IMDX 10-K & 10-Q changes, risk factors and insider trading

Our business is subject to various risks, including those described below. The risks below are those that we believe are the material risks that we currently face but are not the only risks facing us and our business. You should consider the following risk factors, together with all of the other information included in this Report, which could materially adversely affect our proposed operations, our business prospects, our financial condition, and the value of an investment in our business. If any of the following risks, either alone or taken together, or other risks not presently known to us or that we currently believe to not be significant, develop into actual events, then our business, financial condition, results of operations or prospects could be materially adversely affected. If that happens, the market price of our common stock could decline, and stockholders may lose all or part of their investment.

We plan to continue to incur substantial research and development expensesexpenses, and we anticipate that we will be incurring significant sales and marketing costs as we develop and commercialize our diagnostic tests. Our research and development expenses may also increase if we work to develop tests for additional types of cancer or for other cancer-related diagnostic purposes. The period of time for which our current cash and marketable securities will be sufficient to finance our operations will depend on the extent to which we expend funds on commercializing our tests and conducting new research and development programs. We will need to raise additional capital to pay operating expenses unless we are able to generate sufficient revenues from diagnostic test sales, royalties, and license fees to meet our operating expenses.

Our ability to raise additional equity or debt capital will depend not only on the successful completion of development of our diagnostic tests and receiving reimbursement approval from Medicare and other third-party payers for those tests, but also will depend on access to capital and conditions in the capital markets. Obtaining Medicare reimbursement approval for our diagnostic tests could take two to three years, and investors may be reluctant to provide us with additional capital until we obtain Medicare reimbursement approval for those tests or until we can demonstrate that private payers such as health insurance companies or HMOs are willing to pay for the use of our diagnostic tests at prices sufficient for us to earn a reasonable return on our investments in our diagnostic test portfolio. There is no assurance that we will be able to raise capital at times and in amounts needed to finance the development and commercialization of our diagnostic tests and general operations. Even if capital is available, it may not be available on terms that we or our shareholders would consider favorable. If we are unable to obtain adequate financing or financing on terms satisfactory to us when and if we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.

Sales or other issuances of additional equity securities by us could result in the dilution of the interests of our stockholders.stockholders, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock.

We may incur significant cash payment and common stock issuance obligations under our agreements arising from our investments in InsightIGI and Chronix.

Under the merger agreement pursuant to which we acquired Insight,IGI, as described in Note 3 to the consolidated financial statements included elsewhere in this Report, based on current estimates, we have agreed to pay contingent consideration of up to $4.5 million in any combination of cash or shares of our common stock if certain milestones related to DetermaIO are achieved, which consist of (i) $3.0 million for an affirmative final LCD from CMS for a specified lung cancer test, and (ii) up to $1.5 million for achieving certain CMS reimbursement milestones.

As additional consideration for the acquisition of Chronix, we have agreed to pay to holders of other classes and series of Chronix’s stock earnout consideration of (i) 10% of net collections for sales of specified tests and products, until the expiration of intellectual property related to such tests and products, and (ii) 5% of the gross proceeds received from any sale of all or substantially all of the rights, titles, and interests in and to Chronix’s patents for use in transplantation medicine to such third party.

To meet these various cash payment obligations, we may need to sell additional shares of our common stock or other securities to raise the cash needed,securities, or we may have to divert cash on hand that we would otherwise use for other business and operational purposes which could cause us to delay or reduce activities in the development and commercialization of our cancer tests. Any shares of common stock or other securities we sell to raise cash to meet our cash payment obligations will dilute the interests of our common stockholders.

We incurred research and development expenses amounting to approximately $9.8$15.9 million and $9.3$9.8 million during the years ended December 31, 20242025 and 2023,2024, respectively. The current focus of our research and development efforts is the development of GraftAssureCore, GraftAssureIQ,GraftAssureIQ and GraftAssureDx, DetermaIO and DetermaCNI.in 2025, we started a clinical trial in conjunction with our IVD submission for GraftAssureDx. If we are successful in developing a new technology or diagnostic tests for additional types of cancer, refinement of the new technology or diagnostic tests and definition of the practical applications and limitations of the technology or diagnostic tests may take years and require the expenditure of large sums of money. There is no assurance that we will be successful in completing the development of our current diagnostic tests or in developing additional diagnostic tests regardless of the amount of our expenditures.

Physicians and hospitals may be reluctant to try a new diagnostic test due to the high degree of risk associated with the application of new technologies and diagnostic tests in the field of human medicine, especially if the new tests differ from the current standard of care for detecting cancer in patients.care. Competing tests for organ transplant rejection monitoring and the initial diagnosis, reoccurrence diagnosis and optimal treatment of cancer are being manufactured and marketed by established companies and by other smaller biotechnology companies. In order to compete with other diagnostic tests, particularly any that sell at lower prices, our tests will have to provide medically significant advantages or be more cost effective. Even if we are able to overcome physician reluctance and compete with products that are currently on the market, our competitors may succeed in developing new safer, more accurate or more cost-effective diagnostic tests that could render our diagnostic tests and technologies obsolete or noncompetitive.

ThereDefects, isfailures aor riskquality ofissues associated with our products could lead to product recalls or safety alerts, adverse regulatory actions, product liability claimslawsuits inand ourother business.litigation and negative publicity. If we are unable to obtain or maintain sufficient insurance, a product liability claim against us could adversely affect our business.

Our business exposes us to potential product liability risks that are inherent in the development, testing, manufacturing and marketing of diagnostic test kits and assays. Product liability claims could delay or prevent completion of our clinical development programs. In addition, if any of our collaboration partners face product liability claims, our programs could also be affectedaffected, and our business could be harmed. If we succeed in marketing products, such claims could result in an FDA investigation of the safety and effectiveness of our products, our manufacturing processes and facilities or our marketing programs, and potentially a recall of our products or more serious enforcement action, limitations on the approved indications for which they may be used, or suspension or withdrawal of approvals. Regardless of the merits or eventual outcome, liability claims may also result in decreased demand for our products, injury to our reputation, costs to defend the related litigation, a diversion of management’s time and our resources, substantial monetary awards to trial participants or patients and a decline in our share price. Any insurance we obtain may not provide sufficient coverage against potential liabilities. Furthermore, clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain or maintain sufficient insurance at a reasonable cost to protect us against losses caused by product liability claims that could adversely affect our business.

We are building our own marketing and sales capability for our diagnostic tests,tests and are devoting significant financial and management resources to recruiting, training, and managing our sales force and building a health care regulatory compliance program. However, due to our limited capital resources, we may need to enter into marketing arrangements with other diagnostic companies for one or more of our tests in domestic or foreign markets. Under such marketing arrangements we may license marketing rights to one or more of our diagnostic tests to other diagnostic companies or to one or more joint venture companies that may be formed to market our tests, and we might receive only a royalty on sales or an equity interest in a joint venture company. As a result, our revenues from the sale of our tests through such arrangements may be substantially less than the amount of revenues and gross profits that we might receive if we were to market our tests ourselves.

We currently have a clinical laboratory facility in Nashville,Franklin, Tennessee. We also acquiredhave aresearch laboratoryand development labs in GermanyNashville, throughTennessee ourand mergerGöttingen, with Chronix.Germany. Our facilities and equipment could be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, power outages, wildfires, flooding, hurricanes, droughts and other extreme weather events and changing weather patterns, which are increasing in frequency due to the impacts of climate change, and may render it difficult or impossible for us to perform our tests for some period of time. The inability to perform our tests or the backlog of tests that could develop if any of our facilities is inoperable for even a short period of time may result in the loss of customers or harm to our reputation or relationships with key researchers, collaborators, and customers, and we may be unable to regain those customers or repair our reputation in the future. Furthermore, our facilities and the equipment we use to perform our research and development work could be costly and time-consuming to repair or replace.

Even if we find a third-party with such qualifications to perform our tests, such party may not be willing to perform the tests for us on commercially reasonable terms. Moreover, we believe our tests are currently subject to enforcement discretion by the FDA because we believe the tests currently qualify as LDTs. If, however, we are required to find a third-party laboratory to conduct our testing services, we believe this would change our status and the FDA would consider such tests offered through a third-party to then be a medical device subject to active FDA regulation and enforcement under its IVD authorities. In that case, we may be required to obtain premarket clearance or approval prior to offeringoffering, or continuing to offer, our tests, which would be time-consuming and costly and could result in interruptions and delays in our ability to sell or offer our tests.

We are, and in the future, may become, dependent on collaborations to develop and commercialize many of our diagnostic test candidates and to provide the manufacturing, regulatory compliance, sales, marketing and distribution capabilities required for the success of our business.

These types of problems may be caused by a variety of factors, including infrastructure changes, intentional or accidental human actions or omissions, software errors, malware, security attacks, fraud, spikes in customer usage and denial of service issues. From time to time, large third-party web hosting providers have also experienced outages or other problems that have resulted in their systems being offline and inaccessible. In addition to data security risks, we also face privacy risks. Should we actually violate, or be perceived to have violated, any privacy promises we make to patients or consumers, we could be subject to a complaint from an affected individual or interested privacy regulator, such as the FTC or a state Attorney General. This risk is heightened given the sensitivity of the data we collect.

If a privacy or security event occurs, we may be required to comply with state breach notification laws and become subject to mandatory corrective action. Penalties for failure to comply with a requirement of HIPAA or HITECH vary significantly, and, depending on the knowledge and culpability of the HIPAA-regulated entity, may include civil monetary penalties of up to $1.5 million per calendar year for each provision of HIPAA that is violated. A person who knowingly obtains or discloses individually identifiable health information in violation of HIPAA may face a criminal penalty ofincluding up to $50,000fines and up to one-yearpotential imprisonment. The criminal penalties increase if the wrongful conduct involves false pretenses or the intent to sell, transfer or use identifiable health information for commercial advantage, personal gain or malicious harm. Penalties for unfair or deceptive acts or practices under the FTC Act or state Unfair and Deceptive Acts and Practices statutes may also vary significantly.

Anti-bribery laws prohibit us, our employees, and some of our agents or representatives from offering or providing any personal benefit to covered government officials to influence their performance of their duties or induce them to serve interests other than the missions of the public organizations in which they serve. Certain commercial bribery rules also prohibit offering or providing any personal benefit to employees and representatives of commercial companies to influence their performance of their duties or induce them to serve interests other than their employers. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring us to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and devise and maintain an adequate system of internal accounting controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the United States Department of Justice. The Securities and Exchange Commission (“SEC”) is involved with enforcement of the books and records provisions of the FCPA.

We may in the future bebecome subject to litigation, which could harm our stock price, business, results of operations and financial condition.

We may be subject to litigation infrom thetime future.to time. In the past, following periods of volatility in the market price of their stock, many companies, including us,companies have been the subjects of securities class action litigation. Any such litigation can result in substantial costs and diversion of management’s attention and resources and could harm our stock price, business, results of operations and financial condition. As a result of these factors, holders of our common stock might be unable to sell their shares at or above the price they paid for such shares.

We may acquire businesses or assets that complement or augment our existing business. If we acquire businesses with promising products or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to move one or more products through preclinical and/or clinical development to regulatory approval and commercialization. Integrating any newly acquired businesses or technologies could be expensive and time-consuming, resulting in the diversion of resources from our current business. We may not be able to integrate any acquired business successfully.successfully, We cannot assure that, following an acquisition,and we willmay not achieve revenues, specific net income or loss levels that justify the acquisition or that the acquisition will result in increased earnings, or reduced losses, for the combined company in any future period. Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses, which would result in dilution for stockholders or the incurrence of indebtedness and may not be available on terms which would otherwise be acceptable to us. We may not be able to operate acquired businesses profitably or otherwise implement our growth strategy successfully.

Inflation rates, particularly in the United States, have increased recently to levels not seen in years.recently. We may experience inflationary pressures, primarily in personnel costs, with certain laboratory supplies andsupplies, from inventory costs related to certain raw materials.materials, Wewith anticipateessential inflationaryvendors impactsincluding audit fees and regulatory consultants, and from tariff policies and potential countermeasures. Prices for raw materials may fluctuate based on othera costnumber areasof factors beyond our control, including changes in thesupply future.and demand, general economic conditions, labor costs, fuel related delivery costs, competition, import duties, excises and other indirect taxes, currency exchange rates, and government regulation. The extent of any future impacts from inflation on our business and our results of operations will be dependentdepend upon how long the elevated inflation levels persist and the extent to which the rate of inflation were to further increase, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, the purchasing power of our cash and cash equivalents may be further diminished, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Due to the highly competitive nature of the healthcare industry and the cost containment efforts of our customers and third-party payors, we may be unable to pass along cost increases for key components or raw materials through higher prices to our customers. Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows.

The FDA has a long-standing policy of enforcement discretion for LDTs, meaning the tests are not subject to the FDA’s medical device regulations. In May 2024, the FDA published a final rule that phasesproposed to phase out its enforcement discretion policy for LDTs, unless exempt, and amendsproposed to amend the FDA’s regulations to make explicit that IVDs are medical devices under the Federal Food, Drug, and Cosmetic Act ("FDCA"),Act, including when the manufacturer of the diagnostic product is a laboratory. TheThis Americanfinal Clinicalrule Laboratorywould Associationhave andsubjected LDTs to the Associationsame ofregulatory Molecularrequirements Pathologyas havemedical fileddevices, lawsuitsincluding, againstin some cases, requiring pre-market clearance or approval. However, in March 2025, following a legal challenge to the FDA to challenge itsFDA’s authority to regulate LDTsLDTs, underthe thisEastern District of Texas vacated the final rule. The fullFDA impactdid ofnot thisappeal the decision to vacate the final rulerule, andand, in September 2025, the existingFDA (andformally anyrevoked future)the challengesfinal againstrule, currentlyretaining remainsthe toenforcement bediscretion seen.policy for LDTs.

We currently market certain IVDs for RUO that have not been cleared by the FDA in reliance on the regulatory exemption for IVDs intended for RUO, but if the FDA determines that our RUO tests do not meet the applicable requirements for exemption or have intended uses that are inconsistent with RUO tests, we may be required to suspend commercialization of such products until we can obtain the requisite FDA clearance and/or subject to FDA warning or untitled letters, seizure, injunction, fines, or other enforcement action.

Some of our tests are marketed for RUO, which allows us to sell such products without the premarket clearance that FDA requires for the marketing of traditional devices. An RUO product may not be marketed for clinical diagnostic use and must be labeled “For Research Use Only. Not for use in diagnostic procedures.” Products that are intended for research use only and are properly labeled as RUO are exempt from compliance with the FDA’s pre- and post-market requirements to which traditional devices are subject, including the requirement that the product be cleared or approved before commercialization and QSRQuality System Regulation requirements. However, merely including the required RUO labeling will not necessarily exempt the device from the FDA's 510(k) clearance, premarket approval, or other requirements if the circumstances surrounding the distribution of the product indicate an objective intent to market the product for clinical diagnostic use.

In general, if (i) evidence shows that one or more of our IVDs are inappropriately labeled RUO (but marketed for clinical diagnostic use), such test(s) will not qualify for an IDE exemption and will be deemed misbranded under the FDCA.Federal Food, Drug, and Cosmetic Act ("FDCA"). Device manufacturers found in violation of the FDCA may be subject to a wide range of enforcement action, including warning letters, seizure, injunction, criminal prosecution, monetary penalties, and others.

We will also need to obtain FDA and other regulatory approvals for any IVDs that we may develop, or for any currently marketed products the FDA determines are IVDs instead of LDTs,develop in order to market those IVD tests.tests, and we may not be able to obtain those regulatory approvals in a timely manner or at all.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our consolidated financial statements for the years ended December 31, 20242025 and 20232024 included elsewhere in this Report, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations. These historical consolidated financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly under “Risk Factors” in Part I, Item 1A1A. of this Report. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should be read in conjunction with our consolidated financial statements and the related notes thereto provided under Part IV, Item 15(a)(1) of this Report.

We are a pioneering diagnostics technology company. Our mission is to democratizeexpand access to novel molecular diagnostic testing, most immediately in the transplanted organ rejection testing to improve patient outcomes.category.

We do this primarily byare developing molecular diagnostic test kits thatdesigned to empower our customers to run their own tests in-house to participate in the patient-care value chain, which is counter-positioned with the send-out-testing central laboratory model. Our decentralized approach also puts testing in the hands of researchers to enable more studies, which inspires innovation, which we believe,believe can improve standards of care while also creating demand for more testing. We developbelieve that combining innovative science with a simple, but disruptive, business model can create substantial value. Our initial targeted customer institutions are hospitals, transplant centers and labs. The decisions to deploy our tests thatcome measurefrom bothdoctors, establishedincluding biomarkerssurgeons, nephrologists and oncologists, as well as pioneerresearchers, thepathologists, adoptionlab ofdirectors, newmedical directors, department heads, lab managers and morechief effectivemedical biomarkers.officers.

At the heart, weWe are a science-driven organization that champions scientific integrity and inquiry. We employ world-renowned scientists who generate intellectual property in our strategic target markets. We have built and acquired an intellectual property portfolio that we believe will enable us to gain share in well-established clinical and research markets.

Our current intellectual property portfolio comprises three general areas: 1) organ transplant, 2) oncology therapy selectionselection, and 3) oncology therapy monitoring. Within these categories, we have developed or are in the process of developing LDTs that can be run at our Nashville,Franklin, Tennessee lab,laboratory, kitted RUO tests, and IVD kitted clinical tests that can be run by local labs.

InOur JulyGraftAssure 2024,family weof beganassays toare commercializeperformed theon technologya underlyingdigital GraftAssureCorePCR (Kidney)instrument that is manufactured by distributingBio-Rad. itsConsequently, sister product, GraftAssureIQ, which is intended to be sold and used for research purposes and is labeled as RUO. We expect to distribute our RUO production through a mix of direct sales, partnering and distribution agreements, and licensing. Wewe have entered into a global strategic partnership agreement with Bio-Rad to collaborate in the development and the commercialization of RUO and IVD kitted transplant products for clinical use (see Note 10, “Collaborative Arrangements,” to our consolidated financial statements included elsewhere in this Report for additional information). In May 2025, we sold our first GraftAssureIQ kits to a research laboratory customer (see Note 2, “Revenue Recognition – Kitted Products,” to our consolidated financial statements included elsewhere in this Report for additional information).

Under strict regulatory rules, our kitted tests may not be used in a clinical treatment setting until they have attained IVDmarketing clearanceauthorization from the FDA in thefor U.S. sales, and In Vitro Diagnostic Medical Devices Regulation approvalapproval, in thefor European Union.Union sales. As such, we are working with these regulatory bodies to attain such clearance and approval, as applicable, supporting future distribution and higher sales of our products for clinical use. In 2025, we started a clinical trial in conjunction with our IVD submission for GraftAssureDx. On March 25, 2026, we submitted a data package to the FDA seeking marketing authorization for GraftAssureDx, which is the kitted version of our transplanted organ rejection monitoring assay. We believe that our assays will perform across multiple tissue, or organ, types, and we are pursuing regulatory authorization in kidneys first.

We also have a laboratory and pharma services lab, certified under the CLIA and accredited by the CAP, in Nashville,Franklin, Tennessee, and a research and development lablabs in Nashville, Tennessee and Göttingen, Germany. Our innovation centers in Nashville and Germany employ world-renowned research scientists who,whom we believe,believe are leaders in their fields.

Our secondary strategic market is in the field of oncology. The inherent uncertainties of developing and commercializing new diagnostic tests for medical use make it impossible to predict the amount of time and expense that will be required to complete the development and commercialization of thoseour oncology tests. There is no assurance that we will be successful in developing new technology or diagnostic tests, nor that any technology or diagnostic tests that we may develop will be proven safe and effective in diagnosis of cancer in humans or will be successfully commercialized. We expect that our operating expenses will continue to increasededicate ifa weminimum successfully complete the developmentamount of resources to our oncology assays, DetermaIO and DetermaCNI, although currently we do not intend to commercialize thiseither test.in the next 12 months.

We also perform other assay development and clinical testing services for pharmaceuticallife sciences and biotechnology companies through our PharmaLaboratory Services operations.

We believe that the experience of our team with diverse technologies through our PharmaLaboratory Services activities, strong scientific integrity regarding evidence generation and innovation mentality, alongside our flexibility in operations and regulatory strategy, will drive our success, differentiate us from our competition, and are foundational to our future. We are focusing on executing the technology priorities discussed herein, which have evolved to reflect our operations and strategic vision.

On February 10,12, 2025,2026, we consummated a registered direct offering and concurrent private placement of our securities to certain accreditedinvestors investorsfor the issuance and sale of 3,482,498 shares of our common stock and pre-funded warrants to purchase 1,043,478 shares of our common stock, with an exercise price of $0.0001 per share (the “February 20252026 Offering”). The aggregatepurchase price for one common share was $5.75, and the purchase price for one pre-funded warrant was $5.75, minus the $0.0001 exercise price per pre-funded warrant. The gross proceeds from the February 20252026 Offering were approximately $29.1$26.0 million. After deducting placement agent fees and offering expenses payable of $1.4 million, the resulting net proceeds were approximately $24.6 million. See Note 14, “Subsequent Events – Private Placement Transaction” and13, “Subsequent Events – Registered Direct Offering,” to our consolidated financial statements included elsewhere in this Report for additional information.

Total net revenue increased to $1.9$4.1 million for the year ended December 31, 2024, as2025, compared to $1.5$1.9 million in the comparable prior period primarily from PharmaLaboratory Services as further discussed below. Future PharmaLaboratory Services revenue is expected to be impacted as a result of our shift in strategic focus on commercializing our transplant kitted tests, and deploying our sales personnel toward signing new hospital research laboratory customers.

LossNet from continuing operationsloss was $60.7$50.2 million for the year ended December 31, 2024,2025, compared to $24.9$60.7 million for the comparable prior period. TheNet loss from continuing operations expandeddecreased by $35.8$10.4 million mainlyprimarily due to a decrease in impairment charges for certain in-process researchlosses and developmentan (discussedincrease below),in Laboratory Services revenue, which were partially offset by increases in operating expenses and the change in fair value of contingent consideration,consideration. andFurther certaindetails otherrelated changesto the change in operatingnet expensesloss from continuing operationsare as follows:

PharmaLaboratory Services revenue increased by $392,000.$2.2 Althoughmillion. we had a decrease in the number of contracts performed during the period, weWe earned Laboratory Services revenue primarily from one existing customer in the amount of approximately $1.5$4.0 million during 2025. In addition, we earned our first Kitted Products revenue in the fourth quarteramount of 2024.approximately $24,000 during 2025. See below for additional revenue information.

Cost of revenues increased by $51,000,$697,000, primarily related to labor and allocated overhead associated with performing our PharmaLaboratory Services.Services, and Kitted Products inventory costs and royalties based on net product sales. See below for additional cost of revenues information.

Cost of revenues - amortization of acquired intangibles wasdecreased unchanged,by and$81,000. This relates to noncash amortization of acquired intangible assets such as our customer relationship intangible assets acquired as part of our merger with IGI, which became fully amortized in the Insightfirst merger.quarter of 2025.

Research and development expenses increased by $545,000,$6.1 million, as we continue development of GraftAssureCore, GraftAsssureIQ, GraftAssureDx, DetermaIOGraftAssureIQ and DetermaCNI.GraftAssureDx. The main drivers of the increase were personnel-relatedprofessional expensesfees, laboratory costs, and facilitiesclinical trial costs, partially offset by depreciation and amortization, stock-based compensationcompensation. and severance costs (seeSee below for additional details).details.

Sales and marketing expenses increased by $1.1$2.4 million, primarily attributable to continued ramp up in sales, marketing and advertising activities related to the transplant business, as well as supporting the commercialization efforts within oncology.business. The main drivers of the increase were personnel-related expenses, depreciation and amortization, marketing and otheradvertising, expenses,professional whichfees, are primarily comprised ofand travel and entertainment,entertainment. partially offset by facilities costs and stock-based compensation (seeSee below for additional details).details.

General and administrative expenses decreasedincreased by $978,000,$429,000, primarily due to decreasesincreases in facilitiespersonnel-related costs,expenses and board fees, and stock-based compensation and severance costs,compensation, partially offset by personnel-relatedfacilities expensesand insurance, and professional fees. See below for additional details.

Change in fair value of contingent consideration was a gainloss of $4.3$5.9 million in 20242025 compared to a gain of $5.8$4.3 million in 2023.2024. This change was due to changes in the fair value model inputs and revised estimates on if and when future payouts will occur. See below for additional information.

TheFor currentthe yearperiods presented, impairment losses relate to our in-process research and development intangible assets. During the fourth quarter of 2025, it was determined that our DetermaIO and DetermaCNI intangible assets were fully impaired, amounting to $14.6 million. During the fourth quarter of 2024, it was determined that our DetermaIO and DetermaCNI intangible assets were impaired by $41.9 millionmillion. (seeSee Note 5 to our consolidated financial statements included elsewhere in this Report for additional information). The prior year impairment losses related to two asset impairments, including in-process research and development intangible assets of $5.0 million (see Note 5 to our consolidated financial statements included elsewhere in this Report for additional information) and leasehold improvements of $1.8 million (see Note 4 to our consolidated financial statements included elsewhere in this Report for additional information).information.

Impairment loss on held for sale assets in 2024 relates to various agreements to sell laboratory equipment and the subsequent fair value adjustments. See Note 2, “Assets Held for Sale and Discontinued Operations,Sale,” to our consolidated financial statements included elsewhere in this Report for additional information.

Total other income, net increased by $97,000,$524,000, primarily due to additional interest income and miscellaneous income in 2024 comparedrelated to 2023.higher cash balances from our February 2025 Offering, partially offset by additional foreign currency losses and interest expense related to our financing leases. See below for additional information.details.

The following table shows our servicerevenues revenuesby type:

PharmaLaboratory Services are generally performed on a time and materials basis. Upon our completion of the service to the customer in accordance with the contract, we have the right to bill the customer for the agreed upon price (either on a per test or per deliverable basis) and recognize the PharmaLaboratory Services revenue at that time, on an accrual basis. PharmaLaboratory Services revenues are generated under discrete agreements for particular customer projects that generally expire with the completion or termination of the customer’s project. Accordingly, different customers may account for greater or lesser portions of PharmaLaboratory Services during different accounting periods, and PharmaLaboratory Services revenues may exhibit a larger variance from accounting period to accounting period than other revenuesrevenues. suchFuture Laboratory Services revenue is expected to be impacted as Laboratorya Developedresult Testof Servicesour revenue.shift Referin tostrategic focus on commercializing our transplant kitted tests, and deploying our sales personnel toward signing new laboratory customers. See Note 2, “Revenue Recognition – PharmaLaboratory Services Revenue” and “Disaggregation of Revenues and Concentrations of Credit Risk,” to our consolidated financial statements included elsewhere in this Report for additional information.

Laboratory Developed Test Services generally relaterelated to payments received from sales prior to the Razor Sale Transaction.Transaction (see Note 2, “Investments in Privately Held Companies,” to our consolidated financial statements included elsewhere in this Report). We generated revenue from performing DetermaRx tests on clinical samples through orders received from physicians, hospitals, and other healthcare providers. For all payers other than Medicare, we mustneeded to consider the novelty of the test, the uncertainty of receiving payment, or being subject to claims for a refund, from payers with whom itiMDx doesdid not have a sufficient payment collection history or contractual reimbursement agreements. Accordingly, for those payers, we have recognized revenue upon payment. Refer toSee Note 2, “Revenue Recognition – Laboratory Developed Test Services,” to our consolidated financial statements included elsewhere in this Report for additional information.

Cost of revenues generally consists of cost of materials, direct labor including payroll,benefits, payroll taxes, bonus, benefitbonus and stock-based compensation, equipment and infrastructure expenses, clinical sample related costs associated with performing PharmaLaboratory Services and Laboratory Developed Test Services, andproviding deliverables according to our licensing agreements, license fees due to third-parties, amortization of acquired intangible assets.assets, and Kitted Products inventory costs and royalties based on net product sales. Infrastructure expenses include depreciation of laboratory equipment, allocated rent costscosts, leasehold improvements, and leaseholdallocated improvements.information technology costs for operations at iMDx’s CLIA-certified laboratory in Tennessee. Costs associated with generating service revenue are recorded as the tests or services are performed regardless of whether revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated using the associated technology, or from product sales, are recorded as expenses at the time the related revenues are recognized. Cost of revenues for PharmaLaboratory Services varies depending on the nature, timing, and scope of customer projects.

We expect to continue to incur a significant amount of research and development expenses for the foreseeable future. We will continue development of GraftAssureCore, GraftAssureIQ, GraftAssureDx, DetermaIOGraftAssureIQ and DetermaCNI.GraftAssureDx. Our future research and development efforts and expenses will also depend on the amount of capital that we are able to raise to finance those activities and whether we acquire rights to any new diagnostic tests. A portion of our costs for leasing and operating our CLIACLIA-certified laboratory in Tennessee, and in Germany with Chronix,Germany, will also be included in research and development expenses to the extent allocated to the development of our diagnostic tests.

We expect to continue to incur sales and marketing expenses duringfor the foreseeable futurefuture, especially as we completecontinue productto developmentcommercialize GraftAssureCore, GraftAssureIQ and begin commercialization efforts for DetermaIO as a clinical test. Sales and marketing expenses will also increase if we successfully develop and begin commercializing GraftAssureCore, GraftAssureIQ, GraftAssureDx and DetermaCNI, or if we acquire and commercialize other diagnostic tests.GraftAssureDx. Our commercialization efforts and expenses will also depend on the amount of capital that we are able to raiseaccess to finance commercialization of our tests. Our future expenditures on sales and marketing will also depend on the amount of revenue that those efforts are likely to generate. Because physicians are more likely to prescribe a test for their patients if the cost is covered by Medicare or health insurance, demand for our diagnostic and other tests and our expenditures on sales and marketing are likely to increase if our diagnostic or other tests qualify for reimbursement by Medicare or private health insurance companies.

We will pay contingent consideration if various payment milestones are triggered under the merger agreements through which we acquired InsightIGI and Chronix. SeeIn Note2025, 3we earned our first Kitted Products revenue, accordingly we began to ourpay consolidatedrelated financialroyalties statementsto included elsewhere in this Report.Chronix. Changes in the fair value of the contingent consideration will be based on our reassessment of the key assumptions underlying the determination of this liability as changes in circumstances and conditions occur from the InsightIGI and Chronix acquisition dates to the reporting periods being presented, with the subsequent changes in fair value recorded as part of our consolidated results from operations for such periods. See aboveNote Results3 ofto Operationsour explanationconsolidated financial statements included elsewhere in this Report for additional information.

Other income and expenses are primarily comprised of interest incomeincome, andinterest expense, and foreign currency gains/ and losses from marketable equity securities, which were sold in 2023 (see Note 2, “MarketableForeign EquityCurrency Securities,Gains and Losses,” to our consolidated financial statements included elsewhere in this Report). Interest income is earned from money market funds we hold for capital preservation. Interest expense wasis incurred mainly from our financing lease obligations (see Note 6 to our consolidated financial statements included elsewhere in this Report) and insurance financing activity.

We did not record any provision or benefit for income taxes for the years ended December 31, 2025 and 2024, as we had a full valuation allowance for the periods presented. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from our net operating loss carry-forwards and other deferred tax assets. See Note 2, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report for additional information.

Although historically not significant to our results of operations, financial condition and cash flows, we may experience inflationary pressures, primarily in personnel costs, with certain laboratory supplies andsupplies, from inventory costs related to certain raw materials.materials, with essential vendors including audit fees and regulatory consultants, and from tariff policies and potential countermeasures. Prices for raw materials may fluctuate based on a number of factors beyond our control, including changes in supply and demand, general economic conditions, labor costs, fuel related delivery costs, competition, import duties, excises and other indirect taxes, currency exchange rates, and government regulation. The extent of any future impacts from inflation on our business and our results of operations will be dependentdepend upon how long elevated inflation levels persist and the extent to which the rate of inflation were to increase, if at all, neither of which we are able to predict. If elevated levels of inflation were to persist or if the rate of inflation were to accelerate, the purchasing power of our cash and cash equivalents may be diminished, our expenses could increase faster than anticipated and we may utilize our capital resources sooner than expected. Due to the highly competitive nature of the healthcare industry and the cost containment efforts of our customers and third-party payors, we may be unable to pass along cost increases for key components or raw materials through higher prices to our customers. Further, given the complexities of the reimbursement landscape in which we operate, our payers may be unwilling or unable to increase reimbursement rates to compensate for inflationary impacts. As such, the effects of inflation may adversely impact our results of operations, financial condition and cash flows. See Note 1, “Business Risks,” to our consolidated financial statements included elsewhere in this Report for additional information about the risks that may impact our business.

Our foreseeable material cash requirements as of December 31, 2024,2025, are recognized as liabilities in the consolidated balance sheet or generally are otherwise described in Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report. CashOur cash requirements are generally derived from our operating and investing activities including expenditures for working capital, human capital, equipment purchases, lease payments, business development, investments in intellectual property, and business combinations. Our office lease obligations (net of sublease payments) and financing lease obligations, and contingent consideration obligations are further described in Note 6 and Note 3, respectively, to our consolidated financial statements included elsewhere in this Report. Historically,As of December 31, 2025 and 2024, other than certain equity-classified warrants (see Note 7, “Common Stock Purchase Warrants,” to our consolidated financial statements included elsewhere in this Report), we had no off-balance sheet arrangements, and historically we have not entered into any off-balancesuch sheetarrangements arrangements.other than the noted warrants. As of December 31, 20242025 and 2023,2024, we had unrecognized tax benefits totaling $1.1$1.6 million and $2.3$1.1 million, respectively (see Note 12, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report).

Since formation, we have financed our operations primarily through the sale of our common stock, preferred stock and warrants.warrants to acquire common stock (see Note 7 to our consolidated financial statements included elsewhere in this Report). We have incurred operating losses and negative operating cash flows since inception and had an accumulated deficit of $350.5$400.8 million as of December 31, 2024.2025. At December 31, 2024,2025, we had $8.6$11.6 million of cash and cash equivalents. On February 10,12, 2025,2026, we raised substantial additional capital as discussed below. WeManagement expectanticipates tothat we may continue to incur operating losses and negative operating cash flows for the near future. Although it is difficult to predict our liquidity requirements, based on the going concern evaluation discussed in Note 11, “Liquidity,” to our consolidated financial statements included elsewhere in this Report, management believes that it will have sufficient cash to meet its projected operating requirements for at least the next twelve months following the issuance of these consolidated financial statements.

Our business, financial condition, results of operations and future growth prospects are subject to various risks, including those described in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 26, 2026, which we encourage you to review. ThereOther than as noted below, there have been no material changes from the risk factors disclosed in our most recent Annual Report on Form 10-K.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide information necessary to understand our consolidated financial statements for the three and six months ended MarchJune 31,30, 2026 and 2025 included elsewhere in this Report, and highlight certain other information which, in the opinion of management, will enhance a reader’s understanding of our financial condition, changes in financial condition and results of operations. These historical consolidated financial statements may not be indicative of our future performance. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risks described throughout this filing, particularly under “Risk Factors” in this Report and those “Risk Factors” in Part I, Item 1A. of our most recent Annual Report on Form 10-K for the year ended December 31, 2025 as filed with the SEC. For additional information, refer to the section above entitled “Cautionary Note Regarding Forward-Looking Statements.” The following discussion should be read in conjunction with our consolidated financial statements and the related notes thereto provided under Part I, Item 1 of this Report.

We are developing molecular diagnostic test kits designed to empower our customers to run their own tests in-house to participate in the patient-care value chain, which is counter-positioned with the send-out-testing central laboratory model. Our decentralized approach also puts testing in the hands of researchers to enable more studies, which we believe can improve standards of care while also creating demand for more testing. We believe that combining innovative science with a simple, but disruptive, business model can create substantial value. Our initial targeted customer institutions are hospitals, transplant centers and labs.labs, including large reference laboratories. The decisions to deploy our tests come from doctors, including surgeons, nephrologists and oncologists, as well as researchers, pathologists, lab directors, medical directors, department heads, lab managers and chief medical officers.

Our current intellectual property portfolio comprises three general areas: 1) organ transplant,transplant testing, 2) oncology therapy selection, and 3) oncology therapy monitoring. Within these categories, we have developed or are in the process of developing LDTs that can be run at our Franklin, Tennessee laboratory, kitted RUO tests, and IVD kitted clinical tests that can be run by local labs.

Our GraftAssure family of assays are performed on a digital PCR instrument that is manufactured by Bio-Rad. Consequently, we have entered into a global strategic partnership agreement with Bio-Rad to collaborate in the development and the commercialization of kitted transplant products for clinical use (see Note 10, “Collaborative Arrangements,” to our consolidated financial statements included elsewhere in this Report for additional information). In May 2025, we sold our first GraftAssureIQ kits to a research laboratory customer (seeSee Note 2, “Revenue Recognition – Kitted Products,Recognition,” to our consolidated financial statements included elsewhere in this Report for additional information).Kitted Products revenue information.

Under strict regulatory rules, our kitted tests may not be used in a clinical treatment setting until they have attained marketing authorization from the Food and Drug Administration (“FDA”) for U.S. sales, and In Vitro Diagnostic Medical Devices Regulation approval, for European Union sales. As such, we are working with these regulatory bodies to attain such clearance and approval, as applicable, supporting future distribution and higher sales of our products for clinical use. In 2025, we started a clinical trial in conjunction with our IVD submission for GraftAssureDx. On March 25, 2026, we submitted a data package to the FDA seeking marketing authorization for GraftAssureDx, which is the kitted version of our transplanted organ rejection monitoring assay. We believe that our assays will perform across multiple tissue, or organ, types, and we are pursuing regulatory authorization in kidneys first. Since our March 2026 submission, we have had meaningful and productive dialogue with the FDA as we work with reviewers to obtain marketing authorization to market and sell GraftAssureDx.

Our secondary strategic market is in the field of oncology. The inherent uncertainties of developing and commercializing new diagnostic tests for medical use make it impossible to predict the amount of time and expense that will be required to complete the development and commercialization of our oncology tests. We continue to dedicate a minimum amount of resources to our oncology assays, DetermaIO and DetermaCNI, although currently we do not intend to commercialize either in the next 12 months. From time to time, we may evaluate strategic alternatives to commercializing and further developing our oncology assets, including but not limited to a divestiture or licensing of such assets, which we may pursue if determined to be in the best interests of shareholders and customers. We may not be able to accurately estimate the timing of any such strategic alternative, valuation or purchase price, or whether economic or other market conditions will impact the timing, price or market interest. In addition, there is no guarantee that we are able to negotiate terms of a strategic acceptable to the Company, successfully complete a transaction at all or that the results of such strategic alternative will be successful.

Results of Operations – Three Months Ended MarchJune 31,30, 2026 Compared with the Three Months Ended MarchJune 31,30, 2025

Total net revenue decreased to $32,000$239,000 for the three months ended MarchJune 31,30, 2026, compared to $2.1 million$518,000 in the comparable prior period primarily from Laboratory Services as further discussed below. Future Laboratory Services revenue is expected to be impacted as a result of our shift in strategic focus on commercializing our transplant kitted tests, and deploying our sales personnel toward signing new laboratory customers.

Net loss was $4.3$11.3 million for the three months ended MarchJune 31,30, 2026, compared to $6.7$9.7 million for the comparable prior period. Net loss decreasedincreased by $2.4$1.5 million primarily due to the change in fair value of contingent consideration, which was partially offset by a decrease in Laboratory Services revenue and increases in operating expenses.expenses, which was partially offset by the change in fair value of contingent consideration. Further details related to the change in net loss are as follows:

Laboratory Services revenue decreased by $2.1 million.$276,000. We earned Laboratory Services revenue from one existing customer in the amount of approximately $32,000$218,000 during the three months ended June 30, 2026. Kitted Products revenue decreased by $3,000. See below for additional revenue information.

Research and development expenses increased by $2.0$1.2 million, as we continue development of GraftAssureCore, GraftAssureIQ and GraftAssureDx. The main drivers of the increase were laboratory costs, clinical trials,trial professionaland registry service fees, and personnel-related expenses, facilities and insurance, and laboratory costs.expenses. See below for additional details.

Sales and marketing expenses increased by $1.2 million,$456,000, primarily attributable to continued ramp up in sales, marketing and advertising activities related to the transplant business. The main drivers of the increase were personnel-related expensesexpenses, professional fees, and professionalmarketing fees.and advertising expenses, partially offset by facilities and insurance. See below for additional details.

General and administrative expenses decreasedincreased by $124,000,$226,000, primarily due to decreasesincreases in professional fees, and facilities and insurance, partially offset by stock-based compensation, and personnel-related expenses and board fees, and severance expense, partially offset by professional fees. See below for additional details.

Change in fair value of contingent consideration was a gainloss of $5.9$2.3 million infor the three months ended June 30, 2026 compared to a loss of $879,000$2.8 million in the same period of 2025. This change was due to changes in the fair value model inputs and revised estimates on if and when future payouts will occur. See below for additional information.

Total other income, net decreasedincreased by $5,000,$42,000, primarily due to losses in money market funds, partially offset by additional interest income related to higher cash balances from our February 20252026 Offering and Februarylower 2026foreign Offering.currency losses. See below for additional details.

Cost of revenues generally consists of cost of materials, direct labor including benefits, bonus and stock-based compensation, equipment and infrastructure expenses, clinical sample related costs associated with performing Laboratory Services, providing deliverables according to our licensing agreements, license fees due to third-parties, and Kitted Products inventory costs and royalties based on net product sales. Infrastructure expenses include depreciation and amortization of laboratory equipment, allocated rent costs, leasehold improvements, and allocated information technology costs for operations at our CLIA-certified laboratory in Tennessee. Costs associated with generating service revenue are recorded as the tests or services are performed regardless of whether revenue was recognized. Royalties or revenue share payments for licensed technology calculated as a percentage of revenues generated using the associated technology, or from product sales, are recorded as expenses at the time the related revenues are recognized. Cost of revenues for Laboratory Services varies depending on the nature, timing, and scope of customer projects.

In 2025, we started a clinical trial in conjunction with our IVD submission for GraftAssureDx. On March 25, 2026, we submitted a data package to the FDA seeking marketing authorization for GraftAssureDx, which is the kitted version of our transplanted organ rejection monitoring assay. We believe that our assays will perform across multiple tissue, or organ, types, and we are pursuing regulatory authorization in kidneys first. Since our March 2026 submission, we have had meaningful and productive dialogue with the FDA as we work with reviewers to obtain marketing authorization to market and sell GraftAssureDx.

We will owe and pay contingent consideration if various payment milestones are triggered under the merger agreements through which we acquired IGI and Chronix.Chronix Inif 2025,various payment milestones are triggered. As we earnedcontinue ourto firstearn Kitted Products revenue and, accordingly,revenue, we began towill pay the related royalties to Chronix.Chronix under the merger agreement. Changes in the fair value of the contingent consideration will be based on our reassessment of the key assumptions underlying the determination of this liability as changes in circumstances and conditions occur from the IGI and Chronix acquisition dates to the reporting periods being presented, with the subsequent changes in fair value recorded as part of our consolidated results from operations for such periods. See Note 33, “Business Combinations and Contingent Consideration Liabilities,” to our consolidated financial statements included elsewhere in this Report for additional information.

We did not record any provision or benefit for income taxes for the three and six months ended MarchJune 31,30, 2026 and 2025, as we had a full valuation allowance for the periods presented. A valuation allowance is provided when it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We established a full valuation allowance for all periods presented due to the uncertainty of realizing future tax benefits from our net operating loss carry-forwards and other deferred tax assets. See Note 2, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report for additional information.

Our foreseeable material cash requirements as of MarchJune 31,30, 2026, are recognized as liabilities in the consolidated balance sheet or generally are otherwise described in Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report. Our cash requirements are generally derived from our operating and investing activities including expenditures for working capital, human capital, equipment purchases, lease payments, business development, investments in intellectual property, and business combinations. Our office lease obligations (net of sublease payments) and financing lease obligations, and contingent consideration obligations are further described in Note 6 and Note 3, respectively, to our consolidated financial statements included elsewhere in this Report. As of MarchJune 31,30, 2026 and December 31, 2025, other than certain equity-classified warrants (see Note 7, “Common Stock Purchase Warrants,” to our consolidated financial statements included elsewhere in this Report), we had no off-balance sheet arrangements, and historically we have not entered into any such arrangements other than the noted warrants. As of MarchJune 31,30, 2026 and December 31, 2025, we had unrecognized tax benefits totaling $1.6 million (see Note 2, “Income Taxes,” to our consolidated financial statements included elsewhere in this Report).

Since formation, we have financed our operations primarily through the sale of our common stock, preferred stock and warrants to acquire common stock (see Note 7 to our consolidated financial statements included elsewhere in this Report). We have incurred operating losses and negative operating cash flows since inception and had an accumulated deficit of $405.1$416.3 million as of MarchJune 31,30, 2026. At MarchJune 31,30, 2026, we had $28.2$17.8 million of cash and cash equivalents. On February 12, 2026, we raised additional capital as discussed below. Management anticipates that we maywill continue to incur operating losses and negative operating cash flows for the near future. Although it is difficult to predict our liquidity requirements, based on the going concern evaluation discussed in Note 1, “Liquidity,” to our consolidated financial statements included elsewhere in this Report, management believes that it will have sufficient cash to meet its projected operating requirements for at least the next twelve months following the issuance of these consolidated financial statements.

Our remaining restricted cash balance in the total amount of $1.2 million$972,000 as of MarchJune 31,30, 2026 relates to a bank letter of credit required under our Irvine office lease. From July 1, 2025 and continuing on the first day of each calendar month thereafter, the letter of credit will be reduced by an amount equal to $60,714.29 on each such date, until the letter of credit is fully reduced,reduced on October 31, 2027, after which the letter of credit arrangement will terminate and we will have no further obligation to maintain or deliver the letter of credit. See Note 6, “Office and Facilities Leases – Irvine Office Lease,” to our consolidated financial statements included elsewhere in this Report for additional information.

In addition to research, development, sales and marketing expenses, we will incur other expenses from leasing and improving our offices and laboratory facilities in the Nashville, Tennessee area and Göttingen, Germany. We have recently expanded our Nashville and Germany facilities by extending and adding new office and laboratory leases. In addition, we have added various new laboratory instruments to be used in our transplant operations, under new financing leases or from purchases. As of MarchJune 31,30, 2026, we have acquired a total of 34 new lab instruments for use in our transplant operations. As of December 31, 2025, we had a total of 32 lab instruments. See Note 6, “Commitments and Contingencies,” to our consolidated financial statements included elsewhere in this Report for additional operating and financing lease information.

We may need to meet significant cash payment or stock obligations to former IGI and Chronix shareholders in connection with our acquisition of those companies, as disclosed in Note 3 to the consolidated financial statements included elsewhere in this Report. As of MarchJune 31,30, 2026 and December 31, 2025, total contingent consideration liabilities were $38.0$40.2 million and $43.9 million, respectively. To meet the future cash payment obligations, we may have to utilize cash on hand that would otherwise be available to us for other business and operational purposes, which could cause us to delay or reduce activities in the development and commercialization of our tests. In 2025,As we earnedcontinue ourto firstearn Kitted Products revenue, accordingly, we began towill pay the related royalties to Chronix.Chronix under the merger agreement.

During the threesix months ended MarchJune 31,30, 2026, our total research and development expenses were $5.0$9.4 million, our sales and marketing expenses were $2.4$4.3 million, and our general and administrative expenses were $3.0$5.9 million. We also incurred $17,000$99,000 in total cost of revenues. Net loss for the period was $4.3$15.6 million, and our net cash used in operating activities amounted to $7.6$16.9 million. Our cash used in operating activities during 2026 did not include the following noncash items: $631,000$1.3 million in depreciation and amortization expenses, $615,000$1.3 million in stock-based compensation, $32,000$40,000 in other equity compensation expenses, $5.9$3.6 million gain from the change in fair value of contingent consideration, and unrealized foreign currency gainslosses of $5,000.$7,000. Net changes in operating assets and liabilities for the period were $1.3 million$342,000 as aan sourceadditional use of additional cash.

During the threesix months ended MarchJune 31,30, 2025, our total research and development expenses were $2.9$6.2 million, our sales and marketing expenses were $1.2$2.7 million, and our general and administrative expenses were $3.1$5.8 million. We also incurred $813,000$993,000 in total cost of revenues, including $7,000 for amortization of intangible assets. Net loss for the period was $6.7$16.4 million, and our net cash used in operating activities amounted to $5.8$12.0 million. Our cash used in operating activities during 2025 did not include the following noncash items: $491,000$1.1 million in depreciation and amortization expenses, $473,000$977,000 in stock-based compensation, $14,000$88,000 in other equity compensation expenses, $879,000$3.7 million loss from the change in fair value of contingent consideration, and unrealized foreign currency losses of $39,000.$188,000. Net changes in operating assets and liabilities for the period were $1.1$1.6 million as an additional use of cash.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $613,000$1.4 million from cash paid for purchases of machinery and equipment, and construction in progress.

During the threesix months ended MarchJune 31,30, 2025, net cash used in investing activities was $307,000$656,000 from cash paid for purchases of machinery and equipment, and construction in progress.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $24.7$24.1 million primarily from $24.8$24.7 million of net cash proceeds from the February 2026 Offering, partially offset by repayments of financing lease obligations of $143,000.$295,000 and taxes paid related to net share settlement of stock-based awards of $237,000.

During the threesix months ended MarchJune 31,30, 2025, net cash provided by financing activities was $28.6$28.4 million from $28.7 million of net cash proceeds from the February 2025 Offering, partially offset by repayments of financing lease obligations of $98,000.$212,000.

The fair value of contingent consideration after the acquisition date is reassessed by us as changes in circumstances and conditions occur, with the subsequent change in fair value recorded in our consolidated statements of operations. Changes in key assumptions can materially affect the estimated fair value of contingent consideration liabilities and, accordingly, the resulting gain or loss that we record in our consolidated financial statements. During the threesix months ended MarchJune 31,30, 2026 and 2025, we recorded a gain of $5.9$3.6 million and a loss of $879,000,$3.7 million, respectively, related to the fair value of contingent consideration. As of MarchJune 31,30, 2026 and December 31, 2025, total contingent consideration liabilities were $38.0$40.2 million and $43.9 million, respectively. As of MarchJune 31,30, 2026, a hypothetical 2% increase and 2% decrease in the discount rate would have resulted in total contingent consideration liabilities of $34.5$36.6 million and $42.0$44.4 million, respectively. For additional information, see Note 33, “Business Combinations and Contingent Consideration Liabilities,” to our consolidated financial statements included elsewhere in this Report.

We assess the impairment of long-lived assets, which currently consists primarily of right-of-use assets, and machinery and equipment, and finite-lived intangible assets, whenever events or changes in circumstances indicate that such assets might be impaired and the carrying value may not be recoverable. When such events or changes in circumstances are present, we estimate the future cash flows expected to result from the use of the asset (or asset group) and its eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount, we recognize an impairment based on the fair value of such assets.

We establish an allowance for credit losses based on the evaluation of the collectability of its Laboratory Services accounts receivables after considering a variety of factors, including the length of time receivables are past due, significant events that may impair the customer’s ability to pay, such as a bankruptcy filing or deterioration in the customer’s operating results or financial condition, reasonable and supportable forecast that affect the collectability of the reported amount, and historical experience. We continuously monitor collections and payments from customers and maintain a provision for estimated credit losses and uncollectible accounts, if any, based upon its historical experience and any specific customer collection issues that have been identified. Amounts determined to be uncollectible are written off against the credit loss reserve accounts. As of MarchJune 31,30, 2026 and December 31, 2025, we had an allowance for credit losses of $2,000 and $11,000, respectively, related to Laboratory Services.

We recognize compensation expense related to stock-based payment awards made to employees, board directors and other non-employees based on estimated fair values. We estimate the fair value of stock-based payment awards on the grant date and recognize the resulting fair value over the requisite service period on a straight-line basis. For stock-based awards that vest only upon the attainment of one or more performance goals, compensation cost is recognized if and when we determine that it is probable that the performance condition or conditions will be, or have been, achieved. For grants with market-based and time-based vesting conditions, the fair value is estimated using the Monte Carlo simulation model, which includes the estimated period to achievement of the performance and market conditions, which are subject to the achievement of the market-based goals established by us and continued employment. We utilize the Black-Scholes option pricing model for determining the fair value of standard time-based stock options. Our determination of fair value of stock-based payment awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. We estimate the expected volatility using our own stock price volatility for a period equal to the expected term of the options. The expected term of options granted is based on our own experience. The risk-free rate is based on the U.S. Treasury rates in effect during the corresponding period of grant. Key inputs and assumptions may change as we continue to develop our Company estimates, experience and key inputs including our expected term, and stock price volatility based on the trading history of our stock in the public market. Changes in these subjective assumptions can materially affect the estimated value of equity grants and the stock-based compensation that we record in our consolidated financial statements. During the threesix months ended MarchJune 31,30, 2026 and 2025, we recognized total stock-based compensation of $615,000$1.3 million and $473,000,$977,000, respectively. For additional information, see Note 8 to our consolidated financial statements included elsewhere in this Report.