UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

Amendment No. 1

(Mark One)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2019~~2020

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number: 000-24249

Interpace Biosciences, Inc.

(Exact name of registrant as specified in its charter)

Delaware

22-2919486

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer

Identification No.)

Morris Corporate Center 1, Building C

300 Interpace Parkway, Parsippany, NJ 07054

(Address of principal executive offices and zip code)

(855) 776-6419

(Registrant’s telephone number, including area code)

~~Interpace Diagnostics Group, Inc.~~

~~(Registrant’s former name)~~

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	IDXG	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]		Accelerated filer [ ]
Non-accelerated filer [X]		Smaller reporting company [X]
		Emerging Growth Company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class		Shares Outstanding ~~November 8, 2019~~October 9, 2020
Common Stock, par value $0.01 per share		~~38,196,038~~4,041,595

INTERPACE BIOSICENCES, INC. ~~(formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

FORM 10-Q FOR PERIOD ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

TABLE OF CONTENTS

		Page No.
	EXPLANATORY NOTE	3

	PART I - FINANCIAL INFORMATION

Item 1.	Unaudited Interim Condensed Consolidated Financial Statements

	Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	34

	Condensed Consolidated Statements of Operations for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	45

	Condensed Consolidated Statements of Stockholders’ Equity for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	56

	Condensed Consolidated Statements of Cash Flows for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 (unaudited)	67

	Notes to Unaudited ~~Interim~~ Condensed Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2634

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.	Controls and Procedures	3847

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	3848

Item 1A.	Risk Factors	3848

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3848

Item 3.	Defaults Upon Senior Securities	3848

Item 4.	Mine Safety Disclosures	3848

Item 5.	Other Information	3948

Item 6.	Exhibits	3949

Signatures			4050

EXPLANATORY NOTE

On August 14, 2020, the Company filed a Form 12b-25 notifying the SEC of its inability to file its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 on a timely basis. In July 2020, the Company had received letters from employees, one of whom has left the Company’s employ, concerning certain employment and billing and compliance matters. In response, the Company informed its Audit Committee and Regulatory Compliance Committee as well as its independent registered public accounting firm. The Audit Committee commenced an investigation of these matters with the assistance of independent counsel and advisors thereto. The investigation was unable to be completed by the filing deadline for this Report which delayed the filing. The Audit Committee concluded that the allegations were not substantiated and that there was no evidence of any illegal acts.

This Amendment No. 1 on Form 10-Q/A amends the Company’s Report on Form 10-Q for the quarter ended June 30, 2020, as amended, (the “Original Filing”) and is being filed to show the impact in such quarter of intangible asset amortization and impairment expense for its Barrett’s and Thyroid assets which began in 2014. Subsequent to the issuance of its consolidated financial statements for the year ended December 31, 2019 and the quarters ended March 31, 2020 and June 30, 2020, the Company determined that amortization should have commenced upon acquisition of those assets as opposed to the Company’s previously disclosed policy of beginning asset amortization when the product was launched and generating revenue. The impact of the additional amortization expense for the three and six-month periods ended June 30, 2020 and June 30, 2019 was approximately $0.1 million and $0.2 million, respectively. The impact of the other immaterial adjustments for the six months ended June 30, 2020 and June 30, 2019 was $0.1 million in expense and $0.2 million as a credit to expense, respectively.

A description of these adjustments and a summary showing their effect on the restated consolidated statements of operations is provided in Note 1 to the consolidated financial statements. In addition to the errors described above, the restated financial statements also include adjustments to correct certain other immaterial errors, including previously unrecorded immaterial adjustments identified in audits of prior years’ financial statements.

The Company is filing this report in order to amend certain information in Items 1, 2 and 4 of Part I to reflect the restatement of the June 30, 2020 and 2019 unaudited interim consolidated statements of operations and Notes 1,3,5 and 9 to the consolidated financial statements attached hereto solely to the extent necessary to reflect the adjustments described herein; and the principal executive officer and principal financial officer certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. Except for the foregoing items, no other information in the Original Filing is revised by this Amendment.

PART I. FINANCIAL INFORMATION

INTERPACE BIOSCIENCES, INC. ~~(formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

September 30, December 31,
2019 2018
(unaudited)

ASSETS
Current assets:
Cash and cash equivalents $ 2,358 $ 6,068
Accounts receivable, net 14,701 9,483
Other current assets 3,522 2,170
Total current assets 20,581 17,721
Property and equipment, net 7,033 837
Other intangible assets, net 34,532 29,853
Goodwill 8,273 -
Operating lease assets 4,212 -
Other long-term assets 42 31
Total assets $ 74,673 $ 48,442

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 5,020 $ 1,059
Accrued salary and bonus 2,087 1,424
Other accrued expenses 9,423 5,091
Current liabilities from discontinued operations 766 918
Total current liabilities 17,296 8,492
Contingent consideration 2,465 2,693
Operating lease liabilities 2,791 -
Line of credit 3,750 -
Excess consideration note 6,822 -
Other long-term liabilities 4,791 4,319
Total liabilities 37,915 15,504

Commitments and contingencies (Note 8)

Preferred stock, $.01 par value; 5,000,000 shares authorized, Series A Preferred Stock 60 shares issued and outstanding; Series A-1 Preferred Stock 80 shares issued and outstanding 13,161 -

Stockholders’ equity:
Common stock, $.01 par value; 100,000,000 shares authorized; 38,295,006 and 28,767,344 shares issued, respectively;38,196,038 and 28,694,275 shares outstanding, respectively 383 287
Additional paid-in capital 182,361 175,820
Accumulated deficit (157,435 ) (141,489 )
Treasury stock, at cost (98,968 and 73,069 shares, respectively) (1,712 ) (1,680 )
Total stockholders’ equity 23,597 32,938
Total liabilities and stockholders’ equity $ 61,512 $ 48,442

Total liabilities, preferred stock and stockholders equity $ 74,673 $ 48,442

	As Restated			As Restated
	June 30,			December 31,
	2020			2019
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,106		$	2,321
Accounts receivable, net of allowance for doubtful accounts of $275 and $25, respectively		7,239			10,338
Other current assets		3,751			3,851
Total current assets		26,096			16,510
Property and equipment, net		7,249			6,814
Other intangible assets, net		13,619			15,849
Goodwill		8,433			8,433
Operating lease right of use assets		5,172			3,892
Other long-term assets		42			42
Total assets	$	60,611		$	51,540

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,348		$	4,709
Accrued salary and bonus		2,247			2,341
Other accrued expenses		9,737			9,476
Current liabilities from discontinued operations		766			766
Total current liabilities		16,098			17,292
Contingent consideration		2,207			2,391
Operating lease liabilities, net of current portion		3,940			2,591
Line of credit		3,400			3,000
Other long-term liabilities		4,557			4,573
Total liabilities		30,202			29,847

Commitments and contingencies (Note 8)

Preferred stock, $.01 par value; 5,000,000 shares authorized,
270 Series A shares issued and outstanding		-			26,172
47,000 Series B shares issued and outstanding		46,536			-

Stockholders’ equity:
Common stock, $.01 par value; 100,000,000 shares authorized; 4,055,454 and 3,932,370 shares issued, respectively; 4,036,595 and 3,920,589 shares outstanding, respectively		402			393
Additional paid-in capital		182,980			182,514
Accumulated deficit		(197,739	)		(185,665	)
Treasury stock, at cost (18,859 and 11,781 shares, respectively)		(1,770	)		(1,721	)
Total stockholders’ equity		(16,127	)		(4,479	)
Total liabilities and stockholders’ equity	$	14,075		$	25,368

Total liabilities, preferred stock and stockholders’ equity	$	60,611		$	51,540

The accompanying notes are an integral part of these condensed consolidated financial statements.

INTERPACE BIOSCIENCES, INC. ~~(formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except for per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,						As Restated
	2019			2018			2019			2018			Three Months Ended June 30,						Six Months Ended June 30,
													2020			2019			2020			2019

Revenue, net	$	7,725		$	5,753		$	20,005		$	16,062		$	5,446		$	6,270		$	14,504		$	12,280
Cost of revenue (excluding amortization of $995 and $813 for the three months and $2,621 and $2,439 for the nine months, respectively)		4,835			2,763			10,489			7,590
Cost of revenue (excluding amortization of $1,115 and $897, for the three months and $2,230 and $1,794 for the six months, respectively)														3,850			3,031			9,963			5,654
Gross profit		2,890			2,990			9,516			8,472			1,596			3,239			4,541			6,626
Operating expenses:
Sales and marketing		2,757			2,048			8,127			6,135			1,596			2,959			4,077			5,369
Research and development		857			510			2,032			1,528			550			647			1,360			1,175
General and administrative		4,492			2,084			9,790			5,981			4,107			2,788			8,999			5,122
Acquisition related expense		838			-			2,534			-			-			1,295			-			1,696
Acquisition related amortization expense		995			813			2,621			2,439
Acquisition amortization expense														1,115			897			2,230			1,794
Total operating expenses		9,939			5,455			25,104			16,083			7,368			8,586			16,666			15,156

Operating loss		(7,049	)		(2,465	)		(15,588	)		(7,611	)		(5,772	)		(5,347	)		(12,125	)		(8,530	)
Accretion expense		(111	)		(248	)		(331	)		(248	)
Other (expense) income, net		(135	)		(288	)		(12	)		(143	)
Interest accretion														(167	)		(91	)		(276	)		(220	)
Other income (expense), net														438			74			485			123
Loss from continuing operations before tax		(7,295	)		(3,001	)		(15,931	)		(8,002	)		(5,501	)		(5,364	)		(11,916	)		(8,627	)
Provision for income taxes		9			7			19			21			13			5			28			10
Loss from continuing operations		(7,304	)		(3,008	)		(15,950	)		(8,023	)
Loss from continuing operations, net of tax														(5,514	)		(5,369	)		(11,944	)		(8,637	)

Loss from discontinued operations, net of tax		(58	)		(34	)		(51	)		(129	)
(Loss) income from discontinued operations, net of tax														(66	)		65			(130	)		7

Net loss	$	(7,362	)	$	(3,042	)	$	(16,001	)	$	(8,152	)		(5,580	)		(5,304	)		(12,074	)		(8,630	)

Net loss attributable to preferred shareholders	$	(7,362	)	$	-		$	(16,001	)	$	-
Less adjustment for preferred stock deemed dividend														-			-			(3,033	)		-

Less dividends on preferred stock	$	(75	)	$	-		$	(75	)	$	-
Net loss attributable to common stockholders													$	(5,580	)	$	(5,304	)	$	(15,107	)	$	(8,630	)

Net loss attributable to common shareholders	$	(7,437	)	$	-		$	(16,076	)	$	-

Basic and diluted (loss) income per share of common stock:
Basic and diluted loss per share of common stock:
From continuing operations	$	(0.19	)	$	(0.11	)	$	(0.43	)	$	(0.29	)	$	(1.37	)	$	(1.41	)	$	(3.73	)	$	(2.36	)
From discontinued operations		(0.00	)		(0.00	)		(0.00	)		(0.00	)		(0.01	)		0.02			(0.03	)		-
Net loss per basic and diluted share of common stock	$	(0.19	)	$	(0.11	)	$	(0.43	)	$	(0.29	)	$	(1.38	)	$	(1.39	)	$	(3.76	)	$	(2.36	)
Weighted average number of common shares and common share equivalents outstanding:
Basic		38,196			28,215			37,169			28,002			4,033			3,813			4,018			3,665
Diluted		38,196			28,215			37,169			28,002			4,033			3,813			4,018			3,665

The accompanying notes are an integral part of these condensed consolidated financial statements.

INTERPACE BIOSCIENCES, INC. ~~(formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

											As Restated					As Restated
	For The Nine Months Ended					For The Nine Months Ended					For The Six Months Ended					For The Six Months Ended
	September 30, 2019					September 30, 2018					June 30, 2020					June 30, 2019
	Shares		Amount			Shares		Amount			Shares		Amount			Shares		Amount
Common stock:
Balance at January 1		28,767	$	287			27,901	$	278			3,932	$	393			2,877	$	287
Common stock issued		95		1			41		1			37		1			9		1
Restricted stock issued												6		-			-		-
Common stock issued through market sales												80		8			-		-
Common stock issued through offerings		9,333		94			-		-			-		-			933		94
Balance at March 31		38,195		382			27,942		279			4,055		402			3,819		382
Common stock issued		100		1			325		3			-		-			10		1
Balance at June 30		38,295		383			28,267		282			4,055		402			3,829		383
Common stock issued		-		-			100		1
Balance at September 30		38,295		383			28,367		283
Treasury stock:
Balance at January 1		73		(1,680	)		64		(1,671	)		12		(1,721	)		7		(1,680	)
Treasury stock purchased		26		(32	)		9		(9	)		-		-			3		(32	)
Balance at March 31		99		(1,712	)		73		(1,680	)		12		(1,721	)		10		(1,712	)
Treasury stock purchased		-		-			-		-			7		(49	)		-		-
Balance at June 30		99		(1,712	)		73		(1,680	)		19		(1,770	)		10		(1,712	)
Treasury stock purchased		-		-			-		-
Balance at September 30		99		(1,712	)		73		(1,680	)
Additional paid-in capital:
Balance at January 1				175,820					173,062					182,514					175,820
Common stock issued through offerings, net of expenses				5,868					-					-					5,868
Extinguishment of Series A Shares														(828	)				-
Beneficial Conversion Feature in connection with Series B Issuance														2,205					-
Amortization of Beneficial Conversion Feature														(2,205	)				-
Common stock issued through market sales														476					-
Stock-based compensation expense				266					597					418					266
Balance at March 31				181,954					173,659					182,580					181,954
Common Stock issued				72					282					-					72
Stock-based compensation expense				205					419					400					205
Balance at June 30				182,231					174,360					182,980					182,231
Common stock issued through offerings, net of expenses				-					144
Dividends accrued				(75	)				-
Stock-based compensation expense				205					374
Balance at September 30				182,361					174,878
Accumulated deficit:
Balance at January 1				(141,489	)				(131,800	)				(185,665	)				(158,981	)
Net loss				(3,419	)				(3,193	)				(6,494	)				(3,326	)
Adoption of ASC 606				-					2,500
Adoption of ASC 842				55					-					-					55
Balance at March 31				(144,853	)				(132,493	)				(192,159	)				(162,252	)
Net loss				(5,220	)				(1,917	)				(5,580	)				(5,304	)
Balance at June 30				(150,073	)				(134,410	)				(197,739	)				(167,556	)
Net loss				(7,362	)				(3,042	)
Balance at September 30				(157,435	)				(137,452	)

Total stockholders’ equity			$	23,597				$	36,029				$	(16,127	)			$	13,346

The accompanying notes are an integral part of these condensed consolidated financial statements.

INTERPACE BIOSCIENCES, INC. ~~(formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

							As Restated
	For The Nine Months Ended September 30,						For The Six Months Ended June 30,
	2019			2018			2020			2019

Cash Flows From Operating Activities
Net loss	$	(16,001	)	$	(8,152	)	$	(12,074	)	$	(8,630	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,911			2,580			2,708			1,917
Interest accretion		331			248			276			220
Reversal of DOJ accrual		-			(350	)
Bad debt expense		499			-
Mark to market on warrants		(35	)		259			(49	)		(45	)
Stock-based compensation		1,246			1,564			818			990
Bad debt expense								250			499
Other gains and expenses, net		18			-			-			18
Other changes in operating assets and liabilities:
Increase in accounts receivable		(1,986	)		(2,703	)
Decrease (increase) in accounts receivable								2,849			(3,982	)
Increase in other current assets		(417	)		(174	)		(788	)		(252	)
Increase in long-term assets		(11	)		-
(Decrease) increase in accounts payable		(766	)		674			(1,361	)		530
Increase (decrease) in accrued salaries and bonus		228			(248	)
Increase (decrease) in accrued liabilities		981			(680	)
Decrease in accrued salaries and bonus								(94	)		(261	)
Increase in accrued liabilities								759			1,097
Increase in long-term liabilities		446			182			33			114
Net cash used in operating activities		(12,556	)		(6,800	)		(6,673	)		(7,785	)

Cash Flows From Investing Activity
Acquisition of Biopharma, net of expenses		(13,829	)		-
Purchase of property and equipment		(105	)		(388	)		(913	)		(48	)
Sale of property and equipment		13			-			-			13
Net cash used in investing activity		(13,921	)		(388	)		(913	)		(35	)

Cash Flows From Financing Activities
Issuance of common stock, net of expenses		5,962			-			434			5,962
Issuance of preferred shares, net of expenses		13,087			-
Cash paid for repurchase of restricted shares		(32	)		(9	)
Borrowings on Line of Credit		3,750			-			400			-
Net cash provided by (used in) financing activities		22,767			(9	)
Issuance of Series B preferred stock, net of expenses								19,537			-
Net cash provided by financing activities								20,371			5,962

Net decrease in cash and cash equivalents		(3,710	)		(7,197	)
Net increase (decrease) in cash and cash equivalents								12,785			(1,858	)
Cash and cash equivalents – beginning		6,068			15,199			2,321			6,068
Cash and cash equivalents – ending	$	2,358		$	8,002		$	15,106		$	4,210

The accompanying notes are an integral part of these condensed consolidated financial statements.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

OVERVIEW

Nature of Business

Interpace Biosciences, Inc. (“Interpace” or the “Company”) enables personalized medicine, offering specialized services along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications and pharma services. The Company provides molecular diagnostics, bioinformatics and pathology services for evaluation of risk of cancer by leveraging the latest technology in personalized medicine for improved patient diagnosis and management. The Company also provides pharmacogenomics testing, genotyping, biorepository and other specialized services to the pharmaceutical and biotech industries. The Company advances personalized medicine by partnering with pharmaceutical, academic, and technology leaders to effectively integrate pharmacogenomics into their drug development and clinical trial programs.

Impact of COVID-19 pandemic

We have taken what we believe are necessary precautions to safeguard our employees from the Coronavirus (COVID-19) pandemic. We continue to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities. The majority of our employees who do not work in a lab setting are currently on a telecommunication work arrangement and have generally been able to successfully work remotely. Our labs require in-person staffing and we have been able to continue to operate our labs, minimizing infection risk to lab staff through a combination of social distancing and appropriate protective equipment. There can be no assurance, however, that key employees will not become ill or that we will able to continue to operate our labs. While a number of employees were furloughed most have returned to work.

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. Accordingly, we believe that the COVID-19 pandemic could continue to adversely impact our results of operations, cash flows and financial condition in the future.

Through the second quarter of 2020 our revenues were impacted by lower than expected clinical service volume from March through June 2020, which we believe resulted from the pandemic related temporary reduction in non-essential testing procedures. While our pharma services revenue increased throughout the first quarter of 2020, during the second quarter our pharma services business also softened. Currently, our clinical services business has recovered to levels prior to the pandemic and our pharma services business is also recovering, but more slowly.

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.

INTERPACE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

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. Further, while we have acquired additional inventories of lab supplies, including reagents, it is possible that we could experience supply chain shortages if the pandemic continues for a prolonged period 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 will continue to monitor the actual and potential impact of the pandemic upon our operations. We have developed and will continue to update our contingency plans in order to mitigate pandemic-related, adverse financial impacts upon our business.

Restatement

We have restated herein our unaudited consolidated financial statements as of June 30, 2020 and for the three and six-months ended June 30, 2020 and June 30, 2019. We have also restated impacted amounts within the accompanying footnotes to the consolidated financial statements which have been noted as such.

As a result of overall economic conditions related to the coronavirus pandemic, the impact of the coronavirus pandemic on the Company’s financial results, and the decrease in the price of the Company’s common stock noted during the third quarter of fiscal 2020, the Company performed an internal review of its long-lived assets. Due to an extended delay in the launch of the Company’s Barrett’s test, the Company believes there was a triggering event in Fiscal 2016. The Company applied the required procedures under ASC 360 and assessed the estimated future cash flows related to the Barrett’s intangible asset on an undiscounted basis. It was determined that the carrying value of the asset was in excess of the undiscounted cash flows as of December 31, 2016. As a result, the Company performed a formal valuation of the asset on a discounted basis in order to measure the related impairment. Additionally, the Company concluded that amortization of both the Barrett’s intangible asset and its Thyroid intangible assets should have begun at the point in which the asset was ready for use. The Company’s policy had been to amortize such assets upon launch of the test.

On December 7, 2020, the Company’s management conferred with the Audit Committee of the Company’s Board of Directors and concluded that (1) a non-cash impairment charge for an intangible asset of approximately $12 million should have been recorded during the Company’s 2016 fiscal year; (2) the Company should have initiated amortization of such intangible asset in fiscal 2014 and therefore each of fiscal years 2014, 2015, 2016, 2017, 2018, and 2019 and the first two quarters of fiscal 2020 require adjustment to record amortization expense; (3) the consolidated financial statements contained in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2014, 2015, 2016, 2017, 2018, and 2019, as well as the consolidated financial statements contained in the Quarterly Reports on Form 10-Q for each quarterly period within those fiscal years as well as the quarterly periods ended March 31, 2020 and June 30, 2020, should no longer be relied upon. As a result the Company is restating its consolidated financial statements for the three and six-months ended June 30, 2020 and June 30, 2019 in this Form 10-Q/A. The following tables’ present reconciliation from our prior periods as previously reported to the restated values for the consolidated balance sheets and the consolidated statement of operations. A description of misstatements is listed below:

	a)	Amortization expense - We recorded amortization expense starting at the dates of acquisition for our Barrett’s and Thyroid intangible assets. The impact of the additional amortization charge was approximately $0.1 million for the three months ended June 30, 2020 and June 30, 2019, respectively and approximately $0.2 million for the six months ended June 30, 2020 and June 30, 2019, respectively.

	b)	Asset impairment - We recorded an impairment charge on our Barrett’s intangible asset of approximately $11.6 million in the fourth quarter of 2016.

	c)	Adjustments - Adjustments to correct certain other immaterial errors, including previously unrecorded immaterial adjustments identified in audits of prior years’ financial statements.

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands, except share and per share data)

	June 30, 2020
	As Previously Reported			Restatement Amount			Restatement Reference	As Restated
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	15,106		$	-			$	15,106
Accounts receivable, net of allowance for doubtful accounts of $275 and $25, respectively		7,239			-				7,239
Other current assets		3,751			-				3,751
Total current assets		26,096			-				26,096
Property and equipment, net		7,249							7,249
Other intangible assets, net		31,439			(17,820	)	(a) (c)		13,619
Goodwill		8,433			-				8,433
Operating lease right of use assets		5,172			-				5,172
Other long-term assets		42			-				42
Total assets	$	78,431		$	(17,820	)		$	60,611

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,348		$	-			$	3,348
Accrued salary and bonus		2,247			-				2,247
Other accrued expenses		9,737			-				9,737
Current liabilities from discontinued operations		766			-				766
Total current liabilities		19,498			-				16,098
Contingent consideration		2,207			-				2,207
Operating lease liabilities, net of current portion		3,940			-				3,940
Line of credit		3,400			-				3,400
Other long-term liabilities		4,557			-				4,557
Total liabilities		30,202			-				30,202

Commitments and contingencies (Note 8)

Preferred stock, $.01 par value; 5,000,000 shares authorized, 47,000 Series B shares issued and outstanding		46,536			-				46,536

Stockholders’ equity:
Common stock, $.01 par value; 100,000,000 shares authorized; 4,055,454 and 4,036,595 shares issued and outstanding, respectively;		402			-				402
Additional paid-in capital		182,980			-				182,980
Accumulated deficit		(179,919	)		(17,820	)	(a) (c)		(197,739	)
Treasury stock, at cost (11,781 shares)		(1,770	)		-				(1,770	)
Total stockholders’ equity		1,693			(17,820	)			(16,127	)
Total liabilities and stockholders’ equity	$	31,895		$	(17,820	)		$	14,075

Total liabilities, preferred stock and stockholders’ equity	$	78,431		$	(17,820	)		$	60,611

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except for per share data)

	Three Months Ended June 30, 2020										Three Months Ended June 30, 2019
	As Previously Reported			Restatement Amount			Restatement Reference	As Restated			As Previously Reported			Restatement Amount			Restatement Reference	As Restated

Revenue, net	$	5,446		$	-			$	5,446		$	6,270		$	-			$	6,270
Cost of revenue (excluding amortization of $1,115 and $897 for the three months , respectively)		3,850			-				3,850			3,031			-				3,031
Gross profit		1,596			-				1,596			3,239			-				3,239
Operating expenses:
Sales and marketing		1,596			-				1,596			2,959			-				2,959
Research and development		550			-				550			647			-				647
General and administrative		4,107			-				4,107			2,788			-				2,788
Acquisition related expense		-			-				-			1,295			-				1,295
Acquisition related amortization expense		1,031			84		(a)		1,115			813			84		(a)		897
Total operating expenses		7,284			84		(a)		7,368			8,502			84		(a)		8,586

Operating loss		(5,688	)		(84	)	(a)		(5,772	)		(5,263	)		(84	)	(a)		(5,347	)
Interest accretion		(167	)		-				(167	)		(91	)		-				(91	)
Other income (expense), net		438			-				438			74			-				74
Loss from continuing operations before tax		(5,417	)		(84	)	(a)		(5,501	)		(5,280	)		(84	)	(a)		(5,364	)
Provision for income taxes		13			-				13			5			-				5
Loss from continuing operations, net of tax		(5,430	)		(84	)	(a)		(5,514	)		(5,285	)		(84	)	(a)		(5,369	)
Less adjustment for preferred stock deemed dividend		-			-				-			-			-				-
Loss from continuing operations attributable to common stockholders		(5,430	)		(84	)	(a)		(5,514	)		(5,285	)		(84	)	(a)		(5,369	)

(Loss) income from discontinued operations, net of tax		(66	)		-				(66	)		65			-				65

Net loss attributable to common stockholders	$	(5,496	)	$	(84	)	(a)	$	(5,580	)	$	(5,220	)	$	(84	)	(a)	$	(5,304	)


Basic and diluted loss per share of common stock:
From continuing operations	$	(1.35	)	$	(0.02	)		$	(1.37	)	$	(1.39	)	$	(0.02	)		$	(1.41	)
From discontinued operations		(0.01	)		-				(0.01	)		0.02			-				0.02
Net loss per basic and diluted share of common stock	$	(1.36	)	$	(0.02	)		$	(1.38	)	$	(1.37	)	$	(0.02	)		$	(1.39	)
Weighted average number of common shares and
common share equivalents outstanding:
Basic		4,033			4,033				4,033			3,813			3,813				3,813
Diluted		4,033			4,033				4,033			3,813			3,813				3,813

	Six Months Ended June 30, 2020										Six Months Ended June 30, 2019
	As Previously Reported			Restatement Amount			Restatement Reference	As Restated			As Previously Reported			Restatement Amount			Restatement Reference	As Restated

Revenue, net	$	14,645		$	(141	)	(c)	$	14,504		$	12,280		$	-			$	12,280
Cost of revenue (excluding amortization of $2,230 and $1,794 for the six months, respectively)		9,963			-				9,963			5,654			-				5,654
Gross profit		4,682			(141	)	(c)		4,541			6,626			-				6,626
Operating expenses:
Sales and marketing		4,077			-				4,077			5,369			-				5,369
Research and development		1,360			-				1,360			1,175			-				1,175
General and administrative		8,993			6		(c)		8,999			5,299			(177	)	(c)		5,122
Acquisition related expense		-			-				-			1,696			-				1,696
Acquisition related amortization expense		2,062			168		(a)		2,230			1,626			168		(a)		1,794
Total operating expenses		16,492			174		(a) (c)		16,666			15,165			(9	)	(a) (c)		15,156

Operating loss		(11,810	)		(315	)	(a) (c)		(12,125	)		(8,539	)		9		(a) (c)		(8,530	)
Interest accretion		(276	)		-				(276	)		(220	)		-				(220	)
Other income (expense), net		485			-				485			123			-				123
Loss from continuing operations before tax		(11,601	)		(315	)	(a) (c)		(11,916	)		(8,636	)		9		(a) (c)		(8,627	)
Provision for income taxes		28			-				28			10			-				10
Loss from continuing operations, net of tax		(11,629	)		(315	)	(a) (c)		(11,944	)		(8,646	)		9		(a) (c)		(8,637	)
Less adjustment for preferred stock deemed dividend		(3,033	)		-				(3,033	)		-			-				-
Loss from continuing operations attributable to common stockholders		(14,662	)		(315	)	(a) (c)		(14,977	)		(8,646	)		9		(a) (c)		(8,637	)

(Loss) income from discontinued operations, net of tax		(130	)		-				(130	)		7			-				7

Net loss attributable to common stockholders	$	(14,792	)	$	(315	)	(a) (c)	$	(15,107	)	$	(8,639	)	$	9		(a) (c)	$	(8,630	)

Basic and diluted loss per share of common stock:
From continuing operations	$	(3.65	)	$	(0.08	)		$	(3.73	)	$	(2.36	)	$	-			$	(2.36	)
From discontinued operations		(0.03	)		-				(0.03	)		-			-				-
Net loss per basic and diluted share of common stock	$	(3.68	)	$	(0.08	)		$	(3.76	)	$	(2.36	)	$	-			$	(2.36	)
Weighted average number of common shares and common share equivalents outstanding:
Basic		4,018			4,018				4,018			3,665			3,665				3,665
Diluted		4,018			4,018				4,018			3,665			3,665				3,665

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

	As Previously Reported										As Restated
	For The Six Months Ended					Restatement			Restatement		For The Six Months Ended
	June 30, 2020					Amount			Reference		June 30, 2020
	Shares		Amount								Shares		Amount
Common stock:
Balance at January 1		3,932	$	393		$	-					3,932	$	393
Common stock issued		37		1			-					37		1
Restricted stock issued		6		-			-					6		-
Common stock issued through market sales		80		8			-					80		8
Common stock issued through offerings		-		-			-					-		-
Balance at March 31		4,055		402			-					4,055		402
Common stock issued		-		-								-		-
Balance at June 30		4,055		402			-					4,055		402
Treasury stock:							-
Balance at January 1		12		(1,721	)		-					12		(1,721	)
Treasury stock purchased		-		-								-		-
Balance at March 31		12		(1,721	)		-					12		(1,721	)
Treasury stock purchased		7		(49	)		-					7		(49	)
Balance at June 30		19		(1,770	)		-					19		(1,770	)
Additional paid-in capital:							-
Balance at January 1				182,514			-							182,514
Common stock issued through offerings, net of expenses				-			-							-
Extinguishment of Series A Shares				(828	)		-							(828	)
Beneficial Conversion Feature in connection with Series B Issuance				2,205			-							2,205
Amortization of Beneficial Conversion Feature				(2,205	)									(2,205	)
Common stock issued through market sales				476			-							476
Stock-based compensation expense				418			-							418
Balance at March 31				182,580			-							182,580
Common Stock issued				-			-							-
Stock-based compensation expense				400			-							400
Balance at June 30				182,980			-							182,980
Accumulated deficit:
Balance at January 1				(168,160	)		(17,505	)		(a) (b) (c)				(185,665	)
Net loss				(6,263	)		(231	)		(a) (c)				(6,494	)
Adoption of ASC 842				-										-
Balance at March 31				(174,423	)		(17,736	)						(192,159	)
Net loss				(5,496	)		(84	)		(a)				(5,580	)
Balance at June 30				(179,919	)		(17,820	)						(197,739	)

Total stockholders’ equity			$	1,693		$	(17,820	)					$	(16,127	)

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

	As Previously Reported										As Restated
	For The Six Months Ended					Restatement			Restatement		For The Six Months Ended
	June 30, 2019					Amount			Reference		June 30, 2019
	Shares		Amount								Shares		Amount
Common stock:
Balance at January 1		2,877	$	287		$	-					2,877	$	287
Common stock issued		9		1			-					9		1
Common stock issued through offerings		933		94			-					933		94
Balance at March 31		3,819		382			-					3,819		382
Common stock issued		10		1								10		1
Balance at June 30		3,829		383			-					3,829		383
Treasury stock:							-
Balance at January 1		7		(1,680	)		-					7		(1,680	)
Treasury stock purchased		3		(32	)							3		(32	)
Balance at March 31		10		(1,712	)		-					10		(1,712	)
Treasury stock purchased		-		-			-					-		-
Balance at June 30		10		(1,712	)		-					10		(1,712	)
Additional paid-in capital:							-
Balance at January 1				175,820			-							175,820
Common stock issued through offerings, net of expenses				5,868			-							5,868
Stock-based compensation expense				266			-							266
Balance at March 31				181,954			-							181,954
Common Stock issued				72			-							72
Stock-based compensation expense				205			-							205
Balance at June 30				182,231			-							182,231
Accumulated deficit:
Balance at January 1				(141,489	)		(17,492	)		(a) (b) (c)				(158,981	)
Net loss				(3,419	)		93			(a) (c)				(3,326	)
Adoption of ASC 842				55			-							55
Balance at March 31				(144,853	)		(17,399	)						(162,252	)
Net loss				(5,220	)		(84	)		(a)				(5,304	)
Balance at June 30				(150,073	)		(17,483	)						(167,556	)

Total stockholders’ equity			$	30,829		$	(17,483	)					$	13,346

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited, in thousands)

	For The Six Months Ended June 30,
	2020							2020
	As Previously Reported			Restatement Amount			Restatement Reference	As Restated

Cash Flows From Operating Activities
Net loss	$	(11,759	)	$	(315	)	(a) (c)	$	(12,074	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,540			168		(a)		2,708
Interest accretion		276			-				276
Mark to market on warrants		(49	)		-				(49	)
Stock-based compensation		818			-				818
Bad debt expense		250			-				250
Other gains and expenses, net		-			-				-
Other changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		2,708			141		(c)		2,849
(Increase) decrease in other current assets		(788	)		-				(788	)
(Decrease) increase in accounts payable		(1,464	)		103		(c)		(1,361	)
(Decrease) increase in accrued salaries and bonus		(94	)		-				(94	)
(Decrease) increase in accrued liabilities		856			(97	)	(c)		759
Increase in long-term liabilities		33			-				33
Net cash used in operating activities		(6,673	)		-				(6,673	)

Cash Flows From Investing Activity
Purchase of property and equipment		(913	)		-				(913	)
Sale of property and equipment		-			-				-
Net cash provided by investing activity		(913	)		-				(913	)

Cash Flows From Financing Activities
Issuance of common stock, net of expenses		434			-				434
Borrowings on Line of Credit, net		400			-				400
Issuance of Series B preferred stock, net of expenses		19,537			-				19,537
Net cash provided by financing activities		20,371			-				20,371

Net increase in cash and cash equivalents		12,785			-				12,785
Cash and cash equivalents – beginning		2,321			-				2,321
Cash and cash equivalents – ending	$	15,106		$	-			$	15,106

INTERPACE BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited, in thousands)

	For The Six Months Ended June 30,
	2019							2019
	As Previously Reported			Restatement Amount			Restatement Reference	As Restated

Cash Flows From Operating Activities
Net loss	$	(8,639	)	$	9		(a) (c)	$	(8,630	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,749			168		(a)		1,917
Interest accretion		220			-				220
Mark to market on warrants		(45	)		-				(45	)
Stock-based compensation		990			-				990
Bad debt expense		499			-				499
Other gains and expenses, net		18			-				18
Other changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		(3,982	)		-				(3,982	)
(Increase) decrease in other current assets		(252	)		-				(252	)
(Decrease) increase in accounts payable		530			-				530
(Decrease) increase in accrued salaries and bonus		(141	)		(120	)	(c)		(261	)
(Decrease) increase in accrued liabilities		1,154			(57	)	(c)		1,097
Increase in long-term liabilities		114			-				114
Net cash used in operating activities		(7,785	)		-				(7,785	)

Cash Flows From Investing Activity
Purchase of property and equipment		(48	)		-				(48	)
Sale of property and equipment		13			-				13
Net cash provided by investing activity		(35	)		-				(35	)

Cash Flows From Financing Activities
Issuance of common stock, net of expenses		5,962			-				5,962
Borrowings on Line of Credit, net		-			-				-
Issuance of Series B preferred stock, net of expenses		-			-				-
Net cash provided by financing activities		5,962			-				5,962

Net decrease in cash and cash equivalents		(1,858	)		-				(1,858	)
Cash and cash equivalents – beginning		6,068			-				6,068
Cash and cash equivalents – ending	$	4,210		$	-				4,210

2.	BASIS OF PRESENTATION

The accompanying unaudited interim condensed consolidated financial statements and related notes (the “Interim Financial Statements”) should be read in conjunction with the consolidated financial statements of ~~Interpace Biosciences, Inc. (formerly known as Interpace Diagnostics Group, Inc.) (the “Company” or “Interpace”),~~the Company and its wholly-owned subsidiaries ~~Interpace~~(Interpace Diagnostics Lab Inc., Interpace Diagnostics Corporation, Interpace Pharma Solutions, Inc. ~~(formerly known as Interpace BioPharma, Inc.)~~ and Interpace Diagnostics, ~~LLC,~~LLC), and related notes as included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, as filed with the ~~U.S. Securities~~SEC on April 22, 2020 and ~~Exchange Commission (“SEC”)~~as amended on ~~March 21, 2019~~May 29, 2020 and the date hereof (the “Form 10-K”) ~~and the special purpose statements and Pro Forma financial information in Form 8-K/A filed on September 20, 2019.~~.

The condensed Interim Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The condensed Interim Financial Statements include all normal recurring adjustments that, in the judgment of management, are necessary for a fair presentation of such interim financial statements. Discontinued operations include the Company’s wholly owned subsidiaries: Group DCA, LLC, or Group DCA; InServe Support Solutions; and TVG, Inc. and its Commercial Services ~~(“CSO”)~~ business unit which was sold on December 22, 2015. All significant intercompany balances and transactions have been eliminated in consolidation. Operating results for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, ~~2019.~~2020. All information related to common stock, stock options, restricted stock units, warrants and earnings per share have been retroactively adjusted to give effect to the reverse stock split (1 for 10) that occurred in January 2020.

2.3.	~~ACQUISITION~~GOING CONCERN

~~On July 15, 2019,~~The accompanying consolidated financial statements have been prepared on a basis that assumes that the Company ~~entered into an Asset Purchase Agreement (“APA”) to acquire certain~~will continue as a going concern and that contemplates the continuity of operations, the realization of assets and ~~assumed certain~~the satisfaction of liabilities and commitments in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include any adjustments relating to ~~Cancer Genetics, Inc.’s (“CGI”) BioPharma services business (“BioPharma”) for $23.5 million less certain closing adjustments~~the recoverability and classification of ~~$1.98 million (the “Base Purchase Price”). At~~recorded asset amounts or amounts of liabilities that might result from the ~~closing the Company used the proceeds from an initial tranche~~outcome of ~~preferred stock financing and paid $13.8 million. Additionally, the Company issued a subordinated seller note to CGI in the amount of $7,692,300.~~

The BioPharma business (presently known as Interpace Pharma Solutions, Inc. or “Pharma Solutions”) provides pharmaceutical and biotech companies and non-profit entities performing clinical trials with lab testing services 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.

~~The Base Purchase Price is subject to two additional adjustments following the closing: for the finalized net worth (assets less liabilities) of BioPharma as~~this uncertainty. As of June 30, ~~2019 (the “NWA”), subject to a cap~~2020, the Company had cash and cash equivalents of ~~$775,000, and for certain older~~$15.1 million, net accounts receivable of $7.2 million, total current assets of $26.1 million and total current liabilities of $16.1 million. For the six-months ended June 30, 2020, the Company had a net loss of $12.1 million and cash used in ~~the aggregate amount~~operating activities was $6.7 million. As of September 30, 2020 we had approximately ~~$830,000, still uncollected as~~$5.2 million of ~~December 31, 2019 (the “ARA”). Any amounts~~cash on hand due principally to additional losses incurred through September 2020, slower collections due to the ~~Company~~pandemic, as well as repayment of approximately $3.4 million to SVB under ~~the NWA were~~our line of credit, which we are currently unable to ~~be set off against the Excess Consideration Note (see~~~~Note 19, Subsequent Events,~~for description), and any amounts due to the Company under the ARA were to be either set off against the Excess Consideration Note or, if it is no longer outstanding, satisfied through an AR Holdback (as defined in the Asset Purchase Agreement) mechanism, in each case as further set forth in the Asset Purchase Agreement.borrow under.

The transaction is being accounted for using the acquisition method of accounting for business combinations in accordance with GAAP. Under this method, the total consideration transferred to consummate the acquisition is being allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the closing date of the acquisition. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

In connection with the transaction, the Company has preliminarily recorded $8.3 million of goodwill and $7.3 million of finite lived intangible assets. Finite lived intangible assets have a combined weighted-average amortization period of 8.4 years, which consists of ten years for tradenames and eight years for customer relationships. Goodwill results largely from a trained workforce in place and expected synergies from new lines of business. Goodwill recorded in conjunction with the acquisition is deductible for income tax purposes. See~~Note 5, Goodwill and Other Intangible Assets, for more information. Business transaction expenses of approximately $2.5 million incurred in connection with the acquisition was expensed as incurred.~~

The ~~reconciliation of consideration given for BioPharma to the preliminary allocation of the purchase price of assets and liabilities acquired based on their relative fair values is as follows:~~

Cash $ 13,829
Subordinated note payable 6,822
Total consideration $ 20,651

Assets acquired
Accounts receivable $ 3,731
Accrued revenue 289
Lab supplies 877
Prepaid expenses 266
Property and equipment 6,412
Operating lease assets 2,187
Acquired identifiable intangible assets:
Trademarks and trade name 1,600
Customer relationships 5,700
Total acquired identifiable intangible assets 7,300
Goodwill 8,273
Total assets acquired 29,335

Liabilities assumed
Accounts payable (4,535 )
Accrued liabilities (435 )
Deferred revenue (1,076 )
Operating lease liabilities (2,187 )
Finance lease liabilities (451 )
Total liabilities assumed (8,684 )
Net assets acquired $ 20,651

The estimated fair values of assets acquired and liabilities assumed are considered preliminary and are based on the most recent information available. The provisional measurements of fair value set forth above are subject to change. We expect to finalize the valuation as soon as practicable, but no later than one-year from the acquisition date.

~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular information in thousands, except per share amounts)~~

The following unaudited pro forma consolidated revenues for the three and nine months ended September 30, 2019 and 2018 assume that the Company had acquired the BioPharma business as of January 1, 2018. The pro forma revenues include estimates and assumptions which management believes are reasonable. However, pro forma revenues are not necessarily indicative of the revenues that would have occurred if the acquisition had been consummated as of the date indicated, nor are they necessarily indicative of future revenues.

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Revenue $ 8,010 $ 27,648 $ 9,741 $ 27,551

The BioPharma business had not historically been accounted for as a separate entity, subsidiary or division of CGI. In addition, stand-alone financial statements related to BioPharma have not been prepared previously as CGI’s financial system was not designed to provide complete financial information of BioPharma. Therefore, the Company was not able to estimate the pro forma impact to net loss or the net loss per share of BioPharma (presently called Interpace Pharma Solutions) for the three and nine months ended September 30, 2019 and 2018.

3.	~~LIQUIDITY~~

~~As of September 30, 2019, the Company had~~Company’s cash and cash equivalents balance is decreasing and 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 (as defined and further discussed in Note 16, Equity); borrowings under the Revolving Line of ~~$2.4 million, net~~Credit (as defined below) with Silicon Valley Bank (“SVB”), once reinstated, as well as by increasing our line of credit limit as a result of the additional accounts receivable acquired in July 2019 as a result of ~~$14.7 million, total current assets~~our acquisition of ~~$20.6 million and total current liabilities~~the Biopharma business of ~~$17.3 million. For the nine months ended September 30, 2019, the Company had a net loss of $16.0 million and cash used in operating activities was $12.6 million.~~

On July 15, 2019 the Company entered into a Securities Purchase Agreement for $27 million in Preferred Stock closing in two tranches on July 15, 2019 for $14 million and on October 16, 2019 for $13 million. After the purchase price of $23.5 million less certain closing adjustments of $1.98 million was paid to Cancer Genetics, Inc. (“CGI”), and presently known as our pharma services business (which requires a modification to the ~~balance~~bank agreement and approval by both SVB and the preferred shareholders), as well as revenue growth and margin improvement; collection of accounts receivable; containment of costs; and the ~~proceeds were used~~potential use of other financing options. The Company is currently unable to ~~pay down a $3.75 million balance in the revolving~~borrow under its line of credit and ~~for general corporate purposes, including~~there is no assurance the ~~integration of the BioPharma business.~~Company will be successful in meeting its capital requirements prior to becoming cash flow positive. These liquidity factors, among others, have raised substantial doubts about our ability to continue as a going concern.

OnIn September ~~20,~~ 2019, ~~the Company~~we entered into anthe Equity Distribution Agreement (the ~~“Agreement”~~“Equity Distribution Agreement”) with Oppenheimer & Co. Inc., as sales agent (the “Agent”), pursuant to which ~~the Company~~we may, from time to time, issue and sell shares of ~~its~~our common stock ~~par value $0.01 per share,~~ in an aggregate offering price of up to ~~$4.8~~$3.7 million ~~(the “Shares”)~~ through the ~~Agent. To date,~~Agent (the “ATM arrangement”). As of June 30, 2020, approximately 178,000 shares of common stock were sold for net proceeds of approximately $0.7 million. As a result of the preferred shares transaction mentioned below, additional shares may no ~~shares have been~~longer be sold under the ~~Agreement.~~ATM arrangement without a majority approval by the holders of the preferred shares. See Note 16, Equity, for more detail relative to the ATM arrangement and related share sales. In addition, if our common stock is delisted by Nasdaq Capital Markets (“Nasdaq”) due to our failure to meet the minimum stockholders’ equity requirement, we may no longer be able to eligible to sell under the Agreement as well. See Note 19, Subsequent Events.

In January 2020, we sold 20,000 Series B preferred shares to investors, led by 1315 Capital II, L.P. (“1315 Capital”), for net proceeds of approximately $19.5 million. See Note 16, Equity, for more detail.

The Company does not expect to generate positive cash flows from operations for the year ending December 31, 2019. The Company intends to meet ongoing capital needs by using proceeds under the Securities Purchase Agreement, additional borrowings under themaintains a secured revolving line of credit ~~resulting from~~facility (the “Revolving Line of Credit”), with a limit of up to $4.0 million, available for working capital purposes, with a three-year term. The borrowing limit of the ~~additional~~Revolving Line of Credit is the lower of 80% of the Company’s eligible accounts receivable ~~acquired~~(as adjusted by SVB) and the aggregate amount of cash collections with respect to accounts receivable during the three prior calendar months. Outstanding amounts incur interest at a rate per annum equal to the Prime Rate plus 0.5%. As of June 30, 2020, $3.4 million was outstanding and there was no remaining Revolving Line of Credit available.

As of July 31, 2020, the Company was in violation of a financial covenant under its Loan and Security Agreement, dated November 13, 2018, as amended March 18, 2019 (as so amended, the “SVB Loan Agreement”). Additionally, due to the untimely filing of our second quarter form 10-Q (this Report) with the SEC subsequent to the filing deadline, the Company is in violation of the SVB Loan Agreement and during September 2020, the Company paid down the outstanding Revolving Line of Credit balance of $3.4 million in full. Additionally during September 2020, the Company transferred $0.35 million into a restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit supporting two of its facilities. Prior to September 2020, the collateral for the letters of credit was accounted for as a reduction in the ~~BioPharma acquisition, selling shares~~availability under the Revolving Line of Credit.

While the Company has received a waiver of default from SVB and is in compliance with the terms of the SVB Loan Agreement ~~revenue growth~~as of the date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit.

See Note 1, Overview, regarding the potential adverse impact of the COVID-19 pandemic on our results of operations, cash flows and ~~margin improvement, collecting accounts receivable, containing costs~~financial condition for the third quarter of fiscal 2020 and possibly beyond.

During April 2020, the Company applied for various federal stimulus grants and advances made available under Title 1 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As of May 1, 2020, we received $2.1 million in advances under the Centers for Medicare & Medicaid Services (CMS) accelerated and advance payment program, which is recorded in other accrued expenses on the Company’s condensed consolidated balance sheet, as well as ~~exploring other financing options. Management believes that~~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, ~~has sufficient~~beginning with Medicare billings in April 2021 and the HSS grant is subject to certain conditions regarding its use. These grants and advances require certain certifications by the Company and impose specific limitations on the use of the proceeds. The Company applied the HHS grant in its entirety towards qualified second quarter expenses related to laboratory equipment and supplies purchased to prevent, prepare for, and respond to coronavirus, including development of coronavirus and serology tests, as well as revenue lost during the second quarter as a result of the pandemic. The portion attributed to lost revenue, $0.45 million, was recorded in Other income and $0.2 million was recorded as an offset to cost of revenue expenses.

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 Secured Creditor Asset Purchase Agreement dated July 15, 2019, by and among the Company, CGI, Interpace Diagnostics Group, Inc. and Partners for Growth IV, L.P. (“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 ~~hand and available to sustain operations through at least November 30, 2020. However, there is no guarantee that additional capital can be raised to fund our future operations.~~the Company’s operating cash flow or liquidity.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

4.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed to be reasonable under the circumstances. Significant estimates include accounting for valuation allowances related to deferred income taxes, contingent consideration, allowances for doubtful accounts, revenue recognition, unrecognized tax benefits, and asset impairments involving other intangible assets. The Company periodically reviews these matters and reflects changes in estimates in earnings as appropriate. Actual results could materially differ from those estimates.

Revenue Recognition

Our ~~Services~~

~~The Company is a leader in enabling personalized medicine, offering specialized~~clinical services along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications. The Company’s primary source of revenue is generated from the performance of its proprietary molecular diagnostic tests for its clinical customers (Interpace Diagnostics) and its DNA-based pharma testing services in support of clinical trials for its biopharma customers (Interpace Pharma Solutions).

Our Diagnostics business is a fully integrated commercial and bioinformatics business unit that provides 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. The genomic tests that we develop and commercialize as well as related first line assays are principally focused on early detection of patients with indeterminate biopsies and at high risk of cancer. Our tests and services provide mutational analysis of genomic material contained in these “suspicious” cysts, nodules and lesions with the goal of better informing treatment decisions in patients at risk of thyroid, pancreatic, and other cancers and in many cases avoiding unnecessary surgical treatment in patients at low risk.

~~We currently have four commercialized molecular diagnostic tests in the marketplace for which we are receiving reimbursement: PancraGEN~~^®~~, which is a pancreatic cyst and pancreaticobiliary solid lesion genomic test that helps physicians better assess risk of pancreaticobiliary cancers using our proprietary PathFinderTG~~^® ~~platform; ThyGeNEXT~~^®~~, which is an expanded oncogenic mutation panel that helps identify potentially malignant thyroid nodules, ThyraMIR~~^®~~, which assesses thyroid nodules for risk of malignancy utilizing a proprietary microRNA gene expression assay. THyGeNEXT~~^® ~~and ThyraMIR~~^®~~are typically used in conjunction; and RespriDx~~^®~~, which is a genomic test that helps physicians differentiate metastatic or recurrent lung cancer from the presence of newly formed primary lung cancer and which also utilizes our PathFinderTG~~^®~~platform to compare the genomic fingerprint of two or more sites of lung cancer.~~

~~BarreGEN~~^®~~, is our esophageal cancer risk classifier for Barrett’s Esophagus that also utilizes our PathFinder TG~~^® ~~platform and is currently in a Clinical Evaluation Program or (“CEP”) whereby we gather information from physicians using BarreGEN~~^®~~to assist us in positioning our product for full launch, partnering and potentially supporting improved reimbursement with payers.~~

Our recently acquired BioPharma or now called Pharma Solutions business provides pharmacogenomics testing, genotyping, biorepository and other customized services to the pharmaceutical and biotech industries and advances personalized medicine by partnering with pharmaceutical, academic, and technology leaders to effectively integrate pharmacogenomics into their drug development and clinical trial programs with the goals of delivering safer, more effective drugs to market more quickly, and improving patient care.

Therefore, the Company’s primary source of revenue is generated from the performance of its proprietary molecular diagnostic tests for its clinical customers and its DNA-based pharma testing services in support of clinical trials for its BioPharma customers. The Company’s performance obligation is fulfilled upon completion, review and release of test results and subsequent billing to the third-party payer, hospital or contracting customer.

~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular information in thousands, except per share amounts)~~

~~Clinical Performance Obligations and Revenue Recognition~~

Under ASC 606, the Company recognizes revenue for billings less contractual allowances and estimated uncollectable amounts for all third party payer groups on the accrual basis based upon a thorough analysis of historical receipts. The net amount derived and used for revenue recognition is referred to as the Net Realizable Value (NRV) for the particular test and payer group from which reimbursement is received. This derived NRV is evaluated quarterly or as needed and then applied to future periods until recalculated.

~~BIoPharma Performance Obligations and Revenue Recognition~~

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. Project level fee revenue is recognized ratably over the life of the contract.

~~Deferred revenue from BioPharma Contracts is recorded at fair value and represents payments received in advance of services rendered.~~

~~Revenue from Contracts with Customers (ASC 606)~~

~~Our Diagnostics business~~ ~~derives~~derive its revenues from the performance of its proprietary assays or tests. The Company’s performance obligation is fulfilled upon the 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. ~~Revenue~~Under Accounting Standards Codification 606, revenue is recognized based on the estimated transaction price or ~~net realizable value (“NRV”),~~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 ~~Diagnostics business,~~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 will adjust the estimates of contractual allowances, which ~~would affect~~affects net revenue in the period such variances become known.

For our pharma services, project level activities, including study setup and project management, are satisfied over the life of the contract while performance-related obligations are satisfied at a point in time as the Company processes samples delivered by the customer. 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.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

~~Disaggregated Revenues~~

We operate in a single operating segment and, therefore, the results of our operations are reported on a consolidated basis for purposes of segment reporting, which is consistent with internal management reporting.

~~Deferred Revenue~~

~~Deferred revenue is recorded at fair value and represents payments received in advance of services rendered.~~

Financing and Payment

For non-Medicare claims, our payment terms vary by payer category. Payment terms for direct-payers in our clinical ~~or diagnostics~~ business are typically thirty days and in our ~~BioPharma business,~~pharma services, up to sixty days. Commercial third-party-payers are required to respond to a claim within a time period established by their respective state regulations, generally between thirty to sixty days. However, payment for commercial third-party claims may be subject to a denial and appeal process, which could take up to two years in some instances where multiple appeals are submitted. The Company generally appeals all denials from commercial third-party payers.

Costs to Obtain or Fulfill a Customer Contract

Sales commissions are expensed ~~when incurred because~~in the ~~amortization~~ period ~~would~~in which they have been ~~one year or less.~~earned. These costs are recorded in sales and marketing expense in the condensed consolidated statements of operations.

Accounts Receivable

The Company’s accounts ~~receivable~~receivables represent unconditional rights to consideration and are generated using its clinical ~~or diagnostics~~services and ~~BioPharma tests.~~pharma services. The Company’s clinical services are fulfilled upon completion of the test, review and release of the test results. In conjunction with fulfilling these services, the Company bills the third-party payer or ~~directly bills the hospital or contracting customer. Accounts receivable is recognized for all payer groups net of contractual adjustment and net of estimated uncollectable amounts.~~direct-bill payer. Contractual adjustments represent the difference between the list prices and the reimbursement ~~rate~~rates set by ~~third party~~third-party payers, including Medicare, commercial payers, orand amounts billed ~~directly~~ to ~~hospitals and service providers.~~direct-bill payers. Specific accounts may be written off after several appeals, which in some cases may take longer than twelve months. Pharma services represent, primarily, the performance of laboratory tests in support of clinical trials for pharma services customers. The Company bills these services directly to the customer.

Leases

The Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease term. Unless a lease provides all of the information required to determine the implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. We use the implicit interest rate in the lease when readily determinable.

Our lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7,Leases.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

Other Current Assets

Other current assets consisted of the following as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
		(unaudited)			(unaudited)
Indemnification assets	$	875	$	875
Lab supply inventory						2,331		1,825
Prepaid expenses		2,571		1,230		728		971
Funds in escrow						-		888
Due from CGI						525		92
Other		76		65		167		75
Total other current assets	$	3,522	$	2,170	$	3,751	$	3,851

Long-Lived Assets, including Finite-Lived Intangible Assets

Finite-lived intangible assets are stated at cost less accumulated amortization. Amortization of finite-lived acquired intangible assets is recognized on a straight-line basis, using the estimated useful lives of the assets of approximately two years to ten years in ~~acquisition related~~acquisition-related amortization expense in the condensed consolidated statements of operations.

The Company reviews the recoverability of long-lived assets and finite-lived intangible assets whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If the sum of the expected future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value of the asset to its fair value measured by future discounted cash flows. This analysis requires estimates of the amount and timing of projected cash flows and, where applicable, judgments associated with, among other factors, the appropriate discount rate. Such estimates are critical in determining whether any impairment charge should be recorded and the amount of such charge if an impairment loss is deemed to be necessary.

~~Discontinued Operations~~

~~The Company accounts for business dispositions and its businesses held for sale in accordance with ASC 205-20,~~~~Discontinued Operations (“ASC 205-20”)~~~~. ASC 205-20 requires the results of operations of business dispositions to be segregated from continuing operations and reflected as discontinued operations in current and prior periods. See Note 13,~~~~Discontinued Operations~~ ~~for further information.~~

Basic and Diluted Net Loss per Share

A reconciliation of the number of shares of common stock, par value $0.01 per share (the “Common Stock”), used in the calculation of basic and diluted loss per share for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 is as follows:

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
	(unaudited)								(unaudited)				(unaudited)
Basic weighted average number of of common shares		38,196		28,215		37,169		28,002
Basic weighted average number of common shares										4,033		3,813		4,018		3,665
Potential dilutive effect of stock-based awards		-		-		-		-		-		-		-		-
Diluted weighted average number of common shares		38,196		28,215		37,169		28,002		4,033		3,813		4,018		3,665

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

The Company’s Preferred Stock, on an as converted basis of 7,833,334 shares for the three- and six-months ended June 30, 2020, and the following outstanding stock-based awards and warrants, were excluded from the computation of the effect of dilutive securities on loss per share for the following periods ~~because~~as they would have been ~~anti-dilutive:~~anti-dilutive (rounded to thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Six Months Ended
	September 30,				September 30,				June 30,				June 30,
	2019		2018		2019		2018		2020		2019		2020		2019
	(unaudited)								(unaudited)				(unaudited)
Options		3,936		2,256		3,936		2,256		638		394		638		394
Stock-settled stock appreciation rights (SARs)		22		59		22		59		-		2		-		2
Restricted stock										6		-		6		-
Restricted stock units (RSUs)		544		220		544		220		36		54		36		54
Warrants		14,196		13,542		14,196		13,542		1,420		1,420		1,420		1,420
		18,698		16,077		18,698		16,077		2,100		1,870		2,100		1,870

5.	GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is attributable to the acquisition of ~~the BioPharma business from CGI~~our pharma services in July 2019. The carrying value of the intangible assets acquired was $15.6 million, with goodwill of approximately $8.3 million and identifiable intangible assets of approximately $7.3 million. The goodwill balance at June 30, 2020 was $8.4 million. The net carrying value of the identifiable intangible assets from all acquisitions as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 are as follows:

		As of September 30, 2019			As of December 31, 2018					As Restated
		(unaudited)								As of June 30, 2020			As of December 31, 2019
	Life	Carrying			Carrying			Life		Carrying			Carrying
	(Years)	Amount			Amount			(Years)		Amount			Amount

Asuragen acquisition:
Thyroid	9	$	8,519		$	8,519			9	$	8,519		$	8,519
RedPath acquisition:
Pancreas test	7		16,141			16,141			7		16,141			16,141
Barrett's test	9		18,351			18,351
Barrett’s test									9		6,719			6,719
BioPharma acquisition:
Trademarks	10		1,600			-			10		1,600			1,600
Customer relationships	8		5,700			-			8		5,700			5,700

CLIA Lab	2.3	$	609		$	609			2.3	$	609		$	609

Total		$	50,920		$	43,620				$	39,288		$	39,288

Accumulated Amortization		$	(16,388	)	$	(13,767	)			$	(25,669	)	$	(23,439	)

Net Carrying Value		$	34,532		$	29,853				$	13,619		$	15,849

Amortization expense was approximately $1.0 million and $0.8 million for the three-month periods ended September 30, 2019 and 2018, respectively, and approximately $2.6 million and $2.4 million for the nine-month periods ended September 30, 2019 and 2018, respectively. Amortization of our diagnostic assets begins upon launch of the product. Estimated amortization expense for the next five years is as follows, based on current assumptions of future product launches:

2019 2020 2021 2022 2023 2024
(remaining)
$ 1,031 $ 5,145 $ 5,781 $ 3,859 $ 3,859 $ 3,149

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

Amortization expense was approximately $1.1 million and $0.9 million for the three-month periods ended June 30, 2020 and 2019, respectively, and approximately $2.2 million and $1.8 million for the six-month periods ended June 30, 2020 and 2019, respectively. Estimated amortization expense for the next five years is as follows:

As Restated
	2020		2021		2022		2023		2024

$	4,871	$	4,078	$	2,156	$	1,745	$	873

The following table displays a roll forward of the carrying amount of goodwill from December 31, 2019 to June 30, 2020:

	Carrying
	Amount
Balance as of December 31, 2019	$	8,433
Adjustments		-
Balance as of June 30, 2020	$	8,433

6.	FAIR VALUE MEASUREMENTS

Cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to their relative short-term nature. The Company’s financial liabilities reflected at fair value in the condensed consolidated financial statements include contingent consideration and warrant liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values into three broad levels as follows:

	Level 1:	Valuations for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving identical assets or liabilities.

	Level 2:	Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing services for identical or similar assets or liabilities.

	Level 3:	Valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.

INTERPACE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation methodologies used for the Company’s financial instruments measured on a recurring basis at fair value, including the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below:

As of September 30, 2019 Fair Value Measurements
Carrying Fair As of September 30, 2019
Amount Value Level 1 Level 2 Level 3
(unaudited)
Liabilities:
Contingent consideration:
Asuragen⁽¹⁾ $ 3,024 $ 3,024 $ - $ - $ 3,024
Other long-term liabilities:
Warrant liability⁽²⁾ 326 326 - - 326
$ 3,350 $ 3,350 $ - $ - $ 3,350

~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular information in thousands, except per share amounts)~~

	As of June 30, 2020				Fair Value Measurements
	Carrying		Fair		As of June 30, 2020
	Amount		Value		Level 1		Level 2		Level 3
Liabilities:					(unaudited)
Contingent consideration:
Asuragen ⁽¹⁾	$	2,861	$	2,861	$	-	$	-	$	2,861
Other long-term liabilities:
Warrant liability ⁽²⁾		33		33		-		-		33
	$	2,894	$	2,894	$	-	$	-	$	2,894

											As of December 31, 2019				Fair Value Measurements
	As of December 31, 2018				Fair Value Measurements						Carrying		Fair		As of December 31, 2019
	Carrying		Fair		As of December 31, 2018						Amount		Value		Level 1		Level 2		Level 3
	Amount		Value		Level 1		Level 2		Level 3
Liabilities:
Contingent consideration:
Asuragen⁽¹⁾	$	3,127	$	3,127	$	-	$	-	$	3,127	$	2,893	$	2,893	$	-	$	-	$	2,893
Other long-term liabilities:
Warrant liability⁽²⁾		361		361		-		-		361		82		82		-		-		82
	$	3,488	$	3,488	$	-	$	-	$	3,488	$	2,975	$	2,975	$	-	$	-	$	2,975

⁽¹⁾⁽²⁾See Note 9,Accrued Expenses and Long-Term Liabilities

In connection with the acquisition of certain assets from Asuragen, Inc., the Company recorded contingent consideration related to contingent payments and other revenue-based payments. The Company determined the fair value of the contingent consideration based on a probability-weighted income approach derived from revenue estimates. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

On June 21, 2017, the Company issued 575,000 Underwriters Warrants, related to a public offering on the same date that included a cash settlement feature in the event of certain circumstances. Accordingly, the Underwriters Warrants are classified as liabilities and were fair valued using the Black Scholes Option-Pricing Model, the inputs for which include exercise price of the respective warrants, market price of the underlying common shares, expected term, volatility based on the Company’s historical market price, and the risk-free rate corresponding to the expected term of the underlying exchange agreement. Changes to the fair value of the warrant liabilities were recorded in Other income (expense), net.

A roll forward of the carrying value of the Contingent Consideration Liability and the Underwriters’ Warrants to ~~September~~June 30, ~~2019~~2020 is as follows:

Cancellation Adjustment
of Obligation/ to Fair Value/
December 31, 2018 Payments Accretion Conversions
Exercises Mark to
Market September 30, 2019
(unaudited)
Asuragen $ 3,127 $ (434 ) $ 331 $ - $ - $ 3,024

Underwriters Warrants 361 - - - (35 ) 326
$ 3,488 $ (434 ) $ 331 $ - $ (35 ) $ 3,350

Certain of the Company’s non-financial assets, such as other intangible assets and goodwill, are measured at fair value on a nonrecurring basis when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.

								Cancellation		Adjustment
								of Obligation/		to Fair Value/
	December 31, 2019		Payments			Accretion		Conversions Exercises		Mark to Market			June 30, 2020
	(unaudited)
Asuragen	$	2,893	$	(308	)	$	276	$	-	$	-		$	2,861

Underwriters Warrants		82		-			-		-		(49	)		33
	$	2,975	$	(308	)	$	276	$	-	$	(49	)	$	2,894

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

LEASES

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which establishes a ROU model that requires a lessee to record a ROU asset and a lease liability, measured on a discounted basis, on the balance sheet for all leases with terms longer than 12 months. Effective January 1, 2019, the Company adopted the provisions of Topic 842 using the alternative modified transition method, with a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption, and prior periods not restated, as allowed under the provisions of Topic 842. The Company also elected to use the practical expedients permitted under the transition guidance of Topic 842, which provides for the following: the carryforward of the Company’s historical lease classification, no requirement for reassessment of whether an expired or existing contract contains an embedded lease, no reassessment of initial direct costs for any leases that exist prior to the adoption of the new standard, and the election to consolidate lease and non-lease components. The Company also elected to keep all leases with an initial term of 12 months or less off the balance sheet.

The Company recorded $2.4 million of right-of-use lease assets and $2.5 million of lease liabilities upon adoption, primarily relating to rentals of space for our corporate headquarters and laboratories, as well as equipment leases, all under operating leases. In addition, the Company recorded a cumulative adjustment to opening accumulated deficit of $0.1 million. With the acquisition of the BioPharma business of CGI in 2019, the Company added $2.2 million of operating lease assets and liabilities and $0.5 million of finance lease assets and liabilities to its balance sheet. Finance lease assets are included in fixed assets, net of accumulated depreciation.

The table below presents the lease-related assets and liabilities recorded in the Condensed Consolidated Balance Sheet:

Classification on the Balance Sheet September 30, 2019
(unaudited)
Assets
Financing lease assets Property and equipment, net $ 998
Operating lease assets Operating lease assets 4,212
Total lease assets $ 5,210

Liabilities
Current
Financing lease liabilities Other accrued expenses $ 247
Operating lease liabilities Other accrued expenses 1,367
Total current lease liabilities $ 1,614
Noncurrent
Financing lease liabilities Other long-term liabilities 173
Operating lease liabilities Operating lease liabilities 2,791
Total long-term lease liabilities 2,964
Total lease liabilities $ 4,578

	Classification on the Balance Sheet	June 30, 2020
			(unaudited)
Assets
Financing lease assets	Property and equipment, net	$	528
Operating lease assets	Operating lease right of use assets		5,172
Total lease assets		$	5,700

Liabilities
Current
Financing lease liabilities	Other accrued expenses	$	150
Operating lease liabilities	Other accrued expenses		1,171
Total current lease liabilities		$	1,321
Noncurrent
Financing lease liabilities	Other long-term liabilities		57
Operating lease liabilities	Operating lease liabilities, net of current portion		3,940
Total long-term lease liabilities			3,997
Total lease liabilities		$	5,318

The weighted average remaining lease term for the Company’s operating leases was ~~2.8~~7.1 years as of ~~September~~June 30, ~~2019~~2020 and the weighted average discount rate for those leases was 6.0%. The Company’s operating lease expenses are recorded within ~~cost~~“Cost of ~~revenue~~revenue” and ~~general~~“General and administrative expenses.” With respect to the Rutherford lease, in March 2020 the Company delivered a notice of early termination which would terminate the lease in March 2021.

In June 2020, the Company entered into an amendment of its North Carolina lease extending it for an additional ten years, commencing on June 1, 2020 and continuing until May 31, 2030. The minimum rent per rentable square foot pursuant to the amendment is $14.10 from June 1, 2020 to May 31, 2021, with annual increases of 3%. Pursuant to the amendment, the Company has two options to extend the term for a period of five years each. Also pursuant to the amendment, the Company has the irrevocable right to terminate the lease on November 30, 2025, as well as on November 30, 2027.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

The table below reconciles the ~~undiscounted~~ cash flows to the lease liabilities recorded on the Company’s Condensed Consolidated Balance Sheet as of ~~September~~June 30, ~~2019:~~2020:

Operating Leases Financing Leases
2019 (remaining) $ 412 $ 90
2020 1,431 226
2021 1,258 120
2022 1,192 13
2023 344 -
Total minimum lease payments 4,637 449
Less: amount of lease payments representing effects of discounting 479 29
Present value of future minimum lease payments 4,158 420
Less: current obligations under leases 1,367 247
Long-term lease obligations $ 2,791 $ 173

	Operating Leases		Financing Leases
2020		991		98
2021		1,235		120
2022		1,028		13
2023		629		-
2024-2030		2,717
Total minimum lease payments		6,600		231
Less: amount of lease payments representing effects of discounting		1,489		24
Present value of future minimum lease payments		5,111		207
Less: current obligations under leases		1,171		150
Long-term lease obligations	$	3,940	$	57

As of ~~December 31, 2018,~~June 30, 2020, contractual obligations with terms exceeding one year and estimated minimum future rental payments required by non-cancelable operating leases with initial or remaining lease terms exceeding one year were as follows:

Less than 1 to 3 3 to 5 After
Total 1 Year Years Years 5 Years
Operating lease obligations $ 2,814 $ 613 $ 1,322 $ 879 $ -

			Less than		1 to 3		3 to 5		After
	Total		1 Year		Years		Years		5 Years
Operating lease obligations	$	6,600	$	991	$	2,263	$	1,020	$	2,326
Total	$	6,600	$	991	$	2,263	$	1,020	$	2,326

8.	COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for the loss. In addition to the estimated loss, the recorded liability includes probable and estimable legal costs associated with the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. There is no pending litigation involving the Company at this time.

Due to the nature of the businesses in which the Company is engaged, it is subject to certain risks. Such risks include, among others, risk of liability for personal injury or death to persons using products ~~or services~~that the Company promotes or commercializes. There can be no assurance that substantial claims or liabilities will not arise in the future due to the nature of the Company’s business activities and recent increases in litigation related to healthcare ~~products~~products. There is also the risk of employment related litigation and ~~related intellectual property.~~other litigation in the ordinary course of business.

The Company could also be held liable for errors and omissions of its employees in connection with the services it performs that are outside the scope of any indemnity or insurance policy. The Company could be materially adversely affected if it were required to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnification agreement; if the indemnity, although applicable, is not performed in accordance with its terms; or if the Company’s liability exceeds the amount of applicable insurance or indemnity.

~~As of September 30, 2019, the Company’s accrual for litigation and threatened litigation was not material to the condensed consolidated financial statements.~~

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

9.	ACCRUED EXPENSES AND LONG-TERM LIABILITIES

Other accrued expenses consisted of the following as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
	(unaudited)				(unaudited)
Accrued royalties	$	2,000	$	1,399	$	2,237	$	1,934
Indemnification liability		875		875
Contingent consideration		559		434		654		502
Medicare payment advance						2,066		-
Operating lease liability						1,171		1,321
Financing lease liability						150		184
Deferred revenue						209		457
Payable to CGI						-		888
Accrued sales and marketing - diagnostics						103		197
Accrued lab costs - diagnostics						125		163
Accrued professional fees		1,318		701		1,196		1,399
Operating lease liability		1,367		-
Deferred revenue		480		-
Taxes payable		287		285		311		403
Unclaimed property		565		565		565		565
All others		1,972		832		950		1,463
Total other accrued expenses	$	9,423	$	5,091	$	9,737	$	9,476

Long-term liabilities consisted of the following as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

	September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
	(unaudited)				(unaudited)
Warrant liability	$	326	$	361	$	33	$	82
Uncertain tax positions		4,011		3,838		4,210		4,081
Deferred revenue		294		-		239		269
Other		160		120		75		141
Total other long-term liabilities	$	4,791	$	4,319	$	4,557	$	4,573

10.	STOCK-BASED COMPENSATION

~~Stock Incentive Plan~~

The Company’s stock-incentive program is a long-term retention program that is intended to attract, retain and provide incentives for talented employees, officers and directors, and to align stockholder and employee interests. Currently, the Company is able to grant options, stock appreciation rights (“SARs”) and restricted shares from the Interpace Biosciences, Inc. 2019 Equity Incentive Plan, (the “Stock Incentive Plan”). No new grants may be made under the Company’s prior stock incentive plan, the Interpace Diagnostics Group, Inc. Amended and Restated 2004 Stock Award and Incentive Plan (the “2004 Plan”). Unless earlier terminated by action of the Company’s board of directors, the 2004 Plan will remain in effect until such time as no stock remains available for delivery and the Company has no further rights or obligations under the 2004 Plan with respect to outstanding awards thereunder.

Historically, stock options have been granted with an exercise price equal to the market value of the ~~Common Stock~~common stock on the date of grant, expire 10 years from the date they are granted, and generally ~~vested~~vest over a one to three-year period for employees and members of the Board. Upon exercise, new shares will be issued by the Company. The Company granted stock options in 2017 which vest monthly over a one-year period. SARs are generally granted with a grant price equal to the market value of the Common Stock on the date of grant, vest one-third each year on the anniversary of the date of grant and expire five years from the date of grant. The restricted shares and restricted stock units (“RSUs”) granted to Board members and employees generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances. ~~Restricted shares and RSUs granted to Board members generally have a three-year graded vesting period and are subject to accelerated vesting and forfeiture under certain circumstances.~~

~~During~~In the ~~first~~second quarter of 2019, members of the Company’s management team were granted stock options to purchase an aggregate of 1,105,440 shares of Common Stock with an exercise price of $0.98 per share and 276,360 RSUs, subject generally to such member’s continued service with2020, the Company issued performance-based options, which ~~vest one-third each year~~requires the Company to assess the likelihood of achieving certain performance milestones on a quarterly basis; approximately $0.3 million in stock compensation expense is expected to be incurred over athe amortization period ~~of three years.~~

~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Tabular information in thousands, except per share amounts)~~for these options.

The following table provides the weighted average assumptions used in determining the fair value of the stock option awards granted during the ~~nine~~six month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.

	Nine Months Ended
	September 30, 2019			September 30, 2018			June 30, 2020			June 30, 2019
	(unaudited)						(unaudited)
Risk-free interest rate		2.51	%		2.65	%		1.20	%		2.51	%
Expected life		6.0 years			6.0 years			5.9 years			6.0 years
Expected volatility		127.81	%		126.93	%		124.16	%		127.81	%
Dividend yield		-			-			-			-

INTERPACE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

The Company recognized approximately ~~$0.3~~$0.4 million and ~~$0.4~~$0.5 million of stock-based compensation expense during the three-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and approximately ~~$1.2~~$0.8 million and ~~$1.6~~$1.0 million for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

11.	INCOME TAXES

Generally, accounting standards require companies to provide for income taxes each quarter based on their estimate of the effective tax rate for the full year. The authoritative guidance for accounting for income taxes allows use of the discrete method when it provides a better estimate of income tax expense. Due to the Company’s valuation allowance position, it is the Company’s position that the discrete method provides a more accurate estimate of income tax expense and therefore income tax expense for the current quarter has been presented using the discrete method. As the year progresses, the Company refines its estimate based on the facts and circumstances by each tax jurisdiction. The following table summarizes income tax expense on ~~(loss) income~~loss from continuing operations and the effective tax rate for the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018:~~2019:

													Three Months Ended						Six Months Ended
	Three Months Ended						Nine Months Ended						June 30,						June 30,
	September 30,						September 30,						2020			2019			2020			2019
	2019			2018			2019			2018			(unaudited)						(unaudited)
	(unaudited)						(unaudited)
Provision for income tax	$	9		$	7		$	19		$	21		$	13		$	5		$	28		$	10
Effective income tax rate		0.1	%		0.2	%		0.1	%		0.3	%		0.2	%		0.1	%		0.2	%		0.1	%

Income tax expense for both the three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 was primarily due to minimum state and local taxes.

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in March 2020. The CARES Act includes several U.S. income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits, modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified improvement property placed in service after December 31, 2017. The CARES Act is not expected to have a material impact on the Company’s financial results.

12.	SEGMENT INFORMATION

We ~~view our operations and manage our business in~~operate under one ~~operating~~ segment which is the business of developing and selling ~~diagnostic tests~~clinical and ~~biopharma~~pharma services.

13.	DISCONTINUED OPERATIONS

The ~~Company’s reporting segment structure is currently reflective~~components of liabilities classified as discontinued operations consist of the ~~way both the Company’s management~~following as of June 30, 2020 and chief operating decision maker view the business, make operating decisions and assess performance. This structure allows investors to better understand Company performance, better assess prospects for future cash flows, and make more informed decisions about the Company.December 31, 2019:

	June 30, 2020		December 31, 2019
	(unaudited)

Accrued liabilities		766		766
Current liabilities from discontinued operations		766		766
Total liabilities	$	766	$	766

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

~~13.~~

~~DISCONTINUED OPERATIONS~~

~~The components of liabilities classified as discontinued operations relate to Commercial Services and consist of the following as of September 30, 2019 and December 31, 2018:~~

September 30, 2019

December 31, 2018

(unaudited)
Accounts payable $ 69 $ 192
Other 697 726
Current liabilities from discontinued operations 766 918
Total liabilities $ 766 $ 918

14.	REVOLVING LINE OF CREDIT

On November 13, 2018, the Company, Interpace Diagnostics Corporation, and Interpace Diagnostics, LLC entered into athe SVB Loan ~~and Security~~ Agreement, ~~(the “SVB Loan Agreement”) with Silicon Valley Bank (“SVB”),~~ which provides for up to $4.0 million of debt financing consisting of a term loan of up to $850,000 and a ~~revolving line~~Revolving Line of ~~credit~~Credit based on its outstanding accounts receivable ~~(the “Revolving Line”)~~ of up to ~~$4.0~~$3.75 million. The ability to use the term loan portion of the SVB Loan Agreement expired in 2019.

~~The amount that may be borrowed~~Borrowings under the Revolving Line isof Credit are typically the lower ofof: (i) ~~$4.0~~$3.75 million or (ii) 80% of the Company’s eligible accounts receivable (as adjusted by SVB). Revolving Line of Credit outstanding amounts incur interest at a rate per annum equal to the Wall Street Journal Prime Rate plus 0.5%. The Company is also required to pay an unused Revolving Line of Credit facility fee monthly in arrears in an amount equal to 0.35% per annum of the average unused but available portion of the Revolving ~~Line.~~Line of Credit. The ~~term loan portion~~Revolving Line of ~~the SVB Loan Agreement has a maturity date of May 2, 2022, and the Revolving Line~~Credit has a maturity date three years from the effective date, or November 13, 2021. As of June 30, 2020, the outstanding balance on the revolving Line of Credit was $3.4 million.

As of ~~September 30, 2019,~~July 31, 2020, the Company was in violation of a quick ratio financial covenant under the SVB Loan Agreement. Additionally, due to the untimely filing of this Report with the SEC subsequent to the filing deadline, the Company was in violation of the SVB Loan Agreement. While the Company has ~~drawn $3.75 million~~received a waiver of default from SVB and is in compliance with the terms of the ~~available funds with~~SVB Loan Agreement as of the date of this Report, we currently do not have the ability to drawn down on the Revolving Line ~~which is~~of Credit.

The Company however expects to reinstate the ~~maximum allowed and has no remaining availability as $250,000 of the~~Revolving Line of Credit in the near term, and is ~~used~~in negotiations with SVB to ~~secure~~expand the ~~issuance~~borrowing base from $4.0 million to $8.0 million. The expansion of the Revolving Line of Credit, however, also requires approval of the holders of the Company’s Series B convertible preferred stock and the Company cannot provide assurance that such expansion or approval will be successful.

During September 2020, the Company paid down the outstanding Revolving Line of Credit balance in full. Additionally during September 2020, the Company transferred $0.35 million into a ~~standby letter~~restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit ~~by SVB. See also Note 19, Subsequent Events –~~supporting two of its facilities. Prior to September 2020, the collateral for the letters of credit was accounted for as a reduction in availability under the Revolving ~~line~~Line of ~~credit.~~Credit.

15.	SUPPLEMENTAL CASH FLOW INFORMATION

The following table represents cash flows used in the Company’s discontinued operations for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018:~~2019:

Nine Months Ended
September 30,
2019 2018
(unaudited)
Net cash used in operating activities of discontinued operations $ (30 ) $ (376 )

	Six Months Ended
	June 30,
	2020		2019
	(unaudited)
Net cash used in operating activities of discontinued operations	$	-	$	(30	)

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

Supplemental Disclosures of Non Cash Activities

(in thousands)

Nine Months Ended
September 30,
2019 2018
(unaudited)
Operating
Adoption of ASC 606 $ - $ 2,500
Prepaid stock grants issued to vendors $ 72 $ 257
Adoption of ASC 842 - right of use asset $ 2,449 $ -
Adoption of ASC 842 - operating lease liability $ 2,536 $ -
Investing
Acquisition of property and equipment $ - $ 12
Excess consideration note $ 6,822 $ -

	Six Months Ended
	June 30,
	2020		2019
	(unaudited)
Operating
Adoption of ASC 842 - right of use asset	$	-	$	2,190
Adoption of ASC 842 - operating lease liability	$	-	$	(2,312	)
Prepaid stock grants issued to vendors	$	-	$	73
Taxes accrued for repurchase of restricted shares	$	49	$	-
Investing
Accrued Financing costs	$	314	$	-
Preferred Stock Deemed Dividend	$	3,033	$	-

16.

EQUITY

~~Public Offering~~

On January 25, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”) with respect to the issuance and sale of an aggregate of 9,333,334 shares (the “Firm Shares”) of the Company’s Common Stock in an underwritten public offering. Pursuant to the Underwriting Agreement, the Company also granted Wainwright an option, exercisable for 30 days, to purchase an additional 1,400,000 shares of Common Stock. The option expired unexercised. The Firm Shares were offered to the public at a price of $0.75 per Share. Wainwright purchased the Firm Shares from the Company pursuant to the Underwriting Agreement at an effective price of $0.6975 per share.

The Company received net proceeds, after deducting underwriter discounts and commissions and other expenses related to the offering, in the amount of approximately $6.0 million. The Company used the net proceeds from the offering for working capital, capital expenditures, business development and research and development expenditures, and the acquisition (in part) of the BioPharma business.

Preferred Stock Issuance

Securities Purchase and Exchange Agreement

~~The~~

On January 10, 2020, the Company entered into a Securities Purchase and Exchange Agreement (the “Securities Purchase and Exchange Agreement”) ~~on July 15, 2019~~ with 1315 Capital and Ampersand 2018 Limited Partnership ~~(the “Investor”), a fund managed by Ampersand~~(“Ampersand” and, together with 1315 Capital, ~~Partners, providing for~~ the ~~issuance and sale~~“Investors”) pursuant to which the Company agreed to sell to the ~~Investor of up to~~Investors an aggregate of ~~$27,000,000~~$20.0 million in Series B convertible preferred stock of the Company, par value $0.01 per share (the “Series B Preferred Stock”), at an issuance price per share of $1,000. Pursuant to the Securities Purchase and Exchange Agreement, 1315 Capital agreed to purchase 19,000 shares of Series B Preferred Stock at an aggregate purchase price of $19.0 million and Ampersand agreed to purchase 1,000 shares of Series B Preferred Stock at an aggregate purchase price of $1.0 million.

In addition, the Company agreed to exchange $27.0 million of the Company’s existing Series A convertible preferred stock, par value $0.01 per share, held by Ampersand (the “Series A Preferred Stock”), represented by 270 shares of Series A Preferred Stock with a stated value of $100,000 per share, which represents all of the ~~Company consisting of two series,~~Company’s issued and outstanding Series A (“Preferred Stock, for 27,000 newly issued shares of Series ~~A”)~~B Preferred Stock (such shares of Series B Preferred Stock, the “Exchange Shares” and such transaction, the “Exchange”). Following the Exchange, no shares of Series ~~A-1 (“~~A Preferred Stock remained designated, authorized, issued or outstanding. The Series ~~A-1” and together with~~B Preferred Stock has a conversion price of $6.00 as compared to a conversion price of $8.00 on the Series A Preferred Stock, but did not include certain rights applicable to the ~~“Preferred Stock”~~Series A Preferred Stock, including a six-percent (6%)~~, both~~ dividend and a conversion price adjustment for any failure by the Company to achieve a revenue target of $34.0 million in 2020 related to its clinical services or a weighted-average anti-dilution adjustment. Under the terms of the Securities Purchase and Exchange Agreement, Ampersand also agreed to waive all dividends and weighted-average anti-dilution adjustments accrued to date on the Series A Preferred Stock.

INTERPACE BIOSCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

A convertible financial instrument includes a beneficial conversion feature if its conversion price is lower than the Company’s stock price at the commitment date. The Company determined that the sale of the Series B Preferred resulted in a beneficial conversion feature with an ~~issuance~~intrinsic value of $2.2 million, which the Company recorded as a reduction to additional paid-in capital upon the sale of the Series B Preferred stock. The Company calculated the intrinsic value of the beneficial conversion feature as the difference between the estimated fair value of the common stock on January 15, 2020 of $6.79 per share and the effective conversion price per share of ~~$100,000 (the “Stated Value”), to be funded at up to two different closings (the “Investment”).~~

The initial closing, which was consummated promptly after the execution of the Securities Purchase Agreement, involved the issuance of 60 newly created shares of Series A at an aggregate purchase price of $6,000,000, and 80 newly created shares of Series A-1 at an aggregate purchase price of $8,000,000, for net proceeds of approximately $13.1 million.

The Securities Purchase Agreement contemplated a second closing (the “Second Closing”), which would only be effected following the fulfillment to the Investor’s satisfaction of customary conditions, including, among others, the approval$6.00 multiplied by the stockholders of the Company, as required under the rules of the Nasdaq Stock Market LLC (the “Nasdaq Listing Rules”), of the issuance of shares of Common Stock upon conversion of the Preferred Stock (the “Conversion Issuances”) in excess of the aggregate number of shares of ~~Common Stock that~~common stock issuable upon conversion. The Company fully amortized the beneficial conversion feature during the three months ended March 31, 2020 in accordance with GAAP. The beneficial conversion feature resulted in an increase in the loss attributable to common shareholders for the three months ended March 31, 2020 in the Condensed Consolidated Statement of Operations, as it represented a deemed dividend to the preferred shareholders.

In April 2020, the Company ~~may issue upon conversion of the Preferred Stock without breaching its obligations under the Nasdaq Listing Rules (the “Stockholder Approval”). The terms~~entered into support agreements with each of the Series ~~A-1 provided that each share~~B Investors, pursuant to which Ampersand and 1315 Capital, respectively, consented to, and agreed to vote (by proxy or otherwise), all shares of Series ~~A-1 would automatically convert into one share~~B Preferred Stock registered in its name or beneficially owned by it and/or over which it exercises voting control as of the date of the Support Agreement and any other shares of Series ~~A upon~~B Preferred Stock legally or beneficially held or acquired by such Series B Investor after the date of the Support Agreement or over which it exercises voting control, in favor of any Fundamental Action desired to be taken by the Company ~~obtaining~~as determined by the ~~Stockholder Approval.~~Board. For purposes of each Support Agreement, “Fundamental Action” means any action proposed to be taken by the Company and set forth in Section 4(d)(i), 4(d)(ii), 4(d)(v), 4(d)(vi), 4(d)(viii) or 4(d)(ix) of the Certificate of Designation of Series B Preferred Stock or Section 8.5.1.1, 8.5.1.2, 8.5.1.5, 8.5.1.6, 8.5.1.8 or 8.5.1.9 of the Amended and Restated Investor Rights Agreement. SeeNote 19, Subsequent Events, for ~~additional information.~~a discussion of the termination of the support agreement with Ampersand.

ATM program

On September 20, 2019, the Company entered into an Equity Distribution Agreement ~~(the “Agreement”)~~ with Oppenheimer & Co. Inc., as sales agent (the “Agent”), pursuant to which the Company may, from time to time, issue and sell shares of its Common Stock, at an aggregate offering price of up to $4.8 million (the “Shares”) through the Agent. Under the terms of the Equity Distribution Agreement, the Agent may sell the Shares at market prices by any method that is deemed to be an “at the market offering” as defined in Rule 415 under the Securities Act of 1933, as amended.

Subject to the terms and conditions of the Equity Distribution Agreement, the Agent will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has no obligation to sell any of the Shares and may, at any time, suspend sales under the Equity Distribution Agreement or terminate the Equity Distribution Agreement in accordance with its terms. The Company has provided the Agent with customary indemnification rights, and the Agent will be entitled to a fixed commission of 3.0% of the aggregate gross proceeds from the Shares sold. The Equity Distribution Agreement contains customary representations and warranties and the Company is required to deliver customary closing documents and certificates in connection with sales of the Shares. ~~To date, no~~As of June 30, 2020, approximately 178,000 shares have been sold for net proceeds to the Company of approximately $0.7 million.

As a result of the January 10, 2020 Securities Purchase and Exchange Agreement, additional Shares may no longer be sold under ~~this agreement.~~the ATM arrangement without a majority approval by the holders of the Series B Preferred Stock in accordance with the Amended and Restated Investor Rights Agreement entered into on that date. In addition, if our common stock is delisted by Nasdaq due to our failure to meet minimum stockholders’ equity requirements, we may no longer be eligible to sell under the Agreement as well. See Note 19, Subsequent Events.

INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular information in thousands, except per share amounts)

17.

WARRANTS

In connection with the Wainwright underwritten public offering, the Company issued to Wainwright’s designees warrants (the “Underwriter Warrants”) to purchase up to 654,334 shares of Common Stock (representing 7% of the aggregate number of Firm Shares), at an exercise price of $0.9375 per share (representing 125% of the public offering price). The Underwriter Warrants ~~are exercisable immediately~~outstanding and ~~expire three years from the date of issuance.~~

~~There was no~~ warrant ~~exercise~~ activity for the ~~nine months~~three- and six-months ended ~~September~~June 30, ~~2019. Warrants outstanding for the period ended September 30, 2019~~2020 are as follows:

Description Classification Exercise Price
Expiration
Date
Warrants Issued Warrants Exercised Warrants Cancelled/ Expired
Balance
December 31, 2018
Balance
September 30, 2019

Private Placement Warrants, issued January 25, 2017 Equity $ 4.69 June 2022 855,000 - - 855,000 855,000
RedPath Warrants,issued March 22, 2017 Equity $ 4.69 September 2022 100,000 - - 100,000 100,000
Underwriters Warrants,issued June 21, 2017 Liability $ 1.32 December 2022 575,000 - (40,000 ) 535,000 535,000
Base & Overallotment Warrants,issued June 21, 2017 Equity $ 1.25 June 2022 14,375,000 (5,672,852 ) - 8,702,148 8,702,148
Vendor Warrants,issued August 6, 2017 Equity $ 1.25 August 2020 150,000 - - 150,000 150,000
Warrants issued October 12, 2017 Equity $ 1.80 April 2022 3,200,000 - - 3,200,000 3,200,000
Underwriters Warrants,issued January 25, 2019 Equity $ 0.9375 January 2022 654,334 - - - 654,334

  19,909,334   (5,672,852 ) (40,000 )   13,542,148   14,196,482
Description Classification Exercise Price Expiration Date Warrants Issued Warrants Exercised Warrants Cancelled/ Expired
Balance
December 31,
2019

Balance
June 30,
2020

Private Placement Warrants, issued January 25, 2017 Equity $ 46.90 June 2022 85,500 - - 85,500 85,500
RedPath Warrants, issued March 22, 2017 Equity $ 46.90 September 2022 10,000 - - 10,000 10,000
Underwriters Warrants, issued June 21, 2017 Liability $ 13.20 December 2022 57,500 - (4,000 ) 53,500 53,500
Base & Overallotment Warrants, issued June 21, 2017 Equity $ 12.50 June 2022 1,437,500 (567,286 ) - 870,214 870,214
Vendor Warrants, issued August 6, 2017 Equity $ 12.50 August 2020 15,000 - - 15,000 15,000
Warrants issued October 12, 2017 Equity $ 18.00 April 2022 320,000 - - 320,000 320,000
Underwriters Warrants, issued January 25, 2019 Equity $ 9.40 January 2022 65,434 - - 65,434 65,434

1,990,934 (567,286 ) (4,000 ) 1,419,648 1,419,648

18. RECENT ACCOUNTING PRONOUNCEMENTS

~~Recently adopted standards~~Standards not yet effective

In ~~February 2016,~~December 2019, the FASB issued ASU ~~2016-02, Leases~~No. 2019-12, Income Taxes (Topic ~~842), which~~740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendment is effective for ~~public companies for~~ annual ~~reporting~~ periods beginning after December 15, ~~2018, including interim periods within those fiscal years. Topic 842 establishes~~2020. We do not expect that the requirements of ASU 2017-04 will have a ~~right-of-use model that requires a lessee to record a right-of-use asset and a lease liability, measured~~material impact on a discounted basis, on the balance sheet for all leases with terms longer than 12 months. Leases are to be classified as either finance or operating leases, with such classification affecting the pattern or expense recognition in the statement of operations. We adopted this new standard as of January 1, 2019, by using the alternative modified transition method. See Note 3,~~Significant Accounting Policies~~~~, for more details.~~our consolidated financial statements.
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INTERPACE ~~BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP,~~BIOSCIENCES, INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular information in thousands, except per share amounts)

~~Standards not yet effective~~
~~In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350):~~~~Simplifying the Accounting for Goodwill Impairment~~, which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. Early adoption is permitted and applied prospectively. Management is evaluating ASU 2017-04 to determine the impact on the consolidated financial statements.
19. SUBSEQUENT EVENTS

~~Additional financing received~~Audit Committee Investigation

~~Stockholder Approval~~In July 2020, the Company received letters from employees, one of whom has left the Company’s employ, concerning certain employment and billing and compliance matters. In response, the Company informed its Audit Committee and Regulatory Compliance Committee as well as its independent registered public accounting firm. The Audit Committee commenced an investigation of these matters with the assistance of independent counsel and advisors thereto. The Audit Committee concluded that the allegations were not substantiated and that there was ~~obtained on October 10, 2019 for the Securities Purchase Agreement (discussed in~~~~Note 16, Equity~~)no evidence of any illegal acts.
Untimely SEC Filing and ~~each share of Series A-1 issued to the Investor at the initial closing automatically converted into one share of Series A on that day (the “Conversion”).~~Nasdaq Notification

On ~~October 16, 2019,~~August 14, 2020 the Company ~~and~~filed Form 12b-25 with the ~~Investor consummated the Second Closing. At the Second Closing,~~SEC, which stated that the Company ~~issued~~was unable to file timely its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020 due to the ~~Investor 130 newly created shares~~investigation being conducted by the Company’s Audit Committee discussed in the preceding paragraph. The Audit Committee was unable to conclude their investigation by the SEC filing deadline. On August 18, 2020, the Company was notified by Nasdaq that it is in non-compliance with Listing Rule 5250(c)(1), which requires the timely filing of ~~Series A at an aggregate gross purchase price of $13,000,000.~~periodic financial statements. The Company ~~used~~was provided 60 days to submit its plan to show compliance with the ~~proceeds from~~filing requirement. Upon the ~~Second Closing to make~~filing of this Form 10-Q with the ~~maturity date payment, subject to certain holdbacks, with respect~~SEC, the Company believes it will have remedied the Nasdaq non-compliance issue due to the ~~promissory note issued by~~untimely filing.
Nasdaq Minimum Stockholders’ Equity Requirement
As of June 30, 2020, the Company was not in compliance with the Nasdaq Listing Rule 5550(b)(1), which requires the minimum stockholders’ equity required for continued listing to be in excess of $2.5 million. While the Company notified Nasdaq in advance that it would not be in compliance upon filing of this Report, the Company anticipates that it will receive a ~~subsidiary~~letter from Nasdaq notifying it of the ~~Company~~failure to ~~Cancer Genetics, Inc., and expects to use~~meet this listing requirement shortly after the ~~remaining proceeds for general corporate purposes, including the integration~~filing of ~~the Biopharma services business.~~this Report. The Company ~~issued the aforementioned note in connection with the acquisition of its BioPharma services business.~~
~~The Series A was offered and sold pursuant~~is currently working on developing a plan to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder. The shares to be issued upon conversion of the Series A have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements.
~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~(Tabular information in thousands, except per share amounts)~~remedy this Nasdaq continued listing requirement.

Revolving ~~line~~Line of ~~credit~~Credit

~~Using~~As of July 31, 2020, the ~~proceeds~~Company was in violation of a financial covenant under the SVB Loan Agreement. Additionally, due to the untimely filing of this Report with the SEC subsequent to the filing deadline, the Company was in violation of the SVB Loan Agreement. While the Company has received a waiver of default from SVB and is in compliance with the ~~Second Closing described above,~~terms of the SVB Loan Agreement as of the date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit.
As of June 30, 2020, the outstanding balance on the SVB Revolving Line of Credit was $3.4 million. During September 2020, the Company paid ~~off~~down the ~~line~~outstanding Revolving Line of Credit balance in full. Additionally during September 2020, the Company transferred $0.35 million into a restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit ~~balance~~supporting two of ~~$3.75 million that~~its facilities. Prior to September 2020, the collateral for the letters of credit was ~~outstanding~~accounted for as a reduction in the availability under the Revolving Line of ~~September 30, 2019 in October 2019.~~Credit.

~~Excess consideration note~~
~~As part of the purchase of the BioPharma business from CGI and the consideration given for the purchased assets, $7,692,300 was in the form of a subordinated seller note (the “~~~~Excess Consideration Note~~~~”), issued by a subsidiary of the Company to CGI. The payment of the note due in October 2019 was subject to certain adjustments to the purchase price as described in~~~~Note 2, Acquisition~~.Ampersand Support Agreement Termination

In ~~October 2019,~~April 2020, the ~~excess consideration note balance was paid~~Company entered into a support agreement with Ampersand pursuant to ~~CGI amounting~~which Ampersand agreed to ~~$6,024,489 million which included~~vote the ~~following adjustments: an indemnification holdback~~shares of ~~$735,000 (less paid indemnity claims) due to be released to CGI~~the Company owned by it in ~~January 2020, less the remaining accounts receivable holdback of $152,858 also due to be released by January 2020, less the final post-closing net-worth adjustment of $775,000, less repayment~~favor of certain ~~advances made by the Company on behalf of the BioPharma business to CGI regarding certain pre-closing liabilities totaling $317,628, plus $289,000 of unbilled accounts receivable~~fundamental actions, as ~~of July 15, 2019 that were not included in the original financial schedules, plus unpaid and accrued interest under the excess consideration note of $23,674.~~
~~The indemnification and accounts receivable holdbacks were deposited into separate escrow accounts until released or settled which is due by December 31, 2019.~~
~~Nasdaq notification~~
On October 15, 2019, the Company received notice from Nasdaq indicating that, while the Company has not regained compliance with the minimum bid price requirement, the staff of Nasdaq (the “Staff”) has determined that the Company is eligible for an additional 180-day period, or until April 13, 2020, to regain compliance. The Staff’s determination was based on (i) the Company meeting the continued listing requirement for market value of its publicly held shares and all other applicable initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and (ii) the Company providing written notice to Nasdaq of its intent to cure the deficiency during this second compliance period by effecting a reverse stock split, if necessary. If at any time during this second, 180-day period the closing bid price of the Company’s Common Stock is at least $1.00 per share for at least a minimum of 10 consecutive business days, the Staff will provide written confirmation of compliance. If compliance cannot be demonstrated by April 13, 2020, Nasdaq will provide written notification to the Company that its Common Stock will be subject to delisting. At that time, the Company may appeal the delisting determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the Rule or maintain compliance with other Nasdaq continued listing requirements.
~~Reverse Stock Split~~
On November 14, 2019, the Company filed a definitive proxy statement on Schedule 14A for a special meeting of stockholders to be held on December 13, 2019 to approve an amendment to the Company’s certificate of incorporation to effect a reverse stock split of common stock, at a ratio in the range from one-for-five to one-for-fifteen, with such specific ratio to be determined by the Company’s ~~board~~Board of ~~directors following~~Directors, primarily with respect to our potential application for a U.S. Small Business Administration Paycheck Protection Program of 2020 loan (“PPP Loan”). As the ~~special meeting.~~Company subsequently determined that it would not apply for a PPP Loan, the support agreement between the Company and Ampersand was terminated by mutual agreement on July 9, 2020. The ~~Company is not obligated to effect the reverse stock split.~~support agreement entered into with 1315 Capital remains in effect.
33
INTERPACE BIOSCIENCES, ~~INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~INC

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”).~~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:

● material adverse impact of Coronavirus (COVID-19) pandemic due to the slowdown in demand for our ~~stock price is volatile~~clinical services and ~~could be further affected by events not within our control,~~pharma services, a reduction in samples received and ~~an investment in our common stock could suffer a decline in value;~~
● ~~dilution as a result of future equity issuances;~~
● stockholders must rely on appreciation of the value of our common stock for any return on their investment because we do not intend to declare cash dividends on our shares of common stock in the foreseeable future;testing volume and delayed third party collections and other factors;

● the ~~limited revenue generated from our business thus far and~~substantial doubt about our ability to ~~commercially leverage~~continue as a going concern due to our ~~bioinformatics data~~history of operating losses and ~~develop~~other liquidity factors, and the potential impact of being in default on our ~~pipeline products;~~debt and other agreements;

● ~~whether we are able to successfully utilize~~
the limited revenue generated by our ~~commercial~~clinical services and ~~operating experience to sell our molecular diagnostic tests;~~pharma services;

● we expect to incur net losses for the foreseeable future and may never achieve or sustain profitability;
●
our ~~dependence on a concentrated selection of third-party payers~~limited operating history, the limited revenue generated from our business thus far and our fluctuating quarterly and annual revenue and operating results, including the lack of timeliness of their payments, payer volatility and subjective decision making as well as the impact of reporting subsequent accounts receivable adjustments related to our diagnostics business as a ~~reduction in current periods revenues;~~result of how we recognize revenue;

● our ability to ~~obtain broad adoption~~timely file our SEC reports the failure of ~~and ability to grow or continue to secure sufficient levels of reimbursement~~which could result in a ~~changing reimbursement environment, including obtaining clinical data to support sufficient levels~~delisting from Nasdaq, a breach of ~~reimbursement;~~our SVB Loan Agreement, and loss of eligibility for certain registration statements and exemptions for resales;

● the ~~demand~~failure to meet Nasdaq minimum stockholders’ equity requirement as of June 30, 2020 that we anticipate will shortly result in a letter from Nasdaq notifying us of the failure to meet this listing requirement and commencing procedures to potentially delist our common stock from Nasdaq, which delisting (if effected) could lead to a possible reduced stock price, potentially causing difficulty raising additional capital or debt, and also resulting in the loss of exemptions from various state securities laws;
● 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 the company’s ability to meet its financial and other targets;
● we rely on third parties to process and transmit claims to payers for our ~~molecular diagnostic tests from physicians~~clinical services, and ~~patients;~~any delay, data loss, or other disruption in processing or transmitting could have an adverse effect on our revenue and financial condition;

● our ~~products continuing~~ability to ~~perform as expected;~~utilize our commercial and operating experience to sell our clinical and pharma services;

● our ability to compete successfully in the markets that our clinical services and pharma services operate in;
34
INTERPACE BIOSCIENCES, INC
● our ability to obtain, retain and increase sufficient levels of third-party reimbursement for our clinical services tests in a changing and challenging reimbursement environment, including our current dependence on a concentrated number of third-party payers, 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 that can impact our ability to effectively bill and collect on claims for the sale of our clinical tests;
● our revenue recognition is based, in part, on our estimates for future collections and such estimates may prove to be incorrect;
● a deterioration in the collectability of our accounts receivable could have a material adverse effect on our business, financial condition and results of operations;
● the inability to finance our business on acceptable terms in the future 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 ability to comply with the SVB Loan Agreement financial covenants, other outstanding debt obligations, as well as our ability to utilize and borrow under the line, expand our working capital borrowing base to provide sufficient working capital financing during growth periods as well as our ability to get approval of our private equity investors in order to expand our line of credit borrowing base beyond $4.5 million;
● we have issued convertible preferred stock, and may issue additional convertible preferred stock in the future, that includes terms that may dilute our common stock;
● the concentration of our ownership in two private equity firms and their affiliates that 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”), as well as their corresponding designation rights for a majority of our directors and their right to approve certain Company actions, has resulted in these stockholders having a substantial influence on our business decisions;
● as billing for our clinical services tests is complex, we must dedicate substantial time and resources to its invoicing process and are continuously taking measures to improve the success of our accounts receivable collection activities;
● we depend upon a small number of payers for a significant portion of our clinical services and could experience a decline in revenue, as well as a compromise to our commercial success, should one or more of these payers stop, delay or decrease reimbursement payments;
● if payers do not provide reimbursement, rescind or modify their reimbursement policies or delay payments for our clinical services, we could experience a decline in revenue and our commercial success could be compromised;
● the development of new tests, products and related services and solutions typically requires a lengthy, complex and costly process and development activities could prove unsuccessful or yield uncertain results;
●
the effect of potential adverse findings, including potential laboratory shut downs, resulting from regulatory audits and inspections of our facilities, as well as our billing and payment practices, and the impact such adverse findings could have on our continuing business operations;
● a decline in demand for our clinical services tests and/or our pharma services products;
● the failure of our products and services to perform as forecast;
● customer claims against us asserting inaccurate results from our clinical services tests or our pharma services products;
35
INTERPACE BIOSCIENCES, INC
● our obligations to make royalty and milestone payments to our licensors;

● our ~~inability to finance our business on acceptable terms in the future may limit our~~ ability to ~~develop~~obtain the data and ~~commercialize new molecular diagnostic solutions and technologies and grow our business;~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
● ~~our ability~~samples that are needed to ~~comply with financial covenants under our current line of credit facility and comply with our debt obligations;~~
● ~~our limited operating history;~~
● ~~our ability~~perform the clinical studies that will enable us to ~~attract and retain qualified commercial representatives and other key employees and management personnel;~~
●
~~our relationships with leading thought leaders and biopharmaceutical companies;~~
● ~~our ability to continue to meet~~publish data demonstrating the ~~high compliance standards necessary to do business with biopharmaceutical companies~~
● ~~our ability to expand our international footprint with consistency of service to be able to meet our biopharmaceutical customers’ demands~~
● ~~demonstration of~~ clinical relevance and value ~~in utility studies;~~
● of our ~~ability~~clinical services tests, including to ~~continue to expand our sales and marketing forces;~~
● ~~our reliance on our commercial sales forces for continued business expansion;~~
● ~~fluctuating quarterly operating results;~~support sufficient levels of third-party reimbursement;

● our dependence on third parties for the supply of some of the materials used in our clinical and pharma services tests;

● our ability to successfully scale our operations, ~~testing capacity and processing technology;~~
● ~~our ability to support demand~~which could potentially result in delays in providing test results or in shortages for our ~~molecular diagnostic tests and any of our future tests or solutions;~~
● our ability 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 obtain sufficient data and samples to cost effectively and timely perform sufficient clinical trials in order to support our current and future products;~~
● ~~our ability to license rights to use technologies in order to commercialize new products;~~
● ~~our involvement in current and future litigation against us or our ability to collect on judgements found in our favor;~~
● ~~our ability to continuously develop our technology and to work to develop new solutions to keep pace with evolving standards of care;~~
● ~~our ability to enter into additional clinical study collaborations with highly regarded institutions;~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
● ~~the effect of seasonal results and adverse weather conditions, such as hurricanes and floods, on our business;~~
● our ability to increase or maintain sales of the tests and services in our Biopharma business or to successfully develop and commercialize other proprietary tests and services in our Biopharma business;
● ~~whether pharmaceutical, biotech companies and clinical research organizations decide to use our Biopharma business~~ tests and services;

● our ability to ~~perform~~develop or acquire tests, services or solutions;
● the ability of our ~~Biopharma business~~clinical services ~~in accordance~~to enter into collaborations with ~~contractual and regulatory requirements, and ethical considerations;~~highly regarded institutions;

● the ~~effect~~potential adverse impact of current and future laws, licensing requirements and ~~regulation have on~~governmental regulations upon our business operations, including but not limited to the ~~changing~~evolving U.S. ~~Food~~regulatory environment related to laboratory developed tests (LDT’s), pricing of our tests and ~~Drug Administration environment as it relates to molecular diagnostics~~services and ~~biopharma services;~~patient access limitations;

● ~~our~~if we fail to comply with Federal, State and foreign laboratory licensing requirements, we could lose the ability to ~~obtain and maintain sufficient laboratory space~~perform our tests resulting in disruptions to ~~meet~~ our ~~processing needs 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;~~business;

● ~~legislative reform of~~legislation reforming the U.S. healthcare ~~system, including the effect of pricing provisions of the Protecting Access~~system;
● a failure to comply with Federal and State laws and regulations pertaining to our billing practices could result in our being excluded from participation in Medicare, ~~Act of 2014 on~~ Medicaid or other governmental payer programs and/or significant monetary fines;
● our ~~Advanced Diagnostic Laboratory Tests, adjustments~~ability to comply with U.S. fraud and abuse laws, as well as payer regulations, could result in our being excluded from participation in Medicare, Medicaid or ~~reductions in reimbursement rates of our molecular diagnostic tests by the Centers for Medicare and Medicaid Services and changes~~ other governmental payer programs and/or ~~reductions in reimbursement rates or coverage of our tests by third party payers;~~significant monetary fines;

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

● the effect of The Eliminating Kickbacks in Recovery Act of 2018 asto the extent that it ~~potentially impacts~~could negatively impact our ability to incentivize our sales ~~personnel appropriately;~~
● ~~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 business;~~
● business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States, including our ability to comply with international laws and regulations;
● ~~compliance with the U.S. Foreign Corrupt Practices Act and anti-bribery laws;~~personnel;

● our ability to ~~use~~realize all of the anticipated benefits of the acquisition of our ~~net operating loss carryforwards;~~pharma services or those benefits, if any, taking longer to realize than was forecasted;

● ~~tax reform legislation;~~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;

● ~~changes~~if we fail to perform our pharma services in ~~financial accounting standards or practices;~~accordance with contractual and regulatory requirements, and ethical considerations, we could be subject to significant costs, legal liabilities and could experience a decline in revenue;

● our continuing ability to effectively compete in the clinical and pharma services markets;
● our ability to attract and retain key employees and management personnel;
● 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 limited experience in marketing and selling our products;
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INTERPACE BIOSCIENCES, INC
● the ability of our clinical services tests to be successfully embraced by physicians and members of the medical community who have historically used traditional methods to diagnose gastrointestinal and endocrine cancers;
● our ability to effectively compete against competitors that offer product lines that extend beyond the clinical services testing market, that have greater brand recognition and that possess greater financial resources;
● our ability to license rights to use emerging technologies that will enhance our ability to commercialize new products and services;
● the potential for liabilities or restraints on our business as a result of unanticipated, future litigation, as well as our potential inability to enforce legal judgments or collect monetary damages awarded in our favor;
● the adverse impact of force majeure events, including but not limited to acts of nature, adverse weather conditions, hurricanes and floods, epidemics and pandemics upon our business and the ability of our suppliers to provide us with critical materials and services;
● our use of hazardous materials;

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

● ~~product liability claims against us;~~
● ~~our billing practices and our ability to collect on claims for the sale~~catastrophic loss of our ~~tests;~~
● ~~our dependence on third-party medical billing providers to operate effectively without delays, data loss, or other disruptions;~~
● ~~cost increases resulting from enacted healthcare reform legislation;~~
● ~~changes in governmental regulations mandating price controls and limitations on patient access to our products;~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
● ~~our ability to increase revenue and manage the size of our operations;~~laboratories;

● our ability to ~~successfully identify, complete~~obtain and ~~integrate recent~~maintain sufficient qualified laboratory space to meet the processing needs of our business, as well as our ability to pass regulatory inspections and ~~any future acquisitions of companies, assets and/or products that we believe meet our strategic goals and needs,~~continue to be Clinical Laboratory Improvement Amendments (“CLIA”) and the ~~effects~~College of ~~any such acquisitions on our revenues, profitability and ongoing business;~~American Pathologists (“CAP”) certified or accredited;

● compliance with the ~~impact of contingent liabilities on our financial condition;~~U.S. Foreign Corrupt Practices Act and anti-bribery laws;

● our ability ~~and~~to respond to rapid scientific changes in the ~~ability of our third-party billing providers, to effectively maintain, upgrade and integrate the information systems on~~areas in which we ~~depend, including our partially customized Laboratory Information Management System;~~
● ~~the results of any future impairment testing for intangible assets as required under U.S. generally accepted accounting principles (“~~~~GAAP~~~~”);~~operate;

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

● ~~changes in U.S. patent law;~~
● patent infringement claims against us;

● ~~our ability to maintain our listing with Nasdaq;~~changes in U.S. and global patent law;

● ~~compliance with public company reporting requirements;~~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 negatively impact the results of business operations, dilute our stockholders’ ownership, increase our debts and/or cause us to incur significant expenses;
● the potential impact of existing and future 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”);
37
INTERPACE BIOSCIENCES, INC
● our ability to maintain and implement effective internal controls over financial ~~reporting;~~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;

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

● ~~the impact of anti-takeover defenses on an acquisition~~our ability to manage our growth or ~~stock price;~~unexpected declines;

● ~~fluctuations in~~uncertainty regarding the regulatory obligations related to our ~~quarterly and annual revenues and earnings;~~receipt of $650,000 funding for COVID-19 testing;

● ~~securities class action litigation;~~the potential impact of the relocation of our laboratory activities from Rutherford, NJ facility to our North Carolina facility upon ongoing customer clinical trials if revalidation is delayed with respect to the new site;

● ~~cost~~the impact of ~~settlement or damage awards against~~costs associated with expanding our ~~directors and officers;~~
● ~~preferential rights~~laboratory capabilities in North Carolina in anticipation of the ~~holders~~relocation of ~~our Preferred Stock that may be adverse to holders~~operations from Rutherford, NJ, as well as the potential for loss of ~~our common stock;~~
● ~~our ability to successfully execute under the transition services agreement with Cancer Genetics, Inc. (“~~~~CGI~~~~”);~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
● ~~our ability to realize all~~customers as a result of ~~the anticipated benefits of the acquisition of the Biopharma business or those benefits taking longer to realize than expected;~~this relocation;

● our ability to ~~retain customers~~efficiently execute and ~~critical vendors~~complete the planned laboratory transition from Rutherford, NJ to North Carolina on a timely basis and within our ~~Biopharma business;~~forecasted costs;

● potential loss of personnel that are uniquely qualified to perform the breadth of specialty testing and lab applications necessary for developing customized assays in our ~~ability to integrate the Biopharma business acquired;~~pharma services;

● potential legal liabilities related to our ~~ability~~employees, contractors and other third parties asserting claims for damages arising from workplace exposure to ~~integrate accounting systems and disclosure controls and procedures of~~certain infectious agents, including but not limited to the ~~Biopharma business;~~
● ~~our ability to expand and grow our newly acquired Biopharma business;~~
● ~~our ability to effectively separate the Biopharma business from CGI’s former clinical business;~~
● ~~our ability to continue to engage necessary personnel to operate the Biopharma business;~~
● ~~our ability to manage costs of our combined diagnostic business and the Biopharma business and provide sufficient capital to continue to grow and expand the base of business;~~COVID-19 virus;

● the ~~limited financial information on which~~possibility that we may have to ~~evaluate~~cease laboratory operations at one or more facilities for an undefined period of time due to the ~~financial prospects~~contraction of COVID-19 by persons that have been in such facilities, resulting in our inability to satisfy contractual obligations, a loss of revenue and other potential legal liabilities;
● certain payors may decline to reimburse us for services rendered and billed using new billing codes currently in use with Medicare;
● the  inability to charge and collect payment for the ~~combined company;~~Company’s serology antibody ELISA test for COVID-19 or the inability to coordinate the technology with a polymerase chain reaction test;
● the inability to raise capital in the future under the terms of our preferred stock arrangement could result in a Nasdaq market delisting and possibly in the Company seeking creditor protection pursuant to U.S. bankruptcy laws;
● the inability by the Company to consolidate its multiple LIM’s programs into one functioning LIM’s program by year-end in the North Carolina laboratory could negatively impact the operations of our pharma services; and

● the risk of a breach of proprietary or confidential data, regulated data, and personal information of employees, customers and others; successful breaches, employee malfeasance, or human or technological error that could result in, unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third party data or systems; theft of sensitive, regulated, or confidential data including personal information and intellectual property; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions or denials of service, as well as legal consequences under Federal, state and other applicable laws and regulations.
● the risk and cost associated with whistleblower threats, interventions and lawsuits on our ~~ability~~business and the cost of responding to ~~expand our working capital borrowing base to provide sufficient working capital financing during growth periods.~~such matters.
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INTERPACE BIOSCIENCES, INC

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, ~~including our Current Report on Form 8-K/A filed on September 20, 2019,~~ 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

~~The Company is a leader in enabling personalized medicine, offering~~We provide complex molecular analysis for the early diagnosis and treatment of certain cancers and supporting the development of targeted therapeutics. Though our clinical and pharma services, we offer specialized services along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications. ~~The Company’s primary source~~Our clinical services enable physicians to personalize the clinical management of ~~revenue is generated from the performance of its~~each patient by providing genomic information that allows them to better diagnose certain cancers and individualize patient treatments. Our proprietary molecular diagnostic tests for its clinical customers (Interpace Diagnostics) and its DNA-based pharma testing services in support of clinical trials for its BioPharma customers (Interpace Pharma Solutions). We are leveraging our licensed and accredited laboratories in Pittsburgh, PA, Rutherford, NJ, Raleigh, North Carolina and New Haven, CT all CLIA and CAP Certified to develop and commercialize our assays and products. and lung cancers. Our customers consist primarily of physicians, hospitals, clinics, biotechnology and pharmaceutical companies as well as major Contract Research Organizations and specialty contractors.
~~Diagnostics (Interpace Diagnostics)~~
~~Our Diagnostics business is a fully integrated commercial and bioinformatics business unit that provides clinically useful~~ molecular diagnostic tests, bioinformatics and pathology services ~~for evaluating risk of cancer by leveraging~~leverage the latest ~~technology in~~ personalized medicine ~~for improved~~technologies in order to improve patient diagnosis and management. ~~The genomic~~
Through our pharma services, we offer an extensive suite of molecular- and biomarker-based tests and services that ~~we develop~~provide unique, customized solutions for patient stratification and ~~commercialize as well as related first line assays are principally focused on early detection of patients with indeterminate biopsies and at high risk of cancer.~~treatment selection. Our tests and services ~~provide mutational analysis of genomic material contained in these “suspicious” cysts, nodules~~include DNA- and ~~lesions with the goal of better informing treatment decisions in patients at risk of thyroid, pancreatic,~~RNA- extraction, customized assay development and ~~other cancers and in many cases avoiding unnecessary surgical treatment in patients at low risk.~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
We have four commercialized molecular diagnostic tests in the marketplace for which we are receiving reimbursement: PancraGEN®, which is a pancreatic cyst and pancreaticobiliary solid lesion genomic test that helps physicians better assess risk of pancreaticobiliary cancers using our proprietary PathFinderTG^® ~~platform; ThyGeNEXT~~^®~~, which is an expanded oncogenic mutation panel that helps identify potentially malignant thyroid nodules, ThyraMIR~~^®~~, which assesses thyroid nodules for risk of malignancy utilizing a proprietary microRNA gene expression assay. ThyGeNEXT~~^®~~and ThyraMIR~~^®~~are typically used in conjunction; and RespriDx~~^®~~, which is a genomic test that helps physicians differentiate metastatic or recurrent lung cancer from the presence of newly formed primary lung cancer and which~~trial design consultation. Our pharma services offerings also ~~utilizes our PathFinderTG~~^®~~platform to compare the genomic fingerprint of two or more sites of lung cancer.~~
~~BarreGEN~~^®~~, is our esophageal cancer risk classifier for Barrett’s Esophagus that also utilizes our PathFinder TG~~^® ~~platform and is currently in a Clinical Evaluation Program or (“CEP”) whereby we gather information from physicians using BarreGEN~~^®~~to assist us in positioning our product for full launch, partnering and potentially supporting improved reimbursement with payers.~~
~~We currently process diagnostic samples in our laboratory facilities in Pittsburgh, Pennsylvania and New Haven, Connecticut. The New Haven facility is also a center for new product development.~~ Our laboratories are licensed pursuant to federal law under CLIA and are accredited by CAP and New York State. In August 2018, we acquired a majority of the Philadelphia laboratory equipment of Rosetta Genomics Ltd., a molecular diagnostics company, in order to further support our CLIA and CAP certified lab expansion in our New Haven, Connecticut and Pittsburgh, Pennsylvania laboratories. Our customers consist primarily of physicians, hospitals, and clinics.
~~BioPharma (Interpace Pharma Solutions)~~
~~Our recently acquired BioPharma business (now called Interpace Pharma Solutions, Inc.) provides~~include pharmacogenomics testing, genotyping, biorepository and other ~~customized~~specialized services to the pharmaceutical and biotechnology ~~industries and advances personalized medicine by partnering~~industries. Through collaboration with pharmaceutical, academic and technology leaders, ~~to effectively integrate~~we are investing in innovations that will advance personalized medicine by better integrating pharmacogenomics into ~~their~~the drug development process and clinical trial ~~programs with the goals of delivering~~programs. Our goal is to help deliver safer, more effective drugs to market more quickly, ~~and~~while also improving patient care.
During fiscal 2019, in connection with the acquisition of our Pharma Services business unit, Ampersand Capital Partners, one of the leading private equity firms in the diagnostic/biopharma sector, agreed to invest $27 million in Interpace in exchange for two tranches of newly issued convertible preferred stock. This was followed in 2020 by agreements with investors, led by 1315 Capital, another sophisticated private equity investor, to invest an additional $20 million in the company. 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
In an effort to safeguard our employees from the Coronavirus (COVID-19) pandemic, we are adhering to the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions provided by state and local authorities. The majority of our employees who do not work in a lab setting are currently on a telecommunication work arrangement and have generally been able to successfully work remotely. Our laboratories require in-person staffing and, as of the date of this report, we have been able to continue to operate our laboratories, minimizing infection risk to staff through a combination of social distancing and what we believe to be appropriate protective equipment. There can be no assurance that key employees will not become ill or that we will able to continue to operate our laboratories. While we furloughed a number of employees during the second quarter of 2020 as a result of reductions in ~~Raleigh, NC~~customer demand, the majority of these employees have returned to active employment status.
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INTERPACE BIOSCIENCES, INC
The continuing impact that the COVID-19 pandemic will have on our operations, including duration, severity and scope, remains uncertain and cannot be totally predicted at this time. The spread of the coronavirus has had and will continue to have an adverse effect upon global economies and financial markets and will continue to hold the potential to materially and adversely impact our operations including the health and availability of employees that operate of our laboratories, the availability of supplies including reagents, the progress and data collection of our pharma services, and customer demand. Accordingly, we believe it is likely that the COVID-19 pandemic will continue to adversely impact our results of operations, cash flows and financial condition for the remainder of fiscal 2020 and possibly beyond.
Our fiscal 2020 first and second quarter revenues were impacted by lower than expected clinical service volume from March through June 2020, which we believe resulted from the temporary reduction in non-essential testing procedures in connection with the COVID-19 pandemic. We were able to reduce overall costs to match the lower volumes experienced by our laboratories. We will continue to monitor the actual and potential impact of the pandemic upon our operations. While we are attempting to improve operations, the future remains uncertain and we may not be able to return our volumes to pre-pandemic levels.
To optimize the operations of laboratory operations within our pharma services, we are transitioning activities from the Rutherford, NJ facility to our Morrisville, NC facility. We are ~~licensed pursuant~~investing several million dollars to ~~federal law under~~facilitate this relocation, including but not limited to the transfer of personnel, expansion of the Morrisville facility and validation of transferred processes over the next several months. We believe that this investment will result in a reduction in future operating costs; however, it is not certain whether we will successfully implement the relocation or whether the transition will produce the predicted financial benefits.
All of our laboratories are currently in operation and, in our view, are appropriately staffed for current volumes. While we do not anticipate any laboratory 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. Further, while we have acquired additional inventories of laboratory supplies, including reagents, it is possible that we could experience supply chain shortages if the pandemic continues for a prolonged period and/or if one or more suppliers is unable to continue to provide us with inventory. For the foreseeable future, however, we do not anticipate supply chain shortages of critical supplies or delays from our third-party clinical services billing and collections company. We continue to monitor the actual and potential impact of the pandemic upon our operations and will continue to do so.
We have developed serology antibody ELISA testing for COVID-19 at our CLIA lab in Pittsburgh, PA and have launched 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 ~~accredited~~now offering this test to employees and our customers. Our serological, or antibody test measures 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 ~~CAP. Our customers consist mostly of biotechnology~~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 language within test reports cautioning that negative results do not rule out COVID-19 infection and ~~pharmaceutical companies as well as major Contract Research Organizations and specialty contractors.~~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.
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INTERPACE BIOSCIENCES, INC

Additional Reimbursement Coverage During ~~2019~~2020

Reimbursement progress is key for ~~any molecular diagnostic company.~~us. We have been successful to date in expanding both the scope and amount of product reimbursement for our clinical services in 2020. Examples of our ~~products in 2019. Specifically, the most significant~~ progress ~~we have made regarding payers to date in 2019 is as follows:~~include:

● In ~~January 2019,~~February 2020, we announced ~~that we had entered into~~ an ~~Agreement with the University of Maryland Medical System (“UMMS”) to provide physicians’ access to ThyGeNEXT~~^®,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 ~~PancraGEN~~^®~~across~~clinical performance of the ~~UMMS network, which includes 4,000 affiliated physicians who provide primary~~test relative to other molecular tests in the market and ~~specialty care in more than 150 locations and at 14 hospitals.~~their respective prices.
● ~~In April 2019, we announced that Medica, one of the largest health plans in the Midwest, extended coverage of both ThyGeNEXT~~^®~~and ThyraMIR~~^® ~~to its 1.3 million covered lives. Physicians across Medica’s entire network will now be able to utilize Interpace’s thyroid products.~~
● In ~~April 2019,~~March 2020, we announced ~~that we had received approval to launch ThyraMIR~~^® ~~diagnostic testing on formalin-fixed, paraffin-embedded (“FFPE”) tissue samples from thyroid nodules from the State~~an agreement with Blue Cross Blue Shield of ~~New York.~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
● ~~In June 2019, we announced that our~~Massachusetts under which ThyGeNEXT^®and ThyraMIR^® tests are now covered ~~by Independence Blue Cross (“Independence”), providing plan benefits coverage~~in-network services for ~~its members who meet established medical criteria for the tests. Independence covers nearly 2.5~~their more than 3 million members in ~~Philadelphia~~Massachusetts and ~~Southeastern Pennsylvania.~~across New England.
● In ~~July 2019,~~March 2020, we announced ~~that we reached~~ an agreement with ~~SelectHealth (a plan associated with Intermountain Healthcare) (“SelectHealth”) to provide our proprietary thyroid cancer assays,~~CareFirst Blue Cross Blue Shield that makes ThyGeNEXT^® and ThyraMIR^®~~, to SelectHealth’s~~tests covered in-network services for their more than ~~850,000~~3.3 million members in ~~Utah~~Maryland, Washington, D.C., and ~~Idaho.~~Northern Virginia.

● In ~~July 2019,~~March 2020, we announced we had entered into a contract with Premera Blue ~~Shield of California,~~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 ~~not-for-profit independent member of~~laboratory benefit manager representing numerous health plans. This agreement provides in-network status for our products to approximately 5.8 million lives covered by the following health plans: Blue Cross Blue Shield ~~Association~~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 ~~4 million lives.~~more than 576,000 members.

●
In ~~July 2019,~~May 2020, we ~~announced that we contracted~~executed a contract with Blue Cross Blue Shield of ~~Michigan, a not-for-profit independent member of the Blue Cross Blue Shield Association, for coverage of our thyroid tests. The contract makes the ThyGeNEXT~~^®~~and ThyraMIR~~^®~~tests both covered services as well as in-network services for their total of 6 million members.~~
● In September 2019, we announced that we contracted with 3 independent Blue Cross Blue Shield (BCBS) plans totaling nearly 5 million covered lives across Alabama, Arkansas, and Arizona. These members of the BCBS Association are the largest payers in their respective states and each affiliate’s customers now have access to both the ThyGeNEXT® and ThyraMIR® tests for assessing indeterminate thyroid biopsies on an in-network basis.Wyoming.

~~DESCRIPTION OF REPORTING SEGMENTS~~
~~Since December 22, 2015, the Company has reported its operations as one segment, molecular diagnostics and bioinformatics. On~~In July 15, 2019 the Company acquired the BioPharma business of Cancer Genetics, Inc. and still operates under one segment which is the business of developing and selling diagnostic tests and biopharma services. The Company’s reporting segment structure is currently reflective2020, we announced that our peer reviewed manuscript, describing results from a seminal clinical validation study of the ~~way both~~combination of ThyGeNEXT^® and ThyraMIR^®, was accepted for publication in the ~~Company’s management~~highly respected journal Diagnostic Cytopathology and ~~chief operating decision maker view the business, make operating decisions and assess performance. Further, this structure allows investors to understand Company performance, assess prospects~~also accepted as a podium presentation for the ~~future, evaluate cash flows, and make informed decisions about the Company.~~American Society of Cytopathology (ASC) Annual Meeting. On August 7, 2020 this publication was made available on-line.

Revenue Recognition

~~The Company’s primary source of revenue is generated~~Clinical services derive its revenues from the performance of its proprietary ~~molecular diagnostic tests for its clinical customers and its DNA-based testing services in support of clinical trials for its BioPharma customers. The Company’s~~assays or tests. Our performance obligation is fulfilled upon completion, review and release of test results ~~and subsequent billing~~ 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 ~~hospital or contracting customer.~~
~~Clinical (Interpace Diagnostics) Performance Obligations and Revenue Recognitio~~n
~~Under ASC 606,~~category for each proprietary test offered. To the ~~Company recognizes revenue for billings less contractual allowances and estimated uncollectable amounts~~extent that the transaction price includes variable consideration, for all third party ~~payer groups~~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 ~~the accrual basis based upon a thorough analysis of~~ historical receipts. The net amount derived and used for revenue recognition is referred to as the NRV for the particular test and payer group from which reimbursement is received. This derived NRV is evaluated quarterly or as needed and then applied to future periods until recalculated.experience.

~~BioPharma (Interpace Pharma Solutions) Performance Obligations~~The ultimate amounts received from the third-party and ~~Revenue Recognitions~~
~~With~~direct-bill payers and related estimated reimbursement rates are regularly reviewed and we adjust the ~~acquisition~~NRV’s and related contractual allowances accordingly. If actual collections and related NRV’s vary significantly from our estimates, we adjust the estimates of ~~our BioPharma business,~~contractual allowances, which consists of customized solutions for patient stratification and treatment selection through an extensive suite of DNA-based testing services. The services are billed to pharmaceutical and biotechnology companies.affects net revenue in the period such variances become known.

~~Performance~~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. ~~Project~~
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.

~~Deferred revenue from BioPharma contracts is recorded at fair value and represents payments received in advance of services rendered.~~
Cost of Revenue

Cost of ~~Revenue for services~~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~~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.

~~Other Matters~~
41

The acquisition of the net assets of the BioPharma business and the acquisition funding provided by Ampersand Capital Partners were important milestones for the Company during the quarter. Subsequent to September 30^th, we closed on the $13 million second tranche acquisition financing, settled the Net Worth Adjustment obligations with Cancer Genetics, and provided additional working capital. Our primary diagnostic assays volume grew to 16% for the quarter and 22% year to date over the prior year. We did have an adjustment of approximately $1.8 million to reduce our estimate of amounts to be collected related principally to the transition to a new billing contractor and we have taken corrective action steps to resolve. It should be further noted that, in accordance with ASC 606 implemented in 2018 this adjustment did directly reduce revenues for the quarter and year to date.

INTERPACE BIOSCIENCES, ~~INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~INC

CONDENSED CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statements of operations ~~data.~~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 ~~September~~June 30, ~~2019~~2020 Compared to the Quarter Ended ~~September~~June 30, ~~2018 (in~~2019 (unaudited, in thousands)

As Restated
Three Months Ended September 30, Three Months Ended June 30,
2019 2019 2018 2018 2020 2020 2019 2019

Revenue, net $ 7,725 100.0 % $ 5,753 100.0 % $ 5,446 100.0 % $ 6,270 100.0 %
Cost of revenue 4,835 62.6 % 2,763 48.0 % 3,850 70.7 % 3,031 48.3 %
Gross profit 2,890 37.4 % 2,990 52.0 % 1,596 29.3 % 3,239 51.7 %
Operating expenses:
Sales and marketing 2,757 35.7 % 2,048 35.6 % 1,596 29.3 % 2,959 47.2 %
Research and development 857 11.1 % 510 8.9 % 550 10.1 % 647 10.3 %
General and administrative 4,492 58.1 % 2,084 36.2 % 4,107 75.4 % 2,788 44.5 %
Acquisition related expense 838 10.8 % - 0.0 % - 0.0 % 1,295 20.7 %
Acquisition related amortization expense 995 12.9 % 813 14.1 %
Acquisition amortization expense 1,115 20.5 % 897 14.3 %
Total operating expenses 9,939 128.7 % 5,455 94.8 % 7,368 135.3 % 8,586 136.9 %

Operating loss (7,049 ) -91.2 % (2,465 ) -42.8 % (5,772 ) -106.0 % (5,347 ) -85.3 %
Accretion expense (111 ) -1.4 % (248 ) -4.3 %
Other expense, net (135 ) -1.7 % (288 ) -5.0 %
Interest accretion (167 ) -3.1 % (91 ) -1.5 %
Other income (expense), net 438 8.0 % 74 1.2 %
Loss from continuing operations before tax (7,295 ) -94.4 % (3,001 ) -52.2 % (5,501 ) -101.0 % (5,364 ) -85.6 %
Provision for income taxes 9 0.1 % 7 0.1 % 13 0.2 % 5 0.1 %
Loss from continuing operations (7,304 ) -94.6 % (3,008 ) -52.3 % (5,514 ) -101.2 % (5,369 ) -85.6 %

Loss from discontinued operations, net of tax (58 ) -0.8 % (34 ) -0.6 % (66 ) -1.2 % 65 1.0 %

Net loss $ (7,362 ) -95.3 % $ (3,042 ) -52.9 % $ (5,580 ) -102.5 % $ (5,304 ) -84.6 %

Revenue, net

Consolidated revenue, net for the three months ended ~~September~~June 30, ~~2019 increased~~2020 decreased by ~~$2.0~~$0.8 million, or ~~34%~~13%, to ~~$7.7~~$5.4 million, compared to ~~$5.8~~$6.3 million for the three months ended ~~September~~June 30, ~~2018.~~2019. This ~~increase~~decrease was ~~principally~~ attributable to ~~our acquisition of the BioPharma business~~lower than expected clinical service volume in the ~~third quarter.~~second quarter, 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 ~~September~~June 30, ~~2019~~2020 was ~~$4.8~~$3.9 million, as compared to ~~$2.8~~$3.0 million for the three months ended ~~September~~June 30, ~~2018.~~2019. As a percentage of revenue, cost of revenue increased to ~~63%~~71% for the three months ended ~~September~~June 30, ~~2019~~2020 as compared to 48% in the comparable same period in ~~2018.~~2019. This increase as a percentage of revenue can be primarily attributed to the lower margins associated with our pharma services and the ~~BioPharma business.~~reduction in revenue from clinical services. We were able to apply a portion of the HHS grant received in the second quarter (approximately $0.2 million) towards qualified second quarter expenses within cost of revenue. These expenses related to lab equipment and supplies purchased to prevent, prepare for, and respond to coronavirus, including development of coronavirus and serology tests.
42
INTERPACE BIOSCIENCES, INC

Gross profit

Consolidated gross profit was approximately ~~$2.9~~$1.6 million for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~$3.0~~$3.2 million for the three months ended ~~September~~June 30, ~~2018.~~2019. The gross profit percentage decreased from 52% in the ~~third~~second quarter of ~~2018~~2019 to ~~37%~~29% for the ~~third~~second quarter of ~~2019.~~2020. This decrease can be attributed to the lower margins associated with ~~BioPharma business~~our pharma services as mentioned above, and the reduction in ~~the estimate of amounts to be collected resulting~~net revenue from our ~~transition to a new billing and collections contractor.~~clinical services.

Sales and marketing expense

Sales and marketing expense was ~~$2.8~~$1.6 million for the three months ended ~~September~~June 30, ~~2019,~~2020, or ~~36%~~29% as a percentage of net revenue. For the three months ended ~~September~~June 30, ~~2018,~~2019, sales and marketing expense was ~~$2.0~~$3.0 million, or ~~36%~~47% as a percentage of net revenue. The ~~increase~~decrease in sales and marketing expense primarily reflects ~~an increase in employee and consulting costs of $0.3 million, as we have expanded~~ the ~~size of our salesforce and increased our contracting and marketing activities which are supporting our growth, and the addition~~slowdown of sales ~~and marketing costs associated with~~activity for clinical services due to the ~~BioPharma business.~~
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~pandemic.

Research and development

Research and development expense was ~~$0.9~~$0.6 million for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~$0.5~~$0.6 million for the three months ended ~~September~~June 30, ~~2018. The increase was primarily attributable to costs associated with the acquired BioPharma business.~~2019. As a percentage of revenue, research and development expense ~~increased to 11%, up from 9% in the comparable prior year quarter.~~remained at approximately 10% for both periods.

General and administrative

General and administrative expense for the three months ended ~~September~~June 30, ~~2019~~2020 was ~~$4.5~~$4.1 million as compared to ~~$2.1~~$2.8 million for the three months ended ~~September~~June 30, ~~2018.~~2019. The increase was primarily attributable to costs associated with the acquired ~~BioPharma~~pharma services business.

Acquisition related expense

During the three months ended ~~September~~June 30, 2019 we incurred approximately ~~$0.8~~$1.3 million in expenses related to ~~our~~the acquisition of our pharma services in 2019. We did not incur any acquisition related expenses during the ~~BioPharma Business on July 15, 2019.~~three months ended June 30, 2020.

Acquisition ~~related~~ amortization expense

During the three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, we recorded amortization expense of ~~$1.0~~$1.1 million and ~~$0.8~~$0.9 million, respectively, ~~in both periods~~ which is related to intangible assets associated with prior acquisitions. The increase is related to our acquisition of ~~the BioPharma Business mentioned above~~our pharma services in 2019 and the associated intangible assets.

Operating loss

Operating loss from continuing operations was ~~$(7.0)~~$5.8 million for the three months ended ~~September~~June 30, ~~2019~~2020 as compared to ~~$(2.5)~~$5.3 million for the three months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase can be attributed to~~operating loss for the ~~increase in general and administrative and sales and marketing expense discussed above as well as the $0.8~~three months ended June 30, 2019 also included $1.3 million in acquisition related ~~expenses incurred in the quarter.~~expenses.

Provision for income taxes

Income tax expense was approximately ~~$9,000~~$13,000 for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~$7,000~~$5,000 for the three months ended ~~September~~June 30, ~~2018.~~2019. Income tax expense for both periods was primarily driven by minimum state and local taxes.
43
INTERPACE BIOSCIENCES, INC
Loss from discontinued operations, net of tax
We had a loss from discontinued operations of approximately $0.06 million for the three months ended June 30, 2020 and income from discontinued operations of approximately $0.06 million for the three months ended June 30, 2019.
Condensed Consolidated Results of Continuing Operations for the Six-Months Ended June 30, 2020 Compared to the Six-Months Ended June 30, 2019 (unaudited, in thousands)
As Restated
Six Months Ended June 30,
2020 2020 2019 2019

Revenue, net $ 14,504 100.0 % $ 12,280 100.0 %
Cost of revenue 9,963 68.7 % 5,654 46.0 %
Gross profit 4,541 31.3 % 6,626 54.0 %
Operating expenses:
Sales and marketing 4,077 28.1 % 5,369 43.7 %
Research and development 1,360 9.4 % 1,175 9.6 %
General and administrative 8,999 62.0 % 5,122 41.7 %
Acquisition related expense - 0.0 % 1,696 13.8 %
Acquisition amortization expense 2,230 15.4 % 1,794 14.6 %
Total operating expenses 16,666 114.9 % 15,156 123.4 %

Operating loss (12,125 ) -83.6 % (8,530 ) -69.5 %
Interest accretion (276 ) -1.9 % (220 ) -1.8 %
Other income (expense), net 485 3.3 % 123 1.0 %
Loss from continuing operations before tax (11,916 ) -82.2 % (8,627 ) -70.3 %
Provision for income taxes 28 0.2 % 10 0.1 %
Loss from continuing operations (11,944 ) -82.3 % (8,637 ) -70.3 %

Loss from discontinued operations, net of tax (130 ) -0.9 % 7 0.1 %

Net loss $ (12,074 ) -83.2 % $ (8,630 ) -70.3 %
Revenue, net
Consolidated revenue, net for the six months ended June 30, 2020 increased by $2.2 million, or 18%, to $14.5 million, compared to $12.3 million for the six months ended June 30, 2019. This increase was principally attributable to our acquisition of our pharma services in 2019. Our six months revenue has been impacted by lower than expected clinical service volume from March through June 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 six months ended June 30, 2020 was $10.0 million, as compared to $5.6 million for the six months ended June 30, 2019. As a percentage of revenue, cost of revenue increased to 68% for the six months ended June 30, 2020 as compared to 46% in the comparable same period in 2019. This increase as a percentage of revenue can be primarily attributed to the lower margins associated with our pharma services and the decrease in revenue within clinical services.
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INTERPACE BIOSCIENCES, INC
Gross profit
Consolidated gross profit was approximately $4.5 million for the six months ended June 30, 2020 and $6.6 million for the six months ended June 30, 2019. The gross profit percentage decreased from 54% in the first six months of 2019 to 31% for the first six months of 2020. This decrease can be attributed to the lower margins associated with our pharma services, as mentioned above, and the reduction in net revenue from clinical services.
Sales and marketing expense
Sales and marketing expense was $4.1 million for the six months ended June 30, 2020, or 28% as a percentage of net revenue. For the six months ended June 30, 2019, sales and marketing expense was $5.4 million, or 44% as a percentage of net revenue. The decrease in sales and marketing expense primarily reflects the slowdown of sales activity for clinical services due to the pandemic.
Research and development
Research and development expense was $1.4 million for the six months ended June 30, 2020 and $1.2 million for the six months ended June 30, 2019. The increase was primarily attributable to costs associated with the acquired pharma services. As a percentage of revenue, research and development expense was approximately the same in both periods.
General and administrative
General and administrative expense for the six months ended June 30, 2020 was $9.0 million as compared to $5.3 million for the six months ended June 30, 2019. The increase was primarily attributable to costs associated with the acquired pharma services.
Acquisition related expense
During the six months ended June 30, 2019 we incurred approximately $1.7 million in expenses related to the acquisition of our pharma services in 2019. We did not incur any acquisition related expenses during the three months ended June 30, 2020.
Acquisition amortization expense
During the six months ended June 30, 2020 and June 30, 2019, we recorded amortization expense of $2.2 million and $1.8 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 $12.1 million for the six months ended June 30, 2020 as compared to $8.5 million for the six months ended June 30, 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 $28,000 for the six months ended June 30, 2020 and $10,000 for the six months ended June 30, 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 ~~$(0.06)~~approximately $0.1 million for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~a loss~~we had income from discontinued operations of ~~$(0.03)~~approximately $0.01 million for the ~~three~~six months ended ~~September~~June 30, ~~2018.~~2019.

~~INTERPACE BIOSICENCES, INC (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
45

~~Condensed Consolidated Results of Continuing Operations for the Nine Months Ended September 30, 2019 Compared to the Nine Months Ended September 30, 2018 (in thousands)~~

Nine Months Ended September 30,
2019 2019 2018 2018

Revenue, net $ 20,005 100.0 % $ 16,062 100.0 %
Cost of revenue 10,489 52.4 % 7,590 47.3 %
Gross profit 9,516 47.6 % 8,472 52.7 %
Operating expenses:
Sales and marketing 8,127 40.6 % 6,135 38.2 %
Research and development 2,032 10.2 % 1,528 9.5 %
General and administrative 9,790 48.9 % 5,981 37.2 %
Acquisition related expense 2,534 12.7 % - 0.0 %
Acquisition related amortization expense 2,621 13.1 % 2,439 15.2 %
Total operating expenses 25,104 125.5 % 16,083 100.1 %

Operating loss (15,588 ) -77.9 % (7,611 ) -47.4 %
Accretion expense (331 ) -1.7 % (248 ) -1.5 %
Other expense, net (12 ) -0.1 % (143 ) -0.9 %
Loss from continuing operations before tax (15,931 ) -79.6 % (8,002 ) -49.8 %
Provision for income taxes 19 0.1 % 21 0.1 %
Loss from continuing operations (15,950 ) -79.7 % (8,023 ) -50.0 %

Loss from discontinued operations, net of tax (51 ) -0.3 % (129 ) -0.8 %

Net loss $ (16,001 ) -80.0 % $ (8,152 ) -50.8 %
~~Revenue, net~~
Consolidated revenue, net for the nine months ended September 30, 2019 increased by $3.9 million, or 25%, to $20.0 million, compared to $16.1 million for the nine months ended September 30, 2018. This increase was principally attributable to increased test volume in our diagnostic business and revenue from our newly acquired BioPharma business.
~~Cost of revenue~~
Consolidated cost of revenue for the nine months ended September 30, 2019 increased $2.9 million or 38%. This increase was in line with the increase in revenue discussed above related to increased test volume and the BioPharma business.
~~Gross profit~~
Consolidated gross profit for the nine months ended September 30, 2019 increased $1.0 million, or 12%, to $9.5 million, as compared to $8.5 million for the nine months ended September 30, 2018. The gross profit percentage was approximately 48% for the nine months ended September 30, 2019 as compared to 53% in the comparable prior year period. The decrease in gross profit percentage can be attributed to the lower margins associated with the BioPharma business and the reduction in the estimate of amounts to be collected resulting from our transition to a new billing and collections contractor.
~~Sales and marketing expense~~
Sales and marketing expense was $8.1 million for the nine months ended September 30, 2019, or 41% as a percentage of net revenue. For the nine months ended September 30, 2018, sales and marketing expense was $6.1 million, or 38% as a percentage of net revenue. The increase in sales and marketing expense primarily reflects an increase in employee and consulting costs of $1.3 million, as we expanded the size of our salesforce and have increased our contracting and marketing activities which are supporting our growth.
INTERPACE BIOSCIENCES, ~~INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~INC
~~Research and development~~
~~Research and development expense totaled approximately $2.0 million for the nine months ended September 30, 2019 and $1.5 million for the nine months ended September 30, 2018.~~
~~General and administrative~~
General and administrative expense for the nine months ended September 30, 2019 was $9.8 million as compared to $6.0 million for the nine months ended September 30, 2018. This increase was primarily related to certain non-cash charges including bad debt expense from the ASC 606 conversion and the reversal of a contingent claim in the prior year as well as general and administrative costs associated with the BioPharma business discussed previously.
~~Acquisition related expense~~
~~During the nine months ended September 30, 2019 we incurred approximately $2.5 million in expenses related to our acquisition of the BioPharma business on July 15, 2019.~~
~~Acquisition related amortization expense~~
During the nine months ended September 30, 2019 and September 30, 2018, we recorded amortization expense of approximately $2.6 million and $2.4 million, respectively, which is related to intangible assets associated with prior acquisitions.
~~Operating loss~~
Operating loss from continuing operations was $(15.6) million for the nine months ended September 30, 2019 as compared to $(7.6) million for the nine months ended September 30, 2018. The increase can be attributed to the increase in general and administrative expense and sales and marketing expense discussed above as well as the $2.5 million in acquisition related expenses incurred during the nine months ended September 30, 2019.
~~Provision for income taxes~~
Income tax expense was approximately $19,000 for the nine months ended September 30, 2019 and $21,000 for the nine months ended September 30, 2018. 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 $(0.1) million for the nine months ended September 30, 2019 and a loss from discontinued operations of $(0.1) million for the nine months ended September 30, 2018.

LIQUIDITY AND CAPITAL RESOURCES

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we had an operating loss of ~~$(15.6)~~$12.1 million. As of ~~September~~June 30, ~~2019,~~2020, we had cash and cash equivalents of ~~$2.4 million, net accounts receivable of $14.7~~$15.1 million, total current assets of ~~$20.6~~$26.1 million and current liabilities of ~~$17.3~~$16.1 million. As of September 30, 2020 we had approximately $5.2 million of cash on hand due principally to additional losses incurred through September 2020, slower collections due to the pandemic, as well as repayment of approximately $3.4 million to SVB under our line of credit, which we are currently unable to borrow under.

During the ~~nine~~six months ended ~~September~~June 30, 2020, net cash used in operating activities was $6.7 million. The main component of cash used in operating activities was our net loss of $12.1 million which was partially offset by a decrease in accounts receivable of $2.7 million. During the six months ended June 30, 2019, net cash used in operating activities was ~~$12.6~~$7.8 million, all but $0.03 million of which was used in continuing operations. The main component of cash used in operating activities during the ~~nine~~six months ended ~~September~~June 30, 2019 was the net loss of ~~$(16.0)~~$8.6 million. During the nine months ended September 30, 2018, net cash used in operating activities was $6.8 million, of which $6.4 million was used in continuing operations and $0.4 million was used in discontinued operations. The main component of cash used in operating activities during the nine months ended September 30, 2018 was the net loss of $8.2 million.
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~
~~For the nine months ended September 30, 2019, there was cash used in investing activities of $13.9 million, $13.8 million of which was used in our acquisition of the BioPharma business.~~

For the ~~nine~~six months ended ~~September~~June 30, 2020, there was cash provided from financing activities of $20.4 million, $19.5 million which resulted from the issuance of Preferred Stock in January 2020, $0.4 million from sales of common stock, and $0.4 million of borrowed funds under our Revolving Line of Credit with SVB. For the six months ended June 30, 2019, there was cash provided from financing activities of ~~$22.8 million,~~ $6.0 million which resulted from the issuance of ~~Common Stock~~common stock in our underwritten public offering completed in January ~~2019, $13.1 million which resulted from the issuance of Preferred Stock in July 2019, and $3.7 million from the drawing down of funds under our revolving line of credit.~~2019.

~~Additionally, on~~In September ~~20,~~ 2019, ~~the Company~~we entered into the Equity Distribution Agreement ~~(the “Agreement”)~~ with Oppenheimer & Co. Inc., as sales agent (the “Agent”), pursuant to which ~~the Company~~we may, from time to time, issue and sell shares of ~~its~~our common stock in an aggregate offering price of up to $4.8 million through the Agent. ~~Under~~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. In the event our common stock is delisted by Nasdaq due to our failure to meet minimum stockholders’ equity requirements, we may no longer be eligible to sell under the Agreement as well. See Note 19, Subsequent Events.
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 notes to the financial statements for more detail.
As of June 30, 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 (HHS). The CMS advance will be offset against future Medicare billings of the Company, and we applied the HHS grant in its entirety towards qualified second quarter expenses. These expenses related to lab equipment and supplies purchased to prevent, prepare for, and respond to coronavirus, including development of coronavirus and serology tests, as well as expenses that would have been covered by revenue lost to coronavirus during the second quarter.
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.
As of July 31, 2020, the Company was in violation of a financial covenant under the SVB Loan Agreement. Additionally, due to the untimely filing of this Report with the SEC subsequent to the filing deadline, the Company was in violation of the SVB Loan Agreement and during September 2020, the Company paid down the outstanding Revolving Line of Credit balance of $3.4 million in full. Additionally during September 2020, the Company transferred $0.35 million into a restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit supporting two of its facilities. Prior to September 2020, the collateral for the letters of credit was accounted for as a reduction in the availability under the Revolving Line of Credit.
While the Company has received a waiver of default from SVB and is in compliance with the terms of the SVB Loan Agreement ~~the Agent may sell the Shares at market prices by any method that is deemed to be an “at the market offering”, i.e., ATM, as defined in Rule 415 under the Securities Act, as amended.~~
Further, under the terms of the Financing Agreement with Ampersand, and as a result of the stockholder approval required by the Nasdaq Listing Rules and the satisfaction of customary conditions, the second tranche of funding of approximately $13.0 million of Preferred Stock was received in October 2019.
As of September 30, 2019, the Company had drawn $3.75 million of the $4.0 million of available funds under its Revolving Line with SVB. The funds drawn were used principally in conjunction with the acquisition of the BioPharma business of CGI and have been paid off as of the ~~report date.~~date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit. The Company expects to reinstate the Revolving Line of Credit in the near term, and is in negotiations with SVB to expand the borrowing base from $4.0 million to $8.0 million. This expansion of the Revolving Line of Credit requires approval of the Company’s preferred shareholders and the Company cannot provide assurance that such expansion will be successful.

We do not expect to generate positive cash flows from operations for the year ending December 31, 2019. We intend to meet our ongoing capital needs by using proceeds under the Securities Purchase Agreement, additional borrowings under the line of credit resulting from the additional accounts receivable acquired in the BioPharma acquisition, selling shares under the Agreement, revenue growth2020 and margin improvement, collecting accounts receivable, containing costs as well as exploring other financing options. Management believes that the Company has sufficient cash on hand and available to sustain operations through at least November 30, 2020. However, there is no guarantee that additional capital can be raised to fund our future operations. At this time, we plan to meet our ongoing capital needs by using our available cash, proceeds under the Securities Purchase and Exchange Agreement, our Revolving Line of Credit once reinstated and additional borrowings that may become available if an agreement can be reached with SVB to amend the SVB Loan Agreement and increase the existing 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 both SVB and the Company’s preferred shareholders, which cannot be assured), revenue growth and margin improvement, collection of accounts receivable, and containment of costs, as well as exploring other financing options. As formerly noted, the agreement of SVB to reinstate the facility and to amend the SVB Loan Agreement cannot be assured. The Company’s 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 expenses and related costs, and leasehold improvements. However, in the event the Company’s common stock is delisted from Nasdaq due to its failure to meet minimum stockholders’ equity requirements, the Company’s ability to raise additional capital may be materially adversely impacted. Moreover, the decrease in the Company’s stockholders’ equity resulting from the impairment and amortization expense reflected in this Form 10-Q/A will make it more difficult for the Company to comply with Nasdaq minimum stockholders’ equity requirements. There is no assurance we will be successful in meeting our capital requirements prior to becoming cash flow positive. These liquidity factors, among others, have raised substantial doubts about our ability to continue as a going concern
46
INTERPACE BIOSCIENCES, INC

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~~ensure that billing rates reflect increases in costs due to inflation.

Off-Balance Sheet Arrangements

None.

Item 3. — Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk

As a smaller reporting company, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
37
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

Item 4. Controls and Procedures

Evaluation of ~~disclosure controls~~Disclosure Controls and ~~procedures~~Procedures

~~Our~~As of the end of the period covered by this report, the Company’s management, with the participation of ~~our~~the Chief Executive Officer (“CEO”) and Chief Financial Officer ~~evaluated~~(“CFO”), carried out an evaluation of the effectiveness of ~~our~~the Company’s disclosure controls and procedures ~~pursuant to Rule 13a-15 under~~(as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange ~~Act~~Act). Based upon that evaluation, the then CEO and CFO concluded at that time that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives including that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In addition, management is required to apply its judgment in evaluating the benefits of possible disclosure controls and procedures relative to their costs to implement and maintain.report.

~~Based on~~Subsequent to this evaluation and in light of the ~~evaluation~~restatement of the Company’s condensed financial statements for the quarters ended June 30, 2020 and 2019 relating to the amortization and the impairment of certain intangible assets referenced in Note 1, Restatement of Previously Issued Consolidated Financial Statements, the Company’s management, with the participation of the CEO and the CFO, has reevaluated the Company’s disclosure controls and procedures as of June 30, 2020, including whether the errors identified were the result of a material weakness in the Company’s internal control over financial reporting. Based on this assessment, management has identified a material weakness in the Company’s internal control over financial reporting related to properly identifying all the events that ~~term is defined in Rule 13a-15(e) under~~could trigger asset impairment. The Company did not properly amend policies and procedures associated with its valuation process for asset impairment, specifically for intangible assets, and as a result failed to develop appropriate control activities to adequately respond to the ~~Securities Exchange Act of 1934, as amended,~~triggering events identified. As a result, the ~~Chief Executive Officer of the Company~~CEO and ~~the Chief Financial Officer of the Company have~~CFO concluded that the ~~Company’s~~ disclosure controls and procedures ~~are~~were not effective as of ~~September~~June 30, ~~2019.~~2020 as a result of this material weakness.
Remediation Plan - The Company plans to amend its control activities designed to mitigate the significant risks identified, including updating its policies and procedures regarding the recognition of asset impairments, specifically to review the procedures identifying and considering all outside triggering events that can cause such impairments. The Company believes implementation of these processes and appropriate testing of their effectiveness will remediate this material weakness.

Reference should be made to our Form 10-K for additional information regarding discussion of the effectiveness of the Company’s controls and procedures.

Changes in ~~internal controls~~Internal Controls

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

47
INTERPACE BIOSCIENCES, INC
PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~“Item 3- Legal Proceedings” and Note 10,~~~~Commitments and Contingencies~~~~, to the Consolidated Financial Statements of our Form 10-K, include a discussion of our legal proceedings, as does Note 8,~~~~Commitments and Contingencies~~, to the condensed consolidated financial statements furnished herewith. During the fiscal quarter ended September 30, 2019, there have been no material changes from the proceedings disclosed in our Form 10-K.None.

Item 1A. Risk Factors.

Not applicable as we are a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior ~~Securities.~~Securities

None.

Item 4. Mine Safety Disclosures

None.
~~INTERPACE BIOSCIENCES, INC. (formerly known as INTERPACE DIAGNOSTICS GROUP, INC.)~~

Item 5. Other ~~Information.~~Information

None.
48
INTERPACE BIOSCIENCES, INC

Item 6. Exhibits

Exhibit No. Description

3.1**10.1* ~~Conformed version of Certificate of Incorporation of~~Support Agreement, dated April 7, 2020, by and between Ampersand 2018 Limited Partnership and Interpace Biosciences, Inc.~~, as amended by the Certificate of Amendment filed on November 14, 2019.~~

~~3.2~~10.2* ~~Amended~~Support Agreement, dated April 2, 2020, by and ~~Restated Bylaws~~between 1315 Capital II, L.P. and Interpace Biosciences, Inc.
10.3* Termination Agreement, dated July 9, 2020, by and between Ampersand 2018 Limited Partnership and Interpace Biosciences, Inc.
10.4# Amendment to the Interpace Biosciences, Inc. 2019 Equity Incentive Plan, incorporated by reference to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on June 26, 2020.
10.5 Eleventh Amendment to Lease, effective as of June 1, 2020, by and between Southport Business Park Limited Partnership and Interpace ~~Biosciences,~~Pharma Solutions, Inc., incorporated by reference to ~~the designated exhibit~~Exhibit 10.1 of the Company’s Current Report on Form 8-K, ~~dated November 12, 2019,~~ filed with the ~~Commission~~SEC on ~~November 14, 2019.~~June 9, 2020.

4.1**10.6* ~~Interpace Biosciences, Inc. 2019 Equity Incentive Plan..~~
4.2** ~~Interpace Biosciences, Inc. Employee Stock Purchase Plan.~~
4.3** ~~Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Interpace Biosciences, Inc. 2019 Equity Incentive Plan.~~
4.4** ~~Form of Stock Option Grant Notice and Stock Option Agreement under the Interpace Biosciences, Inc. 2019 Equity Incentive Plan.~~
~~10.2~~ ~~Equity Distribution~~First Loan Modification Agreement, dated ~~September 20,~~March 18, 2019, by and ~~between~~among Silicon Valley Bank, Interpace Diagnostics Group, Inc. ~~(now known as~~(n/k/a Interpace Biosciences, Inc.), Interpace Diagnostics Corporation, and ~~Oppenheimer & Co. Inc., incorporated by reference to the designated exhibit of the Company’s Current Report on Form 8-K, dated September 20, 2019 filed with the Commission on September 20, 2019.~~Interpace Diagnostics, LLC.

31.1** Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2** Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1+ Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

32.2+ Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

101
The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended ~~September~~June 30, ~~2019~~2020 formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

* This exhibit is being filed pursuant to Item 601(b)(3)(i) of Regulation S-K which requires a conformed version of our charter reflecting all amendments in one document. The exhibit reflects our Certificate of Incorporation, as amended, as filed with the Delaware Secretary of State on November 14, 2018, revised for the Certificate of Amendment filed on November 13, 2019.
** Filed herewith.
+ Exhibits 32.1 and 32.2 are being furnished herewith and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference to any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise stated in any such filing.
* Filed herewith.
# Denotes compensatory plan, compensation arrangement or management contract.
49
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November 14, 2019~~January 19, 2021
Interpace Biosciences, Inc.
(Registrant)

/s/ ~~Jack E. Stover~~Thomas W. Burnell
~~Jack E. Stover~~
Thomas W. Burnell
President and Chief Executive Officer
(Principal Executive Officer)

Date: ~~November 14, 2019~~January 19, 2021
/s/ ~~James Early~~Fred Knechtel
~~James Early~~Fred Knechtel
Chief Financial Officer
(Principal Financial Officer)

Date: ~~November 14, 2019~~January 19, 2021
/s/ Thomas Freeburg
Thomas Freeburg
Chief Accounting Officer
(Principal Accounting Officer)
50

Cash		$	13,829
Subordinated note payable			6,822
Total consideration		$	20,651

Assets acquired
Accounts receivable		$	3,731
Accrued revenue			289
Lab supplies			877
Prepaid expenses			266
Property and equipment			6,412
Operating lease assets			2,187
Acquired identifiable intangible assets:
Trademarks and trade name	1,600
Customer relationships	5,700
Total acquired identifiable intangible assets			7,300
Goodwill			8,273
Total assets acquired			29,335

Liabilities assumed
Accounts payable			(4,535	)
Accrued liabilities			(435	)
Deferred revenue			(1,076	)
Operating lease liabilities			(2,187	)
Finance lease liabilities			(451	)
Total liabilities assumed			(8,684	)
Net assets acquired		$	20,651

		Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019				Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
Revenue		$	8,010			$	27,648			$	9,741			$	27,551

	Operating Leases		Financing Leases
2019 (remaining)	$	412	$	90
2020		1,431		226
2021		1,258		120
2022		1,192		13
2023		344		-
Total minimum lease payments		4,637		449
Less: amount of lease payments representing effects of discounting		479		29
Present value of future minimum lease payments		4,158		420
Less: current obligations under leases		1,367		247
Long-term lease obligations	$	2,791	$	173

Description	Classification	Exercise Price		Expiration Date	Warrants Issued		Warrants Exercised			Warrants Cancelled/ Expired			Balance December 31, 2018		Balance September 30, 2019

Private Placement Warrants, issued January 25, 2017	Equity	$	4.69	June 2022		855,000		-			-			855,000		855,000
RedPath Warrants,issued March 22, 2017	Equity	$	4.69	September 2022		100,000		-			-			100,000		100,000
Underwriters Warrants,issued June 21, 2017	Liability	$	1.32	December 2022		575,000		-			(40,000	)		535,000		535,000
Base & Overallotment Warrants,issued June 21, 2017	Equity	$	1.25	June 2022		14,375,000		(5,672,852	)		-			8,702,148		8,702,148
Vendor Warrants,issued August 6, 2017	Equity	$	1.25	August 2020		150,000		-			-			150,000		150,000
Warrants issued October 12, 2017	Equity	$	1.80	April 2022		3,200,000		-			-			3,200,000		3,200,000
Underwriters Warrants,issued January 25, 2019	Equity	$	0.9375	January 2022		654,334		-			-			-		654,334

						19,909,334		(5,672,852	)		(40,000	)		13,542,148		14,196,482

	●	material adverse impact of Coronavirus (COVID-19) pandemic due to the slowdown in demand for our ~~stock price is volatile~~clinical services and ~~could be further affected by events not within our control,~~pharma services, a reduction in samples received and ~~an investment in our common stock could suffer a decline in value;~~

	●	~~dilution as a result of future equity issuances;~~

	●	stockholders must rely on appreciation of the value of our common stock for any return on their investment because we do not intend to declare cash dividends on our shares of common stock in the foreseeable future;testing volume and delayed third party collections and other factors;

	●	the ~~limited revenue generated from our business thus far and~~substantial doubt about our ability to ~~commercially leverage~~continue as a going concern due to our ~~bioinformatics data~~history of operating losses and ~~develop~~other liquidity factors, and the potential impact of being in default on our ~~pipeline products;~~debt and other agreements;

	●	~~whether we are able to successfully utilize~~ the limited revenue generated by our ~~commercial~~clinical services and ~~operating experience to sell our molecular diagnostic tests;~~pharma services;

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

	●	our ~~dependence on a concentrated selection of third-party payers~~limited operating history, the limited revenue generated from our business thus far and our fluctuating quarterly and annual revenue and operating results, including the lack of timeliness of their payments, payer volatility and subjective decision making as well as the impact of reporting subsequent accounts receivable adjustments related to our diagnostics business as a ~~reduction in current periods revenues;~~result of how we recognize revenue;

	●	our ability to ~~obtain broad adoption~~timely file our SEC reports the failure of ~~and ability to grow or continue to secure sufficient levels of reimbursement~~which could result in a ~~changing reimbursement environment, including obtaining clinical data to support sufficient levels~~delisting from Nasdaq, a breach of ~~reimbursement;~~our SVB Loan Agreement, and loss of eligibility for certain registration statements and exemptions for resales;

	●	the ~~demand~~failure to meet Nasdaq minimum stockholders’ equity requirement as of June 30, 2020 that we anticipate will shortly result in a letter from Nasdaq notifying us of the failure to meet this listing requirement and commencing procedures to potentially delist our common stock from Nasdaq, which delisting (if effected) could lead to a possible reduced stock price, potentially causing difficulty raising additional capital or debt, and also resulting in the loss of exemptions from various state securities laws;

	●	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 the company’s ability to meet its financial and other targets;

	●	we rely on third parties to process and transmit claims to payers for our ~~molecular diagnostic tests from physicians~~clinical services, and ~~patients;~~any delay, data loss, or other disruption in processing or transmitting could have an adverse effect on our revenue and financial condition;

	●	our ~~products continuing~~ability to ~~perform as expected;~~utilize our commercial and operating experience to sell our clinical and pharma services;

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

	●	our ability to obtain, retain and increase sufficient levels of third-party reimbursement for our clinical services tests in a changing and challenging reimbursement environment, including our current dependence on a concentrated number of third-party payers, 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 that can impact our ability to effectively bill and collect on claims for the sale of our clinical tests;

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

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

	●	the inability to finance our business on acceptable terms in the future 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 ability to comply with the SVB Loan Agreement financial covenants, other outstanding debt obligations, as well as our ability to utilize and borrow under the line, expand our working capital borrowing base to provide sufficient working capital financing during growth periods as well as our ability to get approval of our private equity investors in order to expand our line of credit borrowing base beyond $4.5 million;

	●	we have issued convertible preferred stock, and may issue additional convertible preferred stock in the future, that includes terms that may dilute our common stock;

	●	the concentration of our ownership in two private equity firms and their affiliates that 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”), as well as their corresponding designation rights for a majority of our directors and their right to approve certain Company actions, has resulted in these stockholders having a substantial influence on our business decisions;

	●	as billing for our clinical services tests is complex, we must dedicate substantial time and resources to its invoicing process and are continuously taking measures to improve the success of our accounts receivable collection activities;

	●	we depend upon a small number of payers for a significant portion of our clinical services and could experience a decline in revenue, as well as a compromise to our commercial success, should one or more of these payers stop, delay or decrease reimbursement payments;

	●	if payers do not provide reimbursement, rescind or modify their reimbursement policies or delay payments for our clinical services, we could experience a decline in revenue and our commercial success could be compromised;

	●	the development of new tests, products and related services and solutions typically requires a lengthy, complex and costly process and development activities could prove unsuccessful or yield uncertain results;

	●	the effect of potential adverse findings, including potential laboratory shut downs, resulting from regulatory audits and inspections of our facilities, as well as our billing and payment practices, and the impact such adverse findings could have on our continuing business operations;

	●	a decline in demand for our clinical services tests and/or our pharma services products;

	●	the failure of our products and services to perform as forecast;

	●	customer claims against us asserting inaccurate results from our clinical services tests or our pharma services products;

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

	●	our ~~inability to finance our business on acceptable terms in the future may limit our~~ ability to ~~develop~~obtain the data and ~~commercialize new molecular diagnostic solutions and technologies and grow our business;~~

	●	~~our ability~~samples that are needed to ~~comply with financial covenants under our current line of credit facility and comply with our debt obligations;~~

	●	~~our limited operating history;~~

	●	~~our ability~~perform the clinical studies that will enable us to ~~attract and retain qualified commercial representatives and other key employees and management personnel;~~

	●	~~our relationships with leading thought leaders and biopharmaceutical companies;~~

	●	~~our ability to continue to meet~~publish data demonstrating the ~~high compliance standards necessary to do business with biopharmaceutical companies~~

	●	~~our ability to expand our international footprint with consistency of service to be able to meet our biopharmaceutical customers’ demands~~

	●	~~demonstration of~~ clinical relevance and value ~~in utility studies;~~

	●	of our ~~ability~~clinical services tests, including to ~~continue to expand our sales and marketing forces;~~

	●	~~our reliance on our commercial sales forces for continued business expansion;~~

	●	~~fluctuating quarterly operating results;~~support sufficient levels of third-party reimbursement;

	●	our dependence on third parties for the supply of some of the materials used in our clinical and pharma services tests;

	●	our ability to successfully scale our operations, ~~testing capacity and processing technology;~~

	●	~~our ability to support demand~~which could potentially result in delays in providing test results or in shortages for our ~~molecular diagnostic tests and any of our future tests or solutions;~~

	●	our ability 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 obtain sufficient data and samples to cost effectively and timely perform sufficient clinical trials in order to support our current and future products;~~

	●	~~our ability to license rights to use technologies in order to commercialize new products;~~

	●	~~our involvement in current and future litigation against us or our ability to collect on judgements found in our favor;~~

	●	~~our ability to continuously develop our technology and to work to develop new solutions to keep pace with evolving standards of care;~~

	●	~~our ability to enter into additional clinical study collaborations with highly regarded institutions;~~

	●	~~the effect of seasonal results and adverse weather conditions, such as hurricanes and floods, on our business;~~

	●	our ability to increase or maintain sales of the tests and services in our Biopharma business or to successfully develop and commercialize other proprietary tests and services in our Biopharma business;

	●	~~whether pharmaceutical, biotech companies and clinical research organizations decide to use our Biopharma business~~ tests and services;

	●	our ability to ~~perform~~develop or acquire tests, services or solutions;

	●	the ability of our ~~Biopharma business~~clinical services ~~in accordance~~to enter into collaborations with ~~contractual and regulatory requirements, and ethical considerations;~~highly regarded institutions;

	●	the ~~effect~~potential adverse impact of current and future laws, licensing requirements and ~~regulation have on~~governmental regulations upon our business operations, including but not limited to the ~~changing~~evolving U.S. ~~Food~~regulatory environment related to laboratory developed tests (LDT’s), pricing of our tests and ~~Drug Administration environment as it relates to molecular diagnostics~~services and ~~biopharma services;~~patient access limitations;

	●	~~our~~if we fail to comply with Federal, State and foreign laboratory licensing requirements, we could lose the ability to ~~obtain and maintain sufficient laboratory space~~perform our tests resulting in disruptions to ~~meet~~ our ~~processing needs 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;~~business;

	●	~~legislative reform of~~legislation reforming the U.S. healthcare ~~system, including the effect of pricing provisions of the Protecting Access~~system;

	●	a failure to comply with Federal and State laws and regulations pertaining to our billing practices could result in our being excluded from participation in Medicare, ~~Act of 2014 on~~ Medicaid or other governmental payer programs and/or significant monetary fines;

	●	our ~~Advanced Diagnostic Laboratory Tests, adjustments~~ability to comply with U.S. fraud and abuse laws, as well as payer regulations, could result in our being excluded from participation in Medicare, Medicaid or ~~reductions in reimbursement rates of our molecular diagnostic tests by the Centers for Medicare and Medicaid Services and changes~~ other governmental payer programs and/or ~~reductions in reimbursement rates or coverage of our tests by third party payers;~~significant monetary fines;

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

	●	the effect of The Eliminating Kickbacks in Recovery Act of 2018 asto the extent that it ~~potentially impacts~~could negatively impact our ability to incentivize our sales ~~personnel appropriately;~~

	●	~~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 business;~~

	●	business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States, including our ability to comply with international laws and regulations;

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

	●	our ability to ~~use~~realize all of the anticipated benefits of the acquisition of our ~~net operating loss carryforwards;~~pharma services or those benefits, if any, taking longer to realize than was forecasted;

	●	~~tax reform legislation;~~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;

	●	~~changes~~if we fail to perform our pharma services in ~~financial accounting standards or practices;~~accordance with contractual and regulatory requirements, and ethical considerations, we could be subject to significant costs, legal liabilities and could experience a decline in revenue;

	●	our continuing ability to effectively compete in the clinical and pharma services markets;

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

	●	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 limited experience in marketing and selling our products;

	●	the ability of our clinical services tests to be successfully embraced by physicians and members of the medical community who have historically used traditional methods to diagnose gastrointestinal and endocrine cancers;

	●	our ability to effectively compete against competitors that offer product lines that extend beyond the clinical services testing market, that have greater brand recognition and that possess greater financial resources;

	●	our ability to license rights to use emerging technologies that will enhance our ability to commercialize new products and services;

	●	the potential for liabilities or restraints on our business as a result of unanticipated, future litigation, as well as our potential inability to enforce legal judgments or collect monetary damages awarded in our favor;

	●	the adverse impact of force majeure events, including but not limited to acts of nature, adverse weather conditions, hurricanes and floods, epidemics and pandemics upon our business and the ability of our suppliers to provide us with critical materials and services;

	●	our use of hazardous materials;

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

	●	~~product liability claims against us;~~

	●	~~our billing practices and our ability to collect on claims for the sale~~catastrophic loss of our ~~tests;~~

	●	~~our dependence on third-party medical billing providers to operate effectively without delays, data loss, or other disruptions;~~

	●	~~cost increases resulting from enacted healthcare reform legislation;~~

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

	●	~~our ability to increase revenue and manage the size of our operations;~~laboratories;

	●	our ability to ~~successfully identify, complete~~obtain and ~~integrate recent~~maintain sufficient qualified laboratory space to meet the processing needs of our business, as well as our ability to pass regulatory inspections and ~~any future acquisitions of companies, assets and/or products that we believe meet our strategic goals and needs,~~continue to be Clinical Laboratory Improvement Amendments (“CLIA”) and the ~~effects~~College of ~~any such acquisitions on our revenues, profitability and ongoing business;~~American Pathologists (“CAP”) certified or accredited;

	●	compliance with the ~~impact of contingent liabilities on our financial condition;~~U.S. Foreign Corrupt Practices Act and anti-bribery laws;

	●	our ability ~~and~~to respond to rapid scientific changes in the ~~ability of our third-party billing providers, to effectively maintain, upgrade and integrate the information systems on~~areas in which we ~~depend, including our partially customized Laboratory Information Management System;~~

	●	~~the results of any future impairment testing for intangible assets as required under U.S. generally accepted accounting principles (“~~~~GAAP~~~~”);~~operate;

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

	●	~~changes in U.S. patent law;~~

	●	patent infringement claims against us;

	●	~~our ability to maintain our listing with Nasdaq;~~changes in U.S. and global patent law;

	●	~~compliance with public company reporting requirements;~~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 negatively impact the results of business operations, dilute our stockholders’ ownership, increase our debts and/or cause us to incur significant expenses;

	●	the potential impact of existing and future 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;~~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;

	●	~~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;~~

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

	●	~~the impact of anti-takeover defenses on an acquisition~~our ability to manage our growth or ~~stock price;~~unexpected declines;

	●	~~fluctuations in~~uncertainty regarding the regulatory obligations related to our ~~quarterly and annual revenues and earnings;~~receipt of $650,000 funding for COVID-19 testing;

	●	~~securities class action litigation;~~the potential impact of the relocation of our laboratory activities from Rutherford, NJ facility to our North Carolina facility upon ongoing customer clinical trials if revalidation is delayed with respect to the new site;

	●	~~cost~~the impact of ~~settlement or damage awards against~~costs associated with expanding our ~~directors and officers;~~

	●	~~preferential rights~~laboratory capabilities in North Carolina in anticipation of the ~~holders~~relocation of ~~our Preferred Stock that may be adverse to holders~~operations from Rutherford, NJ, as well as the potential for loss of ~~our common stock;~~

	●	~~our ability to successfully execute under the transition services agreement with Cancer Genetics, Inc. (“~~~~CGI~~~~”);~~

	●	~~our ability to realize all~~customers as a result of ~~the anticipated benefits of the acquisition of the Biopharma business or those benefits taking longer to realize than expected;~~this relocation;

	●	our ability to ~~retain customers~~efficiently execute and ~~critical vendors~~complete the planned laboratory transition from Rutherford, NJ to North Carolina on a timely basis and within our ~~Biopharma business;~~forecasted costs;

	●	potential loss of personnel that are uniquely qualified to perform the breadth of specialty testing and lab applications necessary for developing customized assays in our ~~ability to integrate the Biopharma business acquired;~~pharma services;

	●	potential legal liabilities related to our ~~ability~~employees, contractors and other third parties asserting claims for damages arising from workplace exposure to ~~integrate accounting systems and disclosure controls and procedures of~~certain infectious agents, including but not limited to the ~~Biopharma business;~~

	●	~~our ability to expand and grow our newly acquired Biopharma business;~~

	●	~~our ability to effectively separate the Biopharma business from CGI’s former clinical business;~~

	●	~~our ability to continue to engage necessary personnel to operate the Biopharma business;~~

	●	~~our ability to manage costs of our combined diagnostic business and the Biopharma business and provide sufficient capital to continue to grow and expand the base of business;~~COVID-19 virus;

	●	the ~~limited financial information on which~~possibility that we may have to ~~evaluate~~cease laboratory operations at one or more facilities for an undefined period of time due to the ~~financial prospects~~contraction of COVID-19 by persons that have been in such facilities, resulting in our inability to satisfy contractual obligations, a loss of revenue and other potential legal liabilities;

	●	certain payors may decline to reimburse us for services rendered and billed using new billing codes currently in use with Medicare;

	●	the inability to charge and collect payment for the ~~combined company;~~Company’s serology antibody ELISA test for COVID-19 or the inability to coordinate the technology with a polymerase chain reaction test;

	●	the inability to raise capital in the future under the terms of our preferred stock arrangement could result in a Nasdaq market delisting and possibly in the Company seeking creditor protection pursuant to U.S. bankruptcy laws;

	●	the inability by the Company to consolidate its multiple LIM’s programs into one functioning LIM’s program by year-end in the North Carolina laboratory could negatively impact the operations of our pharma services; and

	●	the risk of a breach of proprietary or confidential data, regulated data, and personal information of employees, customers and others; successful breaches, employee malfeasance, or human or technological error that could result in, unauthorized access to, disclosure, modification, misuse, loss, or destruction of company, customer, or other third party data or systems; theft of sensitive, regulated, or confidential data including personal information and intellectual property; the loss of access to critical data or systems through ransomware, destructive attacks or other means; and business delays, service or system disruptions or denials of service, as well as legal consequences under Federal, state and other applicable laws and regulations.

	●	the risk and cost associated with whistleblower threats, interventions and lawsuits on our ~~ability~~business and the cost of responding to ~~expand our working capital borrowing base to provide sufficient working capital financing during growth periods.~~such matters.

	●	In ~~January 2019,~~February 2020, we announced ~~that we had entered into~~ an ~~Agreement with the University of Maryland Medical System (“UMMS”) to provide physicians’ access to ThyGeNEXT~~^®,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 ~~PancraGEN~~^®~~across~~clinical performance of the ~~UMMS network, which includes 4,000 affiliated physicians who provide primary~~test relative to other molecular tests in the market and ~~specialty care in more than 150 locations and at 14 hospitals.~~their respective prices.
	●	~~In April 2019, we announced that Medica, one of the largest health plans in the Midwest, extended coverage of both ThyGeNEXT~~^®~~and ThyraMIR~~^® ~~to its 1.3 million covered lives. Physicians across Medica’s entire network will now be able to utilize Interpace’s thyroid products.~~
	●	In ~~April 2019,~~March 2020, we announced ~~that we had received approval to launch ThyraMIR~~^® ~~diagnostic testing on formalin-fixed, paraffin-embedded (“FFPE”) tissue samples from thyroid nodules from the State~~an agreement with Blue Cross Blue Shield of ~~New York.~~

	●	In ~~July 2019,~~March 2020, we announced ~~that we reached~~ an agreement with ~~SelectHealth (a plan associated with Intermountain Healthcare) (“SelectHealth”) to provide our proprietary thyroid cancer assays,~~CareFirst Blue Cross Blue Shield that makes ThyGeNEXT^® and ThyraMIR^®~~, to SelectHealth’s~~tests covered in-network services for their more than ~~850,000~~3.3 million members in ~~Utah~~Maryland, Washington, D.C., and ~~Idaho.~~Northern Virginia.

●	In ~~July 2019,~~March 2020, we announced we had entered into a contract with Premera Blue ~~Shield of California,~~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 ~~not-for-profit independent member of~~laboratory benefit manager representing numerous health plans. This agreement provides in-network status for our products to approximately 5.8 million lives covered by the following health plans: Blue Cross Blue Shield ~~Association~~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 ~~4 million lives.~~more than 576,000 members.

●	In ~~July 2019,~~May 2020, we ~~announced that we contracted~~executed a contract with Blue Cross Blue Shield of ~~Michigan, a not-for-profit independent member of the Blue Cross Blue Shield Association, for coverage of our thyroid tests. The contract makes the ThyGeNEXT~~^®~~and ThyraMIR~~^®~~tests both covered services as well as in-network services for their total of 6 million members.~~
	●	In September 2019, we announced that we contracted with 3 independent Blue Cross Blue Shield (BCBS) plans totaling nearly 5 million covered lives across Alabama, Arkansas, and Arizona. These members of the BCBS Association are the largest payers in their respective states and each affiliate’s customers now have access to both the ThyGeNEXT® and ThyraMIR® tests for assessing indeterminate thyroid biopsies on an in-network basis.Wyoming.

													As Restated
	Three Months Ended September 30,												Three Months Ended June 30,
	2019			2019			2018			2018			2020			2020			2019			2019

Revenue, net	$	7,725			100.0	%	$	5,753			100.0	%	$	5,446			100.0	%	$	6,270			100.0	%
Cost of revenue		4,835			62.6	%		2,763			48.0	%		3,850			70.7	%		3,031			48.3	%
Gross profit		2,890			37.4	%		2,990			52.0	%		1,596			29.3	%		3,239			51.7	%
Operating expenses:
Sales and marketing		2,757			35.7	%		2,048			35.6	%		1,596			29.3	%		2,959			47.2	%
Research and development		857			11.1	%		510			8.9	%		550			10.1	%		647			10.3	%
General and administrative		4,492			58.1	%		2,084			36.2	%		4,107			75.4	%		2,788			44.5	%
Acquisition related expense		838			10.8	%		-			0.0	%		-			0.0	%		1,295			20.7	%
Acquisition related amortization expense		995			12.9	%		813			14.1	%
Acquisition amortization expense														1,115			20.5	%		897			14.3	%
Total operating expenses		9,939			128.7	%		5,455			94.8	%		7,368			135.3	%		8,586			136.9	%

Operating loss		(7,049	)		-91.2	%		(2,465	)		-42.8	%		(5,772	)		-106.0	%		(5,347	)		-85.3	%
Accretion expense		(111	)		-1.4	%		(248	)		-4.3	%
Other expense, net		(135	)		-1.7	%		(288	)		-5.0	%
Interest accretion														(167	)		-3.1	%		(91	)		-1.5	%
Other income (expense), net														438			8.0	%		74			1.2	%
Loss from continuing operations before tax		(7,295	)		-94.4	%		(3,001	)		-52.2	%		(5,501	)		-101.0	%		(5,364	)		-85.6	%
Provision for income taxes		9			0.1	%		7			0.1	%		13			0.2	%		5			0.1	%
Loss from continuing operations		(7,304	)		-94.6	%		(3,008	)		-52.3	%		(5,514	)		-101.2	%		(5,369	)		-85.6	%

Loss from discontinued operations, net of tax		(58	)		-0.8	%		(34	)		-0.6	%		(66	)		-1.2	%		65			1.0	%

Net loss	$	(7,362	)		-95.3	%	$	(3,042	)		-52.9	%	$	(5,580	)		-102.5	%	$	(5,304	)		-84.6	%

	Nine Months Ended September 30,
	2019			2019			2018			2018

Revenue, net	$	20,005			100.0	%	$	16,062			100.0	%
Cost of revenue		10,489			52.4	%		7,590			47.3	%
Gross profit		9,516			47.6	%		8,472			52.7	%
Operating expenses:
Sales and marketing		8,127			40.6	%		6,135			38.2	%
Research and development		2,032			10.2	%		1,528			9.5	%
General and administrative		9,790			48.9	%		5,981			37.2	%
Acquisition related expense		2,534			12.7	%		-			0.0	%
Acquisition related amortization expense		2,621			13.1	%		2,439			15.2	%
Total operating expenses		25,104			125.5	%		16,083			100.1	%

Operating loss		(15,588	)		-77.9	%		(7,611	)		-47.4	%
Accretion expense		(331	)		-1.7	%		(248	)		-1.5	%
Other expense, net		(12	)		-0.1	%		(143	)		-0.9	%
Loss from continuing operations before tax		(15,931	)		-79.6	%		(8,002	)		-49.8	%
Provision for income taxes		19			0.1	%		21			0.1	%
Loss from continuing operations		(15,950	)		-79.7	%		(8,023	)		-50.0	%

Loss from discontinued operations, net of tax		(51	)		-0.3	%		(129	)		-0.8	%

Net loss	$	(16,001	)		-80.0	%	$	(8,152	)		-50.8	%

Exhibit No.		Description

3.1*10.1		~~Conformed version of Certificate of Incorporation of~~Support Agreement, dated April 7, 2020, by and between Ampersand 2018 Limited Partnership and Interpace Biosciences, Inc.~~, as amended by the Certificate of Amendment filed on November 14, 2019.~~

~~3.2~~10.2*		~~Amended~~Support Agreement, dated April 2, 2020, by and ~~Restated Bylaws~~between 1315 Capital II, L.P. and Interpace Biosciences, Inc.

10.3*		Termination Agreement, dated July 9, 2020, by and between Ampersand 2018 Limited Partnership and Interpace Biosciences, Inc.

10.4#		Amendment to the Interpace Biosciences, Inc. 2019 Equity Incentive Plan, incorporated by reference to Exhibit 10.8 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on June 26, 2020.

10.5		Eleventh Amendment to Lease, effective as of June 1, 2020, by and between Southport Business Park Limited Partnership and Interpace ~~Biosciences,~~Pharma Solutions, Inc., incorporated by reference to ~~the designated exhibit~~Exhibit 10.1 of the Company’s Current Report on Form 8-K, ~~dated November 12, 2019,~~ filed with the ~~Commission~~SEC on ~~November 14, 2019.~~June 9, 2020.

4.1*10.6		~~Interpace Biosciences, Inc. 2019 Equity Incentive Plan..~~

4.2**		~~Interpace Biosciences, Inc. Employee Stock Purchase Plan.~~

4.3**		~~Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Interpace Biosciences, Inc. 2019 Equity Incentive Plan.~~

4.4**		~~Form of Stock Option Grant Notice and Stock Option Agreement under the Interpace Biosciences, Inc. 2019 Equity Incentive Plan.~~

~~10.2~~		~~Equity Distribution~~First Loan Modification Agreement, dated ~~September 20,~~March 18, 2019, by and ~~between~~among Silicon Valley Bank, Interpace Diagnostics Group, Inc. ~~(now known as~~(n/k/a Interpace Biosciences, Inc.), Interpace Diagnostics Corporation, and ~~Oppenheimer & Co. Inc., incorporated by reference to the designated exhibit of the Company’s Current Report on Form 8-K, dated September 20, 2019 filed with the Commission on September 20, 2019.~~Interpace Diagnostics, LLC.

31.1**		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2**		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1+		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

32.2+		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

101		The following financial information from this Quarterly Report on Form 10-Q for the fiscal quarter ended ~~September~~June 30, ~~2019~~2020 formatted in XBRL (Extensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

	+	Exhibits 32.1 and 32.2 are being furnished herewith and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference to any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise stated in any such filing.

	*	Filed herewith.

	#	Denotes compensatory plan, compensation arrangement or management contract.

Date: ~~November 14, 2019~~January 19, 2021	Interpace Biosciences, Inc.
	(Registrant)

	/s/ ~~Jack E. Stover~~Thomas W. Burnell
	~~Jack E. Stover~~ Thomas W. Burnell
	President and Chief Executive Officer
	(Principal Executive Officer)

Date: ~~November 14, 2019~~January 19, 2021	/s/ ~~James Early~~Fred Knechtel
	~~James Early~~Fred Knechtel
	Chief Financial Officer
	(Principal Financial Officer)

Date: ~~November 14, 2019~~January 19, 2021	/s/ Thomas Freeburg
	Thomas Freeburg
	Chief Accounting Officer
	(Principal Accounting Officer)