19.           SUBSEQUENT EVENTS

Company Announces Reversal of Previous CMS Decision

On June 5, 2023 the Company had announced that CMS issued the final LCD of Genetic Testing for Oncology (L39365) which established non-coverage for the Company’s widely used PancraGEN^® test effective July 17, 2023. On July 6, 2023, Novitas announced that it was rescinding implementation of the Genetic Testing for Oncology LCD (L39365) so that it will not become effective on July 17, 2023. Novitas issued a new proposed LCD affecting the same companies and tests and reaching the same conclusions as noted in the previously rescinded LCD on July 27, 2023. The Company has been invited to participate in a public meeting presentation regarding the tests in question. The timing and content of any final LCD is uncertain at this time; the process could potentially take a year or longer to reach a conclusion. As a result, the Company is able to continue offering PancraGEN^® and the related Point2^® fluid chemistry tests for amylase, CEA, and glucose.

Appointment of New Chief Financial Officer

On July 24, 2023, the Board appointed Christopher McCarthy, age 32, as Chief Financial Officer of the Company. Mr. McCarthy has served as the Company’s Principal Financial Officer since April 2023. In connection with his appointment as Chief Financial Officer, the Company entered into an employment agreement with Mr. McCarthy on July 31, 2023, effective as of July 24, 2023 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company agreed to pay to Mr. McCarthy a base salary of $220,000 annually to be paid in accordance with the Company’s payroll practices, with any increase in the sole discretion of the Company’s Compensation and Management Development Committee (the “Compensation Committee”) of the Board. Mr. McCarthy is also eligible to receive additional annual incentive compensation with an annual target of up to 40% of the base salary, paid out in cash, less applicable taxes and deductions and/or stock as determined by the Compensation Committee. The Company has awarded to Mr. McCarthy, under the Company’s 2019 Equity Incentive Plan, as amended, (the “Plan”) and related Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the 2019 Equity Incentive Plan (the “RSU Award Agreement”) a grant of restricted stock units (“RSUs”) with respect to 25,000 shares of the Company’s common stock (such grant, the “RSU Grant”). The RSU Grant vested immediately upon its grant date of July 31, 2023 with respect to 12,500 RSUs and the remaining 12,500 RSUs will vest on the six month anniversary of the date of grant. On July 27, 2024, the Company will grant an additional 25,000 RSU’s to Mr. McCarthy, which will be immediately vested.

The Employment Agreement provides for “at will” employment that may be terminated by Mr. McCarthy or by the Company at any time, and for any reason or for no reason. In the event of termination, Mr. McCarthy will be entitled to retain any equity awards that have vested through the date of termination, subject to the terms and conditions of the applicable equity incentive plan and the applicable award agreement. In the event that Mr. McCarthy’s employment is terminated by the Company without Cause or by Mr. McCarthy for Good Reason (in each case, as defined in the Employment Agreement), then subject to, among other things, Mr. McCarthy’s execution and non-revocation of a release agreement in favor of the Company, Mr. McCarthy would be entitled to salary continuation payments for a period of six months.