Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $16.9 million, down from $19.7 million in the same period last year, reflecting a significant impact from COVID-19 related volume decline [23] - Clinical service revenue decreased to $10.5 million from $11.8 million, a decline of 11% [23] - Product revenue fell to $6.4 million from $7.9 million, a decrease of 19% [24] - Gross margin for the quarter was 26%, slightly down from 27% year-over-year [26] - GAAP net loss was $9.9 million or $0.21 per share, with adjusted EBITDA loss of approximately $7.4 million [28] Business Line Data and Key Metrics Changes - The services segment experienced a 28% reduction in excision volume due to the pandemic, although there are signs of recovery [25] - Gross margin in clinical services improved to 13% from 7% year-over-year, while product gross margin decreased to 48% from 57% [26][27] - Research and development expenses increased by 49% to $1.2 million, primarily due to investments in the GenFlex platform [27] Market Data and Key Metrics Changes - The company is ramping testing volume to meet demand, increasing from an initial capacity of approximately 10,000 COVID-19 molecular tests and 10,000 ELISA serological antibody tests per week [18] - The analysis indicated that many states, including New York, New Jersey, and Massachusetts, require significantly more testing to safely lift restrictions [21] Company Strategy and Development Direction - The company is focused on vertical integration and has developed a proprietary COVID-19 testing platform, which includes molecular and antibody tests [17][19] - Enzo aims to improve gross margins by 500 to 1,000 basis points in a post-COVID environment through strategic investments [31] - The company is exploring strategic opportunities in both diagnostics and therapeutics, particularly in response to COVID-19 [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed pride in the company's ability to adapt and continue operations during the pandemic, highlighting the importance of diagnostics [22] - The demand for COVID-19 testing is expected to remain strong, even with the introduction of vaccines, indicating a sustained revenue opportunity [20][42] - Management noted that the pandemic has caused a pause in some strategic activities but remains committed to exploring new opportunities [47] Other Important Information - The company secured $10.6 million in capital during the quarter through grants, loans, and advance payments, strengthening its balance sheet [29] - Cost efficiency measures have yielded over $8 million towards a $10 million annualized savings target [30] Q&A Session Summary Question: About grant revenue and its relation to total cash package - Management clarified that approximately $7 million was received from the PPP loan, which may turn into a grant, along with $750,000 from HHS based on Medicare billings [37] Question: When did sales bottom out and when are they expected to ramp back up? - Management indicated that clinical laboratory volume bottomed out in early April and began recovering through April and May [38] Question: Expected significance of COVID-19 testing revenue in upcoming quarters - Management expects COVID-19 testing to be material but could not provide specific guidance on its impact for the year [41] Question: Strategic opportunities for shareholder benefits - Management is in discussions regarding various aspects of the business, including diagnostics and therapeutics, but noted that the pandemic has required a focus on immediate survival and operational stability [45][46]

```markdown PART I - FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q2 and H1 2020, detailing financial position, performance, and cash flows Consolidated Balance Sheets (Unaudited, in thousands) | Assets & Liabilities | Jan 31, 2020 | July 31, 2019 | | :--- | :--- | :--- | | **Total current assets** | $71,100 | $81,453 | | **Total assets** | $116,782 | $106,640 | | **Total current liabilities** | $23,200 | $16,009 | | **Total liabilities** | $45,922 | $20,612 | | **Total stockholders' equity** | $70,860 | $86,028 | Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Three Months Ended Jan 31, 2020 | Three Months Ended Jan 31, 2019 | Six Months Ended Jan 31, 2020 | Six Months Ended Jan 31, 2019 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $19,384 | $19,327 | $39,591 | $40,587 | | **Operating loss** | $(8,009) | $(8,893) | $(16,212) | $(14,871) | | **Net loss** | $(7,687) | $(8,408) | $(15,335) | $(14,389) | | **Net loss per share** | $(0.16) | $(0.18) | $(0.32) | $(0.30) | Consolidated Statements of Cash Flows (Unaudited, in thousands) | Cash Flow Activity | Six Months Ended Jan 31, 2020 | Six Months Ended Jan 31, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(7,991) | $(14,775) | | **Net cash used in investing activities** | $(434) | $(6,988) | | **Net cash (used in) provided by financing activities** | $(229) | $4,456 | | **Decrease in cash and cash equivalents** | $(8,644) | $(17,313) | - On August 1, 2019, the Company adopted a new lease accounting standard, resulting in the recognition of right-of-use assets of approximately **$24.4 million** and lease liabilities of **$25.1 million** on the balance sheet[33](index=33&type=chunk)[34](index=34&type=chunk) - The company is involved in several legal proceedings, primarily related to patent infringement cases. On February 26, 2020, Enzo filed a petition for writ of certiorari to the U.S. Supreme Court regarding a Federal Circuit decision. Additionally, a shareholder complaint was filed on February 5, 2020, in connection with the company's 2020 annual meeting[96](index=96&type=chunk)[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, revenue trends, operating costs, liquidity, and critical accounting policies for the recent periods [Overview](index=22&type=section&id=Overview) Enzo Biochem operates as an integrated diagnostics and life sciences company, exploring strategic alternatives for its Therapeutics segment - Enzo operates as an integrated diagnostics, clinical lab, and life sciences company with three main segments: Enzo Clinical Lab, Enzo Life Sciences, and Enzo Therapeutics[107](index=107&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) - The company holds a substantial intellectual property portfolio with **463** issued patents worldwide and over **75** pending applications[112](index=112&type=chunk) - The company is exploring strategic alternatives for its Enzo Therapeutics biopharmaceutical venture, including a possible spin-off, sale, joint venture, or licensing of its intellectual property[115](index=115&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Analyzes Q2 and H1 2020 financial results, highlighting revenue trends, operating losses, and the impact of legal expenses Three-Month Financial Comparison (in thousands) | Metric | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $19,384 | $19,327 | $57 | 0% | | **Operating Loss** | $(8,009) | $(8,893) | $884 | 10% | | **Net Loss** | $(7,687) | $(8,408) | $721 | 9% | Six-Month Financial Comparison (in thousands) | Metric | H1 2020 | H1 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $39,591 | $40,587 | $(996) | (2%) | | **Operating Loss** | $(16,212) | $(14,871) | $(1,341) | (9%) | | **Net Loss** | $(15,335) | $(14,389) | $(946) | (7%) | - Q2 2020 Clinical Services revenue increased **4%** YoY to **$12.5 million**, as higher testing volume offset negative reimbursement impacts from the Protecting Access to Medicare Act (PAMA)[120](index=120&type=chunk) - Legal expenses for Q2 2020 increased by **$0.9 million** YoY, primarily due to incurring **$1.8 million** in contested proxy costs for the February 2020 annual meeting[127](index=127&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Details cash, working capital, and cash flow from operations, affirming sufficient liquidity for the next twelve months - Cash, cash equivalents, and restricted cash totaled **$52.3 million** at January 31, 2020, down from **$60.9 million** at July 31, 2019[142](index=142&type=chunk) - Working capital decreased by **$17.5 million** to **$47.9 million**, influenced by the period's net loss and the recognition of **$4.6 million** in current operating lease liabilities following the adoption of a new accounting standard[142](index=142&type=chunk) - Net cash used in operating activities for the first six months of fiscal 2020 was **$8.0 million**, a **$6.8 million** improvement compared to the **$14.8 million** used in the same period of 2019[143](index=143&type=chunk) - The company believes its current cash position is sufficient for its foreseeable liquidity and capital needs over the next twelve months[147](index=147&type=chunk) [Critical Accounting Policies](index=27&type=section&id=Critical%20Accounting%20Policies) Outlines key accounting policies, including revenue recognition, accounts receivable, inventory, leases, and goodwill valuation - The contractual adjustment percentage for Clinical Services was **88.5%** of gross billings for the six months ended January 31, 2020, compared to **88.0%** for the same period in 2019[156](index=156&type=chunk) - A **1-percentage-point** change in the contractual adjustment could result in a change in clinical services revenues of approximately **$2.2 million** for the six-month period[157](index=157&type=chunk) - As of January 31, 2020, approximately **17%** of Clinical Labs net accounts receivable are from a single payer, indicating a concentration of credit risk[39](index=39&type=chunk)[164](index=164&type=chunk) - The company adopted a new lease accounting standard, recognizing right-of-use assets and lease liabilities on the balance sheet based on the present value of payment obligations, primarily using its incremental borrowing rate[172](index=172&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Discusses market risks from foreign currency fluctuations and interest rates, noting potential impacts on sales and earnings - The company is exposed to market risk from foreign currency exchange rates and does not currently engage in hedging[175](index=175&type=chunk) - A hypothetical **10%** increase in the U.S. dollar's value against foreign currencies would decrease annual net sales by **$0.8 million** and unfavorably impact pre-tax earnings by approximately **$1.6 million**[176](index=176&type=chunk)[177](index=177&type=chunk) - Interest rate risk is limited as the company has fixed interest rate financing on its building mortgage and equipment finance leases[178](index=178&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures with no material changes in internal control over financial reporting - Management, including the principal executive and financial officers, concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[179](index=179&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended January 31, 2020, that have materially affected, or are reasonably likely to materially affect, internal controls[180](index=180&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Reports no material legal developments since the last annual report, except for ongoing patent litigation and a new shareholder lawsuit - There have been no material developments regarding legal proceedings other than those disclosed in Note 12 to the Consolidated Financial Statements[184](index=184&type=chunk) - Note 12 discloses that on February 26, 2020, Enzo filed a petition for writ of certiorari to the U.S. Supreme Court concerning a patent case[96](index=96&type=chunk) - A shareholder complaint was filed against the company and its directors on February 5, 2020, related to the 2020 annual meeting[99](index=99&type=chunk) [Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) States no material changes to risk factors previously disclosed in the Annual Report on Form 10-K for FY2019 - There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2019[185](index=185&type=chunk) [Exhibits](index=32&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including SOX certifications and XBRL data files List of Exhibits | Exhibit No. | Description | | :--- | :--- | | 31.1, 31.2 | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | 32.1, 32.2 | Certifications pursuant to 18 U.S.C. §1350 (Section 906 of Sarbanes-Oxley). | | 101 Series | XBRL Instance Document and related taxonomy files. | [Signatures](index=33&type=section&id=Signatures) The Form 10-Q report was signed on March 6, 2020, by the Chief Financial Officer and Principal Accounting Officer - The report was signed on March 6, 2020, by David Bench, Chief Financial Officer and Principal Accounting Officer[189](index=189&type=chunk) ```

Revenue Performance - Revenues for the three months ended October 31, 2019, were $20.2 million, a decrease of $1.1 million or 5% compared to $21.3 million in the same period of 2018[110]. - Clinical services revenues decreased by $1.5 million or 11% to $12.8 million, primarily due to lower reimbursement rates and a decline in genetic testing volume[112]. - Product revenues increased by $0.5 million or 7% to $7.4 million, driven by higher product order volume in the U.S. market[113]. Profitability and Expenses - The gross profit margin on clinical services was 14% in the 2020 period, down from 23% in the 2019 period, attributed to increased volume of lower margin testing[114]. - Research and development expenses rose by $0.3 million or 45% to $1.0 million, entirely attributed to the Clinical Services division for lab-developed tests[116]. - Selling, general and administrative expenses increased by $0.2 million or 2% to approximately $11.1 million during the 2020 period[118]. - Legal and related expenses increased by $0.4 million to $1.7 million, influenced by disputes with third-party payers regarding reimbursements[119]. Cash Flow and Working Capital - As of October 31, 2019, the company had cash and cash equivalents of $57.6 million, a decrease from $60.9 million as of July 31, 2019[122]. - Working capital decreased to $54.3 million from $65.4 million, primarily due to the adoption of a new accounting standard for leases, which recognized $4.6 million in current operating lease liabilities[122]. - Net cash used in operating activities decreased to approximately $2.1 million in fiscal 2020 from $6.2 million in fiscal 2019, a reduction of approximately $4.1 million[123]. - The company expects cash reserves to decrease over the next four quarters as it implements its strategy for developing innovative diagnostic platforms and assays[126]. Accounts Receivable - The company's net accounts receivable totaled $9.877 million as of October 31, 2019, down from $10.738 million as of July 31, 2019[141]. - Approximately 64% of the company's net accounts receivable relates to its Clinical Laboratory Services business as of October 31, 2019[139]. - The contractual adjustment percentage for the three months ended October 31, 2019, was 88.3%, compared to 87.5% for the same period in 2018[134]. - A 1% point change in the contractual adjustment percentage could result in a change in clinical services revenues of approximately $1.1 million for the three months ended October 31, 2019[136]. Debt and Financing - The mortgage agreement has a balance of $4.4 million as of October 31, 2019, with a fixed interest rate of 5.09% per annum[125]. - The Company has fixed interest rate financing on a building mortgage and transportation and equipment finance leases as of October 31, 2019[157]. Assets and Goodwill - The Company values inventory at the lower of cost or net realizable value, with potential write downs based on estimated sales forecasts and demand changes[149]. - Goodwill represents the excess of acquisition costs over the fair value of net assets acquired, with amortization of finite-lived intangible assets ranging from 4 to 15 years[150]. - The Company tests goodwill and long-lived assets for impairment annually, with the option for a qualitative assessment to determine fair value[152]. - As of October 31, 2019, the Company had restricted cash of $750,000 related to a mortgage collateralized by a money market account[153]. Market Risk - The Company is exposed to market risk from foreign currency exchange rate changes, with a hypothetical 10% increase in the U.S. dollar potentially decreasing net sales by $0.8 million annually[155]. - Intercompany balances with subsidiaries in different currencies are at risk of foreign exchange losses, with a hypothetical 10% increase in the U.S. dollar impacting pre-tax earnings by approximately $1.6 million annually[156]. Patents and Intellectual Property - The company holds a substantial portfolio of 406 issued patents worldwide and over 75 pending patent applications, supporting its research and development efforts[102]. - The Company does not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K[129].

Financial Data and Key Metrics Changes - Total revenues for Q4 2019 amounted to $21 million, a decline of 8% from $22.8 million in the same period last year, primarily due to lower industry-wide PAMA reimbursement rates [25] - For the full year, total revenues were $81.2 million, down 20% from $101 million a year ago, reflecting reduced reimbursement payments and insurance claim rejections [34] - GAAP net loss was $5.4 million or $0.11 per share, an improvement of 7% compared to a net loss of $5.8 million or $0.12 per share in the previous year [32] - Non-GAAP net loss amounted to $26.4 million, compared to a loss of approximately $11.4 million in fiscal 2018 [36] - EBITDA loss for the quarter was approximately $5 million, a decrease from $6.1 million in the previous quarter [33] Business Line Data and Key Metrics Changes - Clinical laboratory services revenue increased 11% sequentially from the prior quarter's $11.8 million, while product revenues were up 3% year-over-year due to new marketing initiatives [26] - Lab revenues declined to $13.1 million from $15.1 million in the year-ago period, attributed to reduced insurance reimbursement payments [26] - Gross profit improved sequentially by 21% to $6.3 million, with clinical lab gross profit more than doubling to $1.8 million [27] Market Data and Key Metrics Changes - Testing activity volume increased sequentially this quarter, contributing to an overall lab revenue growth of 11% compared to the previous quarter [24] - The company’s expanding panel of STI testing is one of the most extensive available, addressing a rapidly growing healthcare segment [19] Company Strategy and Development Direction - The company aims to achieve clinical laboratory profitability despite a challenging reimbursement environment, guided by three core pillars: strategic relationships, creating a new paradigm for the laboratory and diagnostic marketplaces, and operational profitability [12][13] - Enzo has retained Lazard to assist in strategic relationships and new venture creation across its four core platforms: molecular, immunohistochemistry, cytology, and immunology [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged reimbursement pressures facing diagnostic labs as a headwind but expressed confidence in the company’s unique products to capitalize on long-term trends in the molecular medicines marketplace [10] - The company has invested approximately $10 million in strategic growth initiatives, which are already resulting in cost reductions for laboratory operations [22] Other Important Information - Enzo received New York State Department of Health approval for its AMPIPROBE HBV Hepatitis B virus viral load monitoring assay, enhancing its portfolio in the viral load monitoring market [17] - The company was issued 74 patents worldwide during fiscal year 2019, including a notable U.S. patent for a new probe technology [20] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded with management looking forward to reporting on the first quarter in December [37][38]

Revenue Sources and Financial Performance - A significant portion of the Company's product revenues comes from academic centers funded by government grants, which may be impacted by reduced funding due to global financial pressures [196]. - The company reported a net income of $2.2 million for fiscal year 2019, but incurred net losses of $10.3 million and $2.5 million for the fiscal years ended July 31, 2018, and 2017, respectively [239]. - Revenues outside the United States accounted for approximately 11% of total revenues in fiscal 2019 [297]. - The company may need additional capital to fund growth, which may not be available on acceptable terms [240]. - The company does not intend to pay cash dividends on its common stock in the foreseeable future, relying on future appreciation for investor returns [307]. Competition and Market Challenges - The Company faces competition from larger commercial laboratories and pharmaceutical companies, which could affect pricing and market share [205][206]. - The clinical testing business is highly competitive, with competition from commercial laboratories, hospital-affiliated laboratories, and physician-office laboratories [245]. - The diagnostic industry faces competition from technologies enabling more convenient testing, such as point-of-care and home testing, which could reduce demand for laboratory-based services [269]. - Future success will depend on the ability to enhance existing products and develop new ones in a rapidly changing technological environment [199][200]. Regulatory and Compliance Risks - The company is subject to extensive government regulation, and loss of required certifications could require ceasing operations in the clinical laboratory business [248]. - The company has not obtained coverage from Medicare or any state Medicaid program for its tests [253]. - Compliance with Medicare policies has led to a steady decline in reimbursements under the Medicare Fee Schedule, directly impacting operating results and cash flows [267]. - The company is subject to the U.S. Foreign Corrupt Practices Act and the UK Anti-Bribery Act, which could result in significant penalties if violated [300]. Investment and Development Risks - The development of new products requires substantial investment and may not yield successful commercialization, impacting returns on research and development expenditures [216][220]. - Patent disputes are frequent and can hinder product commercialization, leading to significant legal costs [226]. - The Company has filed for patents, but there is no guarantee of issuance or the extent of protection provided [227]. - Protecting proprietary rights is crucial for revenue generation, and failure to do so could result in loss of competitive advantage [224][225]. Operational Risks - The Company relies on distributors and contract manufacturers for materials, and any disruption could impair operations [211][212]. - The company must attract and retain highly skilled personnel to support its technical and clinical laboratory services, as competition for such professionals is intense [291]. - The company is subject to risks related to network and information systems, including potential cyber threats that could disrupt operations and lead to financial losses [221][223]. - Cybersecurity risks pose a threat to the integrity and confidentiality of sensitive data, potentially leading to reputational damage and financial penalties [287]. Foreign Currency and International Risks - A hypothetical decline of 10% in foreign currency exchange rates against the U.S. dollar would decrease net sales by $0.9 million and net earnings by $0.2 million annually [427]. - A hypothetical increase of 10% in foreign currency exchange rates against the U.S. dollar would unfavorably impact pre-tax earnings by approximately $1.5 million annually [428]. - The company does not currently engage in any hedging or market risk management tools to mitigate foreign currency exchange rate risks [426]. - The company is subject to significant international business risks, including fluctuations in foreign currency exchange rates and complex regulatory requirements [297]. Financial Stability and Asset Management - As of July 31, 2019, goodwill and intangible assets represented approximately 8% of total assets [244]. - The company had $4.4 million in borrowings under a ten-year mortgage agreement with a fixed interest rate of 5.09% per annum as of July 31, 2019 [242]. - The company has fixed interest rate financing on a mortgage and equipment leases as of July 31, 2019 [429]. - The existence of a material weakness in internal controls could lead to errors in financial statements and a potential restatement, impacting investor confidence [316]. Market Trends and Future Outlook - The healthcare industry is experiencing increased consolidation among health insurance plans, leading to fewer but larger plans with significant bargaining power, which may adversely affect clinical testing providers' reimbursement rates [259]. - The number of individuals covered under managed care contracts has grown, and Medicare may continue to shift to managed care, resulting in reduced payments for medical services, including clinical laboratory services [262]. - The company expects to focus substantial resources on increasing adoption and reimbursement for its current and future tests [254]. - The company’s stock price has experienced historical volatility, influenced by factors such as quarterly operating results and technological innovations [302].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Mark one x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2019 or o 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 001-09974 ENZO BIOCHEM, INC. (Exact name of registrant as specified in its charter) of Incorpo ...

Financial Performance - Revenues for the three months ended January 31, 2019, were $19,327,000, down 26.3% from $26,152,000 for the same period in 2018[15] - Operating loss for the six months ended January 31, 2019, was $14,871,000, compared to a loss of $3,654,000 for the same period in 2018, representing an increase in loss of 308.5%[15] - Net loss for the three months ended January 31, 2019, was $8,408,000, compared to a loss of $901,000 for the same period in 2018, indicating a significant increase in loss of 833.5%[19] - The company reported a comprehensive loss of $14,317,000 for the six months ended January 31, 2019, compared to a loss of $2,036,000 for the same period in 2018[19] - For the six months ended January 31, 2019, Enzo Biochem reported a net loss of $14,389,000 compared to a net loss of $1,541,000 for the same period in 2018, indicating a significant increase in losses[27] - The company reported a comprehensive loss of $8.61 million for the three months ended January 31, 2019[19] - Total revenues for the six months ended January 31, 2019, were $26.297 million, a decrease from $38.264 million in the same period of 2018[55] - Consolidated revenues for the three months ended January 31, 2019, were $19.3 million, a decrease of 26.2% compared to $26.2 million for the same period in 2018[16] - Operating loss for the three months ended January 31, 2019, was $8.9 million, compared to an operating loss of $3.0 million for the same period in 2018[16] - Consolidated revenues for the six months ended January 31, 2019, were $40.587 million, a decrease from $53.028 million for the same period in 2018, representing a decline of approximately 23.5%[91] Assets and Liabilities - Total assets decreased from $101,660,000 in July 2018 to $89,120,000 in January 2019, a decline of approximately 12.3%[10] - Total current assets decreased from $83,200,000 in July 2018 to $63,640,000 in January 2019, a reduction of 23.5%[10] - Total stockholders' equity decreased from $81,121,000 in July 2018 to $67,497,000 in January 2019, a decline of 16.7%[13] - Cash and cash equivalents decreased from $60,041,000 in July 2018 to $41,978,000 in January 2019, a decrease of 30.1%[10] - Total liabilities increased to $21.62 million as of January 31, 2019, compared to $20.54 million as of July 31, 2018[10] - The company’s accumulated deficit increased to $266.61 million as of January 31, 2019, from $252.22 million as of July 31, 2018[13] Cash Flow and Expenditures - Total cash used in operating activities for the six months ended January 31, 2019 was $(14,845,000), a decrease from cash provided of $835,000 in the prior year[27] - Cash and cash equivalents at the end of the period were $42,728,000, down from $64,468,000 at the end of the previous year[27] - Capital expenditures for the six months ended January 31, 2019 were $(6,988,000), compared to $(1,066,000) for the same period in 2018, reflecting increased investment[27] - Capital expenditures for the three months ended January 31, 2018, were $604 million, while for the six months ended January 31, 2019, they were $6,988 million[90][91] Revenue Sources - Clinical services revenue accounted for 65% of total net revenues for the six months ended January 31, 2019, down from 72% in the same period of 2018[47] - Third-party payer revenue for the three months ended January 31, 2019, was $6.509 million, representing 54% of total revenue, compared to $11.102 million and 59% in the same period of 2018[54] - Medicare revenue increased to $2.338 million (20% of total revenue) for the three months ended January 31, 2019, from $3.230 million (17%) in the same period of 2018[54] - Products revenue for the three months ended January 31, 2019, was $7.327 million, slightly up from $7.122 million in the same period of 2018[58] - The company reported no royalty income for the three and six months ended January 31, 2019, compared to $300,000 and $561,000 in the same periods of 2018[57] Research and Development - Research and development expenses for the six months ended January 31, 2019, were $1,561,000, slightly up from $1,559,000 in the same period in 2018[15] - Research and development expenses for the three months ended January 31, 2019, were $0.81 million, compared to $1.56 million for the same period in 2018[16] - Research and development expenses for the six months ended January 31, 2019, totaled $1.561 million, slightly down from $1.559 million in the prior year, reflecting a stable investment in innovation[91] Legal and Regulatory Matters - The company has ongoing patent infringement cases, with a settlement agreement with Roche Diagnostics for $21 million reached on February 5, 2019[92] - The company is appealing several court decisions regarding patent invalidity, including the '180 and '405 patents[92] - The company believes that any potential liabilities from ongoing legal matters will not have a material adverse effect on its financial position or results of operations[94] Shareholder and Stock Information - Weighted average common shares outstanding for the three months ended January 31, 2019, were 47,199,000, compared to 46,941,000 for the same period in 2018[15] - The company excluded approximately 78,000 potential common shares from the calculation of diluted earnings per share for the six months ended January 31, 2019 due to antidilutive effects[45] - As of January 31, 2019, there were 2,367,707 stock options outstanding with a weighted average exercise price of $4.53[78] - The Company awarded 81,500 Performance Stock Units (PSUs) to executive officers, with payouts based on revenue and Adjusted EBITDA growth over a three-year performance period[82] - The intrinsic value of in-the-money stock options at the end of the period was $811,000[78] Accounting Changes - The company adopted a new accounting standard on revenue recognition effective August 1, 2018, which resulted in a restatement of total revenues for the six months ended January 31, 2018 to $53,028,000[31] - The company expects the adoption of the new lease accounting standard to materially impact its consolidated financial statements starting August 1, 2019[38] - The total revenues for the six months ended January 31, 2018 were adjusted to $53,028 thousand after the adoption of the new accounting standard[34] - Total revenues for the three months ended January 31, 2018, were $26,152 million, down from $26,952 million reported previously, reflecting an adjustment of $(800) million due to a new accounting standard[36]