| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies Accounting
Principles The
consolidated financial statements and accompanying notes are prepared on the accrual basis of accounting in accordance with U.S. generally
accepted accounting principles (“GAAP”). ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Principles
of Consolidation and Basis of Presentation On
January 31, 2020, with the acquisition of Insight Genetics, Inc. (“Insight”) through a merger with a newly incorporated wholly-owned
subsidiary of Oncocyte (the “Insight Merger”) under the terms of an Agreement and Plan of Merger (the “Insight Merger
Agreement”), Insight became a wholly-owned subsidiary of Oncocyte, and on that date Oncocyte began consolidating Insight’s
operations and results with Oncocyte’s operations and results (see Note 3). On
April 15, 2021, with the acquisition of Chronix Biomedical, Inc. (“Chronix”) pursuant to an Agreement and Plan of Merger
dated February 2, 2021, amended February 23, 2021, and amended and restated as of April 15, 2021 (as amended and restated, the “Chronix
Merger Agreement”), by and among Oncocyte, CNI Monitor Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Oncocyte
(“Merger Sub”), Chronix became a wholly-owned subsidiary of Oncocyte (the “Chronix Merger”), and on that date
Oncocyte began consolidating Chronix’s operations and results with Oncocyte’s operations and results (see Note 3). All
material intercompany accounts and transactions have been eliminated in consolidation. We
have reflected the operations of Razor as discontinued operations for the periods presented. See Note 13 for further information. Amounts
and disclosures throughout these notes to consolidated financial statements relate solely to continuing operations and exclude all discontinued
operations, unless otherwise noted. Discontinued operations comprise activities that were disposed of or discontinued at the end of the
period, represent a separate major line of business that can be clearly distinguished for operational and financial reporting purposes
and represent a strategic business shift having a major effect on the Company’s operations and financial results according to ASC
Topic 205, Presentation of Financial Statements On
July 24, 2023, the Company implemented a 1-for-20 230 Reclassifications Certain
prior period amounts in the consolidated financial statements and notes to consolidated financial statements have been reclassified to
conform to the current period presentation. These changes had no impact on the previously reported consolidated financial condition,
results of operations or cash flows. Use
of Estimates The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and contingent assets and liabilities, at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates estimates which are
subject to significant judgment, including, but not limited to, valuation methods used, assumptions requiring the use of judgment to
prepare financial projections and forecasted financial information, timing of potential commercialization of acquired in-process intangible
assets, applicable discount rates, probabilities of the likelihood of multiple outcomes of certain events related to contingent consideration,
comparable companies or transactions, determination of fair value of the assets acquired and liabilities assumed (including those relating
to contingent consideration), the carrying value of goodwill and other intangibles, impairments, assumptions related to going concern
assessments, revenue recognition, allocation of direct and indirect expenses, useful lives associated with long-lived intangible and
other assets, key assumptions in operating and financing leases including incremental borrowing rates, loss contingencies, valuation
allowances related to deferred income taxes, allowances for credit losses, and assumptions used to value debt, stock-based awards and
other equity instruments. These assessments are made in the context of information reasonably available to Oncocyte. Actual results may
differ materially from those estimates. ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Segments Oncocyte’s
executive management team, as a group, represents the entity’s chief operating decision makers. To date, Oncocyte’s executive
management team has viewed Oncocyte’s operations as one segment that includes the research, development and commercialization of
diagnostic tests, including molecular diagnostic services to pharmaceutical customers. As a result, the financial information disclosed
materially represents all of the financial information related to Oncocyte’s sole operating segment. Fair
Value Measurements, Business Combinations and Contingent Consideration Liabilities Oncocyte
accounts for business combinations in accordance with ASC 805, which requires the purchase consideration transferred to be measured at
fair value on the acquisition date in accordance with ASC 820, Fair Value Measurement ●
Level 1 ●
Level 2 ●
Level 3 When
a part of the purchase consideration consists of shares of Oncocyte common stock, Oncocyte calculates the purchase price attributable
to those shares, a Level 1 security, by determining the fair value of those shares as of the acquisition date based on prices quoted
on the principal national securities exchange on which the shares traded. Oncocyte recognizes estimated fair values of the tangible assets
and identifiable intangible assets acquired, including in-process research and development (“IPR&D”), and liabilities
assumed, including any contingent consideration, as of the acquisition date. Goodwill is recognized as any amount of the fair value of
the tangible and identifiable intangible assets acquired and liabilities assumed in excess of the consideration transferred. ASC 805
precludes the recognition of an assembled workforce as an asset, effectively subsuming any assembled workforce value into goodwill. In
determining fair value, Oncocyte utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable
inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value. For the periods presented,
Oncocyte has no financial assets recorded at fair value on a recurring basis, except for money market funds and marketable equity securities.
These assets are measured at fair value using the period-end quoted market prices as a Level 1 input. Certain
of Oncocyte’s asset and business acquisitions involve the potential for future payment of consideration to third-parties and former
selling shareholders in amounts determined as a percentage of future net revenues generated, or upon attainment of revenue milestones,
from Pharma Services or laboratory tests, as applicable, or annual minimum royalties to certain licensors, as provided in the applicable
agreements. The fair value of such liabilities is determined using unobservable inputs. These inputs include the estimated amount and
timing of projected cash flows and the risk-adjusted discount rate used to present value the cash flows. These obligations are referred
to as contingent consideration, which are carried at fair value based on Level 3 inputs on a recurring basis. ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS ASC
805 requires that contingent consideration be estimated and recorded at fair value as of the acquisition date as part of the total consideration
transferred. Contingent consideration is an obligation of the acquirer to transfer additional assets or equity interests to the selling
shareholders in the future if certain future events occur or conditions are met, such as the attainment of product development milestones.
Contingent consideration also includes additional future payments to selling shareholders based on achievement of components of earnings,
such as “earn-out” provisions or percentage of future revenues, including royalties paid to the selling shareholders based
on a percentage of certain revenues generated. The
fair value of contingent consideration after the acquisition date is reassessed by Oncocyte as changes in circumstances and conditions
occur, with the subsequent change in fair value recorded in the consolidated statements of operations. Changes in key assumptions can
materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that
Oncocyte records in its consolidated financial statements. See Note 3 for a full discussion of these liabilities and additional Level
3 fair value disclosures. The
following tables present the Company’s assets and liabilities, measured and recognized at fair value on a recurring basis, classified
under the appropriate level of the fair value hierarchy: Schedule of Fair
Value Measurement of Financial Assets and Liabilities
December 31, 2023
Fair value Level 1 Level 2 Level 3
(In thousands)
Liabilities:
Contingent consideration liabilities (Note 3) $ 39,900 $ - $ - $ 39,900
Total $ 39,900 $ - $ - $ 39,900
December 31, 2022
Fair value Level 1 Level 2 Level 3
(In thousands)
Assets:
Marketable equity securities $ 433 $ 433 $ - $ -
Total $ 433 $ 433 $ - $ -
Liabilities:
Contingent consideration liabilities (Note 3) $ 45,662 $ - $ - $ 45,662
Total $ 45,662 $ - $ - $ 45,662 The
carrying amounts of cash and cash equivalents, restricted cash, prepaid expenses and other current assets, accounts payable, accrued
expenses and other current liabilities approximate fair values because of the short-term nature of these items. In
accordance with GAAP, from time to time, the Company measures certain assets at fair value on a nonrecurring basis. The Company reviews
the carrying value of intangibles, including IPR&D (see Note 5), and other long-lived assets for indications of impairment at least
annually. Refer to related discussions of impairments below. Cash,
Cash Equivalents and Restricted Cash Oncocyte
considers all highly liquid securities with original maturities of three months or less when purchased to be cash equivalents. For the
periods presented, Oncocyte’s cash equivalents are comprised of investments in AAA rated money market funds that invest in first-tier
only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its
agencies. Restricted cash relates to a bank letter of credit required under our office lease arrangement, refer to Note 7 for additional
information. Marketable
Equity Securities Oncocyte
accounted for the shares of Lineage Cell Therapeutics, Inc. (“Lineage”) and AgeX Therapeutics, Inc. (“AgeX”)
common stock it held as marketable equity securities in accordance with ASC 321-10, Investments – Equity Securities As
of December 31, 2022, Oncocyte held 353,264 35,326 433,000 1.4 ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Investments
in Privately Held Companies Oncocyte
evaluates whether investments held in common stock of other companies require consolidation of the company under, first, the variable
interest entity (“VIE”) model, and then under the voting interest model in accordance with accounting guidance for consolidations
under ASC 810-10. If consolidation of the entity is not required under either the VIE model or the voting interest model, Oncocyte determines
whether the equity method of accounting should be applied in accordance with ASC 323, Investments – Equity Method and Joint
Ventures Oncocyte
initially records equity method investments at fair value on the date of the acquisition with subsequent adjustments to the investment
balance based on Oncocyte’s pro rata share of earnings or losses from the investment. Since
February 16, 2023, Oncocyte continues to own an equity interest Razor, however, based on the Razor transactions as discussed in Note
1, the remaining common stock held is accounted for at historical cost less impairment, which is zero. Assets
Held for Sale and Discontinued Operations Assets
and liabilities are classified as held for sale when all of the following criteria for a plan of sale have been met: (1) management,
having the authority to approve the action, commits to a plan to sell the assets; (2) the assets are available for immediate sale, in
their present condition, subject only to terms that are usual and customary for sales of such assets; (3) an active program to locate
a buyer and other actions required to complete the plan to sell the assets have been initiated; (4) the sale of the assets is probable
and is expected to be completed within one year; (5) the assets are being actively marketed for a price that is reasonable in relation
to their current fair value; and (6) actions required to complete the plan indicate that it is unlikely that significant changes to the
plan will be made or the plan will be withdrawn. When all of these criteria have been met, the assets and liabilities are classified
as held for sale in the consolidated balance sheet. Assets classified as held for sale are reported at the lower of their carrying value
or fair value less costs to sell. Depreciation and amortization of assets ceases upon designation as held for sale. During
the year ended December 31, 2023, the Company entered into various agreements to sell laboratory equipment. As a result, the Company
classified the equipment as held for sale as current assets, in the consolidated balance sheet, as all the criteria of ASC subtopic 360-10,
Property, Plant, and Equipment 139,000 1.3 Discontinued
operations comprise activities that were disposed of, discontinued or held for sale at the end of the period, represent a separate major
line of business that can be clearly distinguished for operational and financial reporting purposes and represent a strategic business
shift having a major effect on the Company’s operations and financial results according to ASC Topic 205, Presentation of Financial
Statements ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Machinery
and Equipment, Net, and Construction in Progress Machinery
and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets, generally over a period of 3 10 3 5 Construction
in progress, comprised primarily of leasehold improvements under construction, is not depreciated until the underlying asset is placed
into service. Intangible
Assets and Goodwill In
accordance with ASC 350, Intangibles – Goodwill and Other Oncocyte
does not have intangible assets with indefinite useful lives other than the acquired IPR&D discussed in Note 5, which as of December
31, 2023, has been partially impaired. Goodwill
represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. Goodwill, similar to IPR&D,
is not amortized but is tested for impairment at least annually, or if circumstances indicate that it is more-likely-than-not that the
carrying value of the associated reporting unit exceeds its fair value. Qualitative factors considered in this assessment include industry
and market conditions, overall financial performance, and other relevant events and factors affecting Oncocyte’s business. Based
on the qualitative assessment, if it is determined that the fair value of goodwill is more-likely-than-not to be less than its carrying
amount, the fair value of a reporting unit will be calculated and compared with its carrying amount and an impairment charge will be
recognized for the amount that the carrying value exceeds the fair value. Oncocyte continues to operate in one segment and considered
to be the sole reporting unit and, therefore, goodwill is tested for impairment at the enterprise level. In
accordance with ASC 350, we review and evaluate our long-lived assets, including intangible assets with finite lives, for impairment
whenever events or changes in circumstances indicate that we may not recover their net book value. We test goodwill for impairment on
an annual basis in the fourth quarter of each year, and between annual tests, if indicators of potential impairment exist, using a fair-value
approach. We typically use an income method to estimate the fair value of these assets, which is based on forecasts of the expected future
cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration
of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates). Estimates
utilized in the projected cash flows include consideration of macroeconomic conditions, overall category growth rates, competitive activities,
cost containment and margin expansion, Company business plans, the underlying product or technology life cycles, economic barriers to
entry, and the discount rate applied to the cash flows. Unanticipated market or macroeconomic events and circumstances may occur, which
could affect the accuracy or validity of the estimates and assumptions. During
the fourth quarter of 2022, and upon the eminent sale of Razor, the Company assessed its current environment and concluded that it was
more-likely-than-not that the fair value of the goodwill was less than the carrying value. As such, the Company performed a quantitative
test to estimate the fair value of the enterprise. Using the discounted cash flow method and taking into consideration the loss of Razor’s
future cash flows, the calculated enterprise fair value was lower than carrying value. At that time, the carrying value of goodwill was
comprised of, $ 9.2 9.5 18.7 ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Long-Lived
Intangible Assets Long-lived
intangible assets subject to amortization are stated at acquired cost, less accumulated amortization. We amortize intangible assets not
considered to have an indefinite useful life using the straight-line method over their estimated period of benefit, which generally ranges
from 1 9 5 Impairment
of Long-Lived Assets Oncocyte
assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that such assets might be impaired
and the carrying value may not be recoverable. Oncocyte’s long-lived assets consist primarily of intangible assets, right-of-use
assets for operating leases, customer relationships, and machinery and equipment. If events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable and the expected undiscounted future cash flows attributable to the asset are
less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying value of the asset over its fair
value, is recorded. See Note 4 for additional information with respect to the impairment of leasehold improvements during 2023. Leases Oncocyte
accounts for leases in accordance with ASC 842, Leases ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Accounting
for Warrants Oncocyte
determines the accounting classification of warrants it issues, as either liability or equity classified, by first assessing whether
the warrants meet liability classification in accordance with ASC 480-10, Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company’s Own Stock After
all relevant assessments, Oncocyte concludes whether the warrants are classified as liability or equity. Liability classified warrants
require fair value accounting at issuance and subsequent to initial issuance with all changes in fair value after the issuance date recorded
in the statements of operations. Equity classified warrants only require fair value accounting at issuance with no changes recognized
subsequent to the issuance date. Based on the above guidance and, among other factors, the fact that our warrants cannot be cash settled
under any circumstance but require share settlement, all of our outstanding warrants meet the equity classification criteria and have
been classified as equity. Refer to Notes 6 and 8 for details about our outstanding warrants. Revenue
Recognition Pursuant
to ASC 606, revenues are recognized when control of services performed is transferred to customers, in an amount that reflects the consideration
Oncocyte expects to be entitled to in exchange for those services. ASC 606 provides for a five-step model that includes: (i)
identifying the contract with a customer, (ii)
identifying the performance obligations in the contract, (iii)
determining the transaction price, (iv)
allocating the transaction price to the performance obligations, and (v)
recognizing revenue when, or as, an entity satisfies a performance obligation. Oncocyte
determines transaction prices based on the amount of consideration we expect to receive for transferring the promised goods or services
in the contract. Consideration may be fixed, variable, or a combination of both. The Company considers any constraints on the variable
consideration and includes in the transaction price variable consideration to the extent it is deemed probable that a significant reversal
in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently
resolved. The
following table presents consolidated revenues by service: Schedule
of Disaggregation of Revenue
2023 2022
Years Ended
December 31,
2023 2022
(In thousands)
Pharma Services $ 1,467 $ 958
Laboratory developed test services 36 -
Total $ 1,503 $ 958 Pharma
Services Revenue Revenues
recognized include Pharma Services performed by Oncocyte’s Insight and Chronix subsidiaries for its pharmaceutical customers,
including testing for biomarker discovery, assay design and development, clinical trial support, and a broad spectrum of biomarker
tests. These Pharma Services are generally performed under individual scope of work (“SOW”) arrangements or license
agreements (together with SOW the “Pharma Services Agreements”) with specific deliverables defined by the customer.
Pharma Services are performed on a (i) time and materials basis or (ii) per test completed basis. Upon completion of the service to
the customer in accordance with a Pharma Services Agreement, Oncocyte has the right to bill the customer for the agreed upon price
(either on a per test or per deliverable basis) and recognizes Pharma Service revenue at that time. Insight identifies each service
of its Pharma Service offering as a single performance obligation. Offerings include services such as recurring fees for project
management, fees for storage and handling, pass through expenses for shipping or calibration, training, proficiency, reproducibility
tests, etc. Chronix identifies the processing of test samples as a separate performance obligation (considered a series) within
license agreements with customers. ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Completion
of the service and satisfaction of the performance obligation is typically evidenced by acknowledgment of completed services, and
access to the report or test made available to the customer or any other form or applicable manner of delivery defined in the Pharma
Services Agreements. However, for certain SOWs under which work is performed pursuant to the customer’s highly customized
specifications, Oncocyte has the enforceable right to bill the customer for work completed, rather than upon completion of the SOW.
For those SOWs, Oncocyte recognizes revenue over a period during which the work is performed using a formula that accounts for
expended efforts, generally measured in labor hours, as a percentage of total estimated efforts for the completion of the SOW. As
performance obligations are satisfied under the Pharma Services Agreements, any amounts earned as revenue and billed to the customer
are included in accounts receivable. Any revenues earned but not yet billed to the customer as of the date of Oncocyte’s
consolidated financial statements are recorded as contract assets and are included in prepaids and other current assets as of the
financial statement date. Amounts recorded in contract assets are reclassified to accounts receivable in Oncocyte’s
consolidated balance sheets when the customer is invoiced according to the billing schedule in the contract. As
of December 31, 2023 and 2022, Oncocyte had accounts receivable from Pharma Services customers of $ 488,000 257,000 Allowance
for Credit Losses Oncocyte
establishes an allowance for credit losses based on the evaluation of the collectability of its Pharma Services accounts receivables
after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the
customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial
position, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. If circumstances
related to customers change, estimates of the recoverability of receivables would be further adjusted. Oncocyte continuously monitors
collections and payments from customers and maintains a provision for estimated credit losses and uncollectible accounts, if any, based
upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible
are written off against the credit loss reserve accounts. As of December 31, 2023 and 2022, we had an allowance for credit losses of
$ 5,000 zero Laboratory
Developed Test Services Prior
to the Razor Sale Transaction, Oncocyte generated revenue from performing DetermaRx tests on clinical samples through orders received
from physicians, hospitals, and other healthcare providers. In determining whether all the revenue recognition criteria (i) through (v)
above are met with respect to DetermaRx tests, each test result is considered a single performance obligation and is generally considered
complete when the test result is delivered or made available to the prescribing physician electronically, and, as such, there are no
shipping or handling fees incurred by Oncocyte or billed to customers. Although Oncocyte has billed a list price for all tests ordered
and completed for all payer types, Oncocyte considers constraints on the variable consideration when recognizing revenue for DetermaRx.
Because DetermaRx is a novel test and there are no current reimbursement arrangements with third-party payers other than Medicare, the
transaction price represents variable consideration. Application of the constraint for variable consideration is an area that requires
significant judgment. For all payers other than Medicare, Oncocyte must consider the novelty of the test, the uncertainty of receiving
payment, or being subject to claims for a refund, from payers with whom it does not have a sufficient payment collection history or contractual
reimbursement agreements. Accordingly, for those payers, Oncocyte has recognized revenue upon payment because it has had insufficient
history to reliably estimate payment patterns. As
of December 31, 2023 and 2022, Oncocyte had accounts receivable of zero 1.9 ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Allowance
for Credit Losses We
maintain an allowance for credit losses related to Laboratory Developed Test Services at an amount we estimate to be sufficient to
provide adequate protection against losses resulting from extending credit to our customers. We base this allowance, in the
aggregate, on historical collection experience, age of receivables and general economic conditions, as well as specific
identification of uncollectible accounts. We initially established an allowance in 2022 in connection with remaining Medicare and
Medicare Advantage account balances and have continued to add to the allowance as appropriate. In the first quarter of 2023, in
connection with the adoption of the new current expected credit loss model (see “Recent Accounting Pronouncements –
Recently Adopted” below for additional information), the Company determined that the Medicare and Medicare Advantage accounts
receivable net balance of approximately $ 1.4 million
was uncollectible and should therefore be written-off as of the adoption date, January 1, 2023. As of December 31, 2023 and 2022, we
had an allowance for credit losses of zero 154,000 154,000 zero Licensing
Revenue Revenues
that may be recognized include licensing revenue derived from agreements with customers for exclusive rights to market Oncocyte’s
proprietary testing technology. Under the agreements, Oncocyte grants exclusive rights to certain trademarks and technology of Oncocyte
for the purpose of marketing Oncocyte’s tests within a defined geographic territory. A license agreement may specify milestone
deliverables or performance obligations, for which Oncocyte recognizes revenue when its licensee confirms the completion of Oncocyte’s
performance obligation. A licensing agreement may also include ongoing sales support from Oncocyte and typically includes non-refundable
licensing fees and per-test Pharma Services revenues discussed above, for which Oncocyte treats the licensing of the technology, trademarks,
and ongoing support as a single performance obligation satisfied by the passage of time over the term of the agreement. Disaggregation
of Revenues and Concentrations of Credit Risk The
following table presents the percentage of consolidated revenues by service: Schedule
of Concentration of Risk
2023 2022
Years Ended
December 31,
2023 2022
Pharma Services 98 % 100 %
Laboratory developed test services 2 % 0 %
Total 100 % 100 % The
following table presents the percentage of consolidated revenues generated by unaffiliated customers, based on the respective periods
presented, that individually represented greater than ten percent of consolidated revenues: Schedule
of Consolidated Revenues Generated by Unaffiliated Customers
2023 2022
Years Ended
December 31,
2023 2022
Pharma services - Company A 47 % 43 %
Pharma services - Company B 27 % 14 %
Pharma services - Company C 11 % 11 % The
following table presents the percentage of consolidated revenues attributable to geographical locations, based on country of domicile: Schedule
of Percentage of Consolidated Revenues Attributable to Geographical Locations
2023 2022
Years Ended
December 31,
2023 2022
United States – Pharma Services 59 % 77 %
Outside of the United States – Pharma Services 39 % 23 %
United States – Laboratory developed test services 2 % 0 %
Total 100 % 100 % The
Company holds an insignificant amount of long-lived tangible assets in Germany. ONCOCYTE
CORPORATION NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS Financial
instruments that potentially subject the Company to concentrations of credit risk are cash equivalents and accounts receivable. The Company
places its cash equivalents primarily in highly rated money market funds. Cash and cash equivalents are also invested in deposits with
certain financial institutions and may, at times, exceed federally insured limits. The Company has not experienced any significant losses
on its deposits of cash and cash equivalents. Two
Pharma Services customers individually represented approximately 79 13 59 30 Cost
of Revenues Cost
of revenues generally consists of cost of materials, direct labor including benefits, bonus and stock-based compensation, equipment and
infrastructure expenses, clinical sample related costs associated with performing Pharma Services and Laboratory Developed Test Services,
providing deliverables according to our licensing agreements, license fees due to third parties, and amortization of acquired intangible
assets such as the customer relationship intangible assets (see Note 5). Infrastructure expenses include depreciation of laboratory equipment,
allocated rent costs, leasehold improvements, and allocated information technology costs for operations at Oncocyte’s CLIA laboratory
in Tennessee. Costs associated with generating the revenues are recorded as the tests or services are performed regardless of whether
revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated
using the associated technology are |
