attack methods for adversaries.
−Removed: The use of AI to support business operations carries inherent risks related to data privacy, IP, and security, such as intended, unintended, or inadvertent transmission of proprietary, confidential, or sensitive information, as well as challenges related to implementing and maintaining AI tools, such as developing and maintaining appropriate datasets for such support.
+Added: Leveraging AI capabilities to potentially improve administrative internal functions and operations presents further risks and challenges, including the possibility of creating new attack methods for adversaries.
+Added: This use of AI to support business operations carries inherent risks related to data privacy, IP, and security, such as intended, unintended, or inadvertent transmission of proprietary, confidential, or sensitive information, as well as challenges related to implementing and maintaining AI tools, such as developing and maintaining appropriate datasets for such support.
If we fail to implement adequate safeguards, the use of AI may introduce additional operational vulnerabilities by producing inaccurate outcomes based on flaws in the underlying data or methodologies, or unintended results.
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It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our practices.
−Removed: If so, this could result in government-imposed fines or orders requiring that we change our practices, as well as private litigation, which could adversely affect our business.
+Added: If so, this could result in government-imposed fines or orders requiring that we change our practices, as well as private litigation, which could adversely affect our
Moreover, these laws and their interpretations are constantly evolving and may become more stringent or inclusive over time.
−Removed: For example, increasing concerns about health information privacy have recently prompted the federal government to issue guidance taking a newly expansive view of the scope of the laws and regulations that they enforce.
Complying with these various laws could cause us to incur substantial costs or require us to change our business practices, systems and compliance procedures in a manner adverse to our business.
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Such adverse effects could include disruptions or restrictions on the ability of our, our collaborators’, or our suppliers’ personnel to travel, and could result in temporary closures of our facilities or the facilities of our collaborators or suppliers, including our sole laboratory.
−Removed: While the impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows has subsided, the extent to which any potential pandemics or health epidemics will affect our operations in the future will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
+Added: The extent to which any potential pandemics or health epidemics will affect our operations in the future will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
Performance issues, service interruptions or price increases by our shipping carrier could adversely affect our business, results of operations and financial condition, and harm our reputation and ability to provide testing services on a timely basis.
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Inflation could adversely affect our business and financial results.
−Removed: The current inflationary environment has resulted in higher prices, which have impacted our costs incurred to generate revenue from our laboratory testing services, costs to attract and retain personnel, and other operating costs.
+Added: The current inflationary environment has resulted in higher prices, which have impacted our costs incurred to generate revenue from our laboratory testing services, costs to attract and retain personnel, and other operating costs in recent periods.
The severity and duration of the current inflationary environment remains uncertain and may continue to impact our financial condition and results of operations.
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As such, inflationary pressures could have a material adverse effect on our performance and financial statements.
+Added: Changes in U.S.
+Added: trade policy and the impact of tariffs may have a material adverse effect on our business, results of operations and financial condition.
+Added: Our business, results of operations and financial condition may be adversely affected by uncertainty and changes in U.S.
+Added: trade policies, including tariffs, quotas, trade agreements or other trade restrictions imposed by the United
+Added: States or other governments.
+Added: Recently, the U.S.
+Added: Government has enacted, repealed, threatened and revised tariffs on various countries.
+Added: Retaliatory measures from affected countries have also been enacted, repealed threatened and revised.
+Added: Several tariff announcements have been followed by announcements of limited exemptions and temporary pauses.
+Added: And, certain tariffs recently enacted by the U.S.
+Added: government have been overturned by the U.S.
+Added: Supreme Court.
+Added: These actions have caused substantial uncertainty and volatility in financial markets and have and may again result in retaliatory measures on U.S.
+Added: Our business requires access to reagents and other materials to run our tests, some of which we source from suppliers located outside the United States.
+Added: Any imposition of or increase in tariffs or other restrictions on imports of reagents or other materials, as well as corresponding price increases for such materials available domestically, if any, could materially increase our costs.
+Added: We would likely be unable to pass all or any such cost increases on to our customers and such cost increases could materially and adversely affect our business, results of operations and financial condition, including our gross margin.
+Added: Tariffs or other trade restrictions may lead to continuing uncertainty and volatility in U.S.
+Added: and global financial and economic conditions and commodity markets, declining consumer confidence, significant inflation and diminished expectations for the economy.
+Added: Such conditions could have a material adverse impact on our business, results of operations and financial position.
+Added: Also, disruptions and volatility in the financial markets may lead to adverse changes in the availability, terms and cost of capital.
+Added: Such adverse changes could increase our costs of capital and limit our access to external financing sources.
+Added: Inadequate funding for the SEC and other government agencies, or a work slowdown or stoppage at those agencies as part of a broader federal government shutdown, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner, or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
+Added: The ability of governmental agencies to meet their mandates can be affected by a variety of factors, including government budget and funding levels, the ability to hire and retain key personnel, and statutory, regulatory, and policy changes.
+Added: Government funding of government agencies on which our operations may rely, including those that fund research and development activities and those that process government payor decisions, is subject to the political process, which is inherently fluid and unpredictable.
+Added: For example, over the last several years, the U.S.
+Added: government has shut down several times, resulting in certain regulatory agencies furloughing critical employees and suspending critical activities.
+Added: If a prolonged government shutdown or slowdown occurs, or a significant reduction in force makes it difficult for the officers or government agencies with which we interact to respond timely, it could have a material adverse effect on our business.
+Added: Further, the ongoing or future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
We maintain cash deposits in excess of federally insured limits.
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We maintain our cash, cash equivalents, and marketable securities with high quality, accredited financial institutions.
−Removed: However, some of these accounts exceed the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000 and, while we believe we are not exposed to significant credit risk due to the financial strength of these depository institutions or investments, if any such depository institution fails to return our deposits, or if a depository institution is subject to other adverse conditions in the financial or credit markets, this could further impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
+Added: However, some of these accounts exceed the Federal Deposit Insurance Corporation insurance limit of $250,000 and, while we believe we are not exposed to significant credit risk due to the financial strength of these depository institutions or investments, if any such depository institution fails to return our deposits, or if a depository institution is subject to other adverse conditions in the financial or credit markets, this could further impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
Further, the failure or collapse of one or more of these depository institutions or default on these investments could materially adversely affect our ability to recover these assets and/or materially harm our financial condition.
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Our term loan contains restrictions that limit our flexibility in operating our business, and if we fail to comply with the covenants and other obligations under our loan agreement, the lenders may be able to accelerate amounts owed under the facility and may foreclose upon the assets securing our obligations.
−Removed: In September 2017, we entered into the loan and security agreement (the 2017 Term Loan) with Innovatus Life Sciences Lending Fund I, LP (Innovatus), which we subsequently amended in November 2019, November 2021, April 2023 and April 2024 (the Amended Loan Agreement).
−Removed: The Amended Loan Agreement is collateralized by substantially all of our personal property, including our intellectual property.
−Removed: The Amended Loan Agreement also subjects us to certain affirmative and negative covenants, including limitations on our ability to transfer or dispose of assets, merge with or acquire other companies, make investments, pay dividends, incur additional indebtedness and liens and conduct transactions with affiliates.
−Removed: We are also subject to certain covenants that require us to maintain a minimum liquidity of at least $2.0 million, achieve certain minimum amounts of annual revenue, as measured on a rolling twelve-month basis, periodically deliver financial statements to Innovatus with an unqualified opinion (including no “going concern”) from our independent certified public accounting firm, and are required under certain conditions to make mandatory prepayments of outstanding principal.
−Removed: As a result of these covenants, we have certain limitations on the manner in which we can conduct our business, and we may be restricted from engaging in favorable business activities or financing future operations or capital needs until our current debt obligations are paid in full or we obtain the consent of Innovatus, which we may not be able to obtain.
−Removed: As of December 31, 2024, there was $15.0 million in principal outstanding under the term loan and an additional $3.5 million outstanding representing interest payable in-kind by adding the paid in-kind interest amount to the outstanding principal balance of the term loans.
−Removed: Under the Amended Loan Agreement, we are required to repay any outstanding principal and capitalized interest in monthly installments over a ten-month period commencing on April 1, 2026.
−Removed: At December 31, 2024, we were in compliance with all covenants of the Amended Loan Agreement.
+Added: On April 25, 2025, we entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings IV, LP (Perceptive) that was amended on March 6, 2026 (as amended, the Credit Agreement), which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $65.0 million (the Perceptive Term Loan Facility).
+Added: An initial tranche of $25.0 million (the Tranche A Loan) was funded on April 25, 2025.
+Added: Additional tranches of up to $10.0 million (the Tranche B Loan), and $30.0 million (the Tranche D Loan, and collectively with the Tranche A Loan, and the Tranche B Loan, the Term Loans) may be drawn subject to the Company’s satisfaction of certain conditions precedent, including specified revenue milestones.
+Added: The Perceptive Term Loan Facility matures on April 25, 2030, and includes an interest-only period through maturity, with all outstanding principal and accrued interest due on the maturity date.
+Added: The Perceptive Term Loan Facility accrues interest at an annual rate equal to the greater of (i) Term Secured Overnight Financing Rate (SOFR) or (ii) 4.75%, plus a margin of 7.0% (the Applicable Margin), payable monthly in arrears.
+Added: Upon the occurrence and during the continuance of an event of default, the Applicable Margin may be increased by 4.0% at Perceptive’s election.
+Added: We may prepay the Term Loans at any time, subject to prepayment premiums ranging from 2.0% to 10.0% of the principal amount, depending on the date of prepayment.
+Added: The Credit Agreement is collateralized by substantially all of our personal property, including our intellectual property.
+Added: The Credit Agreement includes customary affirmative, negative, and financial covenants.
+Added: These include, among others, restrictions on additional indebtedness, liens, dividends, mergers and acquisitions, and affiliate transactions.
+Added: The Credit Agreement also requires that we maintain a minimum unrestricted cash balance of $3.0 million and achieve specified net revenue levels on a quarterly basis beginning with the quarter ending June 30, 2025.
+Added: As a result of these covenants, we have certain limitations on the manner in which we can conduct our business, and we may be restricted from engaging in favorable business activities or financing future operations or capital needs until our current debt obligations are paid in full or we obtain the consent of Perceptive, which we may not be able to obtain.
We cannot be certain that we will be able to generate sufficient cash flow or revenue to meet the financial covenants or pay the principal and accrued interest on our debt.
−Removed: In addition, upon the occurrence of an event of default, Innovatus, among other things, can declare all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes.
−Removed: An event of default includes, but is not limited to, our failure to pay any amount due and payable under the Amended Loan Agreement, the occurrence of a material adverse change in our business as defined in the Amended Loan Agreement, our breach of any representation or warranty in the Amended Loan Agreement, our breach of any covenant in the Amended Loan Agreement (subject to a cure period in some cases), a change in control as defined in the Amended Loan Agreement, our default on any debt payments to a third party in an amount exceeding $0.5 million or any voluntary or involuntary insolvency proceeding.
−Removed: If an event of default occurs and we are unable to repay amounts due under the Amended Loan Agreement, Innovatus could foreclose on substantially all of our personal property, including our intellectual property.
−Removed: We cannot be certain that future working capital, borrowings or equity financings will be available to repay or refinance our debt to Innovatus or any other debt we may incur in the future.
+Added: In addition, upon the occurrence of an event of default, Perceptive, among other things, can declare all indebtedness due and payable immediately, which would adversely impact our liquidity and reduce the availability of our cash flows to fund working capital needs, capital expenditures and other general corporate purposes.
+Added: An event of default includes, among others, non-payment of principal, interest, or fees, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments, cross-defaults to material contracts, certain regulatory-related events and events constituting a change of control.
+Added: If an event of default occurs and we are unable to repay amounts due under the Credit Agreement, Perceptive could foreclose on substantially all of our personal property, including our intellectual property.
+Added: We cannot be certain that future working capital, borrowings or equity financings will be available to repay or refinance our debt to Perceptive or any other debt we may incur in the future.
We may require substantial additional capital to finance our planned operations, which may not be available to us on acceptable terms or at all.
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Our operating plans and other demands on our cash resources may change as a result of many factors currently unknown to us and we may need to seek additional funds sooner than planned, through public or private equity or debt financings or other sources, such as strategic collaborations.
−Removed: If our available cash balances and anticipated future revenue are insufficient to satisfy our liquidity requirements, including because of lower demand for our testing products or lower-than-expected rates of reimbursement from commercial payors and government payors, or other risks described in this “Risk Factors” section, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements.
+Added: If our available cash balances and anticipated future revenue are insufficient to satisfy our liquidity requirements, including because of lower demand for our testing products or lower-than-expected rates of reimbursement from commercial payors and
+Added: government payors, or other risks described in this “Risk Factors” section, we may seek to raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements.
On November 17, 2023, we filed a shelf registration statement on Form S-3, as amended by Amendment No.
1 to Form S-3 filed on November 27, 2023, that provides for aggregate offerings of up to $150.0 million of our securities subject to various limitations.
−Removed: We filed a prospectus on November 29, 2023 pursuant to this registration statement, registering sales of our common stock in an amount not to exceed $50.0 million, pursuant to a sales agreement by and between us and TD Securities (USA) LLC (as successor in interest to Cowen and Company, LLC) (TD Cowen), as amended by Amendment No.
+Added: We filed a prospectus supplement on November 29, 2023 pursuant to this registration statement, registering sales of our common stock in an amount not to exceed $50.0 million, pursuant to a sales agreement by and between us and TD Securities (USA) LLC (TD Cowen), as amended by Amendment No.
1 to Sales Agreement dated November 17, 2023 (the Amended Sales Agreement).
+Added: Additionally, on May 8, 2025, we filed a prospectus supplement relating to the issuance and sale of an aggregate of 3,852,500 shares of our common stock to Canaccord Genuity (the Underwriter), including 502,500 shares of our common stock issued and sold pursuant to the exercise in full of the Underwriter’s option to purchase additional shares.
Using a shelf registration statement to raise capital generally takes less time and is less expensive than other means, such as conducting an offering under a registration statement on Form S-1 and companies may be able to receive more favorable terms by raising capital pursuant to a shelf registration statement on Form S-3.
Our ability to raise capital under our current shelf registration statement (and any future registration statement on Form S-3) has in the past, and may again in the future be, limited by, among other things, current and future SEC rules and regulations impacting the eligibility of smaller companies to use Form S-3 without restrictions.
−Removed: We have previously been subject to the "baby shelf rules" and if we were to become subject to the "baby shelf rules" again, we would be unable to use our shelf registration statement on Form S-3 or the Amended Sales Agreement to raise additional funds to the extent the aggregate market value of securities sold by us or on our behalf pursuant to Instruction I.B.6.
+Added: We have previously been subject to the "baby shelf rules" and if we were to become subject to the "baby shelf rules" again, we would be limited in our ability to use our shelf registration statement on Form S-3 or the Amended Sales Agreement to raise additional funds to the extent the aggregate market value of securities sold by us or on our behalf pursuant to Instruction I.B.6.
of Form S-3 during the 12 calendar months immediately prior to, and including, any intended sale would exceed one-third of the aggregate market value of our public float, calculated in accordance with the instructions to Form S-3.
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of Form S-3, or public float, was greater than $75.0 million as of the date of this Annual Report.
−Removed: In the case of the incurrence of further indebtedness, the Amended Loan Agreement, subject to certain customary exceptions, restricts our ability to incur additional indebtedness or encumber any of our property without the prior consent of Innovatus.
−Removed: Under the Amended Loan Agreement, we are required to make monthly interest payments at a rate equal to the sum (the Basic Rate) of (a) the greater of 8.0% or The Wall Street Journal prime rate (the Prime Rate), plus (b) 2.0% (provided that 1.5% of the Basic Rate is payable in-kind by adding the amount to the outstanding principal balance of the term loans).
+Added: In the case of the incurrence of further indebtedness, the Credit Agreement, subject to certain exceptions, restricts our ability to incur additional indebtedness or encumber any of our property without the prior consent of the Majority Lenders (as defined in the Credit Agreement).
+Added: Under the Credit Agreement, we are required to make monthly interest payments based on an annual rate equal to the greater of (i) SOFR or (ii) 4.75%, plus the Applicable Margin.
We may also consider raising additional capital in the future to expand our business, pursue strategic investments, take advantage of financing opportunities, or for other reasons.
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Additional funding may not be available to us on acceptable terms, or at all.
−Removed: If we raise funds by issuing equity securities, including as a result of our existing sales agreement with TD Cowen, dilution to our stockholders could result, and the market price of our common stock could decline.
+Added: If we raise funds by issuing equity securities, including pursuant to the Amended Sales Agreement, dilution to our stockholders could result, and the market price of our common stock could decline.
Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock.
−Removed: The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants (similar to our current obligations pursuant to the Amended Loan Agreement), such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business.
−Removed: In addition, our Amended Loan Agreement restricts our ability to incur additional indebtedness or encumber any of our property without the prior consent of Innovatus, subject to certain exceptions.
+Added: The incurrence of additional indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations and could also result in restrictive covenants (similar to our current obligations pursuant to the Credit Agreement), such as limitations on our ability to incur additional debt or issue additional equity, limitations on our ability to acquire or license intellectual property rights, and other operating restrictions that could adversely affect our ability to conduct our business.
In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms.
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We are a “smaller reporting company” as defined in the Exchange Act.
−Removed: We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled
−Removed: disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
+Added: We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Risks Related to Regulatory and Compliance Matters
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Since December 2019, Congress has passed a series of laws to modify PAMA’s statutory requirements related to the data reporting period and phase-in of payment reductions under the CLFS for CDLTs that are not ADLTs.
−Removed: Most recently, on September 26, 2024, Section 221 of the Continuing Appropriations and Extensions Act, 2025, was passed, and it delayed data reporting requirements for CDLTs that are not ADLTs as well as the phase-in of payment reductions until 2026.
+Added: Most recently, on February 3, 2026, Section 6226 of the Consolidated Appropriations Act, 2026, was passed, and it delayed data reporting requirements for CDLTs that are not ADLTs as well as the phase-in of payment reductions until 2027.
Medicare reimbursement for CDLTs is based on the weighted-median of the payments made by private payors for these tests, rendering private payor payment levels even more significant than in the past.
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If our accreditation under CAP were to terminate, either voluntarily or involuntarily, we would need to convert our certification under CLIA to a certificate of compliance (or to a certificate of accreditation with another accreditation organization) in order to maintain our ability to perform clinical testing and to continue commercial operations.
−Removed: Whether we would be able to successfully maintain operations through either of these alternatives would depend upon the facts and circumstances surrounding termination of our CAP accreditation, such as whether any deficiencies were identified by CAP as the basis for termination and, if so, whether these were addressed to the satisfaction of the surveyors for the CLIA program (or another accrediting organization).
+Added: Whether we would be able to successfully maintain operations through either of these alternatives would depend upon the facts and circumstances surrounding termination of our CAP accreditation, such as whether any deficiencies were identified by CAP as the basis for
+Added: termination and, if so, whether these were addressed to the satisfaction of the surveyors for the CLIA program (or another accrediting organization).
The failure to comply with CLIA requirements can result in enforcement actions, including the revocation, suspension, or limitation of our CLIA certificate of accreditation, as well as a directed plan of correction, state on-site monitoring, civil money penalties, civil injunctive suit and/or criminal penalties.
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• CLIA’s and CAP’s regulation of our laboratory activities, as well as state licensure laws and regulations;
−Removed: • FDA laws and regulations that apply to medical devices such as our companion diagnostics and other IVDs as well as LDTs, following the July 2024 effective date of the agency’s LDT final rule;
• federal and state laws and standards affecting reimbursement by government payors, including certain coding requirements to obtain reimbursement and certain payment mechanisms for clinical laboratory services resulting from PAMA;
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• similar foreign laws and regulations that apply to us in the countries in which we operate or may operate in the future.
−Removed: Various federal and state laws, such as the Sunshine Act and state gift bans, that apply to medical device manufacturers could extend to our clinical reference laboratory now that FDA will actively regulate LDTs as medical devices pursuant to the 2024 final rule, and clinical laboratories offering and furnishing LDTs are considered to be device manufacturers as a result.
−Removed: We are in the process of evaluating whether and to what extent those kinds of medical device-specific state requirements may be applicable to our operations.
Any future growth of our business, including, in particular, continued reliance on consultants, commercial partners and other third parties, may increase the potential for violating these laws.
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Although an effective compliance program can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.
−Removed: Given the complexity of these existing and changing rules and regulations, it is not always possible to identify and deter misconduct by employees, distributors, consultants and commercial partners and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses
−Removed: or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with applicable laws or regulations.
+Added: Given the complexity of these existing and changing rules and regulations, it is not always possible to identify and deter misconduct by employees, distributors, consultants and commercial partners and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with applicable laws or regulations.
Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred.
−Removed: For additional information see the risk factor below entitled “ We have previously and may again in the future be required to modify our business practices, pay fines, incur significant expenses or experience losses due to litigation or governmental investigations.” Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.
+Added: For additional information see the risk factor below entitled “ We have previously and may again in the future be required to modify our business practices, pay fines, incur significant expenses or experience losses due to litigation or governmental investigations.” Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses
+Added: and divert our management’s attention from the operation of our business.
Moreover, achieving and sustaining compliance with these laws may prove costly.
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In February 2024, the relator filed a motion for leave to amend the complaint.
−Removed: Exagen opposed this motion, and all motions are still pending.
−Removed: While we cannot predict when these matters will be resolved, the Company intends to vigorously defend against the claims being asserted in the complaint.
+Added: Exagen opposed this motion, and the case was ultimately dismissed with prejudice on July 15, 2025.
Any of these circumstances may adversely affect our business, prospects, reputation and results of operations.
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Anti-corruption laws are interpreted broadly and prohibit companies and their employees, agents, contractors and other collaborators from authorizing, promising, offering, or providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector.
−Removed: We may engage third parties to sell our testing products outside the United States, to conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals.
+Added: We may engage third parties to sell our testing products outside the United States, to
+Added: conduct clinical trials, and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals.
We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations.
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Specifically, the FDA defines an IVD as “reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae.” Therefore, the FDA generally considers diagnostic testing products to be IVDs subject to the agency’s regulatory requirements for IVDs.
−Removed: Historically, the FDA had generally exercised its enforcement discretion and not enforced applicable regulations with respect to LDTs, which are IVDs that are designed, manufactured, and used within a single high-complexity CLIA-certified laboratory.
+Added: Although the FDA sought to regulate LDTs actively under medical device regulations through notice-and-comment rulemaking after decades of exercising enforcement discretion with respect to LDTs, the U.S.
+Added: District Court for the Eastern District of Texas vacated the final rule in its entirety, holding that the rule exceeded the agency’s authority under the FDCA.
We believe that all of our AVISE ® test products are LDTs, as are our near-term pipeline candidate tests.
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The premarket review process for diagnostic testing products can be lengthy, expensive, time-consuming, and unpredictable.
−Removed: As part of the process to prepare regulatory submissions for FDA review, we may be required to conduct formal clinical trials before applying for commercial marketing authorization.
+Added: As part of the process to prepare regulatory submissions for FDA review, we may be required to conduct formal clinical trials under agency regulations before applying for commercial marketing authorization.
Performing additional, new nonclinical studies or clinical trials in order to obtain product approval from the FDA, if any were to become necessary, would take a significant amount of time and would substantially delay our ability to commercialize our AVISE ® tests, all of which would adversely impact our business.
−Removed: While we believe that we are currently in material compliance with applicable laws and regulations as historically enforced by the FDA with respect to LDTs, we cannot assure you that the FDA will agree with our determination.
+Added: While we believe that we are currently in material compliance with applicable laws and regulations with respect to LDTs, we cannot assure you that the FDA will agree with our determination.
Any finding by the FDA or another regulatory authority that we have violated these laws and regulations, or a public announcement that we are being investigated for possible violations, could adversely affect our business, prospects, results of operations or financial condition.
−Removed: Planned changes in the way that the FDA regulates tests designed and performed by laboratories like ours could result in delay or additional expense in offering our current tests and tests that we may develop in the future.
−Removed: We currently market our AVISE ® tests as LDTs and may, in the future, market other tests as LDTs.
−Removed: Historically, the FDA had exercised enforcement discretion with respect to most LDTs and generally had not required laboratories that furnish LDTs to comply with the agency’s requirements for medical devices (e.g., establishment registration, device listing, quality system regulations, premarket clearance or approval, and post-market controls).
−Removed: May 2024, the FDA issued a final rule to regulate LDTs under the current medical device framework and phasing out its existing enforcement discretion policy for this category of diagnostic tests over several years.
−Removed: The effective date of the agency’s final rule was July 5, 2024.
−Removed: The agency’s final rule provides that the LDT enforcement policy phase-out process will occur in gradual stages over a total period of four years, with premarket approval applications for high-risk tests to be submitted by the 3.5-year mark.
−Removed: Moderate-risk and low-risks tests are expected to be in compliance at the four-year mark, although FDA has stated that if premarket submissions are pending review it will continue to exercise enforcement discretion with respect to those tests.
−Removed: The FDA’s final rule is complex and, concurrently, the agency announced several exceptions from the requirement to comply with full medical device regulatory controls, depending upon the specific nature of the LDT and the clinical laboratory that is offering such LDT for use by health care providers.
−Removed: Of potential relevance is the agency’s position on LDTs that were marketed prior to the official publication date of the final rule.
−Removed: Such “currently marketed” tests are subject to many of the device regulatory controls but are exempted from the premarket review and FDA authorization requirements (unless or until significant modifications are made to such “currently marketed” tests).
−Removed: Similarly, FDA has created a partial enforcement discretion policy for tests approved by the New York State Clinical Laboratory Evaluation Program whereby such tests also do not need to undergo FDA premarket review but must come into compliance with all other device general controls in a stagged fashion between 2025 and 2027.
−Removed: We have begun the process of evaluating the final rule’s potential impact on our tests, as well as our operations and business more generally.
−Removed: On May 29, 2024, the American Clinical Laboratory Association (ACLA) and one of its members filed a complaint against the FDA in the Eastern District of Texas, alleging that the agency does not have authority to promulgate the LDT final rule and seeking to vacate the FDA’s action.
−Removed: A second lawsuit was also filed against FDA by the Association for Molecular Pathology (AMP) on August 19, 2024 in the Southern District of Texas, and subsequently the two cases were consolidated into a single action pending in the Eastern District of Texas.
−Removed: Briefing is ongoing in the consolidated case, and the outcome of such litigation is uncertain.
−Removed: The litigation could potentially affect FDA’s plans to implement these new LDT requirements, making the potential implementation timeline somewhat uncertain, although no preliminary injunction has been issued to date.
−Removed: Accordingly, the agency has continued its implementation efforts by actively providing guidance and training to clinical laboratories on how to comply with medical device general controls.
−Removed: Affected stakeholders also continue to press for a comprehensive legislative solution to create a harmonized paradigm for oversight of LDTs by both the FDA and CMS, instead of implementation of the FDA’s final rule, which may be disruptive to the industry and to patient access to certain diagnostic tests.
−Removed: However, this FDA rulemaking was initiated after years of failed congressional attempts to harmonize the regulatory paradigms applicable to LDTs and other IVDs, making it unclear whether any legislative efforts would be successful going forward.
−Removed: If the FDA prevails in the Texas litigation and is able to fully implement the multi-year phase-in plan for the LDT final rule or Congress enacts comprehensive legislation to regulate in vitro diagnostics that moots the need for the LDT final rule, it could have a materially adverse impact on our results of operations.
−Removed: Failure to comply with any applicable FDA requirements could trigger a range of enforcement actions by the FDA, including warning letters, civil monetary penalties, injunctions, criminal prosecution, recall or seizure, operating restrictions, partial suspension or total shutdown of operations and denial of or challenges to applications for clearance or approval, as well as significant adverse publicity.
The FTC and/or state enforcement or regulatory agencies may object to the methods and materials we use to promote our tests and initiate enforcement against us, which could adversely affect our business and financial condition.
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Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could materially and adversely affect our business, results of operations and financial condition.
−Removed: Any failure or perceived failure by us to comply with federal or state laws or regulations, our internal policies and procedures or our contracts governing our use and disclosures of personal information could result in negative publicity, government investigations and enforcement actions including significant penalties, claims by third parties,
−Removed: and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
+Added: Any failure or perceived failure by us to comply with federal or state laws or regulations, our internal policies and procedures or our contracts governing our use and disclosures of personal information could result in negative
+Added: publicity, government investigations and enforcement actions including significant penalties, claims by third parties, and damage to our reputation, any of which could have a material adverse effect on our operations, financial performance and business.
Failure to comply with HIPAA, the HITECH Act, their implementing regulations and similar comparable state laws and regulations affecting the transmission, security and privacy of health information could result in significant penalties or private litigation.
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Additionally, certain states have adopted comparable privacy and security laws and regulations, some of which may apply more broadly or be more stringent than HIPAA.
−Removed: For example, the CCPA, which went into effect on January 1, 2020, gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
+Added: For example, the CCPA, which went into effect on January 1, 2020, gives California residents, including our California-based employees, expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
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It also created a new regulatory authority, the California Privacy Protection Agency (CPPA), which is authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
−Removed: In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws (for example Virginia's Consumer Data Protection Act and other similar laws that recently went into effect in in other states, such as Utah, Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Montana, Oregon, Tennessee, and Texas or Washington's "My Health My Data" Act), any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
+Added: In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws (for example Virginia's Consumer Data Protection Act and other similar laws that recently went into effect in other states), any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
In Europe, the GDPR went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the EEA.
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Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to countries outside of the EEA that have not been found to provide adequate protection to such personal data.
−Removed: In 2016, the EU and United States agreed to a transfer framework for data transferred from the EU to the United States, called the Privacy Shield, but the Privacy Shield was invalidated in July 2020 by the Court of Justice of the EU.
−Removed: In July 2023, however, the European Commission adopted an adequacy decision for a new mechanism for transferring data from the EU to the United States – the EU-US Data Privacy Framework, which provides EU individuals with several new rights, including the right to obtain access to their data, or obtain correction or deletion of incorrect or unlawfully handled data.
−Removed: The adequacy decision followed the signing of an executive order introducing new binding safeguards addressing the reasons behind the Court of Justice of the EU’s invalidation of the original Privacy Shield.
+Added: In July 2023, the European Commission adopted an adequacy decision with respect to a mechanism for transferring data from the EU to the United States – the EU-US Data Privacy Framework, which provides EU individuals with several new rights, including the right to obtain access to their data, or obtain correction or deletion of incorrect or unlawfully handled data.
+Added: The adequacy decision followed the signing of an executive order introducing new binding safeguards addressing the reasons behind the Court of Justice of the EU’s invalidation of the original Privacy Shield in 2016.
The European Commission will continually review developments in the United States along with its adequacy decision, and the adequacy decision could be altered or withdrawn.
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GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of annual global turnover.
−Removed: In June of 2021, the European Commission issued a decision, which will sunset on June 27, 2025 without further action, that the United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the EU to the United Kingdom.
+Added: In June of 2021, the European Commission issued a decision, which was subsequently extended on December 19, 2025 through December 27, 2031, that the United Kingdom ensures an adequate level of protection for personal data transferred under the EU GDPR from the EU to the United Kingdom.
The regulatory framework governing the collection, storage, use and sharing of certain information, particularly financial and other personal information, is rapidly evolving and is likely to continue to be subject to uncertainty and varying interpretations.
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Risks Related to our Intellectual Property
−Removed: If we are unable to maintain intellectual property protection, our competitive position could be harmed.
+Added: If we are unable to maintain or obtain intellectual property protection, our competitive position could be harmed.
Our ability to protect our technologies, such as the AVISE ® Lupus platform, affects our ability to compete and to achieve sustained profitability.
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and foreign patents and patent applications, copyrights, trademarks and trademark applications, and contractual restrictions to protect our intellectual property rights.
−Removed: We cannot be certain that the claims in our granted patents and pending patent applications covering our AVISE ® testing products will be considered patentable or enforceable by the United States Patent and Trademark Office (the USPTO) courts in the United States, or by patent offices and courts in foreign countries.
+Added: We cannot be certain that the claims in our granted patents and pending patent applications covering our testing products will be considered patentable or enforceable by the United States Patent and Trademark Office (the USPTO) courts in the United States, or by patent offices and courts in foreign countries.
If we fail to protect our intellectual property, third parties may be able to compete more effectively against us and we may incur substantial litigation costs in our attempts to recover or restrict use of our intellectual property.
−Removed: We apply for patents covering our testing products and technologies and uses thereof, as we deem appropriate, however we may fail to apply for patents on important testing products and technologies in a timely fashion or at all, or we may fail to apply for patents in potentially relevant jurisdictions, or we may cease our prosecution and maintenance of patents in potentially relevant jurisdictions.
+Added: We apply for patents covering our testing products and technologies and uses thereof, as we deem appropriate, however we may fail to apply for patents on important testing products and technologies or for pipeline testing products and technologies in a timely fashion or at all, or we may fail to apply for patents in potentially relevant jurisdictions, or we may cease our prosecution and maintenance of patents in potentially relevant jurisdictions.
Currently, we have an exclusive license to two issued U.S.
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patent application, and certain corresponding foreign counterpart patents, relevant to our AVISE ® testing products.
−Removed: We own five issued U.S.
−Removed: patents, three pending U.S.
−Removed: patent applications, and certain corresponding foreign counterpart patents relevant to our AVISE ® testing products.
+Added: We own seven issued U.S.
+Added: patents and two pending U.S.
+Added: patent applications relevant to our AVISE ® testing products.
While we intend to pursue additional patent applications, it is possible that our pending patent applications and any future applications may not result in issued patents.
Even if such patents do successfully issue, third parties may challenge the validity, enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held unenforceable.
−Removed: Any successful opposition to our patents could deprive us of exclusive rights necessary for the further development of our AVISE ® testing products.
−Removed: Furthermore, even if they are unchallenged, our patents may not adequately protect our intellectual property, provide exclusivity for our AVISE ® testing products or prevent others from designing around our claims.
+Added: Any successful opposition to our patents could deprive us of exclusive rights necessary for the further development of our testing products.
+Added: Furthermore, even if they are unchallenged, our patents may not adequately protect our intellectual property, provide exclusivity for our testing products or prevent others from designing around our claims.
We might not have been the first to make the inventions covered by each of our pending patent applications and we might not have been the first to file patent applications for these inventions.
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8,126,654, and foreign equivalents thereof), effective March 22, 2024, and as a result may face increased competition with respect to the portion of our testing products previously protected by these patents.
−Removed: In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our AVISE ® testing products and development processes that involve proprietary know-how, information or technology that is not covered by patents.
+Added: In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our testing products and development processes that involve proprietary know-how, information or technology that is not covered by patents.
However, trade secrets can be difficult to protect.
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Certain of our testing products utilize unpatented technology that is publicly available and can be used by our competitors.
−Removed: Certain of our AVISE ® testing products, such as AVISE ® CTD, utilize both patented technology and publicly available technology that is not protected by patents or other intellectual property rights.
+Added: Certain of our testing products, such as AVISE ® CTD, utilize both patented technology and publicly available technology that is not protected by patents or other intellectual property rights.
We believe that using certain publicly available technology allows us to offer a better and more comprehensive testing product.
−Removed: However, the publicly available technology which we rely upon is also used in, and may continue to be used in, products which compete with our AVISE ® testing products.
+Added: However, the publicly available technology which we rely upon is also used in, and may continue to be used in, products which compete with our testing products.
Our competitors may independently develop competing diagnostic products and services that do not infringe our intellectual property.
Changes in U.S.
−Removed: patent law could diminish the value of patents in general, thereby impairing our ability to protect our AVISE ® testing products.
+Added: patent law could diminish the value of patents in general, thereby impairing our ability to protect our testing products.
Our success is heavily dependent on intellectual property, particularly on obtaining and enforcing patents.
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As a result, the U.S.
−Removed: government may have certain rights to intellectual
−Removed: property embodied in our testing products pursuant to the Bayh-Dole Act.
+Added: government may have certain rights to intellectual property embodied in our testing products pursuant to the Bayh-Dole Act.
government rights include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose.
In addition, the U.S.
−Removed: government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive or non-exclusive licenses to any of these inventions to a third party if it determines that:
+Added: government has the right, under certain limited circumstances, to require us to grant exclusive,
+Added: partially exclusive or non-exclusive licenses to any of these inventions to a third party if it determines that:
(i) adequate steps have not been taken to commercialize the invention;
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We may not be able to protect our intellectual property rights throughout the world.
−Removed: Filing, prosecuting and defending patents on our AVISE ® testing products in all countries throughout the world would be prohibitively expensive.
+Added: Filing, prosecuting and defending patents on our testing products in all countries throughout the world would be prohibitively expensive.
Moreover, we believe that obtaining foreign patents may be more difficult than obtaining domestic patents because of differences in patent laws and, accordingly, our patent position may be stronger in the United States than abroad.
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In order to manage our foreign patent costs and focus on the U.S.
−Removed: market, we made the decision to cease the prosecution and maintenance of certain of our foreign patents and patent applications related to our CB-CAPs technology, which is used in our AVISE ® testing products.
+Added: market, we made the decision to cease the prosecution and maintenance of certain of our foreign patents and patent applications related to our CB-CAPs technology and our AVISE ® testing products.
Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States.
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If our licensors are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.
−Removed: If there are material defects in the form, preparation, prosecution or enforcement of our patents or patent applications, such patents may
−Removed: be invalid and/or unenforceable, and such applications may never result in valid, enforceable patents.
+Added: If there are material defects in the form, preparation, prosecution or enforcement of our patents or patent applications, such patents may be invalid and/or unenforceable, and such applications may never result in valid, enforceable patents.
Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.
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Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on any issued patents and/or applications are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patents and/or applications.
−Removed: Our outside counsel has systems in place to monitor deadlines to pay these fees and to remind us of these fees, and our outside counsel employs an outside firm to pay these fees due to the USPTO and to foreign patent agencies based on our instructions.
+Added: We have systems in place to monitor deadlines to pay these fees and to remind us of these fees, and we employ an outside firm to pay these fees due to the USPTO and to foreign patent agencies based on our instructions.
In the aggregate, these fees can be cost prohibitive for an early-stage company.
−Removed: Accordingly, we made a financially-driven decision to prioritize our payment of these fees and to allow certain of our applications to lapse, particularly with respect to our ex-U.S.
−Removed: rights licensed from UPitt related to our CB-CAPs technology.
+Added: Accordingly, we made a financially-driven decision to prioritize our payment of these fees and to allow certain of our parents to lapse, particularly with respect to our ex-U.S.
+Added: rights licensed from UPitt related to our CB-CAPs technology and to foreign patents covering our AVISE ® testing products.
The permanent lapse of certain of these ex-U.S.
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Numerous U.S.
−Removed: and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our AVISE ® testing products.
−Removed: As the diagnostics industry expands and more patents are issued, the risk increases that our activities related to our AVISE ® testing products may give rise to claims of infringement of the patent rights of others.
−Removed: We cannot assure you that any of our current or future AVISE ® testing products will not infringe existing or future patents.
−Removed: Although we are not aware of any issued patents that will prevent us from marketing our AVISE ® testing products, there may be third-party patents of which we are currently unaware with claims to materials or methods of manufacture related to the use or manufacture of our AVISE ® testing products.
−Removed: If a third party that owns such a patent asserts it successfully against one of our current or future AVISE ® testing products, we may be unable to market our product, which could materially harm our business and because patent applications can take many years to issue and may be confidential for 18 months or more after filing, there may be currently pending third-party patent applications which may later result in issued patents that our AVISE ® testing products or our technologies may infringe, or which such third parties claim are infringed by the use of our technologies.
−Removed: Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop one or more of our AVISE ® testing products.
+Added: and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our testing products.
+Added: As the diagnostics industry expands and more patents are issued, the risk increases that our activities related to our testing products may give rise to claims of infringement of the patent rights of others.
+Added: We cannot assure you that any of our current or future testing products will not infringe existing or future patents.
+Added: Although we are not aware of any issued patents that will prevent us from marketing our testing products, there may be third-party patents of which we are currently unaware with claims to materials or methods of manufacture related
+Added: to the use or manufacture of our testing products.
+Added: If a third party that owns such a patent asserts it successfully against one of our current or future testing products, we may be unable to market our product, which could materially harm our business and because patent applications can take many years to issue and may be confidential for 18 months or more after filing, there may be currently pending third-party patent applications which may later result in issued patents that our testing products or our technologies may infringe, or which such third parties claim are infringed by the use of our technologies.
+Added: Parties making claims against us for infringement or misappropriation of their intellectual property rights may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop one or more of our testing products.
Defense of these claims, regardless of their merit, would involve substantial expenses and would be a substantial diversion of employee resources from our business.
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We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms.
−Removed: Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or development of our AVISE ® testing products.
+Added: Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or development of our testing products.
We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all.
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Third parties may also attempt to initiate reexamination, post grant review or inter partes review of our patents in the USPTO.
−Removed: We may also become involved in similar proceedings in the patent offices in other jurisdictions regarding our intellectual property rights with respect to our AVISE ® testing products and technology.
+Added: We may also become involved in similar proceedings in the patent offices in other jurisdictions regarding our intellectual property rights with respect to our testing products and technology.
We may be involved in proceedings to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.
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We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
−Removed: In addition, if we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering one of our AVISE ® testing products, the defendant could counterclaim that the patent covering such AVISE ® testing product is invalid and/or unenforceable.
+Added: In addition, if we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering one of our testing products, the defendant could counterclaim that the patent covering such AVISE ® testing product is invalid and/or unenforceable.
In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent.
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With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution.
−Removed: If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our AVISE ® testing products.
+Added: If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our testing products.
Such a loss of patent protection could have a material adverse impact on our business.
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We are not aware of any third-party infringement of our intellectual property rights that would have a materially adverse impact on our business.
−Removed: In addition, there can be no assurance that our licensors will be willing to bring and enforce claims to prevent third parties from infringing intellectual property that is licensed to us, particularly if the affected intellectual property is less important to the licensor’s business than to ours.
+Added: In addition, there can be no assurance that our licensors will be willing to bring and enforce claims to prevent third
+Added: parties from infringing intellectual property that is licensed to us, particularly if the affected intellectual property is less important to the licensor’s business than to ours.
In such cases, we may decide that the more prudent course of action is to simply monitor the situation or initiate or seek some other non-litigious action or solution.
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We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers.
−Removed: Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our AVISE ® testing products.
+Added: Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved in developing our testing products.
We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property.
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• future sales of our common stock by our executive officers, directors and other stockholders;
−Removed: • general economic conditions and slow or negative growth of our markets, including as a result of the current conflicts in the Ukraine and the Middle East.
+Added: • general economic conditions and slow or negative growth of our markets, including as a result of the current conflicts in the Ukraine and the Middle East and other geopolitical tensions.
In addition, the stock market in general, and the market for stock of life sciences companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies.
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In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies.
−Removed: This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
+Added: This litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and
Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments.
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Any sales of securities by directors and executive officers, or the perception that those sales may occur, including the entry into such programmed selling plans, could have a material adverse effect on the trading price of our common stock, particularly if the trading volume of our common stock is relatively low at the time of these sales.
+Added: We have incurred and will continue to incur increased costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may adversely affect our results of operations.
+Added: As a public company we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.
+Added: The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Stock Market LLC and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
+Added: Moreover, these rules and regulations have increased our legal and financial compliance costs and has made some activities more time-consuming.
+Added: We are subject to the reporting requirements of the Exchange Act that require us to file, among other things, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.
+Added: Under Section 302 of the Sarbanes-Oxley Act as a part of each of these reports, our chief executive officer and chief financial officer are required to evaluate and report their conclusions regarding the effectiveness of our disclosure controls and procedures and to certify that they have done so.
+Added: Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
+Added: The process of documenting our internal controls and complying with Section 404 is expensive and time consuming, and requires significant attention of management.
+Added: When or if we reach an accelerated filer threshold, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting.
+Added: Complying with these requirements applicable to public companies may at times place a strain on our personnel, information technology systems and resources while diverting management’s attention from other business concerns.
+Added: We have engaged outside service providers with appropriate public company compliance experience and technical accounting knowledge to support our compliance efforts, and we may need to engage additional service providers in the future to ensure compliance which may cause us to incur additional operating costs.
+Added: These and other requirements may also make it more difficult or more costly for us to obtain or maintain certain types of insurance, including directors’ and officers’ liability insurance.
+Added: We may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
+Added: The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
+Added: Any one of these requirements could have a material adverse effect on our business, financial condition and results of operations.
Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.
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These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
−Removed: By agreeing to this provision, however, the stockholders will not be deemed to have waived our compliance with the Federal Securities laws and rules and regulations thereunder.
+Added: By agreeing to this provision, however, the stockholders will not be deemed to have waived our compliance with the
+Added: Federal Securities laws and rules and regulations thereunder.
Furthermore, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.
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We currently intend to retain any future earnings to fund the growth of our business.
−Removed: In addition, our Amended Loan Agreement restricts our ability to pay cash dividends on our common stock and we may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common stock.
−Removed: Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital
−Removed: requirements, general business conditions and other factors that our board of directors may deem relevant.
+Added: In addition, the Credit Agreement restricts our ability to pay cash dividends on our common stock and we may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common stock.
+Added: Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant.
As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future.
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An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect our business.
−Removed: During 2024, our average daily trading volume has been approximately 56,732 shares.
+Added: During 2025, our average daily trading volume was approximately 256,838 shares.
Our failure to meet the continued listing requirements of Nasdaq or the Nasdaq Stock Market LLC could result in a delisting of our common stock.
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Currently, we have limited analyst coverage and we do not have any control over such analysts or the content and opinions included in their reports.
−Removed: Securities analysts may elect not to provide research coverage of our company, and such lack of research coverage may adversely affect the market price of our common stock.
+Added: Securities analysts may elect not to provide
+Added: research coverage of our company, and such lack of research coverage may adversely affect the market price of our common stock.
The price of our common stock could also decline if one or more equity research analysts downgrade our common stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.
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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.