FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q (Form 10-Q) contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act. Statements that are not historical facts, including statements about our plans, objectives, beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words "believes," "expects," "anticipates," "plans," "estimates," "intends," "projects," "should," "could," "may," "will" or similar words and expressions. These forward-looking statements are contained throughout this Form 10-Q.

Forward-looking statements are only predictions and are not guarantees of future performance. These statements are based on current expectations and assumptions involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. These predictions are also affected by known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from those expressed or implied by any forward-looking statement. Many of these factors are beyond our ability to control or predict. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors. Such factors include, but are not limited to, the following:





    ?   adverse impact of Coronavirus (COVID-19) pandemic due to the slowdown in
        demand for our clinical services and pharma services, a reduction in
        samples received and testing volume and delayed third party collections
        and other factors;

    ?   we have a history of operating losses, and our clinical services and
        pharma services have generated limited revenue;

    ?   we expect to incur net losses for the foreseeable future and may never
        achieve or sustain profitability;

    ?   our limited operating history and the limited revenue generated from our
        business thus far and fluctuating quarterly and annual revenue and
        operating results, including as a result of how we recognize revenue;

    ?   we depend on sales and reimbursements from our clinical services for more
        than 50% of our revenue, and we will need to generate sufficient revenue
        from these and other products and/or solutions that we develop or require
        to grow our business;

    ?   we rely on third parties to process and transmit claims to payers for our
        clinical services, and any delay, data loss, or other disruption in
        processing or transmitting could have an adverse effect on our revenue and
        financial condition;

    ?   our ability to utilize our commercial and operating experience to sell our
        clinical and pharma services;

    ?   our ability to compete successfully in the markets our clinical services
        and pharma services operate in;

    ?   our ability to obtain, retain and increase sufficient levels of third
        party reimbursement for our molecular diagnostic tests in a changing and
        challenging reimbursement environment, including our current dependence on
        a concentrated number of third-party payers and the lack of timeliness of
        their payments, and the potential failure of such payments to ever occur;

    ?   our billing practices and those of our third-party billing providers to
        effectively bill and collect on claims for the sale of our tests;

    ?   our revenue recognition is based in part on our estimates for future
        collections and such estimates may prove to be incorrect;




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    ?   a deterioration in the collectability of our accounts receivable could
        have a material adverse effect on our business, financial condition and
        results of operations;

    ?   our inability to finance our business on acceptable terms in the future
        may limit our ability to grow our business, develop and commercialize
        products and services, develop and commercialize new molecular diagnostic
        solutions and technologies and expand our pharma services;

    ?   our ability to comply with financial covenants under our current line of
        credit facility and comply with our debt obligations and our ability to
        expand our working capital borrowing base to provide sufficient working
        capital financing during growth periods;

    ?   we have issued convertible preferred stock and may issue additional
        convertible preferred stock in the future, and the terms of our preferred
        stock may dilute our common stock;

    ?   two private equity firms and their affiliates control, on an as-converted
        basis, 66% of our fully diluted outstanding shares of common stock through
        their holdings of Series B Convertible Preferred Stock, par value $0.01
        per share ("Series B Preferred Stock"), and this concentration of
        ownership along with having authority for designation rights for a
        majority of our directors will have a substantial influence on our
        decisions;

    ?   billing for our clinical services tests is complex, and we must dedicate
        substantial time and resources to the billing process to be paid for our
        clinical services;

    ?   we depend on a few payers for a significant portion of our revenue for our
        clinical services, and if one or more significant payers stops providing
        reimbursement or decreases the amount of reimbursement for our tests, our
        revenue could decline;

    ?   if payers do not provide reimbursement, rescind or modify their
        reimbursement policies or delay payments for clinical services, our
        commercial success could be compromised;

    ?   developing new tests and related services and solutions includes a lengthy
        and complex process with uncertain results;

    ?   the effect of potential adverse findings resulting from regulatory audits
        of our billing and payment practices and the impact such results could
        have on our clinical services;

    ?   the demand for our molecular diagnostic tests from physicians and
        patients;

    ?   our products and services continuing to perform as expected;

    ?   claims against us for inaccurate results from our molecular diagnostic
        tests;

    ?   our obligations to make royalty and milestone payments to our licensors;

    ?   our ability to obtain data and samples to perform sufficient clinical
        studies to successfully publish data demonstrating the clinical relevance
        and value of our molecular diagnostic tests, including to support
        sufficient levels of third party reimbursement;

    ?   our dependence on third parties for the supply of some of the materials
        used in our molecular diagnostic tests and pharma services;

    ?   our ability to scale our operations or delays or reagent and supply
        shortages for our tests and services;

    ?   our ability to develop or acquire tests, services or solutions;




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    ?   the ability of our clinical services to enter into additional clinical
        study collaborations with highly regarded institutions;

    ?   the effect current and future laws, licensing requirements and regulation
        have on our business including the changing U.S. Food and Drug
        Administration environment as it relates to molecular diagnostics and
        pharma services and laboratory developed tests (LDT's);

    ?   changes in governmental regulations mandating price controls and
        limitations on patient access to our products and services;

    ?   if we fail to comply with Federal, State and foreign laboratory licensing
        requirements, we could lose the ability to perform our tests or experience
        disruptions to our business;

    ?   legislation reforming the U.S. healthcare system;

    ?   a failure to comply with Federal and State laws and regulations pertaining
        to our payment practices;

    ?   our ability to comply with fraud and abuse laws or payer regulations could
        result in our being excluded from participation in Medicare, Medicaid or
        other governmental payer programs;

    ?   compliance with numerous statutes and regulations pertaining to our
        business;

    ?   the effect of The Eliminating Kickbacks in Recovery Act of 2018 as it
        potentially impacts our ability to incentivize our sales personnel
        appropriately;

    ?   our ability to realize all of the anticipated benefits of the acquisition
        of our pharma services or those benefits, if any, taking longer to realize
        than expected;

    ?   if pharmaceutical and biotech companies, universities and contract
        research organizations performing clinical trials decide not to use our
        tests and services, we may be unable to generate sufficient revenue to
        sustain our pharma services;

    ?   if we fail to perform our pharma services in accordance with contractual
        and regulatory requirements, and ethical considerations, we could be
        subject to significant costs or liability;

    ?   our ability to compete in the markets our clinical services operate in;

    ?   our ability to attract and retain key employees and management personnel;

    ?   our reliance on our sales and marketing forces for future business growth
        and our ability to continue to expand our sales and marketing forces;

    ?   our limited experience in marketing and selling our products;

    ?   the ability of our molecular diagnostic tests to compete successfully with
        physicians and members of the medical community who use traditional
        methods to diagnose gastrointestinal and endocrine cancers, competitors
        offering broader product lines outside of the molecular diagnostic testing
        market and having greater brand recognition than we do, and companies with
        greater financial resources;

    ?   our ability to license rights to use technologies in order to
        commercialize new products and services;

    ?   our involvement in future litigation against us or our ability to collect
        on judgements found in our favor;

    ?   the effect of acts of nature, seasonal results and adverse weather
        conditions, hurricanes and floods, on our business and our suppliers;




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    ?   our use of hazardous materials;

    ?   the susceptibility of our information systems to security breaches, loss
        of data and other disruptions;

    ?   catastrophic loss of our laboratories;

    ?   our ability to obtain and maintain sufficient qualified laboratory space
        to meet our processing needs for all of our business as well as our
        ability to pass regulatory inspections and continue to be Clinical
        Laboratory Improvement Amendments ("CLIA") and the College of American
        Pathologists ("CAP") certified or accredited;

    ?   compliance with the U.S. Foreign Corrupt Practices Act and anti-bribery
        laws;

    ?   our ability to respond to rapid scientific changes in the areas in which
        we operate;

    ?   our compliance with our license agreements and our ability to protect and
        defend our intellectual property rights;

    ?   patent infringement claims against us;

    ?   changes in U.S. and global patent law;

    ?   tax reform legislation;

    ?   stock dilution;

    ?   changes in financial accounting standards or practices;

    ?   exposure to international law, regulations and risk as a result of
        international expansion;

    ?   we may acquire businesses or assets or make investments in other companies
        or testing, service or solution technologies that could harm our operating
        results, dilute our stockholders' ownership, increase our debts or cause
        us to incur significant expense;

    ?   the impact of contingent liabilities on our financial condition;

    ?   the results of any future impairment testing for intangible assets as
        required under U.S. generally accepted accounting principles ("GAAP");

    ?   our ability to maintain and implement effective internal controls over
        financial reporting especially as we are consolidating operations;

    ?   if our information technology or communications systems fail or we
        experience a significant interruption in their operation, our reputation,
        business and results of operations could be materially and adversely
        affected;

    ?   the impact of future issuances of debt, common and preferred shares on
        stockholders' interest and stock price;

    ?   our ability to report financial results on a timely and accurate basis;

    ?   our ability to manage our growth or unexpected declines;

    ?   the potential that the temporary equity classification of our preferred
        stock and the amortization and impairment of certain intangible assets set
        forth herein may trigger a Nasdaq compliance default for failure to meet
        minimum stockholder equity requirements which could result in a delisting
        of our common stock from Nasdaq leading to a possible reduced stock price;
        potential difficulty in raising additional capital or debt as well as loss
        of exemptions from various state securities laws which could hamper action
        plans to remediate such a Nasdaq compliance default;

    ?   uncertainty regarding the regulatory obligations related to our receipt of
        $650,000 funding for COVID testing;

    ?   our ability to rebuild our cost structure in anticipation of volume growth
        that does not happen as planned;

    ?   the potential impact on customers currently in clinical trials in our
        Rutherford, NJ lab that we are now relocating to North Carolina which may
        require revalidation in the new site;

    ?   the impact of increased costs building expanded laboratory capabilities in
        North Carolina in anticipation of the move from Rutherford, NJ and the
        potential loss of customers related to the move;

    ?   our ability to efficiently execute and complete the planned laboratory
        move from Rutherford, NJ to North Carolina on a timely basis within our
        forecasted costs;

    ?   the risk of loss of personnel that are uniquely qualified to perform the
        breadth of specialty testing and lab applications necessary for developing
        customized assays in our pharma solutions business; and

    ?   the risk related to our sales reps fully reengaging with customers after
        reducing physical visits by our commercial team during the pandemic.




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Please see Part I - Item 1A - "Risk Factors" in our Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on April 22, 2020, as amended on May 29, 2020, and January 19, 2021 as well as other documents we file with the SEC from time-to-time, for other important factors that could cause our actual results to differ materially from our current expectations as expressed in the forward-looking statements discussed in this Form 10-Q. Because of these and other risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. In addition, these statements speak only as of the date of the report in which they are set forth and, except as may be required by law, we undertake no obligation to revise or update publicly any forward-looking statements for any reason.





OVERVIEW

We are an emerging leader in enabling precision medicine principally in oncology by offering specialized services along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications through our clinical services and pharma services. Through our clinical services, we enable physicians to personalize the clinical management of each individual patient by providing genomic information to better diagnose, monitor and inform cancer treatment. Our clinical services provide clinically useful molecular diagnostic tests, bioinformatics and pathology services for evaluating risk of cancer by leveraging the latest technology in personalized medicine for improved patient diagnosis and management. Through our pharma services, we develop, commercialize and provide molecular- and biomarker-based tests and services and provide companies with customized solutions for patient stratification and treatment selection through an extensive suite of molecular and biomarker-based testing services, DNA- and RNA- extraction and customized assay development and trial design consultation. Our pharma services provide pharmacogenomics testing, genotyping, biorepository and other specialized services to the pharmaceutical and biotech industries and advances personalized medicine by partnering with pharmaceutical, academic and technology leaders to effectively integrate pharmacogenomics into drug development and clinical trial programs with the goals of delivering safer, more effective drugs to market more quickly, and improving patient care.

During fiscal 2019, in connection with the acquisition of our pharma services, we raised $27 million with Ampersand, a diagnostic laboratory private equity investor. This was followed by raising an additional $20 million in early 2020 led by 1315 Capital, another sophisticated private equity investor. We believe that the combination of our clinical services and acquired pharma services uniquely positions us for growth and expansion in the fast-growing biopharma sector where we can provide our unique diagnostic capabilities to a broad customer base.

Impact of COVID-19 pandemic

We have taken what we believe are all necessary precautions to safeguard our employees from the Coronavirus (COVID-19) pandemic. We are following CDC guidance and local restrictions. All employees who do not work in a lab have been on a telecommunication work arrangement. Our employees in the lab are wearing what we believe is appropriate protective gear. There can be no assurance that key employees will not become ill or that we will able to continue to operate our labs. We have furloughed a number of employees as a result of reductions in customer demand and we have closed our administrative offices. Our labs require in-person staffing and as of the date of this report, we have been able to successfully operate our labs though a combination of social distancing, managing lab scheduling and protective equipment. Our management, finance staff and sales personnel have generally been able to successfully work remotely. As of June 15, 2020 we began allowing general and administrative staff to return to their respective offices on a limited basis.

The extent to which the COVID-19 pandemic impacts our operations continues to depend on future developments, which are highly uncertain and cannot be predicted at this time, and include the duration, severity and scope of the outbreak and the actions taken to contain or treat the coronavirus outbreak. In particular, the continued spread of the coronavirus globally has adversely affecting global economies and financial markets resulting in an economic downturn which could materially and adversely impact our operations including, without limitation, the functioning of our laboratories, the availability of supplies including reagents, the progress and data collection of our pharma services, customer demand and travel and employee health and availability.





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We believe that the COVID-19 pandemic will also adversely impact our results of operations, cash flows and financial condition for the second quarter of fiscal 2020 and possibly beyond. Our fiscal 2020 first quarter revenue was impacted by lower than expected clinical service volume throughout March 2020, which we believe has resulted from the temporary reduction in non-essential testing procedures in connection with the COVID-19 pandemic. Further, we did reduce overall costs to match the lower volumes in the labs.

However, as of the date of this Report, our overall business is still down approximately 30% from our run rate before the pandemic. We have continued to add resources to support the increased volume consistent with the changing environment. However, as we rebuild our cost structure to support the improved volume, there is risk that the anticipated volume growth will not materialize as planned and we will be required to adjust accordingly.

To optimize the pharma services lab operations we are transitioning lab work from Rutherford, NJ to our facility in Morrisville, NC. We will be investing several million dollars to facilitate the move, transfer personnel, build out facilities and validate processes over the next several months. We believe this investment and transition will result in reduced operating costs in the future: however, there is no guarantee we will be as successful with the move or the benefits expected thereof as we currently plan.

All of our labs are currently operating and we believe we are appropriately staffed for the volume of work. At this time, we do not anticipate any lab closures beyond temporary work stoppages from time to time to clean and disinfect the labs. Lab supplies including reagents have been secured to mitigate any potential supply chain issues for the foreseeable future and we are not observing any shortages due to supply chain issues. Our third party clinical services billing and collections company has taken steps to continue operations remotely. There have been indications that payer processing may slow down but so far there has been little or no material impact to our collections.

As of May 2020, we are in the process of launching a new product line of antibody testing for the COVID-19 virus. Validation is complete; we have acquired acceptable kits and reference samples and are now offering this testing to our employees and customers. The serological, or antibody, test measures the amount of antibodies present in the blood. In response to an infection, such as COVID-19, the body develops an overall immune response to fight the infection. One component of the immune system's response is the development of antibodies that attach to the virus and help eliminate it. Antibody tests detect the body's immune response to the infection caused by the virus rather than detecting the virus itself. The FDA has issued guidance allowing companies to market serological tests that have been validated following notification to FDA. Validated antibody tests offered under the policy should, among other things, include in test reports language explaining that negative results do not rule out COVID-19 infection and that follow-up testing with a molecular diagnostic should be considered to rule out infection. There is no guarantee that we will be successful in realizing revenue or benefit from these efforts.

Additional Reimbursement Coverage During 2020

Reimbursement progress is key for any molecular diagnostic company. We have been successful to date in expanding the reimbursement of our products in 2020. Specifically, the most significant progress we have made regarding payers to date in 2020 is as follows:





?   In February 2020, we announced an increase in Medicare reimbursement for our
    ThyraMIR® test from $1,800 to $3,000, retroactive to January 1, 2020,
    reflecting a re-evaluation of the technical and clinical performance of the
    test relative to other molecular tests in the market and their respective
    prices.

?   In March 2020, we announced we had entered into a contract with Blue Cross
    Blue Shield of Massachusetts making ThyGeNEXT® and ThyraMIR® tests covered
    in-network services for their more than 3 million members in Massachusetts
    and across New England.




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?   In March 2020, we announced we had entered into a contract with CareFirst
    Blue Cross Blue Shield, making ThyGeNEXT® and ThyraMIR® tests covered
    in-network services for their more than 3.3 million members in Maryland,
    Washington, D.C., and Northern Virginia.

?   In March 2020, we announced we had entered into a contract with Premera Blue
    Cross, making ThyGeNEXT® and ThyraMIR® tests covered in-network services for
    their more than 2 million members in Washington State and Alaska.

?   In April 2020, we executed an agreement with Avalon Healthcare Solutions
    (Avalon), a laboratory benefit manager representing numerous health plans.
    Our agreement with Avalon offers us in-network status to approximately 5.8
    million lives covered by the following health plans: Blue Cross Blue Shield
    North Carolina, South Carolina, Kansas City and Vermont, and Capital Blue
    Cross of Central Pennsylvania.

?   In April 2020, we executed a contract with Blue Cross of Idaho making
    ThyGeNEXT® and ThyraMIR® tests covered in-network services for their more
    than 576 thousand members.

?   In May 2020, we executed a contract with Blue Cross Blue Shield of Wyoming.




Revenue Recognition

Clinical services derive its revenues from the performance of its proprietary assays or tests. The Company's performance obligation is fulfilled upon completion, review and release of test results to the customer. The Company subsequently bills third-party payers or direct-bill payers for the tests performed. Under Accounting Standards Codification 606, revenue is recognized based on the estimated transaction price or net realizable value ("NRV"), which is determined based on historical collection rates by each payer category for each proprietary test offered by the Company. To the extent the transaction price includes variable consideration, for all third party and direct-bill payers and proprietary tests, the Company estimates the amount of variable consideration that should be included in the transaction price using the expected value method based on historical experience.

For our clinical services, we regularly review the ultimate amounts received from the third-party and direct-bill payers and related estimated reimbursement rates and adjust the NRV's and related contractual allowances accordingly. If actual collections and related NRV's vary significantly from our estimates, we adjust the estimates of contractual allowances, which would affect net revenue in the period such variances become known.

For our pharma services customers, performance obligations are satisfied at a point in time as the Company processes samples delivered by the customer. Project level activities, including study setup and project management, are satisfied over the life of the contract. Revenues are recognized at a point in time when the test results or other deliverables are reported to the customer.





Deferred Revenue

For our pharma services, project level fee revenue is recognized as deferred revenue and recorded at fair value. It represents payments received in advance of services rendered and is recognized ratably over the life of the contract.





Cost of Revenue

Cost of revenue consists primarily of the costs associated with operating our laboratories and other costs directly related to our tests. Personnel costs, which constitute the largest portion of cost of services, include all labor related costs, such as salaries, bonuses, fringe benefits and payroll taxes for laboratory personnel. Other direct costs include, but are not limited to, laboratory supplies, certain consulting expenses, royalty expenses, and facility expenses.





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CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statements of operations data and have been restated to reflect the additional amortization expense and certain other adjustments. The trends illustrated in this table may not be indicative of future results.





Condensed Consolidated Results of Continuing Operations for the Quarter Ended
March 31, 2020 Compared to the Quarter Ended March 31, 2019 (unaudited, in
thousands)



                                                                 As Restated
                                                        Three Months Ended March 31,
                                                  2020        2020         2019        2019

Revenue, net                                    $  9,059       100.0 %   $  6,010       100.0 %
Cost of revenue                                    6,113        67.5 %      2,622        43.6 %
Gross profit                                       2,946        32.5 %      3,388        56.4 %
Operating expenses:
Sales and marketing                                2,481        27.4 %      2,411        40.1 %
Research and development                             809         8.9 %        528         8.8 %
General and administrative                         4,893        54.0 %      2,735        45.5 %
Acquisition related amortization expense           1,115        12.3 %        897        14.9 %
Total operating expenses                           9,298       102.6 %      6,571       109.3 %

Operating loss                                    (6,352 )     -70.1 %     (3,183 )     -53.0 %
Interest accretion                                  (109 )      -1.2 %       (129 )      -2.1 %
Other income (expense), net                           47         0.5 %         48         0.8 %

Loss from continuing operations before tax (6,414 ) -70.8 % (3,264 ) -54.3 % Provision for income taxes

                            15         0.2 %          5         0.1 %
Loss from continuing operations                   (6,429 )     -71.0 %     (3,269 )     -54.4 %

Loss from discontinued operations, net of tax (65 ) -0.7 % (57 ) -0.9 %



Net loss                                        $ (6,494 )     -71.7 %   $ (3,326 )     -55.3 %




Revenue, net

Consolidated revenue, net for the three months ended March 31, 2020 increased by $3.0 million, or 51%, to $9.1 million, compared to $6.0 million for the three months ended March 31, 2019. This increase was principally attributable to our acquisition of our pharma services business in 2019. Our first quarter revenue was impacted by lower than expected clinical service volume throughout March 2020, which we believe has resulted from the temporary reduction in non-essential testing procedures in connection with the COVID-19 pandemic.





Cost of revenue

Consolidated cost of revenue for the three months ended March 31, 2020 was $6.1 million, as compared to $2.6 million for the three months ended March 31, 2019. As a percentage of revenue, cost of revenue increased to 66% for the three months ended March 31, 2020 as compared to 44% in the comparable same period in 2019. This increase as a percentage of revenue can be primarily attributed to the lower margins associated with pharma services.





Gross profit

Consolidated gross profit was approximately $2.9 million for the three months ended March 31, 2020 and $3.4 million for the three months ended March 31, 2019. The gross profit percentage decreased from 56% in the first quarter of 2019 to 33% for the first quarter of 2020. This decrease can be attributed to the lower margins associated with pharma services mentioned above and the reduction in net revenue from clinical services.





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Sales and marketing expense

Sales and marketing expense was $2.5 million for the three months ended March 31, 2020, or 27% as a percentage of net revenue. For the three months ended March 31, 2019, sales and marketing expense was $2.4 million, or 40% as a percentage of net revenue. The increase in sales and marketing expense primarily reflects the addition of sales and marketing costs associated with pharma services.





Research and development

Research and development expense was $0.8 million for the three months ended March 31, 2020 and $0.5 million for the three months ended March 31, 2019. The increase was primarily attributable to costs associated with the acquired pharma services. As a percentage of revenue, research and development expense stayed the same at approximately 9% in both periods.





General and administrative

General and administrative expense for the three months ended March 31, 2020 was $4.9 million as compared to $2.7 million for the three months ended March 31, 2019. The increase was primarily attributable to costs associated with the acquired pharma services.

Acquisition related amortization expense

During the three months ended March 31, 2020 and March 31, 2019, we recorded amortization expense of $1.1 million and $0.9 million, respectively, which is related to intangible assets associated with prior acquisitions. The increase is related to our acquisition of our pharma services in 2019 and the associated intangible assets.





Operating loss

Operating loss from continuing operations was $6.4 million for the three months ended March 31, 2020 as compared to $3.2 million for the three months ended March 31, 2019. The increase can be attributed to the operating loss associated with our pharma services as well as the reduced revenue and gross profit in our clinical services.





Provision for income taxes

Income tax expense was approximately $15,000 for the three months ended March 31, 2020 and $5,000 for the three months ended March 31, 2019. Income tax expense for both periods was primarily driven by minimum state and local taxes.

Loss from discontinued operations, net of tax

We had a loss from discontinued operations of approximately $0.1 million for both the three months ended March 31, 2020 and March 31, 2019.





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LIQUIDITY AND CAPITAL RESOURCES

For the three months ended March 31, 2020, we had an operating loss of $6.4 million. As of March 31, 2020, we had cash and cash equivalents of $13.4 million, total current assets of $28.1 million and current liabilities of $15.7 million. Currently, the Company has no further availability on its credit facility, but is in the process of completing an agreement with SVB to expand the credit facility. No assurance can be given that such an expansion agreement will be entered into.

During the three months ended March 31, 2020, net cash used in operating activities was $7.1 million. The main component of cash used in operating activities was our net loss of $6.5 million. During the three months ended March 31, 2019, net cash used in operating activities was $3.0 million, all of which was used in continuing operations. The main component of cash used in operating activities during the three months ended March 31, 2019 was the net loss of $3.4 million.

For the three months ended March 31, 2020, there was cash provided from financing activities of $18.2 million, $19.5 million which resulted from the issuance of Preferred Stock in January 2020, $0.4 million from sales of common stock, and was partially offset by $1.8 million in a net repayment of funds under our revolving line of credit with SVB. For the three months ended March 31, 2019, there was cash provided from financing activities of $6.0 million which resulted from the issuance of common stock in our underwritten public offering completed in January 2019.

In September 2019, we entered into the Equity Distribution Agreement (the "Agreement") with Oppenheimer & Co. Inc., as sales agent (the "Agent"), pursuant to which we may, from time to time, issue and sell shares of our common stock in an aggregate offering price of up to $4.8 million through the Agent. See Note 16, Equity of the notes to the financial statements for more details. In January 2020, 80,341 shares (as adjusted for the reverse stock split) of common stock were sold for net proceeds of approximately $0.4 million.

As of March 31, 2020, the Company had drawn $1.2 million of the $3.75 million of available funds under its Revolving Line with SVB. As of June 17, 2020, we had no funds available on the Revolving Line because we were fully drawn.

In January 2020, we sold 20,000 preferred shares to investors, led by 1315 Capital, for net proceeds of approximately $19.5 million; see Note 16, Equity of the footnotes to the financial statements for more detail.

As of June 17, 2020, we received $2.1 million in advances under the Centers for Medicare & Medicaid Services (CMS) accelerated and advance payment program, as well as a $0.65 million grant from the Department of Health and Human Services (HSS). The CMS advance will be offset against future Medicare billings of the Company, and the HSS grant is subject to certain conditions regarding its use, including developing coronavirus and serology tests. These grants and advances require certain certifications by the Company and impose specific limitations on the use of the proceeds. Based on these restrictions and limitations, the Company is treating the $0.65 million HSS grant as restricted cash until we have clarity on how the funds can be utilized by the Company based on the specific requirements of the HSS. Furthermore, although the Company initially explored the possibility of requesting a loan under the Small Business Administration Paycheck Protection Program, we elected not to complete an application because we are not certain we meet certain criteria of the program.

During April and early May 2020, the Company made payments totaling $888,000 to CGI for funds withheld from the Excess Consideration Note to satisfy certain adjustments and indemnification obligations under the Asset Purchase Agreement. The funds used to satisfy this obligation were not included in cash and cash equivalents as of December 31, 2019 and March 31, 2020. These funds and the related liability were included in Other Assets and Other Current Liabilities, respectively, as of those period ends, and the settlement of the liability had no net impact on the Company's operating cash flow or liquidity.

We do not expect to generate positive cash flows from operations for the year ending December 31, 2020. We intend to meet our ongoing capital needs by using our available cash, proceeds under the Securities Purchase and Exchange Agreement, additional borrowings under the Line of Credit as well as increasing our line of credit limit as a result of the additional accounts receivable acquired in July 2019 as part of our acquisition of pharma services (which requires a modification to the bank agreement and approval by SVB which cannot be assured, revenue growth and margin improvement, collecting accounts receivable, containing costs as well as exploring other financing options. Our planned capital expenditures over the next twelve months currently includes several million dollars to be utilized in consolidating our laboratories, which includes equipment purchases, calibration and testing costs, moving and other related costs, and leasehold improvements. Management believes that the Company has sufficient cash on hand and available to sustain operations through at least June 30, 2021. However, in the event the Company is unable to maintain its Nasdaq listing for its common stock due to a failure to meet minimum stockholder equity requirements as a result of the classification of its preferred stock as temporary equity and the amortization and impairment of certain intangible assets, the Company's ability to raise additional capital may be adversely impacted. Therefore, there is no guarantee that additional capital can be raised to fund our future operations.





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Inflation

We do not believe that inflation had a significant impact on our results of operations for the periods presented. On an ongoing basis, we attempt to minimize any effects of inflation on our operating results by controlling operating costs and whenever possible, seeking to insure that billing rates reflect increases in costs due to inflation.

Off-Balance Sheet Arrangements

None.

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