| SUBSEQUENT EVENTS | 20. SUBSEQUENT EVENTS Revolving
Line of Credit On
October 13, 2021, the Company and its subsidiaries entered into a Loan and Security Agreement (the “Comerica Loan Agreement”)
with Comerica Bank (“Comerica”), providing for a revolving credit facility of up to $ 7,500,000 The
amount that may be borrowed under the Credit Facility is the lower of (i) the revolving limit of $ 7,500,000 80 2,000,000 250,000 5,000,000 80 300,000 0.50 2.5 0.25 The
Credit Facility matures on September 30, 2023 The
Comerica Loan Agreement contains affirmative and negative restrictive covenants that are applicable whether or not any amounts are outstanding
under the Comerica Loan Agreement. These restrictive covenants could adversely affect our ability to conduct our business. The Comerica
Loan Agreement also contains customary events of default. As
a condition for Comerica to extend the Credit Facility to the Company and its subsidiaries, the Company’s existing creditors, Ampersand and 1315 Capital (the “Existing Creditors”), entered into that certain Subordination Agreement,
dated as of October 13, 2021, pursuant to which each Existing Creditor agreed to subordinate all of the indebtedness and obligations
of the Company and its subsidiaries owing to such Existing Creditor to all of the indebtedness and obligations of the Company and its
subsidiaries owing to Comerica (the “Subordination Agreement”). Each Existing Creditor further agreed to subordinate all
of its respective security interests in assets or property of the Company and its subsidiaries to Comerica’s security interests
in such assets or property. The Subordination Agreement provides that it is solely for the benefit of Comerica and each of the Existing
Creditors and is not for the benefit of the Company or any of its subsidiaries. BroadOak
Loan and Repayment of Promissory Notes On
October 29, 2021, the Company and its subsidiaries entered into a Loan and Security Agreement (the “BroadOak Loan Agreement”)
with BroadOak, providing for a term loan in the aggregate principal amount of $ 8,000,000 4.5 3 The
Term Loan matures upon the earlier of (i) October 31, 2024 9 Company 7,500,000 The Term
Loan has an origination fee of 3 The
BroadOak Loan Agreement contains affirmative and negative restrictive covenants that are applicable from and after the date of the Term
Loan advance. These restrictive covenants could adversely affect our ability to conduct our business. The BroadOak Loan Agreement also
contains customary events of default. The
representations, warranties and covenants contained in the BroadOak Loan Agreement were made only for purposes of such agreement and
as of specific dates, were solely for the benefit of the parties to such agreement, and may be subject to limitations agreed upon by
the contracting parties, including being qualified by confidential disclosures exchanged between the parties in connection with the execution
of such agreement. The representations and warranties may have been made for the purposes of allocating contractual risk between the
parties to such agreement instead of establishing these matters as facts, and may be subject to standards of materiality applicable to
the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under such agreement
and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of
the representations and warranties may change after the date of such agreement, and this subsequent information may or may not be fully
reflected in the Company’s public disclosure. In
connection with the BroadOak Loan Agreement, the Company and its subsidiaries entered into that certain First Amendment to Loan and Security
Agreement and Consent with Comerica, dated as of November 1, 2021 (the “Comerica Amendment”),
pursuant to which Comerica consented to the Company’s and its subsidiaries’ entry into the BroadOak Loan Agreement, and amended
that certain Loan and Security Agreement among Comerica, the Company and its subsidiaries (the “Comerica Loan Agreement”)
to, among other things, permit the indebtedness, liens and encumbrances contemplated by the BroadOak Loan Agreement. As
a condition for BroadOak to extend the Term Loan to the Company and its subsidiaries, the Company’s existing creditor, Comerica,
and BroadOak entered into that certain Subordination and Intercreditor Agreement, dated as of November 1, 2021, pursuant to which BroadOak
agreed to subordinate all of the indebtedness and obligations of the Company and its subsidiaries owing to BroadOak to all of the indebtedness
and obligations of the Company and its subsidiaries owing to Comerica (the “Intercreditor Agreement”). BroadOak further agreed
to subordinate all of its respective security interests in assets or property of the Company and its subsidiaries to Comerica’s
security interests in such assets or property. The Intercreditor Agreement provides that it is solely for the benefit of BroadOak and
Comerica and is not for the benefit of the Company or any of its subsidiaries. INTERPACE
BIOSCIENCES, INC FORWARD-LOOKING
STATEMENTS This
quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act
and Section 21E of the Securities Exchange Act of 1934, as amended (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:
● potential
future material adverse impact of Coronavirus (COVID-19) pandemic;
● the
quotation of our common stock on the OTCQX and our inability to use Form S-3 for offerings by the Company may adversely affect our
ability to raise additional capital;
● our
expectations of future revenues, expenditures, capital or other funding requirements;
● the
operating performance of our clinical services and pharma solutions businesses;
● we
generally depend on sales and reimbursements from our clinical services for more than 50% of our revenue; the ability to continue
to generate sufficient revenue from these and other products and/or solutions that we develop in the future is important for our
ability to meet our financial and other targets;
● our
revenue recognition is based, in part, on our estimates for future collections and such estimates may prove to be incorrect;
● our
ability to finance our business on acceptable terms in the future, which may limit the ability to grow our business, develop and
commercialize products and services, develop and commercialize new molecular clinical service solutions and technologies and expand
our pharma services offerings;
● our
obligations to make royalty and milestone payments to our licensors;
● our
dependence on third parties for the supply of some of the materials used in our clinical and pharma services tests;
● the
potential adverse impact of current and future laws, licensing requirements and governmental regulations upon our business operations,
including but not limited to the evolving U.S. regulatory environment related to laboratory developed tests (“LDTs”),
pricing of our tests and services and patient access limitations;
● our
reliance on our sales and marketing activities for future business growth and our ability to continue to expand our sales and marketing
activities;
● our
ability to implement our business and restructuring strategy; and
● the
potential impact of existing and future contingent liabilities on our financial condition. Please
see Part I – Item 1A – “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2020 filed with
the SEC on April 1, 2021, as amended, 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 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 advance 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. COVID-19
pandemic The
outbreak of the COVID-19 pandemic continues to impact a significant portion of the regions in which we operate. The continuing impact
that the COVID-19 pandemic will have on our operations, including duration, severity and scope, remains highly uncertain and cannot be
fully predicted at this time. While we believe we have generally recovered from the adverse impact that the COVID-19 pandemic had on
our business during 2020, we believe that the COVID-19 pandemic could continue to adversely impact our results of operations, cash flows
and financial condition in the future. As
our business operations continue to be impacted by the pandemic, we continue to monitor the situation and the guidance that is being
provided by relevant federal, state and local public health authorities. We may take additional actions based upon their recommendations.
However, it is possible that we may have to make further adjustments to our operating plans in reaction to developments that are beyond
our control. While
we do not anticipate any lab closures at this time beyond periodic, temporary work stoppages to clean and disinfect the labs, this could
change in the future based upon conditions caused by the pandemic. It is also possible that we could experience supply chain shortages
if the pandemic worsens and if one or more suppliers is unable to continue to provide us with supplies. For the foreseeable future, however,
we do not anticipate supply chain shortages of critical supplies. We
have developed and will continue to update our contingency plans in order to mitigate pandemic-related, adverse financial impacts upon
our business. Transition
costs To
optimize the operations of laboratory operations within our pharma services, we transitioned activities from the Rutherford, NJ facility
to our Morrisville, NC facility. We invested several million dollars to facilitate this relocation, including but not limited to the
transfer of personnel, expansion of the Morrisville facility and validation of transferred processes. We believe that this investment
will result in a reduction in future operating costs; however, it is not certain whether we will fully realize the anticipated savings.
We have also undergone several other cost-cutting initiatives, primarily reductions in headcount, and those costs are categorized as
transition expenses as well. Nasdaq
delisting On
February 16, 2021, the Company received a delisting determination letter (the “Letter”) from the Listing Qualifications Department
(the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) stating that the Staff had determined to delist the Company’s
common stock from Nasdaq due to the Company’s failure to regain compliance with the Nasdaq Capital Market’s minimum $2,500,000
stockholders’ equity requirement for continued listing as set forth in Nasdaq Listing Rule 5550(b) (the “Rule”) and
the Company’s failure to timely execute its plan to regain compliance under the Rule. Nasdaq
commenced with delisting the Company’s common stock from the Nasdaq Capital Market and, suspended trading in the Company’s
common stock effective at the open of business on February 25, 2021. On
February 24, 2021, the Company was approved to have its common stock quoted on the OTCQX ® Additional
Reimbursement Coverage and Price Increase During 2021 Reimbursement
progress is key for us. We have been successful to date in expanding both the scope and amount of product reimbursement for our clinical
services in 2021. Examples of our progress include:
● In
January 2021, we announced an agreement with Blue Cross Blue Shield of Florida under which ThyGeNEXT ® ®
● In
February 2021, we announced an agreement with Blue Cross Blue Shield of Illinois that makes ThyGeNEXT ® ®
● In
April 2021, we announced that Novitas, our Medicare Administrative Contractor, has agreed to recognize the new Proprietary Laboratory
Analysis (PLA) code that specifically identifies ThyGeNEXT ® ®
● In
May 2021, we announced that eviCore Healthcare (“eviCore”), a wholly owned subsidiary of Cigna, has updated their laboratory
management guidelines to include positive coverage for ThyGeNEXT ® ® Revenue
Recognition Clinical
services derive its revenues from the performance of its proprietary assays or tests. Our performance obligation is fulfilled upon completion,
review and release of test results to the customer, at which time we bill third-party payers or direct-bill payers for the tests performed.
Under Accounting Standards Codification 606, revenue is recognized based upon 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.
To the extent that the transaction price includes variable consideration, for all third party and direct-bill payers and proprietary
tests, we estimate the amount of variable consideration that should be included in the transaction price using the expected value method
based on historical experience. The
ultimate amounts received from the third-party and direct-bill payers and related estimated reimbursement rates are regularly reviewed
and we 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 affects net revenue in the period such variances become
known. With
respect to our pharma services, customer 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. 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. CONDENSED
CONSOLIDATED RESULTS OF OPERATIONS The
following table sets forth, for the periods indicated, certain statements of operations data. The trends illustrated in this table may
not be indicative of future results. Condensed
Consolidated Results of Continuing Operations for the Quarter Ended September 30, 2021 Compared to the Quarter Ended September 30, 2020
(unaudited, in thousands)
Three
Months Ended September 30,
2021 2021 2020 2020
Revenue, net $ 9,472 100.0 % $ 8,248 100.0 %
Cost of revenue 5,848 61.7 % 5,194 63.0 %
Gross profit 3,624 38.3 % 3,054 37.0 %
Operating expenses:
Sales and
marketing 2,456 25.9 % 2,699 32.7 %
Research
and development 416 4.4 % 763 9.3 %
General and
administrative 3,278 34.6 % 3,795 46.0 %
Transition
expenses 363 3.8 % 687 8.3 %
Acquisition
related amortization expense 1,112 11.7 % 1,115 13.5 %
Total
operating expenses 7,625 80.5 % 9,059 109.8 %
Operating
loss (4,001 ) -42.2 % (6,005 ) -72.8 %
Interest accretion expense (106 ) -1.1 % (138 ) -1.7 %
Related party interest (151 ) -1.6 % - 0.0 %
Other
income (expense), net 45 0.5 % (12 ) -0.1 %
Loss from
continuing operations before tax (4,213 ) -44.5 % (6,155 ) -74.6 %
(Benefit)
provision for income taxes (714 ) -7.5 % 14 0.2 %
Loss from
continuing operations (3,499 ) -36.9 % (6,169 ) -74.8 %
Loss from
discontinued operations, net of tax (62 ) -0.7 % (65 ) -0.8 %
Net
loss $ (3,561 ) -37.6 % $ (6,234 ) -75.6 % Revenue,
net Consolidated
revenue, net for the three months ended September 30, 2021 increased by $1.2 million, or 15%, to $9.5 million, compared to $8.2 million
for the three months ended September 30, 2020. The increase in net revenue was driven by increased reimbursement rates and increased
clinical services volume as the three months ended September 30, 2020 was impacted by the pandemic. This increase was partially offset
by a fairly significant decrease in volume within pharma services. The decrease in revenue within pharma services was approximately 47%
from the comparable prior year period. Cost
of revenue Consolidated
cost of revenue for the three months ended September 30, 2021 was $5.8 million, as compared to $5.2 million for the three months ended
September 30, 2020. This increase is primarily attributed to the increased volume associated with the clinical services business, partially
offset by a decrease in pharma services volume. As a percentage of revenue, cost of revenue was approximately 62% for the three months
ended September 30, 2021 and 63% for the three months ended September 30, 2020. Gross
profit Consolidated
gross profit was approximately $3.6 million for the three months ended September 30, 2021 and $3.1 million for the three months ended
September 30, 2020. The gross profit percentage was approximately 38% for the three months ended September 30, 3021 and 37% for the three
months ended September 30, 2020. Sales
and marketing expense Sales
and marketing expense was approximately $2.5 million for the three months ended September 30, 2021 and $2.7 million for the three months
ended September 30, 2020. As a percentage of revenue, sales and marketing expense decreased to 26% from 33% in the comparable prior year
period due to the higher revenue for the three months ended September 30, 2021 with no comparable increase in expenses. Research
and development Research
and development expense was $0.4 million for the three months ended September 30, 2021 and $0.8 million for the three months ended September
30, 2020 due to lower professional services costs in the quarter. As a percentage of revenue, research and development expense decreased
to 4% from 9% in the comparable prior year period. General
and administrative General
and administrative expense was approximately $3.3 million for the three months ended September 30, 2021 and $3.8 million for the three
months ended September 30, 2020. The decrease can be primarily attributed to the closing of the Rutherford, NJ office as well as employee
and consulting costs associated with the closure. Transition
expense Transition
expense was approximately $0.4 million for the three months ended September 30, 2021 and $0.7 million for the three months ended September
30, 2020. These expenses are primarily related to the Rutherford, NJ lab closing and subsequent move to North Carolina, as well as other
cost-saving initiatives, primarily reductions in headcount. Acquisition
amortization expense During
the three months ended September 30, 2021 and September 30, 2020, we recorded amortization expense of approximately $1.1 million, respectively
in both periods, which is related to intangible assets associated with prior acquisitions. Operating
loss Operating
loss from continuing operations was $4.0 million for the three months ended September 30, 2021 as compared to $6.0 million for the three
months ended September 30, 2020. The lower operating loss was primarily attributable to the increase in gross profit and lower operating
expenses discussed above. (Benefit)
provision for income taxes The
income tax benefit was approximately $0.7 million for the three months ended September 30, 2021 which primarily pertained to the Company’s
sale of NOLs of approximately $0.7 million under the State of New Jersey’s Technology Business Tax Certificate Transfer Program.
Income tax expense of $14,000 for the three months ended September 30, 2020 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 the three months ended September 30, 2021 and a loss from discontinued
operations of approximately $0.1 million for the three months ended September 30, 2020. In both periods, the loss represents income tax
expense associated with our discontinued operations. Condensed
Consolidated Results of Continuing Operations for the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September
30, 2020 (unaudited, in thousands)
Nine
Months Ended September 30,
2021 2021 2020 2020
Revenue, net $ 30,461 100.0 % $ 22,752 100.0 %
Cost of revenue 16,965 55.7 % 15,156 66.6 %
Gross profit 13,496 44.3 % 7,596 33.4 %
Operating expenses:
Sales and
marketing 7,585 24.9 % 6,776 29.8 %
Research
and development 1,475 4.8 % 2,123 9.3 %
General and
administrative 9,582 31.5 % 12,683 55.8 %
Transition
expenses 2,474 8.1 % 798 3.5 %
Gain on DiamiR
transaction (235 ) -0.8 % - 0.0 %
Acquisition
related amortization expense 3,336 11.0 % 3,346 14.7 %
Total
operating expenses 24,217 79.5 % 25,726 113.1 %
Operating
loss (10,721 ) -35.2 % (18,130 ) -79.7 %
Interest accretion expense (375 ) -1.2 % (414 ) -1.8 %
Related party interest (372 ) -1.2 % - 0.0 %
Other
(expense) income, net (255 ) -0.8 % 473 2.1 %
Loss from
continuing operations before tax (11,723 ) -38.5 % (18,071 ) -79.4 %
(Benefit)
provision for income taxes (684 ) -2.2 % 43 0.2 %
Loss from
continuing operations (11,039 ) -36.2 % (18,114 ) -79.6 %
Loss from
discontinued operations, net of tax (175 ) -0.6 % (194 ) -0.9 %
Net
loss $ (11,214 ) -36.8 % $ (18,308 ) -80.5 % Revenue,
net Consolidated
revenue, net for the nine months ended September 30, 2021 increased by $7.7 million, or 34%, to $30.5 million, compared to $22.8 million
for the nine months ended September 30, 2020. The increase in net revenue was driven by increased reimbursement rates and increased clinical
services volume as the nine months ended September 30, 2020 was impacted by the pandemic. This increase was partially offset by a fairly
significant decrease in volume within pharma services. The decrease in revenue within pharma services was approximately 31% from the
comparable prior year period. Cost
of revenue Consolidated
cost of revenue for the nine months ended September 30, 2021 was $17.0 million, as compared to $15.2 million for the nine months ended
September 30, 2020. This increase is primarily attributed to the increased volume associated with the clinical services business. As
a percentage of revenue, cost of revenue was approximately 56% for the nine months ended September 30, 2021 and 67% for the nine months
ended September 30, 2020. Gross
profit Consolidated
gross profit was approximately $13.5 million for the nine months ended September 30, 2021 and $7.6 million for the nine months ended
September 30, 2020. The gross profit percentage was approximately 44% for the nine months ended September 30, 2021 and 33% for
the nine months ended September 30, 2020. The increase can be attributed to increased reimbursement rates as well as the change in the
gross profit mix. Sales
and marketing expense Sales
and marketing expense was approximately $7.6 million for the nine months ended September 30, 2021 and $6.8 million for the nine months
ended September 30, 2020. As a percentage of revenue, sales and marketing expense decreased to 25% from 30% in the comparable prior year
period due to the higher revenue for the nine months ended September 30, 2021. Research
and development Research
and development expense was $1.5 million for the nine months ended September 30, 2021 and $2.1 million for the nine months ended September
30, 2020 due to lower professional services and employee costs. As a percentage of revenue, research and development expense decreased
to 5% from 9% in the comparable prior year period. General
and administrative General
and administrative expense was approximately $9.6 million for the nine months ended September 30, 2021 and $12.7 million for the nine
months ended September 30, 2020. The decrease can be primarily attributed to the closing of the Rutherford, NJ office as well as employee
and consulting costs associated with the closure. Transition
expense Transition
expense was approximately $2.5 million for the nine months ended September 30, 2021 and $0.8 million for the nine months ended September
30, 2020. These expenses are primarily related to the Rutherford, NJ lab closing and subsequent move to North Carolina, as well as other
cost-saving initiatives, primarily reductions in headcount. Acquisition
amortization expense During
the nine months ended September 30, 2021 and September 30, 2020, we recorded amortization expense of approximately $3.3 million, respectively
in both periods, which is related to intangible assets associated with prior acquisitions. Operating
loss Operating
loss from continuing operations was $10.7 million for the nine months ended September 30, 2021 as compared to $18.1 million for the nine
months ended September 30, 2020. The lower operating loss was primarily attributable to the increase in gross profit discussed above. (Benefit)
provision for income taxes The
income tax benefit was approximately $0.7 million for the nine months ended September 30, 2021 and was related to the sale of NOLs discussed
above. Income tax expense of $43,000 for the nine months ended September 30, 2020 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 $0.2 million for the nine months ended September 30, 2021 and a loss from discontinued
operations of approximately $0.2 million for the nine months ended September 30, 2020. In both periods, the loss represents income tax
expense associated with our discontinued operations. Non-GAAP
Financial Measures In
addition to the United States generally accepted accounting principles, or GAAP, results provided throughout this document, we have provided
certain non-GAAP financial measures to help evaluate the results of our performance. We believe that these non-GAAP financial measures,
when presented in conjunction with comparable GAAP financial measures, are useful to both management and investors in analyzing our ongoing
business and operating performance. We believe that providing the non-GAAP information to investors, in addition to the GAAP presentation,
allows investors to view our financial results in the way that management views financial results. In
this 10-Q, we discuss Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is a metric used by management to measure cash flow
of the ongoing business. Adjusted EBITDA is defined as income or loss from continuing operations, plus depreciation and amortization,
acquisition related expenses, transition expenses, noncash stock based compensation, interest and taxes, and other non-cash expenses
including asset impairment costs, bad debt expense, loss on extinguishment of debt, goodwill impairment and change in fair value of contingent
consideration, and warrant liability. The table below includes a reconciliation of this non-GAAP financial measure to the most directly
comparable GAAP financial measure. Reconciliation
of Adjusted EBITDA (Unaudited) ($
in thousands)
Three
Months Ended Nine
Months Ended
September
30, September
30,
2021 2020 2021 2020
Loss from continuing
operations (GAAP Basis) $ (3,499 ) $ (6,169 ) $ (11,039 ) $ (18,114 )
Bad debt (recovery) expense - - (140 ) 250
Receipt of HHS stimulus grant - - - (650 )
Transition expenses 363 687 2,474 798
Legal and professional services - 495 - 495
Depreciation and amortization 1,407 1,394 4,350 4,102
Stock-based compensation 477 563 1,314 1,381
Taxes (714 ) 14 (684 ) 43
Financing interest and related
costs 174 - 482 -
Interest accretion expense 106 138 375 414
Gain on DiamiR transaction - - (235 ) -
Mark to market on warrant liability (71 ) (13 ) 137 (62 )
Change
in fair value of contingent consideration - - (57 ) -
Adjusted
EBITDA $ (1,757 ) $ (2,891 ) $ (3,023 ) $ (11,343 ) LIQUIDITY
AND CAPITAL RESOURCES For
the nine months ended September 30, 2021, we had an operating loss of $10.7 million. As of September 30, 2021, we had cash and cash equivalents
of $3.2 million, net of restricted cash, total current assets of $12.8 million, net of restricted cash and current liabilities of $22.8
million. As of November 5, 2021, we had approximately $2.4 million of cash on hand, net of restricted cash. During
the nine months ended September 30, 2021, net cash used in operating activities was $7.5 million. The main component of cash used in
operating activities was our net loss of $11.2 million which was partially offset by non-cash expenses of $6.2 million. During the nine
months ended September 30, 2020, net cash used in operating activities was $12.4 million. The main component of cash used in operating
activities was our net loss of $18.3 million which was partially offset by non-cash expenses of $4.9 million. During
the nine months ended September 30, 2021, net cash used in investing activities was $0.2 million. For the nine months ended September
30, 2020, cash used in investing activities was $1.3 million, primarily related to capital expenditures associated with the moving of
our Rutherford, New Jersey lab to North Carolina. For
the nine months ended September 30, 2021, cash provided from financing activities was $7.7 million, of which $7.4 million were the net
proceeds from the Company’s secured promissory notes with Ampersand and 1315. See Note 14, Notes Payable - Related Parties In
September 2020, we repaid approximately |
