Aspira Women's Health
Annual Report 2019

Plain-text annual report

ASPIRA WOMEN'S HEALTH INC. FORM 10-K (Annual Report) Filed 04/07/20 for the Period Ending 12/31/19 Address Telephone CIK Symbol SIC Code Industry 12117 BEE CAVES ROAD BUILDING THREE SUITE 100 AUSTIN, TX, 78738 512-519-0400 0000926617 AWH 2835 - In Vitro and In Vivo Diagnostic Substances Biotechnology & Medical Research Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2021, EDGAR Online, a division of Donnelley Financial Solutions. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use.   UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549 FORM 10-K☒☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2019 or☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from __________ to __________Commission file number: 001-34810 Vermillion, Inc.(Exact name of registrant as specified in its charter)Delaware33-0595156(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)12117 Bee Caves Road, Building Three, Suite 100 Austin, Texas78738(Address of Principal Executive Offices)(Zip Code)Registrant's telephone number, including area code: (512) 519-0400 Securities registered pursuant to Section 12(b) of the Act: Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, par value $0.001 per shareVRMLThe NASDAQ Stock MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒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 Actof 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subjectto 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 Rule405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required tosubmit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” inRule 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 withany 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 ☒  The aggregate market value of voting common stock held by non-affiliates of the registrant is $47,231,865 and is based upon the last sales priceas quoted on The NASDAQ Capital Market as of June 28, 2019.Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the SecuritiesExchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐As of March 24, 2020, the registrant had 97,288,657 shares of common stock, par value $0.001 per share, outstanding.DOCUMENTS INCORPORATED BY REFERENCECertain information from the registrant’s definitive Proxy Statement for its Annual Meeting of Stockholders is incorporated by reference intoPart III of this report. The registrant intends to file the Proxy Statement with the Securities and Exchange Commission within 120 days ofDecember 31, 2019.  VERMILLION, INC.FORM 10-KFor the Fiscal Year Ended December 31, 2019Table of Contents Page No. PART I 1 ITEM 1.Business 3 ITEM 1A.Risk Factors 15 ITEM 1B.Unresolved Staff Comments 25 ITEM 2.Properties 26 ITEM 3.Legal Proceedings 26 ITEM 4.Mine Safety Disclosures 26 PART II 27 ITEM 5.Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 27 ITEM 6.Selected Financial Data 28 ITEM 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 ITEM 7A.Quantitative and Qualitative Disclosures About Market Risk 35 ITEM 8.Financial Statements and Supplementary Data 35 ITEM 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 34 ITEM 9A.Controls and Procedures 35 ITEM 9B.Other Information 36 PART III 37 ITEM 10.Directors, Executive Officers and Corporate Governance 37 ITEM 11.Executive Compensation 37 ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 37 ITEM 13.Certain Relationships and Related Transactions, and Director Independence 37 ITEM 14.Principal Accountant Fees and Services 37 PART IV 37 ITEM 15.Exhibits and Financial Statement Schedules 37 ITEM 16.Form 10-K Summary 40 SIGNATURES 1 The following are registered and pending trademarks of Vermillion, Inc.: Vermillion®, OVA1®, Overa® and ASPiRA GenetiXSM.  PART IFORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of1995. These statements involve a number of risks and uncertainties. Words such as “may,” “expects,” “intends,” “anticipates,” “believes,”“estimates,” “plans,” “seeks,” “could,” “should,” “continue,” “will,” “potential,” “projects” and similar expressions are intended to identify suchforward-looking statements. Readers are cautioned that these forward-looking statements speak only as of the date on which this report is filedwith the Securities and Exchange Commission (the “SEC”), and, except as required by law, Vermillion, Inc. (“Vermillion” and, together with itssubsidiaries the “Company”, “we”, “our” or “us”) does not assume any obligation to update, amend or clarify them to reflect events, newinformation or circumstances occurring after such date. Examples of forward-looking statements regarding our business include the following:·projections or expectations regarding our future test volumes, revenue, cost of revenue, operating expenses, cash flow, results ofoperations and financial condition;·our plan to broaden our commercial focus from ovarian cancer to differential diagnosis of women with a range of gynecologicaldisorders;·our planned business strategy and the anticipated timing of the implementation thereof;·plans with respect to our market expansion and growth, including plans to market OVA1, Overa, OVA1PLUS and ASPiRAGenetiX outside the United States;·plans to develop new algorithms and molecular diagnostic tests;·plans to develop a product or tool combining OVA1PLUS with results of a symptom index;·plans regarding our ability to develop a product to assess the risk of gynecologic diseases that are difficult to detect throughOVAinherit screening;·plans to establish payer coverage for Overa and ASPiRA GenetiX separately and expand coverage for OVA1;·intentions to address clinical questions related to early disease detection, treatment response, monitoring of disease progression,prognosis and other issues in the fields of oncology and women’s health;·our planned focus on the execution of five core strategic business drivers in ovarian cancer diagnostics and specialized laboratoryservices to address unmet medical needs for women faced with gynecologic disease and other conditions and the continueddevelopment of our business; ·expectations to increase research and development expenses;·anticipated efficacy of our products, product development activities and product innovations;·expected competition in the markets in which we compete;·plans with respect to ASPiRA LABS, Inc. (“ASPiRA LABS”);·expectations regarding future services provided by Quest Diagnostics Incorporated (“Quest Diagnostics”);·plans to expand our product offerings to additional pelvic disease conditions, including endometriosis;·plans to develop an ethnicity-specific pelvic mass risk assessment:·plans to commercialize Overa and ASPiRA GenetiX, our offering to detect hereditary breast and ovarian cancer syndrome andcarriers of the gene;·plans to develop informatics products and develop and perform laboratory developed tests (“LDTs”);·plans with respect to the Company’s pelvic mass registry;·our ability to improve sensitivity and specificity over traditional diagnostic biomarkers;·expectations regarding existing and future collaborations and partnerships, including OVA1, Overa, OVA1PLUS and ASPiRAGenetiX distribution and technology transfer agreements;·plans regarding future publications;1  ·our continued ability to comply with applicable governmental regulations, expectations regarding pending regulatory submissionsand plans to seek regulatory approvals for our tests outside the United States;·our ability to obtain and maintain the regulatory approvals required to market OVA1, Overa, OVA1PLUS and ASPiRA GenetiX inother countries;·our continued ability to expand and protect our intellectual property portfolio;·anticipated liquidity and capital requirements; ·anticipated future losses and our ability to continue as a going concern;·expectations regarding the second disbursement from our financing arrangement, as amended, with the State of ConnecticutDepartment of Economic and Community Development (the “DECD”);·expected expenditures, including the expected increase in expenses related to sales and marketing of OVA1, Overa, OVA1PLUSand ASPiRA GenetiX in 2020;·expectations regarding the results of our clinical utility studies;·our ability to use our net operating loss carryforwards;·anticipated future tax liability under U.S. federal and state income tax legislation;·expected market adoption of our diagnostic tests, including OVA1, Overa, OVA1PLUS and ASPiRA GenetiX; ·expectations regarding our ability to launch new products we develop, license, co-market or acquire;·expectations regarding the size of the markets for our products;·expectations regarding raising capital and the amount of financing anticipated to be required to fund our planned operations;·expectations regarding reimbursement for our products, and our ability to obtain such reimbursement, from third-party payers suchas private insurance companies and government insurance plans; ·expectations regarding our first diagnostic algorithm LDT, OVAnex, formerly referred to as Diagnostic Algorithm #1 and Watchand Wait, and studies relating thereto; and·expectations regarding our second diagnostic algorithm LDT, Endocheck, formerly referred to as Diagnostic Algorithm #2, andstudies relating thereto.Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I Item 1A, “RiskFactors,” that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors,including our ability to continue as a going concern; ability to increase the volume of OVA1, Overa, OVA1PLUS or ASPiRA GenetiX sales;failures by third-party payers to reimburse OVA1 or Overa or changes or variances in reimbursement rates; our ability to secure additionalcapital on acceptable terms to execute our business plan; our ability to comply with Nasdaq’s continued listing requirements to remain publiclytraded; in the event that we succeed in commercializing OVA1, Overa, OVA1PLUS and ASPiRA GenetiX outside the United States, thepolitical, economic and other conditions affecting other countries; our ability to continue developing existing technologies; our ability to developand commercialize additional diagnostic products and achieve market acceptance with respect to these products; our ability to competesuccessfully; our ability to obtain any regulatory approval required for our future diagnostic products; our or our suppliers’ ability to complywith Food and Drug Administration (“FDA”) requirements for production, marketing and post-market monitoring of our products; additionalcosts that may be required to make further improvements to our manufacturing operations; our ability to maintain sufficient or acceptablesupplies of immunoassay kits from our suppliers; our ability to continue to develop, protect and promote our proprietary technologies; our abilityto use intellectual property directed to diagnose biomarkers; our ability to successfully defend our proprietary technology against third parties;future litigation against us, including infringement of intellectual property and product liability exposure; our ability to retain key employees;business interruptions; changes in healthcare policy; our ability to comply with environmental laws; our ability to comply with the additionallaws and regulations that apply to us in connection with the operation of ASPiRA LABS; our ability to comply with FDA regulations that relateto our products and to obtain any FDA clearance or approval required to develop and perform LDTs; our ability to integrate and achieveanticipated results from any acquisitions or strategic alliances; our ability to use our net operating loss carryforwards; the liquidity and tradingvolume of our common stock; and the concentration of ownership of our common stock.2  ITEM 1. BUSINESSCompany OverviewCorporate Vision: To transform the state of women’s health, globally, starting with ovarian cancer. We aim to ensure that women ofall ages, stages and ethnicities have the best solutions available to assess their personalized risk of cancer at the earliest stage when it mattersmost. Our end goal is to serve a large global pelvic mass population and overall women’s health sector with a platform coupled with proprietaryscience and data tools which will drive better health and wellbeing for each patient we serve. Our plan is to broaden our commercial focus from ovarian cancer to differential diagnosis of women with a range of gynecologicaldisorders. We plan to continue commercializing our new generation of technology and decentralized technology transfer service platform. Wealso intend to raise public awareness regarding the diagnostic superiority of OVA1 as compared to cancer antigen 125 (“CA125”) for AfricanAmerican women with adnexal masses.In the fourth quarter of 2018, we launched our new generation of technology, OVA1PLUS. OVA1PLUS is designed to improveaccuracy and reduce false positive diagnoses by over 30% by leveraging the strengths of OVA1’s sensitivity and Overa’s specificity.OVA1PLUS will also be available through a decentralized platform structure enabling hospital networks and super groups to run the test in theirlabs.We expanded our commercial strategy in late 2018 and the first quarter of 2019 through the establishment of medical and advisorysupport and a Key Opinion Leader Network aligned with our territories in the US. We ultimately plan to globally commercialize OVA1 andOvera by utilizing the full national licensure of ASPiRA LABS, select laboratories for distribution, managed care coverage in select markets, oursales force and existing customer base. During 2018 we put OVA1, as we have with Overa, on a global testing platform, which allows both teststo be deployed internationally as well as run locally in the United States at major customer sites. We initiated the targeted launch of Overa inOctober 2016 with two key accounts converting from OVA1 to Overa. In October 2015, we announced registration of the CE mark for andclearance to market Overa in the European Union.We also plan to develop an LDT product series of diagnostic algorithms that will include not only biomarkers, but also clinical riskfactors, other diagnostics and patient history data in order to boost predictive value. The first diagnostic algorithm LDT, which we refer tointernally as OVAnex, and formerly referred to as Diagnostic Algorithm #1 and Watch and Wait, focuses on monitoring women with pelvicmasses. We expect OVAnex to be available for commercial use in 2021. The second diagnostic algorithm LDT, Endocheck, formerly knownas Diagnostic Algorithm #2, will focus on endometriosis. We also plan to expand our portfolio of products to include OVAinherit, which is thebasis for a high-risk screening test for those patients who are genetically predisposed to ovarian cancer. This algorithm will include genetics,proteins and other modalities to assess the risk. All of our products are focused on gynecologic diseases that cannot be assessed through atraditional biopsy. Mission Statement: We are dedicated to the discovery, development and commercialization of novel high-value diagnostic and bio-analytical solutions that help physicians diagnose, treat and improve outcomes for women. Our tests are intended to detect and to help guidedecisions regarding patient treatment, which may include decisions to refer patients to specialists, to perform additional testing, or to assist inmonitoring patients. A distinctive feature of our approach is the combination of multi-modal diagnostics and data. Our goal is to combinemultiple biomarkers, other modalities and diagnostics, clinical risk factors and patient data into a single, reportable index score that has higherdiagnostic accuracy than its constituents. We concentrate our development of novel diagnostic tests for gynecologic disease, with an initial focuson ovarian cancer. We also intend to address clinical questions related to early disease detection, treatment response, monitoring of diseaseprogression, prognosis and others through collaborations with leading academic and research institutions.Science of Biomarkers: Our focus on translational biomarkers and informatics enables us to address the market for novel diagnostictests that simultaneously measure multiple biomarkers. A biomarker is a biomolecule or variant biomolecule that is present at measurably greateror lesser concentrations in a disease state versus a normal condition. Conventional protein tests measure a single protein biomarker whereas mostdiseases are complex. We believe that efforts to diagnose cancer and other complex diseases have failed in large part because the disease isheterogeneous at the causative level (i.e., most diseases can be traced to multiple potential etiologies) and at the human response level (i.e., eachindividual afflicted with a given disease can respond to that ailment in a specific manner).Consequently, measuring a single biomarker when multiple biomarkers may be altered in a complex disease is unlikely to providemeaningful information about the disease state. We believe that our approach of monitoring and combining multiple biomarkers using a varietyof analytical techniques has allowed and will continue to allow us to create diagnostic tests with sufficient sensitivity and specificity about thedisease state to aid the physician considering treatment options for patients with complex diseases. Such assays are commonly referred to asIVDMIA (also known as In Vitro Diagnostic Multivariate Index Assays), and often utilize advanced algorithms based on logistic regression,pattern recognition and the like. Often, IVDMIA algorithms are non-intuitive, and therefore require rigorous clinical validation and errormodeling. Vermillion and its collaborators are considered experts in these areas3  and, in the case of OVA1, presented both the clinical validation and error modeling needed in order to gain pre-market notification clearanceunder the Federal Food, Drug and Cosmetic Act, known as 510(k) clearance, of OVA1 as an IVD software device.Our Business and Products: We currently market and sell the following products and related services: (1) OVA1, a blood testdesigned to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at high risk of having amalignant ovarian tumor prior to planned surgery; (2) Overa, a second-generation biomarker panel intended to maintain our product’s highsensitivity while improving specificity; (3) OVA1PLUS, a service offering combining our OVA1 and Overa products, designed to improveaccuracy and reduce false elevations in the intermediate risk area by over 30% by leveraging the strengths of OVA1’s (MIA) sensitivity andOvera’s (MIA2G) specificity; and (4) ASPiRA GenetiX, a genetic test for specific women’s health diseases, initially focused on detectinghereditary breast and ovarian cancer syndrome (“HBOC”) and Carrier screening, genetic screening for carriers of disease. OVA1 received FDAclearance in September 2009, and Overa received FDA clearance in March 2016. OVA1 and Overa each use the Roche cobas 4000, 6000 and8000 platforms and OVA1, Overa and OVA1PLUS are each available through our decentralized platform and cloud service testing. ThroughDecember 31, 2019, Vermillion’s product and related services revenue has primarily been limited to revenue generated by sales of OVA1, withASPiRA GenetiX revenue beginning in the fourth quarter of 2019. We are currently developing three additional products and related services, including two diagnostic algorithms as part of an LDTproduct series, OVAnex and Endocheck, respectively, as well as a high-risk screening algorithm, OVAinherit, for patients who are geneticallypredisposed to ovarian cancer.We also own and operate ASPiRA LABS, a Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) certified nationallaboratory based in Austin, Texas, which specializes in applying biomarker-based technologies to address critical needs in the management ofgynecologic cancers and disease. ASPiRA LABS provides expert diagnostic services using a state-of-the-art biomarker-based diagnosticalgorithm to aid in clinical decision making and advance personalized treatment plans. The lab currently processes our OVA1 and Overa tests,and we plan to expand the testing to other gynecologic conditions with high unmet need. We also plan to develop and perform LDTs at ASPiRALABS. ASPiRA LABS holds a CLIA Certificate of Registration and a state laboratory license in California, Florida, Maryland, New York,Pennsylvania and Rhode Island. This allows the lab to process OVA1 on a national basis. The Centers for Medicare and Medicaid Services(“CMS”) issued a provider number to ASPiRA LABS in March 2015.In the fourth quarter of 2018, we entered into a comprehensive study agreement with Clalit Health Services to validate OVA1 (MIA),OVERA® (MIA2G) and OVA1PLUS on the Israeli population. Vermillion’s technology will be studied on this high risk hereditary ovariancancer population to determine if earlier stage disease can be diagnosed and if the time to surgical treatment can be expedited for improvedsurgical outcomes for patients with an adnexal mass.In the fourth quarter of 2019, we completed all outstanding service revenue contract commitments relating to our ASPiRA IVDsubsidiary. The Company is no longer pursuing IVD contracts and has fulfilled all contractual obligations under previous contracts. All directemployees and contract labor have been terminated.About OVA1 and Overa: OVA1 addresses a clear clinical need, namely the pre-surgical identification of women who are at high risk ofhaving a malignant ovarian tumor. Numerous studies have documented the benefit of referral of these women to gynecologic oncologists fortheir initial surgery. Prior to the clearance of OVA1, no blood test had been cleared by the FDA for physicians to use in the pre-surgicalmanagement of ovarian adnexal masses. OVA1 and Overa are qualitative serum tests that utilize five well-established biomarkers andproprietary software cleared as part of the OVA1 510(k) to determine the likelihood of malignancy in women over age 18, with a pelvic mass forwhom surgery is planned. OVA1 or Overa should not be used without an independent clinical/radiological evaluation and is not intended to be ascreening test or to determine whether a patient should proceed to surgery. Incorrect use of OVA1 or Overa carries the risk of unnecessarytesting, surgery and/or delayed diagnosis. OVA1 was developed through large pre-clinical studies in collaboration with numerous academicmedical centers encompassing over 2,500 clinical samples. OVA1 was fully validated in a prospective multi-center clinical trial encompassing27 sites reflective of the diverse nature of the clinical centers at which ovarian adnexal masses are evaluated.In November 2016, the American College of Obstetricians and Gynecology (“ACOG”) issued Practice Bulletin Number 174, whichincluded OVA1 as a “Multivariate Index Assay”, outlining ACOG’s clinical management guidelines for adnexal mass management. PracticeBulletin Number 174 recommends that obstetricians and gynecologists evaluating women with adnexal masses who do not meet Level A criteriaof a low risk transvaginal ultrasound should proceed with Level B clinical guidelines. Level B guidelines state that the physician may use riskassessment tools such as existing CA125 technology or OVA1 (“Multivariate Index Assay”) as listed in the bulletin. Based on this, OVA1achieved parity with CA125 as a Level B clinical recommendation for the management of adnexal masses. Practice Bulletins summarize current information on techniques and clinical management issues for the practice of obstetrics andgynecology. Practice Bulletins are evidence-based documents, and recommendations are based on the evidence. Practice Bulletins are also theonly clinical management tool used for adnexal masses. Although there are Practice Bulletins, guidelines do not exist for adnexal masses. ACOGguidelines do exist, however, for ovarian cancer management. 4  About OVA1PLUS: In the fourth quarter of 2018, we launched OVA1PLUS. OVA1PLUS helps drive earlier detection, which in turnlowers overall healthcare costs and reduces inefficiencies in the care pathway. OVA1PLUS is available through a decentralized platformstructure, which allows other facilities, including hospital networks and large doctor practices, also known as super groups, to performOVA1PLUS locally and upload raw data to us and receive the OVA1PLUS score, enabling increased reach and access in the geographic areaswe serve. We plan to eventually pursue larger-scale partnerships to leverage this decentralized platform.About Decentralized Technology Transfer: In the fourth quarter of 2018, we launched our new platform and cloud service for OVA1and Overa testing. The platform and web service allow third-party facilities to perform OVA1 and Overa and calculate OVA1 and Overa scoreslocally, enabling increased reach and access in the markets we serve.About ASPiRA GenetiX: In June 2019, we launched ASPiRA GenetiX, which is genetic testing for specific women’s health diseases,with a core focus on ovarian cancer. ASPiRA GenetiX’s initial offering is designed to detect hereditary breast and ovarian cancer syndrome(“HBOC”) and Carrier screening, genetic screening for carriers of disease. Women who test positive for HBOC variants have a significantlyelevated risk of developing ovarian cancer. ASPiRA GenetiX complements OVA1PLUS and is sold at the same call point as OVA1PLUS. Intime, ASPiRA GenetiX testing results could be reported in a combined report with OVA1PLUS. The testing is performed by Fulgent Genetics,Inc.About OVAnex: We are developing an LDT product series of diagnostic algorithms that will include not only biomarkers, but alsoclinical risk factors, other diagnostics and patient history data in order to boost predictive value. The first diagnostic algorithm LDT, which werefer to internally as OVAnex, and formerly referred to as Diagnostic Algorithm #1 and Watch and Wait, focuses on monitoring women withpelvic masses. The new test will have a strong sensitivity and specificity as well as a strong negative predictive value of greater than 99%,which will allow physicians to serially monitor women with a mass to delay or avoid unnecessary surgery. Tackling serial monitoring, whichinvolves testing each patient two to four times a year, presents a new and potentially large market opportunity for us. The test will be initiallylaunched as a serial monitoring LDT only, but the 2020 prospective monitoring study will be designed to enable us to submit for FDA clearanceif we choose to do so. We expect OVAnex to be commercially available in 2021. About Endocheck: The second LDT product we are developing is known as Endocheck, formerly referred to as Diagnostic Algorithm#2, will focus on endometriosis. The Endocheck test is being developed to act as an aide in detection of endometriosis. We expect to develop andvalidate the test in 2021 and commercially launch in the fourth quarter of 2022.About OVAinherit: We also plan to expand our portfolio of products to include OVAinherit, which is the basis for a high-riskscreening test for those patients which are genetically predisposed. This algorithm will include genetics, proteins and other modalities to assessthe risk of ovarian cancer.Strategy: We are focused on the execution of five core strategic business drivers in ovarian cancer diagnostics and specializedlaboratory services to build long-term value for our investors:·Maximizing the existing OVA1 and Overa opportunities in the United States by leading in payer coverage andcommercialization of OVA1 and Overa. This strategy included the launch of a CLIA certified clinical laboratory, ASPiRALABS, in June 2014, multiple publications, inclusion in the American College of Obstetricians and Gynecologists (“ACOG”)adnexal mass guidelines, payer traction and finally the addition of OVA1 to CMS National Fee schedule as of January 2018;·Expanding the distribution platform beyond the U.S. by launching Overa, a next generation biomarker panel and OVA1 on thesame platform, while building the clinical utility and health economics foundation of both OVA1 and Overa, which we believemay allow for better domestic market penetration and international expansion;·Leveraging our existing database and specimen bank while building the largest specimen and data repository of gynecologicpelvic mass patients worldwide; ·Expanding our product offerings to additional pelvic disease conditions such as benign mass monitoring and endometriosis byadding additional gynecologic bio-analytic solutions involving biomarkers, other modalities (e.g., imaging), clinical riskfactors and patient data to aid diagnosis and risk stratification of women presenting with a pelvic mass; and·Coupling our OVA1 products with an individual’s hereditary risk to refine ovarian cancer risk assessment.We believe that these business drivers will contribute significantly to addressing unmet medical needs for women faced withgynecologic disease and other conditions and the continued development of our business.5  Studies and PublicationsBelow is a list of peer reviewed publications or articles published by outside parties to date regarding our technology, including five newpublications in 2019. #TitleFirst Author and JournalYearStudySizeFindings1Effect of Surgeon Specialty on Processes ofCare and Outcomes for Ovarian CancerPatientsEarle et al. JCNI 20062006N=3067Retrospective analysis of Medicare claimsshowed that only 33% of patients have access toa gynecological oncologist, but gynecologicaloncologists overall provided superior care.2Effectiveness of a multivariate index assayin the preoperative assessment of ovariantumorsUeland, et. al. ObstetGynecol2011N=524Initial OVA1 Clinical Validation. OVA1detected 76% of malignancies missed by CA125in a prospective, multi-institutional trialinvolving 27 primary care and specialty sitesthroughout the US. Additionally, MIA plusphysician assessment identified 86% ofmalignancies missed by CA125.3The Role of the Obstetrician-Gynecologistin Early Detection of Epithelial OvarianCancerACOG2011N/APractice Guidance. Discusses practices inevaluating symptomatic patients with physicalexam, imaging and tumor markers.4An in vitro diagnostic multivariate indexassay ("IVDMIA") for ovarian cancer:harvesting the power of multiple biomarkersZhen Zhang2012N/ADiscusses rationale and strategy fordevelopment of IVDMIA, including specificson OVA1.5Adherence to treatment guidelines forovarian cancer as a measure of quality ofcareBristow, et. al. ObstetGynecol2013N=13,321Patients were identified as having epithelialovarian cancer in the California CancerRegistry. 37.2% of patients received NationalComprehensive Cancer Network ("NCCN")guideline adherent care for the treatment ofepithelial ovarian cancer. Adherence to NCCNguideline care for the treatment of epithelialovarian cancer is correlated with improvedsurvival.6Impact of a multivariate index assay onreferral patterns for surgical management ofan adnexal massBristow, et. al. AJOG2013N=770MIA demonstrated statistically significanthigher sensitivity (90.2%) for detectingmalignancy compared with clinical assessment(73.2%), CA125 (68.3%), and mACOGguidelines (79.3%). However, use of OVA1does not lead to over-referral.7Ovarian malignancy risk stratification of theadnexal mass using a multivariate indexassayBristow, et. al.Gynecologic Oncology2013N=494Second Pivotal Clinical Validation. Primaryovarian cancer was identified in 65 patients(13.2%) with 43.1% having FIGO Stage 1disease. Overall sensitivity of MIA was 95.7%,and the MIA correctly predicted ovarianmalignancy in 91.4% of cases of early stagedisease compared to only 65.7% for CA125-II.8Disparities in ovarian cancer care qualityand survival according to race andsocioeconomic statusBristow, et. al. JNCI2013N=47160Statistically and clinically significant disparitiesin the quality of ovarian care and overallsurvival, independent of NCCN guidelines, isobserved along both racial and socioeconomicdifferences.6  9Widespread flaws found in ovarian cancertreatmentDenise Grady, NY times2013N/ADiscusses current state of ovarian cancer careand highlighted the problem of lack of referralto proper physician.10The effect of ovarian imaging on the clinicalinterpretation of a multivariate index assayGoodrich, et. al. AJOG2014N=1024Using OVA1 in conjunction with Ultrasoundfindings reduces missing ovarian cancer to just2% (ultrasound alone missed 23% ofmalignancies and CT scan missed 20%).11Clinical performance of a multivariate indexassay for detecting early-stage ovariancancerLongoria et al. AJOG 20142014N=1022OVA1 combined with clinical assessmentshows higher sensitivity for early stage ovariancancer when compared to other biomarkers(CA125 at two cutoffs) and modified ACOGguidelines for adnexal mass triage.12Risk Stratification of the Persistent OvarianMass with OVA 1MEDCO Forum, 20142014N/AReview of current risk stratification and surgicalplanning using CA125 and OVA1.13Performance of the American College ofObstetricians and Gynecologists’ OvarianTumor Referral Guidelines With aMultivariate Index AssayWare Miller et al. 20142014N=590Study to estimate performance of substitution ofOVA1 for CA125 in ACOG guidelines.Substitution resulted in identification of 79% ofmissed malignancies in premenopausal and 67%of missed malignancies in postmenopausalwomen.14Validation of a second-generationmultivariate index assay for malignancy riskof adnexal massesColeman, et. al. AJOG20162016N=493When compared to MIA, MIA2G had improvedspecificity (69% vs. 54%) and PPV (40% vs.31%) with no significant change in sensitivityand NPV.15Cost-effectiveness analysis of a multivariateindex assay compared to modifiedAmerican College of Obstetrics andGynecologists criteria and CA125 in thetriage of women with adnexal massesForde, et. al. CMRO, 20162016N/AMIA was cost effective, resulting in fewerreoperations and pretreatment CT Scans; overallresulting in an incremental cost-effectivenessratio of $35,094 per quality-adjusted life-yeargained.16The clinical utility of an elevated-riskmultivariate index assay score in ovariancancer patientsEskander, et. al. CMRO2016N=122Clinical Utility of OVA1 elevated risk result.When OVA1 is used preoperatively for both preand postmenopausal women with adnexalmasses, 94% of the women with elevated MIAscores had their primary surgery with agynecological oncologist. Of these women, 65(53%) were found to have ovarian cancer.Previous studies have proven a survival benefitfrom an ovarian cancer patient being operatedon by a gynecological oncologist initially.17Evaluation of a Validated Biomarker Test inCombination With a Symptom Index toPredict Ovarian MalignancyUrban, et al. Int J GynecolCancer2017N=218The combination of a symptom index and amultivariate panel had improved accuracy inpredicting ovarian cancer for patientsundergoing surgery for a pelvic mass.18Economic Impact of Increased Utilization ofMultivariate Assay Testing to Guide theTreatment of Ovarian Cancer: Implicationsfor PayersBrodsky, et al. Am Healthand Drug Benefits2017N=92,843The results of the budget impact model supportthe use of OVA1 instead of CA125 byindicating that modest cost savings can beachieved, while reaping the clinical benefits ofimproved diagnostic accuracy, early diseasedetection, and reductions in multiple, andpossibly unnecessary, referrals to gynecologiconcologists.7  19Combined symptom index and second-generation multivariate biomarker test forprediction of ovarian cancer in patients witha pelvic massUrban, et al. GynecologicOncology2018N=218The combination of a symptom index andrefined multivariate panel had improvedaccuracy in predicting ovarian cancer forpatients undergoing surgery for a pelvic mass.20Adherence to a Practice Guideline IsAssociated With Reduced Referral Time toTreating Physician (GynecologicOncologist)Boac, et al., AJOG2018N=335Patients whose workup adhered to the 4 NCCN-based categories were seen by the gynecologiconcologist in a significantly shorter time. Thiswork identified several areas for improvementin the care of OVCA patients, includingutilization of physician referrals and tumormarkers.21Clinical performance comparison of twoIVDMIA’s for pre-surgical assessment ofovarian cancer riskShulman, et. al. Advancesin Therapy 20192019N=993ROMA misclassified 51/245 malignancies(including 10 high-grade ovarian malignancies)whereas MIA2G misclassified 22/245(including 5 high-grade ovarian malignancies).In early-stage cancer, ROMA misclassifiedmore often than MIA2G (20 vs. 8).22Performance of a Second-GenerationMultivariate Index Assay and OvarianImaging in the Malignancy Assessment ofAdnexal MassesFredericks et al. Journal ofSurgical Oncology2019N=878For evaluating ovarian tumors, combiningimaging with a second-generation multivariateindex assay results in higher sensitivity andnegative predictive value over imaging alone.23Ethnic Disparity in Clinical PerformanceBetween Multivariate Index Assay andCA125 in Detection of Ovarian MalignancyDunton, et al. Journal,Future Oncology2019N=274Clinical performance of OVA1 was better thanCA125 in African American women.24Ethnicity and tumor markers in ovarianneoplasmsDunton, et al. Biomarkersin Cancer2019N=274Clinical performance of OVA1 was better thanROMA in African American women.25Adnexal Mass Risk Assessment – AMultivariate Index Assay for MalignancyRisk StratificationZhang et al. Journal,Future Oncology2019N=2092Initial OVA3/AMRA validation. AMRA is amultivariate serum test developed to assess therisk of a mass with indeterminate features,intended to separate out the relatively smallnumber of malignancies from the benign massesfor which a nonsurgical approach may be taken.The Diagnostic FieldThe economics of healthcare demand effective and efficient allocation of resources which can be accomplished through diseaseprevention, early detection of disease leading to early intervention, and diagnostic tools that can triage patients to more appropriate therapy andintervention. In December 2018, Allied Market Research, a market research and business consulting partnership, published a studywhich forecasts the global IVD market to reach $93.6 billion by 2025, growing at a compound annual growth rate of 4.8% from 2018 to 2025.We have chosen to concentrate our business focus in the areas of oncology and women’s health where we have established strong key opinionleaders, and provider and patient relationships. Demographic trends suggest that, as the population ages, the burden from gynecologic diseases,including cancers, will increase and the demand for quality diagnostic, prognostic and predictive tests will escalate. In addition, the areas ofoncology and women’s health generally lack quality diagnostic tests and, therefore, we believe patient outcomes can be significantly improvedby the development of novel diagnostic tests.Ovarian CancerBackground Commonly known as the “silent killer,” ovarian cancer leads to nearly 14,000 deaths each year in the United States. As of early 2020,The American Cancer Society (“ACS”) estimated that nearly 22,000 new ovarian cancer cases will be diagnosed, with the majority of patientsdiagnosed in the late stages of the disease in which the cancer has spread beyond the ovary. Unfortunately, ovarian cancer patients in the latestages of the disease have a poor prognosis, which leads to high mortality rates. According to the National Cancer Institute, when ovarian canceris diagnosed at its earliest stage, patients have up to a 92.4% 5-year survival rate following surgery and/or chemotherapy if detected in stage 1.However, many ovarian cancer patients are diagnosed after the tumor8  has spread outside the ovary. For ovarian cancer patients diagnosed in the late-stages of the disease, the 5-year survival rate falls to as low as24.3%. While the diagnosis of ovarian cancer in its earliest stages greatly increases the likelihood of long-term survival from the disease,another factor that predicts clinical outcomes from ovarian cancer is the specialized training of the surgeon who operates on the ovarian cancerpatient. Numerous studies have demonstrated that treatment of malignant ovarian tumors by specialists such as gynecologic oncologists or atspecialist medical centers improves outcomes for women with these tumors. Published guidelines from the Society of Gynecologic Oncology(“SGO”) and the ACOG recommend referral of women with malignant ovarian tumors to specialists. Unfortunately, we believe only about one-third of women with these types of tumors are operated on by specialists, in part because of inadequate diagnostics that can identify suchmalignancies with high sensitivity. Accordingly, there is a clinical need for a diagnostic test that can provide adequate predictive value to stratifypatients with a pelvic mass into those with a high risk of invasive ovarian cancer versus those with a low risk of ovarian cancer, which isessential for improving overall survival in patients with ovarian cancer.Although adnexal masses are relatively common, malignant tumors are less so. Screening studies have indicated that the prevalence ofsimple ovarian cysts in women 55 years of age and older can be as high as 14%.[1] Adnexal masses are thought to be even more common inpremenopausal women, but there are more non-persistent, physiologic ovarian masses in this demographic group. For instance, in the Universityof Kentucky ovarian cancer screening project, the rate of postmenopausal women with persistently abnormal ultrasound findings requiringsurgery was 1.4%.[2] According to 2010 U.S. census data, there are 36.8 million women between the ages of 50 and 70 in the U.S., suggestingthat there are more than 500,000 suspicious adnexal masses in this segment alone. Those that do require evaluation for the likelihood formalignancy could potentially benefit from the use of OVA1 or Overa.The ACOG Ovarian Cancer Guidelines and the SGO guidelines help physicians evaluate adnexal masses for malignancy. Theseguidelines take into account menopausal status, CA125 levels, and physical and imaging findings. However, these guidelines have notableshortcomings because of their reliance on diagnostics with certain weaknesses. Most notably, the CA125 blood test, which is cleared by the FDAonly for monitoring for recurrence of ovarian cancer, is negative in up to 50% of early stage ovarian cancer cases. Moreover, CA125 can beelevated in numerous conditions and diseases other than ovarian cancer, including benign ovarian masses and endometriosis. Theseshortcomings limit the CA125 blood test’s utility in distinguishing benign from malignant ovarian tumors or for use in detection of early stageovarian cancer. Transvaginal ultrasound is another diagnostic modality used with patients with ovarian masses. Attempts at defining specificmorphological criteria that can aid in a benign versus malignant diagnosis have led to the morphology index and the risk of malignancy index,with reports of 40-70% predictive value. However, ultrasound interpretation can be variable and dependent on the experience of the operator.Accordingly, the ACOG and SGO guidelines perform only modestly in identifying early stage ovarian cancer and malignancy in pre-menopausalwomen. Efforts to improve detection of cancer by lowering the cutoff for CA125 (the “Modified ACOG/SGO Guidelines”) provide only amodest benefit, since CA125 is absent in about 20% of epithelial ovarian cancer cases and is poorly detected in early stage ovarian canceroverall.In November 2016, ACOG practice bulletin 174 (November 2016) states the following “The multivariate index assay has demonstratedhigher sensitivity and negative predictive value for ovarian malignancy when compared with clinical impression and CA 125 alone.”[3]The ovarian cancer information page on American Cancer Society’s website (cancer.org/cancer/ovarian-cancer/about/new-research.html) indicates that:For women who have an ovarian tumor, a test called OVA1 can measure the levels of 5 proteins in the blood. The levels of theseproteins, when looked at together, are used to determine whether a woman’s tumor should be considered low risk or high risk. If thetumor is labeled ‘low risk’ based on this test, the woman is not likely to have cancer. If the tumor is considered ‘high risk,’ the womanis more likely to have a cancer, and should see a specialist (a gynecologic oncologist). This test is NOT a screening test and it is NOT atest to decide if you should have surgery or not− it is meant for women who have an ovarian tumor where surgery has been decided buthave not yet been referred to a gynecologic oncologist. [4]In 2019, two studies were released indicating superior clinical performance of OVA1 over CA125 and OVA1 over CA125, HE4 andRisk of Malignancy Algorithm (“ROMA”) in African American women. [5],[6][1] Greenlee RT, Kessel B, Williams CR, Riley TL, Ragard LR, Hartge P, Buys SS, Partridge EE, Reding DJ. Prevalence, incidence, and naturalhistory of simple ovarian cysts among women >55 years old in a large cancer screening trial. Am J Obstet Gynecol. 2010 Apr; 202(4):373.e1-9.9  [2] van Nagell JR Jr, DePriest PD, Ueland FR, DeSimone CP, Cooper AL, McDonald JM, Pavlik EJ, Kryscio RJ. Ovarian cancer screening withannual transvaginal sonography: findings of 25,000 women screened. Cancer. 2007 May 1;109(9):1887-96.[3] The American College of Obstetrics and Gynecologists Practice Bulletin No. 174: Evaluation and Management of Adnexal Masses. Obstet & Gynecol. 2016 Nov; 128(5):e210-e226.[4] The American Cancer Society medical and editorial content team. “What’s New in Ovarian Cancer Research?” About Ovarian CancerOvarian, American Cancer Society, 11 Apr. 2018.[5] Dunton C, Bullock RG, Fritsche H. Ethnic Disparity in Clinical Performance Between Multivariate Index Assay and CA125 in Detection ofOvarian Malignancy. Future Oncology. 2019 Aug. [6] Dunton C, Bullock RG, Fritsche H. Multivariate Index Assay is Superior to CA125 and HE4 Testing in Detection of Ovarian Malignancy inAfrican-American Women. Biomark Cancer. 2019 Jun.Commercialization and DistributionStarting in 2014, we offered OVA1 via ASPiRA LABS. In March 2015, we entered into a commercial agreement with QuestDiagnostics. Pursuant to this agreement, all OVA1 U.S. testing services for Quest Diagnostics customers were transferred to Vermillion’swholly-owned subsidiary, ASPiRA LABS. Pursuant to this agreement as amended as of March 11, 2020, Quest Diagnostics has continued toprovide blood draw and logistics support by transporting specimens to ASPiRA LABS for testing in exchange for a market value fee. Per theterms of the agreement, we may not offer to existing or future Quest Diagnostics customers any tests that Quest Diagnostics offers.We have active international distribution agreements for Overa with Pro-Genetics LTD in Israel and MacroHealth, Inc. in thePhilippines. The MacroHealth, Inc. agreement was our first agreement regarding decentralized technology transfer for Overa specimen testing.We ultimately plan to commercialize OVA1, Overa, OVA1PLUS and ASPiRA GenetiX on a global level. We currently hold CE marksfor OVA1 and Overa. In addition, each of OVA1 and Overa are already offered on our global testing platform, which allows both tests to bedeployed worldwide.CustomersIn the United States, our clinical customer base can be segmented into three major groups: physicians, physician office laboratories andhospital laboratories. Both within and outside the United States, laboratories may become our customers, either directly with us through payercontracts or client bill arrangements or via decentralized technology transfer relationships established between us and authorized distributors.Research and DevelopmentOur research and development efforts center on the discovery and validation of biomarkers and combinations of biomarkers that can bedeveloped into diagnostic assays. We have done this predominantly through collaborations we have established with academic institutions suchas JHU and M.D. Anderson as well as through contract research organizations such as PrecisionMed, Inc. In addition, we actively seekcollaborations and initiate dialog with clinical academics, in order to generate publications, intellectual property or test development in broaderareas of gynecologic oncology and other gynecologic diseases. In 2019, two studies identified a disparity in diagnosis for African American women and demonstrated that OVA1 has superiorsensitivity for detection in this population over CA125 or ROMA.Some of the new biomarkers currently under consideration for validation are (a) 15 serum proteins highly associated with ovariancancer that were identified by mass spectrometry; (b) circulating methylated DNA fragments from cancer genes; and (c) micro-RNA profiles inserum.Commercial OperationsWe have a commercial infrastructure, including sales and marketing and reimbursement expertise. We also operate a national CLIAcertified clinical laboratory, ASPiRA LABS. Our sales representatives work to identify opportunities for educating general gynecologists andgynecologic oncologists on the benefits of OVA1. In February 2015, Vermillion received ISO 13485:2003 certification for our qualitymanagement system from the British Standards Institution (BSI), one of the world's leading certification bodies. We currently hold CE marks forOVA1 and Overa. We are targeting markets outside of the United States now that we have Overa cleared on the Roche cobas platform, which isavailable globally. We currently have two decentralized technology transfer contracts with distributors outside the United States.Approximately 12,898 OVA1 tests were performed in 2019 compared to 7,679 in 2018, with the increase being attributed to expandedcommercial efforts. In 2019, we continued to increase sales through experienced Market Development Managers and Regional AccountManagers. As awareness of our product continues to build, these managers are focused on efforts that will have a10  positive impact on regional payers and create positive coverage decisions. They are working with local key opinion leaders and meeting withmedical directors to discuss the clinical need, our technology assessment package and increasing experience and cases studies showing thepositive outcomes utilizing OVA1, Overa and OVA1PLUS. There are still obstacles to overcome and significant milestones ahead. First, the average gynecologist will only see about 2 to 4 patientsper month who may need our test, and additional effort will be required to establish a consistent ordering pattern. Second, despite gains inpositive medical policy coverage and contract agreements, insurance coverage and patient bills remain a concern to the physician and can disruptthe ordering pattern of a generalist who is supportive of our products. We have instituted a “Patient Transparency Program” to assist with thisprocess by proactively assessing insurance and educating patients on testing costs prior to testing being performed.Revenue and ReimbursementIn the United States, revenue for diagnostic tests comes from several sources, including third-party payers such as insurance companies,government healthcare programs, such as Medicare and Medicaid, client bill accounts and patients. Novitas Solutions, a Medicare contractor,covers and reimburses for OVA1 tests performed in certain states, including Texas. Because OVA1 tests are exclusively performed at ASPiRALABS in Texas, this local coverage determination from Novitas Solutions essentially provides national coverage for patients enrolled inMedicare as well as Medicare Advantage health plans. ASPiRA LABS also bills third-party commercial and other government payers as well asclient bill accounts and patients for OVA1. Through December 31, 2019, Vermillion’s product and related services revenue has primarily beenlimited to revenue generated by sales of OVA1, with ASPiRA GenetiX beginning to generate revenue in the fourth quarter of 2019.In the fourth quarter of 2019, we completed all outstanding service revenue contract commitments relating to our ASPiRA IVDsubsidiary. In December 2013, the CMS made its final determination and authorized Medicare contractors to set prices for Multianalyte Assayswith Algorithmic Analyses (“MAAA”) test CPT codes when they determine it is payable. In late 2016, OVA1 was included on the list of clinicaldiagnostic laboratory test procedure codes as one for which the CMS would require reporting of private payer rates as part of the implementationof Protecting Access to Medicare Act of 2014 (“PAMA”). In November 2017, we announced that the CMS released the Final 2018 Clinical LabFee Schedule (“CLFS”), effective January 1, 2018. Under the new fee schedule, the price for OVA1(MIA) (code 81503) is $897. This is a four-fold increase over the previous CMS rate, and this new rate was based on the median of private payer payments submitted to CMS bycompanies, including ASPiRA Labs, as part of the market-based payment reform mandated through PAMA. The rate is scheduled to be in effectfor a three-year term from January 2018 through December 2020. This rate is extended through 2021.CMS also published a final price for Overa of $950, which was benchmarked to the only proteomic test currently on the CLFS that usesbiomarkers and an algorithm to produce a prognostic score. The rate is scheduled to be in effect for a three-year term from January 2018 throughDecember 2020. This rate is extended through 2021.In January 2019, we announced that Cigna added OVA1®(MIA) to its national preferred coverage list. In June 2019, we announced that both BlueCross BlueShield of Texas and BlueCross BlueShield of Arizona began offering preferredcoverage for OVA1®(MIA).We are reimbursed for ASPiRA GenetiX based on either contracted rates or out of network rates for covered testing under patientinsurance plans.CompetitionThe diagnostics industry in which we operate is competitive and evolving. There is intense competition among healthcare,biotechnology and diagnostics companies attempting to discover candidates for potential new diagnostic products. These companies may:·develop new diagnostic products in advance of us or our collaborators;·develop diagnostic products that are more effective or cost-effective than those developed by us or our collaborators;·obtain regulatory clearance or approval of their diagnostic products more rapidly than us or our collaborators; or·obtain patent protection or other intellectual property rights that would limit our or our collaborators’ ability to develop andcommercialize, or a customers’ ability to use our or our collaborators’ diagnostic products.We compete with companies in the United States and abroad that are engaged in the development and commercialization of novelbiomarkers that may form the basis of novel diagnostic tests. These companies may develop products that are competitive with and/or performthe same or similar functions as the products offered by us or our collaborators, such as biomarker specific reagents or diagnostic test kits. Also,clinical laboratories may offer testing services that are competitive with the products sold by us or our collaborators. For example, a clinicallaboratory can either use reagents purchased from manufacturers other than us or use its own11  internally developed reagents to make diagnostic tests. If clinical laboratories make tests in this manner for a particular disease, they could offertesting services for that disease as an alternative to products sold by us used to test for the same disease. The testing services offered by clinicallaboratories may be easier to develop and market than test kits developed by us or our collaborators because the testing services are not subjectto the same clinical validation requirements that are applicable to FDA-cleared or approved diagnostic test kits.Fujirebio Diagnostics sells Risk of Ovarian Malignancy Algorithm (“ROMA”). ROMA combines two tumor markers and menopausalstatus into a numerical score using a publicly available algorithm. This test has the same intended use and precautions as OVA1. ROMA iscurrently marketed as having utility limited to epithelial ovarian cancers, which accounts for 80% of ovarian malignancies. Based upon theresults of studies done in 2013 and 2019, we believe that OVA1 has superior performance when compared to the Fujirebio Diagnostics test.In addition, competitors such as Becton Dickinson and Abbott Laboratories have publicly disclosed that they have been or are currentlyworking on ovarian cancer diagnostic assays. Academic institutions periodically report new findings in ovarian cancer diagnostics that may havecommercial value.We also compete in the development and commercialization of genetic testing for hereditary cancer and carrier screening forautosomal-recessive or X-linked conditions with companies in the United States and internationally. The testing services offered by competitiveclinical laboratories, if performed in-house, may be easier to develop and market than our testing, which is performed by a third party.Several companies such as Invitae Corporation, Myriad Genetics, Inc., Laboratory Corporation of America, Inc., Natera, AmbryGenetics, and Progenity, Inc. offer similar genetic testing for carrier screening and hereditary genetic testing. We believe that the technologyoffered by our testing is competitive with these companies and that our existing relationships with gynecologist offices enhance our ability toreach customers.Intellectual Property ProtectionOur intellectual property includes the federally registered trademarks for Vermillion, OVA1 Overa and OVA1PLUS as well as a pendingtrademark for ASPiRA GenetiX and a portfolio of owned, co-owned or licensed patents and patent applications. As of the date of the filing of thisAnnual Report on Form 10-K, our clinical diagnostics patent portfolio included 18 issued United States patents, 7 pending United States patentapplications, and numerous pending patent applications and issued patents outside the United States. These patents and patent applications fallinto 23 patent families and are directed to diagnostic technologies.ManufacturingWe are the manufacturer of OVA1 and Overa. Components of OVA1 and Overa include purchased reagents for each of the componentassays as well as the OvaCalc® software. Because we do not directly manufacture the component assays, we are required to maintain supplyagreements with manufacturers of each of the assays. As part of our quality systems, reagent lots for these assays are tested to ensure they meetspecifications required for inclusion in OVA1 and Overa. Only reagent lots determined by us as having met these specifications are permitted foruse in OVA1 and Overa. OVA1PLUS is a service offering that combines OVA1 and Overa. Our principal supplier is Roche DiagnosticsCorporation.Environmental MattersMedical WasteWe are subject to licensing and regulation under federal, state and local laws relating to the handling and disposal of medical specimensand hazardous waste as well as to the safety and health of laboratory employees. ASPiRA LABS is operated in material compliance withapplicable federal and state laws and regulations relating to disposal of all laboratory specimens. We utilize outside vendors for disposal ofspecimens. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. Federal, stateand local laws and regulations govern the use, manufacture, storage, handling and disposal of these materials. We could be subject to fines,penalties and damages claims in the event of an improper or unauthorized release of, or exposure of individuals to, hazardous materials. Inaddition, claimants may sue us for injury or contamination that results from our use, or the use by third parties, of these materials, and ourliability may exceed our total assets. Compliance with environmental laws and regulations is expensive, and current or future environmentalregulations may impair our research, development or production efforts.Occupational SafetyIn addition to its comprehensive regulation of safety in the workplace, the Federal Occupational Safety and Health Administration hasestablished extensive requirements relating to workplace safety for healthcare employers whose workers may be exposed to blood-bornepathogens such as HIV and the hepatitis virus. These regulations, among other things, require work practice controls, protective clothing andequipment, training, medical follow-up, vaccinations and other measures designed to minimize exposure to chemicals and transmission of theblood-borne and airborne pathogens. Although we believe that we have complied in all12  material respects with such federal, state and local laws, failure to comply could subject us to denial of the right to conduct business, fines,criminal penalties and other enforcement actions.Specimen TransportationRegulations of the Department of Transportation, the International Air Transportation Agency, the Public Health Service and the PostalService apply to the surface and air transportation of clinical laboratory specimens. Although we believe that we have complied in all materialrespects with such federal, state and local laws, failure to comply could subject us to denial of the right to conduct business, fines, criminalpenalties and other enforcement actions.Government Regulation General. Our activities related to diagnostic products are, or have the potential to be, subject to regulatory oversight by the FDAunder provisions of the Federal Food, Drug and Cosmetic Act and regulations thereunder, including regulations governing the development,marketing, labeling, promotion, manufacturing and export of our products. The Federal Food, Drug and Cosmetic Act requires that medicaldevices introduced to the United States market, unless exempted by regulation, be the subject of either a pre-market notification clearance,known as a 510(k) clearance or 510(k) de novo clearance, or a pre-market approval (“PMA”). OVA1 was cleared by the FDA in September 2009under the 510(k) de novo guidelines. OVA1 was the first FDA-cleared blood test for the pre-operative assessment of ovarian masses. Wereceived 510(k) clearance for Overa, our second-generation biomarker panel in March 2016. Even in the case of devices like analyte specific reagents (“ASRs”), which may be exempt from 510(k) clearance or PMA approvalrequirements, the FDA may impose restrictions on marketing. Our potential future ASR products may be sold only to clinical laboratoriescertified under CLIA to perform high complexity testing. In addition to requiring approval or clearance for new products, the FDA may requireapproval or clearance prior to marketing products that are modifications of existing products or the intended uses of these products. Additionally,the FDA will generally conduct a pre-approval inspection for PMA devices. Our suppliers’ manufacturing facilities are subject to periodic andunannounced inspections by the FDA and state agencies for compliance with Quality System Regulations (“QSRs”). Although we believe thatwe and our suppliers will be able to operate in compliance with the FDA’s QSRs for ASRs, we cannot ensure that we or our suppliers will be inor be able to maintain compliance in the future. We passed an FDA inspection in 2016. However, we cannot ensure that we will pass any futureinspection, if and when it occurs. If the FDA believes that we or our suppliers are not in compliance with applicable laws or regulations, theFDA can issue a Form 483 List of Observations or warning letter, detain or seize our products, issue a recall notice, enjoin future violations andassess civil and criminal penalties against us. In addition, approvals or clearances could be withdrawn under certain circumstances.ASPiRA LABS and any customers using our products for clinical use in the United States may be regulated under CLIA, which isintended to ensure the quality and reliability of clinical laboratories in the United States by mandating specific standards in the areas of personnelqualifications, administration, participation in proficiency testing, patient test management, quality control, quality assurance and inspections.The regulations promulgated under CLIA establish three levels of diagnostic tests - namely, waived, moderately complex and highly complex -and the standards applicable to a clinical laboratory depend on the level of the tests it performs.FDA Regulation of Cleared Tests. Once granted, a 510(k) clearance or PMA approval may place substantial restrictions on how ourdevice is marketed or to whom it may be sold. All devices cleared by the FDA are subject to continuing regulation by the FDA and certain stateagencies. As a medical device manufacturer, we are also required to register and list our products with the FDA. We are required to set forth andadhere to a quality policy and other regulations. In addition, we are required to comply with the FDA’s QSRs, which require that our devices bemanufactured and records be maintained in a prescribed manner with respect to manufacturing, testing and control activities. Additionally, wemay be subject to inspection by federal and state regulatory agencies. Non-compliance with these standards can result in, among other things,fines, injunctions, civil penalties, recalls, and total or partial suspension of production. Further, we are required to comply with FDArequirements for labeling and promotion. For example, the FDA prohibits cleared or approved devices from being promoted for uncleared orunapproved uses. Labeling and promotional activities are subject to scrutiny by the FDA, which prohibits the marketing of medical devices forunapproved uses. Additionally, the FDA requires us to perform certain post-marketing studies to verify or validate the clinical performance ofFDA-cleared tests, as is permitted by their statutory authority. Failure to comply with our post-marketing study requirements may lead toenforcement actions by the FDA, including seizure of our product, injunction, prosecution and/or civil money penalties.In addition, the medical device reporting regulation requires that we provide information to the FDA whenever evidence reasonablysuggests that one of our devices may have caused or contributed to a death or serious injury, or where a malfunction has occurred that would belikely to cause or contribute to a death or serious injury if the malfunction were to recur.Foreign Government Regulation of Our Products. We intend to obtain regulatory approval in other countries to market our tests.Medical device laws and regulations are in effect in many of the countries in which we may do business outside the United States. These rangefrom comprehensive device approval requirements for some or all of our potential future medical device products, to requests for product data orcertifications. The number and scope of these requirements are increasing. In addition, products which have not yet been cleared or approved fordomestic commercial distribution may be subject to the FDA Export Reform and13  Enhancement Act of 1996. Each country also maintains its own regulatory review process, tariff regulations, duties and tax requirements,product standards, and labeling requirements. In February 2015, Vermillion also received ISO 13485:2003 certification for our qualitymanagement system from the British Standards Institution (BSI), one of the world's leading certification bodies. In March 2015, OVA1 was CEmarked, a requirement for marketing the test in the European Union. In October 2015, we announced registration of the CE mark for andclearance to market Overa in the European Union.EmployeesAs of December 31, 2019, we had 52 full-time employees and 53 total employees. We also engage independent contractors from timeto time.Code of Ethics for Executive OfficersWe have adopted a Code of Ethics for Executive Officers. We publicize the Code of Ethics for Executive Officers by posting the policyon our website, www.vermillion.com. We will disclose on our website any waivers of, or amendments to, our Code of Ethics.Corporate InformationWe were originally incorporated in 1993, and we had our initial public offering in 2000. Our executive offices are located at 12117 BeeCaves Road, Building Three, Suite 100, Austin, Texas 78738, and our telephone number is (512) 519-0400. We maintain a website atwww.vermillion.com and www.aspiralab.com where general information about us is available. Information About UsWe file annual reports, quarterly reports, current reports, proxy statements, and other information with the SEC.The SEC maintains an Internet website, www.sec.gov, that contains reports, proxy statements, and other information regarding issuersthat file electronically with the SEC.In addition, we make available free of charge under the Investor Overview section of our website, www.vermillion.com, the AnnualReports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnishedpursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) as soon as reasonably practicable afterwe have electronically filed such material with or furnished such material to the SEC. You may also obtain these documents free of charge bysubmitting a written request for a paper copy to the following address:Investor RelationsVermillion, Inc. 12117 Bee Caves Road, Building Three, Suite 100 Austin, TX 78738The information contained on our websites is not incorporated by reference in this Annual Report on Form 10-K and should not beconsidered a part of this Annual Report on Form 10-K.14  ITEM 1A. RISK FACTORS Investing in our securities involves a high degree of risk. You should carefully consider the following risk factors and uncertaintiestogether with all of the other information contained in this Annual Report on Form 10-K, including our audited consolidated financialstatements and the accompanying notes in Part II Item 8, “Financial Statements and Supplementary Data.” If any of the following risksmaterializes, our business, financial condition, results of operations and growth prospects could be materially adversely affected, and the valueof an investment in our common stock may decline significantly. The risks and uncertainties described below are not the only ones we face.Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially adversely affect ourbusiness, financial condition, results of operations and growth prospectsRisks Related to Our BusinessThere is substantial doubt about our ability to continue as a going concern, and this may adversely affect our stock price and our ability toraise capital. We have incurred significant losses and negative cash flows from operations since inception and have an accumulated deficit of nearly$422 million as of the end of the period covered by this report. The Company also expects to incur a net loss and negative cash flows fromoperations in 2020. Given these conditions, there is substantial doubt about the Company’s ability to continue as a going concern and ourindependent registered public accounting firm’s report on our financial statements for the year ended December 31, 2019 includes anexplanatory paragraph expressing substantial doubt about our ability to continue as a going concern given our recurring net losses and negativecash flows from operations.The Company’s management believes that successful achievement of the business objectives will require additional financing. TheCompany expects to raise capital through a variety of sources, which may include the exercise of common stock warrants, equity offerings, debtfinancing, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may notbe available when needed or on terms acceptable to the Company. If the Company is unable to obtain additional capital, it may not be able tocontinue sales and marketing, research and development, distribution or other operations on the scope or scale of current activity and that couldhave a material adverse effect on the Company’s business, results of operations and financial condition. If we are unable to increase the volume of OVA1 sales, our business, results of operations and financial condition will be adversely affected.We have experienced significant operating losses each year since our inception and we expect to incur a net loss for fiscal year 2020.Our losses have resulted principally from costs incurred in cost of revenue, sales and marketing, general and administrative costs and researchand development. The number of OVA1 tests performed in 2017, 2018 and 2019 was 8,575, 7,679 and 12,898, respectively. If we are unable toincrease the volume of OVA1 sales, our business, results of operations and financial condition will be adversely affected.Failures by third-party payers to reimburse OVA1, Overa, OVA1PLUS, or ASPiRA GenetiX or changes or variances in reimbursement ratescould materially and adversely affect our business, financial condition and results of operations.We are responsible for obtaining payment from third-party payers. Accordingly, our future revenues will be dependent upon third-partyreimbursement payments to ASPiRA LABS. Insurance coverage and reimbursement rates for diagnostic tests are uncertain, subject to changeand particularly volatile during the early stages of commercialization. There remain questions as to what extent third-party payers, like Medicare,Medicaid and private insurance companies will provide coverage for OVA1, Overa, OVA1PLUS and ASPiRA GenetiX and for whichindications. While CMS has issued PAMA reimbursement rates for OVA1 and Overa effective January 1, 2018, there is no guarantee that CMSwill continue to cover the OVA1 test or that the payment rate will be comparable to the PAMA rate. Such uncertainty could create paymentuncertainty from other payers as well. The reimbursement rates for OVA1, Overa, OVA1PLUS and ASPiRA GenetiX are largely out of ourcontrol. We have experienced volatility in the coverage and reimbursement of OVA1 and Overa due to contract negotiation with third-partypayers and implementation requirements and the reimbursement amounts we have received from third-party payers varies from payer to payer,and, in some cases, the variation is material. Third-party payers, including private insurance companies as well as government payers such as Medicare and Medicaid, haveincreased their efforts to control the cost, utilization and delivery of healthcare services. These measures have resulted in reduced payment ratesand decreased utilization of diagnostic tests such as OVA1 and Overa. From time to time, Congress has considered and implemented changes tothe Medicare fee schedules in conjunction with budgetary legislation, and pricing for tests covered by Medicare is subject to change at any time.Reductions in third-party payer reimbursement rates may occur in the future. Reductions in the price at which OVA1 and Overa is reimbursedcould have a material adverse effect on our business, results of operations and financial condition. If we are unable to establish and maintainbroad coverage and reimbursement for OVA1, Overa, OVA1PLUS or ASPiRA GenetiX or if third-party payers change their coverage orreimbursement policies with respect to OVA1, Overa, OVA1PLUS or ASPiRA GenetiX, our business, financial condition and results ofoperations could be materially adversely affected.15  We will need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable to us, we may beunable to execute our business plan.We will seek to raise additional capital through the issuance of equity or debt securities in the public or private markets, or through acollaborative arrangement or sale of assets. Additional financing opportunities may not be available to us, or if available, may not be onfavorable terms. The availability of financing opportunities will depend, in part, on market conditions, and the outlook for our business. Anyfuture issuance of equity securities or securities convertible into equity could result in substantial dilution to our stockholders, and the securitiesissued in such a financing may have rights, preferences or privileges senior to those of our common stock. If we are unable to obtain additionalcapital, we may not be able to continue our sales and marketing, research and development, distribution or other operations on the scope or scaleof our current activity.Failure to meet Nasdaq’s continued listing requirements could result in the delisting of Vermillion common stock, negatively impact theprice of Vermillion common stock and negatively impact our ability to raise additional capital.On August 2, 2019, we received a deficiency letter from the Listing Qualifications Department of The Nasdaq Stock Market statingthat, for the preceding 30 consecutive business days, the closing bid price for Vermillion common stock was below the minimum $1.00 per sharerequirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). On January 30, 2020,Vermillion was granted an additional 180-calendar day compliance period, or until July 27, 2020, to regain compliance with the minimum bidprice requirement. There is no assurance that we will be able to regain compliance by the July 27, 2020 extended deadline, and there is noassurance that we will otherwise maintain compliance with this or any of the other Nasdaq continued listing requirements.If, in the future, we fail to comply with Nasdaq’s continued listing requirements, Vermillion common stock will be subject to delisting.If that were to occur, Vermillion common stock would be subject to rules that impose additional sales practice requirements on broker-dealerswho sell Vermillion securities. The additional burdens imposed upon broker-dealers by these requirements could discourage broker-dealers fromeffecting transactions in Vermillion common stock. This would adversely affect the ability of investors to trade Vermillion securities and wouldadversely affect the value and liquidity of Vermillion common stock. These factors could contribute to lower prices and larger spreads in the bidand ask prices for Vermillion common stock. If we seek to implement a reverse stock split in order to remain listed on The Nasdaq CapitalMarket, the announcement or implementation of such a reverse stock split could negatively affect the price of Vermillion common stock.If we fail to continue to develop our existing technologies, we may not be able to successfully foster adoption of our products and services. Our technologies are new and complex, and are subject to change as new discoveries are made. New discoveries and advancements inthe diagnostic field are essential if we are to foster the adoption of our product offerings. Development of our existing technologies remains asubstantial risk to us due to various factors, including the scientific challenges involved, our ability to find and collaborate successfully withothers working in the diagnostic field, and competing technologies, which may prove more successful than our technologies.We may not succeed in developing additional diagnostic products, and, even if we do succeed in developing additional diagnostic products,the diagnostic products may never achieve significant commercial market acceptance.Our success depends on our ability to continue to develop and commercialize diagnostic products. There is considerable risk indeveloping diagnostic products based on our biomarker discovery efforts, as candidate biomarkers may fail to validate results in larger clinicalstudies or may not achieve acceptable levels of clinical accuracy. For example, markers being evaluated for one or more next-generationdiagnostic tests may not be validated in downstream pre-clinical or clinical studies, once we undertake and perform such studies. In addition,development of products combining biomarkers with imaging, patient risk factors or other risk indicators carry higher than average risks due totechnical, clinical and regulatory uncertainties. While we have published proof of concept on combining OVA1 and imaging, for example, ourability to develop, verify and validate an algorithm that generalizes to routine testing populations cannot be guaranteed. Also, outcomes ofprospective and retrospective trials, for OVAnex which are essential for clinical validation, are uncertain. In addition, our efforts to developother diagnostic tests, such as Endocheck, are in the discovery phase, and future pre-clinical or clinical studies may not support our early data. Ifsuccessful, the regulatory pathway and clearance/approval process may require extensive discussion with applicable authorities and possiblymedical panels or other oversight mechanisms. These pose considerable risk in projecting launch dates, requirements for clinical evidence andeventual pricing and return on investment. Although we are engaging important stakeholders representing gynecologic oncology, benigngynecology, patient advocacy, women’s health research, reimbursement and others, success, timelines and value will be uncertain and requireactive management at all stages of innovation and development.Clinical testing is expensive, takes many years to complete and can have an uncertain outcome. Clinical failure can occur at any stageof the testing. Clinical trials for our next generation ovarian cancer tests, and other future diagnostic tests, may produce negative or inconclusiveresults, and we may decide, or regulators may require us, to conduct additional clinical and/or non-clinical testing on these tests. In addition, theresults of our clinical trials may identify unexpected risks relative to safety or efficacy, which16  could complicate, delay or halt clinical trials, or result in the denial of regulatory approval by the FDA and other regulatory authorities. If we do succeed in developing additional diagnostic tests with acceptable performance characteristics, we may not succeed inachieving commercial market acceptance for those tests. Our ability to successfully commercialize diagnostic products, including OVA1, Overa,OVA1PLUS and/or ASPiRA GenetiX will depend on many factors, including:·our ability to convince the medical community of the safety and clinical efficacy of our products and their advantages overexisting diagnostic products;·our success in establishing new clinical practices or changing previous ones, such that utilization of the tests fail to meetestablished standards of care, medical guidelines and the like;·our ability to develop business relationships with diagnostic or laboratory companies that can assist in the commercializationof these products in the U.S. and globally; and·the scope and extent of the agreement by Medicare and third-party payers to provide full or partial reimbursement coveragefor our products, which will affect patients’ willingness to pay for our products and will likely heavily influence physicians’decisions to recommend or use our products.These factors present obstacles to commercial acceptance of our existing and potential diagnostic products, for which we will have tospend substantial time and financial resources to overcome, and there is no guarantee that we will be successful in doing so. Our inability to doso successfully would prevent us from generating revenue from OVA1, Overa, OVA1PLUS and ASPiRA GenetiX and developing futurediagnostic products.The diagnostics market is competitive, and we may not be able to compete successfully, which would adversely impact our ability to generaterevenue.Our principal competition currently comes from the many clinical options available to medical personnel involved in clinical decisionmaking. For example, rather than ordering an OVA1, Overa or OVA1PLUS test for a woman with an adnexal mass, obstetricians, gynecologists,and gynecologic oncologists may choose a different clinical option or none at all. If we are not able to convince clinicians that OVA1, Overa andOVA1PLUS provide significant improvement over current clinical practices, our ability to commercialize OVA1, Overa and OVA1PLUS willbe adversely affected. Additionally, in September 2011, Fujirebio Diagnostics received FDA clearance for its ROMA test. ROMA combines twotumor markers and menopausal status into a numerical score using a publicly available algorithm. This test has the same intended use andprecautions as OVA1, and our revenues could be materially and adversely affected if the ROMA test is successful. In addition, competitors, suchas Becton Dickinson, ArrayIt Corporation, Abbott Laboratories and others have publicly disclosed that they have been or are currently workingon ovarian cancer diagnostic assays. Academic institutions periodically report new findings in ovarian cancer diagnostics that may havecommercial value. Our failure to compete with any competitive diagnostic assay if and when commercialized could adversely affect ourbusiness, financial condition and results of operations. We have priced OVA1, Overa and OVA1PLUS at a point that recognizes the value-added by its increased sensitivity for detectingovarian malignancy. If others develop a test that is viewed to be similar to OVA1, Overa or OVA1PLUS in efficacy but is priced at a lowerpoint, we and/or our strategic partners may have to lower the price of OVA1, Overa or OVA1PLUS in order to effectively compete, whichwould impact our margins and potential for profitability.Our diagnostic tests are subject to ongoing regulation by the FDA and any delay by or failure of the FDA to approve our diagnostic testssubmitted to the FDA may adversely affect our business, results of operations and financial condition.Our activities related to diagnostic products are, or have the potential to be, subject to regulatory oversight by the FDA under provisionsof the Federal Food, Drug and Cosmetic Act and regulations thereunder, including regulations governing the development, marketing, labeling,promotion, manufacturing and export of our products. Failure to comply with applicable requirements can lead to sanctions, includingwithdrawal of products from the market, recalls, refusal to authorize government contracts, product seizures, civil money penalties, injunctionsand criminal prosecution.The Federal Food, Drug and Cosmetic Act requires that medical devices introduced to the United States market, unless exempted byregulation, be the subject of either a pre-market notification clearance, known as a 510(k) clearance or 510(k) de novo clearance, or a PMA.Some of our potential future clinical products may require a 510(k) or 510(k) de novo clearance, while others may require a PMA. With respectto devices reviewed through the 510(k) process, we may not market a device until an order is issued by the FDA finding our product to besubstantially equivalent to a legally marketed device known as a predicate device. A 510(k) submission may involve the presentation of asubstantial volume of data, including clinical data. The FDA may agree that the product is substantially equivalent to a predicate device andallow the product to be marketed in the United States. On the other hand, the FDA may determine that the device is not substantially equivalentand require a PMA or a de novo 510(k), or require further information, such as additional test data, including data from clinical studies, before itis able to make a determination regarding substantial equivalence. By requesting additional information, the FDA can delay market introductionof our products. Delays in receipt of or17  failure to receive any necessary 510(k) clearance or PMA approval, or the imposition of stringent restrictions on the labeling and sales of ourproducts, could have a material adverse effect on our business, results of operations and financial condition. If the FDA indicates that a PMA isrequired for any of our potential future clinical products, the application will require extensive clinical studies, manufacturing information andlikely review by a panel of experts outside the FDA. Clinical studies to support either a 510(k) submission or a PMA application would need tobe conducted in accordance with FDA requirements. Failure to comply with FDA requirements could result in the FDA’s refusal to accept thedata or the imposition of regulatory sanctions. We cannot assure that any necessary 510(k) clearance or PMA approval will be granted on atimely basis, or at all. To the extent we seek FDA 510(k) clearance or FDA pre-market approval for other diagnostic tests, any delay by or failureof the FDA to clear or approve those diagnostic tests may adversely affect our consolidated revenues, results of operations and financialcondition.If we or our suppliers fail to comply with FDA requirements for production, marketing and post-market monitoring of our products, we maynot be able to market our products and services and may be subject to stringent penalties, product restrictions or recall.Failure to comply with FDA requirements for post-market monitoring of our products may affect the commercialization of ourproducts, therefore adversely affecting our business. The FDA cleared Overa in March 2016 and OVA1 in September 2009. In connection withthe clearance of OVA1 we agreed to conduct certain post-market surveillance studies to further analyze performance of OVA1. While the OVA1post-market study has been completed and closed with the FDA, Overa’s post-market surveillance requirement is completed but still in the finalsteps for closure with the FDA. Failure to comply with our post-marketing study requirements may lead to enforcement actions by the FDA,including seizure of our product, injunction, prosecution and/or civil money penalties, which may harm our business, results of operations andfinancial condition. Additionally, the commercialization of our products could be delayed, halted or prevented by applicable FDA regulations. If the FDAwere to view any of our actions as non-compliant, it could initiate enforcement actions, such as a warning letter and possible imposition ofpenalties. For instance, we are subject to a number of FDA requirements, including compliance with the FDA’s Quality System Regulations“QSR” requirements, which establish extensive requirements for quality assurance and control as well as manufacturing procedures. Failure tocomply with these regulations could result in enforcement actions for us or our potential suppliers. Adverse FDA actions in any of these areascould significantly increase our expenses and reduce our revenue. We will need to undertake steps to maintain our operations in line with theFDA’s QSR requirements. Some components of OVA1 and Overa are manufactured by other companies and we are required to ensure that, tothe extent that we incorporate those components into our finished OVA1and Overa (or OVA1PLUS, which is a reflex testing service in whichboth OVA1 and Overa are used), we use those components in compliance with QSR. Any failure to do so would have an adverse effect on ourability to commercialize OVA1, Overa or OVA1PLUS. Our suppliers’ manufacturing facilities, since they manufacture finished kits that we usein OVA1, Overa and OVA1PLUS, are subject to periodic regulatory inspections by the FDA and other federal and state regulatory agencies. Ourfacility also is subject to FDA inspection. We or our suppliers may not satisfy such regulatory requirements, and any such failure to do so mayadversely affect our business, financial condition and results of operations. If our suppliers fail to produce acceptable or sufficient stock, make changes to the design or labeling of their biomarker kits or discontinueproduction of existing biomarker kits or instrument platforms, we may be unable to meet market demand for OVA1 and Overa.The commercialization of our OVA1, Overa and OVA1PLUS tests depend on the supply of seven different immunoassay kits fromthird-party manufacturers that run on automated instruments. Failure by any of these manufacturers to produce kits that pass our quality controlmeasures might lead to back-order and/or loss of revenue due to missed sales and customer dissatisfaction. In addition, if the design or labelingof any kit were to change, continued OVA1, Overa or OVA1PLUS supply could be threatened since new validation and submission to the FDAfor 510(k) clearance could be required as a condition of sale. Discontinuation of any of these kits could require identification, validation and510(k) submission on a revised OVA1, Overa or OVA1PLUS design. Likewise, discontinuation or failure to support or service the instrumentsmay pose risk to ongoing operations.For example, one of the five immunoassay component kits that are used in OVA1 has ceased to be supported on the instrument as themanufacturer transitioned to a newer platform. While we have not experienced and do not anticipate disruption of ongoing operations, failure ofa manufacturer to provide extended service or support might harm our business. Overa consolidates the five OVA1 immunoassays onto a singlemainstream automated platform and substitutes a new immunoassay component kit for the discontinuing kit as a mitigating action. Although wereceived a 510(k) clearance from the FDA for Overa in March 2016, there can be no assurances that there will not be future disruptions in oursupply chain. Any resulting disruption to our supply of OVA1 or Overa would adversely affect our business, financial condition and results ofoperations.If we fail to maintain our rights to utilize intellectual property directed to diagnostic biomarkers, we may not be able to offer diagnostic testsusing those biomarkers.One aspect of our business plan is to develop diagnostic tests based on certain biomarkers, which we have the right to utilize throughlicenses with our academic collaborators, such as Johns Hopkins University School of Medicine and the University of Texas M.D. AndersonCancer Center. In some cases, our collaborators own the entire right to the biomarkers. In other cases, we co-own the biomarkers with ourcollaborators. If, for some reason, we lose our license to biomarkers owned entirely by our collaborators, we may18  not be able to use those biomarkers in diagnostic tests. If we lose our exclusive license to biomarkers co-owned by us and our collaborators, ourcollaborators may license their share of the intellectual property to a third party that may compete with us in offering diagnostic tests, whichwould materially adversely affect our business, results of operations and financial condition.If a third party infringes on our proprietary rights, we may lose any competitive advantage we may have as a result of diversion of our time,enforcement costs and the loss of the exclusivity of our proprietary rights.Our success depends in part on our ability to maintain and enforce our proprietary rights. We rely on a combination of patents,trademarks, copyrights and trade secrets to protect our technology and brand. We have submitted a number of patent applications coveringbiomarkers that may have diagnostic or therapeutic utility. Our patent applications may or may not result in additional patents being issued.If third parties engage in activities that infringe on our proprietary rights, we may incur significant costs in asserting our rights, and theattention of our management may be diverted from our business. We may not be successful in asserting our proprietary rights, which could resultin our patents being held invalid or a court holding that the competitor is not infringing, either of which may harm our competitive position. Wecannot be sure that competitors will not design around our patented technology.We also rely upon the skills, knowledge and experience of our technical personnel. To help protect our rights, we require all employeesand consultants to enter into confidentiality agreements that prohibit the disclosure of confidential information. These agreements may notprovide adequate protection for our trade secrets, knowledge or other proprietary information in the event of any unauthorized use or disclosure.If any trade secret, knowledge or other technology not protected by a patent were to be disclosed to or independently developed by a competitor,it could have a material adverse effect on our business, consolidated results of operations and financial condition.If others successfully assert their proprietary rights against us, we may be precluded from making and selling our products or we may berequired to obtain licenses to use their technology.Our success depends on avoiding infringing on the proprietary technologies of others. If a third party were to assert claims that we areviolating its patents, we might incur substantial costs defending ourselves in lawsuits against charges of patent infringement or other unlawfuluse of another’s proprietary technology. Any such lawsuit may involve considerable management and financial resources and may not bedecided in our favor. If we are found liable, we may be subject to monetary damages or an injunction prohibiting us from using the technology.We may also be required to obtain licenses under patents owned by third parties and such licenses may not be available to us on commerciallyreasonable terms, if at all. If we are able to establish operations in countries outside of the United States, we may be subject to political, economic and other conditionsaffecting these countries that could result in increased operating expenses and regulation.In 2018 and 2019, virtually all of our product revenue was generated in the United States. If we are able to successfully commercializeour products outside the United States, there are risks inherent in conducting business internationally, including the following:·data privacy laws that may apply to the transmission of any clients’ and employees’ data to the United States;·import/export sanctions and restrictions;·compliance with applicable anti-corruption laws;·difficulties in managing international distributors;·accounting, tax and legal complexities arising from international operations;·potential difficulties in transferring funds generated overseas to the United States in a tax efficient manner; and·political and economic instability, including recent recessionary trends.Future litigation against us could be costly and time consuming to defend.We are from time to time subject to legal proceedings and claims that arise in the ordinary course of business, such as claims broughtby our clients in connection with commercial disputes, employment claims made by current or former employees, and claims brought by thirdparties alleging infringement of their intellectual property rights. In addition, we may bring claims against third parties for infringement of ourintellectual property rights. Litigation may result in substantial costs and may divert our attention and resources, which may adversely affect ourbusiness, results of operations and financial condition.An unfavorable judgment against us in any legal proceeding or claim could require us to pay monetary damages. In addition, anunfavorable judgment in which the counterparty is awarded equitable relief, such as an injunction, could harm our business, results of operationsand financial condition.19  Our diagnostic efforts may cause us to have significant product liability exposure.The testing, manufacturing and marketing of medical diagnostic tests entail an inherent risk of product liability claims. Potentialproduct liability claims may exceed the amount of our insurance coverage or may be excluded from coverage under the terms of the policy. Wewill need to increase our amount of insurance coverage in the future if we are successful at introducing new diagnostic products, and this willincrease our costs. If we are held liable for a claim or for damages exceeding the limit of our insurance coverage, we may be required to makesubstantial payments. This may have an adverse effect on our business, financial condition and results of operations. Because our business is highly dependent on key executives and employees, our inability to recruit and retain these people could hinder ourbusiness plans.We are highly dependent on our executive officers and certain key employees. Our executive officers and key employees are employedat will by us. Any inability to engage new executive officers or key employees could impact operations or delay or curtail our research,development and commercialization objectives. To continue our research and product development efforts, we need people skilled in areas suchas clinical operations, regulatory affairs and clinical diagnostics. Competition for qualified employees is intense.If we lose the services of any executive officers or key employees, our ability to achieve our business objectives could be harmed,which in turn could adversely affect our business, financial condition and results of operations.Business interruptions could limit our ability to operate our business.Our operations, as well as those of the collaborators on which we depend, are vulnerable to damage or interruption from fire; naturaldisasters, including earthquakes, computer viruses, human error, power shortages, telecommunication failures, international acts of terror,epidemics or pandemics such as COVID-19, and other similar events. Although we have certain business continuity plans in place, we have notestablished a formal comprehensive disaster recovery plan, and our back-up operations and business interruption insurance may not be adequateto compensate us for losses we may suffer. A significant business interruption could result in losses or damages incurred by us and require us tocease or curtail our operations. Changes in healthcare policy could increase our costs and adversely impact sales of and reimbursement for our tests, which would have anadverse effect on our business, financial condition and results of operations. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act(collectively, the “PPACA”) halted certain reductions in payment mandated by the PPACA as well as certain CMS policies and has insteadestablished a market-based reimbursement system for clinical laboratories beginning in 2018 after requiring reporting of certain private payerreimbursement data by laboratories. CMS also issued various regulations and guidance generally effective in 2014 that limited reimbursementfor clinical laboratory tests as a general matter, but permitted the continued ability for CMS to pay for Multianalyte Assays with AlgorithmicAnalyses in certain circumstances. In addition to these changes, a number of states are also contemplating significant reform of their healthcarepolicies. We cannot predict whether future healthcare initiatives will be implemented at the federal or state level, or the effect any futurelegislation or regulation will have on us. Other changes to healthcare laws may adversely affect our business, financial condition and results ofoperations.The current presidential administration and U.S. Congress has made efforts to delay, modify or repeal certain provisions of theAffordable Care Act. In December 2017, the House and Senate passed a new tax bill effective January 1, 2019 that ended the individualmandate, a tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifyinghealth coverage. The passage of this bill resulted in increased premiums and resulted in fewer covered individuals. Over time, this and otherchanges could have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by theAffordable Care Act. In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Actwas enacted that reduced payments to Medicare providers. The ultimate implementation of any healthcare reform legislation and any new lawsand regulations, and its impact on us, is impossible to predict. Any significant reforms made to the healthcare system in the United States, or inother jurisdictions, may have an adverse effect on our business, financial condition and results of operations.We are subject to environmental laws and potential exposure to environmental liabilities.We are subject to various international, federal, state and local environmental laws and regulations that govern our operations,including the handling and disposal of non-hazardous and hazardous wastes, the recycling and treatment of electrical and electronic equipment,and emissions and discharges into the environment. Failure to comply with such laws and regulations could result in costs for corrective action,penalties or the imposition of other liabilities. We are also subject to laws and regulations that impose liability and clean-up responsibility forreleases of hazardous substances into the environment. Under certain of these laws and regulations, a current or previous owner or operator ofproperty may be liable for the costs to remediate hazardous substances or petroleum products on or from its property, without regard to whetherthe owner or operator knew of, or caused, the contamination, as well as incur liability to third parties affected by such contamination. Thepresence of, or failure to remediate properly, such substances could adversely affect the value and the ability to transfer or encumber suchproperty.20  The operation of ASPiRA LABS requires us to comply with numerous laws and regulations, which is expensive and time-consuming andcould adversely affect our business, financial condition and results of operations, and any failure to comply could result in exposure tosubstantial penalties and other harm to our business.In June 2014, we launched a clinical laboratory, ASPiRA LABS. Clinical laboratories that perform tests on human subjects in theUnited States for the purpose of providing information for the diagnosis, prevention or treatment of disease must be certified under CLIA andlicensed under applicable state laboratory laws. CLIA regulates the quality of clinical laboratory testing by requiring laboratories to comply withvarious technical, operational, personnel and quality requirements intended to ensure that the services provided are accurate, reliable and timely.State laws may require that additional quality standards be met and that detailed review of scientific validations and technical procedures fortests occur. ASPiRA LABS holds a CLIA Certificate of Accreditation and a state laboratory license in California, Florida, Maryland, New York,Pennsylvania and Rhode Island. This allows the lab to perform OVA1, Overa and OVA1PLUS testing on a national basis. We are subject toperiodic surveys and inspections to maintain our CLIA certification, and such certification is also required to obtain payment from Medicare,Medicaid and certain other third-party payers. Failure to comply with CLIA or state law requirements may result in the imposition of correctiveaction or the suspension or revocation of our CLIA certification or state licenses. If our CLIA certification or state licenses are suspended orrevoked or our right to bill the Medicare and Medicaid programs or other third-party payers is suspended, we would no longer be able to sell ourtests, which would adversely affect our business, financial condition and results of operations.In addition, no assurance can be given that ASPiRA LABS’ suppliers or commercial partners will remain in compliance withapplicable CLIA and other federal or state regulatory requirements for laboratory operations and testing. ASPiRA LABS’ facilities andprocedures and those of ASPiRA LABS’ suppliers and commercial partners are subject to ongoing regulation, including periodic inspection byregulatory and other government authorities. Possible regulatory actions for non-compliance could include warning letters, fines, damages,injunctions, civil penalties, recalls, seizures of ASPiRA LABS’ products, and criminal prosecution.Our clinical laboratory business is also subject to regulation at both the federal and state level in the United States, as well as regulationin other jurisdictions outside of the United States, including: • Medicare and Medicaid coverage, coding and payment regulations applicable to clinical laboratories; • the Federal Anti-Kickback Statute and state anti-kickback prohibitions;• the federal physician self-referral prohibition, commonly known as the Stark Law, and state self-referral prohibitions; • the Medicare civil monetary penalty and exclusion requirements; • the Federal False Claims Act civil and criminal penalties and state equivalents; and • the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”); Many of these laws and regulations prohibit a laboratory from making payments or furnishing other benefits to influence the referral oftests (by physicians or others) that are billed to Medicare, Medicaid or certain other federal or state healthcare programs. The penalties forviolation of these laws and regulations may include monetary fines, criminal and civil penalties and/or suspension or exclusion fromparticipation in Medicare, Medicaid and other federal healthcare programs. Several states have similar laws that may apply even in the absenceof government payers. HIPAA and HITECH and similar state laws seek to protect the privacy and security of individually identifiable healthinformation, and penalties for violations of these laws may include required reporting of breaches, monetary fines and criminal or civil penalties.While we seek to conduct our business in compliance with all applicable laws and develop compliance policies to address risk asappropriate, many of the laws and regulations applicable to us are vague or indefinite and have not been interpreted by governmental authoritiesor the courts. These laws or regulations also could in the future be interpreted or applied by governmental authorities or the courts in a mannerthat could require us to change our operations. Any action brought against us for violation of these or other laws or regulations (including actions brought by private qui tam“whistleblower” plaintiffs), even if successfully defended, could divert management’s attention from our business, damage our reputation, limitour ability to provide services, decrease demand for our services and cause us to incur significant expenses for legal fees and damages. If we failto comply with applicable laws and regulations, we could suffer civil and criminal penalties, fines, recoupment of funds received by us,exclusion from participation in federal or state healthcare programs, and the loss of various licenses, certificates and authorizations necessary tooperate our business. We also could potentially incur additional liabilities from21  third-party claims. If any of the foregoing were to occur, it could have a material adverse effect on our business, financial condition and resultsof operations.In the future, we plan to develop and perform LDTs at ASPiRA LABS, and future regulation of LDTs may adversely affectcommercialization of our diagnostic tests, which would negatively affect our results of operations and financial condition. We intend to develop and perform LDTs at ASPiRA LABS in the future. The FDA has historically exercised enforcement discretionand not required approvals or clearances for LDTs. Instead, CMS oversees clinical laboratory operations through the Clinical LaboratoryImprovement Amendments (“CLIA”) program.Legislative proposals addressing the FDA’s oversight of LDTs have been previously introduced, and we expect that new legislativeproposals will be introduced from time to time. The likelihood that Congress will pass such legislation and the extent to which such legislationmay affect the FDA’s plans to regulate LDTs as medical devices is difficult to predict. In January 13, 2017, the FDA released a Discussion Paperon LDTs and, in October 2017, the FDA released a draft guidance document outlining the FDA’s proposal to actively regulate LDTs. The 2017Discussion Paper makes recommendations on what the agency would like to see better-controlled. However, it does not have the force of law,and it is not a guidance document.In December 2018, Congress released a draft of the Verifying Accurate, Leading-edge IVCT Development (“VALID”) Act, whichincorporates FDA ideas for diagnostics regulation. This bill proposes a regulatory framework for IVDs and LDTs and would require premarketapproval for in vitro clinical tests. If VALID is passed, we may fail to gain approval for some or all of our LDTs.Even without any new guidance documents, the FDA may assert that a test that we believe to be an LDT is not an LDT and couldrequire us to seek clearance or approval to offer such tests for clinical use. If the FDA pre-market review or approval is required for any of thefuture LDTs we may develop, we may be forced to stop selling our tests or be required to modify claims or make such other changes while wework to obtain FDA clearance or approval. Our business, results of operations and financial condition would be negatively affected until suchreview is completed and clearance to market or approval is obtained.If pre-market review is required by the FDA or if we decide to voluntarily pursue FDA pre-market review of our future LDTs, there canbe no assurance that any tests we develop in the future will be cleared or approved on a timely basis, if at all. Obtaining FDA clearance orapproval for diagnostics can be expensive, time consuming and uncertain, and for higher-risk devices generally takes several years and requiresdetailed and comprehensive scientific and clinical data. In addition, medical devices are subject to ongoing FDA obligations and continuedregulatory oversight and review. Ongoing compliance with FDA regulations for those tests would increase the cost of conducting our businessand subject us to heightened regulation by the FDA and penalties for failure to comply with these requirements.The operation of ASPiRA LABS depends on the effectiveness and availability of our information systems, including the information systemswe use to provide services to our customers and to store employee data, and failures of these systems, including in connection with cyber-attacks, may materially limit our operations or have an adverse effect on our reputation.The information systems we use for our ASPiRA LABS business are comprised of systems we have purchased or developed, ourlegacy information systems and, increasingly, web-enabled and other integrated information systems. In using these information systems, wemay rely on third-party vendors to provide hosting services, where our infrastructure is dependent upon the reliability of their underlyingplatforms, facilities and communications systems. We also plan to utilize integrated information systems that we provide customers access to orinstall for our customers in conjunction with our delivery of services. The addition of our decentralized technology transfer business may also beaffected by these information systems.As the breadth and complexity of ASPiRA LABS’ information system grows, we will increasingly be exposed to the risks inherent inmaintaining the stability of our legacy systems due to prior customization, attrition of employees or vendors involved in their development, andobsolescence of the underlying technology as well as risks from the increasing number and scope of external data breaches on companiesgenerally. Because certain customers and clinical trials may be dependent upon these legacy systems, we will also face an increased level ofembedded risk in maintaining the legacy systems and limited options to mitigate such risk. We are also exposed to risks associated with theavailability of all of our information systems, including:·disruption, impairment or failure of data centers, telecommunications facilities or other key infrastructure platforms, including thosemaintained by third-party vendors;·security breaches of, cyber-attacks on and other failures or malfunctions in our internal systems, including our employee data andcommunications, critical application systems and their associated hardware; and·excessive costs, excessive delays and other deficiencies in systems development and deployment.The materialization of any of these risks may impede the processing of data, the delivery of databases and services, and the day-to-daymanagement of our ASPiRA LABS business and could result in the corruption, loss or unauthorized disclosure of proprietary, confidential orother data. While we have disaster recovery plans in place in line with applicable regulations and industry standards, they might not adequatelyprotect us in the event of a system failure. Despite any precautions we take, damage from fire, floods, hurricanes, the outbreak or escalation ofwar, acts of terrorism, power loss, telecommunications failures, computer viruses,22  break-ins and similar events at our various computer facilities or those of our third-party vendors could result in interruptions in the flow of datato us and from us to our customers. Corruption or loss of data may result in the need to repeat a trial at no cost to the customer, but at significantcost to us, the termination of a contract or damage to our reputation. As our business continues its efforts to expand globally, these types of risksmay be further increased by instability in the geopolitical climate of certain regions, underdeveloped and less stable utilities and communicationsinfrastructure, and other local and regional factors. Additionally, significant delays in system enhancements or inadequate performance of new orupgraded systems could damage our reputation and harm our business. Although we carry property and business interruption insurance whichwe believe is customary for our industry, our coverage might not be adequate to compensate us for all losses that may occur.Unauthorized disclosure of sensitive or confidential data, whether through systems failure or employee or distributor negligence, cyber-attacks, fraud or misappropriation, could damage our reputation and cause us to lose customers and, to the extent any such unauthorizeddisclosure compromises the privacy and security of individually identifiable health information, could also cause us to face sanctions and finesunder the Federal Health Insurance Portability and Accountability Act of 1996 as amended by the Health Information Technology for Economicand Clinical Health Act of 2009. Similarly, we have been and expect that we will continue to be subject to attempts to gain unauthorized accessto or through our information systems or those we internally or externally develop for our customers, including a cyber-attack by computerprogrammers and hackers who may develop and deploy viruses, worms or other malicious software programs, process breakdowns, denial-of-service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing. These concerns about securityare increased when information is transmitted over the Internet. Threats include cyber-attacks such as computer viruses, worms or otherdestructive or disruptive software, and any of these could result in a degradation or disruption of our services or damage to our properties,equipment and data. They could also compromise data security. If such attacks are not detected immediately, their effect could be compounded.These same risks also apply to ASPiRA LABS. Successful attacks could result in negative publicity, significant remediation and recovery costs,legal liability and damage to our reputation and could have an adverse effect on our business, financial condition and results of operations.We selectively explore acquisition opportunities and strategic alliances relating to other businesses, products or technologies. We may not besuccessful in integrating other businesses, products or technologies with our business. Any such transaction also may not produce the resultswe anticipate, which could adversely affect our business, financial condition and results of operations. We selectively explore and may pursue acquisition and other opportunities to strengthen our business and grow our company. We may enterinto business combination transactions, make acquisitions or enter into strategic partnerships, joint ventures or alliances, any of which may bematerial. The market for acquisition targets and strategic alliances is highly competitive, which could make it difficult to find appropriate mergeror acquisition opportunities. If we are required to raise capital by incurring debt or issuing additional equity for any reason in connection with astrategic acquisition or investment, financing may not be available or the terms of such financing may not be favorable to us and ourstockholders, whose interests may be diluted by the issuance of additional stock.The process of integration may produce unforeseen regulatory issues and operating difficulties and expenditures and may divert theattention of management from the ongoing operation of our business and harm our reputation. We may not successfully achieve the integrationobjectives, and we may not realize the anticipated cost savings, revenue growth and synergies in full or at all, or it may take longer to realizethem than expected, any of which could negatively impact our business, financial condition and results of operations. 23  Risks Related to Owning Our StockThe liquidity and trading volume of our common stock may be low, and our ownership is concentrated.The liquidity and trading volume of our common stock has at times been low in the past and may again be low in the future. If theliquidity and trading volume of our common stock is low, this could adversely impact the trading price of our shares, our ability to issue stockand our stockholders’ ability to obtain liquidity in their shares. Our stock issuances since May 2013 have primarily involved a significantissuance of stock to a limited number of investors, significantly increasing the concentration of our share ownership in a few holders.According to information provided on Schedules 13D and 13G, as amended, filed as recently as February 14, 2020, five persons, inaggregate, beneficially owned approximately 62 million shares of our common stock, including the right to acquire approximately 3 millionshares under warrant or option agreements. The shares of common stock currently held by these individuals, excluding the right to acquire thoseshares under warrant or option agreements, represent 61% of our outstanding shares of common stock. Under a May 2013 stockholdersagreement, two of these persons have certain rights to designate a director to be nominated by us to serve on the Board of Directors. As a result,these stockholders will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, includingthe election and removal of directors and any change in control. In particular, this concentration of ownership of our common stock could havethe effect of delaying or preventing a change in control of us or otherwise discouraging or preventing a potential acquirer from attempting toobtain control of us. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our stockholdersfrom realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownershipmay not always coincide with our interests or the interests of other stockholders. The concentration of ownership also contributes to the lowtrading volume and volatility of our common stock.Our stock price has been, and may continue to be, highly volatile.The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in price inresponse to various factors, many of which are beyond our control, including:·failure to significantly increase revenue and volumes of OVA1, Overa, OVA1PLUS or ASPiRA GenetiX;·actual or anticipated period-to-period fluctuations in financial results;·failure to achieve, or changes in, financial estimates by securities analysts;·announcements or introductions of new products or services or technological innovations by us or our competitors;·publicity regarding actual or potential discoveries of biomarkers by others;·comments or opinions by securities analysts or stockholders;·conditions or trends in the pharmaceutical, biotechnology or life science industries;·announcements by us of significant acquisitions and divestitures, strategic partnerships, joint ventures or capital commitments;·developments regarding our patents or other intellectual property or that of our competitors;·litigation or threat of litigation;·additions or departures of key personnel;·limited daily trading volume;·our ability to continue as a going concern;·economic and other external factors, disasters or crises; and·our announcement of additional fundraisings.In addition, the stock market in general and the market for diagnostic technology companies, in particular, have experienced significantprice and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broadmarket and industry factors may adversely affect the market price of our common stock, regardless of our operating performance. In the past,following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. Asecurities class action suit against us could result in substantial costs, potential liabilities and the diversion of our attention and our resources.Anti-takeover provisions in our charter, bylaws, other agreements and under Delaware law could make a third-party acquisition of theCompany difficult.Certain provisions of our certificate of incorporation and bylaws may have the effect of making it more difficult for a third party toacquire, or of discouraging a third party from attempting to acquire, control of us, even if a change of control might be24  deemed beneficial to our stockholders. Such provisions could limit the price that certain investors might be willing to pay in the future for oursecurities. Our certificate of incorporation eliminates the right of stockholders to call special meetings of stockholders or to act by writtenconsent without a meeting, and our bylaws require advance notice for stockholder proposals and director nominations, which may precludestockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting ofstockholders. Our certificate of incorporation also authorizes undesignated preferred stock, which makes it possible for our board of directors,without stockholder approval, to issue preferred stock with voting or other rights or preferences that could adversely affect the voting power ofholders of common stock. In addition, the likelihood that the holders of preferred stock will receive dividend payments and payments uponliquidation could have the effect of delaying, deferring or preventing a change in control.In connection with our private placement offering of common stock and warrants in May 2013, we entered into a stockholdersagreement which, among other things, includes agreements limiting our ability to effect a change in control without the consent of at least one ofthe two primary investors in that offering. These and other provisions may have the effect of deferring hostile takeovers or delaying changes incontrol or management of us. The amendment of any of the provisions of either our certificate of incorporation or bylaws described in thepreceding paragraph would require not only approval by our board of directors and the affirmative vote of at least 66 2/3% of our thenoutstanding voting securities, but also the consent of at least one of the two primary investors in the May 2013 offering. We are also subject tocertain provisions of Delaware law that could delay, deter or prevent a change in control of the Company. These provisions could make a third-party acquisition of the Company difficult and limit the price that investors might be willing to pay in the future for shares of our common stock. Because we do not intend to pay dividends, our stockholders will benefit from an investment in our common stock only if it appreciates invalue.We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, tofinance the expansion of our business and do not expect to pay any cash dividends in the foreseeable future. As a result, the success of aninvestment in our common stock will depend entirely upon any future appreciation. There is no guarantee that our common stock will appreciatein value or even maintain the price at which our stockholders purchased their shares.We may need to sell additional shares of our common stock or other securities in the future to meet our capital requirements, which couldcause significant dilution.Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination ofthe exercise of common stock warrants, public or private equity offerings, debt financings, collaborations, licensing arrangements, grants andgovernment funding and strategic alliances. To the extent that we raise additional capital through the sale of equity or convertible debt, suchfinancing may be dilutive to stockholders. Debt financing, if available, may involve restrictive covenants and potential dilution to stockholders.Furthermore, a perception that future sales of our common stock in the public market are likely to occur could affect prevailing trading prices ofour common stock.As of December 31, 2019, we had 97,286,157 shares of our common stock outstanding and 10,955,683 shares of our common stockreserved for future issuance to employees, directors and consultants pursuant to our employee stock plans, which excludes 6,612,878 shares ofour common stock that were subject to outstanding options. We also have warrants outstanding to purchase 2,810,338 shares of Vermillioncommon stock that were sold in conjunction with a private placement, which took place in February 2017.The exercise of all or a portion of our outstanding options and warrants will dilute the ownership interests of our stockholders. ITEM 1B. UNRESOLVED STAFF COMMENTSNone.25  ITEM 2. PROPERTIESThe following chart indicates the facilities that we lease, the location and size of each facility and its designated use. We believe thatthese facilities are suitable and adequate for our current needs.LocationApproximateSquare FeetPrimary FunctionsLease Expiration DateAustin, Texas4,218 sq. ft.ASPiRA LABS facility, research anddevelopment, clinical and regulatory andadministrative officesJanuary 31, 2021Trumbull, Connecticut10,681 sq. ft.Administrative officesJune 7, 2021ITEM 3. LEGAL PROCEEDINGSFrom time to time, we are involved in legal proceedings and regulatory proceedings arising out of our operations. We establish reservesfor specific liabilities in connection with legal actions that we deem to be probable and estimable. As of the date of the filing of this Form 10-K,we are not a party to any proceeding, the adverse outcome of which would have a material adverse effect on our financial position or results ofoperations.ITEM 4. MINE SAFETY DISCLOSURES Not applicable.26  PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIESOur common stock is traded on The NASDAQ Capital Market under the symbol “VRML.”On April 2, 2020, there were 97 registered holders of record of our common stock. The closing price of our common stock on April 3,2020 was $0.78.DividendsWe have never paid or declared any dividend on our common stock and we do not anticipate paying cash dividends on our commonstock in the foreseeable future. If we pay a cash dividend on our common stock, we also may be required to pay the same dividend on an as-converted basis on any outstanding warrants or other securities. Moreover, any preferred stock or other senior debt or equity securities to beissued and any future credit facilities might contain restrictions on our ability to declare and pay dividends on our common stock. We intend toretain all available funds and any future earnings to fund the development and expansion of our business.Equity Compensation Plan InformationWe currently maintain two equity-based compensation plans that were approved by our stockholders. The plans are the Amended andRestated 2010 Stock Incentive Plan, as amended (the “2010 Plan”) and the Vermillion, Inc. 2019 Stock Incentive Plan (the “2019 Plan”).2010 Plan. The authority of Vermillion’s Board of Directors to grant new stock options and awards under the 2010 Plan terminated in2019. The Board of Directors continued to administer the 2010 Plan with respect to the stock options that remained outstanding under the 2010Plan. At December 31, 2019, options to purchase 6,405,878 shares of common stock remained outstanding under the 2010 Plan.2019 Plan. The 2019 Plan is administered by the Compensation Committee of Vermillion’s Board of Directors. Our employees,directors, and consultants are eligible to receive awards under the 2019 Plan. The 2019 Plan permits the granting of a variety of awards,including stock options, share appreciation rights, restricted shares, restricted share units, unrestricted shares, deferred share units, performanceand cash-settled awards, and dividend equivalent rights. We are authorized to issue up to 10,492,283 shares of Vermillion’s common stock underthe 2019 Plan. At December 31, 2019, options to purchase 207,000 shares of common stock remained outstanding under the 2019 Plan.The number of shares of Vermillion’s common stock to be issued upon exercise of outstanding stock options, the weighted-averageexercise price of outstanding stock options and the number of shares available for future stock option grants and stock awards under the 2019Plan as of December 31, 2019, were as follows:Plan CategoryNumber ofSecurities to beIssued UponExercise ofOutstandingOptions,Warrants andRightsWeighted-Average ExercisePrice ofOutstandingOptions,Warrants andRightsNumber ofSecuritiesRemainingAvailable forFuture IssuanceUnder EquityCompensationPlans (ExcludingShares Reflectedin First Column)Equity compensation plans approved by security holders6,612,878 $1.40 10,955,683 Equity compensation plans not approved by security holders - - -Total6,612,878 10,955,683 27  Performance GraphPursuant to the accompanying instructions, the information called for by Item 201(e) of Regulation S-K is not required.ITEM 6. SELECTED FINANCIAL DATAPer Item 301(c) of Regulation S-K, the information called for by Item 6 of Form 10-K is not required.28  ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONSYou should read the following discussion and analysis in conjunction with our Consolidated Financial Statements and related Notesthereto, included on pages F-1 through F-19 of this Annual Report on Form 10-K, and “Risk Factors”, which are discussed in Item 1A. Thestatements below contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. See "Forward-LookingStatements" on page 1 of this Annual Report on Form 10-K.Overview We aim to serve as a diagnostic service and bio-analytic solutions provider, and we plan to broaden our commercial focus from ovariancancer to differential diagnosis of women with a range of gynecological disorders.In 2020, we plan to continue commercializing our new generation of technology and begin commercializing our decentralizedtechnology transfer service platform. We also intend to raise public awareness regarding the diagnostic superiority of OVA1 as compared tocancer antigen (“CA125”) for African American women with adnexal masses.In the fourth quarter of 2018, we launched our new generation of technology, OVA1PLUS. OVA1PLUS is designed to improveaccuracy and reduce false positive diagnoses by over 30% by leveraging the strengths of OVA1’s sensitivity and Overa’s specificity.OVA1PLUS will also be available through a decentralized platform structure enabling hospital networks and super groups to run the test in theirlabs.We are focused on commercializing OVA1, Overa, OVA1PLUS and ASPiRA GenetiX both inside and outside the U.S. In 2018 andearly 2019, we established medical and advisory support and a Key Opinion Leader Network aligned with our territories in the U.S. In addition,we added to our direct sales force and we put OVA1 on a global testing platform (like we had done with Overa), which allows tests to bedeployed internationally as well as run locally in the United States at major customer sites. In 2020, we plan to more fully commercialize OVA1and Overa by utilizing select laboratories for distribution, managed care coverage in select markets, our sales force and our existing customerbase. We also plan to develop an LDT product series of diagnostic algorithms that will include not only biomarkers, but also clinical risk factors,other diagnostics and patient history data in order to boost predictive value. The first diagnostic algorithm LDT, which we refer to internallyas OVAnex, and formerly referred to as Diagnostic Algorithm #1 and Watch and Wait, focuses on monitoring women with pelvic masses. Weexpect OVAnex to be available for commercial use in 2021. The second diagnostic algorithm LDT, Endocheck, formerly known as DiagnosticAlgorithm #2, will focus on endometriosis. We also plan to expand our portfolio of products to include OVAinherit, which is the basis for ahigh-risk screening test for those patients who are genetically predisposed to ovarian cancer. This algorithm will include genetics, proteins andother modalities to assess the risk. All of our products are focused on gynecologic diseases that cannot be assessed through a traditional biopsy.Critical Accounting Policies and EstimatesOur significant accounting policies are described in Note 1, Basis for Presentation and Summary of Significant Accounting andReporting Policies, of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K. The ConsolidatedFinancial Statements are prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”).Preparation of the financial statements requires us to make critical judgments, estimates, and assumptions that affect the amounts of assets andliabilities in the financial statements and revenues and expenses during the reporting periods (and related disclosures). We believe the policiesdiscussed below are the Company’s critical accounting policies, as they include the more significant, subjective, and complex judgments andestimates made when preparing our consolidated financial statementsRevenue RecognitionWe recognize product revenue in accordance with the provisions of ASC Topic 606, Revenue from Contracts with Customers (“ASC606”), all revenue is recognized upon completion of the OVA1, Overa or OVA1PLUS test based on estimates of amounts that will ultimately berealized. In determining the amount to accrue for a delivered test result, we consider factors such as historical payment history and amount,payer coverage, whether there is a reimbursement contract between the payer and us, and any current developments or changes that could impactreimbursement. These estimates require significant judgment by management. We also review our patient account population and determine anappropriate distribution of patient accounts by payer (i.e., Medicare, patient pay, other third-party payer, etc.) into portfolios with similarcollection experience. When evaluated for collectability, this results in a materially consistent revenue amount for such portfolios as if eachpatient account were evaluated on an individual contract basis.Under the modified retrospective implementation method of ASC 606, we recorded a one-time cumulative effect adjustment at January1, 2018 to reflect the aggregate effect of all OVA1 and Overa tests performed prior to January 1, 2018 as if revenue had been recognized underASC 606. The cumulative effect adjustment was recorded increasing the opening balance of Accounts Receivable by $500,000 in the condensedconsolidated balance sheets with an offsetting reduction to Accumulated Deficit.29  Stock-Based CompensationWe record the fair value of non-cash stock-based compensation costs for stock options and stock purchase rights related to the 2010 and2019 Plans. We estimate the fair value of stock options using a Black-Scholes option valuation model. This model requires the input ofsubjective assumptions including expected stock price volatility, expected life and estimated forfeitures of each award. We use the straight-linemethod to amortize the fair value over the vesting period of the award. These assumptions consist of estimates of future market conditions,which are inherently uncertain, and therefore are subject to management's judgment.The expected life of options is based on historical data of our actual experience with the options we have granted and represents theperiod of time that the options granted are expected to be outstanding. This data includes employees’ expected exercise and post-vestingemployment termination behaviors. The expected stock price volatility is estimated using our historical volatility in deriving the expectedvolatility assumption. We made an assessment that our historic volatility is most representative of future stock price trends. The expecteddividend yield is based on the estimated annual dividends that we expect to pay over the expected life of the options as a percentage of themarket value of our common stock as of the grant date. The risk-free interest rate for the expected life of the options granted is based on theUnited States Treasury yield curve in effect as of the grant date.Liquidity As discussed in Note 7, on April 17, 2018, the Company completed two public offerings, pursuant to which certain investors purchasedVermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,488,000 after deductingoffering expenses.As discussed in Note 7, on June 28, 2019, the Company completed a public offering, pursuant to which certain investors purchasedVermillion common stock for net proceeds of approximately $13,521,000 after deducting underwriting discounts, commissions and otherexpenses related to the offering. On July 2, 2019, William Blair & Company, L.L.C., the sole underwriter of the Offering, exercised its option topurchase additional shares of Vermillion common stock for net proceeds of approximately $2,092,000, after deducting underwriting discounts,commissions and other expenses related to the offering.We have incurred significant net losses and negative cash flows from operations since inception, and as a result have an accumulateddeficit of approximately $422,161,000 at December 31, 2019. We expect to incur a net loss in 2020 as well. In order to continue our operationsas currently planned through 2020 and beyond, we will need to raise additional capital. Given the above conditions, there is substantial doubtabout the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basisand do not include any adjustments that might result from these uncertainties.We expect to raise capital through a variety of sources, which may include the exercise of common stock warrants, (e.g., the warrants topurchase 2,810,338 shares of Vermillion common stock at $1.80 per share, which warrants were issued in February 2017 and expire in February2022 or, if earlier, five business days after Vermillion delivers notice that the closing price per share of its common stock exceeded the exerciseprice for 20 consecutive trading days during the exercise period), public and private equity offerings, debt financing, collaborations, licensingarrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or onterms acceptable to the Company. If we are unable to obtain additional capital, we may not be able to continue sales and marketing, research anddevelopment, or other operations on the scope or scale of current activity and that could have a material adverse effect on our business, results ofoperations and financial condition.In connection with a private placement offering of common stock and warrants we completed in May 2013, we entered into astockholders agreement which, among other things, gives two of the primary investors in that offering the right to participate in any future equityofferings by the Company on the same price and terms as other investors. In addition, the stockholders agreement prohibits us from takingcertain material actions without the consent of at least one of the two primary investors in that offering. These material actions include:·Making any acquisition with a value greater than $2 million;·Offering, selling or issuing any securities senior to Vermillion’s common stock or any securities that are convertible into orexchangeable or exercisable for securities ranking senior to Vermillion’s common stock;·Taking any action that would result in a change in control of the Company or an insolvency event; and·Paying or declaring dividends on any securities of the Company or distributing any assets of the Company other than in theordinary course of business or repurchasing any outstanding securities of the Company.The foregoing rights terminate for a primary investor when that investor ceases to beneficially own less than 50% of the shares andwarrants (taking into account shares issued upon exercise of the warrants), in the aggregate, that were purchased at the closing of the 2013private placement. Recent Accounting PronouncementsThe information set forth in Note 2 to our consolidated financial statements contained in Part II, Item 8, “Financial Statements andSupplementary Data,” of this Annual Report on Form 10-K is hereby incorporated herein by reference. 30  Recent DevelopmentsIn January 2019, we announced that Cigna added OVA1®(MIA) to its national preferred coverage list. In the first quarter of 2019, we began the development stage of our third-generation technology and first diagnostic algorithm LDT,internally known as OVAnex, and formerly referred to as Diagnostic Algorithm #1 and Watch and Wait. The new test will have strongsensitivity and specificity as well as a negative predictive value of greater than 99%, which will allow physicians to serially monitor women witha mass to delay or avoid unnecessary surgery. Tackling serial monitoring, which involves testing each patient two to four times a year, presents anew and potentially large market opportunity for us. The test will be initially launched as a serial monitoring LDT only, but the 2020 prospectivemonitoring study will be designed to enable us to submit for FDA clearance if we choose to do so. We anticipate conducting further population-based studies and, if all goes well with the 2020 prospective monitoring study, a 2021 product launch.In June 2019, we announced that both BlueCross BlueShield of Texas and BlueCross BlueShield of Arizona began offering preferredcoverage for OVA1®(MIA).In June 2019, we launched ASPiRA GenetiX, which is genetic testing for specific women’s health diseases, with a core focus onovarian cancer. Our initial launch is an offering to detect hereditary breast and ovarian cancer syndrome (“HBOC”) and Carrier screening,genetic screening for carriers of disease. Women who test positive for HBOC variants have a significantly elevated risk of developing ovariancancer. ASPiRA GenetiX complements OVA1PLUS and is sold at the same call point as OVA1PLUS. In time, ASPiRA GenetiX testingresults could be reported in a combined report with OVA1PLUS.On August 2, 2019, the Company received a deficiency letter from the Listing Qualifications Department of the Nasdaq Stock Marketnotifying the Company that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock was belowthe minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2).On January 30, 2020, Vermillion was granted an additional 180-calendar day compliance period, or until July 27, 2020, to regain compliancewith the minimum bid price requirement. There is no assurance that we will be able to regain compliance by the July 27, 2020 extendeddeadline, and there is no assurance that we will otherwise maintain compliance with this or any of the other Nasdaq continued listingrequirements. In the fourth quarter of 2019, we completed all outstanding service revenue contract commitments relating to our ASPiRA IVDsubsidiary. The Company is no longer pursuing IVD contracts and has fulfilled all contractual obligations under previous contracts. All directemployees and contract labor have been terminated.During 2019, we made considerable advancements in our state Medicaid coverage. We have added a total of nine state Medicaid plansto our list of plans with positive coverage.In December 2019, we initiated a study with Einstein Medical Center to review the disparity in ovarian cancer detection in African-American women, as well as other ethnicities.In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. The novel coronavirus has sincespread to over 100 countries, including every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19,the disease caused by the novel coronavirus, a pandemic, and on March 13, 2020, the United States declared a national emergency with respectto the coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in the UnitedStates have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel. In addition, manyconventions and industry conferences have been canceled. As of the date of the filing of this annual report on Form 10-K, we expect theCOVID-19 pandemic and actions taken to contain it to decrease our travel and convention-related expenses for 2020. We are taking severalmeasures to minimize the impact of the current closures and quarantines. Our salespeople are experiencing limitations on their ability tophysically visit physician offices. We are evaluating other means of coverage such as virtual sales rep meetings and leveraging social media. Webelieve any significant disruption, when and if experienced, could be temporary; however, there is uncertainty around when disruption mightoccur, the duration and potential impact. As a result, we are unable to estimate the potential impact on our operations or cash flows as of the dateof this filing. 31  Results of Operations – Year Ended December 31, 2019 as compared to Year Ended December 31, 2018The Company’s selected summary financial and operating data for the years ended December 31, 2019 and 2018 were as follows:Year Ended December 31,Increase (Decrease)(dollars in thousands)20192018Amount%Revenue:Product$4,404 $2,772 $1,632 59 Genetics22 -22 -Service112 281 (169)(60)Total revenue4,538 3,053 1,485 49 Cost of revenue:Product2,378 2,044 334 16 Genetics295 -295 -Service670 1,098 (428)(39)Total cost of revenue3,343 3,142 201 6 Gross profit / (loss)1,195 (89)1,284 (1,443)Operating expenses:Research and development1,018 550 468 85 Sales and marketing9,645 5,642 4,003 71 General and administrative5,810 5,052 758 15 Total operating expenses16,473 11,244 5,229 47 Loss from operations(15,278)(11,333)(3,945)35 Interest (expense) / income, net59 (22)81 (368)Other (expense) / income, net(18)(16)(2)13 Net loss$(15,237)$(11,371)$(3,866)34 Product Revenue. Product revenue was approximately $4,404,000 for the year ended December 31, 2019 compared to $2,772,000 forthe same period in 2018. Revenue for ASPiRA LABS’ OVA1 is being recognized when the OVA1 test is being performed based on estimatesof what we expect to ultimately realize. The 59% product revenue increase is due to an increase in tests performed compared to the prior year, aswell as approximately $56,000 in upward adjustments to estimates to recognize revenue for services provided in a prior period.The number of OVA1 tests performed increased 68% to 12,898 OVA1 tests during the year ended December 31, 2019 compared to7,679 OVA1 tests for the prior year. The volume increase was primarily due to our commercialization investment. Genetics Revenue. Genetics revenue was $22,000 for the year ended December 31, 2019. There was no genetics revenue in 2018 asASPiRA GenetiX was launched in the second quarter of 2019. We expect genetics revenue to increase as genetics will be offered for a full yearin 2020. Revenue for genetics is being recognized when the ASPiRA GenetiX test is being performed based on estimates of what we expect toultimately realize.Service Revenue. Service revenue was $112,000 for the year ended December 31, 2019 compared to $281,000 for the same period in2018, a decrease of $169,000, or 60%. Service revenue decreased due to a wind up of our IVD services. We do not expect any additional servicerevenue in 2020. Revenue for ASPiRA IVD was recognized once certain revenue recognition criteria had been met (see Note 1 to the financialstatements included in Part II, Item VIII of this Form 10-K).32  Cost of Revenue - Product. Cost of product revenue was $2,378,000 for the year ended December 31, 2019 compared to $2,044,000for the same period in 2018, representing an increase of $334,000, or 16%, due primarily to increased lab supply and shipping costs due to theincrease in tests performed compared to the prior year.Cost of Revenue - Genetics. Cost of product revenue, which consisted primarily of personnel costs and consulting expense after thelaunch of ASPiRA GenetiX, was $295,000 for the year ended December 31, 2019. There were no costs of revenue associated with genetics in2018 as the product was launched in 2019.Cost of Revenue - Service. Cost of service revenue was $670,000 for the year ended December 31, 2019 compared to $1,098,000 forthe same period in 2018. The 39% decrease was due to the wind up of our ASPiRA IVD subsidiary.Research and Development Expenses. Research and development expenses represent costs incurred to develop our technologypipeline and carry out clinical studies, and include personnel-related expenses, regulatory costs, reagents and supplies used in research anddevelopment laboratory work, infrastructure expenses, contract services and other outside costs. Research and development expenses increasedby $468,000, or 85%, for the year ended December 31, 2019 compared to the same period in 2018. This increase was mainly due to increases inclinical trials and consulting costs. We expect research and development expenses in 2020 to increase compared to those of 2019, as wecontinue to invest in OVAnex, Endocheck and OVAinherit.Sales and Marketing Expenses. Our sales and marketing expenses consist primarily of personnel-related expenses, education andpromotional expenses, and infrastructure expenses. These expenses include the costs of educating physicians, laboratory personnel and otherhealthcare professionals regarding our products. Sales and marketing expenses also include the costs of sponsoring continuing medicaleducation, medical meeting participation and dissemination of scientific and health economic publications. Our personnel-related expensesinclude the cost of our field sales force, the subject matter experts responsible for market development. Sales and marketing expenses increasedby $4,003,000, or 71%, for the year ended December 31, 2019 compared to the prior year. This increase was primarily due to an increase inpersonnel and personnel expenses as well as travel and entertainment expenses. We expect sales and marketing expenses to increase in futureperiods as we continue to expand our sales team in specific markets where we have broad payer coverage and key opinion leader support.General and Administrative Expenses. General and administrative expenses consist primarily of personnel-related expenses,professional fees and other costs, including legal, finance and accounting expenses, and other infrastructure expenses. General andadministrative expenses increased by $758,000, or 15%, for the year ended December 31, 2019 compared to the same period in 2018. Theincrease was primarily due to increased headcount and legal expenses. We expect general and administrative expenses in 2020 to remain flatcompared to those of 2019.Liquidity and Capital ResourcesWe plan to continue to expend resources in the selling and marketing of OVA1, Overa, OVA1PLUS and ASPiRA GenetiX anddeveloping additional diagnostic tests. As discussed in Note 7, on June 28, 2019, the Company completed a public offering (the “Offering”), pursuant to which certaininvestors purchased shares of Vermillion common stock for net proceeds of approximately $13,521,000 after deducting underwritingdiscounts, commissions and other expenses related to the offering. On July 2, 2019, William Blair & Company, L.L.C., the sole underwriter ofthe Offering, exercised its option to purchase additional shares of Vermillion common stock for net proceeds of approximately $2,092,000, afterdeducting underwriting discounts, commissions and other expenses related to the offering.As discussed in Note 7, on April 17, 2018, the Company completed two public offerings, pursuant to which certain investors purchasedVermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately $13,488,000 after deductingoffering expenses. The Series B convertible preferred stock was converted to common stock on June 21, 2018.On February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased 3,747,125 shares ofVermillion common stock at a price of $1.40 per share. Vermillion also issued warrants to purchase shares of common stock at a price of $0.125per warrant share in the private placement. Net proceeds of the private placement were approximately $5,100,000 after deducting offeringexpenses. The warrants are exercisable for 2,810,338 shares of Vermillion common stock at $1.80 per share. The warrants expire on the fifthanniversary of the date of issuance or, if earlier, five business days after the Company delivers notice that the closing price per share of itscommon stock exceeded the exercise price for 20 consecutive trading days during the exercise period. On March 22, 2016, we entered into a loan agreement, (as amended, the “Loan Agreement”), pursuant to which we may borrow up to$4,000,000 from the DECD. Proceeds from the loan were utilized primarily to fund the build-out, information technology infrastructure andother costs related to our Trumbull, Connecticut facility and operations. The loan bears interest at a fixed rate of 2.0% per annum and requiresequal monthly payments of principal and interest until maturity, which occurs on April 15, 2026. As security for the loan, we have granted theDECD a blanket security interest in our personal and intellectual property. The DECD’s security interest in our intellectual property may besubordinated to a qualified institutional lender. On each of March 7, 2018 33  and April 3, 2020, we amended the Loan Agreement to adjust the future milestones which would allow us to continue to be eligible to borrowthe remaining $2,000,000 based on our current expectation of employment. Under the terms of the Loan Agreement, we may be eligible forforgiveness of up to $1,500,000 of the principal amount of the loan if we achieve certain job creation and retention milestones on orbefore December 31, 2022. Conversely, if we are either unable to meet these job creation or retention milestones, namely, hiring 25 full-timeemployees with a specified average annual salary on or before December 31, 2020 or retaining such employees for a consecutive two-yearperiod on or before December 31,2022, or do not maintain our Connecticut operations for a period of 10 years after the Loan Agreement date,the DECD may require early repayment of a portion or all of the loan depending on job attainment as compared to the required amount plus apenalty of 5% of the total funded loan. An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the LoanAgreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain other future milestones. The loan may beprepaid at any time without premium or penalty. The Company has incurred significant net losses and negative cash flows from operations since inception. At December 31, 2019, wehad an accumulated deficit of $422,161,000 and stockholders' equity of $8,738,000. On December 31, 2019, we had $11,703,000 of cash andcash equivalents and $3,978,000 of current liabilities. The Company expects to incur a net loss in 2020 as well. Working capital levels are notsufficient to fund operations as currently planned through 2020 and beyond, absent a significant increase in revenue over historic revenue oradditional financing. Given the above conditions, there is substantial doubt about the Company’s ability to continue as a going concern withinone year after the date the financial statements are filed. There can be no assurance that we will achieve or sustain profitability or positive cash flow from operations. In addition, while weexpect to grow revenue with the addition of ASPiRA LABS, there is no assurance of our ability to generate substantial revenues and cash flowsfrom ASPiRA LABS’ operations. We expect cash from our products and services to be our only material, recurring source of cash in 2020.Additionally, the impact of COVID-19 on our liquidity for 2020 cannot be estimated as of the date of this filing. See Note 12 to our consolidatedfinancial statements.Our management believes that the successful achievement of our business objectives will require additional financing. We expect toraise capital through a variety of sources, which may include the exercise of common stock warrants, public and private equity offerings, debtfinancing, collaborations, licensing arrangements, grants and government funding and strategic alliances.Any additional equity financing may be dilutive to stockholders, and debt financing, if available, may involve restrictive covenants andpotential dilution to stockholders. If we obtain additional funds through arrangements with collaborators or strategic partners, we may berequired to relinquish our rights to certain technologies or products that we might otherwise seek to retain. Additional funding may not beavailable when needed or on terms acceptable to us. If we are unable to obtain additional capital, we may not be able to continue our sales andmarketing, research and development, or other operations on the scope or scale of current activity, and that could have a material adverse effecton the business, financial condition and results of operations.Our future liquidity and capital requirements will depend upon many factors, including, among others:·resources devoted to establish sales, marketing and distribution capabilities;·the rate of OVA1, Overa, OVA1PLUS and ASPiRA GenetiX adoption by physicians and patients;·the rate of product adoption by healthcare systems and large physician practices of the decentralized distribution agreements forOVA1, Overa and OVAIPLUS;·the insurance payer community’s acceptance of and reimbursement for OVA1, Overa, OVA1PLUS and ASPiRA GenetiX;·our plans to acquire or invest in other products, technologies and businesses; and·the market price of our common stock. Cash and cash equivalents as of December 31, 2019 and December 31, 2018 were $11,703,000 and $9,360,000, respectively. AtDecember 31, 2019 and 2018, working capital was $9,432,000 and $7,824,000, respectively.Net cash used in operating activities was $12,966,000 for the year ended December 31, 2019, resulting primarily from $15,237,000 netloss incurred partially offset by $1,193,000 of stock-based compensation expense, a $971,000 increase in accounts payable, accrued liabilitiesand other liabilities and $333,000 of depreciation and amortization expense. Net cash used in operating activities also included $280,000 of cashused from other changes in operating assets and liabilities.Net cash used in operating activities was $9,367,000 for the year ended December 31, 2018, resulting primarily from $11,371,000 netloss incurred partially offset by $1,101,000 of stock-based compensation expense, $675,000 of depreciation and amortization expense and a$380,000 increase in accounts payable, accrued liabilities and other liabilities. Net cash used in operating activities also included $163,000 ofcash used from other changes in operating assets and liabilities.Net cash used in investing activities was $132,000 for the year ended December 31, 2019, and $113,000 for the year ended December31, 2018 due to purchases of property and equipment.Net cash provided by financing activities was $15,441,000 for the year ended December 31, 2019, which consisted primarily of netproceeds from our June 2019 public offering of common stock.34  Net cash provided by financing activities was $13,301,000 for the year ended December 31, 2018, which consisted primarily of netproceeds from our April 2018 public offering of preferred and common stock.Off-Balance Sheet ArrangementsAs of December 31, 2019, we had no off-balance sheet arrangements.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKPursuant to Item 305(e) of Regulation S-K, the information called for by Item 7A is not required.ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAOur consolidated financial statements, including consolidated balance sheets as of December 31, 2019 and 2018, consolidatedstatements of operations for the years ended December 31, 2019 and 2018, consolidated statements of changes in stockholders’ equity for theyears ended December 31, 2019 and 2018, consolidated statements of cash flows for the years ended December 31, 2019 and 2018 and notes toour consolidated financial statements, together with a report thereon of our independent registered public accounting firm are attached hereto aspages F-1 through F-19.ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENone. ITEM 9A. CONTROLS AND PROCEDURESEvaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports wefile or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules andregulations, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and ChiefFinancial Officer, as appropriate, to allow timely decisions regarding required financial disclosure.An evaluation was performed under the supervision and with the participation of our management, including our Chief ExecutiveOfficer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule13a-15(e) and Rule 15d-15(e) under the Exchange Act, as of December 31, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2019, ourdisclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15(d)-15(e) under the Exchange Act, were effective.Management Report on Internal Control over Financial ReportingWe are responsible for establishing and maintaining adequate internal control over our financial reporting. We have assessed theeffectiveness of internal control over financial reporting as of December 31, 2019. Our assessment was based on criteria set forth by theCommittee of Sponsoring Organizations of the Treadway Commission (“COSO”) entitled “Internal Control - Integrated Framework (2013).”Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financialreporting includes those policies and procedures that:(i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions ofour assets;(ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of ourmanagement and board of directors; and(iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of ourassets that could have a material effect on the financial statements.35  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate.Based on using the COSO criteria, management concluded our internal control over financial reporting as of December 31, 2019 waseffective.This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regardinginternal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting as ofDecember 31, 2019, was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permita smaller reporting company to provide only management’s report in the Company’s Annual Report on Form 10-K.Changes in internal control over financial reporting. None.ITEM 9B. OTHER INFORMATIONOn April 3, 2020, Vermillion entered into the Second Amendment to Assistance Agreement by and between the State of ConnecticutActing by the DECD and Vermillion (the “Amendment”) effective as of April 3, 2020. The Amendment amends the Loan Agreement, pursuantto which the Company may borrow up to $4,000,000 from the DECD. An initial disbursement of $2,000,000 was made to Vermillion on April15, 2016 under the Loan Agreement. The primary purpose of the Amendment is to amend the conditions of the loan, including the criteria forreceiving additional disbursements and the criteria for loan forgiveness.The Amendment changes the criteria for receiving the next $1,000,000 available under the Loan Agreement by reducing from 40 to 25the number of full-time employees that the Company is required to hire, by changing the date on or before which the Company must meet thisrequirement from March 1, 2021 to December 31, 2020, and by increasing the required capital investment of the Company from $18,000,000 to$18,800,000. Although the criteria for receiving the final $1,000,000 available under the loan have not changed, such disbursement is alsoconditioned on the Company meeting the requirements above.The Amendment also changes the criteria for loan forgiveness by reducing from 40 to 30 the number of full-time employees that theCompany is required to hire and retain to be eligible for such forgiveness, by changing the date on or before which the Company must meet thisrequirement from March 1, 2021 to December 31, 2022, and by lowering the initial forgiveness available under the loan from $2,000,000 to$1,000,000. The Amendment also adds a second tier of $500,000 in loan forgiveness if the Company hires and retains 40 full-time employees byDecember 31, 2022. The Amendment also changes the circumstances under which DECD may require early repayment of a portion or all of the loan byreducing from 40 to 25 the number of full-time employees that the Company is required to hire and retain to avoid such early repayment and bychanging the earliest measurement date based on which the Company may be required to make any repayment from March 1, 2021 to December31, 2020.36  PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information regarding our directors, committees of our Board of Directors, our director nomination process, and our executiveofficers appearing under the heading “Election of Directors,” “Corporate Governance,” “Management” and “Section 16(a) Beneficial OwnershipReporting Compliance,” of our proxy statement relating to our annual meeting of stockholders to be held in 2020 (the “2020 Proxy Statement”)is incorporated by reference.Our code of ethics is applicable to all employees, including both our Chief Executive Officer and Chief Financial Officer. This code ofethics is publicly available on our website at www.vermillion.com. ITEM 11. EXECUTIVE COMPENSATIONThe information appearing under the headings “Board Compensation, ” “Compensation Discussion and Analysis, ” “CompensationDiscussion and Analysis - Executive Officer Compensation, ” “Corporate Governance – Compensation Committee Interlocks and InsiderParticipation” and “Compensation Committee Report” of the 2020 Proxy Statement is incorporated by reference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSThe information appearing under the heading “Security Ownership of Certain Beneficial Owners and Management” of the 2020 ProxyStatement is incorporated by reference.The equity compensation plan information contained in Part II Item 5 of this Form 10-K is incorporated by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information appearing under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” of the2020 Proxy Statement is incorporated by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information appearing under the heading “Ratification of the Selection of the Independent Registered Public Accounting Firm forVermillion” of the 2020 Proxy Statement is incorporated by reference.PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES(a)LIST OF DOCUMENTS FILED AS PART OF THIS REPORT:1.Financial StatementsThe financial statements and notes thereto, and the report of the independent registered public accounting firm thereon, are setforth on pages F-1 through F-20.37  (b)EXHIBITS Exhibit Incorporated by ReferenceFiledNumberExhibit DescriptionFormFile No.ExhibitFiling DateHerewith 3.1Fourth Amended and RestatedCertificate of Incorporation ofVermillion, Inc. dated January 22,20108-K000-316173.1 January 25, 2010 3.2Certificate of Amendment of FourthAmended and Restated Certificate ofIncorporation, effective June 19,201410-Q001-348103.2 August 14, 2014 3.3Certificate of Designations,Preferences and Rights of Series BConvertible Preferred Stock8-K001-348104.1 April 17, 2018 3.4Fifth Amended and Restated Bylawsof Vermillion, Inc., effective June 19,201410-Q001-348103.3 August 14, 2014 4.1Form of Vermillion, Inc.’s (formerlyCiphergen Biosystems, Inc.)Common Stock CertificateS-1/A333-328124.1 August 24, 2000 4.2Securities Purchase Agreement datedMay 8, 2013, by and amongVermillion, Inc. and the purchasersidentified therein,8-K001-3481010.1 May 14, 2013 4.3Stockholders Agreement dated May13, 2013, by and among Vermillion,Inc., Oracle Partners, LP, Oracle TenFund Master, LP, Jack W. Schulerand other purchasers named therein.8-K001-3481010.2 May 14, 2013 4.4Amended and Restated PromissoryNote #1 by Vermillion, Inc. in favorof the State of Connecticut, acting byand through the Department ofEconomic and CommunityDevelopment, effective April 3, 2020 √4.5Amended and Restated PromissoryNote #2 by Vermillion, Inc. in favorof the State of Connecticut, acting byand through the Department ofEconomic and CommunityDevelopment, effective April 3, 2020 √4.6Securities Purchase Agreement, datedFebruary 13, 2017, amongVermillion, Inc. and the investorslisted on Schedule I thereto8-K001-3481099.1 February 17, 2017 4.7Form of Warrant, issued February 13,20178-K001-3481099.1 February 17, 2017 4.8Form of Letter Agreement, by andbetween Vermillion, Inc. and certainwarrant holders8-K001-348104.1 August 28, 2017 4.9Form of IndentureS-3333-2210924.6 October 24, 2017 4.10Description of Vermillion, Inc.’sSecurities Pursuant to Section 12 ofthe Securities Exchange Act of 1934 √10.1Vermillion, Inc. 2010 Stock IncentivePlan #8-K000-3161710.1 February 12, 2010 10.2Ciphergen Biosystems, Inc. 401(k)Plan #10-K000-3161710.7 March 22, 2005 10.3Form of Proprietary InformationAgreement between Vermillion, Inc.S-1/A333-3281210.9 August 24, 2000 (formerly Ciphergen Biosystems,Inc.) and certain of its employees #10.4Vermillion, Inc. Amended andRestated 2010 Stock Incentive Plan #8-K001-3481010.1 December 17, 2013 10.5Vermillion, Inc. Second Amendedand Restated 2010 Stock IncentivePlan #8-K001-3481010.1 June 22, 2015 38  10.6Vermillion Inc. Second Amended and Restated2010 Stock Incentive Plan (as amended effectiveJune 21, 2018) #8-K001-3481010.1 June 27, 2018 10.7Form of Vermillion, Inc.’s Stock Option Award #10-K001-3481010.7 March 28, 2019 10.8Form of Vermillion, Inc.’s Restricted StockAward #10-K001-3481010.8 March 28, 2019 10.9Vermillion, Inc. 2019 Stock Incentive Plan #8-K001-3481010.1 June 24, 2019 10.10Employment Agreement between Vermillion, Inc.and Fred Ferrara dated April 1, 2015 #8-K001-3481010.1 April 6, 2015 10.11Employment Agreement between Vermillion, Inc.and Valerie B. Palmieri effective January 1, 2015 #8-K001-3481099.1 December 17, 2014 10.12Testing and Services Agreement betweenVermillion, Inc., ASPiRA LABS, Inc. and QuestDiagnostics Incorporated, dated as of March 11,201510-Q001-3481010.5 May 12, 2015 10.13Amendment No. 1 to the Testing ServicesAgreement dated March 11, 2015 amongVermillion, Inc., ASPiRA LABS, Inc. and QuestDiagnostics Incorporated dated April 10, 201510-Q001-3481010.6 May 12, 2015 10.14Amendment No. 2 to Testing and ServicesAgreement, executed as of March 7, 2017 andeffective as of March 11, 2017, by and amongVermillion, Inc., ASPiRA LABS, Inc. and QuestDiagnostics Incorporated8-K001-3481010.1 March 13, 2017 10.15Amendment No. 3 to Testing and ServicesAgreement, executed as of March 1, 2018 by andamong Vermillion, Inc., ASPiRA LABS, Inc. andQuest Diagnostics Incorporated8-K001-3481010.1 March 6, 2018 10.16Amendment No. 4 to Testing and ServicesAgreement, executed as of March 11, 2020 byand among Vermillion, Inc., ASPiRA LABS, Inc.and Quest Diagnostics Incorporated8-K001-3481010.1 March 17, 2020 10.17Assistance Agreement by and between the Stateof Connecticut, acting by and through theDepartment of Economic and CommunityDevelopment and Vermillion, Inc. effectiveMarch 22, 201610-Q001-3481010.1 May 16, 2016 10.18Patent Security Agreement by Vermillion, Inc. infavor of the State of Connecticut, acting by andthrough the Department of Economic andCommunity Development, effective March 22,201610-Q001-3481010.3 May 16, 2016 10.19Security Agreement by Vermillion, Inc. in favorof the State of Connecticut, acting by and throughthe Department of Economic and CommunityDevelopment, effective March 22, 201610-Q001-3481010.4 May 16, 2016 10.20Employment Agreement between Vermillion, Inc.and Robert Beechey dated December 18, 2017 #8-K001-3481010.1 December 20, 2017 39  10.21First Amendment to the Assistance Agreement byand between the State of Connecticut, acting byand through the Department of Economic andCommunity Development and Vermillion, Inc.dated March 7, 201810-K001-3481010.21 March 13, 2018 10.22Second Amendment to the Assistance Agreementby and between the State of Connecticut, actingby and through the Department of Economic andCommunity Development and Vermillion, Inc.dated April 3, 2020 √14.1Code of Ethics8-K001-3481014.1 December 7, 2010 21.0Subsidiaries of Registrant √23.1Consent of BDO USA, LLP, IndependentRegistered Public Accounting Firm √31.1Certification of the Chief Executive OfficerPursuant to Section 302 of the Sarbanes-OxleyAct of 2002 √31.2Certification of the Chief Financial OfficerPursuant to Section 302 of the Sarbanes-OxleyAct of 2002 √32.0Certification of the Chief Executive Officer andChief Financial Officer pursuant to 18 U.S.C.Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002 √√101 Interactive Data Files √ √ Filed herewith√√ Furnished herewith#Management contract or compensatory plan or arrangement.†Confidential treatment has been granted with respect to certain provisions of this agreement. Omitted portions have been filedseparately with the SEC.ITEM 16. FORM 10-K SUMMARYNone. 40  VERMILLION, INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page No. Report of Independent Registered Public Accounting FirmF-1 Consolidated Balance Sheets at December 31, 2019 and 2018F-2 Consolidated Statements of Operations for the years ended December 31, 2019 and 2018F-3 Consolidated Statements of Changes in Stockholders’ Equity for the years endedDecember 31, 2019 and 2018F-4 Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018F-5 Notes to Consolidated Financial StatementsF-6 Report of Independent Registered Public Accounting FirmBoard of Directors and StockholdersVermillion, Inc.Austin, TexasOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Vermillion, Inc. (the “Company”) as of December 31, 2019 and 2018, therelated consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in allmaterial respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows forthe years then ended, in conformity with accounting principles generally accepted in the United States of America.Going Concern UncertaintyThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has negative cashflows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these mattersare also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of thisuncertainty.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public CompanyAccounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our auditswe are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due toerror or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regardingthe amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used andsignificant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believethat our audits provide a reasonable basis for our opinion./s/ BDO USA, LLPWe have served as the Company's auditor since 2012.Austin, TexasApril 7, 2020F-1   Vermillion, Inc.Consolidated Balance Sheets(Amounts in Thousands, Except Share and Par Value Amounts) December 31,2019 2018Assets Current assets: Cash and cash equivalents$11,703 $9,360 Accounts receivable 924 786 Prepaid expenses and other current assets 758 550 Inventories 25 92 Total current assets 13,410 10,788 Property and equipment, net 353 608 Other assets 65 12 Total assets$13,828 $11,408 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable$1,158 $950 Accrued liabilities 2,588 1,825 Short-term debt 193 189 Other current liabilities 39 -Total current liabilities 3,978 2,964 Long-term debt 1,099 1,292 Other non-current liabilities 13 -Total liabilities 5,090 4,256 Commitments and contingencies (Note 6) Stockholders’ equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding atDecember 31, 2019 and 2018 - -Common stock, $0.001 par value, 150,000,000 shares authorized; 97,286,157 and 75,501,394 sharesissued and outstanding at December 31, 2019 and 2018, respectively 97 75 Additional paid-in capital 430,802 414,001 Accumulated deficit (422,161) (406,924)Total stockholders’ equity 8,738 7,152 Total liabilities and stockholders’ equity$13,828 $11,408 See accompanying Notes to Consolidated Financial StatementsF-2  Vermillion, Inc.Consolidated Statements of Operations(Amounts in Thousands, Except Share and Per Share Amounts) Year Ended December 31,2019 2018Revenue: Product$4,404 $2,772 Genetics 22 -Service 112 281 Total revenue 4,538 3,053 Cost of revenue:(1) Product 2,378 2,044 Genetics 295 -Service 670 1,098 Total cost of revenue 3,343 3,142 Gross profit / (loss) 1,195 (89)Operating expenses: Research and development(2) 1,018 550 Sales and marketing(3) 9,645 5,642 General and administrative(4) 5,810 5,052 Total operating expenses 16,473 11,244 Loss from operations (15,278) (11,333)Interest (expense) income, net 59 (22)Other (expense) / income, net (18) (16)Net loss$(15,237) $(11,371)Net loss per common share - basic and diluted$(0.18) $(0.16)Weighted average common shares used to compute basic and diluted net loss per common share 86,595,581 70,085,842 Non-cash stock-based compensation expense included in expenses: (1) Cost of revenue$78 $124 (2) Research and development 4 6 (3) Sales and marketing 125 102 (4) General and administrative 986 869 See accompanying Notes to Consolidated Financial StatementsF-3  Vermillion, Inc.Consolidated Statements of Changes in Stockholders’ Equity(Amounts in Thousands, Except Share Amounts)See accompanying Notes to Consolidated Financial Statements Preferred Stock Common Stock Shares Amount Shares Amount AdditionalPaid-InCapital AccumulatedDeficit TotalStockholders’EquityBalance at December 31, 2017 - $ - 60,036,017 $60 $399,400 $(396,053) $3,407 Net loss - - - - - (11,371) (11,371)ASC 606 adjustment to retained earnings - - - - - 500 500 Common stock issued in conjunction with public offering,net of $1,008 in issuance costs - - 10,000,000 10 8,980 - 8,990 Preferred stock issued in conjunction with public offering,net of $504 in issuance costs50,000 - - - 4,496 - 4,496 Preferred stock converted to common stock(50,000) - 5,000,000 5 (5) - -Common stock issued for restricted stock awards - - 432,877 - 438 - 438 Common stock issued in conjunction with exercise of stockoptions - - 32,500 - 29 - 29 Stock compensation charge - - - - 663 - 663 Balance at December 31, 2018 - $ - 75,501,394 $75 $414,001 $(406,924) $7,152 Net loss - - - - - (15,237) (15,237)Common stock issued in conjunction with public offering,net of $1,480 in issuance costs - - 18,750,000 19 13,502 - 13,521 Common stock issued in conjunction with exercise of stockoptions - - 19,687 - 17 - 17 Common stock issued for restricted stock awards - - 202,576 - 250 - 250 Stock compensation charge - - - - 943 - 943 Common stock issued in conjunction with the exercise of theunderwriter’s option to purchase additional shares inconnection with a public offering, net of $158 in issuancecosts - - 2,812,500 3 2,089 - 2,092 Balance at December 31, 2019 - $ - 97,286,157 $97 $430,802 $(422,161) $8,738 See accompanying Notes to Consolidated Financial StatementsF-4  Vermillion, Inc. Consolidated Statements of Cash Flows(Amounts in Thousands) Year Ended December 31,2019 2018Cash flows from operating activities: Net loss$(15,237) $(11,371)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 333 675 Stock-based compensation expense 1,193 1,101 Loss on sale and disposal of property and equipment 54 11 Changes in operating assets and liabilities: Accounts receivable (138) (81)Prepaid expenses and other assets (209) (92)Inventories 67 10 Accounts payable, accrued liabilities and other liabilities 971 380 Net cash used in operating activities (12,966) (9,367)Cash flows from investing activities: Purchase of property and equipment (133) (113)Proceeds of property and equipment 1 -Net cash used in investing activities (132) (113)Cash flows from financing activities: Proceeds from public offering of preferred stock, net of issuance costs - 4,496 Proceeds from public offering of common stock, net of issuance costs 13,521 8,990 Proceeds from issuance of common stock in conjunction with the exercise of theunderwriter’s option to purchase additional shares in connection with a public offering, netof issuance costs 2,092 -Principal repayment of DECD loan (189) (185)Repayment of capital lease obligations - (29)Proceeds from issuance of common stock from exercise of stock options 17 29 Net cash provided by financing activities 15,441 13,301 Net increase in cash and cash equivalents 2,343 3,821 Cash and cash equivalents, beginning of year 9,360 5,539 Cash and cash equivalents, end of year$11,703 $9,360 Supplemental disclosure of cash flow information: Cash paid during the period for interest 38 44 Non-cash investing and financing activities: Net increase in other assets/other liabilities for right of use assets 52 -See accompanying Notes to Consolidated Financial StatementsF-5  Vermillion, Inc. Notes to Consolidated Financial StatementsNOTE 1:Basis of Presentation and Summary of Significant Accounting and Reporting PoliciesOrganizationVermillion, Inc. (“Vermillion”; Vermillion and its wholly-owned subsidiaries are collectively referred to as the “Company”) isincorporated in the state of Delaware, and is engaged in the business of developing and commercializing diagnostic tests for gynecologicdisease. The Company sells the OVA1™, Overa™ and Ova1PLUS™ risk of malignancy tests for ovarian cancer (“OVA1”, “Overa” and“OVA1PLUS,” respectively) through Vermillion’s wholly-owned Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) certifiedclinical laboratory, ASPiRA LABS, Inc. (“ASPiRA LABS”). The Company also recently launched genetic testing for specific women’s healthdiseases, called ASPiRA GenetiX, with a core focus on ovarian cancer.The Company also offered in-vitro diagnostic (“IVD”) trial services to third-party customers through its wholly-owned subsidiary,ASPiRA IVD, Inc. (“ASPiRA IVD”), which commenced operations in June 2016. ASPiRA IVD is a specialized, CLIA certified, laboratoryprovider dedicated to meeting the unique testing needs of IVD manufacturers seeking to commercialize high-complexity assays. The Companystopped pursuing contracts through ASPiRA IVD in 2019. All contracts and obligations of ASPiRA IVD had been fulfilled. The Company’sonly remaining obligation as of December 31, 2019, with respect to ASPiRA IVD, is to furnish documents that support work done duringcustomer trials upon request. Upon closure of ASPiRA IVD’s business, the Company evaluated common costs that would remain with thebusiness after the closure. It was determined that approximately $260,000 of the Company’s costs that were previously allocated to the ASPiRAIVD subsidiary, including cost of revenue, would not be eliminated with the closure. The Company also retired assets with a net book value ofapproximately $50,000 relating to the closure of the business. These assets included leasehold improvements used to build out the lab as well assome specialized equipment that could not be repurposed to other areas of the Company.LiquidityAs discussed in Note 6, on March 22, 2016, the Company entered into a loan agreement (as amended, the “Loan Agreement”), pursuantto which it may borrow up to $4,000,000 from the State of Connecticut Department of Economic and Community Development (the “DECD”).An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 willbe advanced if and when the Company achieves certain other future milestones. The loan may be prepaid at any time without premium orpenalty.As discussed in Note 7, on April 17, 2018, the Company completed two public offerings (the “2018 Offerings”), pursuant to whichcertain investors purchased Vermillion common stock and Vermillion Series B convertible preferred stock for net proceeds of approximately$13,488,000 after deducting offering expenses.As discussed in Note 7, on June 28, 2019, the Company completed a public offering (the “Offering”), pursuant to which certaininvestors purchased Vermillion common stock for net proceeds of approximately $13,521,000 after deducting underwritingdiscounts, commissions and other expenses related to the offering. On July 2, 2019, William Blair & Company, L.L.C., the sole underwriter ofthe Offering, exercised its option to purchase additional shares of Vermillion common stock for net proceeds of approximately $2,092,000, afterdeducting underwriting discounts, commissions and other expenses related to the offering.The Company has incurred significant net losses and negative cash flows from operations since inception, and as a result has anaccumulated deficit of approximately $422,161,000 at December 31, 2019. The Company expects to incur a net loss in 2020 as well. TheCompany’s management believes that successful achievement of the business objectives will require additional financing. The Company expectsto raise capital through a variety of sources, which may include the exercise of common stock warrants, public and private equity offerings, debtfinancing, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may notbe available when needed or on terms acceptable to the Company. If the Company is unable to obtain additional capital, it may not be able tocontinue sales and marketing, research and development, or other operations on the scope or scale of current activity and that could have amaterial adverse effect on the business, results of operations and financial condition.There can be no assurance that the Company will achieve or sustain profitability or positive cash flow from operations. Managementexpects cash from product sales and licensing to be the Company’s only material, recurring source of cash in 2020. Given the above conditions,there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements arefiled. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might resultfrom these uncertainties. F-6  Basis of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompanytransactions have been eliminated in consolidation.Use of EstimatesThe preparation of consolidated financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”)requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements andaccompanying notes. The primary estimates underlying the Company’s consolidated financial statements include assumptions regarding revenuerecognition as well as variables used in calculating the fair value of the Company’s equity awards, income taxes and contingent liabilities. Actualresults could differ from those estimates.Cash and Cash EquivalentsCash and cash equivalents consist of cash and highly liquid investments with maturities of three months or less from the date ofpurchase, which are readily convertible into known amounts of cash and are so near to their maturity that they present an insignificant risk ofchanges in value because of interest rate changes. Highly liquid investments that are considered cash equivalents include money market funds,certificates of deposits, treasury bills and commercial paper. The carrying value of cash equivalents approximates fair value due to the short-termmaturity of these securities.Fair Value MeasurementAccounting Standards Codification (“ASC”) Topic 820, Fair Value and Measurements (“ASC 820”), defines fair value as the exchangeprice that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset orliability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy whichrequires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Thestandard describes three levels of inputs that may be used to measure fair value:Level 1 - Quoted prices in active markets for identical assets or liabilities.Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets thatare not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of theassets or liabilities.Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets orliabilities.If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon thelowest level of input that is significant to the fair value calculation.Concentration of Credit RiskFinancial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents andaccounts receivable. The Company maintains cash and cash equivalents in recognized financial institutions in the United States. The funds areinsured by the FDIC up to a maximum of $250,000, but are otherwise unprotected. The Company has not experienced any losses associated withdeposits of cash and cash equivalents. The Company does not invest in derivative instruments or engage in hedging activities.Accounts receivableVirtually all accounts receivable are derived from sales made to customers located in North America. The Company performs ongoingcredit evaluations of its customer’s financial condition and generally does not require collateral. The Company maintains an allowance fordoubtful accounts based upon the expected collectability of accounts receivable. Property and EquipmentProperty and equipment are carried at cost less accumulated depreciation and amortization. Property and equipment are depreciatedwhen placed into service using the straight-line method over the estimated useful lives, generally three to five years. Leasehold improvementsare amortized using the straight-line method over the shorter of the estimated useful life of the asset or the remaining term of the lease.Maintenance and repairs are charged to operations as incurred. Upon sale or retirement of assets, the cost and related accumulated depreciationare removed from the balance sheet and the resulting gain or loss is reflected in operations.F-7  Property and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying amount of an assetmay not be recoverable. If property and equipment are considered to be impaired, an impairment loss is recognized.Revenue RecognitionProduct Revenue: The Company recognizes product revenue in accordance with the provisions of ASC 606. Product revenue isrecognized upon completion of the OVA1, Overa or OVA1PLUS test and delivery of results to the physician based on estimates of amounts thatwill ultimately be realized. In determining the amount of revenue to be recognized for a delivered test result, the Company considers factors suchas payment history and amount, payer coverage, whether there is a reimbursement contract between the payer and the Company, and any currentdevelopments or changes that could impact reimbursement. These estimates require significant judgment by management as the collection cycleon some accounts can be as long as one year. The Company also reviews its patient account population and determines an appropriate distribution of patient accounts by payer (i.e.,Medicare, patient pay, other third-party payer, etc.) into portfolios with similar collection experience. The Company has elected this practicalexpedient that, when evaluated for collectability, results in a materially consistent revenue amount for such portfolios as if each patient accountwere evaluated on an individual contract basis. During the year ended December 31, 2019, there were adjustments to estimates to recognizerevenue for services provided in a prior period totaling a net of approximately $56,000. There were no impairment losses on accounts receivablerecorded during the years ended December 31, 2019 or 2018. Under the modified retrospective implementation method, the Company recorded aone-time cumulative effect adjustment at January 1, 2018 to reflect the aggregate effect of all open OVA1 and Overa tests performed prior toJanuary 1, 2018 as if revenue had been recognized under ASC 606. The cumulative effect adjustment was recorded increasing the openingbalance of Accounts Receivable by $500,000 in the condensed consolidated balance sheets with an offsetting reduction to Accumulated Deficit.The Company’s right to receive payment on this balance is contingent only on the passage of time. ASC 606 did not have an aggregate impact on the Company’s net cash provided by operating activities, but resulted in offsettingchanges in certain assets and liabilities presented within net cash provided by operating activities in the Company’s consolidated statement ofcash flows.Other Practical Expedients The Company does not adjust the transaction price for the effects of a significant financing component, as at contract inception, theCompany expects the collection cycle to be one year or less. The Company expenses sales commissions when incurred because the amortization period would have been one year or less. Thesecosts are recorded within sales and marketing expenses.Genetics Revenue: Under ASC 606, the Company’s genetics revenue is recognized upon completion of the ASPiRA GenetiX test anddelivery of results based on estimates of amounts that will ultimately be realized. In determining the amount of revenue to be recognized for adelivered test result, the Company considers factors such as payment history and amount, payer coverage, whether there is a reimbursementcontract between the payer and the Company, and any current developments or changes that could impact reimbursement. These estimatesrequire significant judgment by management as there is not significant history on which to rely. Service Revenue: The Company’s service revenue was generated by performing IVD trial services for third-party customers.Application of the modified retrospective method did not impact amounts previously reported by the Company, nor did it require a cumulativeeffect adjustment upon adoption, as the Company’s method of recognizing revenue under ASC 606 was analogous to the method utilizedimmediately prior to adoption. Measurement of progress on contracts with customers was generally based on the input measurement of cost incurred relative to thetotal expected costs to satisfy the performance obligation. The Company has not disclosed the value of unsatisfied performance obligations forall service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under theadoption rules. The remainder are not material to the consolidated financial statements.Research and Development CostsResearch and development costs are expensed as incurred. Research and development costs consist primarily of payroll and relatedcosts, materials and supplies used in the development of new products, and fees paid to third parties that conduct certain research anddevelopment activities on behalf of the Company. In addition, acquisitions of assets to be consumed in research and development, with noalternative future use, are expensed as incurred as research and development costs. Software development costs incurred in the research anddevelopment of new products are expensed as incurred until technological feasibility is established.F-8  Patent CostsCosts incurred in filing, prosecuting and maintaining patents (principally legal fees) are expensed as incurred and recorded withingeneral and administrative expenses on the Consolidated Statements of Operations. Such costs aggregated approximately $203,000 and$219,000 for the years ended December 31, 2019 and 2018, respectively.Stock-Based CompensationThe Company records the fair value of non-cash stock-based compensation costs for stock options related to the Amended and Restated2010 Stock Incentive Plan, as amended (the “2010 Plan”). The Company estimates the fair value of stock options using a Black-Scholes optionvaluation model. This model requires the input of subjective assumptions including expected stock price volatility, expected life and estimatedforfeitures of each award. The Company uses the straight-line method to amortize the fair value over the requisite service period of the award,which is generally equal to the vesting period. These assumptions consist of estimates of future market conditions, which are inherentlyuncertain, and therefore are subject to management's judgment.The expected life of options is based on historical data of actual experience with the options granted and represents the period of timethat the options granted are expected to be outstanding. This data includes employees’ expected exercise and post-vesting employmenttermination behaviors. The expected stock price volatility is estimated using Company historical volatility in deriving the expected volatilityassumption. The Company made an assessment that Company historic volatility is most representative of future stock price trends. The expecteddividend yield is based on the estimated annual dividends that are expected to be paid over the expected life of the options as a percentage of themarket value of the Company’s common stock as of the grant date. The risk-free interest rate for the expected life of the options granted is basedon the United States Treasury yield curve in effect as of the grant date. The Company records stock-based compensation net of estimatedforfeitures.ContingenciesThe Company accounts for contingencies in accordance with ASC 450 Contingencies (“ASC 450”) which requires that an estimatedloss from a loss contingency be accrued when (i) information available prior to issuance of the financial statements indicates that it is probablethat an asset has been impaired or a liability has been incurred at the date of the financial statements and (ii) when the amount of the loss can bereasonably estimated. Accounting for contingencies such as legal and contract dispute matters requires the use of management’s judgment.Management believes that the Company’s accruals for these matters are adequate. Nevertheless, the actual loss from a loss contingency mightdiffer from management’s estimates. Income TaxesThe Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities aredetermined based on the difference between the financial statement and the tax bases of assets and liabilities using the current tax laws and rates.A valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized.ASC Topic 740, Accounting for Uncertainty in Income Taxes clarifies the accounting for uncertainty in income taxes recognized in thefinancial statements and provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that theposition will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.This interpretation also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods,and disclosure.The Company recognizes interest and penalties related to unrecognized tax benefits within the interest expense line and other expenseline, respectively, in the Consolidated Statements of Operations. Accrued interest and penalties are included within the related liability lines inthe Consolidated Balance Sheets.Net Loss Per ShareBasic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstandingduring the period. Diluted loss per share is computed by dividing the net loss by the weighted average number of shares of common stockadjusted for the dilutive effect of common stock equivalent shares outstanding during the period. Common stock equivalents consist of stockoptions, restricted stock units and stock warrants. Common equivalent shares are excluded from the computation in periods in which they havean anti-dilutive effect on earnings per share.F-9  Fair Value of Financial InstrumentsFinancial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and debt. Theestimated fair value of financial instruments has been determined using available market information or other appropriate valuationmethodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value; therefore, theestimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of usingdifferent market assumptions and/or estimation methodologies may be material to the estimated fair value amounts. The carrying amounts ofcash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and debt are at cost, which approximates fair value due tothe short maturity of those instruments. The carrying value of debt approximates fair value due to its interest rate approximating market rates ofinterest available to the Company for similar instruments.Segment ReportingThe Company’s chief operating decision maker evaluates the business on a consolidated basis and therefore, the Company operatesone operating and reportable segment.NOTE 2:Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-BasedPayment Accounting (Topic 718), Compensation - Stock Compensation (“ASU 2016-09”). The new guidance simplifies several aspects of theaccounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement,changing the threshold to qualify for equity classification up to the employees’ maximum statutory tax rates, allowing an entity-wide accountingpolicy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying theclassification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 and interim periods within thatreporting period. The Company adopted this standard on January 1, 2018, and the adoption did not have a material impact on the consolidatedfinancial statements. In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Base Payment Accounting. This newguidance expands the scope of Topic 718 to include share-based payment transactions from acquiring goods and services from nonemployees,which was previously codified under Topic 505, where this change will modify the measurement requirements of nonemployee awards. Thisamendment is effective for annual periods after December 15, 2018. The Company adopted the standard on January 1, 2019, and the adoptiondid not have a material impact on the consolidated financial statements.In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses onFinancial Instruments. This update changes the impairment model from the currently used incurred loss methodology to an expected lossmethodology, which will result in the more timely recognition of losses. The ASU is scheduled to be effective in 2023 for smaller reportingcompanies. The Company is currently assessing the impact of this ASU on its consolidated financial statements.In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The standard establishes a right-of-use (“ROU”) modelthat requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases willbe classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The standardis effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Subsequently, in July 2018,the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), which provides a number of optional practicalexpedients in transition. The Company adopted ASU 2016-02 effective January 1, 2019 and elected the package of practical expedients and thenew transition approach permitted by ASU 2018-11. ASU 2018-11 allows the Company not to reassess existing identification of leases,classification of leases or any initial direct costs. The Company has also elected to use the hindsight practical expedient. The Company has twooffice leases which are required to be recorded as ROU assets and corresponding lease liabilities on the balance sheet. The Company hasone short-term lease with a term of twelve months. The Company has elected the policy of not recording leases on the balance sheet when theleases have terms of 12 months or less. The Company recognized ROU assets and a lease liability of approximately $178,000 related to its leaseson its consolidated balance sheet as of January 1, 2019. The Company did not have a cumulative adjustment impacting retained earnings.In May 2014, the FASB issued ASC 606, which superseded existing revenue recognition guidance. The standard’s core principle is thata company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration towhich the company expects to be entitled in exchange for those goods or services. The Company adopted ASC 606 effective on January 1, 2018using the modified retrospective method. Please see the above “Revenue Recognition” section for a discussion of the Company’s revenuerecognition under ASC 606.F-10  In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting forImplementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 aligns therequirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirementsfor capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for annual and interimperiods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-15 effective on January 1, 2020,using the prospective transition approach, which allows the Company to change the accounting method without restating prior periods orbooking cumulative adjustments. The adoption of ASU 2018-15 did not have a material impact on the consolidated financial statements.NOTE 3:Strategic Alliance with Quest Diagnostics Incorporated In March 2015, the Company reached an agreement with Quest Diagnostics, Incorporated (“Quest Diagnostics”). Pursuant to thisagreement, all OVA1 U.S. testing services for Quest Diagnostics customers were transferred to Vermillion’s wholly-owned subsidiary, ASPiRALABS, as of August 2015. Pursuant to this agreement, as amended as of March 11, 2020, Quest Diagnostics has continued to provide blood drawand logistics support by transporting specimens to ASPiRA LABS for testing in exchange for a market value fee.Note 4: Property and EquipmentThe components of property and equipment as of December 31, 2019 and 2018 were as follows: December 31,(in thousands) 2019 2018Machinery and equipment$841 $1,367 Demonstration equipment 16 39 Computer equipment and software 1,094 1,109 Furniture and fixtures 144 137 Leasehold improvements 639 706 Gross property and equipment 2,734 3,358 Accumulated depreciation and amortization (2,381) (2,750)Property and equipment, net$353 $608 Depreciation expense for property and equipment was $333,000 and $675,000 for the years ended December 31, 2019 and 2018,respectively. NOTE 5:Accrued LiabilitiesThe components of accrued liabilities as of December 31, 2019 and 2018 were as follows: December 31,(in thousands)2019 2018Payroll and benefits related expenses$1,229 $853 Collaboration and research agreements expenses 350 366 Professional services 679 329 Other accrued liabilities 330 277 Total accrued liabilities$2,588 $1,825 F-11  NOTE 6:Commitments, Contingencies and debtDevelopment LoanOn March 22, 2016, the Company entered into the Loan Agreement with the DECD, pursuant to which the Company may borrow up to$4,000,000 from the DECD. Proceeds from the loan were utilized primarily to fund the build-out, information technology infrastructure andother costs related to the Company’s Trumbull, Connecticut facility and operations. The loan bears interest at a fixed rate of 2.0% per annum andrequires equal monthly payments of principal and interest until maturity, which occurs on April 15, 2026. As security for the loan, the Companyhas granted the DECD a blanket security interest in the Company’s personal and intellectual property. The DECD’s security interest in theCompany’s intellectual property may be subordinated to a qualified institutional lender. On each of March 7, 2018 and April 3, 2020, theCompany amended the Loan Agreement to adjust the future milestones which would allow the Company to continue to be eligible to borrow theremaining $2,000,000 based on its current expectation of employment. The amended agreement changes the criteria for receiving the next$1,000,000 available under the Loan Agreement by reducing from 40 to 25 the number of full-time employees that the Company is required tohire, by changing the date on or before which the Company must meet this requirement from March 1, 2021 to December 31, 2020, and byincreasing the required capital investment of the Company from $18,000,000 to $18,800,000. Although the criteria for receiving the final$1,000,000 available under the loan have not changed, such disbursement is also conditioned on the Company meeting the requirements above. Under the terms of the Loan Agreement, as amended, the Company may be eligible for forgiveness of up to $1,500,000 of the principalamount of the loan if the Company achieves certain job creation and retention milestones by December 31, 2022 (the “MeasurementDate”). Conversely, if the Company is either unable to meet these job creation and retention milestones, namely, hiring 25 full-time employeeswith a specified average annual salary on or before December 31, 2020 or retaining such employees for a consecutive two-year period or doesnot maintain the Company’s Connecticut operations for a period of 10 years after the Loan Agreement date, the DECD may require earlyrepayment of a portion or all of the loan depending on job attainment as compared to the required amount plus a penalty of 5% of the totalfunded loan. An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The Agreementprovides that the remaining $2,000,000 will be advanced if and when the Company achieves certain other future milestones. The loan may beprepaid at any time without premium or penalty.The balance of the DECD loan, net of issuance costs, was $1,292,000 and $1,481,000 at December 31, 2019 and 2018, respectively.As of December 31, 2019, the annual amounts of future minimum principal payments due under certain of the Company’s contractualobligations are shown in the table below. Payments Due by Period(in thousands) Total 2020 2021 2022 2023 2024 ThereafterDebt Obligations 1,314 197 200 205 209 213 290 Total $1,314 $197 $200 $205 $209 $213 $290 In addition, the Company has minimum royalty obligations (described below in non-cancelable collaboration obligations and othercommitments) and annual minimum quantities of reagent purchases from the manufacturer of certain laboratory instruments of approximately$178,000.Operating LeasesThe Company leases facilities to support its business of discovering, developing and commercializing diagnostic tests in the fields ofgynecologic disease. The Company’s principal facility, including the CLIA laboratory used by ASPiRA LABS, is located in Austin, Texas. TheCLIA laboratory that was used by ASPiRA IVD is located in Trumbull, Connecticut. The Company’s Austin, Texas lease expires on January 31,2020. The Company has elected to extend the lease for a term of twelve months. The new Austin, Texas lease expires on January 31, 2021.In October 2015, the Company entered into a lease agreement for a facility in Trumbull, Connecticut. The lease required initialpayments for the buildout of leasehold improvements to the office space, which were approximately $596,000. The Company has the right torenew the lease for up to two five-year terms at a rate equal to 90% of the then-current fair market rate. TheF-12  Company’s Trumbull, Connecticut lease expires on June 8, 2021. The Company is not reasonably certain to exercise the renewal option for itsTrumbull, Connecticut lease due to the uncertain nature of its pricing.The expense associated with these operating leases for the years ended December 31, 2019 and 2018 is shown in the table below (inthousands). Year Ended December 31Lease CostClassification2019 2018Operating rent expense Cost of revenue$38 $100 Research and development 11 27 Sales and marketing 35 49 General and administrative 46 89 Variable rent expense Cost of revenue$49 $1 Research and development 14 0 Sales and marketing 41 1 General and administrative 57 2 Based on our leases as of December 31, 2019, the table below sets forth the approximate future lease payments related to operatingleases with initial terms of one year or more (in thousands). 2020 40 2021 14 Total Operating Lease Payments 54 Less: Interest (2)Present Value of Lease Liabilities $52 Non-cancelable Collaboration Obligations and Other CommitmentsThe Company is a party to an amended research collaboration agreement with The Johns Hopkins University School of Medicine underwhich the Company licenses certain of its intellectual property directed at the discovery and validation of biomarkers in human subjects,including but not limited to clinical application of biomarkers in the understanding, diagnosis and management of human disease. Under theterms of the amended research collaboration agreement, Vermillion is required to pay the greater of 4% royalties on net sales of diagnostic testsusing the assigned patents or annual minimum royalties of $57,500. Royalty expense for the years ended December 31, 2019 and 2018 totaled$176,000 and $120,000, respectively. Contingent LiabilitiesFrom time to time, the Company is involved in legal proceedings and regulatory proceedings arising from operations. The Companyestablishes reserves for specific liabilities in connection with legal actions that management deems to be probable and estimable. The Companyis not currently a party to any proceeding, the adverse outcome of which would have a material adverse effect on the Company’s financialposition or results of operations.NOTE 7:Common Stock2019 OfferingOn June 26, 2019, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with William Blair &Company, L.L.C., as the sole underwriter (the “Underwriter”), in connection with the underwritten public offering of 18,750,000 shares of theCompany’s common stock, par value $0.001 per share. Pursuant to the Underwriting Agreement, the Company agreed to issue and sell an aggregate of 18,750,000 shares of Vermillioncommon stock offered by the Underwriter in a public offering at a price of $0.80 per share (the “Offering”). The OfferingF-13  closed on June 28, 2019 and resulted in net proceeds to the Company of approximately $13,521,000, after deducting expenses of approximately$1,500,000. Under the Underwriting Agreement, the Company granted the Underwriter an option to purchase up to an additional 2,812,500 sharesof Vermillion common stock at the public offering price, less underwriting discounts and commissions. On July 2, 2019, the Underwriterexercised its option to purchase 2,812,500 shares of Vermillion common stock at a price of $0.80 per share and resulted in proceeds to theCompany of approximately $2,092,000, after deducting underwriting discounts, commissions and other expenses related to the offering.2018 OfferingsOn April 13, 2018, the Company entered into two underwriting agreements (each, a “2018 Underwriting Agreement”) with PiperJaffray & Co., as the sole underwriter (the “2018 Underwriter”), in connection with separate but concurrent public offerings of the Company’ssecurities.Pursuant to the first 2018 Underwriting Agreement, the Company agreed to issue and sell an aggregate of 10,000,000 shares ofVermillion common stock, par value $0.001 per share, offered by the 2018 Underwriter in a public offering at a price to the public of $1.00 pershare (the “2018 Common Stock Offering”). Under this 2018 Underwriting Agreement, the Company granted the 2018 Underwriter an option topurchase up to an additional 1,500,000 shares of Vermillion common stock at the public offering price, less underwriting discounts andcommissions, to cover over-allotments, if any. The 2018 Underwriter did not exercise this option. The 2018 Common Stock Offering closed onApril 17, 2018 and resulted in proceeds, net of 7% underwriting costs and other offering costs, to the Company of $8,992,000.Pursuant to the second 2018 Underwriting Agreement, the Company agreed to issue and sell an aggregate of 50,000 shares ofVermillion Series B Convertible Preferred Stock, par value $0.001 per share, offered by the 2018 Underwriter in a public offering at a price tothe public of $100.00 per share (the “Series B Offering”). The Series B Offering closed on April 17, 2018 and resulted in proceeds, net of 7%underwriting costs and other offering costs, to the Company of $4,496,000. Upon obtaining Company stockholder approval at the annual meeting of Company stockholders on June 21, 2018, each of the 50,000shares of Vermillion Series B Convertible Preferred Stock was automatically converted into shares of Vermillion common stock, at a conversionrate of 100 shares of Vermillion common stock per one share of Vermillion Series B Convertible Preferred Stock, including shares issuablepursuant to customary anti-dilution provisions.2017 Private Placement On February 17, 2017, the Company completed a private placement pursuant to which certain investors purchased 3,747,125 shares ofVermillion common stock at a price of $1.40 per share. Vermillion also issued warrants to purchase shares of common stock at a price of $0.125per warrant share in the private placement. Net proceeds of the private placement were approximately $5,127,000 after deducting offeringexpenses. The warrants are exercisable for 2,810,338 shares of Vermillion common stock at $1.80 per share. The warrants may be exercisedfrom time to time beginning August 17, 2017 and expire on the fifth anniversary of the date of issuance or, if earlier, five business days afterVermillion delivers notice that the closing price per share of its common stock exceeded the exercise price for 20 consecutive trading daysduring the exercise period.The sale of common stock and issuance of warrants qualified for equity treatment under GAAP. The respective values of the warrantsand common stock were calculated using their relative fair values and classified under common stock and additional paid-in capital. The valueascribed to the warrants is $804,000 and to the common stock is approximately $4,323,000.Stockholders AgreementIn connection with a private placement offering of common stock and warrants the Company completed in May 2013, the Companyentered into a stockholders agreement which, among other things, gives two of the primary investors in that offering the right to participate inany future equity offerings by the Company on the same price and terms as other investors. In addition, this stockholders agreement prohibits theCompany from taking certain material actions without the consent of at least one of the two primary investors in that offering. These materialactions include:·Making any acquisition with a value greater than $2 million;·Offering, selling or issuing any securities senior to Vermillion’s common stock or any securities that are convertible into orexchangeable or exercisable for securities ranking senior to Vermillion’s common stock;·Taking any action that would result in a change in control of the Company or an insolvency event; andF-14  ·Paying or declaring dividends on any securities of the Company or distributing any assets of the Company other than in theordinary course of business or repurchasing any outstanding securities of the Company.The foregoing rights terminate for each stockholder when that stockholder ceases to beneficially own less than 50% of the shares andwarrants (taking into account shares issued upon exercise of the warrants), in the aggregate, that were purchased at the closing of the 2013private placement. WarrantsWarrants outstanding as of December 31, 2019 and 2018 were as follows: Exercise PriceNumber of Shares Outstanding under WarrantIssuance DateExpiration Dateper ShareDecember 31, 2019December 31, 2018February 17, 2017February 17, 2022$ 1.802,810,338 2,810,338 2,810,338 2,810,338 NOTE 8: Loss Per ShareThe reconciliation of the numerators and denominators of basic and diluted loss per share for the years ended December 31, 2019 and2018 was as follows: Loss Shares Per Share(In thousands, except per share data)(Numerator) (Denominator) AmountYear ended December 31, 2018: Net loss available to common shareholders - basic$(11,371) 70,085,342 $(0.16)Dilutive effect of common stock shares issuable upon exercise of stock options,exercise of warrants, and unvested restricted stock awards - - Net loss available to common shareholders - diluted$(11,371) 70,085,342 $(0.16) Year ended December 31, 2019: Net loss available to common shareholders - basic$(15,237) 86,595,581 $(0.18)Dilutive effect of common stock shares issuable upon exercise of stock options,exercise of warrants, and unvested restricted stock awards - - Net loss available to common shareholders - diluted$(15,237) 86,595,581 $(0.18)Due to net losses for the years ended December 31, 2019 and 2018, diluted loss per share is calculated using the weighted averagenumber of common shares outstanding and excludes the effects of potential shares of common stock that are antidilutive. The potential shares of common stock that have been excluded from the diluted loss per share calculation above for the years endedDecember 31, 2019 and 2018 were as follows: Year Ended December 31,2019 2018Stock options6,612,878 4,612,005 Stock warrants2,810,338 2,810,338 Unvested restricted stock awards - 11,667 Potential common shares9,423,216 7,434,010 NOTE 9:Employee Benefit Plans2000 Stock PlanUnder the Amended and Restated 2000 Stock Plan (the “2000 Plan”), options could be granted at prices not lower than 85% and 100%of the fair market value of the common stock for non-statutory and statutory stock options, respectively. Options generally vest monthly over aperiod of four years and unexercised options generally expire ten years from the date of grant. The authority ofF-15  Vermillion’s Board of Directors to grant new stock options and awards under the 2000 Plan terminated in 2010. There were no stock optionsunder the 2000 Stock Plan exercised during the years ended December 31, 2019 or 2018. All remaining options expired during 2018. Noadditional shares of common stock were reserved for future option grants under the 2000 Plan.2010 Stock Incentive PlanUnder the 2010 Plan, employees, directors and consultants of the Company were eligible to receive a variety of awards, including stockoptions, share appreciation rights, restricted shares, restricted share units, unrestricted shares, deferred share units, performance and cash-settledawards, and dividend equivalent rights. In June 2015 and June 2018, Vermillion’s stockholders approved increases of 4,500,000 and 4,000,000,respectively, in the number of shares available for issuance under the 2010 Plan for a total of 12,122,983 shares. Unexercised options generallyexpire ten years from the date of grant. The authority of Vermillion’s Board of Directors to grant new stock options and awards under the 2010Plan terminated in 2019. Vermillion’s Board of Directors continued to administer the 2010 Plan with respect to the stock options that remainedoutstanding under the 2010 Plan. Options to purchase 19,687 shares of common stock were exercised during the year ended December 31, 2019.Options to purchase 32,500 shares of common stock were exercised during the year ended December 31, 2018. During the year ended December31, 2019, Vermillion issued to Vermillion’s Board of Directors 190,909 shares of restricted stock under the 2010 Plan having a fair value of$252,000 as payment for services rendered in 2019. Vermillion also issued to certain consultants 11,667 shares of restricted stock under the 2010Plan having a fair value of $4,000. During the year ended December 31, 2018, Vermillion issued to Vermillion’s Board of Directors anaggregate of 398,400 shares of restricted stock under the 2010 Plan having a fair value of $442,000 as payment for services rendered in2018. 35,000 of those shares of restricted stock were forfeited upon the departure of a board member in June. The Company also issued tocertain consultants 40,606 shares of restricted stock under the 2010 Plan having a fair value of $32,000. 2019 Stock Incentive PlanAt Vermillion’s 2019 annual meeting of stockholders, the Company’s stockholders approved the Vermillion, Inc. 2019 Stock IncentivePlan (the “2019 Plan”). The purposes of the 2019 Plan are (i) to align the interests of the Company’s stockholders and recipients of awards underthe 2019 Plan by increasing the proprietary interest of such recipients in the Company’s growth and success; (ii) to advance the interests of theCompany by attracting and retaining non-employee directors, officers, other employees, consultants, independent contractors and agents; and(iii) to motivate such persons to act in the long-term best interests of the Company and its stockholders. The 2019 Plan allows the Company togrant stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to participants.Subject to the terms and conditions of the 2019 Plan, the initial number of shares authorized for grants under the 2019 Plan is10,492,283. To the extent an equity award granted under the 2019 Plan or the 2010 Plan expires or otherwise terminates without having beenexercised or paid in full, or is settled in cash, the shares of common stock subject to such award will become available for future grant under the2019 Plan. As of December 31, 2019, a total of 10,492,283 shares of common stock had been reserved for issuance under the 2019 Plan, ofwhich 207,000 shares of common stock are subject to outstanding stock options. The activity related to shares available for grant under the 2000 Plan, the 2010 Plan and the 2019 Plan for the years endedDecember 31, 2019 and 2018 was as follows: 2000 Stock Plan 2010 StockOption Plan 2019 StockOption Plan TotalShares available at December 31, 2017 - 2,054,633 - 2,054,633 Shares added - 4,000,000 - 4,000,000 Options canceled18,000 861,063 - 879,063 Reduction in shares reserved(18,000) - - (18,000)Options granted - (1,304,000) - (1,304,000)Restricted stock units granted - (432,877) - (432,877)Shares available at December 31, 2018 - 5,178,819 - 5,178,819 Shares added - - 8,000,000 8,000,000 Shares transferred - (2,492,283) 2,492,283 -Options canceled - 691,025 - 691,025 Options granted - (2,504,585) (207,000) (2,711,585)Restricted stock units granted - (202,576) - (202,576)Shares available at December 31, 2019 - 670,400 10,285,283 10,955,683 F-16  The stock option activity under the 2000 Plan, the 2010 Plan and the 2019 Plan for the years ended December 31, 2019 and 2018 wasas follows: Number ofShares WeightedAverageExercise Price AggregateIntrinsic Value Weighted AverageRemainingContractual TermOptions outstanding at December 31, 20174,219,568 $1.86 $1,033 8.02 Granted1,304,000 0.98 Exercised(32,500) 0.89 Canceled(879,063) 1.58 Options outstanding at December 31, 20184,612,005 $1.67 $ - 7.17 Granted2,711,585 1.02 Exercised(19,687) 1.32 Canceled(691,025) 1.79 Options outstanding at December 31, 20196,612,878 $1.67 $303,995 8.66 Shares exercisable: December 31, 20193,115,001 $1.69 $15,026 5.95 Shares expected to vest: December 31, 20192,868,259 $1.14 $288,969 8.66 The range of exercise prices for options outstanding and exercisable at December 31, 2019 is as follows: Exercise Price OptionsOutstanding Weighted AverageExercise Price WeightedAverage RemainingLife in Years OptionsExercisable WeightedAverage ExercisePrice$0.01-$1.30 3,769,835 $1.02 8.81 851,710 $1.13 1.31- 1.64 1,144,168 1.49 4.97 974,418 1.48 1.65- 2.08 791,000 1.99 5.21 709,998 1.99 2.09- 11.55 907,875 2.35 6.37 578,875 2.48 $0.01-$11.55 6,612,878 $1.40 7.38 3,115,001 $1.69 (in thousands) Total Intrinsic Value of OptionsExercised Total Fair Value of Vested OptionsYear ended December 31, 2019$8 $2,869 Year ended December 31, 2018$9 $2,319 F-17  Stock-based CompensationStock-based Compensation ExpenseThe Company records stock-based compensation net of estimated forfeitures. The assumptions used to calculate the fair value ofoptions granted under the 2010 Plan and the 2019 Plan that were incorporated in the Black-Scholes pricing model for the years endedDecember 31, 2019 and 2018 were as follows: Year Ended December 31,2019 2018Dividend yield -% -%Volatility 79 % 69 %Risk-free interest rate 2.30 % 2.69 %Expected lives (years) 4.0 4.0 Weighted average grant date fair value$0.55 $0.51 The allocation of employee and director stock-based compensation expense by functional area for the years ended December 31, 2019and 2018 was as follows: Year Ended December 31,(in thousands) 2019 2018Cost of sales$67 $91 Research and development 4 6 Sales and marketing 122 112 General and administrative 942 982 Total$1,135 $1,191 As of December 31, 2019, total unrecognized compensation cost related to unvested stock option awards was approximately$1,633,000 and the related weighted average period over which it is expected to be recognized was 2.54 years.401(k) PlanThe Company’s 401(k) Plan allows eligible employees to defer up to an annual limit of the lesser of 90.0% of eligible compensation ora maximum contribution amount subject to the Internal Revenue Service annual contribution limit. The Company is not required to makecontributions under the 401(k) Plan. During the years ended December 31, 2019 and 2018, the Company did not contribute to the 401(k) Plan.NOTE 10:Income Taxes There was no income tax expense or benefit for the years ended December 31, 2019 or 2018 because of net losses during those years.These net losses were generated from domestic operations.Based on the available objective evidence and uncertainty about the timing and amount of any future profits, the Company believes it ismore likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuationallowance against its net deferred tax assets at December 31, 2019 and 2018. F-18  The components of net deferred tax assets (liabilities) at December 31, 2019 and 2018 were as follows: Year Ended December 31,(in thousands)2019 2018Deferred tax assets: Net operating losses$21,024 $20,614 Amortization - R&D intangibles 1,903 2,410 Other 11,577 2,406 Total deferred tax assets 34,504 25,430 Valuation allowance (34,504) (25,430)Deferred tax assets$ - $ - Deferred tax liabilities: Other$ - $ -Deferred tax liabilities$ - $ - Net deferred tax asset$ - $ -The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the years ended December 31, 2019and 2018 was as follows: Year Ended December 31,2019 2018Tax at federal statutory rate21 % 21 %State tax, net of federal benefit2 1 Valuation allowance(19) (19) Permanent items(1) - Change in Federal Tax Rate (2017 Tax Reform) - 2 Other(3) (5) Effective income tax rate -% -%As a result of the Tax Cuts and Jobs Act of 2017, net operating losses (“NOLs”) arising before January 1, 2018, and NOLs arising afterJanuary 1, 2018, are subject to different rules. The Company’s pre-2018 NOLs will expire in varying amounts from 2023 through 2037, if notutilized and can offset 100% of future taxable income for regular tax purposes. Any NOLs arising after January 1, 2018 can generally be carriedforward indefinitely and can offset up to 80% of future taxable income. The Company’s ability to use its NOLs during this period will bedependent on its ability to generate taxable income, and the NOLs could expire before the Company generates sufficient taxable income. TheCompany’s ability to use net operating loss carryforwards may be restricted due to ownership change limitations occurring in the past or thatcould occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), as well as similar stateprovisions. These ownership changes may also limit the amount of net operating loss carryforwards that can be utilized annually to offset futuretaxable income and tax, respectively.The Company’s management believes that Section 382 ownership changes occurred as a result of the Company’s follow-on publicofferings in 2011, 2013 and 2015. Any limitation may result in the expiration of a portion of the net operating loss carryforwards beforeutilization and any net operating loss carryforwards that expire prior to utilization as a result of such limitations will be removed from deferredtax assets with a corresponding reduction of the Company’s valuation allowance. Due to the existence of a valuation allowance, it is notexpected that such limitations, if any, will have an impact on the Company’s results of operations or financial position.Legislation commonly referred to as the Tax Cuts and Jobs Act (H.R. 1) was enacted on December 22, 2017. ASC740, Accounting forIncome Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for mostprovisions is for tax years beginning after December 31, 2017. Since the Company’s federal deferred tax asset was fully offset by a valuationallowance, the reduction in the U.S. corporate income tax rate to 21% did not materially affect the Company’s financial statements.F-19  Provisional amountsDeferred tax assets and liabilities: Certain domestic-related deferred tax assets and liabilities were remeasured based on the rates atwhich they are expected to reverse in the future, which is generally 21 percent. As a valuation allowance is recorded for the full amount of thesedeferred tax assets and liabilities, the remeasurement of the deferred tax assets and liabilities was offset by a corresponding remeasurement of thevaluation allowance. Company management believes that it is more likely than not that the benefit from certain deferred tax assets will not be realized due tothe history of the Company’s operating losses. In recognition of this risk, the Company has provided a valuation allowance on the deferred taxassets relating to these assets. The valuation allowance was approximately $34,500,000 and $25,400,000 at December 31, 2019 and 2018,respectively. The increase of approximately $9,100,000 between 2018 and 2019 is primarily due to adjustments to the domestic deferred taxassets related to the net operating losses.The Company files income tax returns in the U.S. and in various state jurisdictions with varying statutes of limitations. The Companyhas not been audited by the Internal Revenue Service or any state income or franchise tax agency. As of December 31, 2019, the Company’sfederal returns for the years ended 2016 through the current period and most state returns for the years ended 2015 through the current period arestill open to examination. In addition, all of the net operating loss carryforwards and research and development credits generated in years earlierthan 2016 and 2015, respectively, are still subject to Internal Revenue Service audit. The federal and California tax returns for the year endedDecember 31, 2018 reflect research and development carryforwards of $5,427,000 and $5,330,000, respectively. The Company has recognizedadditional deferred tax assets for federal and California research and development credits of $0 and $21,000 for the year ended December 31,2019, respectively. As of December 31, 2019, the Company’s gross unrecognized tax benefits are approximately $10,644,000 which are attributable toresearch and development credit carryforwards. A reconciliation of the change in the Company’s unrecognized tax benefits is as follows:  (in thousands) Federal Tax State Tax TotalBalance at December 31, 2017 $5,476 $5,352 $10,828Return to provision true up 145 (40) 105Increase in tax position during 2018 16 18 34Decrease due to expirations during 2018 - - -Balance at December 31, 2018 $5,637 $5,330 $10,967Return to provision true up (210) - (210)Increase in tax position during 2019 - 21 21Decrease due to expirations during 2019 (134) - (134)Balance at December 31, 2019 $5,293 $5,351 $10,644The increase for the year ended December 31, 2019 relates to a position taken in the current year. The increase for the year endedDecember 31, 2018 is related to tax positions taken during 2018 and prior years. If the $10,644,000 of unrecognized income tax benefit isrecognized, approximately $10,644,000 would impact the effective tax rate in the period in which each of the benefits is recognized.The Company recognizes interest and penalties related to unrecognized tax benefits within the interest expense line and other expenseline, respectively, in the consolidated statement of operations and comprehensive loss. The Company has not recorded any interest or penaltiesas a result of uncertain tax positions as of December 31, 2019 and 2018. Accrued interest and penalties would be included within the relatedliability in the consolidated balance sheet.NOTE 11:Related Party TransactionsOn December 18, 2017, the Company entered into a consulting agreement for a term of up to five months with the Company’s formerSenior Vice President, Finance and Chief Accounting Officer. Pursuant to the terms of the consulting agreement through May 15, 2018, theconsultant provided accounting and finance services related to the transition of financial leadership. The Company agreed to pay $150 perhour for such consulting services. The consultant also remained eligible for payout under the Company’s 2017 Corporate Incentive Plan after hesatisfactorily met certain performance obligations as outlined in the consulting agreement. During the years ended December 31, 2019 and 2018,the consultant was paid an aggregate of $0 and $53,925 for services provided pursuant to the consulting agreement. F-20  NOTE 12:SUBSEQUENT EVENTSOn February 19, 2020, the Company finalized an in-network contract agreement with CIGNA. This agreement includes OVA1 andOvera, as well as our ovarian and carrier genetics testing panels. The final agreed prices will be effective April 1, 2020.On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a global pandemic,which continues to spread throughout the United States and around the world. This outbreak has severely impacted global economic activity, andmany countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and schoolclosures and restricting travel. In addition, many conventions and industry conferences have been canceled. As of the date of the filing of thisannual report on Form 10-K, the Company expects the COVID-19 pandemic and actions taken to contain it to decrease our travel andconvention-related expenses for 2020. The Company is taking several measures to minimize the impact of the current closures and quarantines.The Company’s salespeople are experiencing limitations on their ability to physically visit physician offices. The Company is evaluating othermeans of coverage such as virtual sales rep meetings and leveraging social media. While these disruptions could be temporary, continueddisruption may negatively impact sales for 2020 and the Company’s overall liquidity. The full impact of COVID-19 continues to evolve as thedate of this filing. As a result, the Company is not able to estimate the effects of COVID-19 on its results of operations, financial condition, orliquidity for 2020.On March 27, 2020, the U.S federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).The CARES Act is an emergency economic stimulus package in response to the coronavirus outbreak which, among other things, containsnumerous income tax provisions. Some of these tax provisions are expected to be effective retroactively for years ending before the date ofenactment. The Company is currently evaluating the implications of the CARES Act, and its impact on the financial statements and relateddisclosures has not yet been determined. F-21 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.Vermillion, Inc.Date: April 7, 2020 /s/ Valerie B. PalmieriValerie B. PalmieriPresident and Chief Executive Officer (Principal ExecutiveOfficer)Date: April 7, 2020 /s/ Robert BeecheyRobert BeecheyChief Financial Officer (Principal Financial Officer and PrincipalAccounting Officer)Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated.NameTitleDate/s/ Valerie B. PalmieriValerie B. PalmieriPresident and Chief Executive Officer (Principal Executive Officer)and DirectorApril 7, 2020 /s/ Robert BeecheyRobert BeecheyChief Financial Officer (Principal Financial Officer and PrincipalAccounting Officer)April 7, 2020 /s/ James T. LaFranceJames T. LaFranceChairman of the Board of DirectorsApril 7, 2020 /s/ James S. BurnsJames S. Burns DirectorApril 7, 2020 /s/ Nancy CocozzaNancy CocozzaDirectorApril 7, 2020 /s/ Veronica G. H. Jordan Veronica G. H. Jordan DirectorApril 7, 2020 /s/ David Schreiber David Schreiber DirectorApril 7, 20201   Exhibit 4.10DESCRIPTION OF THE REGISTRANT’S SECURITIESREGISTERED PURSUANT TO SECTION 12 OFTHE SECURITIES EXCHANGE ACT OF 1934IntroductionVermillion, Inc. (the “Company,” “we,” “us” or “our”) has one security registered pursuant to Section 12 of the SecuritiesExchange Act of 1934, as amended, which is our common stock. Our common stock is listed on The Nasdaq Capital Marketunder the symbol “VRML.”The following summary does not purport to be complete and is qualified by reference to certain provisions of the DelawareGeneral Corporation Law, as amended (the “DGCL”), our Fourth Amended and Restated Certificate of Incorporation, datedJanuary 22, 2010, as amended effective June 19, 2014 (our “Certificate of Incorporation”), and our Fifth Amended andRestated Bylaws, effective June 19, 2014 (our “Bylaws”), each of which has been filed as an exhibit to the Annual Report onForm 10-K filed with the Securities and Exchange Commission to which this exhibit is attached and is hereby incorporated byreference.Authorized Capital StockOur authorized capital stock consists of 150,000,000 shares of common stock, par value $0.001 per share, and 5,000,000shares of preferred stock, par value $0.001 per share.Preferred StockOur board of directors is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue fromtime to time up to an aggregate of 5,000,000 shares of preferred stock, in one or more series, each of such series to have suchrights and preferences, including voting rights, dividend rights, conversion rights, redemption terms and liquidationpreferences as shall be determined by our board of directors. Any issuance of shares of preferred stock could adversely affectthe voting power or rights of holders of common stock, and the likelihood that the holders of preferred stock will receivedividend payments and payments upon liquidation could have the effect of delaying, deferring or preventing a change incontrol.Common StockVoting RightsEach holder of common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders, andthere are no cumulative voting rights. In all matters other than the election of directors, stockholder approval requires theaffirmative vote of the majority of the holders of our common stock entitled to vote on the subject matter unless the matter isone upon which, by express provision of law, our Certificate of Incorporation or our Bylaws, a different vote isrequired. Directors are elected by a plurality of the votes of the shares present in person or represented by proxy and entitledto vote on the election of directors.Dividend RightsSubject to preferences to which holders of preferred stock may be entitled and the rights of certain of our stockholders setforth in the Stockholders Agreement (as defined below), holders of common stock are entitled to receive ratably suchdividends, if any, as may be declared from time to time by our board of directors out of funds legally available therefor. Wehave never paid or declared any dividend on our common stock, and we do not anticipate paying cash dividends on ourcommon stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund thedevelopment and expansion of our business. No Preemptive or Similar RightsHolders of our common stock do not have preemptive rights, and our common stock is not convertible or redeemable. Asdescribed under “Stockholders Agreement,” certain holders of our common stock have the right to purchase shares inconnection with most equity offerings made by the Company.Right to Receive Liquidation DistributionsIn the event of our liquidation, dissolution or winding up, holders of common stock would be entitled to share in our assetsremaining after the payment of liabilities and the satisfaction of any liquidation preference granted the holders of anyoutstanding shares of any senior class of securities. The rights, preferences and privileges of the holders of common stock aresubject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we maydesignate in the future.Stockholders AgreementIn connection with a private placement in May 2013, we entered into a stockholders agreement with the purchasers namedtherein (the “Stockholders Agreement”). Pursuant to and subject to the terms of the Stockholders Agreement, certain of theinvestors received rights to participate in any future equity offerings on the same price and terms as other investors, and rightsto exercise “piggyback” registration rights for any registration statements that we file prior to May 13, 2018 on our ownaccount or for the account of others with respect to shares of our common stock.In addition, the Stockholders Agreement prohibits the Company from taking material actions without the consent of at leastone of the two primary investors. These material actions include:  ● making any acquisition with value greater than $2 million; ● entering into, or amending the terms of agreements with Quest Diagnostics, provided that such investors’consent shall not be unreasonably withheld, conditioned or delayed following good faith consultation with theCompany; ● submitting any resolution at a meeting of stockholders or in any other manner changing or authorizing a changein the size of our board of directors; ● offering, selling or issuing any securities senior to our common stock or any securities that are convertible intoor exchangeable or exercisable for securities ranking senior to our common stock; ● amending our Certificate of Incorporation or our Bylaws in any manner that affects the rights, privileges oreconomics of our common stock or the warrants purchased in the May 2013 private placement; ● taking any action that would result in a change in control of Vermillion or an insolvency event; ● paying or declaring dividends on any securities of the Company or distributing any assets of the Company otherthan in the ordinary course of business or repurchasing any outstanding securities of the Company; or ● adopting or amending any stockholder rights plan.In addition, the two primary investors (Jack W. Schuler, on the one hand, and Oracle Partners, LP and Oracle Ten FundMaster, LP, on the other hand) each received the right to designate a person to serve on our board of directors. These rightsterminate for each investor when that investor ceases to beneficially own less than 50% of the shares and warrants (taking intoaccount shares issued upon exercise of the warrants), in the aggregate, that such investor purchased at the closing of our May2013 private placement. Section 203 of the Delaware Corporation LawWe are subject to Section 203 of the DGCL, which prevents an “interested stockholder” (defined in Section 203 of the DGCL,generally, as a person owning 15% or more of a corporation’s outstanding voting stock), from engaging in a “businesscombination” (as defined in Section 203 of the DGCL) with a publicly-held Delaware corporation for three years followingthe date such person became an interested stockholder, unless:  ● before such person became an interested stockholder, the board of directors of the corporation approved thetransaction in which the interested stockholder became an interested stockholder or approved the businesscombination; ● upon consummation of the transaction that resulted in the interested stockholders becoming an interestedstockholder, the interested stockholder owns at least 85% of the voting stock of the corporation outstanding atthe time the transaction commenced (excluding stock held by directors who are also officers of the corporationand by employee stock plans that do not provide employees with the rights to determine confidentiallywhether shares held subject to the plan will be tendered in a tender or exchange offer); or ● following the transaction in which such person became an interested stockholder, the business combination isapproved by the board of directors of the corporation and authorized at a meeting of stockholders by theaffirmative vote of the holders of two-thirds of the outstanding voting stock of the corporation not owned bythe interested stockholder.The provisions of Section 203 of the DGCL could make a takeover of the Company difficult.Effect of Certain Provisions of Our Certificate of Incorporation and BylawsCertain provisions of our Certificate of Incorporation and Bylaws may also have the effect of making it more difficult for athird party to acquire, or of discouraging a third party from attempting to acquire, control of us. Such provisions could limitthe price that certain investors might be willing to pay in the future for our securities. Our Certificate of Incorporationeliminates the right of stockholders to call special meetings of stockholders or to act by written consent without a meeting, andour Bylaws require advance notice for stockholder proposals and director nominations, which may preclude stockholders frombringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting ofstockholders. Our Certificate of Incorporation authorizes undesignated preferred stock, which makes it possible for our boardof directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt tochange control of us.These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management ofus. The amendment of any of the provisions of our Certificate of Incorporation described in the immediately precedingparagraph would require approval by our board of directors and the affirmative vote of at least 66 2/3% of our thenoutstanding voting securities, and the amendment of any of the provisions of our Bylaws described in the immediatelypreceding paragraph would require approval by our board of directors or the affirmative vote of at least 66 2/3% of our thenoutstanding voting securities.      Exhibit 4.4 AMENDED AND RESTATED PROMISSORY NOTE #1$2,000,000.00April 3, 2020Trumbull, ConnecticutFOR VALUE RECEIVED, the undersigned, VERMILLION, INC., a Delaware corporationauthorized to conduct business in the State of Connecticut, with an office and principal place ofbusiness located at 12117 Bee Caves Road, Building III, Suite 100, Austin, Texas 78738 (the“Applicant”), promises to pay to the order of the STATE OF CONNECTICUT, acting by and throughits DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT (“State”), at its officeat 505 Hudson Street, Hartford, Connecticut 06106 or at such other place as the holder hereof(including State, hereinafter referred to as “Holder”) may designate, the sum of TWO MILLION00/100 DOLLARS ($2,000,000.00) or such lesser amount as may be due and payable to State underthe terms and conditions of that certain Assistance Agreement dated March 22, 2016, as amended by aFirst Amendment to Assistance Agreement dated March 7, 2018, and as further amended by SecondAmended and Restated Agreement of even date herewith by and between Applicant and State(collectively, the “Assistance Agreement”), the terms of which are incorporated by reference herein,together with interest on the unpaid balance of this Note at the rate set forth in Section 2(a) hereof,which interest shall be computed and payable as set forth therein, together with all taxes levied orassessed on this Note or the debt evidenced hereby against the Holder, and together with all reasonablecosts, expenses and reasonable attorneys’ and other reasonable professionals’ fees incurred in anyaction to collect and/or enforce this Note or to enforce, protect, preserve, defend, realize upon orforeclose any security agreement, or other agreement securing or relating to this Note, includingwithout limitation, all reasonable costs and expenses incurred to enforce, protect, preserve, defend orsustain the lien of said security agreement, or other agreement or in any litigation or controversyarising from or connected in any manner with said security agreement, or other agreement, or thisNote. Applicant further agrees to pay all reasonable costs, expenses and reasonable attorneys’ andother reasonable professionals’ fees incurred by Holder in connection with any “workout” or defaultresolution negotiations involving legal counsel or other professionals and further in connection withany re-negotiation or restructuring of the indebtedness evidenced by this Note. Any such costs,expenses and/or fees remaining unpaid after demand therefor, may, at the discretion of the Holder, beadded to the principal amount of the indebtedness evidenced by this Note.All capitalized terms not otherwise defined herein shall have the meanings ascribed to suchterms in the Assistance Agreement.This Note has been executed and delivered subject to the following terms and conditions: 1. Lawful Interest. Notwithstanding any provisions of this Note, it is the understandingand agreement of the Applicant and Holder that the maximum rate of interest to be paid by Applicantto Holder shall not exceed the highest or the maximum rate of interest permissible to be charged underthe laws of the State of Connecticut. Any amounts paid in excess of such rate shall be considered tohave been payments in reduction of principal.2. Payments of Principal and Interest. (a) The principal amount of this Note shall bear interest at a rate of two percent (2%) perannum (the “Loan Interest Rate”) commencing on the date on which the initial advance in respect ofthe Loan is funded (the “Advancement Date”). Commencing on the first day of the second monthfollowing the Advancement Date, which was April 15, 2016, and continuing on the same day of eachand every month thereafter until the date which is ten (10) years from the first day of the monthfollowing the Advancement Date (the “Maturity Date”), and so long as no Instance of Default shallhave occurred and remains uncured past any applicable cure period, principal and interest under thisNote shall be payable in one hundred twenty (120) equal monthly installments in such a manner as tofully amortize the Loan over the remaining term of this Note.(b) The entire indebtedness under this Note, including, all outstanding principal (includingamounts not forgiven or repaid), accrued and unpaid interest, if any, and any other obligations duehereunder or under the Assistance Agreement, shall be due and payable in full on the Maturity Date. (c) Payments in respect of this Note shall be made payable to “The State of Connecticut,Department of Economic and Community Development”.1. Late Charge. In the event Applicant fails to pay any installment of principal and/orinterest within fifteen (15) days of the date when said amount was due and payable, without in anyway affecting the Holder’s right to accelerate this Note, a late charge equal to five percent (5.00%) ofsuch late payment shall, at the option of Holder, be assessed against Applicant and be due upondemand by the Holder.4.Prepayments. The Applicant may prepay principal of this Note, in whole or in part, at anytime without penalty or premium. Any and all prepayments shall be applied first to accrued andunpaid interest and then to unpaid principal in the inverse order of maturity, and shall not affect theobligation of Applicant to pay the regular installments required hereunder until the entire indebtednesshas been paid except as otherwise provided in the Assistance Agreement.5.Instances of Default. The Applicant agrees that the occurrence of an Instance of Default underthe Assistance Agreement shall constitute an “Instance of Default” hereunder. Upon the occurrence ofany Instance of Default, which remains uncured past any applicable cure period, if any, the entireindebtedness with accrued interest thereon and any other sums due under this Note, shall, at the optionof the Holder, become immediately due and payable without presentment or demand for payment, notice of non-payment, protest or any other notice or demand ofany kind, all of which are expressly waived by the Applicant. Failure to exercise such option shall notconstitute a waiver of the right to exercise the same in the event of any subsequent default. Upon theoccurrence of any Instance of Default the interest rate shall increase to fifteen per cent per annum(15%) (the “Default Rate”) and liquidated damages may be assessed in accordance with Section 4.2(C)(3) of the Assistance Agreement.6.No Waiver. No delay or omission by Holder in exercising any rights hereunder, nor failure bythe Holder to insist upon the strict performance by Applicant of any terms and provisions herein shalloperate as or be deemed to be a waiver of such right, any other right hereunder, or any terms andprovisions herein, and the Holder shall retain the right thereafter to insist upon strict performance bythe Applicant of any and all terms and provisions of this Note or any document securing the repaymentof this Note. No waiver of any right shall be effective unless in writing and signed by Holder, norshall a waiver on one occasion be considered as a bar to, or waiver of, any such right on any futureoccasion.7.Prejudgment Remedy and Other Waivers. APPLICANT ACKNOWLEDGES THAT THELOAN EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND WAIVESAPPLICANT’S RIGHTS TO NOTICE AND HEARING, OR THE ESTABLISHMENT OF ABOND, WITH OR WITHOUT SURETY, UNDER CHAPTER 903a OF THE CONNECTICUTGENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAWWITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TOUSE, AND FURTHER WAIVES DILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT,NOTICE OF NONPAYMENT, PROTEST AND NOTICE OF PROTEST, AND NOTICE OF ANYRENEWALS OR EXTENSIONS OF THIS NOTE, AND ALL RIGHTS UNDER ANY STATUTEOF LIMITATIONS. THE APPLICANT ACKNOWLEDGES THAT APPLICANT MAKES THESEWAIVERS KNOWINGLY AND VOLUNTARILY, WITHOUT DURESS AND ONLY AFTEREXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER. THEAPPLICANT FURTHER ACKNOWLEDGES THAT THE LENDER HAS NOT AGREED WITHOR REPRESENTED TO APPLICANT OR ANY OTHER PARTY HERETO THAT THEPROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALLINSTANCES.8.Jury Waiver. THE APPLICANT HEREBY WAIVES TRIAL BY JURY IN ANY COURTAND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING INCONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OFWHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT OF ANY OF YOUR RIGHTSAND REMEDIES, INCLUDING WITHOUT LIMITATION, TORT CLAIMS. THE APPLICANTACKNOWLEDGES THAT APPLICANT MAKES THIS WAIVER KNOWINGLY ANDVOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OFTHE RAMIFICATIONS OF THIS WAIVER. THE APPLICANT FURTHER ACKNOWLEDGESTHAT THE LENDER HAS NOT AGREED WITH OR REPRESENTED TO APPLICANT OR ANY OTHER PARTY HERETO THAT THE PROVISIONSOF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.9.Miscellaneous. The provisions of this Note shall be binding upon the Applicant, its successorsand assigns and shall inure to the benefit of Holder, its successors and assigns. If any provision of thisNote shall, to any extent, be held invalid or unenforceable, then only such provision shall be deemedineffective and the remainder of this Note shall not be affected. This Note shall be governed by andconstrued in accordance with the laws of the State of Connecticut (but not its conflicts of lawprovisions).10. Security. This Note is secured by a Security Agreement and Patent Security Agreement betweenApplicant and the State.   VERMILLION, INC.By:/s/ Valerie B. Palmieri Valerie B. Palmieri Its President and CEO Duly AuthorizedDated: April 3, 2020     Exhibit 4.5  AMENDED AND RESTATED PROMISSORY NOTE #2$2,000,000.00April 3, 2020Trumbull, ConnecticutFOR VALUE RECEIVED, the undersigned, VERMILLION, INC., a Delaware corporationauthorized to conduct business in the State of Connecticut, with an office and principal place ofbusiness located at 12117 Bee Caves Road, Building III, Suite 100, Austin, Texas 78738 (the“Applicant”), promises to pay to the order of the STATE OF CONNECTICUT, acting by and throughits DEPARTMENT OF ECONOMIC AND COMMUNITY DEVELOPMENT (“State”), at its officeat 505 Hudson Street, Hartford, Connecticut 06106 or at such other place as the holder hereof(including State, hereinafter referred to as “Holder”) may designate, the sum of up to TWO MILLION00/100 DOLLARS ($2,000,000.00) or such lesser amount as may be due and payable to State underthe terms and conditions of that certain Assistance Agreement dated March 22, 2016, as amended byFirst Amendment to Assistance Agreement dated March 7, 2018 and as further amended by SecondAmendment to Assistance Agreement dated as of even date hereof by and between Applicant andState (collectively, the “Assistance Agreement”), the terms of which are incorporated by referenceherein, together with interest on the unpaid balance of this Note at the rate set forth in Section 2(a)hereof, which interest shall be computed and payable as set forth therein, together with all taxes leviedor assessed on this Note or the debt evidenced hereby against the Holder, and together with allreasonable costs, expenses and reasonable attorneys’ and other reasonable professionals’ fees incurredin any action to collect and/or enforce this Note or to enforce, protect, preserve, defend, realize upon orforeclose any security agreement, or other agreement securing or relating to this Note, includingwithout limitation, all reasonable costs and expenses incurred to enforce, protect, preserve, defend orsustain the lien of said security agreement, or other agreement or in any litigation or controversyarising from or connected in any manner with said security agreement, or other agreement, or thisNote. Applicant further agrees to pay all reasonable costs, expenses and reasonable attorneys’ andother reasonable professionals’ fees incurred by Holder in connection with any “workout” or defaultresolution negotiations involving legal counsel or other professionals and further in connection withany re-negotiation or restructuring of the indebtedness evidenced by this Note. Any such costs,expenses and/or fees remaining unpaid after demand therefor, may, at the discretion of the Holder, beadded to the principal amount of the indebtedness evidenced by this Note.All capitalized terms not otherwise defined herein shall have the meanings ascribed to suchterms in the Assistance Agreement. This Note has been executed and delivered subject to the following terms and conditions:1. Lawful Interest. Notwithstanding any provisions of this Note, it is the understandingand agreement of the Applicant and Holder that the maximum rate of interest to be paid by Applicantto Holder shall not exceed the highest or the maximum rate of interest permissible to be charged underthe laws of the State of Connecticut. Any amounts paid in excess of such rate shall be considered tohave been payments in reduction of principal.2. Payments of Principal and Interest. (a) The principal amount of this Note shall bear interest at a rate of two percent (2%) perannum (the “Loan Interest Rate”) commencing on the date on which the One Million Dollar($1,000,000.00) advance pursuant to Section 1.2 B of the Second Amendment to AssistanceAgreement is funded (the “Advancement Date”). Commencing on the first day of the second monthfollowing the Advancement Date and on the first day of each month thereafter, Applicant shall makeinterest payments only. Commencing on March 1, 2023, and continuing on the same day of each andevery month thereafter until the date which is ten (10) years from the first day of the month followingthe Advancement Date (the “Maturity Date”), and so long as no Instance of Default shall haveoccurred and remains uncured past any applicable cure period, principal and interest under this Noteshall be payable in equal monthly installments in such a manner as to fully amortize the Loan over theremaining term of this Note.(b) The entire indebtedness under this Note, including, all outstanding principal (includingamounts not forgiven or repaid), accrued and unpaid interest, if any, and any other obligations duehereunder or under the Assistance Agreement, shall be due and payable in full on the Maturity Date. (c) Payments in respect of this Note shall be made payable to “The State of Connecticut,Department of Economic and Community Development”.(d) The principal amount of this Note is subject to a Forgiveness Credit   and a Job Penalty inaccordance with the provisions of Section 2.17 of the Assistance Agreement.(e ) In the event that a Job Penalty is assessed or a Forgiveness Credit is given in accordancewith Section 2.17 of the Assistance Agreement, monthly payment of principal and interest shall be adjustedin accordance with said sections.1. Late Charge. In the event Applicant fails to pay any installment of principal and/orinterest within fifteen (15) days of the date when said amount was due and payable, without in anyway affecting the Holder’s right to accelerate this Note, a late charge equal to five percent (5.00%) of such late payment shall, at the option of Holder, be assessed againstApplicant and be due upon demand by the Holder.4.Prepayments. The Applicant may prepay principal of this Note, in whole or in part, at anytime without penalty or premium. Any and all prepayments shall be applied first to accrued andunpaid interest and then to unpaid principal in the inverse order of maturity, and shall not affect theobligation of Applicant to pay the regular installments required hereunder until the entire indebtednesshas been paid except as otherwise provided in the Assistance Agreement.5.Instances of Default. The Applicant agrees that the occurrence of an Instance of Default underthe Assistance Agreement shall constitute an “Instance of Default” hereunder. Upon the occurrence ofany Instance of Default, which remains uncured past any applicable cure period, if any, the entireindebtedness with accrued interest thereon and any other sums due under this Note, shall, at the optionof the Holder, become immediately due and payable without presentment or demand for payment,notice of non-payment, protest or any other notice or demand of any kind, all of which are expresslywaived by the Applicant. Failure to exercise such option shall not constitute a waiver of the right toexercise the same in the event of any subsequent default. Upon the occurrence of any Instance ofDefault the interest rate shall increase to fifteen per cent per annum (15%) (the “Default Rate”) andliquidated damages may be assessed in accordance with Section 4.2(C)(3) of the AssistanceAgreement.6.No Waiver. No delay or omission by Holder in exercising any rights hereunder, nor failure bythe Holder to insist upon the strict performance by Applicant of any terms and provisions herein shalloperate as or be deemed to be a waiver of such right, any other right hereunder, or any terms andprovisions herein, and the Holder shall retain the right thereafter to insist upon strict performance bythe Applicant of any and all terms and provisions of this Note or any document securing the repaymentof this Note. No waiver of any right shall be effective unless in writing and signed by Holder, norshall a waiver on one occasion be considered as a bar to, or waiver of, any such right on any futureoccasion.7.Prejudgment Remedy and Other Waivers.  APPLICANT ACKNOWLEDGES THAT THE LOAN EVIDENCEDBY THIS NOTE IS A COMMERCIAL TRANSACTION AND WAIVES APPLICANT’S RIGHTS TO NOTICE ANDHEARING, OR THE ESTABLISHMENT OF A BOND, WITH OR WITHOUT SURETY, UNDER CHAPTER 903a OF THECONNECTICUT GENERAL STATUTES, OR AS OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITHRESPECT TO ANY PREJUDGMENT REMEDY WHICH HOLDER MAY DESIRE TO USE, AND FURTHER WAIVESDILIGENCE, DEMAND, PRESENTMENT FOR PAYMENT, NOTICE OF NONPAYMENT, PROTEST AND NOTICE OFPROTEST, AND NOTICE OF ANY RENEWALS OR EXTENSIONS OF THIS NOTE, AND ALL RIGHTS UNDER ANYSTATUTE OF LIMITATIONS. THE APPLICANT ACKNOWLEDGES THAT APPLICANT MAKES THESE WAIVERSKNOWINGLY AND VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OF THERAMIFICATIONS OF THIS WAIVER. THE APPLICANT FURTHER ACKNOWLEDGES THAT THE LENDER HAS NOTAGREED WITH OR REPRESENTED TO APPLICANT OR ANY OTHER PARTY HERETO THAT THE PROVISIONS OFTHIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. 8.Jury Waiver. THE APPLICANT HEREBY WAIVES TRIAL BY JURY IN ANY COURTAND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING INCONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OFWHICH THIS NOTE IS A PART AND/OR THE ENFORCEMENT OF ANY OF YOUR RIGHTSAND REMEDIES, INCLUDING WITHOUT LIMITATION, TORT CLAIMS. THE APPLICANTACKNOWLEDGES THAT APPLICANT MAKES THIS WAIVER KNOWINGLY ANDVOLUNTARILY, WITHOUT DURESS AND ONLY AFTER EXTENSIVE CONSIDERATION OFTHE RAMIFICATIONS OF THIS WAIVER. THE APPLICANT FURTHER ACKNOWLEDGESTHAT THE LENDER HAS NOT AGREED WITH OR REPRESENTED TO APPLICANT OR ANYOTHER PARTY HERETO THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BEFULLY ENFORCED IN ALL INSTANCES.9.Miscellaneous. The provisions of this Note shall be binding upon the Applicant, its successorsand assigns and shall inure to the benefit of Holder, its successors and assigns. If any provision of thisNote shall, to any extent, be held invalid or unenforceable, then only such provision shall be deemedineffective and the remainder of this Note shall not be affected. This Note shall be governed by andconstrued in accordance with the laws of the State of Connecticut (but not its conflicts of lawprovisions).10. Security. This Note is secured by a Security Agreement and Patent Security Agreement betweenApplicant and the State.   VERMILLION, INC.By:/s/ Valerie B. Palmieri Valerie B. Palmieri Its President and CEO Duly AuthorizedDated: April 3, 2020     Exhibit 10.22 SECOND AMENDMENTTOASSISTANCE AGREEMENT BY AND BETWEENTHE STATE OF CONNECTICUTACTING BY THE DEPARTMENT OF ECONOMIC AND COMMUNITYDEVELOPMENTANDVERMILLION, INC.Re:Vermillion Relocation ProjectTHIS SECOND AMENDMENT to the Assistance Agreement dated March 22, 2016 (the “AssistanceAgreement”) is made and entered into by and between the STATE OF CONNECTICUT (hereinafter the “State”), actingherein by David Lehman, its Commissioner of Economic and Community Development (hereinafter “Commissioner”), andthe VERMILLION, INC., a Delaware corporation (hereinafter the “Applicant”), acting herein by Valerie B. Palmieri, itsduly authorized President and Chief Executive Officer.All capitalized terms not otherwise defined herein have the meanings ascribed to them in the Assistance Agreement.W I T N E S S E T H:WHEREAS, the State and the Applicant entered into the Assistance Agreement whereby the State agreed to providefinancial assistance to the Applicant for the Project in the form of a loan in the amount not to exceed FOUR MILLION ANDNO/100 DOLLARS ($4,000,000.00) (hereinafter the “Loan”); andWHEREAS, the Applicant and the State entered into a First Amendment to Assistance Agreement dated March 7,2018 (First Amendment”) to amend Section 2.17 A of the Assistance Agreement; and WHEREAS, the Applicant has requested a modification to the Assistance Agreement to change the manner ofdisbursement of the Loan, as well to amend the Employment Obligation and the Forgiveness Credit as provided in theAssistance Agreement as modified by the First Amendment;NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and of the mutual benefits to begained by the performance thereof, the State and the Applicant hereby agree to amend the Assistance Agreement as follows:1. Section 1.2 of the Assistance agreement is hereby deleted in its entirety and the following substituted in lieuthereof: 1.2 Disbursement of the Loan: A. The first $2,000,000.00 of the Loan shall be disbursed (i) upon the closing of this financial assistance; (ii)whenever the Applicants shall have established its operations in and taken occupancy of its Trumbull, Connecticutlocation at 35 Nutmeg Drive; and (iii) upon the Applicant providing evidence on its balance sheet showing at least$18,800,000.00 of additional capital investment. B. Thereafter, $1,000,000.00 of the Loan shall be disbursed (i) after Commissioner’s approval per Section 1.1above, (ii) after the Applicant shall have received clearance from the Food and Drug Administration (FDA) for OVA 2 and (iii) upon verification by the State of the creation of 25 full time jobs prior to the Target Date referredto in Section 2.17 infra. C. The last remaining $1,000,000.00 balance of the Loan shall be disbursed after subsection B above is satisfied andthe Applicant shall have achieved gross consolidated revenue of $5,000,000.00 for any trailing twelve (12) month period. 2. Section 2.17 of the Assistance Agreement as modified by the First Amendment is hereby deleted in its entirety andthe following is hereby substituted in its place: 2.17 Job Creation and Retention; Job Audit; Penalty; Forgiveness Credit. (A) The Applicant will create and retain twenty five (25) full-time employment positions with an average annual salaryof $85,000.00 in Connecticut on or before December 31, 2020 (the “Target Date”, and shall maintain such positions fortwenty-four (24) consecutive months thereafter (the “Employment Obligation”). A full-time employment position is definedas a position that is paid for a minimum of forty (40) hours per week. The twenty-four (24) consecutive month period endingon or before the Target Date that yields the highest annual average positions will be used to determine compliance with theEmployment Obligation, provided that no portion of said twenty-four (24) consecutive months may begin before theAgreement Date. 3. Section 2.17 (D) of the Assistance Agreement is hereby deleted in its entirety and the following is hereby substitutedin its place: (D)The Applicant may be eligible for a credit to be applied against the outstandingprincipal balance of the Loan (the “Forgiveness Credit”) in accordance with the following:(i) If as a result of a Job Audit, the Commissioner determines that the Applicant has met itsEmployment Obligation and that the employment positions created and retained are at an average annual salary of not lessthan $80,750.00 (the “Threshold Salary”) (i.e. 95% or more of the “Baseline Salary” of Eighty Five Thousand and 00/100Dollars ($85,000.00)) the Applicant shall receive a credit in the amount of One Million and 00/100 Dollars ($1,000,000.00)which will be applied against the then outstanding principal balance of the Loan. If the Applicant shall have created andretained 40 full time positions on or before December 31, 2022 (i.e. ten (10) more than the Employment Obligation of 30 fulltime positions), then the Applicant shall receive an additional Forgiveness Credit of $500,000.00 for a total of $1,500,000.00.Upon application of the Forgiveness Credit, the Commissioner shall recalculate the monthly payments of principal andinterest under the Amended and Restated Promissory Note #2 Note such that such monthly payments shall amortize the thenremaining principal balance over the remaining term of the Amended and Restate Promissory Note #2.(ii) Notwithstanding the foregoing, if, as a result of the Job Audit conducted inaccordance with this Section 2.17, the Commissioner determines that the Applicant has met its Employment Obligation butthat the average annual salary of full-time employees created and retained is less than $80,750.00, any Forgiveness Credit forwhich the Applicant would otherwise be eligible to receive pursuant to Section 2.17(D)(i) above shall be reduced by a numberequal to the result of the following formula: (the difference between the Baseline Salary and the actual average annual salaryof new full-time employees) divided by the Baseline Salary, and multiplied by the Forgiveness Credit the Applicant isotherwise eligible to receive. For Example, if the Applicant met its Employment Obligation of 25 jobs created and retainedfor a period of twenty-four (24) consecutive months and, based on the Job Audit, it is determined that the Company had anactual annual salary of $75,000.00 per eligible employee, then the following would be the calculation for the reduction in theForgiveness Credit: ($85,000.00-$75,000.00)/$85,000.00 multiplied by $1,000,000.00 = $117,647.06. Therefore, the actualadjusted Forgiveness Credit would be $982,352.94 (i.e. $1,000,000.00 less $117,647.06). 4. The Note referred to in Section 1.3 of the Assistance Agreement shall be voided and replaced with (i) an Amended andRestated Promissory Note #1 (for $2,000,000.00) and (ii) an Amended and Restated Promissory Note #2, (for $2,000,000.00)copies of which are attached hereto as Exhibit 1 and Exhibit 2 respectively, and made a part hereof. 5. Applicant does hereby expressly ratify, conform and restate the grant of liens, security interests and other encumbrancesin the Collateral provided as security for the Loan, as amended herein, pursuant to the Security Agreement and Patent Security Agreement executed by the Applicant pursuant to the Assistance Agreement dated March 22,2016.Except as herein modified the Assistance Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto make and enter into this Agreement.   VERMILLION, INC.By:/s/ Valerie B. Palmieri Name:Valerie B. Palmieri Title:President and CEO Duly AuthorizedDated: March 24, 2020 STATE OF CONNECTICUT DEPARTMENT OF ECONOMICAND COMMUNITY DEVELOPMENTBy:/s/ David Lehman Name:David Lehman Title:Commissioner Duly AuthorizedDated: April 3, 2020 EXHIBIT 1Amended and Restated Promissory Note #1[Intentionally omitted.] EXHIBIT 2Amended and Restated Promissory Note #2[Intentionally omitted.]Exhibit 21.0Vermillion, Inc. SubsidiariesDecember 31, 2019SPiRA LSubsidiaryState/Country of Incorporation/FormationIllumeSys Pacific, Inc........................................................CaliforniaCiphergen Technologies, Inc..............................................CaliforniaASPiRA Labs, Inc................................................................Delaware  ASPiRA IVD, Inc................................................................DelawareExhibit 23.1Exhibit 23.1Consent of Independent Registered Public Accounting FirmVermillion, Inc.Austin, TexasWe hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-106434, 333-109556, 333-139416, 333-189929, 333-202032, 333-217249 and 333-221092) and Form S-8 (Nos. 333-167204, 333-193312,333-205855, 333-226462 and 333-232541) of Vermillion, Inc. of our report dated April 7, 2020, relating to the consolidatedfinancial statements, which appears in this Form 10-K. Our report contains an explanatory paragraph regarding theCompany’s ability to continue as a going concern./s/ BDO USA, LLPAustin, TexasApril 7, 2020Exhibit 31.1CERTIFICATIONI, Valerie B. Palmieri, certify that:1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2019 of Vermillion,Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) andinternal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of theregistrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.8Date: April 7, 2020  /s/ Valerie B.PalmieriValerie B. PalmieriPresident and Chief Executive Officer(Principal Executive Officer)EXHIBIT 31.2CERTIFICATIONI, Robert Beechey, certify that:1.I have reviewed this annual report on Form 10-K for the year ended December 31, 2019 of Vermillion,Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under whichsuch statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report,fairly present in all material respects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintainingdisclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) andinternal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and proceduresto be designed under our supervision, to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financialreporting to be designed under our supervision, to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in thisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the endof the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant’s internal control over financial reporting thatoccurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation ofinternal control over financial reporting, to the registrant’s auditors and the audit committee of theregistrant’s board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control overfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record,process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financial reporting.XDate: April 7, 2020  /s/ RobertBeecheyRobert BeecheyChief Financial Officer(Principal Financial Officer and Principal AccountingOfficer)Exhibit 32.0CertificationPursuant to 18 U.S.C. Section 1350,as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002with Respect to the Annual Report on Form 10-Kfor the Year Ended December 31, 2019Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, Chapter 63 of Title 18,United States Code), each of the undersigned officers of Vermillion, Inc., a Delaware corporation (the “Company”), doeshereby certify, to the best of such officer’s knowledge, that:1.The Company’s annual report on Form 10-K for the year ended December 31, 2019, (the “Form 10-K”) fully complieswith the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”); and2.The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results ofoperations of the Company. Bruce A. Huebner Date: April 7, 2020 /s/ Valerie B. PalmieriValerie B. PalmieriPresident and Chief Executive Officer(Principal Executive Officer)Date: April 7, 2020 /s/ RobertBeecheyRobert BeecheyChief Financial Officer(Principal Financial Officer and Principal Accounting Officer)The certification set forth above is being furnished as an Exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of2002 and is not being filed as part of the Form 10-K or as a separate disclosure document of the Company or the certifyingofficers.

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