cgix-20200630

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended June 30, 2020


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

For the transition period from to

Commission file number 001-35817

CANCER GENETICS, INC.

(Exact name of registrant as specified in its charter)


Delaware						04-3462475
State or Other Jurisdiction of Incorporation or Organization						I.R.S. Employer Identification No.


201 Route 17 North 2nd Floor Rutherford, NJ						07070
Address of Principal Executive Offices						Zip Code

(201) 528-9200

Registrant’s Telephone Number, Including Area Code

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Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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


Title of each class	Trading symbol	Name of exchange on which registered
Common Stock, $0.0001 par value per share	CGIX	NASDAQ Capital Market

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 pursuant to Section 13(a) of the Exchange Act. ¨

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

As of August 9, 2020, there were 2,307,612 shares of common stock, par value $0.0001 of Cancer Genetics, Inc. outstanding.

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CANCER GENETICS, INC. AND SUBSIDIARIES

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PART I—FINANCIAL INFORMATION

Item 1.	Condensed Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Sales of Registered Securities	35

Item 3.	Defaults Upon Senior Securities	35

Item 4.	Mine Safety Disclosures	35

Item 5.	Other Information	35

Item 6.	Exhibits	35

SIGNATURE			36

INDEX TO EXHIBITS			37

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PART I — FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

Cancer Genetics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except par value)


	June 30, 2020		December 31, 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,864	$	3,880
Restricted cash	—		350
Accounts receivable	611		696
Earn-Out from siParadigm, current portion	740		747
Excess Consideration Note	—		888
Other current assets	407		546
Current assets of discontinuing operations	—		71
Total current assets	4,622		7,178
FIXED ASSETS, net of accumulated depreciation	524		558
OTHER ASSETS
Operating lease right-of-use assets, net of accumulated amortization	123		94
Earn-Out from siParadigm, less current portion	48		356
Patents and other intangible assets, net of accumulated amortization	2,681		2,895
Investment in joint venture	56		92
Goodwill	3,090		3,090
Other	644		641
Total other assets	6,642		7,168
Total Assets	$	11,788	$	14,904
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	2,674	$	2,072
Obligations under operating leases, current portion	93		193
Obligations under finance leases, current portion	70		68
Deferred revenue	979		1,217
Note payable, net	840		1,277
Advance from NovellusDx, Ltd., net	50		350
Advance from siParadigm, current portion	536		566
Due to Interpace Biosciences, Inc.	628		—
Current liabilities of discontinuing operations	611		1,229
Total current liabilities	6,481		6,972
Obligations under operating leases, less current portion	11		10
Obligation under finance leases, less current portion	97		107
Advance from siParadigm, less current portion	72		252
Warrant liability	26		178
Total Liabilities	6,687		7,519
STOCKHOLDERS’ EQUITY
Preferred stock, authorized 9,764 shares, $0.0001 par value, none issued	—		—
Common stock, authorized 100,000 shares, $0.0001 par value, 2,260 and 2,104 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	—		—
Additional paid-in capital	172,431		171,783

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Accumulated other comprehensive income (loss)	(27)		26
Accumulated deficit	(167,303)		(164,424)
Total Stockholders’ Equity	5,101		7,385
Total Liabilities and Stockholders’ Equity	$	11,788	$	14,904

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Cancer Genetics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Other Comprehensive Loss (Unaudited)

(in thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue	$	1,446	$	1,525	$	2,872	$	3,347
Cost of revenues	640		734		1,454		1,736
Gross profit	806		791		1,418		1,611
Operating expenses:

General and administrative	2,232		1,184		3,765		2,966
Sales and marketing	284		317		625		502
Total operating expenses	2,516		1,501		4,390		3,468
Loss from operations	(1,710)		(710)		(2,972)		(1,857)
Other income (expense):
Interest expense	(97)		(514)		(175)		(1,129)
Interest income	—		—		4		2
Change in fair value of acquisition note payable	—		7		4		7
Change in fair value of other derivatives	—		55		—		86
Change in fair value of warrant liability	25		206		152		199
Change in fair value of siParadigm Earn-Out	(89)		—		(65)		—
Other income (expense)	105		(11)		105		(11)
Total other income (expense)	(56)		(257)		25		(846)
Loss from continuing operations before income taxes	(1,766)		(967)		(2,947)		(2,703)
Income tax expense (benefit)	—		(512)		6		(512)
Loss from continuing operations	(1,766)		(455)		(2,953)		(2,191)
Income (loss) from discontinuing operations	66		(3,318)		74		(6,199)
Net loss	(1,700)		(3,773)		(2,879)		(8,390)
Foreign currency translation gain (loss)	(157)		35		(53)		(41)
Comprehensive loss	$	(1,857)	$	(3,738)	$	(2,932)	$	(8,431)

Basic and diluted net loss per share from continuing operations	$	(0.82)	$	(0.24)	$	(1.39)	$	(1.24)
Basic and diluted net income (loss) per share from discontinuing operations	0.03		(1.74)		0.04		(3.51)
Basic and diluted net loss per share	$	(0.79)	$	(1.98)	$	(1.35)	$	(4.75)

Basic and diluted weighted-average shares outstanding	2,146		1,905		2,126		1,768

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Cancer Genetics, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(in thousands)


	Three and Six Months Ended June 30, 2020
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, January 1, 2020	2,104	$	—	$	171,783	$	26	$	(164,424)	$	7,385
Stock based compensation—employees	—	—		58		—		—		58
Issuance of common stock—VenturEast settlement	3	—		12		—		—		12
Unrealized gain on foreign currency translation	—	—		—		104		—		104
Net loss	—	—		—		—		(1,179)		(1,179)
Balance, March 31, 2020	2,107	—		171,853		130		(165,603)		6,380
Stock based compensation—employees	—	—		47		—		—		47
Fair value of common stock exchanged to settle Note Payable	153	—		531		—		—		531
Unrealized loss on foreign currency translation	—	—		—		(157)		—		(157)
Net loss	—	—		—		—		(1,700)		(1,700)
Balance, June 30, 2020	2,260	$	—	$	172,431	$	(27)	$	(167,303)	$	5,101


	Three and Six Months Ended June 30, 2019
	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total
	Shares	Amount
Balance, January 1, 2019	924	$	—	$	164,458	$	60	$	(157,716)	$	6,802
Stock based compensation—employees	—	—		158		—		—		158
Issuance of common stock - 2019 Offerings, net	952	—		5,412		—		—		5,412
Unrealized loss on foreign currency translation	—	—		—		(76)		—		(76)
Net loss	—	—		—		—		(4,617)		(4,617)
Balance, March 31, 2019	1,876	—		170,028		(16)		(162,333)		7,679
Stock based compensation—employees	—	—		102		—		—		102
Issuance of common stock - Iliad conversions	51	—		350		—		—		350
Increase in fair value of embedded conversion option	—	—		547		—		—		547
Unrealized gain on foreign currency translation	—	—		—		35		—		35
Net loss	—	—		—		—		(3,773)		(3,773)
Balance, June 30, 2019	1,927	$	—	$	171,027	$	19	$	(166,106)	$	4,940

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Cancer Genetics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Six Months Ended June 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,879)	$	(8,390)
Loss (income) from discontinuing operations	(74)		6,199
Net loss from continuing operations	(2,953)		(2,191)

Adjustments to reconcile net loss to net cash used in operating activities, continuing operations:
Depreciation	90		36
Amortization	214		223
Stock-based compensation	113		186
Change in fair value of warrant liability, acquisition note payable and other derivatives	(156)		(292)
Amortization of operating lease right-of-use assets	76		85
Change in fair value of siParadigm Earn-Out	65		—
Amortization of discount on debt and debt issuance costs	63		470
Loss on extinguishment of debt	31		256
Interest added to Convertible Note	—		268
Changes in:
Accounts receivable	82		86
Other current assets	136		3
Other non-current assets	(5)		55
Accounts payable, accrued expenses and deferred revenue	321		889
Due to Interpace Biosciences, Inc.	628		—
Obligations under operating leases	(125)		(107)
Net cash used in operating activities, continuing operations	(1,420)		(33)
Net cash used in operating activities, discontinuing operations	(481)		(4,827)
Net cash used in operating activities	(1,901)		(4,860)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets	(39)		(21)
Distribution from Joint Venture	36		—
Receipts from Excess Consideration Note	888		—
Net cash provided by (used in) investing activities, continuing operations	885		(21)
Net cash provided by (used in) investing activities, discontinuing operations	40		(34)
Net cash provided by (used in) investing activities	925		(55)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on obligations under finance leases	(23)		(25)
Proceeds from offerings of common stock, net of certain offering costs	—		5,412
Payments on Advance from NovellusDx, Ltd.	(300)		—
Net cash provided by (used in) financing activities, continuing operations	(323)		5,387
Net cash provided by financing activities, discontinuing operations	—		75
Net cash provided by (used in) financing activities	(323)		5,462
Effect of foreign exchange rates on cash and cash equivalents and restricted cash	(67)		(41)

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Net increase (decrease) in cash and cash equivalents and restricted cash	(1,366)		506
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Beginning	4,230		511
Ending	$	2,864	$	1,017

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH TO THE CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	2,864	$	667
Restricted cash	—		350
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	2,864	$	1,017


SUPPLEMENTAL CASH FLOW DISCLOSURE
Cash paid for interest	$	7	$	694
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in VentureEast settlement	$	12	$	—
Fair value of common stock exchanged to settle Note Payable	531		—
Right of use assets obtained through operating leases	27		—
Fixed assets obtained through finance leases	17		145
Conversion of debt and accrued interest into common stock	—		350

See Notes to Unaudited Condensed Consolidated Financial Statements.

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Notes to Unaudited Condensed Consolidated Financial Statements (dollars, shares, options and warrants in thousands, except per share amounts)

Note 1. Organization, Description of Business, Basis of Presentation, Reclassifications, Reverse Stock Split, Business Disposals, and Advance from NovellusDx, Ltd.

Cancer Genetics, Inc. (the "Company") supports the efforts of the biotechnology and pharmaceutical industries to develop innovative new drug therapies. Until the closing of the Business Disposals (as defined below) in July 2019, the Company was an emerging leader in enabling precision medicine in oncology by providing multi-disciplinary diagnostic and data solutions, facilitating individualized therapies through its diagnostic tests, services and molecular markers. Following the Business Disposals described below, the Company currently has an extensive set of anti-tumor referenced data based on predictive xenograft and syngeneic tumor models from the acquisition of vivoPharm, Pty Ltd. (“vivoPharm”) in 2017, to provide Discovery Services such as contract research services, focused primarily on unique specialized studies to guide drug discovery and development programs in the oncology and immuno-oncology fields.

The Company was incorporated in the State of Delaware on April 8, 1999 and, until the Business Disposals, had offices and state-of-the-art laboratories located in New Jersey and North Carolina and today continues to have laboratories in Pennsylvania and Australia. The Company’s corporate headquarters are in Rutherford, New Jersey. The Company offers preclinical services such as predictive tumor models, human orthotopic xenografts and syngeneic immuno-oncology relevant tumor models in its Hershey PA facility, and is a leader in the field of immuno-oncology preclinical services in the United States. This service is supplemented with GLP toxicology and extended bioanalytical services in its Australian-based facilities in Clayton, Victoria. Beginning in February 2020, the Company also has an animal testing facility and laboratory in Gilles Plains, South Australia, Australia.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions for interim reporting as prescribed by the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial statements not misleading have been included. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2019, filed with the SEC on May 29, 2020. The condensed consolidated balance sheet as of December 31, 2019, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP. Interim financial results are not necessarily indicative of the results that may be expected for any future interim period or for the year ending December 31, 2020.

Reclassifications

Certain items in the prior year consolidated financial statements have been reclassified to conform to the current presentation.

Reverse Stock Split

On October 24, 2019, the Company amended its Certificate of Incorporation and effected a 30-for-1 reverse stock split of its common stock. All shares and per share information referenced throughout the condensed consolidated financial statements and footnotes have been retrospectively adjusted to reflect the reverse stock split.

Business Disposals - Discontinuing Operations

Interpace Diagnostics Group, Inc.

On July 15, 2019, the Company entered into a secured creditor asset purchase agreement (the “BioPharma Agreement”) by and among the Company, Gentris, LLC, a wholly-owned subsidiary of the Company, Partners for Growth IV, L.P. (“PFG”), Interpace Biosciences, Inc. (“IDXG”) and a newly-formed subsidiary of IDXG, Interpace BioPharma, Inc. (“Buyer”). The BioPharma Agreement provided for a consensual private foreclosure sale by PFG of all assets relating to the Company’s BioPharma Business (as defined in the BioPharma Agreement) to Buyer (the “BioPharma Disposal”).

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Pursuant to the BioPharma Agreement, Buyer purchased from PFG certain assets and assumed certain liabilities of the Company relating to the BioPharma Business, providing as gross consideration $23.5 million, less certain closing adjustments totaling $2.0 million, of which $7.7 million was settled in the form of a promissory note issued by Buyer to the Company (the “Excess Consideration Note”) and the remainder was paid to PFG in cash. PFG utilized the cash proceeds to satisfy the outstanding balances of the Silicon Valley Bank (“SVB”) asset-based revolving line of credit (“ABL”) and the $6.0 million term note to PFG (“PFG Term Note”), and to satisfy certain transaction expenses. The balance of $2.3 million was delivered to the Company in addition to the Excess Consideration Note.

The Excess Consideration Note, which required interest-only quarterly payments at a rate of 6% per year, matured in October 2019 and was settled on October 24, 2019 for $6.0 million, including interest of $24 thousand. The Buyer withheld from the settlement of the Excess Consideration Note approximately $775 thousand for a net worth adjustment (assets less liabilities) of the BioPharma business (“Net Worth”), $153 thousand to secure collection of certain older accounts receivable of the Company purchased by Buyer (“AR Holdback”) and an additional $735 thousand as security for indemnification obligations of the Company for any breaches of certain limited warranties and covenants of the Company and other specified items (“Indemnification Holdback”). The Company received the full amounts of the AR Holdback and the Indemnification Holdback in April and May 2020.

The Company and Buyer also entered into a transition services agreement (the “TSA”) pursuant to which the Company and Buyer are providing certain services to each other to accommodate the transition of the BioPharma Business to Buyer. In particular, the Company agreed to provide to Buyer, among other things, certain personnel services, payroll processing, administration services and benefit administration services (collectively, the “Payroll and Benefits Services”), for a reasonable period commencing July 15, 2019, subject to the terms and conditions of the TSA, in exchange for payment or reimbursement, as applicable, by Buyer for the costs related thereto, including salaries and benefits for certain of the Company’s BioPharma employees during the transition period. The Buyer paid for certain costs of the Company under the TSA with respect to a limited number of employees and professionals. Such shared services amounted to $97 thousand and $199 thousand for the quarter and the six months ended June 30, 2020, respectively. In addition, the Buyer is reimbursing the Company, in part, for the salaries and benefits of John A. Roberts, the Company’s Chief Executive Officer, and Glenn Miles, the Company’s Chief Financial Officer. The reimbursed portion of such salaries and benefits amounted to $48 thousand and $150 thousand for the quarter and six months ended June 30, 2020, respectively. Including the amounts due under the TSA described above, the net amount due to the Buyer is approximately $628 thousand at June 30, 2020. The TSA will continue until a mutually-agreed upon end date.

In connection with the closing of the BioPharma Disposal, the SVB ABL and the PFG Term Note were terminated, and all related liens were released.

siParadigm, Inc.

On July 5, 2019, the Company entered into an asset purchase agreement (the “Clinical Agreement”) by and among the Company and siParadigm, LLC (“siParadigm”), pursuant to which the Company sold to siParadigm, certain assets associated with the Company’s clinical laboratory business (the “Clinical Business,” and such assets, the “Designated Assets”), and agreed to cease operating its Clinical Business. The Designated Assets include intellectual property, equipment and customer lists associated with the Clinical Business. The cash consideration paid by siParadigm at closing was approximately $747 thousand, which includes approximately $45 thousand for certain equipment plus a $1.0 million advance payment of the Earn-Out (as defined below), less approximately $177 thousand of supplier invoices paid directly by siParadigm, an adjustment of $11 thousand and transaction costs of approximately $110 thousand. The Clinical Business sale (together with the BioPharma Disposal, the “Business Disposals”) was completed on July 8, 2019.

The Earn-Out, to be paid over the 24 months post-closing, is based on fees for all tests performed by siParadigm for the Company’s clinical customers during the 12-month period following the closing (the “Earn-Out”). At June 30, 2020, the fair value of the current and long-term portion of the Earn-Out from siParadigm was approximately $740 thousand and $48 thousand, respectively. In addition, the current and long-term portion of the Advance from siParadigm was approximately $536 thousand and $72 thousand, respectively.

Under the Clinical Agreement, the Company agreed to certain non-competition and non-solicitation provisions, including that it cease performing certain clinical tests and will not solicit or seek business from certain of its customers (other than for the Company’s other lines of business) for a period of three years following the closing date (through July 2022).

The Business Disposals have been classified as discontinuing operations in conformity with GAAP. Accordingly, BioPharma and Clinical operations and balances have been reported as discontinuing operations and removed from all financial disclosures

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of continuing operations. As permitted by Accounting Standards Codification (“ASC”) 205-20, the Company elected to allocate approximately $657 thousand and $1.4 million of interest expense on the convertible promissory note (“Convertible Note”) to Iliad Research and Trading, L.P. (“Iliad”) and Advance from NovellusDx, Ltd. (“NDX”) that was not required to be repaid to discontinuing operations during the three and six months ended June 30, 2019, respectively. Unless otherwise indicated, information in these notes to unaudited condensed consolidated financial statements relates to continuing operations.

Note 2. Going Concern

At June 30, 2020, the Company's history of losses required management to assess its ability to continue operating as a going concern, according to ASC 2015-40, Going Concern. Even after the disposal of the Company's BioPharma Business and Clinical Business discussed in Note 1, the Company does not project that cash at June 30, 2020 will be sufficient to fund normal operations for the twelve months from the issuance of these financial statements in the Quarterly Report on Form 10-Q. The Company's ability to continue as a going concern is dependent on reduced losses and improved future cash flows. Alternatively, the Company may be required to raise additional equity or debt capital, or consummate other strategic transactions. The Company is continuing to evaluate strategic options, with the assistance of an investment bank, which could include the sale of assets, a merger, reverse merger or strategic transaction. These factors raise substantial doubt about the Company's ability to continue as a going concern for the twelve months from the issuance of these financial statements in the Quarterly Report on Form 10-Q. The Company can provide no assurance that these actions will be successful or that additional sources of financing will be available on favorable terms, if at all.

The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. In addition, the Company is located in New Jersey and was under a shelter-in-place mandate. Many of the Company's customers worldwide were similarly impacted. The global outbreak of the COVID-19 continues to rapidly evolve, and the extent to which the COVID-19 may impact the Company's business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. As a healthcare provider, the Company is still providing Discovery Services and has yet to experience a significant slowdown in its project work; however, the future of many projects may be delayed. The Company continues to vigilantly monitor the situation with its primary focus on the health and safety of its employees and clients.

In response to COVID-19, the Australian government has provided the Company various grants totaling $105 thousand. The Job Keeper Allowance was provided to supplement employee wages and totaled $55 thousand. An additional $43 thousand relates to cash boost payments received as a reimbursement of payroll taxes. The final $7 thousand relates to small business grants. These grants are recorded as other income.

Note 3. Discontinuing Operations

As described in Note 1, the Company sold its BioPharma Business and Clinical Business in July 2019. In conjunction with the BioPharma Disposal, the Company repaid its debt to SVB and PFG. The Company elected to allocate approximately $657 thousand and $1.4 million of interest expense from the Convertible Note and Advance from NDX to discontinuing operations during the three and six months ended June 30, 2019. Revenue and other significant accounting policies associated with the discontinuing operations have not changed since the most recently filed audited financial statements as of and for the year ended December 31, 2019.

Summarized results of the Company's unaudited condensed consolidated discontinuing operations are as follows for the three and six months ended June 30, 2020 and 2019 (in thousands):

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	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue	$	—	$	4,621	$	—	$	9,638
Cost of revenues	—		3,465		—		7,100
Gross profit	—		1,156		—		2,538
Operating expenses:
Research and development	—		436		—		890
General and administrative	(31)		1,983		(31)		3,510
Sales and marketing	—		590		—		1,513

Transaction costs	—		402		—		651
Total operating expenses	(31)		3,411		(31)		6,564
Income (loss) from discontinuing operations	31		(2,255)		31		(4,026)
Other income (expense):
Interest expense	—		(1,063)		—		(2,173)


Other	35		—		43		—
Total other income (expense)	35		(1,063)		43		(2,173)
Net income (loss) from discontinuing operations	$	66	$	(3,318)	$	74	$	(6,199)

Unaudited condensed consolidated carrying amounts of major classes of assets and liabilities from discontinuing operations were as follows as of June 30, 2020 and December 31, 2019 (in thousands):


	June 30, 2020		December 31, 2019
Current assets of discontinuing operations:
Accounts receivable, net of allowance for doubtful accounts of $4,518 in 2020; $4,536 in 2019	$	—	$	71

Current assets of discontinuing operations	$	—	$	71

Current liabilities of discontinuing operations
Accounts payable and accrued expenses	$	611	$	1,137
Due to Interpace Biosciences, Inc.	—		92
Current liabilities of discontinuing operations	$