Insight Molecular Diagnostics Inc 10-K for FY2023

Insight Molecular Diagnostics Inc. (IMDX)

10-K 2024-04-16 For: 2023-12-31

Added on April 08, 2026

About this 10-K

Insight Molecular Diagnostics Inc filed this 10-K on April 16, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.5M; up 56.9% from $958K a year earlier
Net loss: $27.78M; compared with a net loss of $72.9M a year earlier
Diluted EPS: -$3.75; compared with -$13.25 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, no par value		OCX		The Nasdaq Stock Market LLC

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

			Page Number
Cautionary Note Regarding Forward-Looking Statements			3

Industry and Market Data			3

Part I.	Item 1.	Business	4

	Item 1A.	Risk Factors	22

	Item 1B.	Unresolved Staff Comments	46

	Item 1C.	Cybersecurity	46

	Item 2.	Properties	46

	Item 3.	Legal Proceedings	46

	Item 4.	Mine Safety Disclosures	46

Part II.	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	47

	Item 6.	[Reserved]	47

	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48

	Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	60

	Item 8.	Financial Statements and Supplementary Data	61

	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	108

	Item 9A.	Controls and Procedures	108

	Item 9B.	Other Information	109

	Item 9C.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections	109

Part III.	Item 10.	Directors, Executive Officers, and Corporate Governance	110

	Item 11.	Executive Compensation	110

	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	110

	Item 13.	Certain Relationships and Related Transactions, and Director Independence	110

	Item 14.	Principal Accountant Fees and Services	110

Part IV.	Item 15.	Exhibits and Financial Statement Schedules	111

	Item 16.	Form 10-K Summary	116

Signatures			117

	●	the timing and potential achievement of future milestones;

	●	the timing and our ability to obtain and maintain coverage and reimbursements from the Centers for Medicare and Medicaid Services and other third-party payers;

	●	our plans to pursue research and development of diagnostic test candidates;

	●	the potential commercialization of diagnostic tests currently in development;

	●	the timing and success of future clinical research and the period during which the results of the clinical research will become available;

	●	the potential receipt of revenue from current sales of our diagnostic tests and/or diagnostic tests in development;

	●	our assumptions regarding obtaining reimbursement and reimbursement rates of our current diagnostic tests and/or diagnostic tests in development;

	●	our estimates regarding future orders of tests and our ability to perform a projected number of tests;

	●	our estimates and assumptions around the patient populations, market size and price points for reimbursement for our diagnostic tests

	●	our estimates regarding future revenues, operating expenses, and future capital requirements;

	●	our intellectual property position;

	●	the impact of government laws and regulations; and

	●	our competitive position.

	●	The claims of any patents that are issued may not provide meaningful protection, may not provide a basis for commercially viable diagnostic tests or may not provide us with any competitive advantages;
	●	Our patents may be challenged by competitors or other third parties and, if the third parties are successful in their challenge, the patents could be invalidated, permitting third parties to use the patented inventions to compete with us;
	●	Others may have patents that relate to our technology or business that may prevent us from marketing our diagnostic test candidates unless we are able to obtain a license to those patents;
	●	Patent applications to which we have rights may not result in issued patents and the information disclosed in those applications could be used by our competitors;
	●	Changes in government regulations or patent laws; and
	●	We may not be successful in developing additional proprietary technologies that are patentable.

	●	Stage 1: End the general enforcement discretion approach with respect to MDR requirements and correction and removal reporting requirements one year after FDA publishes a final phaseout policy, which FDA intends to issue in the preamble of the final rule.

	●	Stage 2: End the general enforcement discretion approach with respect to requirements other than MDR, correction and removal reporting, quality system (“QS”), and premarket review requirements two years after FDA publishes a final phaseout policy.

	●	Stage 3: End the general enforcement discretion approach with respect to QS requirements three years after FDA publishes a final phaseout policy.

	●	Stage 4: End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs three and a half years after FDA publishes a final phaseout policy, but not before October 1, 2027.

	●	Stage 5: End the general enforcement discretion approach with respect to premarket review requirements for moderate risk and low risk IVDs (that require premarket submissions) four years after FDA publishes a final phaseout policy, but not before April 1, 2028.

	●	We may incur significant cash payment and common stock issuance obligations under our agreements arising from our investments in Insight and Chronix.
	●	There is substantial doubt about our ability to continue as a going concern and management’s plans to alleviate this condition may be unsuccessful. We will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our operations.
	●	We have incurred operating losses since inception, and we do not know if we will attain profitability.
	●	It is likely that we will need to issue additional equity or debt securities in order to raise additional capital needed to pay our operating expenses.

	●	Our revenues in the near term will depend on our ability to commercialize a small number of diagnostic tests.
	●	The research and development work we are doing is costly, time consuming, and uncertain as to its results.
	●	Sales of our diagnostic tests could be adversely impacted by the reluctance of physicians to adopt the use of our tests and by the availability of competing diagnostic tests.
	●	We have limited capital, marketing, sales, and regulatory compliance resources for the commercialization of our diagnostic tests.
	●	We may face technology transfer challenges and expenses in adding new tests to our portfolio and in expanding our reach into new geographical areas on new instrument platforms.
	●	If our laboratory facilities become damaged or inoperable, or we are required to vacate any facility, our ability to provide services and pursue our research and development and commercialization efforts may be jeopardized.
	●	There is a limited number of manufacturers of molecular diagnostic testing equipment and related chemical reagents necessary for the provision of our diagnostic tests.
	●	If we fail to enter into and maintain successful strategic alliances for diagnostic tests that we elect to co-develop, co-market, or out-license, we may have to reduce or delay our diagnostic test development or increase our expenditures.
	●	We may become dependent on possible future 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.
	●	Our business could be adversely affected if we lose the services of the key personnel upon whom we depend.
	●	Our business and operations could suffer in the event of system failures.
	●	Failure of our internal control over financial reporting could harm our business and financial results.
	●	We are subject to laws and regulations governing corruption, which may require us to develop, maintain and implement costly compliance programs.
	●	We may undertake strategic acquisitions in the future, and difficulties integrating such acquisitions could damage our ability to achieve or sustain profitability.
	●	We are subject to state laws in California that require gender and diversity quotas for boards of directors of public companies headquartered in California.

	●	Our operations as a clinical laboratory are subject to oversight by CMS under CLIA, as well as certain state agencies, and any failure to maintain our CLIA or applicable state permits and licenses may affect our ability to commercialize our diagnostic tests.
	●	If the FDA takes the position that any of our tests are not within the scope of its policy on enforcement discretion for laboratory-developed tests, or otherwise determines that it will seek to actively regulate one or more of our diagnostic tests, responding to such a regulatory position could lead to delays in commercialization, or (if encountered after commercialization) requirements to halt the commercial provision of our tests until FDA marketing authorization is obtained.
	●	We will also need to obtain FDA and other regulatory approvals for any IVDs that we may develop, in order to market those IVD tests.
	●	Clinical trial failures can occur at any stage of the testing and we may experience numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent commercialization of our current or future diagnostic tests.
	●	The commercial success of our diagnostic tests depends on the availability and sufficiency of third-party payer coverage and reimbursement, which may be limited or unavailable.
	●	Changes in healthcare laws and policies may have a material adverse effect on our financial condition, results of operations and cash flows.
	●	Because of certain Medicare billing policies, we may not receive complete reimbursement for tests provided to Medicare patients.
	●	Long payment cycles of Medicare, Medicaid and other third-party payers, or other payment delays, could hurt our cash flows and increase our need for working capital.
	●	Private health insurance company policies may deny coverage or limit the amount they will reimburse us for the performance of our diagnostic tests.
	●	We will be required to comply with federal and state laws governing the privacy of health information, and any failure to comply with these laws could result in material criminal and civil penalties.
	●	If we are successful in commercializing our diagnostic tests, we will be obligated to comply with numerous additional federal and state statutes and regulations pertaining to our business and be subject to government oversight and scrutiny for our compliance with such laws. Laboratory and health care regulatory compliance efforts are expensive and time-consuming, and failure to maintain compliance with applicable laws could result in enforcement action which could be detrimental to our business.

	●	We rely on patents and trade secrets, and our financial success will depend, in part, on our ability to obtain commercially valuable patent claims, protect our intellectual property rights and operate without infringing upon the proprietary rights of others.
	●	We may not be able to obtain patent protection for our diagnostic tests if our pending U.S. patent applications are found to be directed to unpatentable subject matter.
	●	Changes to the patent laws in the United States and other jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our diagnostic tests.
	●	Other companies or organizations may challenge our patent rights or may assert patent rights that prevent us from developing and commercializing our diagnostic tests.
	●	If we are unable to protect the confidentiality of our trade secrets, the value of our technology could be materially adversely affected, and our business would be harmed.
	●	We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.
	●	We may not be able to enforce our intellectual property rights throughout the world.
	●	If we are sued for infringing intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from developing or commercializing our diagnostic tests.
	●	Patent terms may be inadequate to protect our competitive position on our diagnostic tests for an adequate amount of time.

	●	We previously identified and remediated a material weakness in our internal control over financial reporting.
	●	Our recently implemented reverse stock split may decrease the liquidity of our common stock and result in higher transaction costs.
	●	The effective increase in the authorized number of shares of our common stock as a result of our reverse stock split could have anti-takeover implications and result in further dilution to our existing shareholders.
	●	Since we don’t pay dividends, our stock may not be a suitable investment for those needing dividend income.
	●	Our former parent company may sell its Oncocyte shares to raise capital to finance its operations.

	●	We plan to continue to incur substantial research and development expenses 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.

	●	Sales or other issuances of additional equity securities by us could result in the dilution of the interests of our shareholders.

	●	The IVDs that we may develop cannot be sold until the CMS or the FDA, and corresponding foreign regulatory authorities approve or authorize the laboratory tests or the IVDs for medical use.

	●	We will have to conduct expensive and time-consuming clinical trials of new diagnostic tests. The full cost of conducting and completing clinical trials necessary to obtain FDA clearance or approval of IVD tests or for gaining reimbursement from health insurance companies, health maintenance organizations, Medicare, and other third-party payers cannot be presently determined but could exceed our financial resources.

	●	Data obtained from preclinical and clinical studies is susceptible to varying interpretations that could delay, limit or prevent regulatory agency clearances or approvals. Delays or denials of the regulatory clearances or approvals may be encountered as a result of changes in regulatory agency policy, regulations, or laws.

	●	A diagnostic test that is cleared or approved for marketing may be subject to restrictions on use.

	●	The FDA can withdraw approval of an FDA regulated product if problems arise.

	●	Delays in securing clinical investigators or trial sites for our clinical trials;

	●	Delays in obtaining Institutional Review Board and other regulatory approvals to commence a clinical trial;

	●	Slower than anticipated rates of patient recruitment and enrollment, or failing to reach the targeted number of patients due to competition for patients from other trials;

	●	Limited or no availability of coverage, reimbursement and adequate payment from health maintenance organizations and other third-party payers for the use of our diagnostic test candidates in our clinical trials;

	●	Negative or inconclusive results from clinical trials;

	●	Approval and introduction of new diagnostic or changes in standards of practice or regulatory guidance that render our clinical trial endpoints or the targeting of our proposed indications obsolete;

	●	Inability to monitor patients adequately during or after treatment or problems with investigator or patient compliance with the trial protocols;

	●	Inability to replicate in large controlled studies safety and efficacy data obtained from a limited number of patients in uncontrolled trials; and

	●	Inability or unwillingness of medical investigators to follow our clinical protocols.

	Years Ended
	December 31,
	2023			2022			$ Change			% Change
	(In thousands, except percentage change values)
Net revenue	$	1,503		$	958		$	545			57	%
Cost of revenues		1,002			880			122			14	%
Cost of revenues – amortization of acquired intangibles		88			96			(8	)		-8	%
Research and development		9,294			7,301			1,993			27	%
Sales and marketing		2,795			1,132			1,663			147	%
General and administrative		11,182			21,881			(10,699	)		-49	%
Change in fair value of contingent consideration		(5,762	)		(31,019	)		25,257			-81	%
Impairment losses		6,757			-			6,757			100	%
Goodwill impairment		-			18,684			(18,684	)		-100	%
Loss on disposal and held for sale assets		1,283			-			1,283			100	%
Loss from operations		(25,136	)		(17,997	)		(7,139	)		40	%
Total other income (expenses)		281			(615	)		896			-146	%
Loss from continuing operations		(24,855	)		(18,612	)		(6,243	)		34	%
Loss from discontinued operations (Note 13)		(2,926	)		(54,290	)		51,364			-95	%
Net loss	$	(27,781	)	$	(72,902	)	$	45,121			-62	%

●	Pharma Services revenue increased by $509,000 due to an increased number of contracts performed during the period. See below for additional information.

●	Cost of revenues increased by $122,000, primarily related to labor and allocated overhead associated with performing our Pharma Services. See below for additional information.

●	Cost of revenues - amortization of acquired intangibles decreased by $8,000, and relates to noncash amortization of acquired intangible assets such as our customer relationship intangible assets acquired as part of the Insight merger.

●	Research and development expenses increased by $2.0 million, as we continue development of DetermaIO, VitaGraft (formerly TheraSure Transplant Monitor), and DetermaCNI (formerly TheraSure - CNI Monitor). The main drivers of the increase were personnel-related expenses, depreciation and amortization, and stock-based compensation (see below for additional details).

●	Sales and marketing expenses increased by $1.7 million, primarily attributable to continued ramp in sales, marketing and advertising activities related to the transplant business, as well as supporting the commercialization efforts within oncology. The main driver of the increase was personnel-related expenses (see below for additional details).

●	General and administrative expenses decreased by $10.7 million, primarily due to decreases in stock-based compensation, headcount and personnel-related expenses. Headcount reductions were initiated in the second half of 2022 and continued into the first half of 2023. See below for additional details.

●	Change in fair value of contingent consideration was a gain in both periods presented, and decreased by $25.3 million due to changes in the fair value model inputs and revised estimates on if and when future payouts will occur. The change is also driven in part by the Chronix Amendment which amended the earnout considerations, and eliminated the Chronix Milestone Payments, 15% Royalty Payments and Sale Payment obligations (see Note 3 to our consolidated financial statements included elsewhere in this Report). See below for additional information.

●	Impairment losses relate to two 2023 assets impairment charges, including $5.0 million to in-process research and development (“IPR&D”) intangible assets (see Note 5 to our consolidated financial statements included elsewhere in this Report) and $1.8 million to leasehold improvements (see Note 4).

●	Goodwill impairment of $18.7 million was recorded during the fourth quarter of 2022 after we assessed our current environment and concluded that it was more-likely-than-not that the fair value of the goodwill was less than the carrying value. At that time, the carrying value of goodwill was comprised of, $9.2 million and $9.5 million from the Insight and Chronix acquisitions, respectively. See Note 2, “Intangible Assets and Goodwill,” to our consolidated financial statements included elsewhere in this Report for additional information.

●	Loss on disposal and held for sale assets of $1.3 million recorded in 2023 relates to various agreements to sell laboratory equipment and is mainly comprised of an impairment charge. See Note 2, “Assets Held for Sale and Discontinued Operations,” to our consolidated financial statements included elsewhere in this Report for additional information.

●	Total other income (expense) increased by $896,000, from an expense of $615,000 in 2022, to income of $281,000 in 2023, primarily due to additional interest income in 2023 and the change in realized and unrealized loss on marketable equity securities. See below for additional information.

	●	Going Concern Assessment;
	●	Contingent Consideration Liabilities;
	●	Intangible Assets;
	●	Impairment of Long-Lived Assets;
	●	Revenue Recognition and Allowance for Credit Losses;
	●	Stock-Based Compensation; and
	●	Income Taxes.

	Page
Report of Independent Registered Public Accounting Firm (Marcum LLP)	62
Report of Independent Registered Public Accounting Firm (WithumSmith+Brown, PC)	63
Consolidated Balance Sheets	65
Consolidated Statements of Operations	66
Consolidated Statements of Comprehensive Loss	67
Consolidated Statements of Series A Redeemable Convertible Preferred Stock and Shareholders’ Equity	68
Consolidated Statements of Cash Flows	69
Notes to Consolidated Financial Statements	70

	●	The assessment of whether the sale meets the criteria for held for sale;
	●	The assessment of whether the sale of Razor represents a discontinued operation; and
	●	The determination of the impairment charges.

	2023			2022
	Years Ended
	December 31,
	2023			2022

Net revenue	$	1,503		$	958

Cost of revenues		1,002			880
Cost of revenues – amortization of acquired intangibles		88			96
Gross profit (loss)		413			(18	)

Operating expenses:
Research and development		9,294			7,301
Sales and marketing		2,795			1,132
General and administrative		11,182			21,881
Change in fair value of contingent consideration		(5,762	)		(31,019	)
Impairment losses		6,757			-
Goodwill impairment		-			18,684
Loss on disposal and held for sale assets		1,283			-
Total operating expenses		25,549			17,979

Loss from operations		(25,136	)		(17,997	)

Other (expenses) income:
Interest expense		(52	)		(83	)
Realized and unrealized loss on marketable equity securities, net		(61	)		(471	)
Other income (expenses), net		394			(61	)
Total other income (expenses)		281			(615	)

Loss from continuing operations		(24,855	)		(18,612	)

Loss from discontinued operations (Note 13)		(2,926	)		(54,290	)

Net loss	$	(27,781	)	$	(72,902	)

Less: dividends and accretion of Series A redeemable convertible preferred stock		(942	)		(520	)

Net loss attributable to common stockholders	$	(28,723	)	$	(73,422	)

Net loss from continuing operations per share: basic and diluted	$	(3.37	)	$	(3.45	)
Net loss from discontinued operations per share: basic and diluted	$	(0.38	)	$	(9.80	)
Net loss attributable to common stockholders per share: basic and diluted	$	(3.75	)	$	(13.25	)

Weighted average shares outstanding: basic and diluted		7,651			5,540

	Shares			Amount			Shares		Amount			Income		Deficit			Equity
	Year Ended December 31, 2023
	Series A Redeemable Convertible Preferred Stock						Common Stock					Accumulated Other Comprehensive		Accumulated			Total Shareholders’
	Shares			Amount			Shares		Amount			Income		Deficit			Equity
Balance at December 31, 2022		6		$	5,302			5,932	$	294,929		$	39	$	(260,676	)	$	34,292
Cumulative change in accounting principle (Note 2)		-			-			-		-			-		(1,419	)		(1,419	)
Balance at January 1, 2023, as adjusted		6			5,302			5,932		294,929			39		(262,095	)		32,873
Net Loss		-			-			-		-			-		(27,781	)		(27,781	)
Foreign currency translation adjustment		-			-			-		-			10		-			10
Stock-based compensation		-			-			-		2,760			-		-			2,760
Vesting of bonus awards		-			-			-		91			-		-			91
Sale of common shares, net of financing costs		-			-			2,275		13,421			-		-			13,421
Deemed dividend on Series A redeemable convertible preferred stock		-			118			-		(118	)		-		-			(118	)
Shares issued upon vesting of RSUs		-			-			45		-			-		-			-
Shares issued for consultant services		-			-			9		36			-		-			36
Redemption of Series A redeemable convertible preferred stock		(1	)		(1,118	)		-		-			-		-			-
Accretion of Series A convertible preferred stock to redemption value		-			824			-		(824	)		-		-			(824	)
Balance at December 31, 2023		5		$	5,126			8,261	$	310,295		$	49	$	(289,876	)	$	20,468

	Year Ended December 31, 2022
	Series A Redeemable Convertible Preferred Stock				Common Stock					Accumulated Other Comprehensive		Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount			Income		Deficit			Equity
Balance at December 31, 2021		-	$	-		4,612	$	252,954		$	37	$	(187,774	)	$	65,217
Balance		-	$	-		4,612	$	252,954		$	37	$	(187,774	)	$	65,217
Net Loss		-		-		-		-			-		(72,902	)		(72,902	)
Foreign currency translation adjustment		-		-		-		-			2		-			2
Stock-based compensation		-		-		-		10,042			-		-			10,042
Shares issued upon vesting of RSUs, net of shares retired to pay employees’ taxes		-		-		6		-			-		-			-
Issuance of common shares, including at-the-market transactions, net of financing costs and underwriting discounts		-		-		1,314		32,453			-		-			32,453
Issuance of Series A redeemable convertible preferred stock, net of financing costs		6		4,782		-		-			-		-			-
Accretion of Series A convertible preferred stock to redemption value		-		520		-		(520	)		-		-			(520	)
Balance at December 31, 2022		6	$	5,302		5,932	$	294,929		$	39	$	(260,676	)	$	34,292
Balance		6	$	5,302		5,932	$	294,929		$	39	$	(260,676	)	$	34,292

	December 31, 2023
	Fair value		Level 1		Level 2		Level 3
	(In thousands)
Liabilities:
Contingent consideration liabilities (Note 3)	$	39,900	$	-	$	-	$	39,900
Total	$	39,900	$	-	$	-	$	39,900

	December 31, 2022
	Fair value		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Marketable equity securities	$	433	$	433	$	-	$	-
Total	$	433	$	433	$	-	$	-

Liabilities:
Contingent consideration liabilities (Note 3)	$	45,662	$	-	$	-	$	45,662
Total	$	45,662	$	-	$	-	$	45,662

	Contractual		Fair Value on the
	Value		Merger Date
	(In thousands)
Milestone 1	$	1,500	$	1,340
Milestone 2		3,000		1,830
Milestone 3 ⁽^a)		1,500		770
Royalty 1 ^(b)		See(b)		5,980
Royalty 2 ^(b)		See(b)		1,210
Total	$	6,000	$	11,130

^(a)	Indicates the maximum payable if the Milestone is achieved.
^(b)	As defined, Royalty Payments are based on a percentage of future revenues of DetermaIO and Pharma Services over their respective useful life, accordingly there is no fixed contractual value for the Royalty Contingent Consideration.

⁽¹⁾	See Note 3 for information on the Insight Merger.
⁽²⁾	See Note 3 for information on the Chronix Merger.
⁽³⁾	Amortization of intangible assets is included in “Cost of revenues – amortization of acquired intangibles” on the consolidated statements of operations because the intangible assets pertain directly to the revenues generated from the acquired intangibles.

	Amortization
	(In thousands)
Year ending December 31,
2024	$	88
2025		7
Total	$	95

	Operating			Financing
	Leases			Leases
	(In thousands)
Year Ending December 31,
2024	$	903		$	-
2025		869			-
2026		899			-
2027		695			-
Total minimum lease payments		3,366			-
Less amounts representing interest		(636	)		-
Present value of net minimum lease payments	$	2,730		$	-

				Options					RSUs
												Weighted
	Shares						Weighted Average					Average Grant
	Available for Grant			Number Outstanding			Exercise Price		Number Outstanding			Date Fair Value
	(In thousands, except weighted average amounts)
Balance at December 31, 2022		442			458		$	59.39		22		$	12.23
RSUs vested		n/a			n/a			n/a		(13	)	$	7.97
RSUs granted		(9	)		n/a			n/a		5		$	4.00
Options granted		(355	)		355		$	5.50		n/a			n/a
Options exercised		n/a			-		$	-		n/a			n/a
Options forfeited/expired		261			(281	)	$	57.90		n/a			n/a
RSUs forfeited		2			n/a			n/a		(1	)	$	19.40
Performance RSUs forfeited		15			n/a			n/a		(8	)	$	19.40
Balance at December 31, 2023		356			532		$	24.56		5		$	4.00
Weighted average remaining contractual life (years)					8.30
Options exercisable at December 31, 2023					160		$	56.34
Weighted average remaining contractual life (years)					6.05
Stock-based compensation expense for the year				$	2,721				$	39
Unrecognized stock-based compensation expense				$	2,659				$	9
Weighted average remaining recognition period (years)					2.07					0.48

	2023			2022⁽¹⁾
	December 31,
	2023			2022⁽¹⁾
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards and capital loss carryforwards	$	61,760		$	57,675
Research and development credit carryforwards		4,054			3,680
Marketable equity securities		-			364
Stock-based and other compensation		2,368			5,067
Right-of-use liability		756			952
Razor investment		2,303			-
Capitalized R&D⁽²⁾		6,026			4,011
Capital loss carryforward		5,372			-
Other		8			49
Total deferred tax assets		82,647			71,798
Valuation allowance		(67,314	)		(54,408	)
Deferred tax assets, net of valuation allowance		15,333			17,390
Deferred tax liabilities:
Right-of-use asset		(453	)		(580	)
Intangibles and fixed assets		(14,880	)		(16,810	)
Total deferred tax liabilities		(15,333	)		(17,390	)
Net deferred taxes	$	-		$	-

⁽¹⁾	The 2022 net operating loss carryforwards and Razor investment lines have been updated to conform to the 2023 presentation.
⁽²⁾	Relates to research and development expenditures required to be capitalized as of December 31, 2023 and 2022.

	2023			2022⁽¹⁾
	Years Ended December 31,
	2023			2022⁽¹⁾
Computed tax benefit at federal statutory rate		21	%		21	%
Permanent differences		0	%		-8	%
State tax benefit		13	%		1	%
Research and development credits		1	%		-3	%
Change in fair value of contingent consideration		5	%		35	%
Change in valuation allowance		-48	%		-19	%
Goodwill impairment		0	%		-21	%
Stock-based compensation		-11	%		-3	%
Officers compensation		2	%		-3	%
Razor investment		19	%		0	%
Expiring tax attributes		-2	%		0	%
Total		0	%		0	%

	●	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
	●	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
	●	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.