UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

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

For the transition period from ___________ to __________

Commission file number 1-37648

Oncocyte Corporation

(Exact name of registrant as specified in its charter)

California		27-1041563
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

15 Cushing

Irvine, California 92618

(Address of principal executive offices) (Zip Code)

(949) 409-7600

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

The number of shares of common stock outstanding as of May 6, 2022 was 118,513,021.

PART 1—FINANCIAL INFORMATION

This Report on Form 10-Q (“Report”) contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology.

Any forward-looking statements in this Report reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those discussed in this Report under Item 1 of the Notes to Condensed Consolidated Interim Financial Statements, 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 as filed with the Securities and Exchange Commission. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

The forward-looking statements in this Report also include, among other things, statements about:

	●	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;
	●	the potential commercialization of our diagnostic tests currently in development;
	●	the timing and success of future clinical trials and the period during which the results of the clinical trials will become available;
	●	the potential receipt of revenue from future sales of our diagnostic tests or diagnostic tests in development;
	●	our assumptions regarding obtaining reimbursement and reimbursement rates;
	●	our estimates regarding future orders of tests and our ability to perform a projected number of tests;
	●	our estimates and assumptions around patient populations, market size and price points for reimbursement for our diagnostic tests;
	●	our estimates regarding future revenues and operating expenses, and future capital requirements;
	●	our intellectual property position;
	●	the uncertainties associated with the coronavirus (COVID-19) ongoing pandemic, including its possible effects on our operations and the demand for our diagnostic tests and Pharma Services;
	●	our ability to efficiently and flexibly manage our business amid uncertainties related to COVID-19;
	●	the impact of government laws and regulations; and
	●	our competitive position.

Unless the context otherwise requires, all references to “Oncocyte,” the “Company,” “we,” “us,” “our,” or similar words refer to Oncocyte Corporation, together with our consolidated subsidiaries.

The description or discussion, in this Form 10-Q, of any contract or agreement is a summary only and is qualified in all respects by reference to the full text of the applicable contract or agreement.

DetermaRx™, DetermaIO™, DetermaTx™, DetermaMx™, DetermaCNI™, and DetermaDx™ are trademarks of Oncocyte Corporation, and TheraSure™ is a trademark of Chronix Biomedical, Inc., regardless of whether the “TM” symbol accompanies the use of or reference to the applicable trademark in this Report.

Item 1. Financial Statements

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	March 31, 2022			December 31, 2021

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	20,412		$	35,605
Accounts receivable		2,122			1,437
Marketable equity securities		574			904
Prepaid expenses and other current assets		1,515			1,197
Total current assets		24,623			39,143

NONCURRENT ASSETS
Right-of-use and financing lease assets, net		2,636			2,779
Machinery and equipment, net, and construction in progress		8,015			5,748
Goodwill		18,684			18,684
Intangible assets, net		90,317			91,245
Restricted cash		1,700			1,700
Other noncurrent assets		298			264
TOTAL ASSETS	$	146,273		$	159,563

LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	2,584		$	2,447
Accrued compensation		3,380			3,376
Accrued expenses and other current liabilities		3,256			2,425
Accrued severance from acquisition, current		2,316			2,352
Accrued liabilities from acquisition, current		624			1,388
Loans payable, net of deferred financing costs, current		945			1,313
Right-of-use and financing lease liabilities, current		850			819
Total current liabilities		13,955			14,120

NONCURRENT LIABILITIES
Right-of-use and financing lease liabilities, noncurrent		3,326			3,545
Contingent consideration liabilities		72,025			76,681

TOTAL LIABILITIES		89,306			94,346

Commitments and contingencies (Note 10)

SHAREHOLDERS’ EQUITY
Preferred stock, no par value, 5,000 shares authorized; no shares issued and outstanding		-			-
Common stock, no par value, 230,000 shares authorized; 92,247 and 92,232 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		254,994			252,954
Accumulated other comprehensive loss		38			37
Accumulated deficit		(198,065	)		(187,774	)
Total shareholders’ equity		56,967			65,217
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	146,273		$	159,563

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

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	2022			2021
	Three Months Ended
	March 31,
	2022			2021

Net revenue	$	1,424		$	1,124

Cost of revenues		1,021			738
Cost of revenues – amortization of acquired intangibles		936			307
Gross profit		(533	)		79

Operating expenses:
Research and development		5,128			3,361
Sales and marketing		3,237			2,254
General and administrative		5,653			4,764
Change in fair value of contingent consideration		(4,656	)		1,060
Total operating expenses		9,362			11,439

Loss from operations		(9,895	)		(11,360	)

OTHER INCOME (EXPENSES), NET
Interest expense, net		(30	)		(68	)
Unrealized gain (loss) on marketable equity securities		(330	)		213
Pro rata loss from equity method investment in Razor		-			(270	)
Other income (expense), net		(36	)		2
Total other expenses, net		(396	)		(123	)

LOSS BEFORE INCOME TAXES		(10,291	)		(11,483	)

Income tax benefit		-			7,564

NET LOSS	$	(10,291	)	$	(3,919	)

Net loss per share: basic and diluted	$	(0.11	)	$	(0.05	)

Weighted average shares outstanding: basic and diluted		92,243			82,123

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

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

	2022			2021
	Three Months Ended
	March 31,
	2022			2021

NET LOSS	$	(10,291	)	$	(3,919	)
Foreign currency translation adjustments		1			-
COMPREHENSIVE LOSS	$	(10,290	)	$	(3,919	)

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

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands)

	Shares		Amount			Income		Deficit			Equity
	Three Months Ended March 31, 2022
	Common Stock					Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount			Income		Deficit			Equity
Balance at December 31, 2021		92,232	$	252,954		$	37	$	(187,774	)	$	65,217
Net Loss		-		-			-		(10,291	)		(10,291	)
Foreign currency translation adjustment		-		-			1		-			1
Stock-based compensation		-		2,010			-		-			2,010
Sale of common shares, including at-the-market transactions		15		31			-		-			31
Financing costs paid to issue common shares, including at-the-market transactions		-		(1	)		-		-			(1	)
Balance at March 31, 2022		92,247	$	254,994		$	38	$	(198,065	)	$	56,967

	Shares		Amount			Income		Deficit			Equity
	Three Months Ended March 31, 2021
	Common Stock					Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount			Income		Deficit			Equity
Balance at December 31, 2020		69,117	$	157,160		$	-	$	(123,677	)	$	33,483
Net Loss		-		-			-		(3,919	)		(3,919	)
Stock-based compensation		-		1,290			-		-			1,290
Sale of common shares, including at-the-market transactions		18,427		71,746			-		-			71,746
Financing costs paid to issue common shares, including at-the-market transactions		-		(2,878	)		-		-			(2,878	)
Stock options exercised		140		348			-		-			348
Warrants exercised		248		802			-		-			802
Issuance of common stock to Razor Genomics		982		5,756			-		-			5,756
Balance at March 31, 2021		88,914	$	234,224		$	-	$	(127,596	)	$	106,628

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

ONCOCYTE CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	2022		2021
	Three Months Ended
	March 31,
	2022		2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(

SEC Form 10-Q filed by Oncocyte Corporation