Quotient
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K (Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended March 31, 2018OR☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number 001-36415 QUOTIENT LIMITED(Exact name of registrant as specified in its charter) Jersey, Channel Islands Not Applicable(State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) B1, Business Park Terre Bonne,Route de Crassier 13,1262 Eysins, Switzerland Not Applicable(Address of Principal Executive Offices) (Zip Code) 011-41-22-716-9800(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of exchange on which registeredOrdinary Shares, nil par value The NASDAQ Global Market Securities registered pursuant to Section 12(g) of the ActNone 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 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 Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer☐ Accelerated filer☒Non-accelerated filer☐(Do not check if a smaller reporting company) Smaller reporting company☐ Emerging growth company☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒As of September 30, 2017, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s ordinary shares heldby non-affiliates was approximately $135.4 million based on the closing sales price of the registrant’s ordinary shares on September 30, 2017 as reported on The NASDAQ GlobalMarket.On May 29, 2018, the registrant had a total of 45,755,978 ordinary shares, nil par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement for the 2018 annual meeting of shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K. TABLE OF CONTENTS PagePART I Item 1. Business 2Item 1A. Risk Factors 15Item 1B. Unresolved Staff Comments 37Item 2. Properties 37Item 3. Legal Proceedings 37Item 4. Mine Safety Disclosures 37 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38Item 6. Selected Consolidated Financial Data 41Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation 42Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59Item 8. Financial Statements and Supplementary Data 60Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 87Item 9A. Controls and procedures 87Item 9B. Other information 88 PART III Item 10. Directors, Executive Officers and Corporate Governance 89Item 11. Executive Compensation 89Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 89Item 13. Certain Relationships and Related Transactions and Director Independence 89Item 14. Principal Accounting Fees and Services 89 PART IV Item 15. Exhibits, Financial Statement Schedules 90Item 16. Form 10-K Summary 94Signatures 95 FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K, and exhibits thereto, contains estimates, predictions, opinions, projections and other statements that may be interpreted as“forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of theSecurities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. The forward-looking statements arecontained principally in Part 1, Item 1: “Business,” Part I, Item 1A: “Risk Factors,” and Part II, Item 7: “Management’s Discussion and Analysis of FinalCondition and Results of Operations,” but are also contained elsewhere in this Annual Report. Forward-looking statements can be identified by words such as“strategy,” “objective,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,”“could,” “should,” “continue,” “contemplate,” “might,” “design” and other similar expressions, although not all forward-looking statements contain theseidentifying words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report, we caution youthat these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot becertain, and are subject to numerous known and unknown risks and uncertainties.Forward-looking statements include statements about: •the development, regulatory approval and commercialization of MosaiQTM; •the design of blood grouping and disease screening capabilities of MosaiQ and the benefits of MosaiQ for both customers and patients; •future demand for and customer adoption of MosaiQ, the factors that we believe will drive such demand and our ability to address suchdemand; •our expected profit margins for MosaiQ; •the size of the market for MosaiQ; •the regulation of MosaiQ by the U.S. Food and Drug Administration, or the FDA, or other regulatory bodies, or any unanticipated regulatorychanges or scrutiny by such regulators; •future plans for our conventional reagent products; •the status of our future relationships with customers, suppliers, and regulators relating to our conventional reagent products; •future demand for our conventional reagent products and our ability to meet such demand; •our ability to manage the risks associated with international operations; •anticipated changes, trends and challenges in our business and the transfusion diagnostics market; •the effects of competition; •the expected outcome or impact of litigation; •our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others; •our anticipated cash needs and our expected sources of funding, including proceeds from exercises of our outstanding warrants and theissuance of additional 12% Senior Secured Notes due 2023, or the Secured Notes, and our estimates regarding our capital requirements andcapital expenditures; and •our plans for executive and director compensation for the future.You should refer to Part I, Item 1A: “Risk Factors” in this Annual Report for a discussion of other important factors that may cause our actual results to differmaterially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-lookingstatements in this Annual Report will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material.In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us thatwe will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Annual Report represent our views onlyas of the date of this Annual Report. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, except as required by law.You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Annual Report. - 1 -PART IItem 1. BusinessOverviewWe are a commercial-stage diagnostics company committed to reducing healthcare costs and improving patient care through the provision of innovative testswithin established markets. Our initial focus is on blood grouping and donor disease screening, which is commonly referred to as transfusion diagnostics.Blood grouping involves specific procedures performed at donor or patient testing laboratories to characterize blood, which includes antigen typing andantibody detection. Disease screening involves the screening of donor blood for unwanted pathogens using two different methods, a serological approach(testing for specific antigens or antibodies) and a molecular approach (testing for DNA or RNA).We have over 30 years of experience developing, manufacturing and commercializing conventional reagent products used for blood grouping within theglobal transfusion diagnostics market. We are developing MosaiQ, our proprietary technology platform, to better address the comprehensive needs of thislarge and established market. MosaiQ will initially comprise two separate microarrays, one for immunohematology (blood grouping), or IH, and one forserological disease screening, or SDS, and a high-throughput instrument. We are also developing a third microarray for molecular disease screening. Webelieve MosaiQ has the potential to transform transfusion diagnostics, significantly reducing the cost of blood grouping in the donor and patient testingenvironments, while improving patient outcomes.We have designed MosaiQ to offer a breadth of diagnostic tests that is unmatched by existing commercially available transfusion diagnostic instrumentplatforms. Time to result for MosaiQ is expected to be significantly quicker than existing methods for extended antigen typing and antibody detection and isexpected to be equivalent to the time to result for current instrument platforms performing basic antigen typing. We believe that customer adoption ofMosaiQ will lead to improved patient outcomes through better and easier matching of donor and patient blood, given cost-effective extended antigen typingoffered by MosaiQ. Improved patient outcomes using MosaiQ include the potential for reduced incidence of alloimmunization, where the patient developsantibodies to foreign antigens introduced to the body through transfused blood. Cost savings and efficiencies should also be available to customers thatadopt MosaiQ, as a result of: •comprehensive characterization of donor or patient blood, eliminating the need for routine manual testing typically undertaken by skilledtechnicians; •simplification of required consumables and testing processes; •consolidation of multiple instrument platforms in donor testing laboratories; •significant reduction of sample volume requirements; •reduction of consumable and reagent waste; and •more streamlined processes for matching donor units to patients.We have designed MosaiQ to match the existing performance of automated platforms used by donor testing laboratories for serological disease screening. Wealso believe the incorporation of molecular disease screening on MosaiQ will offer considerable advantages over existing approaches in use by donor testinglaboratories, delivering operational cost savings and a reduced time to result, while also eliminating the need to pool samples.Our aim is to provide donor testing laboratories with a single instrument platform to be utilized for blood grouping and, if applicable, both serological andmolecular disease screening for donated red blood cells and plasma. Based on historical annual blood donations collected by our key target donor testingcustomers, we estimate that the potential market for MosaiQ microarrays (for blood grouping, serological disease screening and molecular disease screening)should exceed 100 million microarrays per annum following receipt of applicable regulatory clearances and approvals for MosaiQ.We have a proven track record and significant expertise in product development, manufacturing and quality assurance, tailored to the highly regulatedtransfusion diagnostics market. We currently derive revenue from a portfolio of products used for blood grouping, as well as whole blood controls used dailyfor quality assurance testing of third-party blood grouping instruments. We have introduced a range of FDA-licensed products in the United States under theQuotient brand, which we sell directly to donor testing laboratories, hospitals and independent patient testing laboratories. We also develop, manufactureand sell conventional reagent products to original equipment manufacturers, or OEMs, such as Ortho-Clinical Diagnostics, Inc. (or Ortho), Bio-RadLaboratories, Inc. (or Bio-Rad) and Grifols S.A. (or Grifols). In March and June 2017 the FDA licensed a range of conventional reagent products developedand manufactured by us for use on instrument and semi manual testing platforms commercialized by Ortho.- 2 -From our incorporation in 2012 to March 31, 2018, we have raised $110.8 million of gross proceeds through the private placement of our ordinary andpreference shares and warrants, $181.1 million of gross proceeds from public offerings of our shares and issuances of ordinary shares upon exercise of warrantsand $84.0 million of gross proceeds from the issuance of 12% Senior Secured Notes (which we refer to as the Secured Notes). In addition, on March 23, 2018,we raised $20.9 million from the sale and leaseback of our recently completed new conventional reagents manufacturing facility near Edinburgh, Scotland,which we refer to as the Biocampus facility.The Secured Notes were issued under an indenture, which provides that, so long as no event of default has occurred, we will issue an additional $36 millionaggregate principal amount of the Secured Notes upon the publication of European field trial results for the MosaiQ IH Microarray described below,reflecting concordance with predicate technologies of at least 99% for antigen typing and 95% for antibody detection. In addition, in October 2017, wecompleted a private placement that include the issuance of warrants that are exercisable for up to 8,414,683 ordinary shares at an exercise price of $5.80 perordinary share. If the warrants are exercised in full prior to their expiration on July 31, 2018, it would result in additional proceeds of $48.8million. However, there can be no assurance that our warrants will be exercised or that we will be able to successfully complete our field trials.Our Market OpportunityThe global transfusion diagnostics market is large and well established. Total annual product sales in this market amounted to $3.3 billion in 2016, of whichthe United States accounted for $0.9 billion of sales. Product sales comprise the sale of kits and reagents and instruments. In 2016, we believe blood groupingaccounted for $1.0 billion of product sales, disease screening using serological methods accounted for $0.7 billion of sales and disease screening usingmolecular methods accounted for $1.6 billion of sales. We believe product sales in 2016 to the highly concentrated donor testing market, which includesdiagnostic laboratories, accounted for approximately $1.8 billion of sales, while patient testing and others accounted for the remaining $1.5 billion of sales.Performed primarily within hospitals, the patient testing market is highly fragmented.According to the World Health Organization, 56 million blood donations were collected globally in 2013 within “high-income” countries located in NorthAmerica, Western Europe and Eastern Asia. In the United States, 14 million units of whole blood and red blood cells were donated during 2013, based ondata from the American Association of Blood Bankers and the American Red Cross. In addition, over 20 million plasma donations are collected each year inthe United States and Europe. While plasma is not subject to blood grouping, it is subject to disease screening. We estimate that over 90 million patients areblood grouped annually in the developed world, although only a small proportion of these patients actually receive a blood transfusion.Combined, the cost of procuring and characterizing blood for transfusion represents a significant cost to the global healthcare system. The costs and expensesrelated to blood grouping and disease screening are typically included in the price a hospital pays for a unit of blood. In the United States, the average pricepaid by a hospital for a unit of red blood cells is approximately $225. Where a hospital requests units of blood with a specific antigen profile (for patientswith blood group antibodies) the average price of those antigen negative units of blood in the United States is estimated to increase by $80 for each antigenscreened. The costs and expenses related to patient blood grouping at hospitals are not specifically reimbursed by a third party payor, but are typicallyabsorbed within the reimbursement structure of a broader medical procedure. According to the Centers for Medicare and Medicaid Services 2014 laboratoryfee schedule, the reimbursement rate for outpatient services associated with basic antigen typing and an antibody screen is $36 per sample. When an antibodyscreen is positive, an antibody identification procedure will be undertaken on the patient sample for which the reimbursement rate is an additional $92 persample.Blood grouping and disease screening techniques have remained generally unchanged for many years. Varying levels of automation are offered by existinginstrument platforms, although more complex blood grouping procedures such as extended antigen typing and antibody identification are more typicallyundertaken manually. The need for ongoing routine manual testing continues to impose a significant cost burden on the healthcare system.Our StrategyOur strategy is based on the development and commercialization of a flexible and unique microarray technology and manufacturing capability forserological and molecular testing across a broad array of medical and life science applications. Our initial strategic focus is on the development andcommercialization of a range of consumables (or microarrays) to address the global transfusion diagnostics market. Each microarray will incorporateexisting, well characterized assays to undertake:(i)a comprehensive characterization of donor and patient blood, including extended antigen typing and antibody detection/identification. We expectthere to be two blood grouping microarrays, one for the donor testing market and one for the patient testing market. We refer to the blood groupingmicroarrays as the MosaiQ IH Microarray;(ii)all mandated serological disease screening tests for donor red blood cells or source plasma. We refer to the serological disease screening microarraysas the MosaiQ SDS Microarray. The initial MosaiQ SDS Microarray will comprise assays to detect CMV and Syphilis. We expect to follow our initialMosaiQ SDS Microarray launch with the launch of a range of additional MosaiQ- 3 -SDS II Microarrays incorporating all remaining mandated serological disease screening assays, depending upon the final application for the product;and(iii)all mandated molecular disease screening tests for donor red cells or source plasma. We refer to the molecular disease screening microarray as theMosaiQ MDS Microarray.Together, we refer to the MosaiQ IH Microarray, MosaiQ SDS Microarray and MosaiQ MDS Microarray as MosaiQ Microarrays.We manufacture the MosaiQ Microarrays at our state-of-the-art manufacturing facility located in Eysins, Switzerland. Construction, qualification andvalidation of the initial manufacturing system to produce MosaiQ Microarrays was completed during 2017.Development of assays for inclusion on the initial MosaiQ IH Microarray and MosaiQ SDS Microarray and the transfer of these assays to final manufacturewas completed during 2017.Development of the MosaiQ Instrument and formal validation is now complete and we have taken delivery of the first commercially ready MosaiQInstrument.Pending regulatory approval, we intend to launch the MosaiQ IH Microarray and initial MosaiQ SDS Microarray into the European donor testing market and,with our commercial partner, Ortho, launch the MosaiQ IH Microarray into the European patient testing market (in each case, with the MosaiQ Instrument).We plan to follow this initial launch with: (i) a second MosaiQ IH II Microarray comprising an expanded antigen typing panel for the donor testing market;(ii) a third MosaiQ IH III Microarray comprising the extended antigen typing panel and an expanded antibody detection panel for the patient testing marketwhich will be commercialized by our commercial partner Ortho; and (iii) the MosaiQ SDS II Microarray incorporating assays for the detection of CMV;Syphilis; Hepatitis B, or HBV, comprising HBV Surface Antigen and HBV Core Antibody; Hepatitis C, or HCV; human immunodeficiency virus, or HIV,comprising HIV Type 1 and HIV Type 2; Human T-Lymphotropic Antibodies, or HTLV; and Chagas disease.In Europe, the MosaiQ Microarrays will be subject to CE-marking and the instrument will be self-certified. In the United States, the FDA has indicated to usthat the MosaiQ IH Microarray will be subject to a biologics license application, or BLA, and the MosaiQ instrument will be subject to a 510(k) filing. Theinitial MosaiQ SDS Microarray, comprising tests for CMV and Syphilis, will be subject to a 510(k) filing, while the MosaiQ SDS II Microarray will be subjectto BLA approval. The MosaiQ Instrument is expected to be classified as a Class II medical device.We expect to commence field trials for both the MosaiQ IH Microarray and initial MosaiQ SDS Microarray in Europe in 2018. We expect to file necessaryregulatory submissions for Europe in the second half of 2018 to obtain required marketing clearances for the MosaiQ IH Microarray, and to obtain marketingclearances for the initial MosaiQ SDS Microarray before the end of fiscal year 2019. Field trials in the United States for the MosaiQ IH II Microarray and theMosaiQ SDS Microarray are expected to commence in the first half of 2019, with regulatory submissions planned to be filed shortly after completion of thefield trials to obtain required marketing clearances in the United States. Field trials for the MosaiQ SDS II Microarray are expected to be completed in 2019 inEurope and the United States.In Europe, we are currently responding to invitations to tender by major government blood collection agencies. First commercial sales will not, however,commence in Europe until receipt of CE-Marking for the MosaiQ IH Microarray and the MosaiQ SDS Microarray. We also anticipate commercial launch ofthe MosaiQ IH II Microarray in Europe following a regulatory submission based upon the US field trial results, during 2019.In addition, we intend to continue: •to engage and collaborate with our key potential customers on the functionality of the MosaiQ system; •our dialogue with regulators to obtain required regulatory licenses and clearances; •to build a highly focused sales and support infrastructure to successfully commercialize MosaiQ for the donor testing market in North America,the European Union and certain territories in the Asia-Pacific region; and •to collaborate with Ortho, our commercial partner for the global patient testing market. For additional information, see “—Sales, Marketing andDistribution—Ortho Clinical Diagnostics".In our conventional reagent business, we have obtained FDA approvals to sell 20 new reagent products in the United States in the last 15 months. Throughthis business we intend to continue to strengthen the Quotient brand, expand our customer base, reinforce our relationship with the FDA and other keyregulators, continue to service our key OEM customers and expand the number of conventional reagent products we offer directly for sale in the UnitedStates.- 4 -Blood GroupingPrior to blood transfusion, or when there is likelihood that a blood transfusion might be required, extensive blood grouping procedures are undertaken onpatient and donor blood using in vitro diagnostic products. These procedures ascertain the blood group of the patient and ensure the compatibility of donorblood. The testing regime is designed to prevent transfusion reactions, which can range from mild to fatal.Red blood cells (the cellular portion) and plasma (the fluid portion) are the principal components of blood. On the exterior of red blood cells are blood groupantigens that determine an individual’s blood group (A, B, AB, O), or ABO group, and type (RhD positive or RhD negative), or Rh type. In addition, there areother clinically significant blood group antigens that may be present on patient and donor red blood cells. Plasma contains many different kinds of proteins,including: (i) blood group antibodies, such as Anti-A and Anti-B; (ii) unexpected blood group antibodies developed by the body in response to foreign redblood cell antigens introduced during transfusion (alloantibodies); or (iii) blood group antibodies developed following pregnancy. Blood group antibodiesmirror the antigen families that are present on red blood cells. In its normal state, blood does not contain antibodies that will react with its own red blood cellantigens (autoantibodies).Because of the potential for a transfusion reaction, it is crucial that clinicians correctly identify the blood group antigens and antibodies present in donor andpatient blood prior to transfusion. If a donor’s red blood cells contain antigens that are recognized by and react with existing blood group antibodies in thepatient’s plasma, the transfused red blood cells could be destroyed in a potentially life-threatening reaction. The identification of blood group antigens ondonor and patient red blood cells is typically referred to as blood typing or basic antigen typing, with a more comprehensive characterization being referredto as extended antigen typing. The identification of blood group antibodies in plasma is typically referred to as antibody identification.All patients potentially requiring a blood transfusion will generally be blood grouped, including pregnant women, cancer patients undergoingchemotherapy, patients undergoing surgery or patients suffering from chronic diseases that require regular blood transfusions, such as thalassemia or sicklecell disease.Patient blood will typically be subject to a basic antigen typing and an antibody screen. Less than 1% of patients that have not received a blood transfusionwill screen positive for an antibody. The incidence of blood group antibodies, however, increases significantly to 3 to 8% in patients who have previouslyreceived a blood transfusion and women that have given birth to two or more children. When an antibody screen proves positive, a complex and time-consuming procedure will be performed by skilled technicians to identify all clinically significant blood group antibodies in the patient’s plasma. Thislargely manual process may take two to six hours to complete, although more complex cases can take one or more days to complete. Antibody identificationrepresents a significant cost to hospitals, particularly those that treat large numbers of chronically transfused patients. Reagents used for antibodyidentification also have a short shelf life, typically being shipped on a 28-day cycle, making management of blood grouping reagent inventories morecomplex with increased waste.The increasing incidence of alloantibodies developing in patients who have received multiple transfusions, commonly referred to as alloimmunization, hasprompted clinicians to request costly, extended antigen matching of donor blood for at-risk patient groups, such as those suffering from thalassemia or sicklecell disease. The incidence of antibodies present in these patient groups is estimated to be 20 to 30%. These patients typically also present with multipleantibodies, making the process of antibody identification more complex and time consuming and the procurement of antigen specific units of donor bloodmuch more expensive.According to a study published in January 2014, the estimated total cost of extended antigen typing for patients is $364, based on a screen for 14 antigens atan estimated cost of $26 per antigen.Donor blood will typically be subject to a basic antigen typing and an antibody screen. Clinicians will request specific antigen negative donor blood forpatients with one or more blood group antibodies. In this instance, multiple donor units will be selected from inventory by the donor collection agency andsubjected to an extended antigen typing procedure to identify the most appropriate units for the patient. This procedure is completed to ensure that thecorresponding antigen to the patient’s antibody is not present on the donor’s red blood cells.The number of donor units that need to be screened to identify specific antigen negative units varies depending upon blood group. In the Caucasianpopulation, for example, ten donor units on average would need to be screened to find two units of donor blood negative for the Duffy-A antigen. Similarly,to identify two units of donor blood negative for the little-e antigen, one hundred donations would need to be screened and, to identify two units of bloodnegative for the little-k antigen one thousand donations would need to be screened. Additionally, the numbers of units needed to be screened increasessignificantly if the patient has two or more antibodies.- 5 -The identification of antigen negative units of blood is largely a manual and labor-intensive process. Because of the additional testing procedures requiredand the large numbers of donor units that must be screened, antigen negative donor units are more expensive for hospitals to purchase. The average premiumcharged for antigen negative units of blood in the United States is estimated to be $80 for each antigen screened.We believe both donor collection agencies and hospitals would prefer to fully characterize donor units and patient blood through extended antigen typingprior to transfusion, although the time and expense required to undertake such procedures is currently prohibitive. As a consequence, extended antigentyping is only undertaken as needed (i.e., where the patient has a specific antibody) on a small percentage of donor units. Extended antigen typing forpatients is also typically undertaken only in patients expected to be chronically transfused.Disease ScreeningThe safety of donor red blood cells and source plasma is ultimately the responsibility of donor collection agencies, with regulatory agencies in individualcountries establishing safeguards and standards to ensure patient safety. In the developed world, donor red blood cells and source plasma is subject tomandatory screening for infectious diseases before it can be released for transfusion or further manufacture. Two different methods of testing have beenadopted—a serological approach (testing for specific antigens or antibodies) and, for certain viruses, a molecular approach (testing for DNA or RNA). TheUnited States, many countries in Western Europe and Japan require both serological and molecular disease screening be performed on donor blood. In theUnited States, it is mandatory to screen donor blood using serological techniques for the following: Syphilis, HBV Surface Antigen, HBV Core Antibody,HCV Antibody, HIV Type 1 and Type 2 Antibodies and HTLV Antibodies. Most blood collection agencies will also screen for CMV, using the sameserological approach and the FDA recommends donor blood to be screened for Chagas disease. Molecular disease screening is required to be performed ondonated blood to screen for HBV, HCV, HIV, West Nile virus and Zika. Other pathogens, such as Babesia, Dengue and Malaria are transmissible by blood, butthere is no test currently available, given cost or technology limitations.Serological and molecular disease screening is already largely automated. However, it is typically undertaken using instrument platforms that are notintegrated with commonly used blood grouping instruments. Automation platforms for serological disease screening have been on the market for many years,but lack many of the attributes users benefit from in other diagnostic fields, such as graphical user-interface, remote diagnostics, links to laboratoryautomation systems and software compatibility with laboratory information systems. Existing disease screening platforms also lack the ability to easilyincorporate additional tests as the market and regulators dictate.Donor TestingIn the developed world, the testing of donated blood is primarily completed by donor collection agencies. In the United States, following the merger of thetesting laboratory operations of the American Red Cross (or ARC) with Creative Testing Solutions (or CTS), effective on January 1, 2018, one organizationtests approximately 75% of the U.S. blood supply. Throughout Western Europe, Japan, Australia and Canada, national collection agencies, or a small numberof regional collection agencies, typically collect and test all donated blood. Currently, donor testing laboratories must adopt multiple instrument platforms,as well as undertake complex manual testing procedures for extended antigen typing or antibody identification, to complete the required testing for donatedblood. Maintaining multiple instrument platforms requires complex quality control and assurance procedures, along with costly service and supportinfrastructures.Single instrument platforms for each testing procedure have typically been adopted within and across laboratory networks. In addition, donor testinglaboratories typically utilize costly manual testing techniques to identify antigen negative donor units and to carry out any antibody identificationprocedures required.Patient TestingPatients are typically blood grouped in hospitals. Large-to-medium-sized hospitals will generally adopt one of several semi-automated instrument platformsto perform basic blood grouping procedures. These instruments employ either column agglutination technology supplied by companies such as Ortho, Bio-Rad and Grifols, or solid-phase microplate technologies supplied by companies such as Immucor. These platforms offer only a limited number of bloodgrouping tests per testing run and are therefore cumbersome, especially if a more comprehensive characterization of the patient’s blood is required.Consequently, laboratories that have adopted a blood grouping instrument platform will continue to use manual or semi-manual techniques to undertakemore complex procedures, such as antibody identification or extended antigen typing.- 6 -Because of the continued need for manual testing, many small-to-medium-sized hospitals choose not to adopt existing instrument platforms. Instead, theywill use manual or semi-manual techniques for basic blood grouping. Complex procedures, such as antibody identification, may also be outsourced toindependent testing laboratories by these hospitals. We believe the continued requirement for manual testing and drawbacks of existing instrument platformsfor blood grouping have limited the attraction of offering blood grouping services to hospitals by large independent testing laboratories, such as LabCorpand Quest Diagnostics.The MosaiQ Solution for Transfusion DiagnosticsWe have initially developed MosaiQ to address the comprehensive needs of the global transfusion diagnostics market. We believe MosaiQ has the potentialto transform transfusion diagnostics by substantially reducing costs and offering a range of operational efficiencies within donor and patient testinglaboratories, while improving patient outcomes through the more complete characterization of donor and patient blood.Specifically, we have initially developed MosaiQ to: •Comprehensively characterize donor and patient blood; and •Screen donor blood for specific viruses using serological and molecular methods.We intend to pursue a “razor/razor blade” business model for MosaiQ, placing MosaiQ Instruments and securing long-term agreements for the supply ofMosaiQ IH Microarrays and/or MosaiQ SDS Microarrays and MosaiQ MDS Microarrays used by those instruments. We expect donor and patient laboratoriesto adopt MosaiQ because it is designed to offer a comprehensive characterization of clinically significant blood group antigens and antibodies, while alsooffering the opportunity for substantial cost savings and a range of operational efficiencies. We believe these customers would prefer to more fullycharacterize the blood of all donors and patients to facilitate better blood matching. While MosaiQ is designed to be a highly cost-effective solution for ourcustomers, delivering substantial cost savings, we also expect to generate attractive, long-term profit margins on the sale of MosaiQ Microarrays.We have designed MosaiQ leveraging our expertise in transfusion diagnostics. MosaiQ combines novel manufacturing techniques and well-characterizedblood grouping and disease screening tests to create multiplex testing microarrays for use on a high-throughput instrument, the MosaiQ Instrument. Throughminiaturization, we plan to combine a full portfolio of existing serological tests on two distinct microarrays for use on MosaiQ – one for blood grouping orimmunohematology (or IH) and one for serological disease screening (or SDS). We are also developing a third microarray for molecular disease screening (orMDS). We expect there to be multiple variants of each microarray depending upon the stage of development and the end markets in which we expect theMosaiQ Microarrays will be adopted.In a donor testing environment, the MosaiQ IH Microarray and the MosaiQ SDS Microarray have been designed to run simultaneously, utilizing the samedonor sample and the same MosaiQ Instrument. The MosaiQ MDS Microarray would also be utilized in a donor testing environment. In a patient testingenvironment, only MosaiQ IH Microarrays would be utilized.Our novel approach incorporates existing, well-characterized tests for blood group antigens and antibodies on a single consumable for the global market.Each MosaiQ IH Microarray consists of two microarrays – one for antigen typing (comprising printed monoclonal antibodies) and one for antibodydetection/identification (comprising printed human red blood cells). We believe MosaiQ, when launched, will be the only commercially availableautomation platform capable of offering this breadth of testing on a single consumable.The MosaiQ SDS Microarray has been designed to incorporate all tests required to meet current regulatory requirements for serological disease screening ofdonor blood and source plasma in the markets in which we intend to operate. Initially we will include tests to screen serologically for Syphilis and CMV, andsubsequently in the MosaiQ SDS II microarray, we plan to include additional tests for HBV, HCV, HIV, HTLV and Chagas disease. The MosaiQ SDSMicroarray has additional capacity to incorporate further serological disease screening tests should it be necessary in the future.The MosaiQ MDS Microarray is being designed to incorporate all mandated tests required to meet current regulatory requirements for molecular diseasescreening for donor blood and source plasma in the markets in which we intend to operate. We plan to include molecular tests to screen for HBV, HCV, HIV,West Nile virus and Zika.MosaiQ Microarrays are manufactured using a novel, patented printing technology we have further developed with TTP plc, or TTP, a leading Europeantechnology development company. This print technology enables us to industrialize the manufacture of MosaiQ Microarrays. We have an exclusive licensefor the use of this technology in our fields of use and we are not aware of any alternative technology suitable and commercially available for this purpose.- 7 -We have developed a high-throughput, floor standing MosaiQ Instrument for use by both donor collection agencies and medium to large-sized hospitals. TheMosaiQ Instrument has been designed to process up to 3,000 microarrays per day (assuming three eight-hour shifts), giving a capacity to test up to 1,500donor samples (utilizing a MosaiQ IH Microarray and a MosaiQ SDS Microarray) or 3,000 patient samples (utilizing MosaiQ IH Microarrays only). TheMosaiQ Instrument can complete the comprehensive characterization of donor or patient blood in less than 35 minutes and has the capability to prioritizeurgent patient sample testing, commonly referred to as STAT testing.The MosaiQ Instrument is designed to fully automate blood grouping and perform a simultaneous serological disease screen in a donor testing laboratory.Consistent with the typical workflow of donor or patient testing laboratories, centrifuged tubes of whole blood will be placed on the MosaiQ Instrument forprocessing. The instrument will then complete a comprehensive blood group characterization of each sample, combined with a parallel serological diseasescreen in a donor testing environment, with the results being reported through existing laboratory information management systems (or LIMS).We have partnered with STRATEC, a leading global developer of diagnostics instruments, to design, develop and manufacture the MosaiQ Instrument.STRATEC has been operating for over 30 years and has significant experience designing, developing and manufacturing in vitro diagnostics instruments,including a number of existing instruments used today for blood grouping and disease screening. We took delivery of the first commercially ready MosaiQInstrument in the fourth calendar quarter of 2017.We are also collaborating with key potential donor and patient testing customers on the development of MosaiQ. This group includes the ARC and CTS,along with several other major hospitals, donor collection organizations and reference laboratories.Our Conventional Reagent BusinessWe have over 30 years of experience in the development, manufacturing and commercialization of conventional reagent products for blood grouping. Ourconventional reagent products are used primarily to identify blood group antigens and antibodies in donor and patient blood and to perform daily qualityassurance testing for third-party blood grouping instrument platforms. We also undertake product development projects for our OEM customers, generatingproduct development fees. Following development, we enter into long-term supply contracts with our OEM customers to manufacture and supply theproducts we have developed.We currently develop, manufacture and commercialize the following key products: •Antisera Products —These products contain antibodies used to identify blood group antigens. The majority of our antisera products aremonoclonal antibodies manufactured from master cell lines we own; •Reagent Red Blood Cells —These products are composed of human red blood cells formulated to enable the identification of blood groupantibodies. We source human red blood cells with the desired antigen profiles globally, primarily from donor collection organizations; •Whole Blood Controls —We are an industry leader in the development and manufacture of whole blood control products, with a significantrelationship with Ortho and other major OEM customers. These products contain both human red blood cells and antisera specificallyformulated for use as daily quality assurance tests on third-party blood grouping instrument platforms; and •Ancillary Products —These products and solutions are used to support blood grouping, but are not directly involved in blood groupdetermination. They include Anti-Human Globulin, enhancement media, and kits for training and staff certification.We manufacture our conventional reagent products at our Edinburgh, Scotland manufacturing facility using our own cell lines or from raw materialspurchased from a limited number of suppliers. We believe we have good relationships with our suppliers. We are in the process of replacing and expandingour existing facility in Edinburgh for the development and manufacture of conventional reagent products. The new Biocampus facility was completed inJanuary 2018 and we expect to complete the relocation to and validation of the new facility before the end of 2018.- 8 -Our CustomersIn the United States, we currently offer directly to our customers a portfolio of 55 conventional reagent products focused on blood grouping and we have 12additional products at various stages of development or FDA licensing. Conventional reagent products sold in the United States under the Quotient brandinclude antisera products, reagent red blood cells and other ancillary products. We currently serve 845 hospitals, donor collection agencies and independenttesting laboratory customers throughout the United States. Global direct sales, including sales to distributors, accounted for 29% of our product sales in theyears ended March 31, 2018 and 2017.We sell the majority of our conventional reagent products to our OEM customers for use with their blood grouping instruments as specific tests or controls.Products sold to OEM customers range from bulk material incorporated into the customer’s own products to finished, vialled products sold under ourcustomer’s label. We retain ownership of the intellectual property for these finished, vialled products and their associated regulatory licenses. OEM customersaccounted for 71% of product sales in the years ended March 31, 2018 and 2017. We have long-standing relationships with three leading global transfusiondiagnostics companies: Ortho, Bio-Rad and Grifols.We have developed several conventional reagent products launched by Ortho over the past five years. As a result, Ortho accounted for 61% and 60% of ourproduct sales in the years ended March 31, 2018 and 2017, respectively. We are currently developing a range of rare antisera products for use on Ortho’sinstrument platforms. Several of these products have now received CE-Marking for sale in Europe and have been approved for sale in the United States by theFDA. We have filed an updated application with the FDA to cover the use of the products on Ortho’s automation platforms in the United States. We also sella range of whole blood control products, red blood cell products and ancillary products to Ortho worldwide, many of which have been launched over the pastfive years.MosaiQ Manufacturing and SupplyWe have leased a facility in Eysins, Switzerland (near Geneva), which is the initial manufacturing site for MosaiQ Microarrays.TTP plc (“TTP”)We entered into a master development agreement with TTP to design, build, install and validate the initial manufacturing system for the MosaiQ Microarraysbeing installed at our Eysins, Switzerland facility. TTP agreed to certain development work programs for each phase of the design and build process and weagreed to pay for all development costs, including costs of materials, third party costs and specified professional fees for the time of TTP’s engineers andscientists. The agreement does not have a defined term and will terminate following completion of product qualification procedures for the initial MosaiQMicroarray manufacturing system. Either party may terminate the agreement for certain breaches by the other party or in the event of certain bankruptcyevents involving the other party. In addition, we may terminate the agreement upon 30 days’ notice for any reason. Upon termination of the agreement, weare responsible for paying any unpaid development and other costs of TTP.We have entered into an exclusive, royalty-bearing, worldwide license with TTP to certain patented technologies and trade secrets to enable high volumemanufacturing of MosaiQ Microarrays. The license is for uses that include antigen typing, antibody detection and serological disease screening of donatedblood for infectious diseases (collectively, the initial purpose), as well as all human blood sample diagnostic testing on batch processing instruments(collectively, the additional purposes), with the exception of companion diagnostics, epigenetics and nucleic acid sequencing. Pursuant to this licenseagreement, we are paying TTP a $10 million license fee (the TTP License Fee), which is payable in installments through September 30, 2021. We have paid$3 million under this agreement to date, with the balance due in instalments which commence in September 2018. If the TTP License Fee payments are notmade by us when due, we will lose the license to the additional purposes, but not to the initial purpose. We will pay a low single digit royalty to TTP basedon our net sales for 20 years or for so long as the licensed intellectual property is protected by patent in the country of sale.TTP has also granted us a non-exclusive, fully paid, royalty-free, perpetual, irrevocable, worldwide license to use certain other intellectual property TTP ownsand has incorporated into bespoke components of the manufacturing system for MosaiQ Microarrays. The agreement will remain in effect so long as thelicensed intellectual property is subject to patent or other intellectual property protection. TTP may terminate the agreement if we assist another party indisputing the validity and/or scope of any of TTP’s patented intellectual property covered by the agreement. Either party may terminate the agreement withimmediate effect by notice to the other party upon the occurrence of bankruptcy events. Any fee disputes are subject to mandatory dispute resolution.- 9 -STRATEC Biomedical AG (“STRATEC”)We entered into a development agreement with STRATEC pursuant to which it developed a high-throughput instrument for MosaiQ, The MosaiQInstrument. The project development timeline ran through the end of 2017. STRATEC’s fees under this agreement totaled €13.1 million in aggregate, or$16.1 million using exchange rates on March 31, 2018.We have also entered into a manufacturing agreement with STRATEC pursuant to which we will be required to purchase a fixed minimum number of MosaiQInstruments during the six years following delivery of the first field trial instruments. Our aggregate remaining obligation under this agreement totals€58.5 million, or $72.1 million using exchange rates on March 31, 2018. The agreement is terminable by either party for certain breaches by the other partyor in the event of certain bankruptcy events involving the other party. If STRATEC terminates the manufacturing agreement, certain termination paymentsare payable by us depending upon the number of the instruments purchased at the time of termination, and we are also responsible for certain costs.Pursuant to the development agreement, STRATEC has granted us an irrevocable, fully-paid, perpetual, royalty-free, worldwide license to intellectualproperty that is developed for use by, or the manufacture of, the MosaiQ Instrument, as well as an exclusive right to market and sell the MosaiQ Instrument.STRATEC has additionally granted us, or agreed to grant, similar rights to its pre-existing technologies for use in development and manufacturing activitiesfor the MosaiQ Instrument. We may only exercise our rights to manufacture in limited circumstances when STRATEC fails to perform under themanufacturing agreement and such rights are subject to a to be negotiated license fee.QualityOur quality function (composed of quality assurance, quality control and validation) oversees the quality of our manufacturing as well as the quality systemsused in research and development and sales and marketing. We have established a control system that oversees implementation and maintenance, documentcontrol, supplier qualification, corrective and preventative actions, as well as employee training processes that we believe ensures quality across ouroperations. We continuously monitor and seek to improve quality over time and believe the implementation of these processes has supported productperformance, customer satisfaction, and a culture of continuous improvement.Sales, Marketing and DistributionWe market our conventional reagent products directly in the United States. Outside of this territory, we sell our products to a range of third-party distributorsand customers. In the United States, we use a combination of sales managers, sales representatives, customer service staff and technical experts to interact withlaboratory managers and administrative staff, purchasing directors, medical directors and other individuals and groups involved in the implementation ofblood testing programs. Our goal is to educate these groups about the technical and economic benefits of switching from competing offerings to our products.Our customer service staff and technical experts are also involved in the practical training of customers, as well as answering customer questions. These teamsare supported by various marketing activities, which include advertising, medical education, attendance at scientific meetings and other awareness-raisingactivities. As of March 31, 2018, we had 17 employees engaged worldwide in sales, marketing and customer service functions for the conventional reagentsbusiness.Ortho-Clinical DiagnosticsOn January 29, 2015, we entered into a distribution and supply agreement with Ortho (the Ortho Agreement) to sell and distribute MosaiQ Microarrays withinthe $3.3 billion global transfusion diagnostics market. We have retained all rights to commercialize MosaiQ in North America, the European Union andcertain Asia-Pacific territories (excluding Japan) for the donor testing market. Pursuant to the Ortho Agreement, and for an initial term of 20 years, Ortho willexclusively commercialize MosaiQ for the global patient testing market (for blood grouping), as well as the donor testing market (for blood grouping anddonor disease screening) in territories other than those in which we will commercialize MosaiQ. We will be responsible for the manufacture of all products(instruments, MosaiQ Microarrays and ancillary products) associated with MosaiQ and have retained all other commercial rights to MosaiQ. Ortho has a rightof first offer where we decide to commercialize MosaiQ with a third party for an application other than blood grouping. We have also agreed with Ortho toexplore opportunities to develop and commercialize MosaiQ in other diagnostics applications outside of blood grouping and serological disease screening,utilizing the combined knowledge and expertise of both parties. - 10 -Ortho has agreed to pay us certain one-time payments upon the achievement of regulatory and commercial milestones totaling in the aggregate $59 million.These milestones primarily relate to the approval and launch of MosaiQ in the United States and the European Union for blood grouping. Ortho has alsoagreed to reimburse us for the cost of goods sold incurred for MosaiQ Instruments and associated replacement parts sold to Ortho, as well as the cost ofancillary products sold to Ortho. A transfer price mechanism for MosaiQ IH Microarrays and MosaiQ SDS Microarrays sold to Ortho has also beenestablished, which will increase as a percentage of net sales based on agreed-upon revenue milestones. In addition, a basis for calculating minimum transferprices for MosaiQ IH Microarrays, instruments and ancillary products has also been agreed.As part of the exclusive sale and distribution rights granted to Ortho for the MosaiQ Instruments and MosaiQ Microarrays (which rights are non-assignableexcept as provided for in the distribution and supply agreement) we have granted to Ortho: (i) an exclusive, license to use the “MosaiQ” trademark; (ii) accessto CE-Mark, biologics license application and 510(k) clearances and other dossiers to be filed or that are approved by regulatory authorities for the MosaiQInstrument, MosaiQ Microarrays and ancillary products; (iii) access to other confidential information; and (iv) intellectual property rights controlled by theCompany as well as intellectual property rights granted to us by STRATEC and TTP, and rights we may control in the future, which are necessary orreasonably useful for the sale and distribution of MosaiQ Instruments and MosaiQ Microarrays and are freely licensable or sub-licensable and free of royaltyor other payments (unless Ortho agrees to pay any such royalties or payments). Ortho may not use these intellectual property rights and information tomanufacture the MosaiQ Instrument or MosaiQ Microarrays, supply serological screening microarrays to the patient testing market, or to carry out researchand development, other than with our consent or pursuant to the distribution and supply agreement. Ortho will grant us a license for the term of thedistribution and supply agreement for any know how related to the MosaiQ Instrument and MosaiQ Microarrays that Ortho generates during the course of thedistribution and supply agreement, which is necessary or useful for the development, use or sale of the MosaiQ Instrument and MosaiQ Microarrays, orcomponents thereof, or for us to provide maintenance and support.Research and DevelopmentOur research and development efforts are focused on the further development of MosaiQ and new conventional reagent products. We believe we haveassembled an experienced research and development team with the scientific talent needed to develop new products that leverage our significant bloodgrouping expertise. We believe our experience in developing tests based on existing serological testing methods will allow us to conceive, develop andvalidate comprehensive multiplex tests utilizing MosaiQ.As of March 31, 2018, we had 182 employees engaged in research and development functions.Customer Funding and ReimbursementIn the United States, our products are not directly subject to reimbursement by governmental or commercial third-party payors for health care services. Thecosts and expenses related to donor blood grouping and disease screening are typically included in the price to a hospital of a unit of blood. The costs andexpenses related to patient blood grouping at hospitals are not specifically reimbursed by a third-party payor, but absorbed within the reimbursementstructure of a broader medical procedure. We supply products to our customers, including hospitals, donor testing laboratories, independent testinglaboratories and OEM customers based on negotiated prices.CompetitionIn the past 10 to 15 years, the transfusion diagnostics market has experienced considerable consolidation, particularly in the United States. Given significantbarriers to entry, there are only a small number of vendors currently addressing this market. These vendors can be divided into four groups: (i) those offeringinstrument platforms for blood grouping and related microarrays, in addition to conventional reagent products for manual testing; (ii) those only offeringconventional reagent products for manual blood grouping; (iii) those offering raw materials for inclusion in products used on instrument platforms for bloodgrouping and in conventional reagent products; and (iv) those offering instruments for disease screening and related microarrays. A small number of donorcollection agencies continue to manufacture a limited range of products, primarily for internal use.In our view, barriers to entry for the transfusion diagnostics market include: •the need to manufacture a broad range of complex antisera products, with annual volume requirements ranging from hundreds of milliliters tohundreds of liters, depending upon individual blood group specificities; •the ability to reliably procure and formulate red blood cell donations with the appropriate antigen profiles to support the manufacture of redblood cells for antibody identification and whole blood control products; •rigorous global regulatory requirements; and •customers who can be reluctant to change product suppliers.- 11 -Our principal competitors in the United States are Immucor, Ortho and Grifols. The principal market participants in Europe are Bio-Rad, Ortho, Grifols andImmucor and the principal market participants in Japan are Ortho and Immucor.For serological disease screening, only two vendors have instruments approved for sale in the United States – Abbott and Ortho. Outside the United States,Abbott, Ortho, Roche and Bio-Rad are the principal instrument providers for serological disease screening.For molecular disease screening, only two vendors have instruments approved for sale in the United States – Grifols and Roche. Outside the United States,Grifols and Roche are the principal instrument providers for molecular disease screening.For products sold to OEM customers, the cost of switching vendors (raw material and/or finished costs) can be considerable, given regulatory scrutiny of themanufacturing process and the potential need to modify instrument platforms and software. For our OEM business, we consider Merck/Millipore and Diagastto be our primary competitors. We are also a customer of each of these two organizations. We believe the complexity and high cost of switching suppliers,together with our ownership of key products and associated regulatory licenses, reduce the risk of loss of our important OEM business. We believe the FDA-licensed status of our manufacturing facility also offers major benefits as our key OEM clients seek to either establish or defend their position in the UnitedStates market.Intellectual PropertyWe have relied, and expect to continue to rely, on various exclusive and non-exclusive license agreements, granting rights to patent-protected technologiesrelating to the manufacture of MosaiQ Microarrays and instruments. We have entered into an exclusive license with TTP to patented technologies to enablehigh volume manufacture of MosaiQ Microarrays. In addition, STRATEC has agreed to grant us licenses to certain of its pre-existing technologies and hasgranted us licenses to technologies developed under our development agreement with it, for use in the sale of MosaiQ instruments, and in the developmentand manufacture of the MosaiQ instrument, which it will undertake on our behalf. See “Business— MosaiQ Manufacturing and Supply—TTP plc” and “—STRATEC Biomedical AG” for additional information about these agreements. These licenses are material to the development and commercialization ofMosaiQ. The remaining lives of the patents for key existing technologies that we have licensed currently exceed 10 years.We have an issued U.S. patent related to blood typing that expires in September 2027. This patent provides methods of detecting the presence of red bloodcells coated (or sensitized) with host antibody and/or components of the complement system. We received counterpart patents for this U.S. patent in Europe,Australia and Japan, which also expire in September 2027, and filed a counterpart patent application in Canada in September 2007, which is currentlypending.In February 2014, we filed a new UK patent application providing for a new method for detecting red blood cells, also using MosaiQ. The technology findsparticular application in immunological assays where it can be used as the basis of positive controls to confirm the addition of red blood cells.In January 2018, we filed a provisional U.S. patent application relating to methods and kits for detecting nucleic acids, antigens and antibodies in a sampleusing a microarray platform, in addition to a method for the amplification of nucleic acids.We also rely upon copyright protection, trade secrets, know-how, continuing technological innovation and licensing opportunities to develop and maintainour competitive position. Our success will depend in part on our ability to obtain patent protection for our products and processes, to preserve our copyrightsand trade secrets, and to operate without infringing the proprietary rights of third parties.We have developed several conventional reagent products launched by Ortho over the past five years. We generally retain ownership of the intellectualproperty for these products and their associated regulatory licenses.- 12 -Government RegulationIn the United States, medical products are subject to extensive regulation by the U.S. Food and Drug Administration, or the FDA. The Federal Food, Drug, andCosmetic Act, or the FDC Act, the Public Health Service Act, or the PHSA, and other federal and state statutes and regulations, govern, among other things,the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoringand reporting, sampling, and import and export of medical products. Prior to marketing certain medical products, manufacturers are required to obtainpermission from the FDA via a product approval or clearance. Failure to comply with applicable U.S. requirements may subject a company to a variety ofadministrative or judicial sanctions, such as FDA refusal to file submissions, refusal to approve or clear products, warning or untitled letters, product recalls,field actions, product seizures, total or partial suspension of production or distribution, refusal to permit the importation of product, injunctions, fines, civilpenalties, and criminal prosecution.The FDA regulates in vitro diagnostic, or IVD, products intended to evaluate blood as either biological products or medical devices. In general, reagents usedto identify blood types, including extended antigen typing, and detect and identify antibodies in plasma, as well as assays intended for disease screening ofthe blood supply are regulated as biological products, while the instruments that conduct the analyses and quality assurance products intended to test theaccuracy of instrument platforms are regulated as medical devices.The European Commission is the legislative body responsible for directives with which manufacturers selling medical products in the European Union andthe European Economic Area, or EEA, must comply. The European Union includes most of the major countries in Europe, while other countries, such asSwitzerland, are not part of the EEA and have voluntarily adopted laws and regulations that generally mirror those of the European Union with respect tomedical devices. The European Union has adopted directives that address regulation of the design, manufacture, labeling, clinical studies and post-marketvigilance for medical devices, including IVDs. Devices that comply with the requirements of a relevant directive, including the IVD Directive (Directive98/79 EC), will be entitled to bear the CE conformity marking, indicating that the device conforms to the essential requirements of the applicable directivesand, accordingly, can be marketed throughout the European Union and EEA. On May 26, 2017, the European Union adopted a new regulatory framework,the In Vitro Diagnostic Regulation (IVDR 17/746), or IVDR, which replaces the IVD Directive. Our products in the European Union will have to comply withthe IVDR requirements after May 26, 2022. Until that time, our products must continue to meet the requirements of IVD Directive for commercialization inthe European Union.Outside of the United States and the European Union, regulatory pathways for the marketing of medical devices vary greatly from country to country. Inmany countries, local regulatory agencies conduct an independent review of IVD medical devices prior to granting marketing approval. The process in thesecountries may be lengthy and require the expenditure of significant resources, including the conduct of clinical trials. In other countries, the regulatorypathway may be shorter and/or less costly. The timeline for the introduction of new IVD medical devices is heavily impacted by these various regulations ona country-by-country basis, which may become more lengthy and costly over time.Environmental MattersOur operations require the use of hazardous materials, which, among other matters, subjects us to a variety of federal, state, local and foreign environmental,health and safety laws, regulations and permitting requirements, including those relating to the handling, storage, transportation and disposal of biologicaland hazardous materials and wastes. The primary hazardous materials we handle or use include human blood samples and solvents. Some of the regulationsunder the current regulatory structure provide for strict liability, holding a party liable for contamination at currently and formerly owned, leased andoperated sites and at third-party sites without regard to fault or negligence.Executive OfficersBelow is a list of the names, ages as of March 31, 2018 and positions, and a brief account of the business experience of the individuals who serve as ourexecutive officers. Name Age PositionFranz Walt 58 Chief Executive OfficerChristopher Lindop 60 Chief Financial OfficerJeremy Stackawitz 43 PresidentEdward Farrell 48 PresidentRoland Boyd 61 Group Financial Controller & Treasurer- 13 -Franz Walt, Chief Executive OfficerMr. Walt, 58, joined the Board of Directors in February 2018 and was appointed Interim Chief Executive Officer upon the retirement of Mr. Paul Cowan inMarch 2018 and was subsequently appointed Chief Executive Officer in May 2018. Mr. Walt served as President of Siemens Healthineers LaboratoryDiagnostics, the laboratory diagnostics provider within the healthcare division of Siemens AG, the German based conglomerate, from March 2014 toDecember 2017. From January 2012 to February 2014, Mr. Walt was the Senior Vice President and head of Siemen Healthineers’ Diagnostic Division NorthAmerica. Prior to joining Siemens Healthineers, from June 1989 to November 2011, Mr. Walt served in various capacities at F. Hoffman-La Roche Ltd., aSwiss based healthcare company that develops diagnostics and therapeutic products, including as Geschäftsführer (CEO) of Roche Diagnostics GmbH inMannheim from January 2007 to November 2011, and as a board member of the Roche Diagnostic Executive Committee (DiaEC), from November 1998 toDecember 2006. During his time as a board member of the DiaEC, Mr. Walt served, among other capacities, as President and Consejero Delegado (CEO) ofRoche Diagnostics Spain and Regional President for the LATAM Region from October 2004 to December 2006, and as Managing Director of RocheDiagnostics Asia Pacific Pte Ltd. and Regional President for the APAC Region from November 1998 to September 2004. Mr. Walt holds undergraduatedegrees in management from the IMAKA Institute of Management in Zürich, and in marketing from the Swiss Institute of Economics in Zürich, and an MBAfrom City University of Seattle.Christopher Lindop, Chief Financial OfficerChristopher Lindop joined us in February 2017 and serves as our Chief Financial Officer. Mr. Lindop previously served as chief financial officer from January2007 until June 2016 and as executive vice president of business development from August 2007 until May 2016 of Haemonetics Corporation (NYSE:HAE),a global leader in blood processing technology. From September 2003 to December 2006, he served as chief financial officer of Inverness MedicalInnovations, Inc., a global developer, manufacturer and marketer of medical diagnostic products. From June 2002 to September 2003, he served as an auditpartner with the Boston office of Ernst & Young LLP, an accounting firm. From 1991 to 2002, he served as an audit partner with the Boston office of ArthurAndersen LLP, an accounting firm. In addition, Mr. Lindop served as a director of Parexel International Corporation (NASD: PRXL) from 2006 to its sale in2017, where he acted as chairman of the audit and finance committee and as a member of the nominating and governance committee. He holds a B.A. inBusiness from the University of Strathclyde (Scotland).Jeremy Stackawitz, PresidentJeremy Stackawitz joined us in March 2009 and serves as one of our two Presidents. Mr. Stackawitz has over 17 years of healthcare industry experiencegained through various consulting and industry roles. From 2007 to 2009, Mr. Stackawitz was Worldwide Commercial Director for Immunohematology ofOrtho Clinical Diagnostics, a Johnson & Johnson company. Prior to this senior role, Mr. Stackawitz held positions from 2006 to 2007 at Therakos, abiotechnology company, from 2004 to 2006 at Ortho Biotech, and from 2000 to 2003 at Purdue Pharma L.P. He also held consulting positions at ISOHealthcare Group (now part of Monitor Group) from 1997 to 2000 and McKinsey & Company in 2003. Mr. Stackawitz received a B.S. in chemistry fromDartmouth College and an M.B.A. from The Wharton School at the University of Pennsylvania.Edward Farrell, PresidentEdward Farrell joined us in February 2013 and serves as one of our two Presidents. Mr. Farrell has over 20 years of engineering and manufacturing experiencegained through various industry roles with a particular emphasis on medical diagnostics. From March 2001 to February 2013, Mr. Farrell held several seniorpositions with Bayer Diagnostics, which was acquired by Siemens Healthcare Diagnostics in 2007. Starting in 2010, Mr. Farrell was Managing Director andVice President of Manufacturing for a high volume immunoassay reagent manufacturing plant in the United Kingdom. From 2007 to 2010, Mr. Farrell wasManaging Director and Vice President of Manufacturing for a facility in the United Kingdom that develops and manufactures point-of-care diagnosticinstruments and microarrays. From 2005 to 2007, he worked in the United States as Director of Distribution, Service and Repair and initially worked in 2001as a Senior Manufacturing Manager in a large instrument manufacturing plant in Ireland. Prior to Bayer Diagnostics, Mr. Farrell worked at Ingersoll Rand as aProduction Manager from 1999 to 2001, Intel as a Manufacturing Engineer and Supervisor from 1995 to 1999, and Barlo plc as a Project Engineer from 1993to 1995. Mr. Farrell received a B.E (Mechanical) and a Masters in Engineering Science from University College Dublin.- 14 -Roland Boyd, Group Financial Controller and TreasurerRoland Boyd joined us in August 2012 and serves as our Group Financial Controller and Treasurer. Mr. Boyd has over 35 years of financial experiencegained through various roles in industry and public accounting. From 2006 to 2012, Mr. Boyd served as the Chief Financial Officer at Chiltern InternationalGroup, a global contract research organization. From 2002 to 2004, Mr. Boyd was Group Financial Controller at Inveresk Research Group and was aconsultant to Charles River Laboratories until 2006 following Charles River’s 2004 acquisition of Inveresk. Prior to that, Mr. Boyd spent over 20 years withArthur Andersen, becoming a Partner in 1997. Mr. Boyd is a Fellow of the Institute of Chartered Accountants in England & Wales. Mr. Boyd received a B.A.(Hons) in accounting and finance from Lancaster University.EmployeesAs of March 31, 2018, we had 407 employees. None of our employees are represented by a labor union or covered under a collective bargaining agreement,nor have we experienced any work stoppages. We believe our employee relations are good.Available InformationAccess to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed with orfurnished to the Securities and Exchange Commission, or SEC, may be obtained through the investor section of our website at www.quotientbd.com as soonas reasonably practical after we electronically file or furnish these reports. We do not charge for access to and viewing of these reports. Information in theinvestor section and on our website is not part of this Annual Report on Form 10-K or any of our other securities filings unless specifically incorporatedherein by reference. In addition, the public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street,NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.Also, our filings with the SEC may be accessed through the SEC’s website at www.sec.gov. All statements made in any of our securities filings, including allforward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertakeany obligation to update any of those statements or documents unless we are required to do so by law.Corporate InformationQuotient Limited is a limited liability no par value company incorporated under the laws of Jersey, Channel Islands. Our registered address is 28 Esplanade,St Helier, JE2 3QA, Jersey, Channel Islands. Our agent for service of process is our wholly owned U.S. subsidiary, Quotient Biodiagnostics, Inc., 301 SouthState Street, Suite S-204, Newtown, Pennsylvania 18940. We were incorporated in Jersey, Channel Islands in 2012. Our principal executive offices arelocated at B1, Business Park Terre Bonne, Route de Crassier 13, 1262 Eysins, Switzerland, and our telephone number is 011-41-22-716-9800. Our websiteaddress is www.quotientbd.com. The information on, or that can be accessed through, our website is not part of this Annual Report on Form 10-K. Item 1A. Risk FactorsRisks Related to Our Business, Industry and Future PlansYou should consider our business and prospects in light of the risks and difficulties we expect to encounter in the markets in which we compete, and theprospects of our development projects, particularly MosaiQ. Factors that may contribute to fluctuations in our operating results include many of the risksdescribed in this section. These fluctuations may make financial planning and forecasting difficult. In addition, these fluctuations may result in unanticipateddecreases in our available cash, which could negatively affect our business and prospects. You should not rely on our operating results for any prior periodsas an indication of our future operating performance.We have incurred losses since our commencement of operations and expect to incur losses in the future.We have incurred net losses and negative cash flows from operations in each year since we commenced operations in 2007. As of March 31, 2018, we had anaccumulated deficit of $275.6 million. We expect our operating losses to continue for at least the next fiscal year as we continue our investment in thedevelopment and commercialization of MosaiQ. Because of the numerous risks and uncertainties associated with developing and commercializing MosaiQand the other products we may develop, we are unable to predict the magnitude of any future operating losses or if or when we will become profitable. Ourhistoric losses, combined with expected future losses, have had and will continue to have an adverse effect on our cash resources, shareholders’ deficit andworking capital. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including marketacceptance of our products, future product development, and our market penetration and margins. Even if we achieve profitability, we may not be able tosustain it.- 15 -We may need to raise additional capital, which may not be available on favorable terms, if at all, and which may cause dilution to shareholders, restrictour operations or adversely affect our ability to operate our business.We expect to fund our operations in the near-term, including the continued development of MosaiQ to commercialization, from a combination of fundingsources, including with existing cash and short-term investment balances, and the issuance of new equity, debt or other securities. Our ability to raiseadditional capital may be significantly affected by general market conditions, the market price of our ordinary shares, our financial condition, uncertaintyabout the future commercial success of MosaiQ, regulatory developments, the status and scope of our intellectual property, any ongoing litigation, ourcompliance with applicable laws and regulations and other factors, many of which are outside our control. Furthermore, the indenture governing the SecuredNotes contains limitations on our ability to incur debt and issue preferred and/or disqualified stock. Accordingly, we cannot be certain that we will be able toobtain additional financing on favorable terms or at all. If we are unable to obtain needed financing on acceptable terms, or otherwise, we may not be able toimplement our business plan, which could have a material adverse effect on our business, financial condition and results of operations, including a decline inthe trading price of our ordinary shares. Any additional equity financings could result in additional dilution to our then existing shareholders. In addition,we may enter into additional financings that restrict our operations or adversely affect our ability to operate our business and, if we issue equity, debt or othersecurities to raise additional capital, the new equity, debt or other securities may have rights, preferences and privileges senior to those of our existingshareholders.If we do not achieve, sustain or successfully manage our anticipated growth, our business and prospects will be harmed.If we are unable to maintain adequate revenue growth, our financial results could suffer. Furthermore, significant growth will place strains on our managementand our operational and financial systems and processes. If we do not successfully forecast the timing of regulatory authorization for product marketing andsubsequent demand for our products or manage our anticipated expenses accordingly, our operating results will be harmed.The development of MosaiQ includes many factors, including factors beyond our control, and we may not commercialize it on a timely basis, or at all.Our future revenue growth and profitability will substantially depend on our ability to successfully commercialize MosaiQ. Our ability to successfullycommercialize MosaiQ may be affected by the following factors, among others: •the scope of and progress made in our development activities; •our ability to successfully complete field trial studies; •our ability to obtain and maintain FDA and other regulatory authorizations; •threats posed by competing technologies; •our, Ortho’s or any other commercial partner’s, ability to market MosaiQ to donor collection agencies, hospitals and independent testinglaboratories; •our ability to successfully optimize the individual tests to be included on the MosaiQ Microarrays; •the occurrence of unforeseen technical difficulties associated with the design, build or operation of the manufacturing system for the MosaiQMicroarrays; •the occurrence of unforeseen technical difficulties associated with the design, manufacture or operation of the MosaiQ Instrument; •the occurrence of unforeseen technical difficulties in the design or development of software and the integration of the MosaiQ Microarrays, theMosaiQ Instrument and software; •delays resulting from the failure of third-party suppliers or contractors to meet their obligations in a timely and cost-effective manner; and •endorsement and acceptance by donor collection agencies, hospitals and independent testing laboratories.Development and commercialization of novel products, such as MosaiQ, is inherently uncertain. At any point, we may abandon development of MosaiQ orwe may be required to expend considerable resources addressing unforeseen technical challenges or otherwise to complete and commercialize MosaiQ, whichwould adversely impact potential revenue and our expenses. In addition, any delay in the commercialization of MosaiQ would provide others with additionaltime to commercialize competing products, which in turn may adversely affect our growth prospects and operating results. Although we believe that our costestimates and our project completion and commercialization schedule for MosaiQ are reasonable, we cannot assure you that the actual costs or time requiredto complete the project will not substantially exceed our current estimates.- 16 -Obtaining regulatory authorization for MosaiQ will take time, require material expenditures and ultimately may not succeed.MosaiQ will be subject to CE-marking in Europe. In the United States, the FDA has indicated that it will require MosaiQ to obtain approval of a biologicslicense application, or BLA, for the MosaiQ IH Microarrays and traditional 510(k) clearances for the instrument and the initial MosaiQ SDS Microarray,comprising two tests, CMV and syphilis. The MosaiQ SDS II Microarray, comprising additional tests, will be subject to BLA approval. The process ofcomplying with the requirements of the FDA and comparable agencies is generally costly, time consuming and burdensome, and regulatory authorization isnever guaranteed, irrespective of time and financial expenditures. Furthermore, given the complexities of the regulatory pathway for MosaiQ, there may bedelays in obtaining marketing authorization, or we may not be able to obtain marketing authorization at all. Moreover, the manufacturing process of theMosaiQ Microarrays is based on novel technologies and the FDA and regulatory agencies in other jurisdictions may have limited experience reviewingproduct candidates using these technologies, which may also result in delays in obtaining regulatory authorization for MosaiQ.Among other things, our manufacturing facility will be subject to pre-approval inspection by the FDA and other applicable regulators. In addition, we arerequired to perform field trial studies to obtain regulatory authorizations for MosaiQ. Field trial studies are subject to factors within and outside of our controland the outcome of these studies is uncertain. For example, success in performance evaluation studies may not be replicated in later field trial studies. Thereis no guarantee that our analytical testing will meet the FDA’s or other regulatory authorities’ requirements, that our field trial studies will be successful, thatthe FDA or other regulatory authorities will provide marketing authorization for MosaiQ based on the studies we have completed or, if we obtain marketauthorization, that the prognostic information that may be reported will differentiate MosaiQ from alternatives in the United States or other markets. Even ifour field trials are successful and we obtain the necessary regulatory authorizations, the regulatory review process will still take time and require materialexpenditures.MosaiQ Microarrays have not been manufactured on a commercial scale and are subject to unforeseen scale-up risks.While we have developed the manufacturing system for MosaiQ Microarrays, there can be no assurance that we will be able to manufacture MosaiQMicroarrays at a scale that is adequate for our increasing commercial needs. We may face significant or unforeseen difficulties in manufacturing the MosaiQMicroarrays, including but not limited to: •technical issues relating to manufacturing products on a commercial scale at reasonable cost, and in a reasonable time frame; •difficulty meeting demand or timing requirements for Microarray orders due to excessive costs or lack of capacity for part or all of an operationor process; •lack of skilled labor or unexpected increases in labor costs needed to produce or maintain our manufacturing systems or perform certainrequired operations; •changes in government regulations or in quality or other requirements that lead to additional manufacturing costs or an inability to supplyproduct in a timely manner, if at all; and •increases in raw material or component supply cost or an inability to obtain certain critical supplies needed to complete our manufacturingprocesses.These and other difficulties may only become apparent when scaling up the manufacturing of the MosaiQ Microarrays to more substantive commercial scale.In the event our MosaiQ Microarrays cannot be manufactured in sufficient commercial quantities, market acceptance of MosaiQ could be harmed, ourprospects could be significantly impacted and our financial prospects would be materially harmed.We cannot accurately predict the volume or timing of any future sales for MosaiQ, making the timing of any such revenues difficult to predict.Our limited commercialization experience makes it difficult to evaluate our business and predict our prospects. We may be faced with lengthy customerevaluation and approval processes associated with MosaiQ. Consequently, we may incur substantial expenses and devote significant management effort andexpense in developing customer adoption of MosaiQ, which may not result in revenue generation. As such, we cannot accurately predict the volume ortiming of any future sales for MosaiQ. - 17 -We expect to rely on third parties to conduct studies of MosaiQ and our other transfusion diagnostics products that will be required by the FDA or otherregulatory authorities and those third parties may not perform satisfactorily.We do not have the ability to independently conduct the field trial studies or other studies that may be required to obtain FDA and other regulatoryclearances or approvals for MosaiQ as well as our conventional reagent products. Accordingly, we expect to rely on third parties, such as independent testinglaboratories and hospitals, to conduct such studies. Our reliance on these third parties will reduce our control over these activities. These third-partycontractors may not complete activities on schedule or conduct studies in accordance with regulatory requirements or our study design. We cannot controlwhether they devote sufficient time, skill and resources to our studies. Our reliance on third parties that we do not control will not relieve us of any applicablerequirement to prepare, and ensure compliance with, various procedures required under good clinical practices. If these third parties do not successfully carryout their contractual duties or regulatory obligations or meet expected deadlines, if the third parties need to be replaced or if the quality or accuracy of thedata they obtain is compromised due to their failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our studies may beextended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for MosaiQ or our other transfusion diagnostic products.Our commercial success will largely depend upon the degree of market acceptance of MosaiQ by donor collection agencies, hospitals and independenttesting laboratories.MosaiQ may not gain sufficient market acceptance by donor collection agencies, hospitals and independent testing laboratories. If the product does notachieve an adequate level of acceptance by these critical customer groups, our future revenue growth and profitability would be materially impacted. Thedegree of market acceptance of MosaiQ will depend on many factors, including: •the efficacy and potential advantages of MosaiQ over alternative technologies, techniques and products, including both conventionaltechnologies such as existing testing methods from Ortho, Immucor, Bio-Rad, Grifols, Danaher, Abbott and Roche, as well as new technologiesfrom such companies or new competitors; •limitations contained in the approved labeling for MosaiQ; •the willingness of our target customers to transition from existing technologies, products and procedures and to adopt MosaiQ; •our ability to offer attractive pricing for MosaiQ; •the strength of marketing and distribution support and the timing of market introduction of competitive products; and •outcomes from field trial studies, the regulatory approval process, and other publicity concerning MosaiQ or competing products.Our efforts to educate donor collection agencies, hospitals, independent testing laboratories and other members of the medical community on the benefits ofMosaiQ may require significant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are requiredby conventional or new technologies marketed by our competitors. If we were to incorrectly forecast our ability to penetrate various markets, expendituresthat we make may not result in the benefits that we expect, which could harm our results of operations. Moreover, in the event that MosaiQ is the subject ofindustry or clinical guidelines, field trial studies or scientific publications that are unhelpful or damaging, or otherwise call into question the benefits ofMosaiQ, we may have difficulty convincing prospective customers to adopt MosaiQ.Our commercialization plan for MosaiQ in the patient testing market depends on our distribution and supply agreement with Ortho, and we may enter intoadditional distribution or sales arrangements in the future that may subject us to similar risks.We will rely on Ortho to commercialize MosaiQ in the highly fragmented patient testing market. Under our distribution and supply agreement, Ortho hasagreed to commercialize MosaiQ in the global patient testing market and donor testing markets not covered by Quotient. Ortho may not commit sufficientresources to this commercialization arrangement, as MosaiQ may compete for time, attention and resources with Ortho’s internal programs, or Ortho otherwisemay not perform its obligations as expected. In addition, Ortho is both a customer and a competitor of our conventional reagent business. If Ortho is unable,or fails, to perform its obligations, there can be no assurance that we will be able to enter into commercialization relationships with other partners withsufficient existing global sales and support infrastructures necessary to successfully commercialize MosaiQ in the patient testing market. Any of these riskscould delay the commercialization of MosaiQ in the patient testing market, result in high costs to us or otherwise materially harm our business and adverselyaffect our future revenues.We may also enter into additional distribution or sales arrangements to commercialize MosaiQ in other markets. To the extent that we enter into otherdistribution or sales arrangements, our product revenue is likely to be lower than if we directly market or sell MosaiQ. In addition, any revenue we receivewill depend in whole or in part upon the efforts of third parties, which may not be successful and will generally not be within our control. If we are notsuccessful in commercializing MosaiQ through collaborations with one or more third parties, our future product revenue will suffer and we may incursignificant additional losses.- 18 -Other companies or institutions may develop and market novel or improved methods for transfusion diagnostics, which may make MosaiQ less competitiveor obsolete.The market for transfusion diagnostics is large and established, and our competitors may possess significantly greater financial resources and have largerdevelopment and commercialization capabilities than we do. Although we are not aware of any companies that are pursuing an alternative fully automatedblood grouping and disease screening platform like MosaiQ, a platform or technology that competes with MosaiQ may be developed. We may be unable tocompete effectively against these competitors either because their diagnostic platforms are superior or because they may have more expertise, experience,financial resources or stronger business relationships.We have leased a factory in Eysins, Switzerland, which is presently the principal manufacturing site for the MosaiQ Microarrays, and any delay inobtaining regulatory approval for the site may delay or prevent the launch of MosaiQ.We have leased a manufacturing facility in Eysins, Switzerland, which is presently the principal manufacturing site for the MosaiQ Microarrays. Finalapproval of the MosaiQ Microarray manufacturing system is subject to many risks, including the fact that, in connection with products that will be sold in theUnited States, this new facility will be subject to a pre-approval inspection by the FDA, and, in connection with products sold outside the United States, thisnew facility will be subject to pre-approval inspection by applicable foreign regulators, which could prevent or delay the launch of MosaiQ.Our near-term success is dependent upon our ability to expand our customer base and introduce new conventional reagent products.Our current customer base is primarily composed of donor testing laboratories and hospitals that use our conventional reagent products for blood grouping,along with original equipment manufacturers, or OEMs (for example, Ortho, Bio-Rad and Grifols). Our success will depend, in part, upon our ability toexpand our customer base and increase our market penetration of existing customers through the development and commercialization of new products afterobtaining regulatory authorization. Attracting new customers and introducing new products requires substantial time and expense. Any failure to expand ourexisting customer base, or launch new products, would adversely affect our operating results.Our financial performance depends in part upon our ability to successfully develop and market new products in a rapidly changing technological andeconomic environment. If we fail to successfully introduce new conventional reagent products, we could lose market share. We could also lose market share ifour competitors introduce new products or technologies that render our conventional reagent products less competitive or obsolete. In addition, delays in theintroduction of new products due to regulatory, developmental or other obstacles could negatively impact our revenue and market share, as well as ourearnings.We are dependent upon our three largest OEM clients for a substantial portion of our total revenues. If any of our key OEM customers terminates orreduces the scope of its relationship with us, our product sales will suffer.We develop, manufacture and sell a range of our conventional reagent products to customers who are major OEMs. These products are sold in bulk, forinclusion in products manufactured by these OEM customers, or as finished, vialled products. Product sales to our three largest OEM customers accounted for71% of our total revenues and product sales to Ortho accounted for 61% of our total revenues in the year ended March 31, 2018. If any of our OEM customeragreements are terminated, particularly our agreement with Ortho, or the scope of our OEM customer relationships is otherwise reduced, our product salescould decrease, and our results of operations may be negatively impacted. In particular, a change of control of any of our OEM customers could negativelyimpact our relationship. Further, we may not be able to enter into new customer agreements on satisfactory terms, or at all.Our OEM customers, including Ortho, are also our competitors. Our conventional reagent business may be harmed if, as a result of the commercialization ofMosaiQ, Ortho or our other OEM customers perceive MosaiQ as a competitive product, resulting in a discontinuation of Ortho’s or our other OEM customers’purchases from us.Gross margin volatility in our conventional reagent business may negatively impact our profitability.Gross margins on our conventional reagent products vary depending upon the product, with whole blood control products, rare antibodies and reagent redblood cell products generating higher margins. Depending upon the sales mix of these products, our gross margin could vary significantly from period toperiod. Our conventional reagent products are manufactured by us. As such, gross margins for these products could be impacted by a rise in the costs of rawmaterials and labor, as well as overhead and the efficiency of our manufacturing operations. Our gross margin may also be negatively impacted by increasedcompetition. Specifically, suppliers in the market seeking to maintain or grow market share may foster a competitive environment of pricing pressures thatcould negatively impact the profitability of product sales.- 19 -If we are unable to maintain or redeploy our network of direct sales representatives, we may not be able to generate anticipated sales of our current orfuture products.We expect our direct sales representatives to develop long-lasting relationships with the customers they serve. If our direct sales representatives fail toadequately promote, market and sell our conventional reagent products, our sales could significantly decrease. If a substantial number of our direct salesrepresentatives were to leave us within a short period of time, our sales could be adversely affected. If a direct sales representative were to depart and beretained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers, which couldfurther adversely affect our sales. We may be unable to hire additional qualified direct sales representatives to work with us. We may also not be able to enterinto agreements with them on favorable or commercially reasonable terms, if at all. Failure to hire or retain qualified direct sales representatives wouldprevent us from expanding our business and generating sales.We or our suppliers may experience development or manufacturing problems or delays that could limit the growth of our revenue or increase our losses.We may encounter unforeseen situations in the manufacturing of our conventional reagent products that could result in delays or shortfalls in our production.Our suppliers may also face similar delays or shortfalls. In addition, our or our suppliers’ production processes may have to change to accommodate anysignificant future expansion of our manufacturing capacity, which may increase our or our suppliers’ manufacturing costs, delay production of our products,reduce our product gross margin and adversely impact our business. If we are unable to keep up with demand for our products by successfully manufacturingand shipping our products in a timely manner, our revenue could be impaired, market acceptance for our products could be adversely affected and ourcustomers might instead purchase our competitors’ products. In addition, developing manufacturing procedures for new products would require developingspecific production processes for those products. Developing such processes could be time consuming and any unexpected difficulty in doing so can delaythe introduction of a product.Demand for our products depends in part on the operating budgets of our customers and their spending levels, a reduction in which could limit demand forour products and adversely affect our business.In the near term, we expect that our revenue will be derived primarily from sales of our conventional reagent products to hospitals and independent testinglaboratories for blood grouping, either directly or through our OEM customers. The demand for our products will depend in part upon the operationalbudgets of these customers, which are impacted by factors beyond our control, such as: •global macroeconomic conditions; •changes in the regulatory environment; •differences in budgetary cycles; •market-driven pressures to consolidate operations and reduce costs; and •market acceptance of new technologies.Our operating results may fluctuate due to reductions and delays in expenditures by our customers. Any decrease in our customers’ budgets or expenditures,or in the size, scope or frequency of operating expenditures, could materially and adversely affect our business, operating results and financial condition.The transfusion diagnostics market is highly competitive. If we fail to compete effectively, our business and operating results will suffer.We face significant competition in the transfusion diagnostics market. We currently compete with established diagnostic companies that design, manufactureand market instruments and microarrays for blood grouping. We believe our principal competitors in the transfusion diagnostics market are Ortho, Immucor,Bio-Rad, Grifols, Danaher, Abbott and Roche.Most of our current competitors have greater financial resources than we do, making them better equipped to fund research and development, manufacturingand marketing efforts or license technologies and intellectual property from third parties. Our competitors can be expected to continue to improve theperformance of their products and to introduce new products with competitive price and performance characteristics. Although we believe we haveadvantages over our competitors, maintaining these advantages will require us to continue to invest in research and development, sales and marketing andcustomer service and support.- 20 -Our current competitors are either privately owned, publicly-traded companies or are divisions of publicly-traded companies, and enjoy many competitiveadvantages over us, including: •greater name and brand recognition, financial and human resources; •broader product lines; •larger sales forces and more established distributor networks; •substantial intellectual property portfolios; •larger and more established customer bases and relationships; and •better established, larger scale, and lower cost manufacturing capabilities.We believe that the principal competitive factors in all of our target markets include: •cost of capital equipment; •cost of microarrays and supplies; •reputation among customers; •innovation in product offerings; •flexibility and ease-of-use; •accuracy and reproducibility of results; •compatibility with existing laboratory processes, tools and methods; •breadth of clinical decisions that can be influenced by information generated by tests; and •economic benefit accrued to customers based on testing services enabled by products.We cannot assure investors that we will be successful in the face of competition from new products and technologies introduced by our existing competitorsor new companies entering our markets. In addition, we cannot assure investors that our competitors do not have or will not develop products or technologiesthat currently or in the future will enable them to produce competitive products with greater capabilities or at lower costs than ours.New technologies, techniques or products could emerge that might offer better combinations of price and performance than our current or future productsand systems.It is critical to our success that we anticipate changes in technology and customer requirements and to successfully introduce, on a timely and cost-effectivebasis, new, enhanced and competitive technologies that meet the needs of current and prospective customers. If we do not successfully innovate andintroduce new technology into our product lines or manage the transitions to new product offerings, our revenues, results of operations and business will beadversely impacted. Competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standardsor customer requirements. We may face increased competition in the future if existing companies and competitors develop new or improved products and ifnew companies enter the market with new technologies.We are dependent on single source suppliers for some of the components and materials used in our products, and supply chain interruptions couldnegatively impact our operations and financial performance.Our products are manufactured by us and we obtain supplies from a limited number of suppliers. In some cases, critical components required to manufactureour products may only be available from a sole supplier or limited number of suppliers, any of whom would be difficult to replace. The supply of any of ourmanufacturing materials may be interrupted because of poor vendor performance or other events outside our control, which may require us, among otherthings, to identify alternate vendors and result in lost sales and increased expenses. Even if the manufacturing materials that we source are available fromother parties, the time and effort involved in validating the new supplies and obtaining any necessary regulatory approvals for substitutes could impede ourability to replace such components in a timely manner or at all.In particular, some of our conventional reagent products are derived from blood having particular or rare combinations of antigens, which are found in alimited number of individuals. If we had difficulty in obtaining sufficient quantities of such blood, we would need to establish a viable alternative, whichmay take both time and expense to either identify and/or develop.- 21 -The loss of a sole supplier would impair our ability to deliver products to our customers in a timely manner and would adversely affect our sales andoperating results and negatively impact our reputation. Our business would also be harmed if any of our suppliers could not meet our quality andperformance specifications and quantity and delivery requirements.If any of our manufacturing facilities become unavailable or inoperable, we will be unable to produce and ship many of our products.All our conventional reagent products are currently produced in our existing Edinburgh, Scotland manufacturing facility. While we believe we have reliablesuppliers of raw materials, our reagent production is highly dependent on the uninterrupted and efficient operation of our existing Edinburgh, Scotlandfacility and we currently have no alternative manufacturing capabilities qualified. Therefore, if a catastrophic event occurred at our existing Edinburgh,Scotland facility, such as a fire or contamination, many of our products could not be produced until the manufacturing portion of the facility was restored andcleared by the FDA and other regulatory authorities. We maintain a disaster plan to minimize the effects of such a catastrophe and we have obtainedinsurance to protect against certain business interruption losses. However, there can be no assurance that such coverage will be adequate or that suchcoverage will continue to remain available on acceptable terms, if at all.Our customers, including our U.S. commercial operations, receive all of their conventional reagent products from our Edinburgh, Scotland manufacturingfacility. If circumstances arose that disrupted our international distribution of products from Edinburgh, we would need to establish an alternate distributionchannel, which may take both time and expense to establish.The landlord for our existing Edinburgh, Scotland manufacturing operation is Scottish National Blood Transfusion Service, or SNBTS. The lease on ourexisting Edinburgh, Scotland facility ends in December 2018.We have leased a manufacturing facility in Eysins, Switzerland, which is presently the principal manufacturing site for MosaiQ Microarrays and we currentlyhave no alternative manufacturing capabilities. Therefore, if a catastrophic event occurred at the Eysins, Switzerland facility, such as a fire or contamination,we would not be able to produce MosaiQ Microarrays until the manufacturing portion of the facility was restored and cleared by the FDA and otherregulatory authorities. We maintain a disaster plan to minimize the effects of such a catastrophe and we have obtained insurance to protect against certainbusiness interruption losses.We have recently completed the Biocampus facility, a new, expanded manufacturing facility for our conventional reagent products, the transition to whichcarries with it operational, quality and regulatory risks that could result in an interruption of product availability, the risk of overlapping operations withduplicative costs, and the delay or prevention of the launch of new products.To meet expected future demand for our conventional reagent products, we have built the Biocampus facility, a new expanded manufacturing facility nearEdinburgh, Scotland near our existing manufacturing facility. We expect to complete the relocation to and validation of the Biocampus facility before theend of December 2018. Moving our manufacturing operations to a new facility may result in overlapping operations and duplicative costs during thetransition period. Furthermore, changes in our manufacturing process or procedure, including a change in the location where our products are manufactured,will require prior FDA review and approval of the manufacturing process and procedures. Any new facility will be subject to a pre-approval inspection by theFDA and would again require us to demonstrate product comparability to the FDA. There are comparable foreign requirements as well. This review may becostly and time consuming and could delay or prevent the manufacture of our conventional reagent products. In addition, the lease for our existingmanufacturing facility expires in December 2018. If we don't complete the relocation and validation of our new conventional reagents manufacturing facilitybefore this lease ends, we may not be able to manufacture and conventional reagent products.We generate a substantial portion of our revenue internationally and are subject to various risks relating to our international activities.A significant proportion of our revenues are earned in U.S. Dollars but the costs of our manufacturing operations are payable mainly in Pounds Sterling whilethe costs of MosaiQ development are payable mainly in Swiss Francs. As a result, fluctuations in foreign currency exchange rates against the U.S. Dollarcould impact our financial results adversely. A significant percentage of our future costs will be incurred in international locations.Engaging in international business also involves many difficulties and risks, including: •required compliance with existing and changing foreign regulatory requirements and laws; •required compliance with anti-bribery laws, such as the U.S. Foreign Corrupt Practices Act and UK Bribery Act, data privacy requirements,labor laws and anti-competition regulations;- 22 - •export or import restrictions; •various reimbursement and insurance regimes; •laws and business practices favoring local companies; •longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; •political and economic instability; •potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements and other trade barriers; •difficulties and costs of staffing and managing foreign operations; and •difficulties protecting or procuring intellectual property rights.The occurrence of any of these factors in the countries in which we operate could materially adversely affect our business, results of operations and financialcondition.Our debt and other financings contain restrictive covenants and other provisions that may limit our operating flexibility.In October 2016, we issued $84.0 million aggregate principal amount of the Secured Notes and, if certain conditions are satisfied, we will issue an additional$36.0 million aggregate principal amount of the Secured Notes. The Secured Notes are secured by substantially all of our property and assets (subject tocertain exclusions). The indenture governing the Secured Notes contains certain restrictive covenants that limit our ability to incur debt, issue preferredand/or disqualified stock, pay dividends, repurchase shares and make certain other restricted payments, prepay, repurchase or redeem subordinated debt,merge, amalgamate or consolidate with other companies, engage in certain transactions with affiliates and make investments other than those permitted bythe indenture. We therefore may not be able to engage in any of the foregoing transactions unless we obtain the consent of the note holders or redeem all theSecured Notes that are then outstanding. There is no guarantee that we will be able to generate sufficient cash flow or sales to pay the principal and interestunder the Secured Notes. Furthermore, there is no guarantee that future working capital, borrowings or equity financing will be available to repurchase,redeem or otherwise refinance the Secured Notes.In addition, upon the occurrence of certain change of control events and, subject to certain conditions, certain asset sales events, holders of the Secured Notesmay require us to repurchase for cash all or part of their Secured Notes at a repurchase price equal to 101.0% or 100.0%, respectively, of the principal amountof the Secured Notes to be repurchased, plus accrued and unpaid interest to the date of repurchase. Furthermore, our outstanding 666,665 7% cumulativeredeemable preference shares are subject to automatic redemption in the event of certain changes of control involving us. In connection with suchredemption, we are required to first pay the amount of the accrued and unpaid preferential dividend on the preference shares and then redeem the preferenceshares at a redemption price of $22.50 per preference share. There is no guarantee that we will have sufficient funds legally available to repurchase theSecured Notes or redeem the preference shares under such circumstances.Undetected errors or defects in our products could expose us to product liability claims, harm our reputation or decrease market acceptance of ourproducts.The sale and use of products or services based on our technologies could lead to the filing of product liability claims if someone were to allege that one ofour products contained a design or manufacturing defect, which resulted in the failure to adequately perform the analysis for which it was designed. Aproduct liability claim could result in substantial damages and be costly and time consuming to defend, either of which could materially harm our business orfinancial condition. We maintain product liability insurance that we believe is adequate for our business. However, there can be no assurance that insurancecoverage for these risks will continue to be available or, if available, that it will be sufficient to cover potential claims or that the present level of coveragewill continue to be available at a reasonable cost. Our existing insurance may have to be increased in the future if we are successful at introducing newtransfusion diagnostics products and this will increase our costs. Under certain of our customer and license agreements, we have agreed to provideindemnification for product liability claims arising out of the use of our products. If we are held liable for a claim or for damages exceeding the limits of ourinsurance coverage, we may be required to make substantial payments.Regardless of merit or eventual outcome, liability claims may result in: •decreased demand for our products and product candidates; •injury to our reputation; •costs of related litigation; •substantial monetary awards to patients and others;- 23 - •loss of revenue; and •the inability to commercialize our products and product candidates.Any of these outcomes may have an adverse effect on our consolidated results of operations, financial condition and cash flows, and may increase thevolatility of our share price.We may also be subject to warranty claims for damages related to errors or defects in our products. A material liability claim or other occurrence that harmsour reputation or decreases market acceptance of our products could harm our business and operating results. If we experience a product performanceproblem, we may be required to, or may voluntarily recall or suspend selling the products until the problem is resolved. Depending on the product as well asthe availability of acceptable substitutes, such a product recall or suspension could significantly impact our operating results.The outcome of any future disputes, claims and litigation could have a material adverse impact on our business, financial condition and results ofoperations.We may, from time to time, be party to litigation in the normal course of business, including class action and product liability lawsuits. Due to the inherentuncertainties of litigation, it is not possible to predict the outcome of these lawsuits or determine the amount of any potential losses we may incur. In theevent we are required or determine to pay amounts in connection with any such lawsuits, such amounts could be significant and could have a materialadverse impact on our liquidity, business, financial condition and results of operations.We are highly dependent on our senior management team and other key employees, and our success depends on our ability to retain our managerialpersonnel and to attract additional personnel.Our success is dependent upon the efforts of our senior management and staff, including sales, technical and management personnel, many of whom havevery specialized industry and technical expertise that is not easily replaced. If key individuals leave us, we could be adversely affected if suitablereplacement personnel are not quickly recruited. We have entered into employment agreements with our executive officers and senior managers, but none ofthese agreements guarantees the service of the individual for a specified period. Our future success depends on our ability to continue to attract, retain andmotivate qualified personnel. There is intense competition for medical technologists and in some markets there is a shortage of qualified personnel in ourindustry. If we are unable to continue to attract or retain highly qualified personnel, the development, growth and future success of our business could beadversely affected.We may seek to grow our business through acquisitions of or investments in new or complementary businesses, products or technologies, and the failure tomanage acquisitions or investments, or the failure to integrate them with our existing business, could have a material adverse effect on us.From time to time, we expect to consider opportunities to acquire or make investments in other technologies, products and businesses that may enhance ourcapabilities, complement our current products or expand the breadth of our product offerings, markets or customer base. Potential and completed acquisitionsand strategic investments involve numerous risks, including: •problems assimilating the purchased technologies, products or business operations; •issues maintaining uniform standards, procedures, controls and policies; •unanticipated costs associated with acquisitions; •diversion of management’s attention from our core business; •adverse effects on existing business relationships with suppliers and customers; •risks associated with entering new markets in which we have limited or no experience; •potential loss of key employees of acquired businesses; and •increased legal and accounting compliance costs.We have no current commitments with respect to any acquisition or investment. Any acquisitions we undertake could be expensive and time consuming andmay disrupt our ongoing business and prevent management from focusing on our operations. If we are unable to manage acquisitions or investments, orintegrate any acquired businesses, products or technologies effectively, our business, results of operations and financial condition may be materiallyadversely affected.- 24 -We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in thedevelopment of commercially viable products or the generation of significant future revenues.In the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships todevelop proposed products and to pursue new markets. Proposing, negotiating and implementing collaborations, in-licensing arrangements, joint ventures,strategic alliances or partnerships may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing,sales, technology or other business resources, may compete with us for these opportunities or arrangements. We may not identify, secure, or complete anysuch transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge andexperience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement.In particular, these collaborations may not result in the development of products that achieve commercial success or result in significant revenues and couldbe terminated prior to developing any products.Additionally, we may not be able to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential riskof creating impasses on decisions, and our collaborators may have economic or business interests or goals that are, or that may become, inconsistent with ourbusiness interests or goals. For example, our distribution and supply agreement with Ortho provides for a six-person steering committee composed of three ofour representatives and three of Ortho's representatives, which provides liaison, coordination and strategic planning with regard to development andregulatory approval of MosaiQ and the sale and distribution of MosaiQ Instruments and Microarrays by Ortho. It is possible that conflicts may arise with ourcollaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such asthose related to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts arise with ourcurrent or future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. Inaddition, we have limited control over the amount and timing of resources that our current collaborators or any future collaborators devote to ourcollaborators’ or our future products. Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses anddivert the attention of our management. Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under theterms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or mayneed to purchase such rights at a premium.Risks Related to Government RegulationRecent global economic and political conditions could result in significant changes to legislation, government policies, rules and regulations, which mayhave a material adverse effect on our business.The impact of recent political and economic developments in the United States, the United Kingdom and Europe, including the election of Mr. DonaldTrump as president of the United States and the referendum in the United Kingdom in which voters approved an exit from the European Union, commonlyreferred to as “Brexit,” are uncertain. These political and economic developments could result in changes to legislation or reformation of governmentpolicies, rules and regulations pertaining to the U.S. healthcare system, tax and trade. Such changes could have a significant impact on our business byincreasing the cost of doing business, affecting our ability to sell our products and negatively impacting our profitability.Efforts to repeal and replace the U.S. Patient Protection and Affordable Care Act (or the PPACA) have been ongoing since the 2016 election, but it is unclearif these efforts will be successful. Since January 2017, President Trump has signed two Executive Orders and other directives designed to delay, circumvent orloosen the implementation of certain provisions requirements mandated by the PPACA or otherwise circumvent some of the requirements for health insurancemandated by the PPACA. In addition, as part of the December 2017 Tax Cuts and Jobs Act, the “individual mandate,” which required individuals to purchaseinsurance, was repealed. The PPACA significantly impacted the pharmaceutical and medical device industries and clinical laboratories, and the repeal,replacement or modification of the PPACA, or other legislative or regulatory actions, could meaningfully further change the way healthcare services aredelivered and may materially impact aspects of our business. We cannot predict whether future healthcare initiatives will be implemented at the federal orstate level or in countries outside of the United States in which we may do business, or the effect any future legislation or regulation will have on us.Our conventional reagent products are manufactured in Scotland and our MosaiQ Instruments and Microarrays will be manufactured in Germany andSwitzerland, respectively. There have been public announcements by members of the U.S. Congress, President Trump and his administration regarding thepossible implementation of a border tax, tariff or increase in custom duties on products manufactured outside of and imported into the United States, as wellas the renegotiation of U.S. trade agreements, and, in March 2018, President Trump issued two proclamations imposing tariffs on imports of certain steel andaluminum products. The implementation of a border tax, tariff or higher customs duties on our products imported into the United States, or any potentialcorresponding actions by other countries in which we do business, could negatively impact our financial performance.- 25 -Lastly, the British government has begun negotiating the terms of the United Kingdom’s future relationship with the European Union. On December 8, 2017,the United Kingdom reached an agreement in principle with the European Union on certain areas under consideration as part of the first phase of negotiationson the terms of its exit from the European Union. Although it is unknown what the final terms will be, it is possible that there will be greater restrictions onimports and exports between the United Kingdom and European Union countries and increased regulatory complexities. These changes may adversely affectour operations and financial results.If we, Ortho or our other commercial partners fail to comply with extensive foreign and domestic regulations, sales of our products in new and existingmarkets and the development and commercialization of any new product candidates, including MosaiQ, could be delayed or prevented.Our reagents and other products are subject to regulation by governmental and private agencies in the United States and abroad, which, among other things,regulate the testing, manufacturing, packaging, labeling, distribution, promotion, marketing, import and export of medical supplies and devices. Certaininternational regulatory bodies also impose import and tax restrictions, tariff regulations, and duties on imported products. Delays in agency review cansignificantly delay new product introduction and may result in a product becoming “outdated” or losing its market opportunity before it can be introduced.If any of our products were to fail to perform in the manner represented during review of the product application, particularly concerning clinicalperformance, one or more of these agencies could place restrictions on the labeling, marketing, distribution or use of the product, require us to modify orcease manufacturing and selling that product, or even recall previously-placed products, and, if the product must be modified in order to resolve the problem,to resubmit the product for market authorization before we could sell it again. Depending upon the product, and the availability of acceptable substitutes,such an agency action could result in significantly reduced revenues and earnings for an indefinite period.Federal, state and foreign regulations regarding the manufacture and sale of our products are subject to change. We cannot predict what impact, if any, suchchanges might have on our business. In addition, there can be no assurance that regulation of our products will not become more restrictive in the future andthat any such development would not have a material adverse effect on our business.If we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated problems with our products, these productscould be subject to restrictions or withdrawal from the market.Any product for which we obtain marketing approval or clearance in the United States or in international jurisdictions, along with the manufacturingprocesses and promotional activities for such product, will be subject to continual review and periodic inspections by the FDA and other regulatory bodies.Furthermore, our suppliers may be subject to similar regulatory oversight and may not currently be or may not continue to be in compliance with applicableregulatory requirements. Our failure or the failure of one of our suppliers to comply with statutes and regulations administered by the FDA and otherregulatory bodies, or our failure to take adequate action in response to any observations, could result in, among other things, any of the followingenforcement actions, any one of which could harm our reputation and could cause our product sales and profitability to suffer: •fines and civil penalties; •the requirement to take corrective actions; •delays in approving or clearing, or refusal to approve or clear, our products; •withdrawal or suspension of approval or clearances by the FDA or other regulatory bodies; •product recall or seizures; •interruption of production; •restrictions on labeling, marketing, distribution or use of our products; •an import or export ban on our products; •injunctions; and •criminal prosecution.We may also receive warning letters or untitled letters regarding compliance with current good manufacturing practices at one or more of our manufacturingfacilities.Any regulatory approval or clearance of a product may also be subject to limitations on the indicated uses for which the product may be marketed. If the FDAor another regulatory body determines that our promotional materials, training or other activities constitute promotion of an unapproved use, it could requestthat we cease or modify our training or promotional materials or subject us to regulatory enforcement actions. It is also possible that other federal, state orforeign enforcement authorities might act if they consider- 26 -our training or promotional materials to constitute promotion of an unapproved use, which could result in significant fines or penalties under applicablestatutory authorities, such as laws prohibiting false claims for reimbursement. Additionally, we may be required to conduct costly post-market testing and wemay be required to report adverse events and malfunctions related to our products. Later discovery of previously unknown problems with our products,including unanticipated adverse events, manufacturing problems or failure to comply with regulatory requirements may result in restrictions on suchproducts or manufacturing processes. Other potential consequences include revisions to the approved labeling, withdrawal of the products from the market,voluntary or mandatory recalls, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties.Furthermore, the FDA and various other authorities will inspect our facilities and those of our suppliers from time to time to determine whether we are incompliance with regulations relating to the manufacture of transfusion diagnostics products, including regulations concerning design, manufacture, testing,quality control, product labeling, distribution, promotion and record-keeping practices. A determination that we are in material violation of such regulationscould lead to the imposition of civil penalties, including warning or untitled letters, fines, product recalls, field actions, product seizures or, in extreme cases,criminal sanctions.Additionally, healthcare policy has been a subject of extensive discussion in the executive and legislative branches of the federal and many stategovernments and healthcare laws and regulations are subject to change. Our reagent product business strategy, and the development of the commercializationstrategy for MosaiQ, have been based on existing healthcare policies. We cannot predict what additional changes, if any, will be proposed or adopted or theeffect that such proposals or adoption may have on our business, financial condition and results of operations.Approval and/or clearance by the FDA and foreign regulatory authorities for our transfusion diagnostics products could take significant time and requiresignificant development expenditures.FDA approval of a BLA or clearance of a 510(k) generally is required before we can market new reagents in the United States or make significant changes toexisting products.Obtaining FDA and other regulatory clearances or approvals for MosaiQ and our newly developed conventional reagent products can be time-consuming,expensive and uncertain. It can take from several months to several years from the date of submission of the application, and generally requires detailed andcomprehensive scientific and clinical data. As with all blood transfusion products, the FDA and other regulatory authorities reserve the right to redefine theregulatory path at the time of submission or during the review process, and could require a more burdensome approach than we currently anticipate.Notwithstanding the time and expense, there is no assurance that marketing authorizations will be granted or that agency reviews will not involve delays thatwould adversely affect our ability to commercialize our products, including MosaiQ. Even if we were to obtain regulatory approval or clearance, it may notbe for the uses we believe are important or commercially attractive, in which case we would not be permitted to market our product for those uses.Our use of biological and hazardous materials and wastes requires us to comply with regulatory requirements, including environmental, health and safetylaws, regulations and permitting requirements and subjects us to significant costs and exposes us to potential liabilities.The handling of materials used in the manufacture of transfusion diagnostics products involves the controlled use of biological and hazardous materials andwastes. The primary hazardous materials we handle or use include human blood donations. Our business and facilities and those of our suppliers are subjectto federal, state, local and foreign laws and regulations relating to the protection of human health and the environment, including those governing the use,manufacture, storage, handling and disposal of, and exposure to, such materials and wastes. In addition, the collection and use of health data in the EuropeanUnion is governed by the recently-enacted General Data Protection Regulation (or GDPR). The GPDR extends the geographical scope of European Uniondata protection law to non-E.U. entities under certain conditions, tightens existing European Union data protection principles and creates new obligations forcompanies and new rights for individuals. Failure to comply with the GDPR may result in substantial fines and other administrative penalties. The GDPR mayincrease our responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuringcompliance with the GDPR. This may be onerous and if our efforts to comply with GDPR or other applicable European Union laws and regulations are notsuccessful, it could adversely affect our business in the European Union.Additionally, under some environmental laws and regulations, we could be held responsible for costs relating to any contamination at our past or presentfacilities and at third-party waste disposal sites even if such contamination was not caused by us. A failure to comply with current or future environmentallaws and regulations, including the failure to obtain, maintain or comply with any required permits, could result in severe fines or penalties. Any suchexpenses or liability could have a significant negative impact on our business, results of operations and financial condition. In addition, we may be requiredto incur significant costs to comply with regulatory requirements in the future.- 27 -Our relationships with customers are subject to applicable anti-kickback, fraud and abuse and other domestic healthcare laws and regulations, whichcould expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.Healthcare providers, physicians at hospitals and public health departments play a primary role in the recommendation and ordering of our reagents and otherproducts, and may play an important role in the recommendation and ordering of the MosaiQ system. Our arrangements with customers may expose us tobroadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationshipsthrough which we market, sell and distribute our product.The federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providingremuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of,any good or service, for which payment may be made under federally funded healthcare programs such as Medicare and Medicaid. This statute has beenbroadly interpreted to apply to manufacturer arrangements with prescribers, purchasers and formulary managers, among others. Several other countries,including the United Kingdom, have enacted similar anti-kickback, fraud and abuse, and healthcare laws and regulations.The federal False Claims Act imposes criminal and civil penalties against individuals or entities for knowingly presenting, or causing to be presented, to thefederal government, claims for payment that are false or fraudulent or making a false statement material to a false or fraudulent action or improperly avoiding,decreasing or concealing an obligation to pay money to the federal government.HIPAA imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, includingmandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. In addition,HIPAA created criminal liability for knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement inconnection with the delivery of or payment for healthcare benefits, items or services.The federal Physician Payment Sunshine Act requirements under the PPACA require manufacturers of drugs, devices, biologics and medical supplies to reportto HHS information related to payments and other transfers of value made to or at the request of covered recipients, such as physicians and teaching hospitals,and physician ownership and investment interests in such manufacturers. Payments made to physicians and research institutions for clinical trials areincluded within the ambit of this law. Certain state laws and regulations also require the reporting of certain items of value provided to health careprofessionals.Analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involvinghealthcare items or services reimbursed by non-governmental third-party payors, including private insurers.Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations involve substantial costs. Wemay be subject to qui tam litigation brought by private individuals on behalf of the government under the federal False Claims Act, with potential liabilityincluding mandatory treble damages and significant per-claim penalties, currently set at $5,500 to $11,000 per false claim. Additionally, it is possible thatgovernmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involvingapplicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any othergovernmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, exclusion fromgovernment funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. Exclusion, suspension anddebarment from government funded healthcare programs would significantly impact our ability to commercialize, sell or distribute any product. If any of thephysicians or other providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, they may be subject tocriminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.We are subject to the UK Bribery Act, the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, customs laws,sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, otherremedial measures, and legal expenses, which could adversely affect our business, results of operations and financial condition.Our operations are subject to anti-corruption laws, including the UK Bribery Act 2010, or Bribery Act, the U.S. Foreign Corrupt Practices Act, or FCPA, andother anti-corruption laws that apply in countries where we do business. The Bribery Act, FCPA and these other laws generally prohibit us and our employeesand intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business orgain some other business advantage. We, Ortho and our other commercial partners operate in many jurisdictions that pose a high risk of potential Bribery Actor FCPA violations, and we participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under theBribery Act, FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory- 28 -requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of theUnited Kingdom, the United States and authorities in the European Union, including applicable export control regulations, economic sanctions on countriesand persons, customs requirements and currency exchange regulations, collectively referred to as the Trade Control laws.There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the Bribery Act, theFCPA or other legal requirements and Trade Control laws. If we are not in compliance with the Bribery Act, the FCPA and other anti-corruption laws or TradeControl laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which couldhave an adverse impact on our business, financial condition, results of operations and liquidity. Likewise, any investigation of any potential violations of theBribery Act, the FCPA, other anti-corruption laws or Trade Control laws by UK, U.S. or other authorities could also have an adverse impact on our reputation,our business, results of operations and financial condition.Risks Related to Intellectual PropertyThe extent to which we can protect our products and technologies through intellectual property rights that we own, acquire or license is uncertain.We employ a variety of proprietary and patented technologies and methods in connection with the products we sell or are developing, including MosaiQ. Welicense some of these technologies from third parties. We cannot provide any assurance that the intellectual property rights that we own or license provideeffective protection from competitive threats or that we would prevail in any litigation in which our intellectual property rights are challenged. In addition,we cannot provide any assurances that we will be successful in obtaining new proprietary or patented technologies or methods in the future, whether throughacquiring ownership or through licenses from third parties.We cannot assure investors that any of our currently pending or future patent applications will result in issued patents, and we cannot predict how long it maytake for a patent to issue on any of our pending patent applications, assuming a patent does issue. Further, we cannot assure investors that other parties willnot challenge any patents issued or exclusively licensed to us or that courts or administrative agencies will hold our patents or the patents we license on anexclusive basis to be valid and enforceable. We cannot guarantee investors that we will be successful in defending challenges made against our patents andother intellectual property rights. Any third-party challenge to any of our patents could result in the unenforceability or invalidity of some or all of the claimsof such patents and could be time consuming and expensive.The extent to which the patent rights of life sciences companies effectively protect their products and technologies is often highly uncertain and involvescomplex legal and factual questions for which important legal principles remain unresolved. No consistent policy regarding the proper scope of allowableclaims of patents held by such companies has emerged to date in the United States. Various courts, including the U.S. Supreme Court, have rendereddecisions that impact the scope of patentability of certain inventions or discoveries relating to diagnostics tests or genomic diagnostics. These decisionsgenerally stand for the proposition that inventions that recite laws of nature are not themselves patentable unless they have sufficient additional features thatprovide practical assurance that the processes are genuine inventive applications of those laws rather than patent drafting efforts designed to monopolize alaw of nature itself. What constitutes a “sufficient” additional feature for this purpose is uncertain. While we do not generally rely on gene sequence patents,this evolving case law in the United States may adversely impact our ability to obtain new patents and may facilitate third-party challenges to our existingowned and exclusively licensed patents.We cannot predict the breadth of claims that may be allowed or enforced in patents we own or in those to which we have exclusive license rights. Forexample: •the inventor(s) named in one or more of our patents or patent applications might not have been the first to have made the relevant invention; •the inventor (or his assignee) might not have been the first to file a patent application for the claimed invention; •others may independently develop similar or alternative products and technologies or may successfully replicate our product and technologies; •it is possible that the patents we own, or in which have exclusive license rights may not provide us with any competitive advantages or may bechallenged by third parties and found to be invalid or unenforceable; •any patents we obtain or exclusively license may expire before, or within a limited period after, the products and services relating to suchpatents are commercialized;- 29 - •we may not develop or acquire additional proprietary products and technologies that are patentable; and •others may acquire patents that could be asserted against us in a manner that could have an adverse effect on our business.Changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of our intellectualproperty rights. In particular, in September 2011, the U.S. Congress passed the Leahy-Smith America Invents Act, or the AIA, which became effective inMarch 2013. The AIA reforms U.S. patent law in part by changing the standard for patent approval for certain patents from a “first to invent” standard to a“first to file” standard and developing a post-grant review system. It is too early to determine what the effect or impact the AIA will have on the operation ofour business and the protection and enforcement of our intellectual property. However, the AIA and its implementation could increase the uncertainties andcosts surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverseeffect on our business and financial condition. Patent applications in the United States and many foreign jurisdictions are not published until at leasteighteen months after filing and it is possible for a patent application filed in the United States to be maintained in secrecy until a patent issues on theapplication. In addition, publications in the scientific literature often lag behind actual discoveries. We therefore cannot be certain that others have not filedpatent applications that cover inventions that are the subject of pending applications that we own or exclusively license or that we or our licensors, asapplicable, were the first to invent the technology (pre-AIA) or first to file (post-AIA). Our competitors may have filed, and may in the future file, patentapplications covering technology that is similar to or the same as our technology. Any such patent application may have priority over patent applicationsthat we own or exclusively license and, if a patent issues on such patent application, we could be required to obtain a license to such patent to carry on ourbusiness. If another party has filed a U.S. patent application covering an invention this is similar to, or the same as, an invention that we own or license, we orour licensors may have to participate in an interference or other proceeding in the U.S. Patent and Trademark Office, or PTO, or a court to determine priorityof invention in the United States, for pre-AIA applications and patents. For post-AIA applications and patents, we or our licensors may have to participate in aderivation proceeding to resolve disputes relating to inventorship. The costs of these proceedings could be substantial, and it is possible that such effortswould be unsuccessful, resulting in our inability to obtain or retain any U.S. patent rights with respect to such invention.Some of our competitors may be better able to sustain the costs of complex patent disputes and litigation than we can because they have substantially greaterresources. In addition, any uncertainties resulting from the initiation and continuation of any disputes or litigation could have a material adverse effect onour ability to raise the funds necessary to continue our operations.In addition to pursuing patents on our technology, we seek to protect our intellectual property and proprietary technology by entering into intellectualproperty assignment and non-disclosure agreements with our employees, consultants and third party collaborators. See “—We may be unable to adequatelyprevent disclosure of trade secrets and other proprietary information.”Obtaining and maintaining our patent protection depends upon compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.The PTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisionsduring the patent prosecution process and following the issuance of a patent. There are situations in which noncompliance with these requirements can resultin abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event,competitors might be able to enter the market earlier than would otherwise have been the case if our patent were in force.Our intellectual property rights may not be sufficient to protect our competitive position and to prevent others from manufacturing, using or sellingcompeting products.The scope of our owned and exclusively licensed intellectual property rights may not be sufficient to prevent others from manufacturing, using or sellingcompeting products. For example, our manufacturing process for MosaiQ Microarrays depends in part on intellectual property that we in-license on anexclusive basis, and such rights may be limited. Our competitors may have obtained or be able to develop or obtain a license to similar intellectual property.Competitors could purchase our product and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfullyinfringe our intellectual property rights, design around our protected technology or develop their own competitive technologies and thereby avoid infringingour intellectual property rights. If our intellectual property is not sufficient to effectively prevent our competitors from developing and selling similarproducts, our competitive position and our business could be adversely affected.- 30 -MosaiQ depends on certain technologies that are licensed to us. We do not control these technologies and any loss of our rights to them could prevent usfrom manufacturing our products.We rely on licenses to various proprietary technologies that are material to our business, including the development of MosaiQ. We have entered into anexclusive license with TTP, to use patented technologies to enable high volume manufacturing of MosaiQ Microarrays. In addition, STRATEC BiomedicalAG, or STRATEC, has agreed to grant us licenses to certain of its pre-existing technologies, and has granted us licenses to its technologies that weredeveloped under our development agreement with it for the MosaiQ Instrument. Our rights to use these technologies will be subject to the continuation ofand our compliance with the terms of those licenses. If we were to lose access to these licenses, we would be unable to manufacture MosaiQ Microarrays orcommercialize MosaiQ Instruments until we obtained access to a comparable technology.We may not control the prosecution, maintenance or filing of the patents to which we now hold or in the future intend to acquire licenses. Enforcement of ourlicensed patents or defense of any claims asserting the invalidity of these patents may be subject to the control or cooperation of our licensors. We cannot becertain that our licensors will prosecute, maintain, enforce and defend the licensed patent rights in a manner consistent with the best interests of our business.We also cannot be certain that drafting or prosecution of the licensed patents and patent applications by the relevant licensors have been or will beconducted in compliance with applicable laws and regulations, will result in valid and enforceable patents or that any patents or patents that may issue in thefuture on any patent applications owned by or exclusively licensed to us will provide any competitive advantage.Certain of our licenses contain, and any future licenses may contain, provisions that allow the licensor to terminate the license upon the occurrence of certainevents, such as material breach by us or our insolvency. For example, the TTP license is for uses that include antigen typing, antibody detection andserological screening of donated blood for infectious diseases (collectively, the initial purpose), as well as all human blood sample diagnostic testing onbatch processing instruments (collectively, the additional purposes), with the exception of companion diagnostics, epigenetics, and nucleic acid sequencing.If any of certain agreed upon license payments are not made by us when due, we will lose the license to the additional purposes, but not the initial purpose.TTP may terminate its license agreement with us if we assist another party in disputing the validity and/or scope of any of TTP’s patented intellectualproperty covered by the agreement. If the licensors of the technologies we rely on were to terminate our license agreements, the commercialization of MosaiQcould be prevented or delayed, and we may be unable to find a suitable replacement technology at an acceptable cost or at all. Our rights under each of thelicenses may be subject to our continued compliance with the terms of the license, including certain diligence, disclosure and confidentiality obligations andthe payment of fees. If we breach any of our license agreements and fail to cure the breach within any applicable cure period, our licensors may take actionagainst us, including termination of the applicable license. Determining the scope of our licenses and related obligations can be difficult and could lead todisputes between us and the licensors. An unfavorable resolution of such a dispute could lead to termination of the license to which a dispute relates. If alicensor terminates a license agreement because of a breach by us that we fail to timely cure, we might no longer have the right to produce or sell some or allof our products and we may be subject to other liabilities, which could have a material adverse effect on our business.We may become involved in disputes relating to our intellectual property rights, and may need to resort to litigation in order to defend and enforce ourintellectual property rights.Extensive litigation regarding patents and other intellectual property rights has been common in the medical diagnostics industry. Litigation may benecessary to assert infringement claims, protect trade secrets or know-how and determine the enforceability, scope and validity of certain proprietary rights.Litigation may even be necessary to resolve disputes of inventorship or ownership of proprietary rights. The defense and prosecution of intellectual propertylawsuits, PTO interference or derivation proceedings and related legal and administrative proceedings (e.g., a re-examination) in the United States andinternationally involve complex legal and factual questions. As a result, such proceedings are costly and time consuming to pursue, and their outcome isuncertain.Even if we prevail in such a proceeding in which we assert our intellectual property rights against third parties, the remedy we obtain may not becommercially meaningful or adequately compensate us for any damages we may have suffered. If we do not prevail in such a proceeding, our patents couldpotentially be declared to be invalid, unenforceable or narrowed in scope, or we could otherwise lose valuable intellectual property rights. Similarproceedings involving the intellectual property we exclusively license could also have an impact on our business. Further, if any of our other owned orexclusively licensed patents are declared invalid, unenforceable or narrowed in scope, our competitive position could be adversely affected.We could face claims that our activities or the manufacture, use or sale of our products infringe the intellectual property rights of others, which couldcause us to pay damages or licensing fees and limit our ability to sell some or all of our products and services.Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties.Other entities may have or obtain patents or other intellectual property rights that could limit our ability to manufacture or commercialize MosaiQ, or mayclaim that our research, development and commercialization activities infringe patents- 31 -or other intellectual property rights owned by them of which we may be unaware because the relevant patent applications may have been filed but not yetpublished. Certain of our competitors and other companies have substantial patent portfolios, and may attempt to use patent litigation as a means to obtain acompetitive advantage or to extract licensing revenue. In addition to patent infringement claims, we may also be subject to other claims relating to theviolation of intellectual property rights, such as claims that we have misappropriated trade secrets or infringed third party trademarks. The risks of beinginvolved in such litigation may also increase as we gain greater visibility as a public company and as we gain commercial acceptance of our products andmove into new markets and applications for our products.Regardless of merit or outcome, our involvement in any litigation, interference or other administrative proceedings could cause us to incur substantialexpense and could significantly divert the efforts of our technical and management personnel. Any public announcements related to litigation or interferenceproceedings initiated or threatened against us could cause our share price to decline. An adverse determination, or any actions we take or agreements we enterinto in order to resolve or avoid disputes, may subject us to the loss of our proprietary position or to significant liabilities, or require us to seek licenses thatmay include substantial cost and ongoing royalties. Licenses may not be available from third parties, or may not be obtainable on satisfactory terms. Anadverse determination or a failure to obtain necessary licenses may restrict or prevent us from manufacturing and selling our products and offering ourservices. These outcomes could materially harm our business, financial condition and results of operations.We may not be able to adequately protect our intellectual property outside of the United States.The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and many companies haveencountered significant problems in protecting and defending such rights in foreign jurisdictions. The legal systems of certain countries, particularly certaindeveloping countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biotechnology, whichcould make it difficult for us to stop the infringement of our patents and for licensors, if they were to seek to do so, to stop infringement of patents that arelicensed to us. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from otheraspects of our business. Additionally, prosecuting and maintaining intellectual property (particularly patent) rights are very costly endeavors, and for theseand other reasons we may not pursue or obtain patent protection in all major markets. We do not know whether legal and government fees will increasesubstantially and therefore are unable to predict whether cost may factor into our global intellectual property strategy.In addition to the risks associated with patent rights, the laws in some foreign jurisdictions may not provide protection for our trade secrets and otherintellectual property. If our trade secrets or other intellectual property are misappropriated in foreign jurisdictions, we may be without adequate remedies toaddress these issues. Additionally, we also rely on confidentiality and assignment of invention agreements to protect our intellectual property in foreignjurisdictions. These agreements may provide for contractual remedies in the event of misappropriation, but we do not know to what extent, if any, theseagreements and any remedies for their breach, will be enforced by a foreign court. In the event our intellectual property is misappropriated or infringed uponand an adequate remedy is not available, our prospects will likely diminish. The sale of products that infringe our intellectual property rights, particularly ifsuch products are offered at a lower cost, could negatively impact our ability to achieve commercial success and may materially and adversely harm ourbusiness.Our failure to secure trademark registrations could adversely affect our business and our ability to market our products and product candidates.Our trademark applications in the United States and any other jurisdictions where we may file may not be allowed for registration, and our registeredtrademarks may not be maintained or enforced. During trademark registration proceedings, we may receive rejections. Although we are given an opportunityto respond to those rejections, we may be unable to overcome such rejections. In addition, in the PTO and in corresponding foreign agencies, third parties aregiven an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may befiled against our applications and/or registrations, and our applications and/or registrations may not survive such proceedings. Failure to secure suchtrademark registrations in the United States and in foreign jurisdictions could adversely affect our business and our ability to market our products andproduct candidates.We may be unable to adequately prevent disclosure of trade secrets and other proprietary information, or the misappropriation of the intellectual propertywe regard as our own.We rely on trade secrets to protect our proprietary know how and technological advances, particularly where we do not believe patent protection isappropriate or obtainable. Nevertheless, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants,third party collaborators and other advisors to protect our trade secrets and other proprietary information. These agreements generally require that the otherparty to the agreement keep confidential and not disclose to third parties all confidential information developed by us or made known to the other party byus during the course of the other party’s- 32 -relationship with us. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in theevent of unauthorized disclosure of confidential information. Monitoring unauthorized disclosure is difficult, and we do not know whether the steps we havetaken to prevent such disclosure are, or will be, adequate. If we were to seek to pursue a claim that a third party had illegally obtained and was using our tradesecrets, it would be expensive and time consuming, and the outcome would be unpredictable. Further, courts outside the United States may be less willing toprotect trade secrets. In addition, others may independently discover our trade secrets and proprietary information and therefore be free to use such tradesecrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Inaddition, our trade secrets and proprietary information may be misappropriated because of breaches of our electronic or physical security systems in whichcase we may have no legal recourse. Failure to obtain, or maintain, trade secret protection could enable competitors to use our proprietary information todevelop products that compete with our products or cause additional, material adverse effects upon our competitive business position.We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.As is common our industry, we employ individuals who were previously employed at other companies in our industry or in related industries, including ourcompetitors or potential competitors. We may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secretsor other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defendingagainst these claims, litigation could result in substantial costs and be a distraction to management.Risks Related to Our Ordinary SharesWe are eligible to be treated as an emerging growth company and we cannot be certain that the reduced disclosure requirements applicable to emerginggrowth companies will not make our ordinary shares less attractive to investors.We are an emerging growth company, as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage ofexemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) notbeing required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, (2) reduceddisclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding anonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be anemerging growth company until March 31, 2020, although circumstances could cause us to lose that status earlier, including if the market value of ourordinary shares held by non-affiliates exceeds $700 million as of September 30 in any fiscal year before that time or if we have total annual gross revenue of$1.07 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the followingMarch 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerginggrowth company immediately. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If someinvestors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and the price of our ordinaryshares may be more volatile.Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until those standards apply to privatecompanies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject tothe same new or revised accounting standards as other public companies that are not emerging growth companies.The price of our ordinary shares is likely to be volatile, and purchasers of our ordinary shares could incur substantial losses.Like other emerging life sciences companies, the market price of our ordinary shares is likely to be volatile. The factors below may also have a materialadverse effect on the market price of our ordinary shares: •fluctuations in our results of operations; •delays in the planned commercialization of MosaiQ; •speed and timing of adoption of MosaiQ by key target customers; •our ability to enter new markets; •negative publicity; •changes in securities or industry analyst recommendations regarding our company, the sectors in which we operate, the securities marketgenerally, conditions in the financial markets and the perception of our ability to raise additional funding;- 33 - •regulatory developments affecting MosaiQ or our industry, including announcement of new adverse regulatory decisions affecting our industryor MosaiQ; •announcements of studies and reports relating to our products, including MosaiQ, or those of our competitors; •changes in economic performance or market valuations of our competitors; •actual or anticipated fluctuations in our annual and quarterly financial results; •conditions in the industries in which we operate; •announcements by us or our competitors of new products, acquisitions, strategic relations, joint ventures or capital commitments; •additions to or departures of our key executives and employees; •fluctuations of exchange rates; •release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares subject to such restrictions; and •sales or perceived sales of additional ordinary shares.In addition, the securities of life sciences companies have recently experienced significant volatility. The volatility of the securities of life sciencescompanies often does not relate to the operating performance of those companies. As we operate in a single industry, we are especially vulnerable to thesefactors to the extent that they affect our industry or our products, or to a lesser extent our markets. In the past, securities class action litigation has often beeninitiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert ourmanagement’s attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.If securities analysts do not continue to cover our ordinary shares or publish unfavorable research or reports about our business, this may have a negativeimpact on the market price of our ordinary shares.The trading market for our ordinary shares depends on the research and reports that securities analysts publish about our business and our company. We donot have any control over these analysts. There is no guarantee that securities analysts will continue to cover our ordinary shares. If securities analysts do notcover our ordinary shares, the lack of research coverage may adversely affect the market price of our ordinary shares. If our shares are the subject of anunfavorable report, our share price and trading volume would likely decline. If one or more of these analysts ceases to cover our company or fails to publishregular reports on our company, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.Substantial future sales of our ordinary shares in the public market, or the perception that these sales could occur, could cause the price of our ordinaryshares to decline, irrespective of the underlying performance of our business.Additional sales of our ordinary shares in the public market, and in particular sales by our directors, executive officers and principal shareholders, or theperception that these sales could occur, could cause the market price of our ordinary shares to decline. We had outstanding 45,646,424 ordinary shares as ofMarch 31, 2018, of which approximately 34,879,491 ordinary shares were sold or issued pursuant to effective registration statements or resold pursuant toRule 144 under the Securities Act, or Rule 144, or are registered for public resale under an effective registration statement under the Securities Act and arefreely transferable without restriction or additional registration under the Securities Act. Approximately 10,766,933 ordinary shares were restricted or controlsecurities that are available, or will be available, for resale subject to volume and other restrictions as applicable under Rule 144. In addition, as of March 31,2018, 9,140,208 ordinary shares were subject to outstanding warrants at a weighted average exercise price of $5.60 per share and 2,096,283 ordinary shareswere subject to outstanding options at a weighted exercise price of $7.79 per share. To the extent any of these shares are sold into the market, particularly insubstantial quantities, the market price of our ordinary shares could decline.We have never paid cash dividends and do not intend to pay cash dividends on our ordinary shares in the foreseeable future.We have never paid dividends on ordinary shares and do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future. Inaddition, the indenture governing the Secured Notes contains covenants that limit our ability to pay dividends on our ordinary shares. Under Jersey, ChannelIslands law, any payment of dividends would be subject to relevant legislation and our Amended Articles of Association provide that all dividends must beapproved by our Board of Directors and, in some cases, our shareholders, and may only be paid from our distributable profits available for the purpose,determined on an unconsolidated basis.- 34 -Galen Partners LLP own a significant percentage of our ordinary shares and will be able to exercise significant influence over matters subject toshareholder approval.Certain entities affiliated with Galen Partners LLP hold a substantial percentage of our outstanding ordinary shares. These shareholders will be able to exert asignificant degree of influence over our management and affairs and over matters requiring shareholder approval, including the election of our Board ofDirectors and approval of significant corporate transactions. This concentration of ownership could have the effect of entrenching our Board of Directors,delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn couldhave a material and adverse effect on the fair market value of our ordinary shares.We incur increased costs as a result of being a public company whose ordinary shares are publicly traded in the United States and our management mustdevote substantial time to public company compliance programs.As a public company, we have incurred and will continue to incur significant legal, insurance, accounting and other expenses that we did not incur as aprivate company. We intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment will result inincreased general and administrative expenses and may divert management’s time and attention. If our efforts to comply with new laws, regulations andstandards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legalproceedings against us and our business may be harmed. Our insurance costs have increased, particularly for directors and officers’ liability insurance. Suchcosts may further increase in the future, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. Thesefactors could also make it more difficult for us to attract and retain qualified members of our Board of Directors, particularly to serve on our audit committeeand remuneration committee, and qualified executive officers.Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we are required to furnish a report by our management on our internal control overfinancial reporting, and, once we cease to be an emerging growth company, will be required to include an attestation report on internal control over financialreporting issued by our independent registered public accounting firm. During the evaluation of our internal controls over financial reporting, we identified amaterial weakness in our internal controls, and concluded that our internal controls over financial reporting was not effective as of March 31, 2018. Foradditional information, see "Item 9A. Management's Annual Report on Internal Control Over Financial Reporting." We cannot assure you that there will notbe additional material weaknesses or significant deficiencies in our internal controls in the future.We cannot guarantee that we will be able to satisfy the continued listing standards of The NASDAQ Global Market going forward.Our ordinary shares are listed on NASDAQ. However, we cannot ensure that we will be able to satisfy the continued listing standards of NASDAQ goingforward. If we cannot satisfy the continued listing standards going forward, The NASDAQ Stock Market may commence delisting procedures against us,which could result in our ordinary shares being removed from listing on NASDAQ. If our ordinary shares were to be delisted, the liquidity of our ordinaryshares could be adversely affected and the market price of our ordinary shares could decrease. Delisting could also adversely affect the ability of a holder ofour ordinary shares to trade or obtain quotations on our ordinary shares because of lower trading volumes and transaction delays.These factors could contribute to lower prices and larger spreads in the bid and ask price for our ordinary shares. You may also not be able to resell yourordinary shares at or above the price you paid for such ordinary shares or at all.The dilutive effect of our warrants and options could have an adverse effect on the future market price of our ordinary shares or otherwise adversely affectthe interests of our ordinary shareholders.As of March 31, 2018, there were outstanding warrants (i) to purchase 64,000 of our ordinary shares at an exercise price of $9.375 per share, (ii) to purchase111,525 of our ordinary shares at an exercise price of $16.14 per share, (iii) to purchase 8,414,683 ordinary shares at $5.80 per share and (iv) to purchase550,000 ordinary shares at $0.01 per share. In addition, as of March 31, 2018, there were outstanding options to purchase 2,096,283 ordinary shares at aweighted average exercise price of $7.79 per share. These warrants and options are likely to be exercised if the market price of our ordinary shares equals orexceeds the applicable warrant’s or option's exercise price. To the extent such warrants and options are exercised, additional ordinary shares will be issued,which would dilute the ownership of existing shareholders.Risks Related to Being a Jersey, Channel Islands Company Listing Ordinary SharesOur ordinary shares are issued under the laws of Jersey, Channel Islands, which may not provide the level of legal certainty and transparency afforded byincorporation in a United States state.We are organized under the laws of the Jersey, Channel Islands, a British crown dependency that is an island located off the coast of Normandy, France. Jerseyis not a member of the European Union. Jersey, Channel Islands legislation regarding companies is largely- 35 -based on English corporate law principles. However, there can be no assurance that Jersey, Channel Islands law will not change in the future or that it willserve to protect investors in a similar fashion afforded under corporate law principles in the United States, which could adversely affect the rights of investors.A change in our tax residence could have a negative effect on our future profitability.We are organized under the laws of Jersey, Channel Islands. Our directors seek to ensure that our affairs are conducted in such a manner that we are notresident in any other jurisdiction for tax purposes. It is possible that in the future, whether as a result of a change in law or the practice of any relevant taxauthority or as a result of any change in the conduct of our affairs following a review by our directors or for any other reason, we could become, or be regardedas having become, a resident in another higher tax jurisdiction. Should we become a tax resident in another jurisdiction, we may be subject to unexpected taxcharges in such jurisdiction. Similarly, if the tax residency of any of our subsidiaries were to change from their current jurisdiction for any of the reasonslisted above, we may be subject to similar tax consequences.We may be or become classified as a passive foreign investment company for U.S. federal income tax purposes, which could result in materially adverseU.S. federal income tax consequences to U.S. investors in our ordinary shares.A non-U.S. corporation will be a passive foreign investment company, or PFIC, for any taxable year in which (1) at least 75% of its gross income is passiveincome or (2) at least 50% of the value (determined on a quarterly basis) of its assets is attributable to assets that produce or are held for the production ofpassive income. Our status as a PFIC depends on certain facts outside of our control and the application of U.S. federal income tax rules that are not entirelyclear. Accordingly, there can be no assurance that we will not be classified as a PFIC for our current taxable year or any future taxable year. If we are treated asa PFIC for any taxable year during which you hold our ordinary shares, such treatment could result in materially adverse U.S. federal income taxconsequences to you if you are a U.S. taxable investor. For example, if we are or become a PFIC, you may become subject to increased tax liabilities underU.S. federal income tax laws and regulations, and will become subject to additional reporting requirements. Although we do not believe we were a PFIC forour taxable year ended March 31, 2018 and do not expect to be a PFIC for the taxable year ending March 31, 2019 or any future taxable year, we cannotassure you that we have not been or will not be a PFIC for any particular taxable year. U.S. investors considering an investment in our ordinary shares areurged to consult their tax advisors regarding our possible status as a PFIC.U.S. withholding tax could apply to a portion of certain payments on the ordinary shares.The United States has enacted rules, commonly referred to as “FATCA,” that generally impose a reporting and withholding regime with respect to certain U.S.source payments (including dividends and interest), gross proceeds from the disposition of property that can produce U.S. source interest and dividends andcertain payments made by entities that are classified as financial institutions under FATCA. The governments of Jersey, Channel Islands and the UnitedStates have entered into an agreement with respect to the implementation of FATCA. Under this agreement, we do not expect to be subject to withholdingunder FATCA on any payments we receive. Similarly, as currently drafted, we do not expect that withholding under FATCA will apply to payments on theordinary shares. However, significant aspects of whether or how FATCA will apply to non-U.S. issuers like us remain unclear, and no assurance can be giventhat withholding under FATCA will not become relevant with respect to payments on the ordinary shares in the future. Even if FATCA were to becomerelevant to payments on the shares, it would not be applicable earlier than January 1, 2019. Prospective investors should consult their own tax advisorsregarding the potential impact of FATCA, including the agreement relating to FATCA between the governments of Jersey and the United States, to aninvestment in the ordinary shares.U.S. shareholders may not be able to enforce civil liabilities against us.A number of our directors and executive officers and a number of directors of certain of our subsidiaries are not residents of the United States, and asubstantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible for investors to effect service ofprocess within the United States upon such persons.Judgments of U.S. courts may not be directly enforceable outside of the United States and the enforcement of judgments of U.S. courts outside of the UnitedStates may be subject to limitations. Investors may also have difficulties pursuing an original action brought in a court in a jurisdiction outside the UnitedStates for liabilities under the securities laws of the United States.- 36 -Item 1B. Unresolved Staff CommentsNone. Item 2. PropertiesOur corporate headquarters, including our principal manufacturing site for MosaiQ Microarrays are located in Eysins, Switzerland. Our UK corporate officesand other office facilities, a development laboratory facility and our manufacturing facilities for conventional reagent products are located near Edinburgh,Scotland. Our U.S. corporate offices are located in Newtown, Pennsylvania. The table below provides selected information regarding our existing facilities,all of which are leased. Facility/Use Size (sq. ft.) Location Office Laboratory Expiration UK Corporate Offices/Development Laboratory and NewConventional Reagents Manufacturing Facility(Biocampus) Edinburgh, Scotland 27,400 59,800 September 30, 2052 Manufacturing Operations—Conventional Reagents(Existing Facility) Edinburgh, Scotland 6,200 16,000 December 31, 2018 MosaiQ Laboratory Facility Edinburgh, Scotland 3,600 3,600 December 31, 2018 Corporate Headquarters and Manufacturing Operations—MosaiQ Eysins, Switzerland 13,600 31,600 March 15, 2020 U.S. Corporate Offices Newtown, PA, USA 1,200 — November 30, 2018 U.S. Direct Sales Operation Chapel Hill, NC, USA 1,000 — May 31, 2018 We are in the process of moving our conventional reagents manufacturing operations and our Edinburgh MosaiQ laboratories to the Biocampus facility, ournew facility in Edinburgh Scotland which was completed earlier in 2018 and we expect to be able to vacate our other Edinburgh facilities before December31, 2018. We believe our current facilities are suitable and adequate to meet our current needs and that suitable additional or substitute space will beavailable to accommodate future growth of our business. Item 3. Legal ProceedingsWe are not currently a party to any pending legal proceedings that we believe could have a material adverse effect on our business or financial condition.However, we may be subject to various claims and legal actions arising in the ordinary course of business from time to time. Item 4. Mine Safety DisclosuresNot applicable. - 37 - PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur ordinary shares are traded on the NASDAQ Global Market. On May 29, 2018, the last reported sale price of our ordinary shares on NASDAQ was $7.29per share.The following table sets forth the high and low sales price per ordinary share reported on NASDAQ as traded for each of the quarters indicated: High Low Fiscal Year Ended March 31, 2018 Fourth Quarter $6.39 $2.78 Third Quarter $5.64 $4.09 Second Quarter $7.52 $3.22 First Quarter $7.74 $5.96 Fiscal Year Ended March 31, 2017 Fourth Quarter $7.10 $4.54 Third Quarter $8.42 $3.75 Second Quarter $8.64 $5.67 First Quarter $12.96 $7.25ShareholdersOn May 29, 2018, there were 24 shareholders of record of our ordinary shares. This number does not include shareholders for whom shares were held in a“nominee” or “street” name.DividendsWe have never declared or paid cash dividends on our ordinary shares. We currently intend to retain all available funds and any future earnings, if any, tofund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. In addition, the indenturegoverning the Secured Notes contains certain restrictive covenants that limit our ability to pay dividends. Any future determination as to the declaration andpayment of dividends, if any, will be made at the complete discretion of our Board of Directors and will depend on then existing conditions, including ourresults of operations, financial conditions, contractual restrictions (including under the indenture for the Secured Notes), capital requirements, businessprospects and other factors our Board of Directors may deem relevant.- 38 - Performance GraphBelow is a graph which compares the cumulative shareholder return on our ordinary shares from May 27, 2014 (the date the ordinary shares and warrantscomprising the units issued in our initial public offering began trading separately on NASDAQ) through March 31, 2018 against the cumulative total returnfor the same period on the NASDAQ Stock Market Composite Index and the NASDAQ Healthcare Index. The results are based on an assumed $100 investedon May 27, 2014.$0 $50 $100 $150 $200 $250 $300 COMPARISON OF 46 MONTH CUMULATIVE TOTAL RETURN* AMONG QUOTIENT LIMITED, THE NASDAQ STOCK MARKET COMPOSITE INDEX AND THE NASDAQ HEALTHCARE INDEX $0 $50 $100 $150 $200 $250 $300 COMPARISON OF 46 MONTH CUMULATIVE TOTAL RETURN* AMONG QUOTIENT LIMITED, THE NASDAQ STOCK MARKET COMPOSITE INDEX AND THE NASDAQ HEALTHCARE INDEX 3/31/18 2/28/181/31/1812/31/1711/30/1710/31/179/30/178/31/177/31/176/30/175/31/174/30/173/31/172/28/171/31/1712/31/1611/30/1610/31/169/30/168/31/167/31/166/30/165/31/164/30/163/31/162/29/161/31/1612/31/1511/30/1510/31/159/30/158/31/157/31/156/30/155/31/154/30/153/31/152/28/151/31/1512/31/1411/30/1410/31/149/30/148/31/147/31/146/30/145/31/145/27/14 QUOTIENT LIMITED NASDAQ HEALTHCARE INDEX NASDAQ COMPOSITE * $100 invested on 5/27/14 in stock or index- including reinvestment of dividends. 46 Months ended March 31, 2018 - 39 - Securities Authorized for Issuance Under Equity Compensation PlansThe following table presents certain information about our equity compensation plans as of March 31, 2018: Number of securities tobe issued upon exerciseof outstanding optionsand rights Weightedaverage exerciseprice ofoutstandingoptions andrights Number ofshares remainingavailable forfuture issuance Equity compensation plans approved by shareholders (1) 2,869,662 $5.69 278,760 Equity compensation plans not approved by shareholders — — —(1)Composed of the 2012 Option Plan, pursuant to which 501,829 ordinary shares are issuable upon exercise of outstanding options and rights at aweighted average exercise price of $2.29, and the 2014 Stock Incentive Plan, pursuant to which 2,367,833 ordinary shares are issuable upon exerciseof outstanding options and rights at a weighted average exercise price of $6.41. At March 31, 2018, 278,760 ordinary shares remain available forfuture issuance under the 2014 Stock Incentive Plan.Recent Sale of Unregistered SecuritiesSince April 1, 2017, we issued the following securities that were not registered under the Securities Act.On October 24, 2017, we entered into subscription agreements with certain institutional and individual accredited investors for the private placement of (i)7,864,683 newly issued ordinary shares, at a subscription price of $4.64 per share, (ii) newly issued warrants, at a purchase price of $0.125 per underlyingwarrant share, exercisable for up to 8,414,683 ordinary shares at an exercise price of $5.80 per ordinary share, and (iii) newly issued pre-funded warrants at apurchase price of $4.755 per underlying pre-funded warrant share, exercisable for up to 550,000 ordinary shares at an exercise price of $0.01 per ordinaryshare. Affiliates of our company, including Galen Partners LLP, our largest shareholder, and certain of our officers and directors, purchased, in the aggregate,526,758 new ordinary shares and 526,758 new warrants in the private placement. The above issuance was exempt from registration under the Securities Actunder Section 4(a)(2) thereof, as a transaction by an issuer not involving a public offering. No underwriters were used in connection with the foregoingtransaction. Each purchaser of securities in such transaction represented that he was an accredited investor as defined in Regulation D with no presentintention of distributing any of such securities or any arrangement or understanding with any other persons regarding the distribution of such securities, andappropriate legends were affixed to the securities. - 40 - Item 6. Selected Consolidated Financial DataThe following tables summarize our consolidated financial and other data. The consolidated statement of income data for the years ended March 31, 2018,2017 and 2016 and the consolidated balance sheet data as of March 31, 2018 and 2017 have been derived from our audited consolidated financial statementsappearing elsewhere in this Annual Report on Form 10-K. The consolidated statement of income data for the year ended March 31, 2015 and 2014 and theconsolidated balance sheet data as of March 31, 2016, 2015 and 2014 have been derived from our audited consolidated financial statements not included inthis Annual Report on Form 10-K.Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the following selected financial datatogether with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and accompanyingnotes included elsewhere in this Annual Report on Form 10-K. The selected financial data in this section are not intended to replace our financial statementsand the accompanying notes. Year ended March 31, 2018 2017 2016 2015 2014 (in thousands, except share and per share data) Consolidated statement of loss: Revenue: Product sales $23,913 $20,127 $18,022 $17,658 $16,987 Other revenues 819 2,100 500 750 2,768 Total revenue 24,732 22,227 18,522 18,408 19,755 Cost of revenue (10,471) (10,844) (9,658) (9,763) (8,406)Gross profit 14,261 11,383 8,864 8,645 11,349 Operating expenses: Sales and marketing (7,347) (5,660) (3,073) (2,750) (2,705)Research and development, net of government grants (51,202) (57,064) (28,781) (19,216) (8,066)General and administrative expense: Compensation expense in respect of share options and management equity incentives (4,156) (4,221) (2,004) (1,138) (933)Other general and administrative expenses (21,544) (18,497) (24,094) (15,255) (8,537)Total general and administrative expense (25,700) (22,718) (26,098) (16,393) (9,470)Total operating expense (84,249) (85,442) (57,952) (38,359) (20,241)Operating loss (69,988) (74,059) (49,088) (29,714) (8,892)Other income (expense): Interest expense, net (15,365) (9,903) (4,151) (2,315) (1,076)Change in financial liability for share warrants — — 15,857 (22,966) — Other, net 2,366 (1,107) 3,504 (4,064) (197)Other income (expense), net (12,999) (11,010) 15,210 (29,345) (1,273)Loss before income taxes (82,987) (85,069) (33,878) (59,059) (10,165)Provision for income taxes 649 — — — — Net loss $(82,338) $(85,069) $(33,878) $(59,059) $(10,165)Net loss available to ordinary shareholders - basic and diluted $(82,338) $(85,069) $(33,878) $(59,059) $(10,165)Loss per share - basic and diluted $(2.02) $(3.02) $(1.73) $(4.00) $(54.41)Weighted-average shares outstanding - basic and diluted 40,839,309 28,145,472 19,558,152 14,773,386 186,817 As of March 31, 2018 2017 2016 2015 2014 (in thousands) Consolidated balance sheet data: Cash and cash equivalents $20,165 $4,754 $44,100 $37,525 $7,192 Short-term investments 5,669 16,057 — — — Total assets 123,841 109,971 119,750 80,204 28,296 Long-term debt 85,063 80,704 27,910 9,853 13,593 Total liabilities 138,472 134,062 73,027 81,819 30,581 Total shareholders' funds (deficit) $(14,631) $(24,091) $46,723 $(1,615) $(31,536) - 41 - Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsYou should read the following discussion and analysis of our financial condition and results of operations in conjunction with the financial statements andthe related notes to those statements included later in this Annual Report on Form 10-K. In addition to historical financial information, the followingdiscussion contains forward-looking statements that reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actualresults and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute tothese differences include those discussed below and elsewhere in this Annual Report, particularly in “Risk Factors.”OverviewWe were incorporated in Jersey, Channel Islands on January 18, 2012. On February 16, 2012, we acquired the entire issued share capital of Alba BioscienceLimited (or Alba), Quotient Biodiagnostics, Inc. (or QBDI) and QBD (QSIP) Limited (or QSIP) from Quotient Biodiagnostics Group Limited (or QBDG), ourpredecessor.The acquisition of Alba, QBDI and QSIP by us is treated for accounting purposes as a combination of entities under common control as these entities were allcontrolled by QBDG prior to their acquisition by us. We recognized the assets and liabilities of Alba, QBDI and QSIP at their carrying amounts in thefinancial statements of those companies. We are a continuation of QBDG and its subsidiaries and, accordingly, our consolidated financial statements includethe assets, liabilities and results of operations of the subsidiaries transferred since their inception.Our BusinessWe are a commercial-stage diagnostics company committed to reducing healthcare costs and improving patient care through the provision of innovative testswithin established markets. Our initial focus is on blood grouping and donor disease screening, which is commonly referred to as transfusion diagnostics.Blood grouping involves specific procedures performed at donor or patient testing laboratories to characterize blood, which includes antigen typing andantibody detection. Disease screening involves the screening of donor blood for unwanted pathogens using two different methods, a serological approach(testing for specific antigens or antibodies) and a molecular approach (testing for DNA or RNA).We have over 30 years of experience developing, manufacturing and commercializing conventional reagent products used for blood grouping within theglobal transfusion diagnostics market. We are developing MosaiQ, our proprietary technology platform, to better address the comprehensive needs of thislarge and established market. We believe MosaiQ has the potential to transform transfusion diagnostics, significantly reducing the cost of blood grouping inthe donor and patient testing environments, while improving patient outcomes.We currently operate as one business segment with over 400 employees in the United Kingdom, Switzerland and the United States. Our principal markets arethe United States, Europe and Japan. Based on the location of the customer, revenues outside the United States accounted for 48%, 49% and 52% of totalrevenue during the years ended March 31, 2018, 2017 and 2016, respectively.We have incurred net losses and negative cash flows from operations in each year since we commenced operations in 2007. As of March 31, 2018, we had anaccumulated deficit of $275.6 million. We expect our operating losses will continue for at least the next fiscal year as we continue our investment in thecommercialization of MosaiQ. Our total revenue was $24.7 million for the year ended March 31, 2018, 22.2 million for the year ended March 31, 2017, and$18.5 million for the year ended March 31, 2016. Our net loss was $82.3 million for the year ended March 31, 2018, $85.1 million for the year endedMarch 31, 2017, and $33.9 million for the year ended March 31, 2016.From our incorporation in 2012 to March 31, 2017, we have raised $70.6 million of gross proceeds through the private placement of our ordinary andpreference shares and warrants, $132.8 million of gross proceeds from public offerings of our shares and issuances of ordinary shares upon exercise of warrantsand $84.0 million of gross proceeds from the issuance of the Secured Notes.During the fiscal year ended March 31, 2018, on April 10, 2017, we completed a public offering of 8,050,000 newly issued ordinary shares at a price of $6.00per share which raised $48.3 million of gross proceeds before underwriting discounts and other offering expenses.- 42 - On October 24, 2017, we entered into subscription agreements for the private placement of (i) 7,864,683 newly issued ordinary shares at a subscription priceof $4.64 per share, (ii) newly issued warrants, at a purchase price of $0.125 per underlying warrant share, exercisable for up to 8,414,683 ordinary shares at anexercise price of $5.80 per ordinary share, and (iii) newly issued pre-funded warrants, at a purchase price of $4.755 per underlying pre-funded warrant share,exercisable for up to 550,000 ordinary shares at an exercise price of $0.01 per ordinary share. The aggregate gross proceeds were $40.2 million. If the warrantsare exercised in full prior to their expiration on July 31, 2018, it would result in additional proceeds of $48.8 million. However, there can be no assurancethat the warrants will be exercised.In addition, on March 23, 2018, we raised $20.9 million from the sale and leaseback of our recently completed Biocampus facility, near Edinburgh, Scotland.RevenueWe generate product sales revenue from the sale of conventional reagent products directly to hospitals, donor collection agencies and independent testinglaboratories in the United States, the United Kingdom and to distributors in Europe and the rest of the world, and indirectly through sales to our OEMcustomers. We recognize revenues in the form of product sales when the goods are shipped. Products sold by standing purchase orders as a percentage ofproduct sales revenue were 75% for the year ended March 31, 2018, 76% for the year ended March 31, 2017 and 73% for the year ended March 31, 2016. Wealso provide product development services to our OEM customers. We recognize revenue from these contractual relationships in the form of productdevelopment fees, which are included in Other revenues. For a description of our revenue recognition policies, see “—Critical Accounting Policies andSignificant Judgments and Estimates—Revenue Recognition and Accounts Receivable.” In the year ended March 31, 2018, other revenues also included thesale of two MosaiQ instruments to a development partner.Our revenue is denominated in multiple currencies. Sales in the United States and to certain of our OEM customers are denominated in U.S. Dollars. Sales inEurope and the rest of the world are denominated primarily in U.S. Dollars, Pounds Sterling or Euros. Our expenses are generally denominated in thecurrencies in which our operations are located, which are primarily in the United Kingdom, Switzerland and the United States. We operate globally andtherefore changes in foreign currency exchange rates may become material to us in the future due to factors beyond our control. See “—Quantitative andQualitative Disclosure About Market Risk—Foreign Currency Exchange Risk.”Cost of revenue and operating expensesCost of revenue consists of direct labor expenses, including employee benefits, overhead expenses, material costs and freight costs, along with thedepreciation of manufacturing equipment and leasehold improvements. Our gross profit represents total revenue less the cost of revenue, and gross marginrepresents gross profit expressed as a percentage of total revenue. Our gross margin was 58% for year ended March 31, 2018, 51% for year ended March 31,2017 and 48% for the year ended March 31, 2016. Excluding other revenues, which consist of product development fees and certain sales of MosaiQinstruments and related products, our gross margin on product sales, which excludes other revenues, was 56% for the year ended March 31, 2018, 46% for theyear ended March 31, 2017 and 46% for the year ended March 31, 2016. We expect our overall cost of revenue to increase in absolute U.S. Dollars as wecontinue to increase our product sales volumes. However, we also believe that we can achieve efficiencies in our manufacturing operations, primarily throughincreasing production volumes.Our sales and marketing expenses include costs associated with our sales organization for conventional reagent products, including our direct sales force, aswell as our marketing and customer service personnel. These expenses consist principally of salaries, commissions, bonuses and employee benefits, as well astravel and other costs related to our sales and product marketing activities. Starting April 1, 2016, these expenses also include the costs of the newlyestablished MosaiQ commercial team. We expense all sales and marketing costs as incurred. We expect sales and marketing expense to increase in absoluteU.S. Dollars, primarily as a result of commissions on increased product sales in the United States and as we grow the MosaiQ commercial team.Our research and development expenses include costs associated with performing research, development, field trials and our regulatory activities, as well asproduction costs incurred in advance of the commercial launch of MosaiQ. Research and development expenses include research personnel-related expenses,fees for contractual and consulting services, travel costs, laboratory supplies and depreciation of laboratory equipment. In the year ended March 31, 2017these expenses also included $2 million in respect of the costs of our intellectual property license with TTP relating to MosaiQ.We expense all research and development costs as incurred, net of government grants received and tax credits. Our UK subsidiary claims certain tax credits onits research and development expenditures and these are included as an offset to our research and development expenses. Our research and developmentefforts are focused on developing new products and technologies for the global transfusion diagnostics market. We segregate research and developmentexpenses for the MosaiQ project from expenses for other- 43 - research and development projects. We do not maintain detailed records of these other costs by activity. We are nearing completion of the initialdevelopment of MosaiQ and as we move to commercialization, we expect overall research and development expense to decrease.Our general and administrative expenses include costs for our executive, accounting and finance, legal, corporate development, information technology andhuman resources functions. We expense all general and administrative expenses as incurred. These expenses consist principally of salaries, bonuses andemployee benefits for the personnel performing these functions, including travel costs. These expenses also include share-based compensation, professionalservice fees (such as audit, tax and legal fees), costs related to our Board of Directors, and general corporate overhead costs, which includes depreciation andamortization. We expect our general and administrative expenses to increase as our business develops and also due to the costs of operating as a publiccompany, such as additional legal, accounting and corporate governance expenses, including expenses related to compliance with the Sarbanes-Oxley Act,directors’ and officers’ insurance premiums and investor relations expenses.Net interest expense consists primarily of interest charges on our note and loan balances and the amortization of debt issuance costs, as well as accrueddividends on the 7% cumulative redeemable preference shares issued in January 2015. We amortize debt issuance costs over the life of the note or loan andreport them as interest expense in our statements of operations. Net interest also includes the expected costs of the royalty rights agreements we entered intoin October 2016 with the purchasers of the Secured Notes. See Note 3 “Debt” and Note 8 “Ordinary and Preference Shares – Preference shares” to ourconsolidated financial statements included in this Annual Report for additional information.Other income (expense), net consists primarily of realized exchange fluctuations resulting from the settlement of transactions in currencies other than thefunctional currencies of our businesses. Monetary assets and liabilities that are denominated in foreign currencies are measured at the period-end closing ratewith resulting unrealized exchange fluctuations. The functional currencies of our businesses are Pounds Sterling, Swiss Franc and U.S. Dollars depending onthe entity. Other income (expense) also includes exceptional costs related to deferred debt issue costs expensed on the repayment of debt facilities and certainother non-recurring items as mentioned below under “—Results of Operations— Comparison of Years ended March 31, 2018 and 2017— Other income(expense)” and “—Results of Operations— Comparison of Years ended March 31, 2017 and 2016— Other income (expense).” In the years ended March 31,2016, net other expense also includes the change in the fair value of our warrants issued in 2014 at the time of our initial public offering.Provision for income taxes in the year ended March 31, 2018 reflected a reduction in the valuation allowance against deferred tax assets in a subsidiary as aresult of an improvement in the profitability of this subsidiary. No provision for income taxes arose in prior years.- 44 - Results of OperationsComparison of Years ended March 31, 2018 and 2017The following table sets forth, for the periods indicated, the amounts of certain components of our statements of operations and the percentage of totalrevenue represented by these items, showing period-to-period changes. Year ended March 31, 2018 2017 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Revenue: Product sales $23,913 97% $20,127 91% $3,786 19%Other revenues 819 3% 2,100 9% (1,281) -61%Total revenue 24,732 100% 22,227 100% 2,505 11%Cost of revenue 10,471 42% 10,844 49% (373) -3%Gross profit 14,261 58% 11,383 51% 2,878 25%Operating expenses: Sales and marketing 7,347 30% 5,660 25% 1,687 30%Research and development 51,202 207% 57,064 257% (5,862) -10%General and administrative 25,700 104% 22,718 102% 2,982 13%Total operating expenses 84,249 341% 85,442 384% (1,193) -1%Operating (loss) (69,988) -283% (74,059) -333% 4,071 -5%Other income (expense): Interest expense, net (15,365) -62% (9,903) -45% (5,462) 55%Other, net 2,366 10% (1,107) -5% 3,473 -314%Total other expense, net (12,999) -53% (11,010) -50% (1,989) 18%Loss before income taxes (82,987) -336% (85,069) -383% 2,082 -2%Provision for income taxes 649 3% — — 649 100%Net loss $(82,338) -333% $(85,069) -383% $2,731 -3% RevenueProduct sales revenue increased by 19% to $23.9 million for the year ended March 31, 2018, compared with $20.1 million for the year ended March 31,2017. The increase in product sales was primarily attributable to growth in product sales to OEM customers and incremental direct sales of conventionalreagent products to customers in the United States. Products sold by standing purchase order were 75% of product sales for the year ended March 31, 2018,compared with 76% for the year ended March 31, 2017. Total revenue for the years ended March 31, 2018 and 2017 also included other revenues of $0.8million and $2.1 million, respectively. Total revenue increased by 11% to $24.7 million for the year ended March 31, 2018, compared with $22.2 million forthe year ended March 31, 2017.The below table sets forth revenue by product group: Year ended March 31, 2018 2017 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Revenue: Product sales - OEM customers $16,900 68% $14,216 64% $2,684 19%Product sales - direct customers and distributors 7,013 28% 5,911 27% 1,102 19%Other revenues 819 3% 2,100 9% (1,281) -61%Total revenue $24,732 100% $22,227 100% $2,505 11%OEM Sales. Product sales to OEM customers increased 19% to $16.9 million for the year ended March 31, 2018, compared with $14.2 million for the yearended March 31, 2017. The increase was due to increased sales to existing customers and the impact of recently launched new products.- 45 - Direct Sales to Customers and Distributors. Direct product sales increased 19% to $7.0 million for the year ended March 31, 2018 compared with$5.9 million for the year ended March 31, 2017. This mainly consisted of direct sales in the United States which increased to $5.9 million in the year endedMarch 31, 2018 compared with $5.5 million in the year ended March 31, 2017 as a result of recent product launches, the expansion of our customer base andimproved revenue hedging arrangements in the year ended March 31, 2018 as compared with the year ended March 31, 2017.Other Revenues. Other revenues of $0.8 million for the year ended March 31, 2018 consisted of $0.6 of product development fees and $0.2 million of sales ofMosaiQ instruments and related products to a development partner. Other revenues of $2.1 million in the year ended March 31, 2017, consisted entirely ofproduct development fees. The product development fees in both years arose as the result of the achievement of product development milestones under theterms of our umbrella supply agreement with Ortho. See Note 1 "Summary of Significant Accounting Policies – Revenue Recognition" to our consolidatedfinancial statements included in this Annual Report for additional information. The cost of the instruments sold to our development partner was included inresearch and development expenses.Cost of revenue and gross marginCost of revenue decreased by 3% to $10.5 million for the year ended March 31, 2018, compared with $10.8 million for the year ended March 31, 2017. Thedecrease in cost of revenue reflected improved product mix and efficiencies in our manufacturing operations, which were offset in part by incremental costsassociated with greater sales volumes.Gross profit on total revenue in the year ended March 31, 2018 was $14.3 million, an increase of 25% when compared with $11.4 million in the year endedMarch 31, 2017. This increase was attributable to the increase in gross margin on product sales described below offset in part by a reduction of $1.3 millionof other revenues in the year ended March 31, 2017 the associated cost of which was included in research and development expenses.Gross margin, which represents gross profit expressed as a percentage of total revenue, was 58% for the year ended March 31, 2018, compared with 51% forthe year ended March 31, 2017. Gross margin on product sales, which excludes other revenues, was 56% for the year ended March 31, 2018, compared with46% for the year ended March 31, 2017 due to the positive impact of our revenue hedging arrangements, improved product and customer mix andefficiencies at our existing manufacturing facility in Edinburgh, Scotland in the year ended March 31, 2018 compared with the year ended March 31, 2017.Sales and marketing expensesSales and marketing expense increased by 30% to $7.3 million for the year ended March 31, 2018, compared with $5.7 million for the year ended March 31,2017. The growth in sales and marketing expenses in the year ended March 31, 2018 was mainly attributable to the MosaiQ commercial team, which wasestablished in April 2016.Research and development expenses Year ended March 31, 2018 2017 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Research and development expenses: MosaiQ research and development $50,187 203% $55,610 250% $(5,423) -10%Other research and development 1,293 5% 1,858 8% (565) -30%Tax credits (278) -1% (404) -2% 126 -31%Total research and development expenses $51,202 207% $57,064 257% $(5,862) -10%Research and development expenses decreased by $5.9 million to $51.2 million for the year ended March 31, 2018, compared with $57.1 million for the yearended March 31, 2017. The decrease in costs mainly reflected reduced expenditure with our development partners as the initial development of MosaiQ nearscompletion. In addition, research and development expenses for the year ended March 31, 2017 included a $2.0 million expense related to the cost of ourintellectual property license with TTP for MosaiQ. There was no equivalent TTP license expense in the year ended March 31, 2018.- 46 - General and administrative expensesGeneral and administrative expenses increased 13% to $25.7 million for the year ended March 31, 2018, compared with $22.7 million for the year endedMarch 31, 2017. We recognized $4.2 million of stock compensation expense in the year ended March 31, 2018 compared with $4.2 million in the year endedMarch 31, 2017. Stock compensation expense is recognized over the expected vesting period of incentive awards. In the year ended March 31, 2018, therewere greater personnel-related costs as a result of our preparations for the commercialization of MosaiQ and our relocation to the Biocampus facility. As apercentage of total revenue, general and administrative expenses increased to 104% for the year ended March 31, 2018, compared with 102% for the yearended March 31, 2017.Other income (expense)Net interest expense was $15.4 million for the year ended March 31, 2018, compared with $9.9 million for the year ended March 31, 2017. Interest expense inthe year ended March 31, 2018 included $10.1 million of interest charges on our Secured Notes. Interest expense in the year ended March 31, 2017 included$4.6 million of interest charges on the Secured Notes for the period from October 14, 2016 to March 31, 2017 and $1.4 million of interest charges on ourborrowings under our former secured term loan facility with MidCap Financial Trust (or MidCap) from April 1, 2016 to October 14, 2016. Borrowings fromMidcap amounted to $30.0 million from April 1, 2016 to October 14, 2016, bore interest at LIBOR plus 6.7% (with a LIBOR floor of 2.00%) and were repaidfrom the proceeds of the issue of the Secured Notes. Interest expense in the years ended March 31, 2018 and March 31, 2017 included amortization ofdeferred debt issue costs of $4.4 million and $2.7 million, respectively which included amortization of the expected costs of the royalty rights agreementsentered into in October 2016 in connection with the issuance of the Secured Notes. In each of the years ended March 31, 2018 and March 31, 2017, netinterest expense also included $1.1 million of accrued dividends on the 7% cumulative redeemable preference shares issued in January 2015. In addition, inthe year ended March 31, 2018 we earned interest income of $0.2 million on our money market deposits.Other income for the year ended March 31, 2018 included $2.4 million of foreign exchange gains arising on monetary assets and liabilities denominated inforeign currencies. Other expense for the year ended March 31, 2017 included $4.0 million of deferred debt costs related to our borrowings from MidCap,which were expensed on repayment of the MidCap borrowings, offset by $2.9 million of foreign exchange gains arising on monetary assets and liabilitiesdenominated in foreign currencies.Provision for income taxesProvision for income taxes in the year ended March 31, 2018 reflected a reduction in the valuation allowance against deferred tax assets in a subsidiary as aresult of an improvement in the profitability of this subsidiary. No provision for income taxes arose in the year ended March 31, 2017.- 47 - Comparison of Years ended March 31, 2017 and 2016The following table sets forth, for the periods indicated, the amounts of certain components of our statements of operations and the percentage of totalrevenue represented by these items, showing period-to-period changes. Year ended March 31, 2017 2016 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Revenue: Product sales $20,127 91% $18,022 97% $2,105 12%Other revenues 2,100 9% 500 3% 1,600 320%Total revenue 22,227 100% 18,522 100% 3,705 20%Cost of revenue 10,844 49% 9,658 52% 1,186 12%Gross profit 11,383 51% 8,864 48% 2,519 28%Operating expenses: Sales and marketing 5,660 25% 3,073 17% 2,587 84%Research and development 57,064 257% 28,781 155% 28,283 98%General and administrative 22,718 102% 26,098 141% (3,380) -13%Total operating expenses 85,442 384% 57,952 313% 27,490 47%Operating loss (74,059) -333% (49,088) -265% (24,971) 51%Other income (expense): Interest expense, net (9,903) -45% (4,151) -22% (5,752) 139%Other, net (1,107) -5% 19,361 105% (20,468) — Total other income (expense), net (11,010) -50% 15,210 82% (26,220) — Loss before income taxes (85,069) -383% (33,878) -183% (51,191) 151%Provision for income taxes — — — — — — Net loss $(85,069) -383% $(33,878) -183% $(51,191) 151% RevenueTotal revenue increased by 20% to $22.2 million for the year ended March 31, 2017, compared with $18.5 million for the year ended March 31, 2016.Product sales revenue increased by 12% to $20.1 million for the year ended March 31, 2017, compared with $18.0 million for the year ended March 31,2016. The increase in product sales was primarily attributable to growth in product sales to OEM customers and incremental direct sales of conventionalreagent products to customers in the United States. Products sold by standing purchase order were 76% of product sales for the year ended March 31, 2017,compared with 73% for the year ended March 31, 2016. Total revenue for the years ended March 31, 2017 and 2016 also included product developmentrevenues of $2.1 million and $0.5 million, respectively.The below table sets forth revenue by product group: Year ended March 31, 2017 2016 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Revenue: Product sales - OEM customers $14,216 64% $12,165 66% $2,051 17%Product sales - direct customers and distributors $5,911 27% 5,857 32% 54 1%Other revenues 2,100 9% 500 3% 1,600 — Total revenue $22,227 100% $18,522 100% $3,705 20%OEM Sales. Product sales to OEM customers increased 17% to $14.2 million for the year ended March 31, 2017, compared with $12.2 million for the yearended March 31, 2016. The increase was due to better pricing, increased sales to existing customers and the impact of recently launched new products.- 48 - Direct Sales to Customers and Distributors. Direct product sales increased 1% to $5.9 million for the year ended March 31, 2017 compared with $5.9 millionfor the year ended March 31, 2016. Direct sales in the United States increased by 21%, which was mainly attributable to the impact of recent productlaunches and expansion of our customer base. Direct sales outside the United States decreased by 30%, reflecting our decision to rationalize our productofferings in Europe and the rest of the world.Other Revenues. Other revenues of $2.1 million for the year ended March 31, 2017 consisted of product development fees as the result of the achievement ofproduct development milestones under the terms of our umbrella supply agreement with Ortho. See Note 1 "Summary of Significant Accounting Policies –Revenue Recognition" to our consolidated financial statements included in this Annual Report for additional information. During the year ended March 31,2016, we recognized $0.5 million of product development fees related to the same development program.Cost of revenue and gross marginCost of revenue increased by 12% to $10.8 million for the year ended March 31, 2017, compared with $9.7 million for the year ended March 31, 2016. Thisreflected costs associated with greater sales volumes and higher levels of waste in our manufacturing operations.Gross profit on total revenue in the year ended March 31, 2017 was $11.4 million, an increase of 28% when compared with $8.9 million in the year endedMarch 31, 2016. The increase was mainly attributable to greater gross profit on product sales and a $1.6 million increase in other revenues. Gross profit onproduct sales, which excludes other revenues, in the year ended March 31, 2017 was $9.3 million, an increase of 11% when compared with $8.4 millionin the year ended March 31, 2016. The improvement in gross profit on product sales was mainly attributable to the positive impact of greater sales volumesand better pricing on sales to existing OEM customers, offset by higher levels of waste in our manufacturing operations.Gross margin, which represents gross profit expressed as a percentage of total revenue, was 51% for the year ended March 31, 2017, compared with 48% forthe year ended March 31, 2016. Gross margin on product sales, which excludes other revenues, was 46% for the year ended March 31, 2017, compared with46% for the year ended March 31, 2016.Sales and marketing expensesSales and marketing expense increased by 84% to $5.7 million for the year ended March 31, 2017, compared with $3.1 million for the year ended March 31,2016. As a percentage of revenue, sales and marketing expenses were 25% for the year ended March 31, 2017 compared with 17% for the year ended March31, 2016. The growth in sales and marketing expenses in the year ended March 31, 2017 was mainly attributable to the MosaiQ commercial team, which wasestablished in April 2016. In addition, as described below under “General and administrative expenses”, following the year ended March 31, 2016, a numberof roles evolved from general administration, management and planning to the performance of more focused commercial activities. As such, the associatedpersonnel costs and related expenses were categorized as sales and marketing expenses in the year ended March 31, 2017.Research and development expenses Year ended March 31, 2017 2016 Change Amount % of revenue Amount % of revenue Amount % (in thousands, except percentages) Research and development expenses: MosaiQ research and development $55,610 250% $26,624 144% $28,986 109%Other research and development 1,858 8% 2,556 14% (698) -27%Tax credits (404) -2% (399) -2% (5) 1%Total research and development expenses $57,064 257% $28,781 155% $28,283 98%Research and development expenses increased by $28.3 million to $57.1 million for the year ended March 31, 2017, compared with $28.8 million for theyear ended March 31, 2016. As a percentage of total revenue, research and development expenses increased to 257% for the year ended March 31, 2017,compared with 155% for the year ended March 31, 2016. This reflected incremental costs associated with the commercial scale-up of MosaiQ, includinginitial production costs, which are currently expensed as research and development. We started to depreciate the main MosaiQ manufacturing equipment inApril 2016 and depreciation expense included in research and development amounted to $9.0 million compared with $2.5 million in the year ended March31, 2016. Research and development expenses for the year ended March 31, 2017 also included a $2.0 million expense related to the costs of our intellectualproperty license with TTP for MosaiQ. There was no equivalent license expense in the year ended March 31, 2016. In addition, as described below under“General and administrative expenses”, following the year ended March 31, 2016, a number of roles evolved from general administration, management andplanning to the performance of more focused pre-production activities. As such, the- 49 - associated personnel costs and related expenses were categorized as research and development expenses in the year ended March 31, 2017.Tax credits amounted to $0.4 million in both the year ended March 31, 2017 and the year ended March 31, 2016.General and administrative expensesGeneral and administrative expenses were $22.7 million for the year ended March 31, 2017, compared with $26.1 million for the year ended March 31, 2016.Greater personnel-related costs, increased facility rental charges and increased corporate costs were offset by the effect of changes in the primary activities ofcertain MosaiQ managerial and support personnel over the year ended March 31, 2017. Specifically, following the year ended March 31, 2016, a number ofroles evolved from general administration, management and planning to the performance of more focused pre-production or commercial activities. As such,the associated personnel and related expenses were categorized as research and development or sales and marketing in the year ended March 31, 2017. Werecognized $4.2 million of stock compensation expense in the year ended March 31, 2017 compared with $2.0 million in the year ended March 31, 2016. Asa percentage of total revenue, general and administrative expenses decreased to 102% for the year ended March 31, 2017, compared with 141% for the yearended March 31, 2016.Other income (expense)Net interest expense was $9.9 million for the year ended March 31, 2017, compared with $4.2 million for the year ended March 31, 2016. Interest expense inthe year ended March 31, 2017 included $4.6 million of interest charges on the Secured Notes for the period from October 14, 2016 to March 31, 2017.Interest expense in the year ended March 31, 2017 also included interest charges of $1.4 million on our borrowings from MidCap, which bore interest atLIBOR plus 6.7% (with a LIBOR floor of 2.00%). Borrowings from MidCap amounted to $30.0 million from April 1, 2016 to October 14, 2016 and were thenrepaid from the proceeds of issue of the Secured Notes. Interest expense in the year ended March 31, 2016 included interest charges of $2.2 million on ourborrowings from MidCap, which bore interest at LIBOR plus 6.7% (with a LIBOR floor of 2.00%). During the year ended March 31, 2016, borrowings fromMidCap from April 1, 2015 to July 1, 2015 were $15.0 million, then decreased to $14.5 million from July 1, 2015 to August 3, 2015 as a result of scheduledprincipal amortization and then increased to $30.0 million as a result of an increase in our credit facility. Interest expense in the years ended March 31, 2017and March 31, 2016 included amortization of deferred debt issue costs of $2.7 million and $0.9 million, respectively. In the year ended March 31, 2017, thisincluded amortization of the expected costs of the royalty rights agreements entered into in October 2016 in connection with the issuance of the SecuredNotes. In each of the years ended March 31, 2017 and March 31, 2016, net interest expense also included $1.1 million of accrued dividends on the 7%cumulative redeemable preference shares issued in January 2015.Other expense for the year ended March 31, 2017 included $4.0 million of deferred debt costs related to our borrowings from MidCap, which were expensedon repayment of the MidCap borrowings, offset by $2.9 million of foreign exchange gains arising on monetary assets and liabilities denominated in foreigncurrencies.Other income for the year ended March 31, 2016 included income of $15.9 million related to the change in the fair value of the warrants issued at the time ofour initial public offering and foreign exchange gains of $4.1 million arising on monetary assets and liabilities denominated in foreign currencies offset by$0.6 million of previously deferred fees that were expensed as a result of the expansion of our previous MidCap facility in August 2015. - 50 - Quarterly Results of OperationsThe following table sets forth selected unaudited consolidated quarterly statements of operations data for our eight most recent completed fiscal quarters. Wehave prepared the consolidated quarterly operations data on a basis consistent with the audited consolidated financial statements included elsewhere in thisAnnual Report. In the opinion of management, the quarterly consolidated operations data reflects all necessary adjustments, consisting only of normalrecurring adjustments, necessary for a fair presentation of this data. Historical results are not necessarily indicative of the results to be expected in futureperiods and the results for a quarterly period are not necessarily indicative of the operating results for a full year. This information should be read inconjunction with the consolidated financial statements included elsewhere in this Annual Report. 2018 2017 2016 Mar 31 Dec 31 Sept 30 June 30 Mar 31 Dec 31 Sept 30 June 30 (in thousands, except percentages) Revenue: Product sales $6,124 $5,653 $5,910 $6,226 $4,726 $4,841 $4,844 $5,717 Other revenues 13 206 — 600 800 — 1,300 — Total revenue 6,137 5,859 5,910 6,826 5,526 4,841 6,144 5,717 Cost of revenue (2,528) (2,325) (2,786) (2,832) (2,390) (2,602) (2,761) (3,091)Gross profit 3,609 3,534 3,124 3,994 3,136 2,239 3,383 2,626 Operating expenses: Sales and marketing (1,886) (1,910) (1,869) (1,682) (1,294) (1,836) (1,273) (1,257)Research and development (13,259) (11,929) (13,341) (12,673) (13,585) (17,183) (14,495) (11,801)General and administrative (6,391) (6,790) (5,974) (6,545) (5,996) (5,650) (5,126) (5,946)Total operating expenses (21,536) (20,629) (21,184) (20,900) (20,875) (24,669) (20,894) (19,004)Operating profit (loss) (17,927) (17,095) (18,060) (16,906) (17,739) (22,430) (17,511) (16,378)Other income (expense): Interest expense, net (3,709) (3,249) (4,197) (4,210) (3,351) (4,168) (1,213) (1,171)Other, net 888 33 565 880 781 (4,568) 1,366 1,314 Total other income (expense), net (2,821) (3,216) (3,632) (3,330) (2,570) (8,736) 153 143 Loss before income taxes (20,748) (20,311) (21,692) (20,236) (20,309) (31,166) (17,358) (16,235)Provision for income taxes 649 — — — — — — — Net loss $(20,099) $(20,311) $(21,692) $(20,236) $(20,309) $(31,166) $(17,358) $(16,235)% of Product Sales from Standing Purchase Orders 77% 76% 68% 79% 81% 75% 73% 76%Our quarterly product sales can fluctuate depending upon the shipment cycles for our red blood cell-based products, which account for approximately two-thirds of our current product sales. For these products, we typically experience 13 shipping cycles per year. This equates to three shipments of each productper quarter, except for one quarter per year when four shipments occur. In fiscal 2018 and in fiscal 2017, the greatest impact of extra product shipmentsoccurred in our first quarter. The timing of shipment of bulk antisera products to our OEM customers may also move revenues from quarter to quarter. We alsoexperience some seasonality in demand around holiday periods in both Europe and the United States. As a result of these factors, we expect to continue to seeseasonality and quarter-to-quarter variations in our product sales.The timing of product development fees included in other revenues is mostly dependent upon the achievement of pre-negotiated project and milestones.Liquidity and Capital ResourcesSince our commencement of operations in 2007, we have incurred net losses and negative cash flows from operations. As of March 31, 2018, we had anaccumulated deficit of $275.6 million. During the year ended March 31, 2018, we incurred a net loss of $82.3 million and used $68.4 million of cash foroperating activities. During the year ended March 31, 2017, we incurred a net loss of $85.1 million and used $56.2 million of cash for operating activities.We incurred a net loss of $33.9 million and used $47.0 million of cash for operating activities during the year ended March 31, 2016. As described underresults of operations, our use of cash during the years ended March 31, 2018 and March 31, 2017 was primarily attributable to our investment in thedevelopment of MosaiQ, the construction of the Biocampus facility near Edinburgh, Scotland and corporate costs, including costs related to being a publiccompany.- 51 - From our incorporation in 2012 to March 31, 2017, we have raised $70.6 million of gross proceeds through the private placement of our ordinary andpreference shares and warrants, $132.8 million of gross proceeds from public offerings of our shares and issuances of ordinary shares upon exercise of warrantsand $84.0 million of gross proceeds from the issuance of the Secured Notes.During the fiscal year ended March 31, 2018, on April 10, 2017, we completed a public offering of 8,050,000 newly issued ordinary shares at a price of $6.00per share which raised $48.3 million of gross proceeds before underwriting discounts and other offering expenses.On October 24, 2017, we entered into subscription agreements for the private placement of (i) 7,864,683 newly issued ordinary shares at a subscription priceof $4.64 per share, (ii) newly issued warrants, at a purchase price of $0.125 per underlying warrant share, exercisable for up to 8,414,683 ordinary shares at anexercise price of $5.80 per ordinary share, and (iii) newly issued pre-funded warrants at a purchase price of $4.755 per underlying pre-funded warrant share,exercisable for up to 550,000 ordinary shares at an exercise price of $0.01 per ordinary share. The aggregate gross proceeds were $40.2 million. If the warrantsare exercised in full prior to their expiration on July 31, 2018, it would result in additional proceeds of $48.8 million. However, there can be no assurancethat the warrants will be exercised.In addition, on March 23, 2018, we raised $20.9 million from the sale and leaseback of our recently completed Biocampus facility, near Edinburgh, Scotland.As of March 31, 2018, we had cash and cash equivalents and short-term investments of $30.9 million, including $5.4 million of cash held in restrictedaccounts as part of the arrangements relating to our Secured Notes and the lease of our property in Eysins, Switzerland.12% Senior Secured Notes Due 2023As described above, on October 14, 2016 we completed the private placement of up to $120 million aggregate principal amount of the Secured Notes. Ourobligations under the Secured Notes and the related indenture are unconditionally guaranteed on a secured basis by the guarantors, which include all oursubsidiaries, and the indenture contains customary events of default. We must also comply with certain customary affirmative and negative covenants,including a requirement to maintain six-months of interest in a cash reserve account maintained with the collateral agent.We issued $84 million aggregate principal amount of the Secured Notes on October 14, 2016 and, so long as no event of default has occurred, we will issuean additional $36 million aggregate principal amount of the Secured Notes upon public announcement of field trial results for the MosaiQ IH Microarray thatdemonstrates greater than 99% concordance for the detection of blood group antigens and greater than 95% concordance for the detection of blood groupantibodies when compared to predicate technologies for a pre-defined set of blood group antigens and antibodies. We paid $5 million of the net proceedsinto the cash reserve account maintained with the collateral agent under the terms of the indenture.Interest on the Secured Notes accrues at a rate of 12% per annum and is payable semi-annually on April 15 and October 15 of each year commencing on April15, 2017. Commencing on April 15, 2019, we will also pay an installment of principal of the Secured Notes on each April 15 and October 15 until October15, 2023 pursuant to a fixed amortization schedule.In connection with the offering on October 14, 2016, we entered into royalty rights agreements, pursuant to which we sold to the note purchasers in theoffering, the right to receive an aggregate payment equal to 2.0% of the aggregate net sales of MosaiQ Instruments and MosaiQ Microarrays made in thedonor testing market in the United States and the European Union. The royalty will be payable beginning on the date that we enter into a contract for the saleof MosaiQ Instruments or MosaiQ Microarrays in the donor testing market in the European Union or the United States and will end on the last day of thecalendar quarter in which the eighth anniversary of the first contract date occurs.Using the proceeds of the Secured Notes issued on October 14, 2016, we repaid in full on that day our borrowings under our previous secured term loanfacility with MidCap, which amounted to $33.5 million including fees and expenses.Cash Flows for the Years Ended March 31, 2018 and 2017Operating activitiesNet cash used in operating activities was $68.4 million during the year ended March 31, 2018, which included net losses of $82.3 million and non-cash itemsof $19.5 million. Non-cash items were depreciation and amortization expense of $10.4 million, share-based compensation expense of $4.2 million, Swisspension costs of $0.7 million, amortization of deferred debt issue costs of $4.4 million and accrued preference share dividends of $1.0 million, offset bydeferred income taxes of $0.6 million and amortization of lease incentives of $0.4 million. We also experienced a net cash outflow of $5.6 million fromchanges in operating assets and- 52 - liabilities during the period, consisting of a $3.3 million reduction in accounts payable and accrued liabilities, a $1.7 million increase in inventories, a $0.1million increase in accounts receivable and a $2.1 million increase in other assets offset by a $1.6 million increase in accrued compensation and benefits.Net cash used in operating activities was $56.2 million during the year ended March 31, 2017, which included net losses of $85.1 million and non-cash itemsof $21.7 million. Non-cash items were depreciation and amortization expense of $9.5 million, share-based compensation expense of $4.2 million, Swisspension costs of $0.6 million, amortization of deferred debt issue costs of $6.8 million and accrued preference share dividends of $1.1 million, offset byamortization of lease incentives of $0.4 million. We also experienced a net cash inflow of $7.2 million from changes in operating assets and liabilities duringthe period, consisting primarily a $10.0 million increase in accounts payable and accrued liabilities and a $0.8 million increase in accrued compensation andbenefits offset by a $1.8 million increase in inventories, a $0.6 million increase in accounts receivable and a $1.2 million increase in other assets.Investing activitiesNet cash from investing activities was $3.3 million in the year ended March 31, 2018 and net cash used in investing activities was $36.3 million in the yearended March 31, 2017. We invested $16.0 million in a short-term money market fund in the year ended March 31, 2017 and withdrew $10.4 million in theyear ended March 31, 2018. Purchases of property and equipment in the years ended March 31, 2018 and March 31, 2017 were $21.6 million and $20.2million, respectively. Most of these expenditures related to the construction of the Biocampus facility and we generated $14.7 million, net of a rent depositpayment in the year ended March 31, 2018 from the sale and leaseback of this building. We also invested $0.2 million and $0.1 million in the years endedMarch 31, 2018 and March 31, 2017, respectively, on new product licenses within our conventional reagent operations.Financing activitiesNet cash provided by financing activities was $83.3 million (including our April 2017 public offering of ordinary shares and our October 2017 privateplacement of ordinary shares and warrants) during the year ended March 31, 2018, consisting of $85.0 million of net proceeds from the issuance of ordinaryshares and warrants and exercise of share options offset by $1.7 million of repayments on finance leases.Net cash provided by financing activities was $56.5 million during the year ended March 31, 2017, consisting primarily of net proceeds of $16.4 millionfrom our August 2016 public offering of ordinary shares, $0.3 million from the issue of other ordinary shares and $45.0 million of proceeds from new debt netof issue costs and repayment of our previous MidCap facility, offset by $5.0 million paid into a cash reserve account maintained with the collateral agent forthe Secured Notes and $0.1 million of repayments on finance leases.Cash Flows for the Years Ended March 31, 2017 and 2016Operating activitiesNet cash used in operating activities was $56.2 million during the year ended March 31, 2017, which included net losses of $85.1 million and non-cash itemsof $21.7 million. Non-cash items were depreciation and amortization expense of $9.5 million, share-based compensation expense of $4.2 million, Swisspension costs of $0.6 million, amortization of deferred debt issue costs of $6.8 million and accrued preference share dividends of $1.1 million, offset byamortization of lease incentives of $0.4 million. We also experienced a net cash inflow of $7.2 million from changes in operating assets and liabilities duringthe period, consisting primarily a $10.0 million increase in accounts payable and accrued liabilities and a $0.8 million increase in accrued compensation andbenefits offset by a $1.8 million increase in inventories, a $0.6 million increase in accounts receivable and a $1.2 million increase in other assets.Net cash used in operating activities was $47.0 million during the year ended March 31, 2016, which included net losses of $33.9 million and non-cash itemsof $8.8 million. Non-cash items were depreciation and amortization expense of $2.9 million, share-based compensation expense of $2.0 million, amortizationof deferred debt issue costs of $1.5 million and accrued preference share dividends of $1.1 million, offset by a change in the fair value of the liability inrespect of share warrants of $15.9 million and amortization of lease incentives of $0.4 million. We also experienced a net cash outflow of $4.3 million fromchanges in operating assets and liabilities during the period, consisting primarily of an $8.1 million increase in inventories and a $0.5 million increase inaccounts receivable, offset by a $2.6 million decrease in other assets and a $1.8 million increase in accounts payable and accrued liabilities.- 53 - Investing activitiesNet cash used in investing activities was $36.3 million and $29.0 million for the years ended March 31, 2017 and 2016, respectively. We invested $16.0million in a short-term money market fund in the year ended March 31, 2017. Purchases of property and equipment in the year ended March 31, 2017 were$20.2 million and included $4.3 million related to the MosaiQ project and $15.9 million related to our conventional reagent business, $15.2 million ofwhich related to the construction the Biocampus facility. In the year ended March 31, 2017, we also invested $0.1 million on new product licenses within ourconventional reagent operations. Purchases of property and equipment in the year ended March 31, 2016 were $28.9 million and included $24.5 millionrelated to the MosaiQ project and $4.4 million related to our conventional reagent business. We also invested $0.1 million on new product licenses withinour conventional reagent operations in the year ended March 31, 2016.Financing activitiesNet cash provided by financing activities was $56.5 million during the year ended March 31, 2017, consisting primarily of net proceeds of $16.4 millionfrom the August 2016 public offering of ordinary shares, $0.3 million from the issue of other ordinary shares and $45.0 million of proceeds from new debt netof issue costs and repayment of our previous MidCap facility, offset by $5.0 million paid into a cash reserve account maintained with the collateral agent forthe Secured Notes and $0.1 million of repayments on finance leases.Net cash provided by financing activities was $85.6 million during the year ended March 31, 2016, consisting primarily of net proceeds of $36.8 millionfrom our February 2016 public offering of ordinary shares and net proceeds of $34.5 million from the exercise of warrants issued at the time of our initialpublic offering and incentive share options. We also received $14.3 million from the expansion of our previous MidCap facility in August 2015.Operating and Capital Expenditure RequirementsWe have not achieved profitability on an annual basis since we commenced operations in 2007 and we expect to incur net losses for at least the next fiscalyear. As we move towards the commercial launch of MosaiQ, we expect our operating expenses during the year ended March 31, 2019 to be similar to thoseof the year ended March 31, 2018, as we continue to invest in growing our customer base, expanding our marketing and distribution channels, hiringadditional employees and investing in other product development opportunities while development expenditure on MosaiQ reduces.As of March 31, 2018, we had cash and cash equivalents and short-term investments of $25.8 million, including $0.3 million of cash held in a restrictedaccount as part of the arrangements relating to the lease of our property in Eysins, Switzerland. We also held $5.0 million in a cash reserve accountmaintained with the collateral agent for the Secured Notes.Our future capital requirements will depend on many factors, including: •our progress in developing and commercializing MosaiQ and the cost required to complete development, obtain regulatory approvals andincrease our manufacturing capacity; •Ortho’s progress in commercializing MosaiQ for the patient testing market; •our ability to manufacture and sell our conventional reagent products, including the costs and timing of further expansion of our sales andmarketing efforts; •our ability to collect our accounts receivable; •our ability to generate cash from operations; •any acquisition of businesses or technologies that we may undertake; and •our ability to penetrate our existing market and new markets.- 54 - We expect to fund our operations in the near-term, including the ongoing development of MosaiQ through successful field trial completion, achievement ofrequired regulatory authorizations and commercialization from a combination of funding sources. These expected funding sources include the use of existingavailable cash and short-term investment balances, the issuance of new equity (including up to $49 million of proceeds from the exercise of warrants with anexercise price of $5.80 issued in connection with our October 2017 private placement of ordinary shares by their expiration date of July 31, 2018) and debt(including through the issuance of a further $36 million of the Secured Notes upon the publication of successful field trial concordance data for the IH1microarray). We expect the publication of field trial concordance data by July 2018, providing availability of these expected funding sources, andaccordingly have prepared the financial statements included elsewhere in this Annual Report assuming that we will continue as a going concern. However,there can be no assurance that we will be able to obtain adequate financing when necessary and the terms of any financings may not be advantageous to usand may result in dilution to our shareholders. In particular, there can be no assurance that we will be able to successfully complete MosaiQ field trials, thatthe Company’s share price will remain above $5.80 until July 31, 2018 and even if it does, that a sufficient level of warrants will be exercised by the warrantholders by that date.Contractual ObligationsWe have contractual obligations for non-cancelable facilities leases, our Secured Notes and related royalty rights agreements, equipment leases and purchasecommitments. The following table sets forth a summary of our contractual obligations as of March 31, 2018. Payment by period Contractual Obligations Total Less than1 year 1 to 3years 3 to 5years After 5years 12% Senior Secured Notes due 2023 $84,000 $— $27,720 $35,280 $21,000 Interest on 12% Senior Secured Notes 40,169 10,080 17,741 10,433 1,915 Royalty rights agreements with note purchasers 41,778 — 1,164 9,558 31,056 7% Cumulative Redeemable Preference Shares (1) 15,000 — 15,000 — — Dividends on 7% Cumulative Redeemable Preference Shares (1) 4,200 — 4,200 — — Operating and capital leases 95,949 4,343 6,268 4,419 80,919 STRATEC Biomedical manufacturing agreement (2) 72,072 4,612 30,836 26,857 9,767 MW High Tech Projects construction contract (3) 3,238 3,238 — — — Other 7,753 7,234 519 — — Total contractual obligations $364,159 $29,507 $103,448 $86,547 $144,657 (1)The 7% Cumulative Redeemable Preference Shares are redeemable at the option of the shareholders on a date not before January 29, 2020, which canbe extended at our option in one year increments until January 29, 2025. We can pay dividends on the 7% Cumulative Redeemable Preference Sharesat any time, but are not obligated to do so until redemption. (2)We have entered into a manufacturing agreement with STRATEC in connection with the supply of MosaiQ instruments over a six year period. Thetotal purchase obligation under this agreement is $72.1 million (€58.5 million) using March 31, 2018 exchange rates.(3)We entered into a contract with MW High Tech Products UK Limited for the construction of the Biocampus facility. Construction was completed inJanuary 2018. The commitment shown is the estimated amount remaining to be paid under the contract at March 31, 2018.Critical Accounting Policies and Significant Judgments and EstimatesWe have prepared our consolidated financial statements in accordance with U.S. GAAP. Our preparation of these consolidated financial statements requires usto make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, expenses and related disclosures at the date of theconsolidated financial statements, as well as revenue and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoingbasis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of whichform the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results couldtherefore differ materially from these estimates under different assumptions or conditions.- 55 - While our significant accounting policies are described in more detail in Note 1 to our consolidated financial statements included in this Annual Report, webelieve the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.Revenue recognition and accounts receivableRevenue is recognized in accordance with Accounting Standards Codification, or “ASC”, 605, Revenue Recognition, when the following four basic criteriahave been met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services are rendered; (3) the fee is fixed or determinable; and(4) collectability is reasonably assured. For product sales, the application of this policy results in sales revenue being recorded at the point of delivery ofproduct to the customer.We also earn revenue from the provision of development services to a small number of OEM customers. These development service contracts are reviewedindividually to ensure that our revenue recognition is in accordance with applicable accounting standards, including ASC 605. In recent years, our productdevelopment revenues have been commensurate with achieving milestones specified in the respective development agreements relating to those products.These milestones may include the approval of new products by the European or U.S. regulatory authorities, which are not within our control. While there canbe no assurance that we will earn product development revenues when milestones are achieved, the nature of the milestones have been such that theyeffectively represent full completion of a particular part of a development program. As a result, we typically fully recognize milestone-related revenues as themilestones are achieved in accordance with applicable accounting standards.Under certain development contracts, we also manufacture and supply the customer with finished products once it has been approved for use by relevantregulatory agencies. These agreements reflect both arrangements for product development and the sales prices and other contractual terms for subsequentsupply of the product to the customer. Under these development contracts, we view the development service revenue as distinct from subsequent productsales revenue, and we recognize each separately as described above.Accounts receivable consist primarily of amounts due from OEM customers, hospitals, donor testing laboratories, and distributors. Accounts receivable arereported net of an allowance for uncollectible accounts, which we also refer to as doubtful accounts. The allowance for doubtful accounts represents a reservefor estimated losses resulting from our inability to collect amounts due from our customers. Direct sales, where we may make many low value sales to a largenumber of customers, represents a larger risk of doubtful accounts, as opposed to OEM customer sales consisting primarily of a small number of wellestablished businesses with whom we have a long trading history. The collectability of our trade receivables balances is regularly evaluated based on acombination of factors such as the ageing profile of our receivables, past history with our customers, changes in customer payment patterns, customer credit-worthiness and any other relevant factors. Based on these assessments, we adjust the reserve for doubtful accounts recorded in our financial statements.InventoriesWe record inventories at the lower of cost (first-in, first-out basis) or market (net realizable value), net of reserves. We record adjustments to inventory basedupon historic usage, expected future demand and shelf life of the products held in inventory. We also calculate our inventory value based on the standardcost of each product. This approach requires us to analyze variances arising in the production process to determine whether they reflect part of the normalcost of production, and should therefore be reflected as inventory value, or whether they are a period cost and should thus not be included in inventory.Intangible assetsThe intangible assets included in our financial statements include intangible assets identified as at the time of the acquisition of the business of AlbaBioscience on August 31, 2007. At the time of this acquisition, we identified intangible assets related to customer relationships, master cell lines and certainother items, which include domain names and product trademarks. The customer relationships have been amortized over a five-year period, which resulted inthem becoming fully amortized at August 31, 2012. The other items were amortized over a seven-year period from August 31, 2007.The intangible assets related to master cell lines reflect the know-how and market recognition associated with the cell lines, which are used as the sourcematerial of certain of our products. These cell lines are maintained by us and have an indefinite life. We have nevertheless decided to amortize the intangibleassets over a forty-year period to reflect the possibility of market changes or other events resulting in the lines becoming technically obsolete at some futuredate. In the event that any of the lines cease to be used, we would record additional amortization at that point.We also include in intangible assets the costs of obtaining product licenses for our products. These include external costs such as regulatory agency feesassociated with the approval and bringing to market of our products once the development is complete. We- 56 - amortize these over an expected product life of eight years, although if any such product ceased to be produced, we would record additional amortization atthat point.Income taxesWe account for income taxes under the asset and liability method, which requires, among other things, that deferred income taxes be provided for temporarydifferences between the tax basis of our assets and liabilities and their financial statement reported amounts. In addition, deferred tax assets are recorded forthe future benefit of utilizing NOLs and research and development credit carry forwards. A valuation allowance is established when necessary to reducedeferred tax assets to the amount expected to be realized.We follow the accounting guidance for uncertainties in income taxes, which prescribes a recognition threshold and measurement process for recordinguncertain tax positions taken, or expected to be taken, in a tax return in the financial statements. Additionally, the guidance also prescribes thederecognition, classification, accounting in interim periods and disclosure requirements for uncertain tax positions. We accrue for the estimated amount oftaxes for uncertain tax positions if it is more likely than not that we would be required to pay such additional taxes. An uncertain tax position will not berecognized if it has less than a 50% likelihood of being sustained. We did not have any accrued interest or penalties associated with any unrecognized taxpositions, and there were no such interest or penalties recognized during the years ended March 31, 2018, 2017 or 2016.Stock compensation expenseStock compensation expense is measured at the grant date based on the fair value of the award and is recognized as an expense in the income statement overthe vesting period of the award. The calculation of the stock compensation expense is sensitive to the fair value of the underlying ordinary shares. The fairvalue of option awards and multi-year performance based restricted share units or MRSUs at the grant date is calculated using the Black-Scholes model orother valuation models, which use a number of assumptions to determine the fair value. Details of the assumptions used are set out in the notes to thefinancial statements included in this Annual Report.Defined benefit pension obligationsWe account for the pension obligations of our Swiss subsidiary as a defined benefit plans under ASC 715 Compensation – Retirement Benefits. This requiresthat an actuarial valuation be performed to determine the funded status of the pension arrangements. The actuarial valuation is based on a number ofassumptions, details of which are set out in the notes to the financial statements included in this Annual Report.Royalty liabilityThe royalty rights agreements entered into in connection with the issue of the Secured Notes are treated as sales of future revenues that meet the requirementsof Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The estimated future cash outflows under the royalty rights agreements havebeen combined with the issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interestexpenses using the effective interest rate method over the term of the Secured Notes and royalty rights agreements. Estimating the future cash outflows underthe royalty rights agreements requires us to make certain estimates and assumptions about future sales of MosaiQ products. These estimates of the magnitudeand timing of MosaiQ sales are subject to significant variability due to the current status of development of MosaiQ products, and thus are subject tosignificant uncertainty. Therefore, the estimates are likely to change as we gain experience of marketing MosaiQ, which may result in future adjustments tothe accretion of the interest expense and the amortized cost based carrying value of the Secured Notes.Off-Balance Sheet ArrangementsWe do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or specialpurpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for any other contractually narrow orlimited purpose.Recent Accounting PronouncementsThe FASB issued ASU 2014-09, Revenue from Contracts with Customers that will supersede virtually all revenue recognition guidance in GAAP. The newstandard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goodsor services to their customers (unless the contracts are in the scope of other GAAP requirements). The guidance also provides a model for the measurementand recognition of gains and losses on the sale of- 57 - certain nonfinancial assets, such as property and equipment, including real estate. We completed an analysis of existing contracts with our customers andassessed the differences in accounting for such contracts under this guidance compared with current revenue accounting standards. Based on our review ofexisting customer contracts, adoption of the new standard is not expected to have a material impact on our financial statements upon adoption or on anongoing basis. We will adopt the new standard on April 1, 2018 using the modified retrospective method.The FASB issued ASU 2016-02, Leases that requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets but recognizeexpenses on their income statements in a manner similar to current accounting standards. ASU 2016-02 will also require new qualitative and quantitativedisclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. Thestandard could have significant implications for the accounting for our operating leases. ASU 2016-02 is effective for annual periods beginning afterDecember 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard will not be mandatory until ourfiscal year ending March 31, 2020. We are continuing to evaluate the impact of the adoption of this guidance on our consolidated financial statements andrelated disclosures.The FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash. ASU 2016-18 requires a statement of cash flows to explain the change during theperiod in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described asrestricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, includinginterim periods within those fiscal years. The effective date will be the first quarter of fiscal year 2019 and early adoption is permitted. We continue toevaluate the impact of the adoption of this guidance on our consolidated financial statements, but do not expect it to have a material impact.The FASB issued ASU 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net PeriodicPostretirement Benefit Cost. ASU 2017-07 changes how employers that sponsor defined benefit pension plans and other postretirement plans present the netperiodic benefit cost in the income statement. An employer is required to report the service cost component in the same line item or items as othercompensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to bepresented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendment also allowsonly the service cost component to be eligible for capitalization, when applicable. ASU 2017-07 is effective for annual periods beginning after December 15,2017, including interim periods within those fiscal years. The effective date will be the first quarter of fiscal year 2019. We continue to evaluate the impactof the adoption of this guidance on our consolidated financial statements, but do not expect it to have a material impact.The FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the termsor conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewerchanges to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before andafter the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods,and interim periods within those annual periods, beginning after December 15, 2017. The effective date will be the first quarter of fiscal year 2019 and earlyadoption is permitted. We continue to evaluate the impact of the adoption of this guidance on our consolidated financial statements, but do not expect it tohave a material impact.JOBS ActUnder the JOBS Act, emerging growth companies that become public can delay adopting new or revised accounting standards until such time as thosestandards apply to private companies. We have elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, weare subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. - 58 - Item 7A. Quantitative and Qualitative Disclosures About Market RiskWe are exposed to market risks in the ordinary course of our business. These market risks are principally limited to interest rate fluctuations and foreigncurrency exchange rate fluctuations.Interest rate sensitivityWe are exposed to market risk related to changes in interest rates as it impacts our interest income.Cash, cash equivalents and cash reserve account. At March 31, 2018, we had cash and cash equivalents of $20.2 million and we also held $5.0 million in acash reserve account maintained with the collateral agent for the Secured Notes. Our exposure to market risk includes interest income sensitivity, which isimpacted by changes in the general level of U.S. and European interest rates. Our cash and cash equivalents and the cash reserve account are held in interest-bearing savings accounts and bank accounts. We do not enter into investments for trading or speculative purposes. Due to the current levels of interest rates,we do not believe an immediate one percentage point change in interest rates would have a material effect on the fair market value of our holdings, andtherefore we do not expect our operating results or cash flows to be significantly affected by changes in market interest rates.Senior Secured Notes. At March 31, 2018, we had term debt of $84.0 million outstanding under the Secured Notes. The Secured Notes are fixed-rateinstruments and, as a result, a change in market interest rates has no impact on our interest expense incurred or cash flows.Foreign currency exchange riskThe main currencies that we use for our trading operations are the U.S. Dollar, the Pound Sterling, the Swiss Franc and to a lesser extent, the Euro. Ourmeaningful cash balances are held in a mixture of U.S. Dollars, Euros, Pounds Sterling and Swiss Francs. These cash balances may not be the same as thefunctional currencies of the Quotient entities in which they are held and as a result, exchange rate fluctuations may result in foreign exchange gains andlosses on our income statement.We are subject to market risks arising from changes in foreign currency exchange rates between the U.S. Dollar and the Pound Sterling and the U.S. Dollar andthe Swiss Franc. Accordingly, fluctuations in the U.S. Dollar versus Pounds Sterling and the U.S. Dollar versus the Swiss Franc exchange rate give rise toexchange gains and losses. These gains and losses arise from the conversion of U.S. Dollars and Euros to Pounds Sterling and the retranslation of cash,accounts receivable, intercompany indebtedness and other asset and liability balances. Based on our assets and liabilities held in Pounds Sterling at March31, 2018, we estimate that a 5% strengthening of the Pound Sterling against the U.S. Dollar would give rise to a gain of approximately $1.1 million and a 5%weakening of the Pound Sterling against the U.S. Dollar would give rise to loss of approximately $1.1 million. Based on our assets and liabilities held inSwiss Francs at March 31, 2018, we estimate that a 5% strengthening of the Swiss Franc against the U.S. Dollar would give rise to a gain of approximately$2.3 million and a 5% weakening of the Swiss Franc against the U.S. Dollar would give rise to loss of approximately $2.3 million.Most of our revenues are earned in U.S. Dollars, but the costs of our conventional reagent manufacturing operations are payable mainly in Pounds Sterling.We therefore closely monitor the results of our UK operations to address this difference. During the year ended March 31, 2018, the net operating expensesarising in Pounds Sterling from our UK conventional reagent manufacturing operations amounted to $18.8 million. This expenditure is offset by revenuesarising in U.S. Dollars and other currencies. We have entered into forward contracts to hedge against the effects of fluctuations in the U.S. Dollar versus thePounds Sterling exchange rate. The principal value of the hedges related to the results of fiscal year 2019 is $4.5 million and, based on this, a hypotheticalinstantaneous 5% strengthening of the Pound Sterling against the U.S. Dollar would reduce our net income by $0.7 million in the year ending March 31,2019 after taking account of the shelter provided by our existing hedging arrangements through March 31, 2019. Similarly, a hypothetical instantaneous 5%weakening of the Pound Sterling against the U.S. Dollar would increase group net income by $0.7 million over the same period.We do not use financial instruments for trading or other speculative purposes.Our management does not believe that inflation in past years has had a significant impact on our results from operations. In the event inflation affects ourcosts in the future, we will offset the effect of inflation and maintain appropriate margins through increased selling prices. - 59 - Item 8. Financial Statements and Supplementary DataThe quarterly financial data required by this item may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quarterly Results of Operations.” - 60 - Index to financial statementsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm 62 Consolidated Balance Sheets as of March 31, 2018 and 2017 63 Consolidated Statements of Comprehensive Loss for the years ended March 31, 2018, 2017 and 2016 64 Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the years ended March 31, 2018, 2017 and 2016 65 Consolidated Statements of Cash Flows for the years ended March 31, 2018, 2017 and 2016 66 Notes to Consolidated Financial Statements 67 - 61 - Report of Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of Quotient LimitedOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Quotient Limited (the Company) as of March 31, 2018 and 2017, the related consolidatedstatements of comprehensive loss, shareholders' equity (deficit) and cash flows for each of the three years in the period ended March 31, 2018, and the relatednotes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of the Company at March 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years inthe period ended March 31, 2018, in conformity with U.S. generally accepted accounting principles.The Company's Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the financial statements, the Company has recurring losses from operations and planned expenditure exceeding available funding, and has stated thatsubstantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions andmanagement’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that mightresult from the outcome of this uncertainty.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe 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 obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financialreporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2007.Belfast, United KingdomMay 30, 2018 - 62 - QUOTIENT LIMITEDCONSOLIDATED BALANCE SHEETS(Expressed in thousands of U.S. Dollars — except for share data and per share data) March 31,2018 March 31,2017 ASSETS Current assets: Cash and cash equivalents $20,165 $4,754 Short-term investments 5,669 16,057 Trade accounts receivable, net 2,862 2,556 Inventories 16,278 13,636 Prepaid expenses and other current assets 7,065 3,629 Total current assets 52,039 40,632 Cash reserve account 5,040 5,040 Property and equipment, net 60,156 63,530 Intangible assets, net 914 769 Deferred income taxes 649 — Other non-current assets 5,043 — Total assets $123,841 $109,971 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Accounts payable $5,441 $10,782 Accrued compensation and benefits 5,312 3,641 Accrued expenses and other current liabilities 15,340 13,509 Current portion of lease incentive 443 422 Current portion of capital lease obligation 515 1,374 Total current liabilities 27,051 29,728 Long-term debt 85,063 80,704 Lease incentive, less current portion 443 844 Capital lease obligation, less current portion 1,422 174 Defined benefit pension plan obligation 6,168 5,337 7% Cumulative redeemable preference shares 18,325 17,275 Total liabilities 138,472 134,062 Commitments and contingencies — — Shareholders' equity (deficit) Ordinary shares (nil par value) 45,646,424 and 29,567,698 issued and outstanding at March 31, 2018 and March 31, 2017 respectively 253,934 172,617 Additional paid in capital 23,708 15,885 Accumulated other comprehensive loss (16,634) (19,292)Accumulated deficit (275,639) (193,301)Total shareholders' deficit (14,631) (24,091)Total liabilities and shareholders' deficit $123,841 $109,971The accompanying notes form an integral part of these consolidated financial statements. - 63 - CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(Expressed in thousands of U.S. Dollars — except for share data and per share data) Year ended March 31, 2018 2017 2016 Revenue: Product sales $23,913 $20,127 $18,022 Other revenues 819 2,100 500 Total revenue 24,732 22,227 18,522 Cost of revenue (10,471) (10,844) (9,658)Gross profit 14,261 11,383 8,864 Operating expenses: Sales and marketing (7,347) (5,660) (3,073)Research and development, net of government grants (51,202) (57,064) (28,781)General and administrative expense: Compensation expense in respect of share options and management equity incentives (4,156) (4,221) (2,004)Other general and administrative expenses (21,544) (18,497) (24,094)Total general and administrative expense (25,700) (22,718) (26,098)Total operating expense (84,249) (85,442) (57,952)Operating loss (69,988) (74,059) (49,088)Other income (expense): Interest expense, net (15,365) (9,903) (4,151)Change in financial liability for share warrants — — 15,857 Other, net 2,366 (1,107) 3,504 Other income (expense), net (12,999) (11,010) 15,210 Loss before income taxes (82,987) (85,069) (33,878)Provision for income taxes 649 — — Net loss $(82,338) $(85,069) $(33,878)Other comprehensive income (loss): Change in fair value of effective portion of foreign currency cash flow hedges $305 $(63) $9 Unrealized gain on short-term investments 6 19 — Foreign currency gain (loss) 2,240 (6,215) (3,028)Provision for pension benefit obligation 107 (410) (4,502)Other comprehensive loss, net 2,658 (6,669) (7,521)Comprehensive loss $(79,680) $(91,738) $(41,399)Net loss available to ordinary shareholders - basic and diluted $(82,338) $(85,069) $(33,878)Loss per share - basic and diluted $(2.02) $(3.02) $(1.73)Weighted-average shares outstanding - basic and diluted 40,839,309 28,145,472 19,558,152The accompanying notes form an integral part of these consolidated financial statements. - 64 - CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)(Expressed in thousands of U.S. Dollars — except for share data) Ordinary shares Additionalpaidin(Distributionin excess of) AccumulatedOtherComprehensive Accumulated TotalShareholders' Shares Amount Capital Loss Deficit Equity(Deficit) March 31, 2015 17,020,574 $84,525 $(6,684) $(5,102) $(74,354) $(1,615)Issue of shares, net of issue costs of $3,165 4,444,445 36,835 — — — 36,835 Issue of shares upon exercise of incentive share options and vestingof RSUs 21,212 41 — — — 41 Issue of shares upon exercise of warrants 3,922,719 34,513 15,154 — — 49,667 Issue of warrants — — 1,190 — — 1,190 Net loss — — — — (33,878) (33,878)Change in the fair value of the effective portion of foreign currencycash flow hedges — — — 9 — 9 Foreign currency translation loss — — — (3,028) — (3,028)Provision for pension benefit obligation — — — (4,502) — (4,502)Other comprehensive loss — — — (7,521) — (7,521)Stock-based compensation — — 2,004 — — 2,004 March 31, 2016 25,408,950 $155,914 $11,664 $(12,623) $(108,232) $46,723 Issue of shares, net of issue costs of $1,348 3,270,000 16,682 — — — 16,682 Exercise of pre-funded warrants 850,000 9 — — — 9 Issue of shares upon exercise of incentive share options and vestingof RSUs 38,748 12 — — — 12 Net loss — — — — (85,069) (85,069)Change in the fair value of the effective portion of foreign currencycash flow hedges — — — (63) — (63)Unrealized gain on short-term investments — — — 19 — 19 Foreign currency gain (loss) on: Long-term investment nature intra-entity balances — — — 6,747 — 6,747 Retranslation of foreign entities — — — (12,962) — (12,962)Provision for pension benefit obligation — — — (410) — (410)Other comprehensive loss — — — (6,669) — (6,669)Stock-based compensation — — 4,221 — — 4,221 March 31, 2017 29,567,698 $172,617 $15,885 $(19,292) $(193,301) $(24,091)Issue of shares, net of issue costs of $680 15,914,683 81,206 — — — 81,206 Issue of shares upon exercise of incentive share options and vestingof RSUs 164,043 111 — — — 111 Issue of warrants — — 3,667 — — 3,667 Net loss — — — — (82,338) (82,338)Change in the fair value of the effective portion of foreign currencycash flow hedges — — — 305 — 305 Unrealized gain on short-term investments — — — 6 — 6 Foreign currency gain (loss) on: Long-term investment nature intra-entity balances — — — (9,105) — (9,105)Retranslation of foreign entities — — — 11,345 — 11,345 Provision for pension benefit obligation — — — 107 — 107 Other comprehensive loss — — — 2,658 — 2,658 Stock-based compensation — — 4,156 — — 4,156 March 31, 2018 45,646,424 $253,934 $23,708 $(16,634) $(275,639) $(14,631) The accompanying notes form an integral part of these consolidated financial statements.- 65 - CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in thousands of U.S. Dollars) Year ended March 31, 2018 2017 2016 OPERATING ACTIVITIES: Net loss $(82,338) $(85,069) $(33,878)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation, amortization and loss on disposal of fixed assets 10,405 9,461 2,945 Share-based compensation 4,156 4,221 2,004 Amortization of lease incentive (435) (428) (434)Swiss pension obligation 659 616 — Amortization of deferred debt issue costs 4,359 6,774 1,472 Accrued preference share dividends 1,050 1,050 1,050 Deferred income taxes (649) — — Change in financial liability for share warrants — — (15,857)Net change in assets and liabilities: Trade accounts receivable, net (87) (584) (519)Inventories (1,741) (1,766) (8,126)Accounts payable and accrued liabilities (3,310) 9,960 955 Accrued compensation and benefits 1,596 778 812 Other assets (2,083) (1,213) 2,603 Net cash used in operating activities (68,418) (56,200) (46,973)INVESTING ACTIVITIES: Increase in short-term investments (78,000) (30,009) — Realization of short-term investments 88,395 13,971 — Purchase of property and equipment (21,604) (20,155) (28,906)Sale of property and equipment 19,741 — — Payment of rent deposit (5,043) — — Purchase of intangible assets (150) (71) (71)Net cash from (used in) investing activities 3,339 (36,264) (28,977)FINANCING ACTIVITIES: Repayment of finance leases (1,692) (141) (39)Proceeds from drawdown of new debt — 84,000 15,500 Repayment of debt — (33,450) (500)Debt issue costs — (5,530) (703)Increase in cash reserve account — (5,040) — Proceeds from issuance of ordinary shares and warrants 84,984 16,703 71,390 Net cash generated from financing activities 83,292 56,542 85,648 Effect of exchange rate fluctuations on cash and cash equivalents (2,802) (3,424) (3,123)Change in cash and cash equivalents 15,411 (39,346) 6,575 Beginning cash and cash equivalents 4,754 44,100 37,525 Ending cash and cash equivalents $20,165 $4,754 $44,100 Supplemental cash flow disclosures: Income taxes paid $— $— $— Interest paid $10,144 $1,702 $2,164The accompanying notes form an integral part of these consolidated financial statements. - 66 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Expressed in thousands of U.S. Dollars — except for share data and per share data, unless otherwise stated) Note 1. Organization and Summary of Significant Accounting PoliciesOrganization and BusinessThe principal activity of Quotient Limited and its subsidiaries (the “Group” and or the “Company”) is the development, manufacture and sale of products forthe global transfusion diagnostics market. Products manufactured by the Group are sold to hospitals, blood banking operations and other diagnosticscompanies worldwide.From its incorporation in 2012 to March 31, 2017, the Company has raised $70.6 million of gross proceeds through the private placement of its ordinary andpreference shares and warrants, $132.8 million of gross proceeds from public offerings of its shares and issuances of ordinary shares upon exercise of warrantsand $84.0 million of gross proceeds from the issuance of 12% Senior Secured Notes (“the Secured Notes”).During the fiscal year ended March 31, 2018, on April 10, 2017, the Company completed a public offering of 8,050,000 newly issued ordinary shares at aprice of $6.00 per share which raised $48.3 million of gross proceeds before underwriting discounts and other offering expenses.On October 24, 2017, the Company entered into subscription agreements for the private placement of (i) 7,864,683 newly issued ordinary shares at asubscription price of $4.64 per share, (ii) newly issued warrants, at a purchase price of $0.125 per underlying warrant share, exercisable for up to 8,414,683ordinary shares at an exercise price of $5.80 per ordinary share, and (iii) newly issued pre-funded warrants, at a purchase price of $4.755 per underlying pre-funded warrant share, exercisable for up to 550,000 ordinary shares at an exercise price of $0.01 per ordinary share. The aggregate gross proceeds were $40.2million. If the warrants are exercised in full prior to their expiration on July 31, 2018, it would result in additional proceeds of $48.8 million. However, therecan be no assurance that the warrants will be exercised.The Company has incurred net losses and negative cash flows from operations in each year since it commenced operations in 2007 and had an accumulateddeficit of $275.6 million as of March 31, 2018. At March 31, 2018, the Company had available cash holdings and short-term investments of $25.5 million.The Company has expenditure plans over the next twelve months that exceed its current cash and short-term investment balances, raising substantial doubtabout its ability to continue as a going concern. The Company expects to fund its operations in the near-term, including the ongoing development of MosaiQthrough successful field trial completion, achievement of required regulatory authorizations and commercialization from a combination of funding sources.These expected funding sources include the use of existing available cash and short-term investment balances, the issuance of new equity (including up to$49 million of proceeds from the exercise of warrants with an exercise price of $5.80 issued in connection with the Company’s October 2017 privateplacement of ordinary shares by their expiration date of July 31, 2018) and debt (including through the issuance of a further $36 million of the Secured Notesupon the publication of successful field trial concordance data for the IH1 microarray). The Company expects the publication of field trial concordance databy July 2018, providing availability of these expected funding sources, and accordingly have prepared the financial statements on the going concern basis.However, there can be no assurance that the Company will be able to obtain adequate financing when necessary and the terms of any financings may not beadvantageous to the Company and may result in dilution to its shareholders. In particular, there can be no assurance that the Company will be able tosuccessfully complete MosaiQ field trials, that the Company’s share price will remain above $5.80 until July 31, 2018 and even if it does, that a sufficientlevel of warrants will be exercised by the warrant holders by that date.Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of intercompany transactionsand balances. All gains and losses realized from foreign currency transactions denominated in currencies other than the foreign subsidiary’s functionalcurrency are included in foreign currency exchange gain (loss) as part of other income or expenses in the Consolidated Statements of Comprehensive Loss.Adjustments resulting from translating the financial statements of all foreign subsidiaries into U.S. dollars are reported as a separate component ofaccumulated other comprehensive loss and changes in shareholders’ deficit. The assets and liabilities of the Company’s foreign subsidiaries are translatedfrom their respective functional currencies into U.S. dollars at the rates in effect at the balance sheet date, and revenue and expense amounts are translated atrates approximating the weighted average rates during the period. The translation effects of inter-company loans designated as long term net investments insubsidiaries are included in accumulated other comprehensive loss.- 67 - Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management tomake estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results coulddiffer from these estimates.Fair Value of Financial InstrumentsThe Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or mostadvantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company’s valuationtechniques used to measure fair value maximized the use of observable inputs and minimized the use of unobservable inputs. The fair value hierarchy isbased on the following three levels of inputs:•Level 1—Quoted prices in active markets for identical assets or liabilities.•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted pricesin markets that are 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 or liabilities.See Note 4, “Fair Value Measurements,” for information and related disclosures regarding our fair value measurements.Cash and Cash EquivalentsThe Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2018 and2017, all cash and cash equivalents comprised cash balances held with the banks used by the Company and its subsidiaries. At March 31, 2018 andMarch 31, 2017, the Company held $320 and $305 respectively in a restricted account as security for the property rental obligations of the Company’s Swisssubsidiary and $5.0 million in a cash reserve account pursuant to the indenture governing the Secured Notes. The cash reserve account is classified as a long-term asset as the indenture requires it to be maintained while the Secured Notes remain outstanding.Short-term InvestmentsShort-term investments represent investments in a money-market fund which is valued daily and which has no minimum notice period for withdrawals. Thefund is invested in a portfolio of holdings and the creditworthiness requirement for individual investment holdings is a minimum of an A rating from aleading credit-rating agency. The Company records the value of its investment in the fund based on the quoted value of the fund at the balance sheet date.Unrealized gains or losses are recorded in accumulated other comprehensive loss and are transferred to the statement of comprehensive loss when they arerealized.Trade Accounts ReceivableTrade accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts toreserve for potentially uncollectible trade receivables. Additions to the allowance for doubtful accounts are recorded as general and administrative expenses.The Company reviews its trade receivables to identify specific customers with known disputes or collectability issues. In addition, the Company maintains anallowance for all other receivables not included in the specific reserve by applying specific rates of projected uncollectible receivables to the various agingcategories. In determining these percentages, the Company analyzes its historical collection experience, customer credit-worthiness, current economic trendsand changes in customer payment terms. The allowance for doubtful accounts at March 31, 2018 and 2017 was $93 and $103, respectively.Concentration of Credit Risks and Other UncertaintiesThe carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilitiesapproximate fair value due to their short maturities. Derivative instruments, consisting of foreign exchange contracts and short-term investments are stated attheir estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the foreign exchange contracts consist oflarge financial institutions of high credit standing. The short-term investments are invested in a fund which is invested in a portfolio of holdings and thecreditworthiness requirement for individual investment holdings is a minimum of an A rating from a leading credit-rating agency.- 68 - The Company’s main financial institutions for banking operation held all of the Company’s cash and cash equivalents as of March 31, 2018 and March 31,2017.The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. TheCompany performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has notexperienced significant losses to date. There was one customer whose accounts receivable balance represented 10% or more of total accounts receivable, net,as of March 31, 2018 and March 31, 2017. This customer represented 51% and 59% of the accounts receivable balances, as of March 31, 2018 and March 31,2017, respectively.The Company currently sells products through its direct sales force and through third-party distributors. There was one direct customer that accounted for10% or more of total product sales for the fiscal years ended March 31, 2018, 2017 and 2016. This customer represented 63%, 60% and 57% of total productsales for the fiscal years March 31, 2018, 2017 and 2016, respectively.InventoryInventory is stated at the lower of standard cost (which approximates actual cost) or market, with cost determined on the first-in-first-out method.Accordingly, allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facilityexpense, freight, handling costs and spoilage are expensed as incurred and not included in overhead. No stock-based compensation cost was included ininventory as of March 31, 2018 and 2017.Property and EquipmentProperty, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization arecomputed on a straight-line basis over the estimated useful lives of the related assets as follows:•Land—not depreciated.•Plant, machinery and equipment—4 to 25 years;•Leasehold improvements—the shorter of the lease term or the estimated useful life of the asset.Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed asincurred.Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the assets to the future undiscounted cash flowsexpected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which thecarrying amount of the assets exceeds the fair value of the assets. During the fiscal years ended March 31, 2018, 2017 and 2016, no impairment losses havebeen recorded.Intangible Assets and GoodwillIntangible assets related to product licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangibleassets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over theirestimated useful lives, on a straight-line basis as follows:Customer relationships—5 yearsBrands associated with acquired cell lines—40 yearsProduct licenses—10 yearsOther intangibles—7 yearsThe Company reviews its intangible assets for impairment and conducts the impairment review when events or circumstances indicate the carrying value of along-lived asset may be impaired by estimating the future undiscounted cash flows to be derived from an asset to assess whether or not a potential impairmentexists. If the carrying value exceeds the Company’s estimate of future undiscounted cash flows, an impairment value is calculated as the excess of thecarrying value of the asset over the Company’s estimate of its fair market value. Events or circumstances which could trigger an impairment review include asignificant adverse change in the business climate, an adverse action or assessment by a regulator, unanticipated competition, significant changes in theCompany’s use of acquired assets, the Company’s overall business strategy, or significant negative industry or economic trends. No impairment losses havebeen recorded in any of the years ended March 31, 2018, 2017 or 2016.- 69 - Goodwill represents the excess of the purchase price in a business combination over the fair value of tangible and identifiable intangible assets acquired lessliabilities assumed. Goodwill resulting from a business combination in 2007 has been fully impaired.Revenue RecognitionThe Company recognizes revenue from product sales when there is persuasive evidence that an arrangement exists, delivery has occurred, the price is fixed ordeterminable and collectability is reasonably assured. Customers have no right of return except in the case of damaged goods. The Company has notexperienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of product sales. In those caseswhere the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue.Revenues related to research and development services included in a collaboration agreement are recognized as research and services are performed over therelated performance periods for each contract and included in other revenues. A payment that is contingent upon the achievement of a substantive milestoneis recognized in its entirety in the period in which the milestone is achieved.Pursuant to the Umbrella Supply Agreement with Ortho-Clinical Diagnostics (“Ortho”), in June 2013, the Company executed a product attachment relatingto the development of a range of rare antisera products. This product attachment was amended in August 2016. During the year ended March 31, 2017, theCompany recognized the milestones of $1,300 related to the completion of the CE marking of the products for use on Ortho’s automation platforms and $800related to the receipt of FDA approval of certain of the rare antisera products. The Company earned a milestone of $600 related to the receipt of FDA approvalof the rare antisera products in the year ended March 31, 2018 and, under the terms of the amended product attachment, the Company is entitled to receive amilestone payment of $1,500 upon the updating of the FDA approvals to cover use of the products on Ortho’s automation platforms.In January 2015, the Company entered into a supply and distribution agreement with Ortho related to the commercialization and distribution of certainMosaiQ products. Under the terms of this agreement, the Company is entitled to receive milestone payments upon CE-mark and FDA approval, as well asupon the first commercial sale of the relevant MosaiQ products by Ortho within the European Union, United States and within any country outside of thesetwo regions. The Company has concluded that as each of these milestones require significant levels of development work to be undertaken and there was nocertainty at the start of the projects that the development work would be successful, these milestones are substantive and should be accounted for under themilestone method of revenue recognition.Research and DevelopmentResearch and development expenses consist of costs incurred for company-sponsored and collaborative research and development activities. These costsinclude direct and research-related overhead expenses. Other than materials assessed as having alternative future uses and which are recognized as prepaidexpenses, the Company expenses research and development costs, including the expenses for research under collaborative agreements, as such costs areincurred. Where government grants are available for the sponsorship of such research, the grant receipt is included as a credit against the related expense.Stock-Based CompensationStock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis overthe requisite service period, which is generally the vesting period. The value of the portion of the award that is ultimately expected to vest is recognized asexpense over the requisite service periods in the Company’s Consolidated Statements of Comprehensive Loss.In determining fair value of the stock-based compensation payments, the Company uses the Black–Scholes model and a single option award approach forshare options and a barrier option pricing model for multi-year performance based restricted share units or MRSUs, both of which require the input ofsubjective assumptions. These assumptions include: the fair value of the underlying share, estimating the length of time employees will retain their awardsbefore exercising them (expected term), the estimated volatility of the Company’s ordinary shares price over the expected term (expected volatility), risk-freeinterest rate (interest rate), expected dividends and the number of shares subject to awards that will ultimately not complete their vesting requirements(forfeitures).Where modifications are made to vesting conditions, as happened during the year ended March 31, 2018 upon the retirement of Paul Cowan, the Company'sformer Chief Executive Officer, the Company considers the nature of the change and accounts for the change in accordance with ASC 715 Compensation –Stock Compensation. The Company determined that the modification to Mr. Cowan’s awards were type III in nature and accordingly the originalcompensation expense related to the awards was reversed and the value of the awards was re-measured at the date of the change and will be expensed over thevesting period of the awards concerned.- 70 - Share WarrantsThe Company has three classes of warrants to purchase ordinary shares outstanding: (i) warrants that were issued in December 2013 and August 2015 inconnection with the entry into and subsequent amendment of the Company’s then existing secured term loan facility; (ii) warrants issued in October 2017 aspart of a private placement of ordinary shares and warrants, and (iii) pre-funded warrants issued in October 2017 as part of the private placement of ordinaryshares and warrants. None of these warrants contain any obligation to transfer value and, as such, the issuance of these warrants has been recorded inadditional paid in capital as part of shareholders’ equity.The Company also issued warrants to purchase ordinary shares at the time of its initial public offering. These warrants were recorded as a liability because theunderlying terms of the warrants contained provisions that may have obligated the Company to transfer value in certain circumstances. The warrants wererecorded at fair value upon issuance and were subject to re-measurement to fair value at each balance sheet date, with any change in fair value recognized ascomponent of other income (expense), net on the Consolidated Statements of Comprehensive Loss. These warrants expired on October 26, 2015 and wereeither exercised prior to that date or expired on that date. As a result, at March 31, 2018 and March 31, 2017, there was no longer any liability related tothese warrants.LeasesAt the inception of each lease, the Company reviews the terms of the lease in accordance with ASC 840 Leases in order to determine whether the leaseconcerned is a capital or an operating lease. In the case of capital leases, an asset is included within property and equipment and a lease liability equal to thepresent value of the minimum lease payments is included in current or long-term liabilities. Interest expense is recorded over the life of the lease at a constantrate.Rentals relating to operating leases are expensed over the life of the lease.Derivative Financial InstrumentsIn the normal course of business, the Company’s financial position is routinely subjected to market risk associated with foreign currency exchange ratefluctuations. The Company’s policy is to mitigate the effect of these exchange rate fluctuations on certain foreign currency denominated business exposures.The Company has a policy that allows the use of derivative financial instruments to hedge foreign currency exchange rate fluctuations on forecasted revenuedenominated in foreign currencies. The Company carries derivative financial instruments (derivatives) on the balance sheet at their fair values. The Companydoes not use derivatives for trading or speculative purposes. The Company does not believe that it is exposed to more than a nominal amount of credit risk inits foreign currency hedges, as counterparties are large, global and well-capitalized financial institutions. To hedge foreign currency risks, the Company usesforeign currency exchange forward contracts, where possible and prudent. These forward contracts are valued using standard valuation formulas withassumptions about future foreign currency exchange rates derived from existing exchange rates, interest rates, and other market factors.The Company considers its most current forecast in determining the level of foreign currency denominated revenue to hedge as cash flow hedges. TheCompany combines these forecasts with historical trends to establish the portion of its expected volume to be hedged. The revenue and expenses are hedgedand designated as cash flow hedges to protect the Company from exposures to fluctuations in foreign currency exchange rates. If the underlying forecastedtransaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified fromaccumulated other comprehensive loss to the consolidated statement of comprehensive loss at that time.Income TaxesThe Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been recognized in the consolidated financial statements, but have not been reflected in taxableincome. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value. Therefore, the Company provides a valuationallowance to the extent that is more likely than not that it will generate sufficient taxable income in future periods to realize the benefit of its deferred taxassets.Pension ObligationThe Company maintains a pension plan covering employees in Switzerland pursuant to the requirements of Swiss pension law. Certain aspects of the planrequire that it be accounted for as a defined benefit plan pursuant to ASC 715 Compensation – Retirement Benefits. The Company recognizes an asset for theplan’s overfunded status or a liability for the plan’s underfunded status in its Consolidated Balance Sheets. Additionally, the Company measures the plan’sassets and obligations that determine its funded status as of the end of the year and recognizes the change in the funded status within ‘‘Accumulated othercomprehensive loss’’.- 71 - The Company uses an actuarial valuation to determine its pension benefit costs and credits. The amounts calculated depend on a variety of key assumptions,including discount rates and expected return on plan assets. Details of the assumptions used to determine the net funded status are set out in Note 11. TheCompany’s pension plan assets are assigned to their respective levels in the fair value hierarchy in accordance with the valuation principles described in the‘‘Fair Value of Financial Instruments’’ section above.Debt Issuance Costs and Royalty RightsThe Company follows the requirements of Accounting Standards Update 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Simplifying thePresentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a directdeduction from the debt liability rather than as an asset.The royalty rights agreements entered into with subscribers to the issue of the Secured Notes are treated as sales of future revenues that meet the requirementsof Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The future cash outflows under the royalty rights agreements have beencombined with the issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interestexpense in the consolidated statement of comprehensive loss using the effective interest rate method over the term of the Secured Notes and royalty rightsagreements.Adoption of New Accounting StandardsThe FASB issued ASU 2014-09, Revenue from Contracts with Customers that will supersede virtually all revenue recognition guidance in GAAP. The newstandard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goodsor services to their customers (unless the contracts are in the scope of other GAAP requirements). The guidance also provides a model for the measurementand recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The Companycompleted an analysis of existing contracts with its customers and assessed the differences in accounting for such contracts under this guidance comparedwith current revenue accounting standards. Based on its review of existing customer contracts, adoption of the new standard is not expected to have amaterial impact on the Company’s financial statements upon adoption or on an ongoing basis. The Company will adopt the new standard on April 1, 2018using the modified retrospective method.Recent Accounting Pronouncements Not Yet AdoptedThe FASB issued ASU 2016-02, Leases that requires lessees to recognize a right-of-use asset and a lease liability on their balance sheets but recognizeexpenses on their income statements in a manner similar to current accounting standards. ASU 2016-02 will also require new qualitative and quantitativedisclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. Thestandard could have significant implications for the accounting for the Company’s operating leases. ASU 2016-02 is effective for annual periods beginningafter December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The new standard will not be mandatory untilthe Company’s fiscal year ending March 31, 2020. The Company is continuing to evaluate the impact of the adoption of this guidance on its consolidatedfinancial statements and related disclosures.The FASB issued ASU 2016-18, Statement of Cash Flows - Restricted Cash. ASU 2016-18 requires a statement of cash flows to explain the change during theperiod in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Amounts generally described asrestricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, includinginterim periods within those fiscal years. The effective date will be the first quarter of fiscal year 2019 and early adoption is permitted. The Companycontinues to evaluate the impact of the adoption of this guidance on its consolidated financial statements, but does not expect it to have a material impact.The FASB issued ASU 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net PeriodicPostretirement Benefit Cost. ASU 2017-07 changes how employers that sponsor defined benefit pension plans and other postretirement plans present the netperiodic benefit cost in the income statement. An employer is required to report the service cost component in the same line item or items as othercompensation costs arising from services rendered by the pertinent employees during the period. Other components of net benefit cost are required to bepresented in the income statement separately from the service cost component and outside a subtotal of income from operations. The amendment also allowsonly the service cost component to be eligible for capitalization, when applicable. ASU 2017-07 is effective for annual periods beginning after December 15,2017, including interim periods within those fiscal years. The effective date will be the first quarter of fiscal year 2019. The- 72 - Company continues to evaluate the impact of the adoption of this guidance on its consolidated financial statements, but does not expect it to have a materialimpact.The FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting. ASU 2017-09 clarifies when changes to the termsor conditions of a share-based payment award must be accounted for as modifications. The new guidance will reduce diversity in practice and result in fewerchanges to the terms of an award being accounted for as modifications. Under ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if the award’s fair value, vesting conditions and classification as an equity or liability instrument are the same immediately before andafter the change. ASU 2017-09 will be applied prospectively to awards modified on or after the adoption date. The guidance is effective for annual periods,and interim periods within those annual periods, beginning after December 15, 2017. The effective date will be the first quarter of fiscal year 2019 and earlyadoption is permitted. The Company continues to evaluate the impact of the adoption of this guidance on its consolidated financial statements, but does notexpect it to have a material impact. Note 2. Intangible Assets March 31, 2018 GrossCarryingAmount AccumulatedAmortization Net CarryingAmount WeightedAverageRemainingUseful Life Customer relationships $2,758 $(2,758) $— — Brands associated with acquired cell lines 569 (150) 419 29.5 years Product licenses 954 (459) 495 5.2 years Other intangibles 179 (179) — — Total $4,460 $(3,546) $914 16.3 years March 31, 2017 GrossCarryingAmount AccumulatedAmortization Net CarryingAmount WeightedAverageRemainingUseful Life Customer relationships $2,458 $(2,458) $— — Brands associated with acquired cell lines 507 (121) 386 30.4 years Product licenses 716 (333) 383 5.4 years Other intangibles 160 (160) — — Total $3,841 $(3,072) $769 17.9 yearsAmortization expense was $94, $73, and $89 in financial years 2018, 2017, and 2016, respectively. Total future amortization expense for intangible assetsthat have definite lives, based upon the Company’s existing intangible assets and their current estimated useful lives as of March 31, 2018, is estimated asfollows: 2019 $110 2020 110 2021 110 2022 110 2023 110 Thereafter 364 Total $914 - 73 - Note 3. DebtLong-term debt comprises: March 31,2018 March 31,2017 Total debt $84,000 $84,000 Less current portion — — Long-term debt $84,000 $84,000 Deferred debt costs and royalty liability, net of amortization 1,063 (3,296) $85,063 $80,704The Company’s debt at March 31, 2018 and March 31, 2017 comprises the 12% Senior Secured Notes due 2023 issued on October 14, 2016. On that date, theCompany completed the private placement of up to $120 million aggregate principal amount of the Secured Notes and entered into an indenture with theguarantors party thereto and U.S. Bank National Association, a national banking association, as trustee and collateral agent. The obligations of the Companyunder the indenture and the Secured Notes are unconditionally guaranteed on a secured basis by the guarantors, which include all the Company’ssubsidiaries, and the indenture contains customary events of default. The Company and its subsidiaries must also comply with certain customary affirmativeand negative covenants, including a requirement to maintain six-months of interest in a cash reserve account maintained with the collateral agent. Upon theoccurrence of a Change of Control, subject to certain conditions, or certain Asset Sales (each, as defined in the indenture), holders of the Secured Notes mayrequire the Company to repurchase for cash all or part of their Secured Notes at a repurchase price equal to 101% or 100%, respectively, of the principalamount of the Secured Notes to be repurchased, plus accrued and unpaid interest to the date of repurchase.The Company issued $84 million aggregate principal amount of the Secured Notes on October 14, 2016 and, so long as no event of default has occurred, theCompany will issue an additional $36 million aggregate principal amount of the Secured Notes upon public announcement of field trial results for theMosaiQ IH Microarray that demonstrates greater than 99% concordance for the detection of blood group antigens and greater than 95% concordance for thedetection of blood group antibodies when compared to predicate technologies for a pre-defined set of blood group antigens and antibodies. The Companypaid $5 million of the net proceeds into the cash reserve account maintained with the collateral agent under the terms of the indenture.Interest on the Secured Notes accrues at a rate of 12% per annum and is payable semi-annually on April 15 and October 15 of each year. Commencing onApril 15, 2019, the Company will also pay an installment of principal of the Secured Notes on each April 15 and October 15 until October 15, 2023 pursuantto a fixed amortization schedule.In connection with the offering on October 14, 2016, the Company entered into royalty rights agreements, pursuant to which the Company sold to the notepurchasers in the offering, the right to receive an aggregate payment equal to 2.0% of the aggregate net sales of MosaiQ Instruments and MosaiQ Microarraysmade in the donor testing market in the United States and the European Union. The royalty will be payable beginning on the date that the Company or itsaffiliates enters into a contract for the sale of MosaiQ Instruments or MosaiQ Microarrays in the donor testing market in the European Union or the UnitedStates and will end on the last day of the calendar quarter in which the eighth anniversary of the first contract date occurs. The royalty rights agreements aretreated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The future cashoutflows under the royalty rights agreements, estimated at $41.8 million at March 31, 2018 and $40.4 million at March 31, 2017, have been combined withthe issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interest expense in theconsolidated statement of comprehensive loss using the effective interest rate method over the term of the Secured Notes and royalty rights agreements.Estimating the future cash outflows under the royalty rights agreements requires the Company to make certain estimates and assumptions about future salesof MosaiQ products. These estimates of the magnitude and timing of MosaiQ sales are subject to significant variability due to the current status ofdevelopment of MosaiQ products, and thus are subject to significant uncertainty. Therefore, the estimates are likely to change as the Company gainsexperience of marketing MosaiQ, which may result in future adjustments to the accretion of the interest expense and amortized cost based carrying value ofthe Secured Notes.The outstanding debt at March 31, 2018 falls due for repayment as follows: Within 1 year $— Between 1 and 2 years 13,440 Between 2 and 3 years 14,280 Between 3 and 4 years 16,800 Between 4 and 5 years 18,480 After 5 years 21,000 Total debt $84,000 - 74 - Note 4. Fair Value MeasurementsAssets and liabilities measured and recorded at fair value on a recurring basisThe following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair valuehierarchy: March 31, 2018 Level 1 Level 2 Level 3 Total Assets: Pension plan assets (1) $— $9,616 $— $9,616 Short-term investments (2) 5,669 — — 5,669 Foreign currency forward contracts (3) — 118 — 118 Total assets measured at fair value $5,669 $9,734 $— $15,403 March 31, 2018 Level 1 Level 2 Level 3 Total Liabilities: Foreign currency forward contracts (3) $— $64 $— $64 Total liabilities measured at fair value $— $64 $— $64 March 31, 2017 Level 1 Level 2 Level 3 Total Assets: Pension plan assets (1) $— $7,981 $— $7,981 Short-term investments (2) 16,057 — — 16,057 Total assets measured at fair value $16,057 $7,981 $— $24,038 March 31, 2017 Level 1 Level 2 Level 3 Total Liabilities: Foreign currency forward contracts (3) $— $252 $— $252 Total liabilities measured at fair value $— $252 $— $252 (1)The fair value of pension plan assets has been determined as the surrender value of the portfolio of active insured employees held within the Swiss Lifecollective investment fund.(2)The fair value of short-term investments has been determined based on the quoted value of the units held in the money market fund at the balancesheet date. See Note 1, “Summary of Significant Accounting Policies – Short-term Investments”.(3)The fair value of foreign currency forward contracts has been determined by calculating the present value of future cash flows, estimated using market-based observable inputs including forward and spot exchange rates and interest rate curves obtained from third party market price quotations. Note 5. Consolidated Balance Sheet DetailInventoryThe following table summarizes inventory by category for the periods presented: March 31,2018 March 31,2017 Raw materials $10,024 $8,993 Work in progress 4,226 3,260 Finished goods 2,028 1,383 Total inventories $16,278 $13,636- 75 - Inventory at March 31, 2018 included $8,441 of raw materials, $1,528 of work in progress, and $389 of finished products related to the MosaiQ project.Inventory at March 31, 2017 included $7,659 of raw materials and $1,415 of work in progress related to the MosaiQ project.Property and equipmentThe following table summarizes property and equipment by categories for the periods presented: March 31,2018 March 31,2017 Land $— $1,286 Plant and equipment 51,912 44,797 Leasehold improvements 34,611 32,343 Total property and equipment 86,523 78,426 Less: accumulated depreciation (26,367) (14,896)Total property and equipment, net $60,156 $63,530 Depreciation expenses were $10,311, $9,375 and $2,856 in financial years 2018, 2017, and 2016, respectively.Accrued compensation and benefitsAccrued compensation and benefits consist of the following: March 31,2018 March 31,2017 Salary and related benefits $455 $403 Accrued vacation 504 413 Accrued payroll taxes 1,353 325 Accrued incentive payments 3,000 2,500 Total accrued compensation and benefits $5,312 $3,641 Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities consist of the following: March 31,2018 March 31,2017 Accrued legal and professional fees $280 $449 Accrued interest 4,612 4,640 Goods received not invoiced 1,272 932 Accrued capital expenditure 3,309 1,387 Accrued development expenditure — 4,187 Other accrued expenses 5,867 1,914 Total accrued expenses and other current liabilities $15,340 $13,509 At March 31, 2018, other accrued expenses included a value added tax liability of $2,905 related to the completion of the sale of the Company’s newconventional reagents manufacturing facility (the “Biocampus facility”) in March 2018. There was an offsetting value added tax recoverable balance withinprepaid expenses and other current assets at March 31, 2018. There were no equivalent amounts at March 31, 2017. Note 6. Commitments and ContingenciesLease commitmentsThe Company leases its facilities and certain equipment under operating leases that expire at various dates through 2052. Some of the leases contain renewaloptions, escalation clauses, rent concessions, and leasehold improvement incentives. Rent expense is- 76 - recognized on a straight-line basis over the lease term. Rent expense was $3,063, $2,928 and $2,923 in financial years ended March 31, 2018, 2017 and2016, respectively.The following is a schedule by years of minimum future rentals on non-cancelable operating leases as of March 31, 2018: 2019 $3,828 2020 3,477 2021 1,889 2022 1,923 2023 1,976 Thereafter 80,919 Total minimum future lease payments $94,012 Sale-leaseback transactionDuring the year ended March 31, 2018, the Company completed a sale-leaseback transaction and sold the Biocampus facility, but retained a leaseholdinterest as tenant of the property. The transaction resulted in net cash proceeds of $19,741 and a gain of $473 which has been deferred and recorded withinaccrued liabilities on the Consolidated Balance Sheet and will be amortized on a straight-line basis over the lease term as a reduction of the rental expense inthe consolidated statements of comprehensive loss. Additionally, the lease required the Company to provide a rental deposit of $5,043 at March 31, 2018which is included within other non-current assets in the March 31, 2018 Consolidated Balance Sheet.The Company evaluated the transaction in accordance with ASC 840, Leases, considering the requirements for sale-leaseback treatment, including thetransfer of all risks of ownership to the purchaser and whether the Company has any continuing involvement in the leased property. The Company alsoevaluated the property lease in accordance with ASC 840 and concluded that the lease of the property was an operating lease. Refer to Lease commitmentsabove for the future minimum lease payments associated with all the Company’s operating leases. In connection with this transaction, the Company hasagreed to transfer tax allowances related to certain other property, plant and equipment to the purchaser. However, at March 31, 2018, the transfer of theseallowances had not been completed and thus the effect of the transfer has not been reflected in the financial statements.The Company has entered into capital leases for the purchase of equipment that has a gross cost and net book value of $3,130 and $2,810, respectively as ofMarch 31, 2018 and $1,928 and $1,663, respectively as of March 31, 2017. The following is a schedule of future annual repayments on capital leases as ofMarch 31, 2018: 2019 $515 2020 510 2021 392 2022 321 2023 199 Thereafter — Total minimum future lease payments $1,937 Purchase obligationsThe Company has purchase obligations that are associated with agreements for purchases of goods or services. Management believes that cancellation ofthese contracts is unlikely and thus the Company expects to make future cash payments according to the contract terms.- 77 - The following is a schedule by years of purchase obligations as of March 31, 2018: 2019 $15,083 2020 9,200 2021 22,155 2022 18,267 2023 8,591 Thereafter 9,767 Total minimum future purchase obligations $83,063 Government GrantIn 2008, the Company was awarded research and development grant funding from Scottish Enterprise amounting to £1,791 for the development of MosaiQ.The total grant claimed to March 31, 2018 is £1,790. Regular meetings are held to update Scottish Enterprise with the status of the project and whilst theterms of the grant award provide for full repayment of the grant in certain circumstances, the Company does not consider that any repayment is likely.Hedging arrangementsThe Company’s subsidiary in the United Kingdom (“UK”) has entered into three foreign currency forward contracts to sell $500 and purchase pounds sterlingat a rate of £1:$1.2990 in each calendar month through June 2018 as hedges of its U.S. dollar denominated revenues. The fair value of these contracts atMarch 31, 2018 was an asset of $118. The same subsidiary also had six contracts to sell $500 in each calendar month from July 2018 through December 2018at £1:$1.4315 as hedges of its U.S. dollar denominated revenues. The fair values of these contracts, and similar contracts in place at March 31, 2017,amounted to liabilities of $64 and $252 at March 31, 2018 and March 31, 2017, respectively.The foreign currency forward contracts were entered into to mitigate the foreign exchange risk arising from the fluctuations in the value of U.S. dollardenominated transactions entered into by our UK subsidiary. These foreign currency forward contracts are designated as cash flow hedges and are carried onthe Company’s balance sheet at fair value with the effective portion of the contracts’ gains or losses included in accumulated other comprehensive loss andsubsequently recognized in revenue/expense in the same period the hedged items are recognized.At inception and at each quarter end, hedges are tested prospectively and retrospectively for effectiveness. Changes in the fair value of foreign currencyforward contracts due to changes in time value are excluded from the assessment of effectiveness and are recognized in revenue in the current period. Thechange in time value related to these contracts was not material for all reported periods. To qualify for hedge accounting, the hedge relationship must meetcriteria relating both to the derivative instrument and the hedged item. These criteria include identification of the hedging instrument, the hedged item, thenature of the risk being hedged and how the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s cash flows will bemeasured. There were no gains or losses during the years ended March 31, 2018, March 31, 2017 or March 31, 2016 associated with ineffectiveness orforecasted transactions that failed to occur.To receive hedge accounting treatment, hedging relationships are formally documented at the inception of the hedge and the hedges must be tested todemonstrate an expectation of providing highly effective offsetting changes to future cash flows on hedged transactions. Note 7. Geographic InformationThe Company operates in one business segment. Revenues are attributed to countries based on the location of the Company’s channel partners as well asdirect customers.- 78 - The following table represents revenue attributed to countries based on the location of the customer: Year ended March 31, 2018 2017 2016 Revenue: United States $12,917 $11,432 $8,879 United Kingdom 980 1,003 1,437 France 5,608 4,733 3,376 Japan 3,335 3,141 2,836 Other foreign countries (1) 1,892 1,918 1,994 $24,732 $22,227 $18,522 (1)No individual country represented more than 10% of the respective totals.The table below lists the Company’s property and equipment, net of accumulated depreciation, by country. With the exception of property and equipment,the Company does not identify or allocate its assets by geographic area: March 31,2018 March 31,2017 Long-lived assets: United Kingdom $24,141 $20,925 Switzerland 36,009 42,596 United States 6 9 $60,156 $63,530 Other income (expense), net includes foreign exchange gains and losses arising on the settlement of transactions in currencies other than the functionalcurrencies of the entity concerned and from retranslation of assets and liabilities denominated in foreign currencies at period end rates. In the years endedMarch 31, 2018, March 31, 2017 and March 31, 2016, the respective amounts were gains of $2,366, $2,853 and $4,120. Note 8. Ordinary and Preference SharesOrdinary sharesThe Company’s issued and outstanding ordinary shares consist of the following: Shares Issuedand Outstanding March 31,2018 March 31,2017 Par value Ordinary shares 45,646,424 29,567,698 $— Total 45,646,424 29,567,698 $— Preference sharesThe Company’s issued and outstanding preference shares consist of the following: Shares Issuedand Outstanding Liquidationamount per share March 31,2018 March 31,2017 March 31,2018 March 31,2017 7% Cumulative Redeemable Preference shares 666,665 666,665 $27.50 $25.92 Total 666,665 666,665 - 79 - The 7% Cumulative Redeemable Preference shares were issued to Ortho-Clinical Diagnostics Finco S.Á.R.L., an affiliate of Ortho on January 29, 2015 at asubscription price of $22.50 per share. These preference shares are redeemable at the request of the shareholder on the “Redemption Trigger Date” which iscurrently the date of the fifth anniversary of the date of issue of the preference shares, but the Company may extend the redemption date in one yearincrements up to the tenth anniversary of the date of issue. Because the 7% Cumulative Redeemable Preference shares are redeemable at the option of theshareholders, they are shown as a liability in the Consolidated Balance Sheet. Note 9. Share-Based CompensationThe Company records share-based compensation expense in respect of options and restricted share units (“RSUs”), including multi-year performance basedrestricted share units (“MRSUs”), issued under its share incentive plans and in respect of deferred shares issued to employees. Share-based compensationexpense amounted to $4,156 in the year ended March 31, 2018, $4,221 in the year ended March 31, 2017 and $2,004 in the year ended March 31, 2016.Option PlansThe 2012 Option Plan (the “Option Plan”) was designed in order to grant options on ordinary shares in the capital of the Company to certain of its directorsand employees. The purpose of the Option Plan is to provide employees with an opportunity to participate directly in the growth of the value of theCompany by receiving options for shares.Each option may be exercised for one ordinary share of the Company.The 2012 Option Plan was approved by the shareholders on February 16, 2012.The total number of shares in respect of which options may be granted under the 2012 Option Plan is limited at 839,509. Options that lapse or are forfeitedare available to be granted again.Options generally vest over a period of three years but certain employees have shorter vesting periods. The contractual life of all options is 10 years. Optionswere not exercisable before the Company became a public company and all outstanding options become exercisable in the event of an acquisition of 75% ormore of the share capital of the Company by a third party. No further awards will be granted under the 2012 Option Plan. The 2014 Stock Incentive Plan was approved by the directors and shareholders immediately prior to the Company’s initial public offering in April 2014. The2014 Plan was designed to provide flexibility to attract and retain the services of qualified employees, officers, directors, consultants and other serviceproviders upon whose judgment, initiative and efforts the successful conduct and development of the business depends, and to provide additional incentivesto such persons to devote their effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in theownership of the Company and thereby have an interest in its success and increased value.Under the 2014 Plan, 1,500,000 ordinary shares were initially reserved for issuance. This number is subject to adjustment in the event of a recapitalization,share split, share consolidation, reclassification, share dividend or other change in the Company’s capital structure and automatically increases annually onApril 1 of each year. The number of shares reserved for issuance under the plan was also increased by 750,000 as a result of a resolution passed at the AnnualShareholder meeting held on October 28, 2016. The plan provides for the issuance of share options, restricted shares, RSUs (including MRSUs) or shareappreciation rights (“SARs”). The Company has only issued options, RSUs and MRSUs under the plan prior to March 31, 2018. To the extent that an awardterminates, or expires for any reason, then any shares subject to the award may be used again for new grants. However, shares which are (i) not issued ordelivered as a result of the net settlement of outstanding SARs or options; (ii) used to pay the exercise price related to outstanding options; (iii) used to paywithholding taxes related to outstanding options or SARs; or (iv) repurchased on the open market with the proceeds from an option exercise, will not beavailable for grant under the 2014 Plan.- 80 - Share option activityThe following table summarizes share option activity: Numberof ShareOptionsOutstanding WeightedAverageExercise Price WeightedAverageRemainingContractual Life(Months) Outstanding — March 31, 2015 1,208,118 $5.58 103 Granted 404,327 14.71 120 Exercised (8,712) 4.72 — Forfeited (13,795) 10.25 — Outstanding — March 31, 2016 1,589,938 $7.86 96 Granted 419,682 9.12 120 Exercised (8,483) 1.44 — Forfeited (52,220) 12.50 — Outstanding — March 31, 2017 1,948,917 $8.04 90 Granted 406,480 6.93 120 Exercised (36,240) 3.07 — Forfeited (222,874) 9.16 — Outstanding — March 31, 2018 2,096,283 $7.79 84 Exercisable —March 31, 2018 1,368,870 $7.27 74 The following table summarizes the options granted in the year ended March 31, 2018 with their exercise prices, the fair value of ordinary shares as of theapplicable grant date, and the intrinsic value, if any: Grant Date Number ofOptions Granted Exercise Price OrdinarySharesFair Value PerShare at GrantDate Per ShareIntrinsicValue ofOptions May 24, 2017 305,525 $7.58 $7.58 $4.62 August 9, 2017 4,000 $5.41 $5.41 $3.34 October 31, 2017 67,179 $5.21 $5.21 $3.20 November 1, 2017 925 $5.11 $5.11 $3.14 February 7, 2018 6,175 $4.03 $4.03 $2.43 February 19, 2018 22,676 $4.41 $4.41 $2.66 Determining the fair value of share optionsThe fair value of each grant of share options was determined by the Company using the Black-Scholes options pricing model. The total fair value of optionawards in the years ended March 31, 2018, March 31, 2017 and March 31, 2016 amounted to $1,718, $1,379 and $2,054, respectively.Assumptions used in the option pricing models are discussed below. Each of these inputs is subjective and generally requires significant judgment todetermine.Expected volatility. The expected volatility was based on the historical share volatilities of a selection of the Company’s publicly listed peers over a periodequal to the expected terms of the options as the Company did not have a sufficient trading history to use the volatility of its own ordinary shares.Fair value of ordinary shares. Since the Company’s initial public offering in April 2014, the fair value of ordinary shares has been based on the share price ofthe Company’s shares on the NASDAQ Global Market immediately prior to the grant of the options concerned.Risk-Free Interest Rate. The risk-free interest rate is based on the UK Government 10 year bond yield curve in effect at the time of grant prior to the initialpublic offering and 10 year U.S. Treasury Stock for awards from April 2014 onwards.- 81 - Expected term. The expected term is determined after giving consideration to the contractual terms of the share-based awards, graded vesting schedulesranging from one to three years and expectations of future employee behavior as influenced by changes to the terms of its share-based awards.Expected dividend. According to the terms of the awards, the exercise price of the options is adjusted to take into account any dividends paid. As a resultdividends are not required as an input to the model, as these reductions in the share price are offset by a corresponding reduction in exercise price.A summary of the weighted-average assumptions applicable to the share options is as follows: Year ended March 31, 2018 2017 2016 Risk-free interest rate 2.34% 1.98% 2.26%Expected lives (years) 6 3 3 Volatility 66.03% 62.93% 57.38%Dividend yield — — — Grant date fair value (per share) $6.93 $9.12 $14.71 Number granted 406,480 419,682 404,327 RSU and MRSU ActivityA summary of the RSUs and MRSUs in issue at March 31, 2018 is as follows: Numberof RSUsor MRSUsOutstanding WeightedAverageRemainingVesting Period(Months) Period in which thetarget must beachievedRSUs subject to time based vesting 249,879 13 N/ARSUs subject to MosaiQ milestone vesting 260,000 N/A N/AMRSUs with vesting based on $60 share price 72,500 N/A Apr - Dec 2018MRSUs with vesting based on $40 share price 85,000 N/A Apr - Dec 2018MRSUs with vesting based on $22 share price 106,000 N/A Apr - Dec 2019 At March 31, 2018, 249,879 RSUs were subject to time based vesting and the weighted average remaining vesting period was 13 months. In addition,260,000 RSUs were subject to vesting based on the achievement of various milestones relating to the development, approval and marketing of MosaiQ.Furthermore, 106,000 MRSUs were awarded on May 24, 2017, which will vest if the volume weighted average price of the Company’s ordinary sharesexceeds $22 for a continuous 20 day period between April 1, 2019 and December 31, 2019. The Company determined the grant date fair value of theseMRSUs using a barrier option pricing model with the same grant date fair value per share, risk free interest rate, volatility and dividend yield assumptions asthe options awarded on the same date. This resulted in a grant date fair value of $3.20 per MRSU on May 24, 2017. The remainder of the MRSUs in issue atMarch 31, 2018 comprised 72,500 MRSUs, which will vest between April 1, 2018 and December 31, 2018 if the Company’s ordinary share price exceeds $60for 20 consecutive days in this period, and 85,000 MRSUs, which will vest between April 1, 2018 and December 31, 2018 if the Company’s ordinary shareprice exceeds $40 for 20 consecutive days in this period. The fair value of the Company’s ordinary shares was $4.71 per share on March 31, 2018.As of March 31, 2018, total compensation cost related to share options and RSUs granted but not yet recognized was $3,983 net of estimated forfeitures. Thiscost will be amortized to expense over a weighted average remaining period of 10 months and will be adjusted for subsequent changes in estimatedforfeitures. During the year ended March 31, 2018, certain modifications were made to the vesting terms of the awards held by one employee upon hisretirement. The modifications had the effect of reducing the compensation expense for the year ended March 31, 2018 by $279. - 82 - Note 10. Income TaxesNo provision has been made for current income taxes in any period. The statutory standard corporate income tax rate of the Company in Jersey is 0%. Theprincipal operating subsidiaries operate in the United States, the United Kingdom and Switzerland and are subject to corporate income taxes in thosecountries. All these entities have trading losses available to shelter any taxable profits and accordingly, no current income taxes liabilities have beenprovided for. In the year ended March 31, 2018, as a result of improvements in the profitability of a subsidiary, the valuation allowances held against thedeferred tax assets in that subsidiary, which principally comprised of trading losses, have been reduced resulting in the recognition of deferred tax assets of$649.A reconciliation of the income tax expense at the statutory rate to the provision for income taxes is as follows: Year ended March 31, 2018 2017 2016 Income tax expense at statutory rate $— $— $— Foreign tax rate differential 4,841 1,823 (1,106)(Increase) decrease in valuation allowance against deferred tax assets (4,192) (1,823) 1,106 Provision for income tax $649 $— $— Significant components of deferred tax assets are as follows: March 31,2018 March 31,2017 Deferred tax assets: Provisions and reserves $1,327 $1,053 Net operating loss carry forwards 12,476 7,873 Gross deferred tax assets $13,803 $8,926 Fixed assets basis difference $(284) $(248)Gross deferred tax liabilities $(284) $(248)Net deferred tax asset $13,519 $8,678 Valuation allowance (12,870) (8,678)Total $649 $— The balance sheet classification of net deferred tax liabilities is as follows: March 31,2018 March 31,2017 Net noncurrent deferred tax assets $649 $— Total $649 $—The Company maintains a valuation allowance on net operating losses and other deferred tax assets in jurisdictions for which it does not believe it is more-likely-than-not to realize those deferred tax assets based upon all available positive and negative evidence, including historical operating performance,carryback periods, reversal of taxable temporary differences, tax planning strategies, and earnings expectations.As of March 31, 2018, the Company has net operating loss carry forwards of approximately $139,116 and $1,789 of U.S. state net operating losses, which willbe available to offset future taxable income. If not used, losses with a tax effect of approximately $12,452 will expire within five years and losses with a taxeffect of $400 will expire in 2038. The remaining portion of the carry forward losses arose in jurisdictions where losses do not expire.The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. During the fiscal years ended March 31,2018, March 31, 2017 and March 31, 2016, the Company had no amounts accrued for interest and penalties. The Company does not currently anticipate thatthe total amount of unrecognized tax benefits will result in material changes to its financial position within the next 12 months.The Company has evaluated its tax positions in all jurisdictions at each year end and has concluded that there are no material uncertain tax positions.- 83 - The Company files separate company income tax returns in its domestic and foreign jurisdictions. All necessary income tax filings in all jurisdictions havebeen completed for all years up to and including March 31, 2017 and there are no ongoing tax examinations in any jurisdiction.No tax charge arose on any element of other comprehensive loss. Note 11. Pension PlansThe Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independentlyadministered fund. The pension cost charge represents the contribution payable by the Company to the fund during the year. Defined contribution pensioncosts during the years ended March 31, 2018, 2017 and 2016 amounted to $1,197, $742 and $580, respectively.In addition, the Company’s Swiss subsidiary has a fully insured pension plan managed by Swiss Life. Under this plan, annual contributions are paid for eachemployee as determined by Swiss Life and each employee accrues pension benefits with Swiss Life. The risks of disability, death and longevity are also fullyinsured by Swiss Life. Swiss Life invests the pension contributions and provides a 100% capital and interest guarantee for the pension benefits. Thesepension arrangements are based on a contract of affiliation between the Company’s Swiss subsidiary and the Swiss Life pension foundation, which can beterminated by either party. In the event of a termination, the Company’s Swiss subsidiary would have an obligation to find alternative pension arrangementsfor its employees. Because there is no guarantee that the Swiss employee pension arrangements would be continued under the same conditions, there is a risk,albeit remote, that a pension obligation may fall on the Company’s Swiss subsidiary. These circumstances require that the Swiss employee pension arrangements be treated as a defined benefit plan under ASC 715 Compensation – RetirementBenefits. Accordingly, an actuarial valuation of the pension obligation has been performed. At March 31, 2018 and 2017, the accumulated pensionobligation amounted to $15,784 and $13,318, respectively, as compared with plan assets of $9,616 and $7,981, respectively. Therefore, the net funded statuswas an obligation of $6,168 and $5,337, as of March 31, 2018 and March 31, 2017 respectively, which were recorded as liabilities on the consolidatedbalance sheets.The following provides a reconciliation of the benefit obligations, the plan assets and the funded status. Year ended March 31,2018 March 31,2017 Pension benefit obligation, beginning of year $13,318 $8,957 Service cost 1,601 1,353 Contributions paid by plan participants 2,627 3,483 Interest cost 110 39 Benefits paid (2,601) (694)Actuarial loss 32 591 Foreign currency translation 697 (411)Pension benefit obligation, end of year $15,784 $13,318 Year ended March 31,2018 March 31,2017 Fair value of plan assets, beginning of year $7,981 $4,455 Actual return on plan assets 78 71 Contributions paid by employer 1,110 892 Contributions paid by plan participants 2,627 3,483 Benefits paid (2,601) (694)Foreign currency translation 421 (226)Fair value of plan assets, end of year $9,616 $7,981 Contributions paid by plan participants include $1,958 and $2,940 of payments into the scheme on new employees joining in the years ended March 31,2018 and March 31, 2017, respectively. - 84 - Year ended March 31,2018 March 31,2017 Pension benefit obligation, end of year $15,784 $13,318 Fair value of plan assets, end of year 9,616 7,981 Net funding obligation, end of year $6,168 $5,337 The assumptions used to determine the pension obligation are: Year ended March 31,2018 March 31,2017 Price inflation 1.00% 1.00%Discount rate 1.00% 0.80%Expected return on plan assets 1.40% 1.40%Average rate of salary increase 1.00% 1.00% Each employee participating in the plan has an individual portfolio that is managed by Swiss Life under a collective arrangement. Plan assets comprise thesurrender value of the portfolio of active insured scheme participants. The expected return on plan assets was determined after consideration of current andhistorical levels of return and discussions with Swiss Life. The discount rate is based on bond yields at March 31, 2018 and March 31, 2017 on the Swissbond market over a fifteen to twenty-five year period.The net pension costs for the year comprises: Year ended March 31,2018 March 31,2017 Employer service cost $1,601 $1,353 Interest cost 110 39 Expected return on plan assets (115) (61)Amortization of prior service credit (14) (14)Amortization of net loss 188 186 Net pension cost $1,770 $1,503The provision for pension benefit obligation recognized in other comprehensive income comprises: Year ended March 31,2018 March 31,2017 Net actuarial loss $67 $582 Amortization of prior service credit 14 14 Amortization of net loss (188) (186) $(107) $410The following benefit payments are expected to be paid in the following periods: 2019 $981 2020 $917 2021 $863 2022 $818 2023 $742 2024 to 2027 $3,518Expected annual employer contributions to the plan in the year ending March 31, 2019 amount to $1,124. - 85 - Note 12. Net Loss Per ShareIn accordance with ASC 260 Earnings Per Share, basic earnings available to ordinary shareholders per share is computed based on the weighted averagenumber of ordinary shares outstanding during each period. Diluted earnings available to ordinary shareholders per share is computed based on the weightedaverage number of ordinary shares outstanding during each period, plus potential ordinary shares considered outstanding during the period, as long as theinclusion of such shares is not anti-dilutive. Potential ordinary shares consist of the incremental ordinary shares issuable upon the exercise of share options(using the treasury shares method), RSUs (including MRSUs) and warrants to acquire ordinary shares.The following table sets forth the computation of basic loss per ordinary share. Diluted earnings per share figures are not applicable due to losses: Year ended March 31, 2018 2017 2016 Numerator: Net loss $(82,338) $(85,069) $(33,878)Net loss available to ordinary shareholders - basic and diluted $(82,338) $(85,069) $(33,878)Denominator: Weighted-average shares outstanding - basic and diluted 40,839,309 28,145,472 19,558,152 Loss per share - basic and diluted $(2.02) $(3.02) $(1.73) The following sets out the numbers of the options, RSUs (including MRSUs) and warrants to purchase ordinary shares excluded from the above computationof earnings per share for the years ended March 31, 2018, March 31, 2017 and March 31, 2016, as their inclusion would have been anti-dilutive. March 31,2018 March 31,2017 March 31,2016 Ordinary shares issuable on exercise of options to purchase ordinary shares 2,096,283 1,948,917 1,589,938 Restricted share units awarded, including the multi-year performance related restricted share units 773,379 843,608 237,695 Ordinary shares issuable on exercise of warrants at $16.14 per share 111,525 111,525 111,525 Ordinary shares issuable on exercise of warrants at $9.375 per share 64,000 64,000 64,000 Ordinary shares issuable on exercise of warrants at $5.80 per share 8,414,683 — — Ordinary shares issuable on exercise of warrants at $0.01 per share 550,000 — 850,000 12,009,870 2,968,050 2,853,158 - 86 - Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureThere have been no changes in or disagreements with accountants on accounting and financial disclosure matters in the last fiscal year.Item 9A. Controls and procedures(a) Evaluation of disclosure controls and proceduresUnder the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have conductedan evaluation of our disclosure controls and procedures, as that term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the“Exchange Act”), as of March 31, 2018. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, due to amaterial weakness in our internal control over financial reporting, which is discussed below in “—Management’s Annual Report on Internal Control overFinancial Reporting,” our disclosure controls and procedures were not effective as of March 31, 2018.(b) Management’s report on internal control over financial reportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange ActRule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, weconducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—IntegratedFramework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. In connection with this assessment, weidentified a material weakness, as described below, in our internal control over financial reporting as of March 31, 2018.A material weakness is defined as “a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.”Based on its evaluation in accordance with COSO criteria, management identified a material weakness in the design of our internal control over the deferredincome tax accounting for complex, non-routine transactions. Specifically, management did not have adequate supervision and review controls over theadvice provided by third party tax advisers, including the accounting for the related deferred income taxes. This material weakness resulted in a misstatementwhich was corrected by post-close adjustments to deferred tax prior to the issuance of the consolidated financial statements for the year ended March 31,2018.Because of the material weakness described above, management concluded that, as of March 31, 2018, our internal control over financial reporting was noteffective.The Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control overfinancial reporting as a result of an exemption provided to emerging growth companies under the JOBS Act.(c) Remediation Plan for Material Weakness in Internal Control over Financial ReportingTo remediate the material weakness identified above, we will implement additional controls and procedures, which include but are not limited to: •increased involvement of third party tax advisers to assist and review the tax implications of complex, non-routine transactions; and •specific management review control procedures around the use of specialists, specifically the review of tax advice and the related accountingtreatment under US GAAP.We anticipate the actions described above and the resulting improvements in controls will remediate the related material weakness that we identified as ofMarch 31, 2018. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that alldeficiencies have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns canoccur because of simple errors or mistakes.- 87 - (c) Changes in internal control over financial reportingThere were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the fourthquarter of the year ended March 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other informationNone. - 88 - PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceThe information required by this item is incorporated herein by reference to our definitive proxy statement, which will be filed not later than July 31, 2018. Item 11. Executive CompensationThe information required by this item is incorporated herein by reference to our definitive proxy statement, which will be filed not later than July 31, 2018. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated herein by reference to our definitive proxy statement, which will be filed not later than July 31, 2018. Item 13. Certain Relationships and Related Transactions and Director IndependenceThe information required by this item is incorporated herein by reference to our definitive proxy statement, which will be filed not later than July 31, 2018. Item 14. Principal Accounting Fees and ServicesThe information required by this item is incorporated herein by reference to our definitive proxy statement, which will be filed not later than July 31, 2018. - 89 - PART IVItem 15. Exhibits, Financial Statement Schedules 1.Financial StatementsOur consolidated financial statements, together with the independent registered public accounting firm’s report thereon, are set forth on pages 62 through 86of this annual report on Form 10-K and are incorporated herein by reference. See Item 8, ‘‘Financial Statements and Supplementary Data,” filed herewith, for alist of financial statements. 2.Financial Statement SchedulesAll financial statement schedules have been omitted because the required information is not applicable or deemed not material, or the required information ispresented in the consolidated financial statements or in the notes to consolidated financial statements filed in response to Item 8 of this annual report onForm 10-K. 3.Exhibit IndexThe following is a list of exhibits filed as part of this Annual Report on Form 10-K: Exhibitnumber Description of exhibit 3.1 Amended Articles of Association (Filed as Exhibit 3.1 to Amendment No. 4 to our Registration Statement on Form S-1 (File No. 333-194390)on April 14, 2014 and incorporated herein by reference) 4.1 Form of Ordinary Shares Certificate (Filed as Exhibit 4.1 to Amendment No. 4 to our Registration Statement on Form S-1 (File No. 333-194390)on April 14, 2014 and incorporated herein by reference) 4.2 Warrant to Purchase C Preference Shares, dated December 26, 2013, issued to Midcap Funding V, LLC (Filed as Exhibit 4.2 to our RegistrationStatement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 4.3 Registration Rights Agreement, dated November 25, 2014, by and among Quotient Limited and the Subscribers named therein (Filed asExhibit 4.2 to our Current Report on Form 8-K on November 26, 2014 and incorporated herein by reference) 4.4 Statement of Rights in relation to Preference Shares in the capital of Quotient Limited (Filed as Exhibit 4.1 to our Current Report on Form 8-Kon January 29, 2015 and incorporated herein by reference) 4.5 Warrant to Purchase 66,915 Ordinary Shares, dated September 25, 2015, issued to Midcap Financial Trust (filed as Exhibit 4.1 to our CurrentReport on Form 8-K on October 1, 2015 and incorporated herein by reference) 4.6 Warrant to Purchase 26,023 Ordinary Shares, dated September 25, 2015, issued to Oxford Finance LLC (filed as Exhibit 4.2 to our CurrentReport on Form 8-K on October 1, 2015 and incorporated herein by reference) 4.7 Warrant to Purchase 14,126 Ordinary Shares, dated September 25, 2015, issued to Oxford Finance LLC (filed as Exhibit 4.3 to our CurrentReport on Form 8-K on October 1, 2015 and incorporated herein by reference) 4.8 Warrant to Purchase 4,461 Ordinary Shares, dated September 25, 2015, issued to Flexpoint MCLS SPV LLC (filed as Exhibit 4.4 to our CurrentReport on Form 8-K on October 1, 2015 and incorporated herein by reference) 4.9 Indenture, dated as of October 14, 2016, among the Company, the Guarantors from time to time party thereto and U.S. Bank NationalAssociation, as trustee and collateral agent (filed as exhibit 4.1 to our report on Form 8-K filed on October 14, 2016 and incorporated herein byreference) 4.10 Registration Rights Agreement, dated October 24, 2017, by and among Quotient Limited and the Subscribers named therein (Filed as Exhibit4.1 of our Current Report on 8-K on October 25, 2017 and incorporated herein by reference) 4.11 Form of Warrant to Purchase up to 8,414,683 Ordinary Shares (Filed as Exhibit 4.2 of our Current Report on 8-K on October 25, 2017 andincorporated herein by reference) 4.12 Form of Pre-Funded Warrants to Purchase up to 550,000 Ordinary Shares (Filed as Exhibit 4.3 of our Current Report on 8-K on October 25,2017 and incorporated herein by reference) 10.1 Service Agreement, dated February 16, 2012, between Quotient Biodiagnostics Holding Limited (since renamed Quotient Limited) and PaulCowan (Filed as Exhibit 10.2 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein byreference) 10.2 Employment Agreement, dated March 9, 2009, between Alba Bioscience Limited and Jeremy Stackawitz (Filed as Exhibit 10.3 to ourRegistration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference)- 90 - Exhibitnumber Description of exhibit 10.3 Service Agreement, dated November 21, 2012, between Quotient Biodiagnostics Holding Limited (since renamed Quotient Limited) andEdward Farrell (Filed as Exhibit 10.4 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporatedherein by reference) 10.4 Service Agreement, dated August 14, 2012, between Quotient Biodiagnostics Holdings Limited (since renamed Quotient Limited) and RolandBoyd (Filed as Exhibit 10.5 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein byreference) 10.5 Employment agreement, dated February 9, 2017, between Quotient Limited and Christopher Lindop (Filed as Exhibit 10.2 to our CurrentReport on Form 8-K on February, 14 2017 and incorporated herein by reference) 10.6 Umbrella Supply Agreement, dated December 1, 2004, between Alba Bioscience, a division of the Scottish National Blood TransfusionService, predecessor to Alba Bioscience Limited, acting on behalf of The Common Services Agency, and Ortho-Clinical Diagnostics Inc. (Filedas Exhibit 10.7 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 10.7 Assignment Agreement of the Supply Umbrella Agreement, dated September 3, 2007, between Ortho-Clinical Diagnostics Inc. and TheCommon Services Agency acting through its division the Scottish National Blood Transfusion Service (Filed as Exhibit 10.8 to ourRegistration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 10.8† STRATEC Development Agreement, dated January 7, 2014, between STRATEC Biomedical AG and QBD (QSIP) Limited (Filed as Exhibit10.9 to Amendment No. 2 to our Registration Statement on Form S-1 (File No. 333-194390) on April 3, 2014 and incorporated herein byreference) 10.9 Future Master Services Agreement, dated April 1, 2013, between Future Diagnostics BV and QDB (QSIP) Limited. (Filed as Exhibit 10.11 toour Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 10.10 Eysins, Switzerland Lease Agreement, dated March 10, 2010, between Nemaco Fléchères B.V. and Quotient Suisse SA (Filed as Exhibit 10.12to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 10.11 Eysins, Switzerland, Lease Assignment Agreement, dated December 9, 2013, by and among Fidfund Management SA, Mondelez EuropeGmbH, Quotient Suisse SA and Quotient Limited. (Filed as Exhibit 10.13 to our Registration Statement on Form S-1 (File No. 333-194390) onMarch 7, 2014 and incorporated herein by reference) 10.12 Edinburgh, Scotland Lease Agreement, dated July 26, 2007, between the Scottish Ministers and Dalglen (No. 1062) Limited (since renamedAlba Bioscience Limited) (Filed as Exhibit 10.14 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 andincorporated herein by reference) 10.13 Edinburgh, Scotland, Minute of Variation of Lease and Guarantee, dated September 21, 2011, among Alba Bioscience Limited (formerlyDalglen (No. 1062) Limited, Quotient Biodiagnostics Group Limited, and the Scottish Ministers (Filed as Exhibit 10.15 to our RegistrationStatement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated herein by reference) 10.14 Form of Indemnification Agreement (Filed as Exhibit 10.16 to Amendment No. 4 to our Registration Statement on Form S-1 (File No. 333-194390) on April 14, 2014 and incorporated herein by reference) 10.15 2012 Option Plan (Filed as Exhibit 10.17 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporatedherein by reference) 10.16 Quotient Limited 2014 Stock Incentive Plan (as adopted on March 31, 2014 and amended and restated on October 28, 2016) (incorporated byreference to Exhibit A to the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on July 26,2016) 10.17† TTP Master Development Agreement, dated January 4, 2010, between The Technology Partnership plc and QBD (QS-IP) Limited. (Filed asExhibit 10.19 to Amendment No. 1 to our Registration Statement on Form S-1 (File No. 333-194390) on March 26, 2014 and incorporatedherein by reference) 10.18† TTP Intellectual Property Rights Agreement, dated March 4, 2014, between The Technology Partnership plc and QBD (QS-IP) Limited. (Filedas Exhibit 10.20 to Amendment No. 2 to our Registration Statement on Form S-1 (File No. 333-194390) on April 3, 2014 and incorporatedherein by reference) 10.19 First Amendment to the STRATEC Development Agreement, dated March 3, 2014, between STRATEC Biomedical AG and QBD (QS-IP)Limited. (Filed as Exhibit 10.21 to our Registration Statement on Form S-1 (File No. 333-194390) on March 7, 2014 and incorporated hereinby reference) 10.20† STRATEC Supply and Manufacturing Agreement, dated April 1, 2014, between STRATEC Biomedical AG and QBD (QS-IP) Limited. (Filed asExhibit 10.22 to Amendment No. 3 to our Registration Statement on Form S-1 (File No. 333-194390) on April 7, 2014 and incorporated hereinby reference) - 91 - Exhibitnumber Description of exhibit10.21 Form of Restricted Stock Unit Award Agreement (Filed as Exhibit 10.24 to Amendment No. 4 to our Registration Statement on Form S-1 (FileNo. 333-194390) on April 14, 2014 and incorporated herein by reference) 10.22 Form of Restricted Stock Award Agreement (Filed as Exhibit 10.25 to Amendment No. 4 to our Registration Statement on FormS-1 (FileNo. 333-194390) on April 14, 2014 and incorporated herein by reference) 10.23 Form of Option Award Agreement (Filed as Exhibit 10.26 to Amendment No. 4 to our Registration Statement on Form S-1 (File No. 333-194390) on April 14, 2014 and incorporated herein by reference) 10.24 Form of Letter of Appointment for a Non-Executive Director (Filed as Exhibit 10.27 to Amendment No. 5 to our Registration Statement onForm S-1 (File No. 333-194390) on April 15, 2014 and incorporated herein by reference) 10.25 Subscription Agreement, dated November 25, 2014, by and among Quotient Limited and the Subscribers named therein. (Filed as Exhibit 10.2to our Current Report on Form 8-K on November 26, 2014 and incorporated herein by reference) 10.26 Subscription Agreement, dated January 29, 2015, between Quotient Limited and Ortho-Clinical Diagnostics Finco S.Á.R.L. (Filed as Exhibit10.1 to our Current Report on Form 8-K on January 29, 2015 and incorporated herein by reference) 10.27† Distribution and Supply Agreement, dated January 29, 2015, between QBD (QS IP) Limited, Quotient Suisse SA and Ortho-ClinicalDiagnostics, Inc. (Filed as Exhibit 10.34 to our Annual Report on Form 10-K on June 1, 2015 and incorporated herein by reference) 10.28† Second Amendment to STRATEC Development Agreement, dated August 25, 2015, between STRATEC Biomedical AG and Quotient QS IPLtd. (filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q on November 4, 2015 and incorporated herein by reference) 10.29 Construction Contract, dated December 3, 2015, between Quotient Biocampus Limited and MW High Tech Projects UK Limited (filed asExhibit 10.1 to our Quarterly Report on Form 10-Q on February 10, 2016 and incorporated herein by reference) 10.30† First Amendment to TTP Intellectual Property Rights Agreement, dated March 28, 2016, between The Technology Partnership plc and QBD(QS-IP) Limited (filed as Exhibit 10.38 to our Annual Report on Form 10-K on May 31, 2016 and incorporated herein by reference) 10.31 Minute of Variation effective June 29, 2016 between The Scottish Ministers and Alba Bioscience Limited relating to the Lease of 21 Ellen’sGlen Road, Edinburgh (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q on August 9, 2016 and incorporated herein by reference) 10.32 Form of Purchase Agreement (filed as exhibit 10.1 to our report on Form 8-K filed on October 14, 2016 and incorporated herein by reference) 10.33 Form of Royalty Rights Agreement (filed as exhibit 10.2 to our report on Form 8-K filed on October 14, 2016 and incorporated herein byreference) 10.34 Collateral Agreement, dated as of October 14, 2016, among the Company the Subsidiary Parties from time to time party thereto and U.S. BankNational Association, as trustee and collateral agent (filed as exhibit 10.3 to our report on Form 8-K filed on October 14, 2016 and incorporatedherein by reference) 10.35 Separation and Release Agreement between Stephen Unger and Quotient Limited, dated November 9, 2016 (filed as exhibit 10.1 to our reporton Form 8-K filed on November 15, 2016 and incorporated herein by reference) 10.36 Subscription Agreement dated February 9, 2017 between Quotient Limited and Christopher J. Lindop (filed as Exhibit 10.1 to our CurrentReport on Form 8-K on February, 14 2017 and incorporated herein by reference) 10.37 Form of Change of Control Agreement dated as of August 7, 2017 between the Company and the following executive officers: Paul Cowan,Christopher Lindop, Edward Farrell, Jeremy Stackawitz and Roland Boyd (filed as Exhibit 10.1 to our report on Form 8-K filed on August 10,2017 and incorporated herein by reference) 10.38 Form of Subscription Agreement, dated October 24, 2017 by an among Quotient Limited and the Subscribers named therein (filed as Exhibit10.1 to our report on Form 8-K filed on October 25, 2017 and incorporated herein by reference) 10.39 Warrant Agent Agreement, dated December 12, 2017, between Quotient Limited and Continental Stock Transfer & Trust Co. (filed as Exhibit10.1 to our report on Form 8-K filed on December 15, 2017 and incorporated herein by reference) 10.40 Lease Agreement, dated July 14, 2017, by and between Quotient Biocampus Limited and Alba Bioscience Limited (filed as Exhibit 10.1 to ourreport on Form 8-K filed on March 26, 2018 and incorporated herein by reference) - 92 - Exhibitnumber Description of exhibit10.41 Minute of Variation of Lease, dated March 23, 2018, by and between Quotient Biocampus Limited and Alba Bioscience Limited (filed asExhibit 10.2 to our report on Form 8-K filed on March 26, 2018 and incorporated herein by reference) 10.42 Guarantee Agreement, dated March 23, 2018, by Quotient Limited and Quotient Suisse SA in favor of Roslin Assets Limited (filed as Exhibit10.3 to our report on Form 8-K filed on March 26, 2018 and incorporated herein by reference) 10.43 Disposition Agreement, dated March 23, 2018, by Quotient Biocampus Limited in favor of Roslin Assets Limited (filed as Exhibit 10.4 to ourreport on Form 8-K filed on March 26, 2018 and incorporated herein by reference) 10.44 Rent Deposit Agreement, dated March 23, 2018, by and between Alba Bioscience Limited and Roslin Assets Limited (filed as Exhibit 10.5 toour report on Form 8-K filed on March 26, 2018 and incorporated herein by reference) 10.45* Principal Offer, dated February 20, 2018, by Quotient Biocampus Limited and Roslin Assets Limited 12.1* Computation of Ratio of Earnings to Combined Fixed Charges and Preference Share Dividends 21.1* List of Subsidiaries 23.1* Consent of Ernst & Young LLP 31.1* Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of the Principal Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of the Principal Financial Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002 101# The following financial statements from the Company’s Annual Report on Form 10-K for the year ended March 31, 2018, formatted in XBRL(eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2018 and 2017, (ii) Consolidated Statements ofComprehensive Loss for the years ended March 31, 2018, 2017 and 2016, (iii) Consolidated Statements of Redeemable Convertible PreferenceShares and Changes in Shareholders’ Equity for the years ended March 31, 2018, 2017 and 2016, (iv) Consolidated Statements of Cash Flowsfor the years ended March 31, 2018, 2017 and 2016 and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and includingdetailed tags. †Confidential treatment has been granted with respect to certain portions of this exhibit. Omitted portions have been submitted separately to theSecurities and Exchange Commission.*Filed herewith.#XBRL information is furnished and not filed for purposes of Section 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities ExchangeAct of 1934, and is not subject to liability under those sections, is not part of any registration statement, prospectus or other document to which itrelates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.- 93 - Item 16. Form 10-K SummaryNone.- 94 - 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 be signed on itsbehalf by the undersigned, thereunto duly authorized, in Eysins, Switzerland on May 30, 2018 QUOTIENT LIMITED By: /s/ Franz Walt Franz WaltChief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on thedate indicated. Signature Title Date /s/ Franz Walt Chief Executive Officer(Principal Executive Officer) May 30, 2018Franz Walt /s/ Christopher Lindop Chief Financial Officer(Principal Financial Officer) May 30, 2018Christopher Lindop /s/ Roland Boyd Group Financial Controller and Treasurer(Principal Accounting Officer) May 30, 2018Roland Boyd /s/ Heino von Prondzynski Chairman of the Board of Directors May 30, 2018Heino von Prondzynski /s/ Thomas Bologna Director May 30, 2018Thomas Bologna /s/ Frederick Hallsworth Director May 30, 2018Frederick Hallsworth /s/ Brian McDonough Director May 30, 2018Brian McDonough /s/ Sarah O’Connor Director May 30, 2018Sarah O’Connor /s/ Zubeen Shroff Director May 30, 2018Zubeen Shroff /s/ John Wilkerson Director May 30, 2018John Wilkerson /s/ Jeremy Stackawitz Authorized Representative in the United States May 30, 2018Jeremy Stackawitz - 95 -Exhibit 10.45DWFLLP110 Queen Street Glasgow G13HD DX GW9 LP - 1 Glasgow 12T +44 (0) 141 228 8000 F +44 (0) 141 228 8310 www.dwf.lawDavid RatterDWF LLP96 FountainbridgeEdinburghEH3 9QA Your Ref: Our Ref:CJM/201667-5Please quote this when replyingDate:16 February 2018Please ask for:Ext:Direct Dial:E-mail:Direct Fax:Chris McLeish562052+44 (0)141 228 8052Chris.McLeish@dwf.law+44 (0)141 228 8310 Dear SirsQUOTIENT BIOCAMPUS LIMITEDROSLIN ASSETS LIMITEDSITE 3, BIO CAMPUS, ROSLIN, MIDLOTHIAN On behalf of and as instructed by the Seller, we offer to sell the Property to the Purchaser on the following conditions:-1.Definitions and Interpretation 1.1.In the Missives:"2003 Act" means the Land Reform (Scotland) Act 2003;"2003 Act Notice" means any copy application, invitation to make representations or notice in terms of the 2003 Act in respect of theProperty;"2012 Act" means the Land Registration etc (Scotland) Act 2012;"Advance Notice" means an advance notice as defined in Section 56 of the 2012 Act;"Agreed Form" means the form of the Warranties and Product Guarantees in the form of the draft warranties and product guaranteespreviously provided to the Purchaser and approved by the Purchaser or the Purchaser's Solicitors;"Alba" means Alba Bioscience Limited, incorporated under the Companies Acts with Registered Number SC310584 and having theirRegistered Office at Douglas Building Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL"Appointment" means the Sub-Consultancy Agreement between MW High Tech Projects UK Limited and Fletcher Joseph(Edinburgh) Limited dated 17 January 2018DWF LLP is a limited liability partnership registered in England and Wales with registered number OC328794.The term Partner is used to refer to a Member of DWF LLP or an employee or consultant with equivalent standing and qualificationsA list of the Members of DWF LLP and of the Non-Members who are designated as Partners isopen to inspection at rts registered of11ce, 1 Scott Place. 2 Hardman Street, Manchester M3 3AADWF LLP (registered number OC328794) is authorised and regulated by the Solicitors Regulation AuthorityDWF LLP is also recognised as an incorporated practict;l by the Law Society of Scotland (registerednumber 43186).ISO 9001 :2008 Certificate No LRQ 4003826 "Beneficial Owner" means Roslin Estate Company, a firm having their place of business at Maybrook House, Blackfriars Street,Manchester M3 2EG;"Building Contract" means the contract in the form of a JCT Design and Build 2011 between the Seller and MW High Tech ProjectsUK Limited dated 18 December 2015;"Building Contractor" means MW High Tech Projects UK Limited incorporated under the Companies Act Registered Number05179071 and having their Registered Office at Unit C1, Methuen South, Methuen Park, Bath Road, Chippenham SN14 0GT;"Building Contractor Collateral Warranties" means a validly executed Collateral Warranty in the Agreed Form in favour of each ofthe Purchaser and the Funder;"Business Day" means a day on which clearing banks in Edinburgh, Glasgow and London are open for normal business"Price Retention" means the sum of Three hundred and fifty thousand pounds (£350,000)"Completion" means the Date of Entry or, if later, the date when the Completion Payment is paid and the purchase of the Propertyis completed in terms of the Missives;"Completion Payment" means the Price subject to all adjustments provided for in the Missives (including all rent and otherapportionments) and under deduction of the Price Retention;"Conclusion Date" means, unless otherwise specified, the first date on which the Missives create a concluded contract;"Consultant" means Fletcher Joseph (Edinburgh) Limited incorporated under the Companies Acts Registered Number SC163995 andhaving its Registered Office at 5 Millar Place, Edinburgh EH10 5HJ;"Consultant Warranties" means a validly executed Collateral Warranty in the Agreed Form by the Consultant in favour of each ofthe Purchaser and the Funder;"Construction Documents" means copies of the complete and fully executed construction documents listed at Part 3B of theSchedule;"Date of Entry" means 16 March 2018 or such other date as the Purchaser and the Seller may agree in writing with specificreference to the Missives;"Deliverable Items (Completion)" means (a)The current draft of the Health and Safety File in respect of the Recently Competed Works complying in all respectswith the CDM Regulations; (b)A schedule listing the names and addresses of all contractors, consultants, sub-contractors and suppliers who havebeen involved in or concerned with the Recently Completed Works;"Deposit Agreement" means the Rent Deposit Agreement to be entered into between the Purchaser and Alba Bioscience Ltd in theform of the draft contained in Part 16 of the Schedule;"Design Documents" means all finalised plans, drawings, elevations, sections, specifications and other design information relatingto the Recently Completed Works; "Disclosed Documents" means the documents listed in Part 1 of the Schedule;"Disposition" means the disposition of the Property in favour of the Purchaser in terms of the draft set out in Part 8 of the Schedule;"Funder" means Rothschild Bank International Limited, a company incorporated in Guernsey with Company Registration Number1088 and having its Registered Office at St Julian's Court, St Peter Port, Guernsey GY1 3BP and Partnership Life AssuranceCompany Limited, a company incorporated under the Companies Act in England and Wales with Company Number 05465261 andhaving its Registered Office at 5th Floor, 110 Bishopsgate, London EC2N 4AY (designed as N M ROTHSCHILD & SONS LIMITED(as security agent) incorporated and registered in England and Wales with company number 925279 whose registered office is atNew Court, St Swithin's Lane, London, EC4N 8AL for the purpose of the Warranties (with the exception of the Letters of Reliance));"Ground Lease Renunciation" means a validly executed renunciation of the Ground Lease listed at Part 3 of the Schedule enteredinto between the Seller and Scottish Enterprise in the form of the draft contained in part 5 of the Schedule;"Guarantee" means the Guarantee to be entered into between (One) Quotient Limited and Quotient Suisse S.A; and (Two) thePurchaser in the form contained in part 13 of the Schedule;"Encumbrances" are encumbrances as set out in Section 9 of the 2012 Act;"HMRC" means HM Revenue & Customs;"Interest" means interest on the sum in question at 4% per annum above the base rate from time to time of Royal Bank of Scotlandplc from the date that such sum is due for payment or, if there is no such date specified, the date of demand for such sum until suchsum is paid;"Landlord Waivers" means the waiver documents entered into between the Seller and Close Brothers Limited in respect of certainitems at the Property all as specified in the documentation contained in Part 17 of the Schedule;"Landlords" means the landlords under the Leases;"Leases" means the lease(s) and other documentation listed in Part 3A of the Schedule;"Letter of Reliance " means a validly executed Letter of Reliance by Mason Evans Partnership Limited in respect of their Report onSite Investigations in respect of the Property dated October 2015 addressed to each of the Purchaser and the Funder in the AgreedForm;"Licence for Works" means a licence for works in the form of the draft contained in Part 12 of the Schedule;"Minute of Variation" means the Minute of Variation of lease to be entered into between the Seller and the Tenant in the formcontained in part 6 of the Schedule;"Necessary Consents" means all necessary consents, licenses, permissions, certificates, authorisations, approvals or relaxationsrequired from any local or any other competent authority or statutory undertaker or any other party for the undertaking and completionof the Recently Completed Works and including without prejudice to the foregoing generality all planning permissions and buildingwarrants;"Opinion Letters" means foreign jurisdiction opinion letters issued by a reputable firm of Jersey Lawyers (in the case of QuotientLimited) and Swiss Lawyers (in the case of Quotient Suisse S.A) in respect of the obligations of those parties in terms of theGuarantee, which opinion letter shall be in a form provided by the opining lawyers subject to such reasonable amendments as may be required by thePurchaser's Solicitors and approved by the opining lawyers (also acting reasonably) but which letters shall, for the avoidance ofdoubt, confirm the capacity of each party to enter into the guarantee and shall confirm that each party's execution of the Guaranteecomplies with the laws of their state of origin."Missives" means the contract constituted by this offer and all duly executed letters following on it;"Post–Completion Deliverable Items" means, collectively, complete hard and (when available) electronic copies of each of thefollowing: (a)The final "as-built" Design Documents delineating all details of construction and services with dimensions and suchother information (including performance manuals and full copies of all maintenance agreements and guarantees inrespect of the Recently Completed Works or any part thereof) as will facilitate future maintenance of the RecentlyCompleted works, including all variations; (b)The final Health and Safety File in respect of the Recently Competed Works complying in all respects with the CDMRegulations; (c)The written consent from Scottish Water in respect of the connection of the Property to the public water and seweragesystem pursuant to the Recently Completed Works;(d)The Energy Performance Certificate in respect of the Recently Completed Works"Price" means FOURTEEN MILLION NINE HUNDRED AND FIFTY THOUSAND POUNDS (£14,950,000) Sterling exclusive of anyVAT;"Property" means ALL and WHOLE the heritable property known as Site 3, Bio Campus, Roslin, Midlothian extending to 3.18hectares or thereby all as more particularly described in the Seller Disposition and the Disposition: Together with (i) the wholebuildings and erections on it, (ii) the whole Landlords' fixtures and fittings in and on it, (iii) the whole rights, parts, privileges andpertinents, and (iv) the Landlords' interest in and under the Leases;"Product Guarantees" means the Product Guarantee from Kingspan Limited in respect of panels and Aluminium metal façade whichhave been installed as part of the Recently Completed works; together with any other product guarantees obtained by and on behalfof the Seller in respect of the Recently Completed Works."Purchaser" means Roslin Assets Limited, incorporated under the Companies Acts (Registered Number 10893348 ) and having itsRegistered Office at 5th Floor, Maybrook House, 40 Blackfriars Street, Manchester M3 2EG;;"Purchaser's Bank" means (a) the client account of the Purchaser's Solicitors and/or (b) the client account of the solicitors acting forthe Purchaser's heritable creditor and/or (c) if it is a bank which is a shareholder in CHAPS Clearing Co. Limited, and the funds inquestion are loan funds from that bank for the purpose of acquiring the Property, the Purchaser's heritable creditor;"Purchaser Deposit" means the sum of Twenty Five Thousand Pounds (£25,000) STERLING."Purchaser's Solicitors" means David Ratter, DWF LLP, 96 Fountainbridge, Edinburgh (Ref: M52733-5/DAR) or such other solicitorsas the Purchaser may appoint in their place from time to time and who have been notified in writing to the Seller's Solicitors; "RCIL" means the register of community interests in land held by the Keeper of the Registers of Scotland;"Recently Completed Works" means the works carried out pursuant to the Building Contract and in respect of which the Certificateof Practical Completion was issued on 19 January 2018;"Rent Deposit" means the rental deposit of THREE MILLION SIX HUNDRED THOUSAND POUNDS (£3,600,000) Sterling payablepursuant to the Deposit Agreement;"Retention Bond" means the Retention Bond comprised by the letter by Commerzbank Aktiengesellschaft to the Seller dated 18January 2018 reference Retention Guarantee Number AZSAV7027208001;"Schedule" means the schedule annexed to this offer;"Seller" means QUOTIENT BIOCAMPUS LIMITED, incorporated under the Companies Acts (Registered Number SC514165) andhaving its Registered Office at Douglas Buildings, Pentlands Science Park, Bush Loan, Penicuick EH26 0PL;"Seller's BankAccount" means Bank: Royal Bank of Scotland plc, Sort Code: 16-00-02, Account Number: 21117212, Account Name: DWF LLPClients Account or such other UK clearing bank account as the Seller's Solicitors nominate by written notice to that effect at least 3Business Days prior to the Date of Entry;"Seller Disposition" means a validly executed Disposition by Scottish Enterprise in favour of the Seller in respect of the Property inthe form of the draft contained in part 9 of the Schedule;"Seller's Solicitors" means Chris Mcleish, DWF LLP, 110 Queen Street, Glasgow (Ref: CJM/2016677-5) or such other solicitors asthe Seller may appoint in their place from time to time and who have been notified in writing to the Purchaser's Solicitors;"Snagging List" means the snagging list attached to the Certificate of Practical Completion issued under the Building Contract;"Sub Consultant Appointments" means each Appointment with a Sub-Consultantin such form as the Seller shall agree with therelevant Sub Consultants and the Consultant and shall be approved by the Purchaser acting reasonably ;"Sub Consultants" means the Sub-Consultants listed in Part 11 of the Schedule;"Sub Consultants Warranties" means a validly executed Collateral Warranty from each of the Sub Consultants in favour of each ofthe Purchaser in such form as the Seller shall agree with the relevant Sub Consultants and shall be approved by the Purchaseracting reasonably;"Sub-Contracts" means each Sub-Contract with a Sub-Contractor a copy of which has been exhibited to the Purchaser;"Sub-Contractor" means the Sub-Contractors listed in Part 11 of the Schedule;"Sub-Contractor Warranties" means a validly executed Collateral Warranty from each of the Sub Contractors in favour of each ofthe Purchaser and the Funder in the Agreed Form;"Tenants" means the current tenants (both collectively and individually) under the Leases;"Title Deeds" means the title deeds of the Property listed in Part 2 of the Schedule;"TOGC" means a transfer of a business as a going concern for the purposes of Section 49(1) of the VAT Act and Article 5 of theValue Added Tax (Special Provisions) Order 1995; "VAT" means value added tax as provided for in the VAT Act and any tax similar or equivalent to value added tax or performing asimilar fiscal function;"VAT Act" means the Value Added Tax Act 1994;"VAT Group" means two or more bodies corporate registered as a group for VAT purposes under Section 43 of the VAT Act; and"Warranties" means the Building Contractor Warranties, the Consultant Warranties, the Letters of Reliance, the Sub-ConsultantWarranties and the Sub-Contractor Warranties. 1.2.In the Missives, unless otherwise specified or the context otherwise requires:- 1.1.2any reference to one gender includes all other genders; 1.1.3words in the singular only include the plural and vice versa; 1.1.4any reference to the whole is to be treated as including reference to any part of the whole; 1.1.5any reference to a person includes a natural person, corporate or unincorporated body (whether or not having separatelegal personality) and words importing individuals include corporations and vice versa; 1.1.6any reference to a Clause, Schedule or Part of the Schedule is to the relevant Clause, Schedule or Part of theSchedule of or to this offer and reference, in any Part of the Schedule, to a numbered paragraph is a reference to therelevant numbered paragraph in that Part of the Schedule; 1.1.7any reference to a statute or statutory provision includes any subordinate legislation which is in force from time to timeunder that statute or statutory provision; 1.1.8any reference to any statute, statutory provision or subordinate legislation is a reference to it as it is in force from timeto time taking account of any amendment or re-enactment; 1.1.9any phrase introduced by the words "including", "include", "in particular" or any similar expression is to be construed asillustrative only and is not to be construed as limiting the generality of any preceding words; 1.1.10a document will be duly executed only if it is executed in such manner as meets the requirements of Section 3 orSections 9B and 9C of the Requirements of Writing (Scotland) Act 1995; 1.1.11where at any one time there are two or more persons included in the expression "Purchaser" or "Seller" obligationscontained in the Missives which are expressed to be made by the Purchaser and/or the Seller are binding jointly andseverally on them and their respective executors and representatives whomsoever without the necessity of discussingthem in their order; 1.1.12any reference to funds being cleared means that the funds are immediately available for withdrawal from the holder'sbank account; 1.1.13any reference to "reasonable consent" means the prior written consent of the party in question, such consent not to beunreasonably withheld or delayed; and 1.1.14where a Clause provides that Interest is payable and that the sum must be paid within a specified period, no Interestwill accrue on the sum provided it is paid within that period. 1.3.The headings in the Missives are included for convenience only and are to be ignored in construing the Missives. 1.4.The Schedule forms part of the Missives.2.Price 2.1.Deposit 2.1.1.Payment2.1.1.1 The Purchaser Deposit will be:- (a)paid by the Purchaser within 1 Business Day after the Conclusion Date by instantaneous bank transfer ofcleared funds from the Purchaser’s Bank to the Seller’s Solicitors; and (b)placed by the Seller’s Solicitors in an interest bearing account immediately on receipt and be held bythem as stakeholders on behalf of the Purchaser and the Seller pending the occurrence of any of theevents described in Clauses 2.1.3.1 to 2.1.3.6.2.1.1.2. payment not made in accordance with Clause 2.1.1.1(a) may be refused. 2.1.2.CancellationIf the Purchaser fails to pay the whole of the Purchaser Deposit with any Interest due as set out in Clause 2.4 within 5Business Days after the due date the Seller is entitled to rescind the Missives and retain any part of the PurchaserDeposit and Interest which has been paid by the Purchaser as its own monies. 2.1.3.Treatment of Purchaser DepositThe Purchaser Deposit will be:- 2.1.3.1treated as a payment to account of the Price if the purchase of the Property proceeds, and accordinglyreleased at Completion; 2.1.3.2forfeited to the Seller if the Purchaser is in material breach of its obligations under the Missives and theSeller properly rescinds the contract constituted by the Missives as a result; 2.1.3.3forfeited to the Seller if the Seller properly rescinds the Missives in accordance with Clause 2.5(Cancellation of Sale); 2.1.3.4returned to the Purchaser if the Purchaser properly resiles from the Missives 2.1.3.5returned to the Purchaser if either the Seller or the Purchaser properly resiles from the Missives or if theMissives automatically terminate in each case in accordance with Clause 7.5.4] (Community Interests); 2.1.3.6returned to the Purchaser if either Seller or the Purchaser properly resiles from the Missives inaccordance with Clause 12.2 (Damage or Destruction). 2.1.4Interest 2.1.4.1If the Purchaser Deposit or any part of it is not paid to the Seller on the due date then, notwithstandingconsignation, the Purchaser will pay to the Seller Interest on the outstanding money. 2.1.4.2The interest accrued on the Purchaser Deposit will be paid to the party to whom the Purchaser Deposit ispayable in accordance with the foregoing provisions. For the avoidance of doubt, the interest will betreated as a payment to account of the Price if Clause 2.1.3.1 applies. 2.1.5Undertakings and Confirmations 2.1.5.1The Seller and the Purchaser undertake that they will, and that they will procure that their respectivesolicitors will, take all such steps as may be necessary as expeditiously as possible to give effect to theforegoing provisions, including signing all necessary bank forms and other documentation. 2.1.5.2The Seller’s Solicitors and the Purchaser’s Solicitors respectively confirm, by the issue and acceptanceof this offer, that they are authorised to give effect to this Clause 2.1 insofar as obligations are imposedon them. 2.2Payment 2.2.1The Completion Payment will be paid by the Purchaser on the Date of Entry by instantaneous bank transferof cleared funds from the Purchaser's Bank to the Seller's Bank Account in exchange for the Dispositionand other items to be delivered by the Seller referred to in Clause 9. 2.2.2A payment not made in accordance with Clause 2.2.1 may be refused. 2.3ApportionmentThe Price will be apportioned between Property and Fixed Plant as determined in conformity with Clause 18. 2.4InterestIf the Completion Payment (and any VAT which the Purchaser has agreed in terms of Clause 3 to pay to the Seller on theDate of Entry) or any part of it is not paid to the Seller on the Date of Entry then, notwithstanding consignation or that thePurchaser has not taken entry, the Purchaser will pay to the Seller Interest on the outstanding money. 2.5Cancellation of SaleIf the Purchaser fails to pay the Completion Payment (and any VAT which the Purchaser has agreed in terms of Clause 3to pay to the Seller on the Date of Entry) with Interest as set out in Clause 4 within 10 Business Days after the Date ofEntry the Seller is entitled to rescind the Missives, to re-sell the Property to any third party and to claim damages from thePurchaser which may include:- 2.5.1all costs and expenses incurred in relation to the re-marketing of the Property and the re-sale of it; 2.5.2any shortfall between:- 2.5.2.1the sale price received by the Seller on any such re-sale; and 2.5.2.2the Price; and 2.5.3financial losses including increased funding costs which the Seller would not have incurred had the Pricebeen paid on the Date of Entry and interest which the Seller could have earned on the Price had it beenpaid on the Date of Entry.If the Seller rescinds the Missives, no Interest will be due by the Purchaser in terms of Clause 2.4. 2.6Receipt of MoneyFor the purposes of this Clause 2, money will not be deemed paid to the Seller until such time as same day credit on it isavailable to the holder of the Seller's Bank Account in accordance with normal banking procedure. 2.7SuspensionThe provisions of Clauses 2.4 and 2.5 will not apply and the Seller will not be entitled to the rents under the Leases interms of Clause 4.2 for any period of time during which the delay in payment by the Purchaser is due to any failure orbreach by or on behalf of the Seller to implement its obligations or duties under the Missives on time. 2.8Price RetentionAt Completion the Price Retention shall be placed by the Purchaser's solicitors and the Seller's solicitors jointly in aninterest bearing account and be held by them as stakeholders on behalf of the Purchaser and the Seller pending theoccurrence of the Payment Date as specified in paragraph 1.5 of Part 18 of the Schedule. The terms of Clauses 2.1.4.1and 2.1.5 shall apply mutatis mutandis to the Price Retention. The Seller and the Purchaser irrevocably instruct theirrespective solicitors to execute any documentation properly due to be executed by them in order to give proper effect tothis clause and the terms of Part 18 of the Schedule.3VAT – 3.1TOGC 3.1.1The Seller and the Purchaser agree: 3.1.1.1that the sale of the Property constitutes a TOGC and accordingly no VAT will be charged onthe Price at Completion and no VAT will form part of the Completion Payment; 3.1.1.2that the business of letting the Property for a consideration is capable of being operatedseparately as a business; and 3.1.1.3to use all reasonable endeavours both before and after Completion to procure that the sale ofthe Property is treated by HMRC as a TOGC. 3.1.2The Seller confirms to the Purchaser that: 3.1.2.1it (or the representative member of its VAT Group) is registered for the purposes of VAT; 3.1.2.2either it or a person of which it is, and will at Completion be, a relevant associate (for thepurposes of the VAT Act, Schedule 10, paragraph 2) has exercised pursuant to the VAT Act,Schedule 10, paragraph 2 (or been treated pursuant to the VAT Act, Schedule 10, paragraph21 as having exercised) an option to tax in respect of the Property and has duly notified thatoption to HMRC to the extent required in order to make it effective; 3.1.2.3it (or such other person referred to in Clause 3.1.2.2) has not revoked, and will not revokebefore Completion, its option and, where such option is treated as having been exercised as aresult of a real estate election having been made, will not prior to Completion take any action,or omit to take any action, by virtue of which HMRC could revoke such real estate election; 3.1.2.4the assets to be transferred to the Purchaser in terms of the Missives have been and will, inthe period up to Completion, be used continuously for the Seller's business comprising theletting of and the collection of rents from property and such assets are the only assets in thebusiness to be transferred; and 3.1.2.5at Completion the Seller and the Tenants will not be members of the same VAT Group.The Seller has exhibited evidence of the matters stated in Clauses 3.1.2.1 and 3.1.2.2, which will include, if receivedby the Seller (or such other person referred to in Clause 3.1.2.2 prior to Completion, an acknowledgement by HMRC ofthe notification of such option to tax or where the option to tax is treated as having been exercised in respect of theProperty by virtue of the VAT Act, Schedule 10, paragraph 21, an acknowledgement by HMRC of the real estateelection made). 3.1.3If, notwithstanding the provisions in this Clause 3, HMRC direct in writing that VAT is chargeable on thesale of the Property, the Seller will notify the Purchaser in writing within 5 BusinessDays of the Seller beingso advised by HMRC. 3.1.4The Purchaser will pay to the Seller within 10 BusinessDays of written demand a sum equal to the amountof VAT determined by HMRC, in exchange for a valid VAT invoice. 3.1.5Subject to Clause 3.1.7, the Purchaser will pay, in addition, to the Seller within 10 Business Days of writtendemand an amount equal to the total of any interest, penalties, claims, losses, damages, costs andexpenses arising as a consequence of, or in relation to the failure to charge and collect VAT on the Price atCompletion and to account for such VAT to HMRC except to the extent that VAT is chargeable on the Priceas a consequence of the Seller's failure to comply with its obligations and undertakings in terms of thisClause 3. 3.1.6The Seller will use all reasonable endeavours to minimise the amount due under Clause 3.1.6. 3.1.7If the Purchaser fails to pay any amount due under Clauses 3.1.5 and 3.1.6 within the relevant time limit,the Purchaser will pay Interest on the outstanding amount. No Interest will be payable under this Clause inrespect of any amount and time period to the extent that the Seller has already been compensated underClause 3.1.6 for interest in respect of the same amount and the same time period. 3.1.8The Purchaser and the Seller do not intend to make a joint application under regulation 6(1) of the VATRegulations 1995 (SI 1995/2518) for the Purchaser to be registered for VAT under the Seller's VATregistration number and the Seller confirms that it will allow the Purchaser such access to VAT recordsrelating to the Property as required by Section 49 of the VAT Act as amended by the Finance Act 2007. 3.1.9The Seller and the Purchaser shall, and the Purchaser shall procure that the Beneficial Owner shall, enterinto an agreement before Completion in the form of the Notice of Agreement to Adopt Statement of Practicecomprised within Part 20 of the Schedule. The Seller shall sign and return the said Notice within 5Business Days of receipt. 3.1.10The Purchaser confirms to the Seller that it is acting as nominee for the Beneficial Owner in relation to thepurchase of the Property. 3.1.11The Purchaser confirms to the Seller that it will procure that: 3.1.11.1the Beneficial Owner will be registered for the purposes of VAT at Completion; 3.1.11.2before Completion the Beneficial Owner will: 3.1.11.2.1exercise an option to tax in respect of the Property under the VAT Act,Schedule 10, paragraph 2 or make a real estate election under the VATAct, Schedule 10, paragraph 21; and 3.1.11.2.2duly notify such option to tax or real estate election (as the case may be)to HMRC;in either case, so as to ensure that the conditions in Article 5(2A) of the Value Added Tax (Special Provisions) Order1995 will be satisfied in respect of the Purchaser's acquisition of the Property from the Seller; 3.1.12the Beneficial Owner will not revoke its option either before or after Completion and, where such option istreated as having been exercised as a result of a real estate election having been made, will not take anyaction, or omit to take any action, by virtue of which HMRC could revoke such real estate election; 3.1.13the Beneficial Owner will use such assets in carrying on the same kind of business as the Seller' namelythat detailed in clause 3.1.13; and 3.1.14the Beneficial Owner and the Tenants will not be members of the same VAT Group. 3.1.15The Purchaser confirms to the Seller that it will deliver to the Seller before Completion a VAT Notification inthe form comprised in Part 19 of the Schedule duly signed by or on behalf of the Beneficial Ownerconfirming that Article 5 (2B) of the Value Added Tax (Special Provisions) Order 1995 does not apply to theBeneficial Owner in relation to the purchase of the Property. 3.1.16The Purchaser will exhibit to the Seller, as soon as reasonably practicable, and in any event beforeCompletion, evidence of the matters stated in 3.1.11.1 and 3.1.11.2 which will include an acknowledgementfrom HMRC of the notification of such option to tax or, as the case may be, such real estate election ifreceived by the Purchaser prior to Completion. 3.2Capital Goods SchemeThe Seller confirms to the Purchaser that none of the assets to be transferred to the Purchaser in terms of the Missives isa capital item to which the Capital Goods Scheme (per Regulation 112 to 116 of the Value Added Tax Regulations 1995 asamended) applies or will apply in the period up to Completion.4.Entry and Apportionments 4.1EntryEntry to the Property subject only to and with the benefit of the Leases will be given on the Date of Entry. 4.2Rent Apportionment 4.2.1The rents payable under the Leases will, subject to Clause 2.7, be apportioned (net of VAT) atCompletion on the basis that the Purchaser will receive a 1/365th part of the rent for each day from(and including) Completion to (but not including) the next rent payment date(s) under the Leases. 4.2.2The rents will be apportioned on the assumption that the Seller has received payment of all sums dueprior to Completion, whether or not that is in fact the case. 4.3Other Apportionments 4.3.1All other payments under the Leases and all other outgoings for the Property (other than rates and,insurance) will be apportioned as at Completion on an equitable basis. 4.3.2Within 5 Business Days after Completion, the Seller or the Seller's Solicitors will advise the localauthority of the change of ownership of the Property so that any apportionment of rates can be carriedout by the local authority. 5.Other Payments 5.1Arrears 5.1.1If any rents or other payments under the Leases are in arrears at Completion the Purchaser will use allreasonable endeavours to procure payment from the Tenants as soon as practicable after Completionprovided that the Seller keeps the Purchaser free of expense. 5.1.2The Purchaser will pay to the Seller all sums relating to such arrears (together with any interest paid bythe Tenants in terms of the relevant Lease) within 5 Business Days of cleared funds being receivedfrom the relevant Tenant. 5.1.3If the Seller or its agents receive any payments from the Tenants after Completion which do not relateto arrears due to the Seller it will pay them to the Purchaser within 5 Business Days of cleared fundsbeing received from the relevant Tenant. 5.1.4If requested by the other, the Seller and the Purchaser will each assign to the other such rights as arereasonably necessary to enable them to recover from the Tenants any sums due under the Leases towhich they are entitled in terms of the Missives. The Seller may not take any steps to sequestrate anyTenant or appoint a receiver or liquidator to any Tenant except with the reasonable consent of thePurchaser. 5.2Rent Deposit 5.2.1 At Completion the Seller will procure that there is paid by Alba to the Purchaser the Rent Deposit (andthe Purchaser shall be entitled to deduct the Rent Deposit from the Completion Payment in the eventthat Alba does not pay the Rent Deposit at Completion); 5.2.2The Purchaser (provided the Purchaser's Solicitors are supplied with the relevant engrossment by theSeller's Solicitors not less than 10 Business Days prior to the Date of Entry) shall validly execute anddeliver to the Seller's Solicitors not less than 5 Business Days prior to the Date of Entry, the DepositAgreement. The Seller shall then procure that Alba validly executes the Deposit Agreement anddelivers the original to the Purchaser at Completion so that the Purchaser may attend to registration assoon as practicably possible following Completion and provide the Seller's Solicitor with an extract ofthe Deposit Agreement.6.Disclosed Documents 6.1Subject to Clause 9 the Purchaser is deemed to have examined the Disclosed Documents and accepts that it ispurchasing the Property on the basis that it has satisfied itself on all matters disclosed in them and on the validity andmarketability of the Seller's title to the Property. 6.2Clause 6.1 will override any other provision of the Missives apparently to the contrary and any confirmation given by theSeller in the Missives is given subject to the Disclosed Documents whether or not that is expressly stated. 7.Title 7.1Encumbrances 7.1.1So far as the Seller is aware there are no Encumbrances affecting the Property other than as referredto in the Disclosed Documents. 7.1.2The Property is sold with and under the Encumbrances affecting the Property whether specified orreferred to in the Title Deeds or not. 7.1.3To the extent that the same are not properly payable by the Tenants, the Seller shall be responsible forall payments due under the Title Deeds in respect of the period prior to Completion and will pay within10 Working Days of demand by the Purchaser any such monies as are invoiced to the Purchaser inrespect of said period. 7.2MineralsThe minerals are included in the sale to the extent to which the Seller has any right to them. 7.3Outstanding DisputesDuring the period of the Seller's ownership of the Property, there have been no disputes which remain outstanding withneighbouring proprietors or third parties about items common to the Property and adjacent premises, access to or from theProperty, the title to the Property or similar matters. 7.4PossessionThe Seller confirms that it is currently in possession of the Property and has been in possession of the subjects let interms of the Ground Lease listed at Part 3 of the Schedule openly, peaceably and without judicial interruption for acontinuous period of at least one year. 7.5Community Interests 7.5.1The Seller has not received any 2003 Act Notice. 7.5.2If the Seller receives any 2003 Act Notice prior to registration of the Disposition, then the Seller willimmediately: 7.5.2.1notify the Purchaser; and 7.5.2.2exhibit a copy of it to the Purchaser. 7.5.3If the Seller receives any 2003 Act Notice (whether before, on or after Completion) which relates to anapplication by a community body to register an interest in the Property received by the ScottishMinisters after the Conclusion Date, the Seller will immediately: 7.5.3.1exhibit a copy of the Missives and any other information in terms of Section 39A of the2003 Act to the Scottish Ministers to ensure that the Scottish Ministers decline toconsider the application in terms of Section 39(5) of the 2003 Act; and 7.5.3.2exhibit evidence to the Purchaser of compliance with Clause 7.5.3.1. 7.5.4If the Seller receives any 2003 Act Notice (whether on or before Completion) which relates to anyapplication by a community body to register an interest in the Property received by the ScottishMinisters on or before the Conclusion Date: 7.5.4.1either party will be entitled to resile from the Missives without penalty on delivery of awritten notice to that effect to the other's solicitors, not later than 5 Business Days after thedate on which the Purchaser has received the copy 2003 Act Notice in terms of Clause7.5.2.2, time being of the essence; or 7.5.4.2if the original Date of Entry has passed because the Seller and the Purchaser have beenprevented by the 2003 Act Notice from taking any further steps to transfer the Property,then: 7.5.4.2.1the Seller will notify the Purchaser in writing within 2 Business Days afterreceipt of notification from the Scottish Ministers or from the communitybody (as appropriate) of any of the matters referred to in Clause7.5.47.5.4.27.5.4.2.2, and 7.5.4.2.2subject to Clause 7.5.47.5.4.3, the Date of Entry will be 5 Business Daysafter receipt of the notice from the Seller confirming that: 7.5.4.2.2.1the Scottish Ministers have decided not to enter thecommunity interest in land to which the 2003 Act Noticerelates in the RCIL; 7.5.4.2.2.2the community body has withdrawn the application towhich the 2003 Act Notice relates; 7.5.4.2.2.3the Scottish Ministers have received written notice fromthe community body that it will not exercise the right tobuy the land; or 7.5.4.2.2.4the Scottish Ministers have decided not to consent toallow the right to buy to proceed. 7.5.4.3and if the Scottish Ministers decide to enter the community interest in land to which the2003 Act Notice relates in the RCIL either party will be entitled to resile from the Missiveswithout penalty on delivery of a written notice to that effect to the other's solicitors, prior tothe date on which either: 7.5.4.3.1the community body withdraws the application to which the 2003 ActNotice relates; or 7.5.4.3.2the Scottish Ministers receive written notice from the community bodythat it will not exercise the right to buy the land; or 7.5.4.3.3the Scottish Ministers decide not to consent to allow the right to buy toproceed. 7.5.4.4and if the community body completes the purchase of the Property then: 7.5.4.4.1the Missives will automatically terminate on completion of the sale of theProperty to the community body; and 7.5.4.4.2the Seller will notify the Purchaser that the Missives have terminatedimmediately. 7.5.5If the Disposition is of no effect by virtue of the 2003 Act then within 5 Business Days of the date onwhich this is established: 7.5.5.1the Seller will pay to the Purchaser: 7.5.5.1.1the Completion Payment (and any VAT on the Price); and 7.5.5.1.2all sums properly expended for rates, utilities, insurance, service chargeexpenditure and other outgoings for the Property in the period from (andincluding) Completion; 7.5.5.2and, in exchange, the Purchaser will: 7.5.5.2.1withdraw its application for registration of the Disposition and within 5days of receipt deliver it to the Seller; and 7.5.5.2.2pay to the Seller any sums received by the Purchaser for rent and anyother sums received in its capacity as owner of the Property in the periodfrom (and including) Completion.The Seller and the Purchaser will co-operate with each other and do such acts and things, execute such deeds anddocuments and deliver such documents and evidence as may be required to return the parties to the position in whichthey were before Completion. 7.6 Advance Notices 7.6.1The Seller will apply to the Keeper for an Advance Notice for the Disposition, in the form adjusted withthe Purchaser, to be either (i) entered on the application record for the Property or (ii) recorded in theRegister of Sasines no earlier than 5 Business Days prior to the Date of Entry. The cost of theAdvance Notice for the Disposition will be met by the Seller. 7.6.2The Seller consents to the Purchaser applying to the Keeper for Advance Notices for any deeds whichthe Purchaser intends to grant in relation to the Property. The cost of any Advance Notices which the Purchaser applies for will be met by thePurchaser. 7.6.3If the Seller rescinds the Missives in the circumstances set out in Clause 2.5 (Cancellation of Sale) thePurchaser consents to the discharge of the Advance Notice for the Disposition and the Purchaserconfirms that it will immediately discharge at its own cost any Advance Notice submitted by it ifrequested to do so by the Seller. 7.6.4If Completion is likely to occur after the Date of Entry, the Seller, if requested to do so by thePurchaser, will apply for a further Advance Notice for the Disposition, in the form adjusted with thePurchaser, and the cost of any additional Advance Notices will be met:- 7.6.4.1by the Seller, if the delay in settlement is due to any failure or breach by or on behalf of theSeller to implement its obligations under the Missives on time; or 7.6.4.2by the Purchaser, if the delay in settlement is due to any failure or breach by or on behalf ofthe Purchaser to implement its obligations under the Missives on time. 7.6.5The Seller's Solicitors will not provide any letter of obligation which undertakes to clear the records ofany deed, decree or diligence. 7.7Land Register Requirements 7.7.1Subject to Clause 7.7.2 the Seller will deliver to the Purchaser, on demand from time to time and at theSeller's expense, such documents and evidence as the Keeper may require to enable the Keeper toupdate or create (as the case may be) the Title Sheet of the Property to disclose the Purchaser as theregistered proprietor of the whole of the Property. Such documents will include (unless the Propertycomprises part only of a building):- 7.7.1.1a plan or bounding description sufficient to enable the Property to be identified on thecadastral map; and 7.7.1.2evidence (such as a plans report) that (i) the description of the Property in the Title Deedsis habile to include the whole of the occupied extent and (ii) there is no conflict between theextent of the Property and any registered cadastral units. 7.7.2After Completion, the Seller will deliver such documents and evidence as are specified in Clause 7.7.1only if the Disposition is presented for registration not later than 14 days after Completion. 7.7.3If the application for registration of the Disposition is rejected by the Keeper, then the Seller will co-operate with the Purchaser and, at the Purchaser’s expense, do such acts and things (includingobtaining a further Advance Notice), execute such deeds and documents and deliver such documentsand evidence as may be required to enable the Keeper to update or create (as the case may be) theTitle Sheet of the Property to disclose the Purchaser as the registered proprietor of the whole of theProperty. 7.8Trust ClauseIf the Seller is a company and if requested in writing by the Purchaser at least 3 Business Days prior to the Date of Entry, theDisposition will incorporate a declaration that the Seller will hold the Property as trustee for the Purchaser and its successors, untilthe Keeper has created or updated (as the case may be) the Title Sheet of the Property to disclose the Purchaser as the registeredproprietor of the whole of the Property.8.Leases 8.1ConfirmationsThe Seller confirms that, except as disclosed in Part 4 of the Schedule:- 8.1.1the Leases and the Minute of Variation accurately set out the whole terms of the letting or occupationof the Property; 8.1.2the Leases and the Minute of Variation; have not been amended or varied in a manner which is bindingon the Purchaser and they will not be so amended or varied, prior to Completion, except with the priorwritten consent of the Purchaser (and save in respect of the Renunciation of the Ground Lease whichwill be completed prior to Completion pursuant to the Ground Lease Renunciation); 8.1.3the Seller is not aware of any material breach by the Tenants of any of their obligations under theLeases which would not be reasonably ascertainable from an inspection of the Property; 8.1.4the Seller has not received written notification from any of the Tenants of claims or disputes under theLeases against the Landlords which are outstanding; 8.1.5there are no notices issued by the Seller to any of the Tenants, or by any of the Tenants to the Seller,under the Leases which remain to be implemented; 8.1.6no notices by or on behalf of any of the Tenants exercising any option to break or terminate any of theLeases have been served on the Seller or vice versa; 8.1.7the Seller has not received written notification of the insolvency, liquidation, administration orreceivership of any of the Tenants; 8.1.8the Seller has not received written notification of the creation of any fixed or floating charges over theinterest of any of the Tenants under the Leases; and 8.1.9The Lease shall continue in force notwithstanding the grant of the Seller Disposition and the enteringinto of the Ground Lease Renunciation. 8.2Period to CompletionThe Seller will take all necessary steps which a prudent landlord (acting reasonably) would take in the interests of good estatemanagement to ensure that the confirmations given in Clause 8.1 apply at Completion. 8.3Interim Management 8.3.1In the period from the date of this offer until Completion, the Seller will:- 8.3.1.1implement its obligations under the Leases; 8.3.1.2continue to manage the Property and the Leases as a responsible landlord and inaccordance with the principles of good estate management; and 8.3.1.3disclose in writing any changes to the confirmations given in Clause 8.1. 8.3.2The Seller will not:- 8.3.2.1terminate or accept a renunciation of any Lease; or 8.3.2.2grant any new lease; or 8.3.2.3vary any Lease, or 8.3.2.4settle any rent review under the Leases, propose or agree any reference to a third party fordetermination of any rent review or make or agree any proposal for a reviewed rent; or 8.3.2.5serve any notice under the Leases,or 8.3.2.6carry out any alterations to the Propertyexcept with the prior written consent of the Purchaser. 8.3.3If any application to the Seller for its consent under the Leases is still outstanding, or if any suchapplication is made prior to Completion, the Seller will not grant consent without the prior writtenapproval of the Purchaser. In relation to each such application, the Purchaser will timeously complywith the obligations of the Seller, as Landlords, failing which the Purchaser will indemnify the Sellerfully in respect of all liability incurred by the Seller to the Tenants in relation to the relevantapplications. 8.4Rent ReviewsThere are no outstanding rent reviews under any of the Leases. 9.Completion 9.1At Completion, the Purchaser will pay the Completion Payment (and any VAT on the Price) to the Seller in terms of Clause2.1. 9.2In exchange for the items referred to in Clause 9.1, at Completion the Seller will deliver to the Purchaser; 9.2.1Dispositionthe Disposition duly executed by the Seller 9.2.2Title Deeds(a)the Title Deeds; and (b)all necessary links in title evidencing the Seller's exclusive ownership of the Property; 9.2.3Leases and the Minute of Variation 9.2.3.1insofar as held by the Seller, the Leases; and 9.2.3.2the principal signed Minute of Variation together with completed land register applicationform and payment in respect of registration dues thereon. 9.2.4The Guarantee and Rent Deposit Agreementthe Guarantee validly exceuted by Quotient Limited and Quotient Suisse S.A; and the Deposit Agreementvalidly executed by Alba; 9.2.5Disclosed Documentsthe remaining Disclosed Documents; 9.2.6Legal Reports 9.2.6.1a legal report brought down to a date as near as practicable to Completion which report willshow:- 9.2.6.1.1no entries adverse to the Seller's interest in the Property; 9.2.6.1.2the Advance Notice for the Disposition; and 9.2.6.1.3no other Advance Notices other than those submitted by the Purchaser; 9.2.6.2a search in the RCIL brought down as near as practicable to Completion showing nothingprejudicial to the ability of the Seller validly to transfer title to the Property to the Purchaserthe cost of the legal report and search being the responsibility of the Seller; 9.2.7Charges Searchessearches in the register of charges and company file of the Seller (including a search to identify thedirectors and the secretary of the Seller as at the date of signing the Disposition) from the date of itsincorporation or the date of inception of the register (whichever is the later) brought down:- 9.2.7.1as near as practicable to Completion; and 9.2.7.2within 3 months following Completion, to a date at least thirty six days after Completionin both cases disclosing no entry prejudicial to the Purchaser's interest but the Seller's Solicitors will notprovide a letter of obligation in respect of the updated search in the register of charges and company file; 9.2.8 Discharge/Deed of Restriction 9.2.8.1a discharge/deed of restriction duly executed by the heritable creditor in any standard securityaffecting the Property together with completed and signed application forms forrecording/registration and payment for the correct amount of recording/ registration dues; and 9.2.8.2evidence of the discharge of any standard securities affecting the ground lease interest in theProperty, specifically including Discharges by US Bank and Scottish Enterprise, together withevidence of an application having been made to register such discharges in the Land Registerof Scotland; 9.2.9Letter of Consent and Non-crystallisationa letter of consent and non-crystallisation in the holder's usual form (releasing the Property from charge or otherwise interms that confer a valid title on the Purchaser subject to compliance with any time limit for registration of thePurchaser's title) in respect of the transaction envisaged by the Missives from each holder of a floating charge grantedby the Seller; 9.2.10Change of Landlorda notice of change of landlord in terms of the draft notice forming Part 7 of the Schedule addressed toeach of the Tenants and signed by the Seller's Solicitors; 9.2.11Construction DocumentsInsofar as not already provided to the Purchaser, the Construction Documents. 9.2.12Foreign Jurisdiction Opinion LettersThe Opinion Letters together with evidence of satisfactory professional indemnity insurance for each of theopining lawyers; 9.2.13Seller DispositionA certified true copy of the Seller Disposition together with evidence that the Seller has submitted anapplication to register its title to the property at the Land Register of Scotland pursuant to the SellerDisposition not less than 5 Working Days prior to the Date of Entry and provided evidence of same to thePurchaser not less than 3 Working Days prior to the Date of Entry. 9.2.14Ground Lease RenunciationA certified true copy of the Ground Lease Renunciation together with evidence that the Seller has submitted anapplication to register the Ground Lease Renunciation at the Land Register of Scotland. 9.2.15Seller's Solicitors' Letter of UndertakingA Letter of Undertaking by the Seller's Solicitors in respect of the registration of the Seller Disposition and the GroundLease Renunciation and completion of LBTT formalities in the Agreed Form; 9.2.16Licence for WorksThe Completed and validly executed Licence for Works with specification and drawings annexed thereto, showing thetenant fit-out to the Property. 9.2.17WarrantiesThe Warranties, declaring that that in the case of the Sub Consultants Warranties, the Seller's obligation shall only be to use allreasonable endeavours to obtain and deliver the Sub Consultants Warranties by Completion or, if not available by then,within 2 months following Completion; and 9.2.18Other Documentsany other deeds and documents to be delivered to the Purchaser on or before Completion in terms of the Missives.10.Post CompletionProvided that the Disposition is presented for registration prior to the earlier of 14 days after Completion and the date of expiry of thelast Advance Notice registered in relation to the Disposition in terms of Clause 7.6, the updated or newly created Title Sheet of theProperty will contain no exclusion or limitation of warranty in terms of Section 75 of the 2012 Act and disclose no entry, deed ordiligence (including any charging order under the Buildings (Recovery of Expenses) (Scotland) Act 2014 or any notice of potentialliability for costs registered under the Tenements (Scotland) Act 2004 or the Title Conditions (Scotland) Act 2003) prejudicial to theinterest of the Purchaser other than such as are created by or against the Purchaser or have been disclosed to, and accepted in writing by, the Purchaser prior to Completion.11.Insurance 11.1From the Conclusion Date until Completion, the Seller will keep the Property insured in accordance with the Landlords'obligations under the Leases. As soon as reasonably practicable after the Conclusion Date, the Seller will make availableto the Purchaser written details of such insurances, if it has not already provided this information. 11.2Immediately following the Conclusion Date, the Seller will use its reasonable endeavours to have the Purchaser's interest inthe Property (as purchaser, price unpaid) endorsed or noted on or otherwise (either specifically or generically) covered byits policies of insurance and will exhibit evidence to the Purchaser that it has done so. 11.3The Seller will:- 11.3.1within 5 Business Days after Completion cancel such insurances (under reservation of all prior claims); and 11.3.2provided that the insurance premiums have been paid in full by the Tenants in question, within 5 Business Daysafter receipt, refund to the relevant Tenants all repayments of premium due to them and exhibit evidence to thePurchaser of having done so.12.Damage or Destruction 12.1Risk of damage to or destruction of the Property will not pass to the Purchaser until Completion. 12.2If prior to Completion the Property sustains damage (whether insured or otherwise) which at common law would entitle ahypothetical tenant under a hypothetical lease of the Property to an abatement of rent of an amount exceeding 20% of therent, either party will be entitled to resile from the Missives without penalty on delivery of written notice to that effect to theother's solicitors no later than midday on the date on which Completion is due to take place, time being of the essence. 12.3If there is any dispute as to whether the Property has suffered such damage, the matter will be referred to the decision ofan independent surveyor, who will act as an expert, appointed, failing agreement, by the Chair of the RICS in Scotland onapplication by either party. The independent surveyor's decision will be binding on the parties. If the independent surveyordies, delays or becomes unwilling or incapable of acting then either the Seller or the Purchaser may apply to the Chair todischarge that independent surveyor and appoint a replacement. The fees and expenses of the independent surveyor andthe cost of appointment are payable by the Seller and the Purchaser in the proportions which the independent surveyordirects and if no direction is made, equally. 12.4Subject to Clause 12.2 if the Property is damaged or destroyed by an insured risk prior to Completion, the Seller'sresponsibility to the Purchaser, at Completion, will be:- 12.4.1to pay to the Purchaser the insurance proceeds received by the Seller to the extent that they have not beenspent on reinstatement; and 12.4.2to assign its rights in respect of the insurance proceeds specified in Clause 12.4.1 to the Purchaser. 13.Statutory Matters 13.1StatuteThe Purchaser is deemed to have satisfied itself on the application of all statute and statutory regulations and rules in so far asaffecting or relating to the Property and, except as expressly provided for in the Missives, the Seller gives no warranties orassurances on such matters. 13.2Statutory Repairs NoticesAny local authority statutory repairs notices (other than any notice or requirement of any Environmental Authority made pursuant tothe Contaminated Land Regime (as such terms are defined in Clause 14) affecting the Property which are issued prior to Completionwill as between the Purchaser and the Seller be the responsibility of the Seller except to the extent that (i) they are instigated by orwith the authority of the Purchaser or (ii) they are the responsibility of any of the Tenants in accordance with the Leases. Liabilityunder this Clause will subsist until met and will not be avoided by the issue of a fresh notice. 13.3Energy Performance 13.3.1The Seller confirms that a valid current energy performance certificate (in terms of the Energy Performance ofBuildings (Scotland) Regulations 2008) will be obtained for, and affixed to, the Property within 3 months ofCompletion. 13.3.2The Property is not subject to The Assessment of Energy Performance of Non-Domestic Buildings (Scotland)Regulations 2016. 13.3.3The Property is not subject to a green deal plan as defined in Section 1 of the Energy Act 2011.14.Environmental 14.1DefinitionsIn Clauses 13.2 and 14:"Contaminated Land Regime" means the contaminated land regime under Part 2A of the Environmental Protection Act 1990 (asamended from time to time) and any statutory instrument, circular or guidance issued under it;"Environment" means any and all organisms (including humans), ecosystems, natural or man-made buildings or structures, and thefollowing media:- (a)air (including air within buildings or structures, whether above or below ground); (b)water (including surface and ground water and water in wells, boreholes, pipes, sewers and drains); and (c)land (including surface land and sub-surface strata and any land under seabeds or rivers, wetlands or flood plains);"Environmental Authority" means any person or legal entity (whether statutory or non-statutory or governmental or non-governmental) having regulatory authority under the Contaminated Land Regime; and"Hazardous Substances" means any natural or artificial substance (whether in solid or liquid form or in the form of a gas or vapourand whether alone or in combination with any other substance) capable of causing harm to the Environment and/or harm to the health of living organisms or other interference with theecological systems of which they form part and/or harm to property and/or in the case of humans, offence caused to any sense. 14.2Agreement as to Environmental LiabilitiesThe Seller and the Purchaser agree that:- 14.2.1if any notice or requirement of any Environmental Authority made pursuant to the Contaminated Land Regime isserved on or made of either of them in respect of the Property or any Hazardous Substances attributable to theProperty, then, as between the Seller and the Purchaser, the sole responsibility for complying with such noticeor requirement is to rest with the Purchaser to the exclusion of the Seller; and 14.2.2if any Environmental Authority wishes to recover costs incurred by it in carrying out any investigation,assessment, monitoring, removal, remedial or risk mitigation works under the Contaminated Land Regime inrespect of the Property or any Hazardous Substances attributable to the Property from either or both of theSeller and the Purchaser then, as between the Seller and the Purchaser, the sole responsibility for the paymentof such costs is to rest with the Purchaser to the exclusion of the Seller.The agreements outlined under Clauses 14.2.1 and 14.2.2 are made with the intention that any Environmental Authority serving anynotice or seeking to recover any costs should give effect to the agreements pursuant to the Contaminated Land Regime.The Seller and the Purchaser agree that the appropriate Environmental Authority may be notified in writing of the provisions of Clause14 if required to give effect to the agreements outlined under Clauses 14.2.1 and 14.2.2. 14.3Sold with Information 14.3.1The Purchaser acknowledges to the Seller that: 14.3.1.1it has been provided with the following reports, surveys and other environmental informationprior to the date of this offer:Report on Site Investigations by the Mason Evans Partnership Limited dated January 2013; 14.3.1.2it has carried out or has had the opportunity to carry out its own investigations of the Propertyfor the purposes of ascertaining whether, and if so the extent to which, HazardousSubstances are present in, on, under or over the Property; 14.3.1.3such information is sufficient to make the Purchaser aware of the presence in, on, under orover the Property of any Hazardous Substances referred to in the reports; 14.3.1.4it relies at its own risk on the contents of any report, plan and other written material andinformation either disclosed to it or orally communicated to it by or on behalf of the Seller bothas to the condition of the Property and as to the nature and effect of any remedial workswhich may have been carried out including but not limited to Report on Site Investigations bythe Mason Evans Partnership Limited dated January 2013 and no warranty is given or representation made by or on behalf of the Seller in this respect; and 14.3.1.5it has satisfied itself as to the condition of the Property. 14.3.2Both parties agree that: 14.3.2.1both the Purchaser and the Seller are large commercial organisations; 14.3.2.2the Purchaser has been given permission and adequate opportunity to carry out its owninvestigations of the Property for the purpose of ascertaining whether, and if so the extent towhich, Hazardous Substances are present in, on, under or over the Property; 14.3.2.3the transfer of the Property pursuant to the Missives is an open market arm's lengthtransaction; and 14.3.2.4the Seller will not retain any interest in the Property or any rights to occupy or use theProperty following Completion. 14.3.3The acknowledgements in this Clause 14.3 are made in order to exclude the Seller from liability under theContaminated Land Regime so that the Seller is not an appropriate person, as defined in it.15.No Employees 15.1As at the Conclusion Date and Completion, the Seller confirms that there are no persons to whom the provisions of theTransfer of Undertakings (Protection of Employment) Regulations 2006 ("Employment Regulations") will apply in relationto:- 15.1.1the sale of the Property; and 15.1.2the creation or cessation of any contractual relationship consequent to such salewith the effect of such person's employment (or liability for it and its termination) being deemed to transfer to the Purchaser [or anycontractor of the Purchaser] at Completion. 15.2If it is asserted or found by a court or tribunal that the Employment Regulations apply in relation to any person ("Employee"), the Purchaser [or any of its contractors] may terminate the employment of the Employee within 10 Business Days,where it has not already terminated, and if the Purchaser complies with its obligations under this Clause 15 (whereapplicable), the Seller undertakes to keep the Purchaser and/or its contractors indemnified, on demand, against all costs,claims, liabilities and expenses (including reasonable legal expenses) of any nature arising out of the employment of theEmployee prior to Completion or the termination of it (whether it is terminated by the Purchaser or any other person andwhether before, on or after Completion).16. Guarantees and Construction Documents 16.1With regard to the Product Guarantees, the Purchaser will:-within 10 Business Days after Completion, intimate the sale of the Property (and transfer of theGuarantee) to Kingspan Limited and deliver a copy of the intimation to the Seller. In respect of any other Product Guarantees, the same shall apply mutatis mutandis and the Sellershall execute any other such documentation as the Purchaser may reasonably require in that regard 16.2 At or Prior to Completion the Seller shall deliver to the Purchaser the Deliverable Items (Completion). 16.3The Seller shall deliver to the Purchaser as soon as reasonably practicable and, in any event not later than 3 monthsfollowing the Date of Entry, the Post-Completion Deliverable Items; 16.4The Seller shall use all reasonable endeavours to procure that the Building Contractor complies with all its outstandingobligations under the Building Contract including rectifying the items identified in the Snagging List and making gooddefects. The Seller shall procure that the certifying officer under the Building Contract will deliver any schedule of defectsunder the Building Contract to the Building Contractor within the time limit for doing so under the Building Contract. TheSeller shall procure that the certifying officer shall (i) consult with and take into consideration and (ii) pass on to the BuildingContractor all representations properly made to the certifying officer by the Purchaser not later than one calendar monthprior to the expiry of the relevant 12 months defects liability period under the Building Contract. In the event of the BuildingContractor failing to comply in full with its obligations under the Building Contract (including inter alia in relation to the issueof the certificate of making good defects) then the Seller shall exercise its rights under Building Contract to secureperformance and will procure that all such outstanding obligations are fulfilled. The Seller undertakes to the Purchaser totake such steps as are necessary to keep the terms of the Retention Bond in full force and effect. 16.5The Seller shall not vary, alter, assign or novate or otherwise change the Building Contract, the Retention Bond or theAppointment. 16.6The Seller shall remain liable for outstanding unperformed obligations as employer in relation to the Building Contract. 16.7The Seller shall, without charge, provide the Purchaser with the original certificate of making good defects issued pursuantto the Building Contract within 10 Business Days of the same being issued. The Seller shall procure that the Purchaser isgiven not less than 5 Business Days' notice of the intended inspection by the certifying officer for the purpose of issuingthe certificate of making good defects and the Purchaser shall be entitled to attend such inspection and to makerepresentations to the certifying officer and the Landlord as to whether in the Purchaser's opinion the certificate of makinggood defects can validly be issued and the Landlord shall have due regard to any such representations and shall procurethat the certifying officer shall also do so. 16.8The Purchaser shall permit the Building Contractor and the Seller to access the Property so that they can comply with theirrespective obligations under the Building Contract and so that the Seller can comply with its obligations under this clauseprovided that the Seller shall and shall procure that the Building Contractor shall comply in all respects with the terms of theLeases in respect of taking such access and carrying out such works and shall further cause as little disturbance andinconvenience as reasonably possible to the Purchaser and the occupiers of the Property and any neighbouring land. TheSeller must not, and must procure that the Building Contractor shall not, infringe any of the Purchaser's rights nor the rightsof any other person in relation to the Property.  17.Service ContractsThe Purchaser will have no responsibility for any service, maintenance, management or similar contracts relating to the Propertyentered into by the Seller (or its predecessors in title) prior to Completion and the Seller will, in respect of the period followingCompletion, indemnify the Purchaser from all liability arising under such contracts. The cancellation costs of any such contracts willbe met by the Seller out of its own funds18.Capital AllowancesThe provisions of Part 18 of the Schedule will apply 19.AccessSubject to the terms of the Leases access to the Property prior to the Date of Entry will be given to the Purchaser, its surveyors andother professional advisers for all reasonable purposes (including examining the Property), provided that the Purchaser will ensurethat in doing so they:- 19.1comply with the Seller's reasonable requirements; 19.2comply with the access restrictions imposed on the Landlords under the Leases; and 19.3exercise reasonable restraint and make good all loss, injury and damage caused to the Property.20.Confidentiality 20.1Pre-CompletionThe Purchaser and the Seller will not disclose details of the Missives or the acquisition of the Property by the Purchaser to the pressor otherwise prior to Completion except:- 20.1.1with the prior written consent of the other party; 20.1.2to the Purchaser and the Seller's respective agents and professional advisers in connection with theacquisition/sale of the Property; 20.1.3to the Purchaser's bankers or other providers of finance (and their professional advisers) in connection with theacquisition of the Property; 20.1.4where required by law; and 20.1.5where required to comply with the requirements of the Stock Exchange or any other regulatory or governmentauthority. 20.2Post-CompletionAny press release after Completion relating to the acquisition/sale of the Property is to be agreed in writing between the Purchaserand the Seller prior to its publication (both parties acting reasonably). 20.3AgentsThe Purchaser and the Seller will ensure that their respective agents and professional advisers comply with the undertakings in thisClause 20. 21.Formal Documentation 21.1Formal Documentation RequiredNeither the Seller nor the Purchaser will be bound by any acceptance of this offer or any other letter purporting to form part of theMissives or any amendment or variation of the Missives unless it is duly executed. 21.2Complete AgreementThe Missives (including the annexations) will represent and express the full and complete agreement between the Seller and thePurchaser relating to the sale of the Property at the Conclusion Date and will supersede any previous agreements between the Sellerand the Purchaser relating to it. Neither the Seller nor the Purchaser has been induced to enter into the Missives on account of anyprior warranties or representations.22.SupersessionThe provisions of the Missives (other than Clauses 2.5, 7.5, 7.7, 10, 14, 15 and 18 which will remain in full force and effect untilimplemented) in so far as not implemented by the granting and delivery of the Disposition and others, will remain in full force andeffect until:- 22.1in the case of the provisions relating to TOGC in Clause 3 six years after the Date of Entry; 22.2in the case of the lease confirmations given in Clause 8 six years after the Date of Entry; and 22.3in the case of all other provisions the earlier of:- 22.3.1the date when such provisions have been implemented; and 22.3.2two years after the Date of Entry except in so far as they are founded on in any court proceedings which havecommenced within such two year period.23.Landlord WaiversThe Purchaser acknowledges the terms of the Landlord Waivers and undertakes as soon as reasonably practicable upon request to doso (whether at or following Completion) to enter into documentation on the same or similar terms (subject to any amendments requestedby Close Brothers Finance Ltd save where any such amendments are adverse to the interests of the Purchaser) in its reasonableopinion.24.Construction Documentation and Warranties 24.1The Seller shall exhibit to the Purchaser as soon as reasonably possible (so far as not already done and in any event notless than 5 Business Days prior to the Date of Entry):- 24.1.1The executed and completed Building Contract; 24.1.2The executed and completed Sub-Contracts listed in Part 11 of the Schedule with all annexures relating theretoincluding the form of Collateral Warranty to be granted in favour of the Purchaser and the Funder 24.1.3The executed and completed Appointment; 24.1.4The executed and completed Sub-Consultant Appointments from each of the Sub-Consultants listed in Part 11of the Schedule with all annexures relating thereto including the form of Collateral Warranty to be granted infavour of the Purchaser and the Funder; 24.1.5The form of the Letters of Reliance to be granted in favour of the Funder.25.Exclusion of Personal Liability 25.1No personal liability will attach to the Purchaser's Solicitors by virtue of their entering into the Missives in their capacity asagents for the Purchaser. 25.2No personal liability will attach to the Seller's Solicitors by virtue of their entering into the Missives in their capacity asagents for the Seller. 25.3The Seller and the Purchaser will be solely liable to each other for compliance with, and fulfilment of, their respectiveobligations under the Missives.26.AssignationThe Purchaser may not (whether at common law or otherwise):- 26.1assign, transfer, grant any fixed security over, hold on trust or deal in any other manner with the benefit of the whole or anypart of its interest in the Missives; 26.2sub-contract any or all of its obligations under the Missives; nor 26.3purport to do any of the foregoing.27.Proper Law and ProrogationThe Missives and the rights and obligations of the Seller and the Purchaser will be governed by and construed in accordance with thelaw of Scotland and the Seller and the Purchaser will be deemed to have agreed to submit to the non-exclusive jurisdiction of theScottish courts.28.Time LimitThis offer, if not previously withdrawn, will fall unless a binding written acceptance has been received by us by 5 pm on Monday 19February 2018.Yours faithfully ……/s/ Chris McLeish …………………….…/s/ Ashleigh Farrell……………Chris McLeishPartnerFor DWF LLPWitnessAshleigh Farrell110 Queen StreetGlasgow G1 3HD This is the Schedule referred to in the foregoing offer by DWF LLP (on behalf of Quitient Biocampus Limited) to David Ratter, DWFLLP(on behalf of Roslin Assets Limited) in respect of Site 3 Biocampus, PenicuikPart 1Disclosed Documents1.Title Deeds.2.Leases.•Scotways Search dated 24 August 2015•Roads Adoption Report dated 24 August 2015•Plans Report dated 8 August 2017•Core Paths Plan•VAT5L and the VAT1614A for the Seller•Property Enquiry Certificate 8 August 2017•Non-Residential Coal Mining Report 8 August 2017•Charge Search against Quotient Biocampus Limited to 3 August 2017•Legal Report dated 7 August 2017, title number MID166779•Legal Report dated 7 August 2017, title number MID4540•RCIL Search dated 7 August 2017•First Scottish Property Enquiry Certificate dated 15 February 2017•Service Charge Budget for 2017/2018•Correspondence relative to Kingspan Guarantee dated 24 May 2017•STATEMENT OF QUALIFYING EXPENDITURE dated December 2017•Completion Certificate dated 22 December 2017 Part 2Title Deeds1.Title sheet and plan MID1667792.Extract Ground Lease between Scottish Enterprise and Quotient Biocampus Limited registered in the Books of Council and Sessionon 19 January 20163.Title sheet and plan MID45404.Signed Lease between Quotient Biocampus Limited and Alba Bioscience Limited dated 14 July 2017  Part 3[A]Leases 1.Lease between the Seller and Alba Bioscience Ltd dated 14 July 2017 and the tenant's interest in which is registered in the LandRegister of Scotland under Title Number MID 192976 and which is to be registered in the Books of Council and Session2.The Minute of Variation of Lease to be entered into between the Seller and Alba Bioscience Ltd3.Ground Lease between Scottish Enterprise and the Seller dated 30 November 2015 and registered in the Books of Council andSession on 19 January 20164.Sub-Station Lease between Scottish Enterprise and SP Distribution Limited dated 15 and 16 March and 10 and 19 April 2017 Part 3BConstruction Documents Part 3BConstruction DocumentsDocumentPartiesDateCommentsBuilding Contract(1) Quotient Biocampus Limited and (2) MW High Tech ProjectsUK Limited Main Contractor CollateralWarranty(1) MW High Tech Projects UK Limited and (2) NM Rothschild &Sons Limited Main Contractor CollateralWarranty(1) MW High Tech Projects UK Limited and (2) Roslin AssetsLimited Retention Bond(1) Commerzbank and (2) Quotient Biocampus Limited18 January 2018 Appointment(1) MW High Tech Projects UK Limited and (2) Fletcher Joseph(Edinburgh) Limited17 January 2018 Consultant Warranty(1) Fletcher Joseph (Edinburgh) Limited and (2) NM Rothschild &Sons Limited Consultant Warranty(1) Fletcher Joseph (Edinburgh) Limited and (2) Roslin AssetsLimited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Rippin Limited12 April 2016 Sub-Contractor CollateralWarranty(1) Rippin Limited and (2) NM Rothschild & Sons Limited Sub-Contractor CollateralWarranty(1) Rippin Limited and (2) Roslin Assets Limited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Thyssen KruppElevator UK Limited4 November 2016 Sub-Contractor CollateralWarranty(1) Thyssen Krupp Elevator UK Limited and (2) NM Rothschild &Sons Limited Sub-Contractor CollateralWarranty(1) Thyssen Krupp Elevator UK Limited and (2) Roslin AssetsLimited Sub-Contract(1) MW High Tech Projects UK Limited and (2) MMM MedicalEquipment UK Limited22 August 2016 Sub-Contractor CollateralWarranty(1) MMM Medical Equipment UK Limited and (2) NM Rothschild &Sons Limited Sub-Contractor CollateralWarranty(1) MMM Medical Equipment UK Limited and (2) Roslin AssetsLimited Sub-Contract(1) MW High Tech Projects UK Limited and (2) J and D PierceContracts Limited Sub-Contractor CollateralWarranty(1) J and D Pierce Contracts Limited and (2) NM Rothschild &Sons Limited  Sub-Contractor CollateralWarranty(1) J and D Pierce Contracts Limited and (2) Roslin AssetsLimited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Weir & McQuiston(Scot) Limited4 December 2017 Sub-Contractor CollateralWarranty(1) Weir & McQuiston (Scot) Limited and (2) NM Rothschild &Sons Limited Sub-Contractor CollateralWarranty(1) Weir & McQuiston (Scot) Limited and (2) Roslin AssetsLimited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Cube GlassLimited13 December 2017 Sub-Contractor CollateralWarranty(1) Cube Glass Limited and (2) NM Rothschild & Sons Limited Sub-Contractor CollateralWarranty(1) Cube Glass Limited and (2) Roslin Assets Limited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Walker CladdingLimited17 January 2018 Sub-Contractor CollateralWarranty(1) Walker Cladding Limited and (2) NM Rothschild & SonsLimited Sub-Contractor CollateralWarranty(1) Walker Cladding Limited and (2) Roslin Assets Limited Sub-Contract(1) MW High Tech Projects UK Limited and (2) Brook EdgleySpecialist Technical Services Limited Sub-Contractor CollateralWarranty(1) Brook Edgley Specialist Technical Services Limited and (2)NM Rothschild & Sons Limited Sub-Contractor CollateralWarranty(1) Brook Edgley Specialist Technical Services Limited and (2)Roslin Assets Limited Sub-Sub-ConsultantAppointment(1) Fletcher Joseph (Edinburgh) Limited and (2) Etive ConsultingEngineers Limited Sub-Sub-ConsultantWarranty(1) Etive Consulting Engineers Limited and (2) NM Rothschild &Sons Limited Sub-Sub-ConsultantWarranty(1) Etive Consulting Engineers Limited and (2) Roslin AssetsLimited Sub-Sub-ConsultantAppointment(1) Fletcher Joseph (Edinburgh) Limited and (2) PS.Com Limitedt/a Christopher Palmer Associates Sub-Sub-ConsultantWarranty(1) PS.Com Limited t/a Christopher Palmer Associates and (2)NM Rothschild & Sons Limited Sub-Sub-ConsultantWarranty(1) PS.com Limited t/a Christopher Palmer Associates and (2)Roslin Assets Limited Sub-Sub-ConsultantAppointment(1) Fletcher Joseph (Edinburgh) Limited and (2) Jeremy GardnerAssociates Edinburgh Limited  Sub-Sub-ConsultantWarranty(1) Jeremy Gardner Associates Edinburgh Limited and (2) NMRothschild & Sons Limited Sub-Sub-ConsultantWarranty(1) Jeremy Gardner Associates Edinburgh Limited and (2) RoslinAssets Limited Letter of Reliance(1) Mason Evans Partnership Limited and (2) Roslin AssetsLimited Letter of Reliance(1) Mason Evans Partnership Limited and (2) N M Rothschild &Sons Limited (as Agent and Security Agent) and Partnership LifeAssurance Company Limited and Rothschild Bank InternationalLimited (as Lenders) (collectively, the "Finance Parties") underthe facility agreement dated on or about the date hereof and madebetween Roslin Assets Limited (a company incorporated inEngland and Wales company number 10893348) (the "Borrower")and the Finance Parties and each transferee, successor, orassignee of any Finance Party from time to time  Part 4Disclosures against Lease ConfirmationsNone Part 5Ground Lease Renunciation RENUNCIATION between Scottish Enterprise and Quotient Biocampus Limited 2017 SUBJECTS: Lease of Gowkley Moss Farm, Milton Bridge, Pencuik, EH26 0NX DWF LLP  RENUNCIATION between QUOTIENT BIOCAMPUS LIMITED, a company incorporated under theCompanies Acts with registered number SC514165 and having its registeredoffice at Douglas Building Pentlands Science Park, Bush Loan, Penicuik,Midlothian, EH26 0PL (hereinafter referred to as "the Tenant") and SCOTTISH ENTERPRISE, established under the Enterprise and New Towns(Scotland) Act 1990 and having their principal place of business at AtriumCourt, 50 Waterloo Street, Glasgow (hereinafter referred to as "the Landlord") WHEREAS:- A.the Landlord is in right of the landlord’s part of the Lease entered into between the Landlord and the Tenant and registered in the LandRegister of Scotland under Title Number MID166779 (which Lease is herein referred to as “the Lease”); B.the Tenant is in right of the tenant’s part of the Lease; C.the Tenant has agreed to renounce the Lease on the terms and conditions hereinafter appearing; and D.the Landlord has agreed to accept a renunciation thereof upon the said terms and conditions. NOW THEREFORE THE LANDLORD AND THE TENANT HEREBY AGREE AND DECLARE as follows:- 1.The Tenant hereby renounces the Lease in favour of the Landlord as at [insert date] (hereinafter called "the date of renunciation")notwithstanding the date or dates hereof and the Landlord accepts the foregoing renunciation.2.The Landlord and the Tenant hereby absolutely and forever discharge each other of all claims of whatever nature by either of them againstor upon or arising out of or in respect of the Lease or the termination thereof; But the Tenant shall nevertheless pay any amounts due bythe Tenant up to the date of renunciation in respect of rent or other charges provided for in terms of the Lease.3.Each party shall bear its own legal expenses in connection with the preparation and execution of these presents and all matters connectedherewith.4.The Tenant warrants the foregoing renunciation.5.The Landlord and the Tenant consent to registration hereof for preservation and execution: IN WITNESS WHEREOFDWF LLP110 Queen StreetGlasgowG1 3HD  Part 6Minute of Variation DWF: CJM/2016677-52017MINUTE OF VARIATION OF LEASEbetweenQUOTIENT BIOCAMPUS LIMITEDandALBA BIOSCIENCE LIMITEDSubjects: Site 3, Bio Campus, Roslin, Midlothian DWF LLP110 Queen StreetGlasgowG1 3HD  MINUTE OF VARIATIONbetweenQUOTIENT BIOCAMPUS LIMITED, incorporated under the Companies Acts (Registered Number SC514165) and having its Registered Office atDouglas Building, Pentlands Science Park, Bush Loan, Penicuik EH26 0PL (who, and whose permitted successors as Landlords under the Leaseare hereinafter referred to as the “Landlords"); andALBA BIOSCIENCE LIMITED, incorporated under the Companies Acts with Registered Number SC310584 and having their Registered Office atDouglas Building Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL (who and in substitution therefor whose permittedsuccessors and assignees are hereinafter referred to as the "Tenants")WHEREAS:-The Landlords and the Tenants are respectively in right of the landlord's and tenant's parts of the lease (hereinafter referred to as the "Lease")between the Landlord and Tenant dated 14 July 2017 and registered or to be registered in the Land Register of Scotland and to be registered in theBooks of Council and Session of ALL and WHOLE ALL and WHOLE the subjects known as and forming Site 3, Bio Campus, Roslin, Midlothian asmore particularly described in the Lease and varied as aftermentioned;1.InterpretationWords and expression defined in the Lease shall bear the same meaning herein unless the context otherwise requires;2.Variation Of Lease Terms 2.1.With effect from the date of last execution of this Minute of Variation, the Lease will be varied as follows:-In the definition of "the Premises" the words "being the whole subjects registered in the Land Register of Scotland under title numberMID166779" shall be delete and there shall be substituted therefor; "and further known as 5 James Hamilton Way, Milton Bridge,Penicuik, Midlothian, EH26 0BF and being the subjects in the course of registration in the Land Register of Scotland under title MID[ ]".he definition of "RPI" in clause 1.1 of the lease shall be amended so as to be entitled "CPI" instead of "RPI" and to read: 2.2."means the Consumer Price Index figure as published from time to time on behalf of HM Government of the United Kingdom by theOffice for National Statistics or any successor bodyVersion 10January 2017 and in the event of (1) discontinuation thereof, such other inflation index being the nearest reasonably equivalent thereto as theLandlord and the Tenant agree both acting reasonably, or (2) a material change in the basis of such index, such index duly modified insuch manner as the Landlord and the Tenant may agree both acting reasonably to accommodate such change in the basis of suchindex (and in the event of dispute as may be determined by an expert to be appointed by written agreement between the Landlord andthe Tenant, or in default of such agreement being reached within a period of four weeks of either party notifying the other of therequirement for an expert to be appointed, to be nominated by the President for the time being of the Institute of CharteredAccountants in Scotland); 2.3.Clause 4.2 of the Lease shall be delete and there shall be substituted therefor:"4.2 - Review of yearly rent4.2.1 The following expressions shall bear the following meanings in this Lease:‑"review date" means the Thirtieth of September in the year Two Thousand and Thirty Two and each fifth anniversaryof such date within the term and any particular such date being referred to as a, or the “relevant review date”;"review period" means the period starting with any review date and ending upon the day immediately preceding thenext review date or starting with the last review date and ending upon the expiry of the term;“revised rent” means the rent ascertained in accordance with the provisions of this clause 4.2;"yearly rent" means as follows: (a)For the period from the Date of Entry until 29 September 2018 – the rent of £1,200,000 STERLING perannum; (b)For the period from 30 September 2018 until 29 September 2019 – the rent of £1,236,000 STERLING perannum; (c)For the period from 30 September 2019 until 29 September 2020 – the rent of £1,273,080 STERLING perannum; (d)For the period from 30 September 2020 until 29 September 2021 – the rent of £1,311,272.40 STERLINGper annum; (e)For the period from 30 September 2021 until 29 September 2022 – the rent of £1,350,610.57 STERLINGper annum; (f)For the period from 30 September 2022 until 29 September 2023 – the rent of £1,391,128.89 STERLINGper annum; (g)For the period from 30 September 2023 until 29 September 2024 – the rent of £1,432,862.76 STERLINGper annum;  (h)For the period from 30 September 2024 until 29 September 2025 – the rent of £1,475,848.64 STERLINGper annum; (i)For the period from 30 September 2025 until 29 September 2026 – the rent of £1,520,124.10 STERLINGper annum; (j)For the period from 30 September 2026 until 29 September 2027 – the rent of £1,565,727.82 STERLINGper annum; (k)For the period from 30 September 2027 until 29 September 2032 – the rent of £1,612,699.65; andduring each successive review period a rent per annum equal to whichever is the greater of the rent payableimmediately before the relevant review date (or which would be payable were it not for any abatement of rent inaccordance with this Lease or any statutory restriction or modification) and the revised rent; 4.2.2On each review date, the yearly rent shall be reviewed and the yearly rent payable in respect of each review periodshall be the higher of (i) the yearly rent payable immediately before that review date, (ii) the Increased Sum ascalculated in accordance with the provisions of clause 4.2.2.1; 4.2.2.1The Increased Sum shall be the sum “R5” which is the product of the following formulae carried outconsecutively:R1=a x the greater of (i) the lesser of and and (ii) R2=R1 x the greater of (i) the lesser of and and (ii) R3=R2 x the greater of (i) the lesser of and and (ii) R4=R3 x the greater of (i) the lesser of and and (ii)  R5=R4 x the greater of (i) the lesser of and and (ii) where: a= the rent payable immediately before the relevant review period (disregarding any abatement ofrent applicable at that time); c= CPI for(i) August 2027, in the case of the first review date, or (ii) in the case of anysubsequent review date, the month preceding the month in which the preceding review date fell; b1= CPI for (i) August 2028 (in the case of the first review rate), or (ii) the month preceding thefirst anniversary of the preceding review date in the case of all other review dates; b2= CPI for (i) August 2029 (in the case of the first review date), or (ii) the month preceding thesecond anniversary of the preceding review date in the case of all other review dates; b3= CPI for (i) August 2030 (in the case of the first review date), or (ii) the month preceding thethird anniversary of the preceding review date in the case of all other review dates; b4= CPI for (i) August 2031 (in the case of the first review date), or (ii) the month preceding thefourth anniversary of the preceding review date in the case of all other review dates; and b5= CPI for (i) August 2032 (in the case of the first review date), or (ii) the month preceding thefifth anniversary of the preceding review date in the case of all other review dates. 4.2.2.2If for any reason the Increased Sum is not agreed or determined until after the relevant review date theTenant shall continue to pay the yearly rent at the rate applicable immediately before that date and on theday on which the new rent is agreed or determined the Tenant shall pay the amount of any increase forthe period from and including the relevant review date up to the rent payment date (referred to in Clause5.1 of this Lease) following that determination together with interest at 4% below the rate of Interest oneach part of that payment for the period on and from the date on which that part would have been payablehad the new rent been agreed or determined before the review date up to the date on which payment isdue.4.2.3Time is not of the essence in this clause 4.2 of the Lease.  4.2.4As soon as practicable after the amount of the revised rent shall have been ascertained, a Minute of Agreementrecording the amount of the revised rent and incorporating the Tenant’s consent to registration of such Minute ofAgreement for preservation and execution shall be executed by the Landlord and the Tenant and the Tenant shall meetthe proper legal costs incurred by the Landlord in connection with the Minute of Agreement and the Tenant shall paythe Land and Building Transaction Tax (if any) on the Minute of Agreement, the costs of registration thereof in theBooks of Council and Session and of obtaining three extracts (one for the Tenant). 4.2.5It is expressly agreed that acceptance by the Landlord at any time after a review date of (or demand by the Landlord atany such time for) rent at the yearly rate payable prior to such review date shall not be regarded as acceptance by theLandlord that such rent represents the revised rent as from such review date or as a waiver of or personal bar on theright of the Landlord to set in motion at any time after the relevant review date the machinery for review of the rent or tocollect the revised rent as and from such review date all as hereinbefore provided." 2.4.The following wording shall be added at the end of Clause 5.6.1 of the Lease "and (c) the Tenant's foregoing obligations shall applyand be fully enforceable by the Landlord irrespective of the fact that the Landlord may possess any right against any other party inrespect of the initial construction of the Premises and/or the rectification of any defects therein". 2.5.There shall be added at the end of Clause 5.6.7 the following sentence: "the Tenant shall ensure that it complies in full with allproduct, services and construction guarantees applicable to the Premises and without prejudice to the foregoing generality it will notcause the same to become invalidated or unenforceable in whole or in part". 2.6.With regard to Clause 5.9.3 of the Lease, the words or "(save where ancillary to the permitted use)" shall be added between the words"or" and "for" on the 7th line thereof. 2.7.Clause 5.9.5.1 of the Lease shall be delete. 2.8.With regard to Clause 5.12.3.1 of the Lease, the word "full" shall be added before the words "market rent" in the third line thereof. 2.9.With regard to clause 5.28.2 of the Lease, the reference to "Development Works" shall be a reference to "Development Works" asdefined in the Superior Lease. 2.10.With regard to Clause 5.11.2 of the Lease, the following provisions shall be added at the end thereof:-"Provided always that:- 5.11.2.1It shall be reasonable for the Landlord to refuse consent to an assignation where the financial standing of the proposedassignee is such that having regard to the provisions of this Lease and all other relevant matters, the value of theLandlord's  interest in the heritable interest subject to this Lease would be diminished if the proposed assignation took place; 5.11.2.2The Landlord's consent shall in every case (unless expressly excluded by the Landlord) be subject to conditionsrequiring that such security as the Landlord reasonably requires is provided for the proposed assignee including:- (a)the provision of a rent deposit in such amount as the Landlord reasonably requires (but not being morethan equivalent to 12 months' rent) and the entering into by the proposed assignee with the Landlord of arent deposit deed in such form as the Landlord reasonably requires; and/or (b)The provision of not more than 2 guarantors reasonably acceptable to the Landlord, of the proposedassignee's undertakings and obligations as tenant under this Lease, which guarantors shall enter into aGuarantee in the form set out in the Schedule to the Lease or in such other form as the Landlord shallreasonably require."The reference to the form of guarantee in the Schedule to the Lease shall be deemed to be a reference to the form ofGuarantee contained within the Schedule to this Minute of Variation. 2.11.With regard to Clause 6.1 of the Lease:- (a)The words "the Tenant or any guarantor of the Tenant's obligations (a "Guarantor") shall be added between the words "or"and "(being" in the sixth line thereof; (b)The words "or such Guarantor" shall be added between the words "Tenant" and the word "or" in the thirteenth line thereof; (c)The words "or such Guarantor's" shall be added between the words "Tenant's" and "effects" in the fourteenth line thereof; (d)The words "or such Guarantor" shall be added between the words "Tenant" and "shall" in the fifteenth line thereof. 2.12.Clause 6.4.2.1 of the Lease shall be delete and the following shall be substituted therefor:"If the Premises are not so rendered fit for occupation or use by a date three years from the date of such destruction or damage byany of the Insured Risks either the Tenant or the Landlord may at any time thereafter by giving not less than 20 Working Dayswritten notice to the other determine this Lease PROVIDED THAT if the Premises shall have been rendered fit for occupation or useby a date prior to the expiry of such notice then such notice shall cease to have effect." 2.13.With regard to Clause 6.6 of the Lease, the word "being" shall be added between the words "notice" and "herein" in the second linethereof.  2.14.A new Clause 6.14 shall be added to the Lease in the following terms:-16.14Substitute GuarantorThe Tenant shall give notice to the Landlord forthwith if any of the events set out in Clause 6.1 shall occur in respect of anyGuarantor (a "Relevant Event") and if any of such events shall occur the Tenant shall procure that another Guarantor (acceptable tothe Landlord acting reasonably) shall within 20 Working Days of the occurrence of the Relevant Event enter into a guarantee insubstitution, such substitute guarantee to be in the form of the previous guarantee or in such other form as the Landlord shallreasonably require".3.Costs 3.1.The Tenants shall pay any Land and Buildings Land Transaction tax due in respect of the land transaction documented by thesepresents and will deliver to the Landlords within 30 days of the effective date of any such land transaction a Land and BuildingsTransaction tax acknowledgement in relation to and such liability on such land transaction and otherwise each party shall meet theirown costs in connection with this Minute of Variation. 4.Terms of LeaseExcept as hereby expressly amended the parties hereto confirm the whole terms and conditions of the Lease.5.Consent to RegistrationThe Landlords and the Tenants consent to registration hereof for preservation and execution: IN WITNESS WHEREOF these presentsconsisting of this and the [ ] preceding pages and the Schedule annexed and executed as relative hereto are executed as follows:Signed for and on behalf of QUOTIENT BIOCAMPUS LIMITED at ...................................... on ...............................by:................................................................... (Signature) ................................................................... (Full name in CAPITALS)Director ................................................................... (Signature) ................................................................... (Full name in CAPITALS)Witness ................................................................... (Full address - witness only) ................................................................... Signed for and on behalf of ALBA BIOSCIENCE LIMITED  at ...................................... on ...............................by:................................................................... (Signature) ................................................................... (Full name in CAPITALS)Company Secretary ................................................................... (Signature) ................................................................... (Full name in CAPITALS)Witness ................................................................... (Full address - witness only) ...................................................................  This is the Schedule referred to in the foregoing Minute of Variation of Lease between Quotient Biocampus Limited and AlbaBioscience Limited in respect of Site 3, Bio Campus, Roslin, Midlothian GUARANTEE by [] in favour of [] Property: []  GUARANTEE by [ ] LIMITED, incorporated under the Companies Acts (Registered Number [ ]), and having its Registered Office at [ ]("Guarantor"); in favour of [ ] LIMITED, incorporated under the Companies Acts (Registered Number [ ]), and having its Registered Office at [ ], andincludes where the context so requires its successors as Landlord under the Lease ("Landlord"); WHEREAS: (A)The Landlord is in right of the landlord's part of the Lease. (B)The Tenant is in right of the tenant's part of the Lease. (C)The Guarantor has agreed to guarantee the obligations of the Tenant under the Lease; IT IS AGREED as follows: 1.Definitions and Interpretation 1.1In this Guarantee: "Business Day" means a day on which clearing banks in [Edinburgh and Glasgow] are open for normal business; "Guaranteed Obligations" means all past, present, future and contingent obligations of the Tenant: (a)to pay all rents and other sums; and (b)to perform and fulfil all other obligations which are now or may at any time in the future become due by the Tenant to the Landlord in terms of the Lease; "Interest" means interest on the sum in question at 4% per cent per annum above the base rate from time to time of Royal Bank ofScotland plc from the date that such sum is due for payment or, if there is no such date specified, the date of demand for such sumuntil such sum is paid; "Lease" means the lease between [ ] and [ ] dated [ ] and [ ] and [about to be] registered in the Books ofCouncil and Session and [also recorded in the Division of the General Register of Sasines for the County of [ ]] [the Tenant'sinterest in which is registered in the Land Register of Scotland under Title Number [ ]] on [ ]; "Property" means [ ] being the subjects more particularly described in the Lease; "Relevant Event" means any of the following events or circumstances: (i)The Tenant going into liquidation including provisional liquidation or a petition being presented or resolution proposed orpassed for their liquidation;  (ii)The Tenant having a receiver appointed in respect of any part of their undertaking or assets; (iii)[The Tenant (not being a corporate body) having their estates sequestrated or becoming insolvent or apparently insolvent orsigning a trust deed for creditors or effecting or proposing any general composition with their creditors;] (iv)The Tenant being dissolved, struck off or otherwise ceasing to exist; (v)The Landlord serving notice on the Tenant that an event has occurred which entitles the Landlord to irritate the Lease; (vi)The Lease being terminated by reason of irritancy; (vii)The Tenant having an administrator appointed or a petition being presented for the appointment of an administrator or noticeof intention to appoint an administrator being given; (viii)The Tenant instituting or giving notice of or indicating an intention to institute a voluntary arrangement or composition inrespect of their debts or affairs; or (ix)The Tenant becoming unable to pay their debts within the meaning of section 123 of the Insolvency Act 1986; "Tenant" means [[ ] Limited, incorporated under the Companies Acts (Registered Number [ ]) and having itsRegistered Office at [ ]] [[ ] residing at [ ]; 1.2In this Guarantee, unless otherwise specified or the context otherwise requires: 1.2.1any reference to one gender includes all other genders; 1.2.2words in the singular only include the plural and vice versa; 1.2.3any reference to the whole is to be treated as including reference to any part of the whole; 1.2.4any reference to a person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality)[and that person's personal representatives, successors or permitted assignees]; words importing individuals include corporations andvice versa; 1.2.5any references to this Guarantee or to the Lease or to any other document are references to this Guarantee, the Lease or to that otherdocument as varied, supplemented, assigned, novated or replaced from time to time; 1.2.6any reference to a Clause is to the relevant Clause of this Guarantee; 1.2.7any reference to a statute or statutory provision includes any subordinate legislation which is in force from time to time under thatstatute or statutory provision; 1.2.8any reference to any statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time takingaccount of any amendment or re-enactment; 1.2.9any phrase introduced by the words "including", "include", "in particular" or any similar expression is to be construed as illustrative onlyand is not to be construed as limiting the generality of any preceding words; 1.2.10references to writing or written do not include [faxes or] e-mail;  1.2.11where at any one time there are two or more persons included in the expression "Guarantor" obligations contained in this Guaranteewhich are expressed to be made by the Guarantor are binding jointly and severally on them and their respective executors andrepresentatives whomsoever without the necessity of discussing them in their order; 1.3The headings in this Guarantee are included for convenience only and are to be ignored in construing this Guarantee. 1.4Unless the context otherwise requires, words and expressions which are defined in the Lease will bear the same meanings for thepurposes of this Guarantee. 2Guarantee The Guarantor irrevocably and unconditionally guarantee a to the Landlord full and punctual payment or performance by the Tenant ofthe Guaranteed Obligations as and when they fall due for payment or performance and failing such payment or performance by theTenant the Guarantor will on demand by the Landlord make payment or effect performance of the Guaranteed Obligations in questiontogether with: 2.1all liabilities, losses, costs, damages and expenses incurred by the Landlord by reason of or in connection with any such failuretogether with Interest; and 2.2all costs and expenses properly and reasonably incurred by the Landlord in connection with the enforcement of this Guarantee togetherwith Interest. 3Primary Obligation The obligations of the Guarantor under this Guarantee will be independent primary obligations and not merely those ofguarantor or cautioner and if any of the Guaranteed Obligations are not, or cease to be, valid and enforceable for any reason whatever(whether or not known to the Landlord) or for any reason are not recoverable from or capable of performance by the Guarantor underClause 2 the Guarantor will still be liable to the Landlord in respect of such Guaranteed Obligations as if they were fully valid andenforceable and/or recoverable or capable of performance and the Guarantor were principal debtor in place of the Tenant. 4Indemnity 4.1The Guarantor undertakes to indemnify the Landlord on demand against all liabilities, losses, costs, damages and expenses which theLandlord may incur by reason of or in connection with any failure by the Tenant to make payment of or perform any of the GuaranteedObligations as and when they fall due or as a result of any of the Guaranteed Obligations being or becoming void or unenforceable forany reason or the Guaranteed Obligations for any reason not being recoverable or capable of performance under Clause 2, togetherwith Interest. 4.2The Guarantor undertakes to indemnify the Landlord on demand against all liabilities, losses, costs, damages and expenses which theLandlord may incur by reason of or in connection with the Tenant proposing or entering into any company voluntary arrangement orother scheme or arrangement having or purporting to have the effect of impairing, compromising or releasing any or all of theGuarantor's obligations under this Guarantee. 5Guarantor to take new lease Without prejudice to any other provision of this Guarantee if a Relevant Event occurs, the Landlord may serve notice on the Guarantorwithin [six] months after the Relevant Event requiring the Guarantor to accept, as required by the Landlord, either: 5.1a new lease of the Property for a period equal to the residue of the term of the Lease which would have remained if the Relevant Eventhad not occurred, at the same rent and on the same terms as the Lease commencing on the date of the Relevant Event, except thatany works carried out by or on behalf of the Tenant (or its predecessor as tenant under the Lease) will be treated by reference to the date of entryunder the Lease and not the date of the Relevant Event; or 5.2an assignation to the Guarantor of the Tenant's interest under the Lease, effective from the date of the Relevant Event. 6Duration This Guarantee will be a continuing security notwithstanding any intermediate payment or performance and will remain in force so longas any liability (including any future or contingent liability): 6.1on the part of the Tenant under the Lease, or 6.2on the part of the Guarantor under this Guarantee remains unfulfilled unless discharged by the Landlord in accordance with Clause 8. 7Non-impairment This Guarantee will not be discharged or prejudiced by: 7.1the Landlord holding, acquiring, failing to perfect, releasing or giving up any obligation, security or remedy (present or future) for theobligations of the Tenant under the Lease or any neglect, delay or forbearance on the part of the Landlord in enforcing such obligation,security or remedy; 7.2the Landlord giving time or any other indulgence to the Tenant; 7.3any variation, amendment, supplement or extension whether formal or informal, of the terms of the Lease or the implementation of anyrent review provisions in the Lease; 7.4the Landlord irritating the Lease; 7.5the Landlord releasing any person(s) comprised in the Tenant from liability under the Lease, or 7.6any other act, omission or event whereby (but for this Clause) the Guarantor would be discharged in whole or in part from thisGuarantee. 8Discharge If the Tenant assigns its interest under the Lease in accordance with the terms of the Lease, or the Landlord accepts a renunciation ofthe Tenant's interest under the Lease, the Landlord will at the request and cost of the Guarantor grant a valid discharge of thisGuarantee as at the date of valid intimation of such assignation or the effective date of such renunciation (as the case may be)provided that there are no outstanding claims under the Guarantee, or if there are any such claims, upon such claims being satisfied infull. 9Assignation 9.1The Landlord has the right to assign or transfer this Guarantee to its successors as landlord under the Lease without the consent of theGuarantor. 9.2The Guarantor does not have the right to assign or transfer their rights or obligations under this Guarantee.  10Postponement of Claims by Guarantor 10.1Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor will not be entitled to share anysecurity held or money received by the Landlord on account of the Guaranteed Obligations. 10.2Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor waives its rights of subrogation,reimbursement and indemnity against the Tenant and any other person and any other right they may have to stand in the place of theLandlord in respect of any security from or money payable by the Tenant or any other person. 10.3Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor will have no recourse, nor beentitled to pursue any right or remedy, against the Tenant arising from the performance of any of the Guarantor’s obligations under thisGuarantee. 10.4In the event of the liquidation, receivership, administration, sequestration or other insolvency or dissolution of the Tenant theGuaranteed Obligations will be deemed to continue to be due and outstanding until fully and unconditionally paid or performed. TheLandlord will be entitled to claim in the liquidation, receivership, administration, sequestration or other insolvency of the Tenant for thefull amount of the Guaranteed Obligations and to retain the whole of the dividends from such claim to the exclusion of any rights of theGuarantor as guarantor in competition with the Landlord until the Landlord' claim is satisfied in full. 11Exclusion of Set Off 11.1All payments due by the Guarantor under this Guarantee will be made without any retention, deduction, set-off or counterclaim and freefrom any deduction or withholding for or on account of any taxes or other charges in the nature of taxes imposed by any competentauthority. If any such deduction or withholding is required by law the Guarantor will pay the Landlord such additional amount as may benecessary to ensure that the Landlord receives the full amount of the relevant payment as if such deduction or withholding had notbeen made. 11.2The Guarantor will not be entitled to withhold or restrict performance of any obligation by it under this Guarantee by reason of anypurported right or claim of retention, set off or counterclaim or for any other reason. 12Certificate A certificate signed by any authorised signatory on behalf of the Landlord will, except in the case of manifest error, conclusivelyconstitute the amount of the Guaranteed Obligations or any sum due by the Guarantor under Clause 13 or any other provision of thisGuarantee at the relevant time for all purposes of this Guarantee. 13Costs 13.1The Guarantor will pay to the Landlord within five Business Days after written demand: 13.1.1the legal fees and expenses reasonably and properly incurred by the Landlord in connection with the preparation and execution of thisGuarantee; 13.1.2the costs of registering this Guarantee in the Books of Council and Session and of obtaining [three] extracts ([one] of which will bedelivered to the Guarantor's solicitors); 13.1.3the legal fees and expenses reasonably and properly incurred by the Landlord in connection with the preparation and completion of anynew lease or assignation entered into under the terms of Clause 5 including the registration dues on such new lease or assignation [andof obtaining [three] extracts (one of which will be delivered to the Guarantor's solicitors)];  13.1.4all Value Added Tax on any of the fees, costs and expenses set out above. 13.2If any amount specified in Clause 13.1 is not paid within [14] days of demand the Guarantor will pay Interest on such amounts. 13.3The Guarantor will be responsible for any Land and Buildings Transaction Tax chargeable on any such new lease or assignation. 14Notices 14.1Any notice, demand, request or certificate required by this Guarantee will be in writing and may be delivered personally, sent by post ortransmitted by fax to the relevant party [using the relevant details specified in Clause 14.3]. 14.2Any notice, demand, request or certificate will be deemed to be received: 14.2.1if delivered personally, (with proof of delivery) at the time of delivery; 14.2.2if sent by recorded delivery post, 48 hours after the date of posting; and 14.2.3in the case of fax, at the time when the sender's fax machine confirms transmission; Provided that if, in the case of personal delivery or transmission by fax, such delivery or transmission occurs outwith normal businesshours on a Business Day or on a day which is not a Business Day, delivery will be deemed to occur on the next Business Day. 14.3[The details referred to in Clause 14.1 are: [Guarantor] Address:[ ] Fax Number:[ ] For the attention of:[ ] [Landlord] Address:[ ] Fax Number:[ ] For the attention of:[ ]; or such other address, fax number or person as may be notified in writing from time to time by the relevant party to the other party forthe purposes of this Clause.] 15Applicable Law and Jurisdiction This Guarantee is governed by and is to be construed in accordance with the law of Scotland and in so far as not already subject to it,the parties irrevocably submit to the non-exclusive jurisdiction of the Scottish Courts. 16Registration The Guarantor consents to the registration of this Guarantee and any certificate pursuant to this Guarantee for preservation andexecution: IN WITNESS WHEREOF   Part 7Notice of Change of LandlordTo:Alba Bioscience LimitedDear SirsLease to Alba Bioscience LtdSite 3 Bio Campus, Roslin, Midlothian (the "Property")On behalf of our clients, Quotient Biocampus Limited, [incorporated under the Companies Acts (Registered Number SC514165) and having theirregistered office at Douglas Building, Pentlands Science Park, Bush Loan, Penicuick, Midlothian EH26 0PL we intimate to you (the "Tenants")that, as from [ ] 2018, our clients have sold their interest as your landlords in the Property to Roslin Assets Limited (acting as trusteefor Roslin Estate Company), incorporated under the Companies Acts (Registered Number 10893348 [ ]) and having its RegisteredOffice at 5th Floor, Maybrook House, 40 Blackfriars Street, Manchester M3 2EG;; (the "Purchaser").Future rent demands will be issued to you by or on behalf of the Purchaser and future communications concerning any matter arising from theletting should be addressed to the Purchaser or their managing agents, namely [ ].This letter is enclosed in duplicate. Kindly post the duplicate, with the docquet on it duly signed, [using the accompanying pre-paid addressedenvelope] to [ ], the solicitors acting for the Purchaser.Yours faithfully Agents for Quotient Biocampus Limited ................................. 2017 We acknowledge receipt of the notice of which the above is a duplicate. .....................................................For and on behalf of the Tenants [NB – Notice will also require to be sent to SP Distribution Limited. Exact form will depend upon whether the Seller has intimated its purchasefrom Scottish Enterprise]. Part 8Disposition 2017DISPOSITIONby(1)SCOTTISH ENTERPRISEin favour of(2) QUOTIENT BIOCAMPUS LIMITEDSUBJECTS: SITE 3, BIO CAMPUS, ROSLIN, MIDLOTHIAN  WE, SCOTTISH ENTERPRISE, established under the Enterprise and New Towns (Scotland) Act 1990 and having our principalplace of business at Atrium Court, 50 Waterloo Street, Glasgow heritable proprietors of the subjects and others hereinafterdisponed, IN CONSIDERATION of the price of ONE POUND (£1.00) STERLING upon which no Value Added Tax is payable paidto us by QUOTIENT BIOCAMPUS LIMITED, a company incorporated under the Companies Acts (Registered NumberSC514165) and having their Registered Office at Douglas Building, Pentlands Science Park, Bush Loan, Penicuik, Midlothian,EH26 0PL, of which sum we hereby acknowledge receipt and discharge them DO HEREBY DISPONE to the said QUOTIENTBIOCAMPUS LIMITED and to their successors and assignees whomsoever heritably and irredeemably ALL and WHOLE thesubjects at Site 3, Bio Campus, Roslin, Midlothian, extending to 3.18 hectares or thereby as shown delineated in red on the Planannexed and signed as relative to this disposition (the “Conveyed Property”) which Conveyed Property forms part and portion ofthe subjects at Gowkley Moss Farm, Bush Loan, Milton Bridge, Penicuik, EH26 0NX, registered in the Land Register of Scotlandunder Title Number MID4540 (the subjects registered in the Land Register of Scotland under Title Number MID4540 underexception of the Conveyed Property being hereinafter referred to as the “Retained Property”); TOGETHER WITH (one) the wholebuildings and other erections on it, (two) the fixtures and fittings therein, (three) the parts, privileges and pertinents of the wholesubjects hereby disponed and (four) our whole right, title and interest, present and future, therein; AND we nominate the ConveyedProperty and the Retained Property each to be a benefited and burdened property in respect of the rights and burdens relative tothe Conveyed Property and the Retained Property respectively contained in the Deed of Conditions by us, Scottish Enterprise,registered in the Land Register of Scotland under Title Number MID4540 on 3 April 2013; WITH ENTRY and VACANTPOSSESSION AT TWO THOUSAND AND EIGHTEEN notwithstanding the date hereof; And the Seller grantswarrandice; And we undertake and agree that if and to the extent that by delivery of these presents to the said QUOTIENTBIOCAMPUS LIMITED, we are not, or are not fully, divested of our whole right, title and interest in the subjects hereby disponed,the same shall be held by us following the delivery of these presents in trust for the sole benefit of the said QUOTIENTBIOCAMPUS LIMITED but provided that our duties as trustee are purely to hold such title in trust for the said QUOTIENTBIOCAMPUS LIMITED and do not include any other duties of a trustee which would otherwise be implied by law: IN WITNESSWHEREOF these presents and the plan annexed hereto and referred to herein are subscribed as follows:-  This is the plan referred to in the foregoing disposition by Scottish Enterprise in favour of Quotient Biocampus Limited  Part 9Seller Disposition WE, QUOTIENT BIOCAMPUS LIMITED, a company incorporated under the Companies Acts in Scotland with Company Number SC514165 andhaving our Registered Office at Douglas Building, Pentlands Science Park, Bush Loan, Penicuik, Midlothian EH26 0PL registered proprietors of thesubjects and others herein after disponed IN CONSIDERATION of the sum of FOURTEEN MILLION NINE HUNDRED AND FIFTY HUNDREDTHOUSAND POUNDS (£14,950,000) STERLING paid to us by ROSLIN ASSETS LIMITED, a company incorporated under the Companies Acts inEngland and Wales with Company Number 10893348 and having their Registered Office at 5th Floor, Maybrook House, 40 Blackfriars Street,Manchester M3 2EG of which sum we hereby acknowledge receipt and discharge them HAVE SOLD and DO HEREBY DISPONE to and in favourof the said Roslin Assets Limited and to their successors and assignees whomsoever heritably and irredeemably ALL and WHOLE that plot orarea of ground together with the buildings and others erected thereon extending to 3.18 hectares or thereby known as and forming 5 JamesHamilton Way, Milton Bridge, Penicuik EH26 0BF (formerly known as Site 3, Biocampus, Roslin) being the subjects registered in the LandRegister of Scotland under Title Number [ ]; WITH ENTRY as at [ ] 2018 subject to the Lease between Quotient Biocampus Limited andAlba Bioscience Limited dated 14 July 2017 and registered in the Land Register of Scotland under Title Number MID166779 and registered in theBooks of Council and Session on 26 January 2018 as amended by Minute of Variation between Quotient Biocampus Limited and Alba BioscienceLimited dated [     ] and to be registered in the Land Register of Scotland and to be registered in the Books of Council and Session ("theLease"); and we grant warrandice but excluding therefrom the Lease; And we undertake and agree that if and to the extent that by delivery of thesepresents to the said Roslin Assets Limited we are not, or are not fully, divested of our whole right, title and interest in the subjects herebydisponed, the same shall be held by us following the delivery of these presents in trust for the sole benefit of the said Roslin Assets Limited butprovided that our duties as trustee are purely to hold such title in trust for the said Roslin Assets Limited and do not include any other duties of atrustee which would otherwise be implied by law: IN WITNESS WHEREOF these presents together with the plan annexed are executed asfollows:-  …………………………………………….………………………………………….Signature of WitnessSignature of Director / Authorised Signatory …………………………………………….………………………………………….Full name of above (print)Full name of above (print) …………………………………………….………………………………………….Date of Signing …………………………………………….………………………………………….AddressPlace of Signing  DISPOSITION by QUOTIENT BIOCAMPUS LIMITED in favour of ROSLIN ASSETS LIMITED 2018 SUBJECTS: 5 James Hamilton Way, Milton Bridge, Penicuik EH26 0BF DWF LLP  Part 10Capital Allowances Election –1.The parties to the Joint ElectionThe Seller whose registered office is situated at Tax Reference The Purchaser/Beneficial Owner whose registered office is situated at Tax Reference 18The Property to be AcquiredAddress: Registered under Title Number: 19The Interest AcquiredThe interest in land to which this election relates and which has been acquired for £[ ] by the Purchaser by an agreement dated[ ] 20[ ], is the heritable interest in the Property.20The Joint ElectionThe Seller and the Purchaser jointly elect, pursuant to the provisions of Section 198 of the Capital Allowances Act 2001, that theamount which, for all purposes of Part 2 of the Capital Allowances Act 2001, is to be taken as the portion of the sale price of theinterest specified above which falls to be treated as expenditure incurred by the Purchaser on the provision of plant and machineryfixtures is £[ ], which amount shall be further apportioned as follows:-Insert either Table A or Table B. Table C is optional and may be used with either Table A or Table B[Table A1Table A should be used where the Seller's expenditure on fixtures which are integral features is allocated in full either to the specialrate class pool (ie where the expenditure was incurred on or after 1 April 2008) or to the main plant and machinery pool, but not splitbetween the two pools.] 1 Since 1 April 2008, there has been a differentiation between expenditure on fixtures which are not integral features (which forms part of the main rate pool and qualifies for awriting down allowance of 18% (from April 2012) and expenditure on fixtures which are integral features (which forms part of a special rate pool and qualifies for a writingdown allowance of 8% (from April 2012)). However, any expenditure that (i) was incurred before 1 April 2008, (ii) was within the main pool and (iii) related to fixtures which areintegral features, will stay in the main pool and attract the main rate of capital allowances. Either Table A or Table B should be completed depending on the type of plant andmachinery fixtures being transferred and when they were acquired.  Plant and machinery fixtures which are integral features (within the meaning ofSection 33A(5) of the Capital Allowances Act 2001)£[ ]Plant and machinery fixtures which are not integral features£[ ][Table BTable B should be used where part of the Seller's expenditure on fixtures which are integral features is allocated to the special ratepool and part is allocated to the main plant and machinery pool.]Plant and machinery fixtures which are integral features(within the meaning of Section 33A(5) of the CapitalAllowances Act 2001), the expenditure on which formspart of the Seller's main pool£[ ]Plant and machinery fixtures which are integralfeatures, the expenditure on which forms part of theSeller's special rate class pool£[ ]Plant and machinery fixtures which are not integralfeatures£[ ][2A list of the fixtures and the amount to be apportioned to them is as follows:-[Table CTable C should be used where a list of fixtures is available.]Item8% Special Rate Pool18 % Main PoolHeating and Ventilation installation Hot water installation Electrical switchgear Emergency lighting Fire alarms Electrical and goods lift installation External lighting Passenger and goods lift installation 2 Note that a number of the following items describe systems or installations which may be comprised of more than one plant and machinery fixture. If in those cases some ofthe fixtures are integral features and others are not, it will be necessary to make a separate apportionment in the table between the expenditure allocated to fixtures which areintegral features and the expenditure allocated to fixtures which are not. In such cases a further apportionment may need to be made of the expenditure allocated to integralfeatures if the Seller's expenditure on integral features has been allocated in part to its main pool and in part to its special rate class pool (by way of example, see guidance inrelation to Table A and Table B above).  Escalators Trade and information signs Mechanical door closers Carpets Door mats Furniture and fittings Sanitary equipment Total The operative date for capital allowances purposes in accordance with the Capital Allowances Act 2001 s.572(4) is [Insert date of Completion or,if earlier, time when possession of Property is given]. Signed………………………………………Signed……………………………………… Name………………………………………Name……………………………………… For and on behalf of the SellerFor and on behalf of the Purchaser  Part 11The Building Contractor, Sub-Contractors, Consultant, Sub-Consultants etc. 1.Building Contract between Quotient Biocampus Limited and MW High Tech Projects UK Limited2.Building Sub-Contract between MW High Tech Projects UK Limited and Weir & McQuiston (Scot) Ltd3.Building Sub-Contract between MW High Tech Projects UK and Limited and Rippin Limited4.Building Sub-Contract between MW High Tech Projects UK and Walker Cladding Limited5.Building Sub-Contract between MW High Tech Projects UK and Thyssen Krupp6.Building Sub-Contract between MW High Tech Projects UK and MMM Medical Equipment Limited7.Building Sub-Contract between MW High Tech Projects UK and J&D Pierce Contracts8.Building Sub-Contract between MW High Tech Projects UK and Brooke Edgley Specialist Technical Services9.Building Sub-Contract between MW High Tech Projects UK and Cube Glass Limited10.Consultant Appointment - Fletcher Joseph (Edinburgh) Limited (Architect) 11.Sub-Consultant Appointment - JGA (Fire Engineer) Sub-Consultant Appointment - Christopher Palmer Associates (LandscapeDesigner)12.Sub-Consultant Appointment - Etive Consulting Engineers Ltd (Structural Engineer)13.Letter of Reliance - Mason Evans Partnership  Part 12Licence for Works DWF Draft (1) 2016677-5 LICENCE FOR WORKS AGREEMENTbetweenQUOTIENT BIOCAMPUS LIMITEDandALBA BIOSCIENCE LIMITED Subjects: Site 3, Bio Campus, Roslin, Midlothian DWF LLP110 Queen StreetGlasgowG1 3HD  CONTENTS1.DEFINITIONS AND INTERPRETATION70 2.GRANT OF CONSENT72 3.TENANT'S OBLIGATIONS72 4.LEASE OBLIGATIONS73 5.RENT REVIEW73 6.REINSTATEMENT AT EXPIRY73 7.IRRITANCY74 8.RIGHTS OF OTHERS74 9.COSTS74 10.NO WARRANTY74 11.RATIFICATION OF LEASE74 12.CONSENT TO REGISTRATION74 PART 1 CONDITIONS75 PART 2 DRAWINGS SHOWING THE WORKS79  THIS AGREEMENT IS BETWEEN QUOTIENT BIOCAMPUS LIMITED incorporated under the Companies Acts with registered number SC514165 and having their registered office atDouglas Building, Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL , and includes where the context so requires theirsuccessors as landlords under the Lease (hereinafter called the "Landlords"); andALBA BIOSCIENCE LIMITED incorporated under the Companies Acts with registered number SC310584 and having their registered office atDouglas Building Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL , and includes where the context so requires their permittedsuccessors as tenants under the Lease (hereinafter called the "Tenants").WHEREASThe Landlords are the landlords under the Lease.The Tenants are the tenants under the Lease.The Tenants have requested, and the Landlords have granted, consent to the Works on the conditions set out below.IT IS CONTRACTED and AGREED between the Parties as follows: 1.Definitions and interpretation 1.1.In this Agreement:"Action Plan" means an action plan in terms of the Assessment of Energy Performance of Non-domestic Buildings (Scotland)Regulations 2016;"Building" means any building of which the Property forms part;"CDM Regulations" means the Construction (Design and Management) Regulations 2015;"EPC" means an energy performance certificate in terms of the Energy Performance of Buildings (Scotland) Regulations 2008;"Lease" means the lease between QUOTIENT BIOCAMPUS LIMITED and ALBA BIOSCIENCE LIMITED dated 14 July and registeredor undergoing registration in the Land Register of Scotland under Title Number MID192976 and undergoing registration in the Books ofCouncil and Session] as varied or amended by Minute of Variation of Lease entered into between QUOTIENT BIOCAMPUS LIMITEDand ALBA BIOSCIENCE LIMITED;"Parties" means the Landlords and the Tenants;"Property" ALL and WHOLE that plot or area of ground together with the buildings and others erected thereon extending to 3.18hectares or thereby known as and forming 5 James Hamilton Way, Milton Bridge, Penicuik EH26 0BF (formerly known as Site 3,Biocampus, Roslin) being the subjects registered in the Land Register of Scotland under Title Number [ ];;  "Schedule" means the Schedule annexed to this Agreement;"Term" means the term of the Lease together with any continuation whether by Act of Parliament, tacit relocation or otherwise;"Verifier" means a verifier as defined in the Building (Scotland) Act 2003;"Working Day" means a day on which clearing banks in Edinburgh and Glasgow are open for normal business;"Works" means the works shown on the drawings set out in part 2 of the Schedule. 1.2.In this Agreement, unless otherwise specified or the context otherwise requires: 1.2.1.any reference to one gender includes all other genders; 1.2.2.words in the singular only include the plural and vice versa; 1.2.3.any reference to the whole is to be treated as including reference to any part of the whole; 1.2.4.any reference to a person includes a natural person, corporate or unincorporated body (whether or not having separate legalpersonality); words importing individuals include corporations and vice versa; 1.2.5.any references to this Agreement or to any other document are references to this Agreement or to that other document asvaried, supplemented, assigned, novated or replaced (in each case other than in breach of the provisions of thisAgreement) from time to time; 1.2.6.any reference to a clause, condition, Schedule or part of the Schedule is to the relevant clause, condition, Schedule or partof the Schedule of or to this Agreement; 1.2.7.any reference to a statute or statutory provision includes any subordinate legislation which is in force from time to timeunder that statute or statutory provision; 1.2.8.any reference to any statute, statutory provision or subordinate legislation is a reference to it as it is in force from time totime taking account of any amendment or re-enactment; 1.2.9.any phrase introduced by the words "including", "include", "in particular" or any similar expression is to be construed asillustrative only and is not to be construed as limiting the generality of any preceding words; 1.2.10.a document will be duly executed only if it is executed in such manner as meets the requirements of section 3 or sections9B and 9C of the Requirements of Writing (Scotland) Act 1995; 1.2.11.any obligation on, or right granted or reserved to, the Landlords may be fulfilled or exercised by managing agents in placeof or in addition to the Landlords; 1.2.12.any action to be performed on a day which is not a Working Day is to be performed on the immediately following WorkingDay; 1.2.13.references to writing or written do not include email;71 1.2.14.where at any one time there are two or more persons included in the expression "Tenants" obligations contained in thisAgreement which are expressed to be made by the Tenants are binding jointly and severally on them and their respectiveexecutors and representatives whomsoever without the necessity of discussing them in their order but not so as to imposeany continuing liability on an assignor following a permitted assignation of the tenants' right to the Lease; 1.2.15.if the Tenants are a firm or partnership: 1.2.15.1.the obligations of the Tenants under this Agreement are binding jointly and severally on all persons who are orbecome partners of the firm at any time and their respective executors and representatives whomsoever as wellas on the firm and its whole stock, funds, assets and estate without the necessity of discussing them in theirorder; 1.2.15.2.except in the circumstances set out in clause 0 the obligations set out in clause 0 remain in full force and effecteven if: (a)the firm or partnership is dissolved; (b)any changes take place in the firm or partnership whether by the assumption of a new partner or partners orby the retiral, bankruptcy or death of any individual partner; or (c)there is a change in the firm name. 1.2.15.3.if any person, who by virtue of his being a partner, is bound to implement the Tenants' obligations, then on suchperson ceasing to be a partner the Landlords, on request, will release such person and his representatives from allobligations on the Tenants under this Agreement subsequent to the date when such person ceases to be a partner(or, if later, the date of such request) provided that it is established to the Landlords' reasonable satisfaction thatany such release does not materially adversely affect the strength of the Tenants' financial covenant or theirability to implement their obligations under this Agreement; and 1.2.16.any reference to "reasonable consent" means the prior written consent of the party in question, such consent not to beunreasonably withheld or delayed. 1.3.The headings in this Agreement are included for convenience only and are to be ignored in construing this Agreement. 1.4.The Schedule forms part of this Agreement. 2.Grant of consentSubject always to the terms and conditions specified or referred to in this Agreement, the Landlords consent to the Tenants carrying out theWorks.3.Tenant's obligationsThe Tenants will:72 3.1.comply in all respects with the conditions set out in part 1 of the Schedule. 3.2.indemnify the Landlords against any charge to tax and any interest and penalties payable in respect of or arising out of the Works. 4.Lease obligationsOn completion of the Works, all the Tenants' obligations contained in the Lease will apply mutatis mutandis to the Property in its then alteredstate.5.Rent reviewAny effect on rental value attributable to the Works will be disregarded for the purposes of the rent review provisions in the Lease.6.Reinstatement at expiryAt the end of the Term or the earlier termination of the Lease (howsoever arising) if and to the extent required by the Landlords in accordancewith the provisions of the Lease the Tenants will at their own cost reinstate and make good the Property in compliance with: 6.1.the provisions of the Lease; and 6.2.the conditions set out in part 1 of the Schedule as if references in that part of the Schedule to the Works were references to the worksfor such reinstatement and making good.PROVIDED that with reference to Clause 5.8 of the Lease that: (A)The Tenant shall be entitled to remove all items contained in the Works which comprise tenant's or trade fixtures and fittings andthe Tenant shall be obliged to remove such items to the extent required by the Landlord at its discretion, in each case making goodin terms of Clause 5.8.2 of the Lease; (B)Works) comprise Landlord's fixtures and fittings the Tenant shall be obliged to comply with its obligations in terms of Clause 5.8.1of the Lease but as regards the heating, ventilation, and air conditioning system installed within the Premises and forming part ofthe Works (the "System") the Tenant's obligation shall be to ensure that that the System (or any replacement or renewal Systeminstalled (with the consent of the Landlord in accordance with the terms of the Lease) during the period of the Lease) is left by theTenant in proper working order and in compliance with all statutory and building regulations requirements. (C)In the event that the Tenant fails to comply with its obligations under sub-clause (B), the Landlord shall be entitled in lieu of theTenant's obligations in terms of Clause 5.8.1 of the Lease to require that the System (or any replacement or renewal Systeminstalled (with the consent of the Landlord in accordance with the terms of the Lease) during the period of the Lease) is removed bythe Tenant at the End of the Term (making good all damage thereby caused) and that either (at the option of the Landlord): (i)the Tenant shall install an heating, ventilation, and air conditioning system of a design andspecification which is, at the end of the Term, equivalent to a standard specification forpremises such as the Property73 having regard to the nature and type of the Property and the permitted use of the Propertyunder the Planning Acts (the "Alternative System"); or (ii)that the Tenant pay to the Landlord upon the expiry of the Term an amount equal to theanticipated cost of the installation of the Alternative System. 7.IrritancyThe Landlords' right of irritancy contained in the Lease will be exercisable not only in the event of any breach by the Tenants of the Tenants'obligations contained in the Lease but also in the event of any breach of any of the Tenants' obligations contained in this Agreement.8.Rights of othersThis Agreement is granted subject to the rights of the owners and occupiers of all adjoining and neighbouring premises, whose rights mustnot be infringed by the Tenants.9.Costs 9.1.The Tenants will pay within five Working Days after written demand the costs and expenses reasonably and properly incurred by theLandlords, their solicitors and surveyors in connection with: 9.1.1.the approval of the Works; 9.1.2.the preparation, execution and completion of this Agreement; and 9.1.3.the inspection and approval of the Works during the course of the Works and after the completion of the Works. 9.2.The Tenants will pay within five Working Days after written demand the costs of registering this Agreement in the Books of Counciland Session and obtaining three extracts (two for the Landlords and one for the Tenants). 10.No warrantyNo representation or warranty is given or implied on the part of the Landlords as to either the suitability of the Property (or the Building) for theWorks, or as to whether the Works or any removal or reinstatement of them may be lawfully carried out.11.Ratification of LeaseExcept in so far as amended by this Agreement, the Parties confirm that the whole provisions of the Lease will remain in full force and effect.12.Consent to registrationThe Parties consent to the registration of this Agreement for preservation and execution.IN WITNESS WHEREOF.74 THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING LICENCE FOR WORKS AGREEMENT BETWEEN (1) QUOTIENTBIOCAMPUS LIMITED AND (2) ALBA BIOSCIENCE LIMITEDPART 1CONDITIONS1.Insurance 1.1In carrying out the Works the Tenants will take such action as the Landlords or their insurers may require to ensure that theLandlords' insurances are not rendered void or voidable or the policy monies under them withheld in whole or in part. 1.2The Tenants will produce, if requested by the Landlords or their insurers, a written certificate of value of the Works forinsurance purposes. 1.3The Tenants will pay to the Landlords any increased or extra premium payable for insurance of the Property and any otheradjoining or neighbouring premises owned or occupied by the Landlords as a result of the carrying out of the Works. 1.4At the commencement, and throughout the carrying out, of the Works: 1.4.1the Tenants will procure that the Tenants' contractors have in force the normal contractual insurances (includingsuitable public liability cover); and 1.4.2in so far as any risks which are likely to arise from the carrying out of the Works are not already covered by theinsurances effected in terms of the Lease or this Agreement, the Tenants will insure or cause to be insured suchrisks (in so far as they can reasonably be insured) to the reasonable satisfaction of the Landlords; and 1.4.3on request the Tenants will produce to the Landlords the policy or policies of such insurance together with receiptsfor the current premiums.2.ConsentsAt the Tenants' own expense, the Tenants will: 2.1obtain all necessary statutory and other third party consents (including, if required, planning permission and building warrant)in relation to the carrying out of the Works and will produce copies of them (together with all docquetted drawings) to theLandlords prior to the commencement of the Works; 2.2comply with all conditions attaching to such consents; and 2.3submit a completion certificate to the Verifier within one month after completion of the Works and as soon as received fromthe Verifier send a copy of the notice of acceptance of a completion certificate and a copy of the original completioncertificate to the Landlords.3.Statutory requirementsThe Tenants will comply with all applicable general or local Acts of Parliament, bye-laws, orders, instruments and regulations madeunder them and the regulations made by and the requirements of the local and any other requisite authority, including, in so far as theyapply to the Works, the Control of Asbestos Regulations 2012 (in pursuance of which the Tenants will deliver to the Landlords onrequest all requisite asbestos records and treatment plans) and the CDM Regulations and:75 3.1where the CDM Regulations apply: 3.1.1the Tenants will be the sole client in respect of the Works for the purposes of the CDM Regulations; 3.1.2where the Works are notifiable in terms of the CDM Regulations the Tenants will notify the Health & SafetyExecutive and forward a copy of the notification to the Landlords within three Working Days of it being sent to theHealth and Safety Executive; and 3.1.3the Tenants will ensure that the Health & Safety file (as defined in the CDM Regulations) is properly prepared,reviewed and updated in accordance with the CDM Regulations and will supply to the Landlords a copy of theHealth & Safety file (duly completed in accordance with the CDM Regulations) as soon as practicable aftercompletion of the Works; 3.2where the CDM Regulations do not apply, the Tenants will supply to the Landlords such drawings and other information asthe Landlords may reasonably require in relation to the Works in order to allow the Landlords to update the Health & Safetyfile for the Property (or the Building); and 3.3the Tenants will procure that copyright licences are obtained so that all the material in the Health & Safety file may be copiedand used by the Landlords or any other party to enable them to comply with their duties under the CDM Regulations and forother related purposes.4.Energy Performance 4.1In the case of Works which may adversely affect an existing EPC rating, Action Plan or the efficiency of the use of energyor water within the Property (or the Building), the Tenants will provide sufficient information to the Landlords to enable theLandlords to ascertain the effect of the Works, and will implement any suggestions that the Landlords make to avoid orminimise any such adverse effect. 4.2In the case of Works which necessitate the provision of a new EPC, the Tenants will obtain a new EPC at the Tenants' costand provide a copy of the EPC to the Landlords. 4.3In the case of Works to any plant, equipment or services in the Property (or the Building) which affect the energy efficiencyof such plant, equipment or services, the Tenants will provide such information about the energy efficiency of the alteredplant or equipment as the Landlords reasonably require.5.NotificationThe Tenants will notify the Landlords or their surveyors in writing not less than five Working Days prior to the date of commencement ofthe Works and immediately after the Works have been completed.6.TimescaleIf it starts the Works the Tenants will carry out and complete them diligently and without interruption and in any event within 3 months ofthe date of this Agreement.76 7.Conduct of Works 7.1At the Tenants' own expense the Tenants will carry out the Works in a proper and workmanlike manner with good qualitymaterials: 7.1.1to the reasonable satisfaction of the Landlords or their surveyors; and 7.1.2to the satisfaction of the local and any other requisite authority. 7.2If an appropriate British Standard Specification or British Standard Code of Practice issued by the British StandardsInstitution is current at the last date of execution of this Agreement, the Tenants will procure that all goods and materialsused or supplied are, and all workmanship is, in accordance with that standard. 7.3The Tenants will carry out the Works with the least inconvenience, disturbance or disruption reasonably practicable to theLandlords and to the owners and occupiers of adjoining or neighbouring premises. 7.4The Tenants will make good to the reasonable satisfaction of the Landlords all damage arising out of or incidental to theWorks including any damage to adjoining or neighbouring premises. 7.5The Tenants will take all proper precautions during the progress of the Works to ensure that the safety of the structure of theProperty (or the Building) is not endangered in any way.8.InspectionThe Tenants will permit the Landlords and their surveyors at all reasonable times to inspect the progress of the Works and the quality ofthe materials and workmanship used.9.Landlords' notices 9.1The Tenants will carry out and complete such works and do such things as the Landlords acting reasonably may specify in anotice in writing to the Tenants as being necessary to comply with the obligations on the part of the Tenants contained in thisAgreement ("Remedial Works"). 9.2Failing the carrying out and completion of the Remedial Works within two months after such notice (or within such otherreasonable period as may be specified in the notice having regard to the nature and extent of the Remedial Works) theTenants will: 9.2.1permit the Landlords to carry out all or any of the Remedial Works; and 9.2.2pay to the Landlords on demand the properly incurred costs of carrying out and completing the Remedial Workswith interest at the rate specified in the Lease as applicable to unpaid rent from the date or dates of disbursementby the Landlords until payment.10.IndemnityThe Tenants will indemnify the Landlords (except in so far as covered by the insurances referred to in the Lease and in condition 1 ofthis part of the Schedule) effectually against: 10.1all actions or other proceedings, costs, claims, losses and demands howsoever arising in relation to the carrying out andcompletion of the Works; and77 10.2any liability due to any requirements of the Health and Safety at Work Etc Act, 1974 by reason of or arising out of the Worksother than any criminal sanctions imposed by the court under this legislation.78 PART 2DRAWINGS SHOWING THE WORKS Excel Spreadsheet showing split of shell & core vs fit out is annexed. In engrossed Licence for Works to be delivered atcompletion, the specification and plans will be annexed to the licence for works showing those items identified in the attached Excel Spreadsheetas "Fit-Out". 79 Part 13 Guarantee DWF CJM/20166775-52017GUARANTEEby Quotient Limited and Quotient Suisse SA in favour of ROSLIN ASSETS LIMITED Property: Site 3, Bio Campus, Roslin, Midlothian80 GUARANTEE by QUOTIENT LIMITED, a company incorporated in Jersey with registered number 109886 and having its registered office at PO Box 1075, ElizabethHouse, 9 Castle Street, St Helier, Jersey, JE2 3RT; and Quotient Suisse SA, a company organised under the laws of Switzerland with registerednumber CHE-167.592.818 and having its registered office at Route de Crassier 13, Business Park Terre Bonne, Bâtiment B 1, 1262 Eysins, Switzerland(together the "Guarantor"); in favour of ROSLIN ASSETS LIMITED, incorporated under the Companies Acts (Registered Number 10893348), and having its Registered Office at 5th Floor,Maybrook House, 40 Blackfriars Street, Manchester, M3 2EG, and includes where the context so requires its successors as Landlord under theLease ("Landlord"); WHEREAS: (A)The Landlord is in right of the landlord's part of the Lease. (B)The Tenant is in right of the tenant's part of the Lease. (C)The Guarantor has agreed to guarantee the obligations of the Tenant under the Lease; IT IS AGREED as follows: 1.Definitions and Interpretation 1.1In this Guarantee: "Business Day" means a day on which clearing banks in Edinburgh and Glasgow are open for normal business; "Change of Control" means in respect of the Tenant, the actions of any person or group of persons acting in concertresult in a change in:(a)the power (whether by way of ownership of shares, members' interests, proxy, contract,agency or otherwise) to:i.cast, or control the casting of, more than 25% of the maximum number of votes that mightbe cast at a general meeting of the Tenant; orii.appoint or remove all, or the majority, of the directors or equivalent officers of the Tenant;oriii.give directions with respect to the operating and financial policies of the entity with whichthe directors or equivalent officers of the entity are obliged to comply: and/or(b)the holding beneficially (either directly or indirectly) of more than 25% of the issued sharecapital or members' interest (as applicable) of the Tenant (excluding any part of thatissued share capital or members' interests (as applicable) that carries no right toparticipate beyond a specified amount in a distribution of either profits or capital) "Guaranteed Obligations" means all past, present, future and contingent obligations of the Tenant: (a)to pay all rents and other sums; and (b)to perform and fulfil all other obligations81 which are now or may at any time in the future become due by the Tenant to the Landlord in terms of the Lease; "Interest" means interest on the sum in question at 4% per cent per annum above the base rate from time to time of Royal Bank ofScotland plc from the date that such sum is due for payment or, if there is no such date specified, the date of demand for such sumuntil such sum is paid; "Lease " means the lease between QUOTIENT BIOCAMPUS LIMITED and ALBA BIOSCIENCE LIMITED dated 14 July and registeredor undergoing registration in the Land Register of Scotland under Title Number MID192976 and undergoing registration registered in theBooks of Council and Session on [ ] as varied or amended by (One) Minute of Variation of Lease entered or about to beentered into between QUOTIENT BIOCAMPUS LIMITED and ALBA BIOSCIENCE LIMITED; and (Two) Licence for Works entered orabout to be entered into into between QUOTIENT BIOCAMPUS LIMITED and ALBA BIOSCIENCE LIMITED ; "Property" means ALL and WHOLE that plot or area of ground together with the buildings and others erected thereon extending to 3.18hectares or thereby known as and forming 5 James Hamilton Way, Milton Bridge, Penicuik EH26 0BF (formerly known as Site 3,Biocampus, Roslin) being the subjects registered in the Land Register of Scotland under Title Number [ ]; ; "Relevant Event" means any of the following events or circumstances: (i)The Tenant going into liquidation including provisional liquidation or a petition being presented or resolution proposed orpassed for their liquidation; (ii)The Tenant having a receiver appointed in respect of any part of their undertaking or assets; (iii)The Tenant (not being a corporate body) having their estates sequestrated or becoming insolvent or apparently insolvent orsigning a trust deed for creditors or effecting or proposing any general composition with their creditors; (iv)The Tenant being dissolved, struck off or otherwise ceasing to exist; (v)The Landlord serving notice on the Tenant that an event has occurred which entitles the Landlord to irritate the Lease; (vi)The Lease being terminated by reason of irritancy; (vii)The Tenant having an administrator appointed or a petition being presented for the appointment of an administrator or noticeof intention to appoint an administrator being given; (viii)The Tenant instituting or giving notice of or indicating an intention to institute a voluntary arrangement or composition inrespect of their debts or affairs; or (ix)The Tenant becoming unable to pay their debts within the meaning of section 123 of the Insolvency Act 1986; "Rent Deposit Agreement" means the rent deposit agreement entered into between the Tenant and the Landlord dated [ ] 2018and subsequent date ancillary to the Lease. "Tenant" means ALBA BIOSCIENCE LIMITED, incorporated under the Companies Acts with Registered NumberSC310584 and having their Registered Office at Douglas Building Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL; 1.2In this Guarantee, unless otherwise specified or the context otherwise requires: 1.2.1any reference to one gender includes all other genders; 1.2.2words in the singular only include the plural and vice versa; 1.2.3any reference to the whole is to be treated as including reference to any part of the whole;82 1.2.4any reference to a person includes a natural person, corporate or unincorporated body (whether or not having separate legal personality)and that person's personal representatives, successors or permitted assignees; words importing individuals include corporations andvice versa; 1.2.5any references to this Guarantee or to the Lease or to any other document are references to this Guarantee, the Lease or to that otherdocument as varied, supplemented, assigned, novated or replaced from time to time; 1.2.6any reference to a Clause is to the relevant Clause of this Guarantee; 1.2.7any reference to a statute or statutory provision includes any subordinate legislation which is in force from time to time under thatstatute or statutory provision; 1.2.8any reference to any statute, statutory provision or subordinate legislation is a reference to it as it is in force from time to time takingaccount of any amendment or re-enactment; 1.2.9any phrase introduced by the words "including", "include", "in particular" or any similar expression is to be construed as illustrative onlyand is not to be construed as limiting the generality of any preceding words; 1.2.10references to writing or written do not include faxes or e-mail; 1.2.11where at any one time there are two or more persons included in the expression "Guarantor" obligations contained in this Guaranteewhich are expressed to be made by the Guarantor are binding jointly and severally on them and their respective executors andrepresentatives whomsoever without the necessity of discussing them in their order; 1.3The headings in this Guarantee are included for convenience only and are to be ignored in construing this Guarantee. 1.4Unless the context otherwise requires, words and expressions which are defined in the Lease will bear the same meanings for thepurposes of this Guarantee. 2Guarantee The Guarantor irrevocably and unconditionally guarantees to the Landlord full and punctual payment or performance by the Tenant of theGuaranteed Obligations as and when they fall due for payment or performance and failing such payment or performance by the Tenantthe Guarantor will on demand by the Landlord make payment or effect performance of the Guaranteed Obligations in question togetherwith: 2.1all liabilities, losses, costs, damages and expenses incurred by the Landlord by reason of or in connection with any such failure togetherwith Interest; and 2.2all costs and expenses properly and reasonably incurred by the Landlord in connection with the enforcement of this Guarantee togetherwith Interest. 3Primary Obligation The obligations of the Guarantor under this Guarantee will be independent primary obligations and not merely those ofguarantor or cautioner and if any of the Guaranteed Obligations are not, or cease to be, valid and enforceable for any reason whatever(whether or not known to the Landlord) or for any reason are not recoverable from or capable of performance by the Guarantor underClause 2 the Guarantor will still be liable to the Landlord in respect of such Guaranteed Obligations as if they were fully valid andenforceable and/or recoverable or capable of performance and the Guarantor were principal debtor in place of the Tenant. 4Indemnity 4.1The Guarantor undertakes to indemnify the Landlord on demand against all liabilities, losses, costs, damages and expenses which theLandlord may incur by reason of or in connection with any failure83 by the Tenant to make payment of or perform any of the Guaranteed Obligations as and when they fall due or as a result of any of theGuaranteed Obligations being or becoming void or unenforceable for any reason or the Guaranteed Obligations for any reason not beingrecoverable or capable of performance under Clause 2, together with Interest. 4.2The Guarantor undertakes to indemnify the Landlord on demand against all liabilities, losses, costs, damages and expenses which theLandlord may incur by reason of or in connection with the Tenant proposing or entering into any company voluntary arrangement orother scheme or arrangement having or purporting to have the effect of impairing, compromising or releasing any or all of theGuarantor's obligations under this Guarantee. 5Limitation 5.1If and to the extent that Quotient Suisse SA is liable under this Guarantee for any Guaranteed Obligations and if complying with suchundertaking would constitute a repayment of capital, a violation of the legally protected reserves or the payment of a constructivedividend by Quotient Suisse SA or would otherwise be restricted under Swiss mandatory law and accounting principles then applicable(the "Restricted Obligations"), Quotient Suisse SA’s liability will be limited to the amount of Quotient Suisse SA’s freely disposableequity in accordance with Swiss law and Swiss accounting principles (the "Swiss Available Amount"). 5.2This limitation shall only apply to the extent that it constitutes a requirement under Swiss mandatory legal and accounting principles atthe time Quotient Suisse SA is required to perform the Restricted Obligations. Such limitation will not release Quotient Suisse SA fromits obligations in excess of the Swiss Available Amount, but will merely postpone the performance date thereof until such time(s) whensuch performance is again permitted from a Swiss legal and Swiss accounting point of view. 5.3The terms of this Clause 5 are entirely without prejudice to Quotient Limited's obligation as Guarantor under this Guarantee includingwithout prejudice to the foregoing generality the terms of Clause 1.2.11. 6Guarantor to take new lease Without prejudice to any other provision of this Guarantee if a Relevant Event occurs, the Landlord may serve notice on the Guarantorwithin six months after the Relevant Event requiring the Guarantor to accept, as required by the Landlord, either: 6.1a new lease of the Property for a period equal to the residue of the term of the Lease which would have remained if the Relevant Eventhad not occurred, at the same rent and on the same terms as the Lease commencing on the date of the Relevant Event, except thatany works carried out by or on behalf of the Tenant (or its predecessor as tenant under the Lease) will be treated by reference to thedate of entry under the Lease and not the date of the Relevant Event; or 6.2an assignation to the Guarantor of the Tenant's interest under the Lease, effective from the date of the Relevant Event. 6.3In the event the Landlord requires the Guarantor to enter into a new lease or assignation in terms of this Clause 6 in circumstanceswhere the Landlord has retained the whole monies then held under the Rent Deposit Agreement pursuant to clause 5.3 and/or 5.4 of theRent Deposit Agreement and there remains in the Landlord's hands a balance from the Deposit Fund (as defined in the Rent DepositAgreement) after settlement of all the outstanding obligations of the Tenant under the Lease and the Landlord is legally entitled thereto("the Surplus") then the Landlord agrees with the Guarantor that the Surplus shall be treated by the Landlord as a rent deposit under thenew lease entered into with the Guarantor and the Landlord and the Guarantor shall enter into a rent deposit agreement in respectthereof in the same terms mutatis mutandis as the Rent Deposit Agreement (excluding clauses 6.1 and 6.2.5 thereof) but subject tosuch amendments as the Landlord shall reasonably require to give effect to this clause. 7Duration 84 This Guarantee will be a continuing security notwithstanding any intermediate payment or performance and will remain in force so longas any liability (including any future or contingent liability): 7.1on the part of the Tenant under the Lease, or 7.2on the part of the Guarantor under this Guarantee remains unfulfilled unless discharged by the Landlord in accordance with Clause 8. 8Non-impairment This Guarantee will not be discharged or prejudiced by: 8.1the Landlord holding, acquiring, failing to perfect, releasing or giving up any obligation, security or remedy (present or future) for theobligations of the Tenant under the Lease or any neglect, delay or forbearance on the part of the Landlord in enforcing such obligation,security or remedy; 8.2the Landlord giving time or any other indulgence to the Tenant; 8.3any variation, amendment, supplement or extension whether formal or informal, of the terms of the Lease or the implementation of anyrent review provisions in the Lease; 8.4the Landlord irritating the Lease; 8.5the Landlord releasing any person(s) comprised in the Tenant from liability under the Lease, or 8.6any other act, omission or event whereby (but for this Clause) the Guarantor would be discharged in whole or in part from thisGuarantee. 9Discharge If the Tenant assigns its interest under the Lease in accordance with the terms of the Lease, or the Landlord accepts a renunciation ofthe Tenant's interest under the Lease, the Landlord will at the request and cost of the Guarantor grant a valid discharge of thisGuarantee as at the date of valid intimation of such assignation or the effective date of such renunciation (as the case may be)provided that there are no outstanding claims under the Guarantee, or if there are any such claims, upon such claims being satisfied infull. 10Assignation & Change of Control 10.1The Landlord has the right to assign or transfer this Guarantee to its successors as landlord under the Lease without the consent of theGuarantor. 10.2The Guarantor does not have the right to assign or transfer their rights or obligations under this Guarantee. 10.3In the event of a Change of Control occurring, the Landlord shall not unreasonably withhold or delay consent to an application by theGuarantor for this Guarantee to be discharged but that only in exchange for a fresh guarantee being granted in the same terms as thisGuarantee by a replacement Guarantor (or Guarantors) who is/are in the Landlord's reasonable opinion of sound financial standing anddemonstrably capable of fulfilling the Guarantor's obligations under this Guarantee. 11Postponement of Claims by Guarantor 11.1Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor will not be entitled to share anysecurity held or money received by the Landlord on account of the Guaranteed Obligations. 11.2Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor waives its rights of subrogation,reimbursement and indemnity against the Tenant and any other person and any other right they may have to stand in the place of theLandlord in respect of any security from or money payable by the Tenant or any other person.85 11.3Until the Guaranteed Obligations have been fully and unconditionally paid or performed, the Guarantor will have no recourse, nor beentitled to pursue any right or remedy, against the Tenant arising from the performance of any of the Guarantor’s obligations under thisGuarantee. 11.4In the event of the liquidation, receivership, administration, sequestration or other insolvency or dissolution of the Tenant theGuaranteed Obligations will be deemed to continue to be due and outstanding until fully and unconditionally paid or performed. TheLandlord will be entitled to claim in the liquidation, receivership, administration, sequestration or other insolvency of the Tenant for thefull amount of the Guaranteed Obligations and to retain the whole of the dividends from such claim to the exclusion of any rights of theGuarantor as guarantor in competition with the Landlord until the Landlord's claim is satisfied in full. 12Exclusion of Set Off 12.1All payments due by the Guarantor under this Guarantee will be made without any retention, deduction, set-off or counterclaim and freefrom any deduction or withholding for or on account of any taxes or other charges in the nature of taxes imposed by any competentauthority. If any such deduction or withholding is required by law the Guarantor will pay the Landlord such additional amount as may benecessary to ensure that the Landlord receives the full amount of the relevant payment as if such deduction or withholding had not beenmade. 12.2When entering into this Guarantee, Quotient Suisse SA and the Landlord have assumed that any sum paid or payable by QuotientSuisse SA is not and will not become subject to any deduction or withholding of Taxes on account of Swiss Withholding Tax (a “SwissTax Deduction”). Notwithstanding that the Landlord and Quotient Suisse SA do not anticipate that any payment will be subject to SwissTax Deduction, they agree that, in the event that a Swiss Tax Deduction should be imposed on any payments, any such payment shall,subject to the provisions of this Guarantee, be increased in an amount which (after making any Swiss Tax Deduction) would have beendue had no Swiss Tax Deduction been made. For this purpose, the Swiss Withholding tax shall be calculated on the full grossed-upamount and Quotient Suisse SA shall deduct and pay to the Swiss Federal Tax Administration the applicable Swiss Withholding Tax. To the extent that a Swiss Tax Deduction is imposed, Quotient Suisse SA shall promptly complete any procedural formalities (includingsubmitting forms and documents required by the appropriate Tax authority) to the extent possible and necessary for the QuotientSuisse SA to obtain authorization (a) to make payments without them being subject to Swiss Withholding Tax or to being subject toSwiss Withholding Tax at a rate reduced under applicable double taxation treaties, as applicable, and (b) for the Landlord to obtain a fullor partial refund of any Swiss Tax Deduction under applicable double taxation treaties. The Landlord shall provide reasonable efforts to cooperate with Quotient Suisse SA to secure such refund or exemption. When theLandlord has been able to realize treaty benefits, Quotient Suisse SA will have a refund claim against the Landlord at the amount of thetreaty benefit obtained after the calculation of the payment as computed under this Clause 12.2. Such refund is subject to any right ofset-off pursuant to this Guarantee and subject to not being in a less favourable net after-tax position than such the Landlord would havebeen in if such Swiss Withholding Tax had not been required in the first instance. Quotient Suisse SA shall cooperate with the Landlordand shall procure that the Tenant also cooperates with the parties. 12.3The terms of Clause 12.2 are entirely without prejudice to Quotient Limited's obligation as Guarantor under this Guarantee includingwithout prejudice to the foregoing generality the terms of Clause 1.2.11. 12.4The Guarantor will not be entitled to withhold or restrict performance of any obligation by it under this Guarantee by reason of anypurported right or claim of retention, set off or counterclaim or for any other reason. 13Certificate A certificate signed by any authorised signatory on behalf of the Landlord will, except in the case of manifest error, conclusivelyconstitute the amount of the Guaranteed Obligations or any sum due by86 the Guarantor under Clause 13 or any other provision of this Guarantee at the relevant time for all purposes of this Guarantee. 14Costs 14.1The Guarantor will pay to the Landlord within five Business Days after written demand: 14.1.1the costs of registering this Guarantee in the Books of Council and Session and of obtaining three extracts (one of which will bedelivered to the Guarantor's solicitors); 14.1.2the legal fees and expenses reasonably and properly incurred by the Landlord in connection with the preparation and completion of anynew lease or assignation entered into under the terms of Clause 5 including the registration dues on such new lease or assignation; 14.1.3all Value Added Tax on any of the fees, costs and expenses set out above. 14.2If any amount specified in Clause 13.1 is not paid within 14 days of demand the Guarantor will pay Interest on such amounts. 14.3The Guarantor will be responsible for any Land and Buildings Transaction Tax chargeable on any such new lease or assignation. 15Notices 15.1Any notice, demand, request or certificate required by this Guarantee will be in writing and may be delivered personally, sent by post ortransmitted by fax to the relevant party using the relevant details specified in Clause 14.3. In the case of notices served on theGuarantor, notices shall be served on each of the Guarantor companies. 15.2Any notice, demand, request or certificate will be deemed to be received: 15.2.1if delivered personally, (with proof of delivery) at the time of delivery; 15.2.2if sent by recorded delivery post, 48 hours after the date of posting; and 15.2.3in the case of fax, at the time when the sender's fax machine confirms transmission; Provided that if, in the case of personal delivery or transmission by fax, such delivery or transmission occurs outwith normal businesshours on a Business Day or on a day which is not a Business Day, delivery will be deemed to occur on the next Business Day. 15.3The details referred to in Clause 14.1 are: Guarantor – {Insert details for both landlord companies} Address:[ ] Fax Number:[ ] For the attention of:[ ] [Landlord] Address:[ ] Fax Number:[ ] For the attention of:[ ]; or such other address, fax number or person as may be notified in writing from time to time by the relevant party to the other party forthe purposes of this Clause.] 87 16Applicable Law and Jurisdiction This Guarantee is governed by and is to be construed in accordance with the law of Scotland and in so far as not already subject to it,the parties irrevocably submit to the non-exclusive jurisdiction of the Scottish Courts. 17Registration The Guarantor consents to the registration of this Guarantee and any certificate pursuant to this Guarantee for preservation andexecution: IN WITNESS WHEREOF Signed for and on behalf of QUOTIENT LIMITED at ...................................... on ...............................by:................................................................... (Signature) ................................................................... (Full name in CAPITALS)Director ................................................................... (Signature) ................................................................... (Full name in CAPITALS)Witness ................................................................... (Full address - witness only) ...................................................................ADD BLOCK FOR QUSTIENT SUISSE SA Signed for and on behalf of ROSLIN ASSETS LIMITED at ...................................... on ...............................by:................................................................... (Signature) ................................................................... (Full name in CAPITALS)Director/Company Secretary/Authorised Signatory ................................................................... (Signature) ................................................................... (Full name in CAPITALS)Witness ................................................................... (Full address - witness only) ................................................................... 88 Part 14Not used 89 Part 15Not used90 Part 16Rent Deposit DWF CJM/2016677-52017RENT DEPOSIT AGREEMENT between ALBA BIOSCIENCE LIMITED and ROSLIN ASSETS LIMITED PROPERTY: SITE 3, BIO CAMPUS, ROSLIN, MIDLOTHIAN 91 DEPOSIT AGREEMENTbetweenROSLIN ASSETS LIMITED, incorporated under the Companies Acts (Registered Number 10893348), and having its Registered Office at 5th Floor,Maybrook House, 40 Blackfriars Street, Manchester, M3 2EG, and includes where the context so requires its successors as Landlord under theLease ("Landlord")andALBA BIOSCIENCE LIMITED, incorporated under the Companies Acts with Registered Number SC310584 and having their Registered Office atDouglas Building Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL ("Tenant")WHEREAS:(A)The Landlord is the landlord under the Lease;(B)The Tenant is the tenant under the Lease;(C)The Landlord has requested, and the Tenant has agreed to lodge with the Landlord, the Deposit which is to be held by the Landlord assecurity for the due performance by the Tenant of its obligations under the Lease.IT IS AGREED as follows:1.Definitions and Interpretation1.1In this Agreement:"Business Day" means any day other than a Saturday, Sunday or a bank, local or statutory holiday in Edinburgh, Glasgow or London;"Deposit" means, initially, the sum of THREE MILLION SIX HUNDRED THOUSAND POUNDS (£3,600,000) Sterling or, in the eventthat TWO MILLION FOUR HUNDRED THOUSAND POUNDS (£2,400,000) of the initial deposit sum is returned to the Tenantin accordance with the terms of Clause 6.1 of this Agreement, the sum of ONE MILLION TWO HUNDRED THOUSAND POUNDS(£1,200,000);"Deposit Account" means an account in the name of the Landlord in terms of Clause 2 which will be an interest-bearing account only ifsuch an account is generally available in the UK for rent deposits;"Deposit Fund" means the balance (including any Interest) of the Deposit Account at any given time;"EBITDA" means, (a) for so long as Quotient Limited remains a guarantor under the Guarantee, the Operating Net Profit (or Loss) ofQUOTIENT LIMITED, arising solely from product sales to bona fide third parties (but not any grants or milestone payments) all asspecified in the Consolidated Statements of Comprehensive Profit (or Loss) contained in the Annual Report filed by the saidQUOTIENT LIMITED with the United States Securities and Exchange Commission, such Net Profit (or Loss) to include all expensesof QUOTIENT LIMITED (whether related to product sales or otherwise and excluding only interest, tax depreciation and amortisationpayments) after having first been adjusted to remove any allowance for "Compensation expense in respect of share options andmanagement equity incentives" (or equivalent expense provided for in any Annual Report filed by the said QUOTIENT LIMITED) or,(b) in the event that Quotient Limited ceases to be a guarantor under the Guarantee, then in respect of any such party as shallguarantee the obligations of the Tenant pursuant to the Guarantee or any subsequent or replacement guarantee, the Operating NetProfit (or Loss) of such new or replacement guarantor arising solely from product sales to bona fide third parties (but not any grants ormilestone payments) as contained in independently audited accounts, such Operating Net Profit or Loss to include all expenses ofthe guarantor and excluding only interest, tax depreciation and amortisation payments;92 "Guarantee" means the Guarantee by Quotient Limited and Quotient Suisse SA in favour of the Tenant dated [ ] 2018 andsubsequent date ancillary to the Lease"Interest" means any interest accruing on the Deposit Account from time to time;"Lease" means the lease between Quotient Biocampus Limited and the Tenant dated 14 July 2017 and registered or to be registered inthe Land Register of Scotland under Title Number MID[]and registered in the Books of Council and Session on [] as amendedby Minute of Variation of Lease between Quotient Biocampus Limited and the Tenant dated [ ] and registered in the Books ofCouncil and Session on [ ];]"Parties" means the Landlord and the Tenant;"Prescribed Rate" means the rate of interest payable in respect of late payment of rent and other sums due in terms of the Lease;"Property" means ALL and WHOLE the subjects known as and forming Site 3, Bio Campus, Roslin, Midlothian as more particularlydescribed in the Lease;"Quotient Limited" means QUOTIENT LIMITED, a company incorporated in Jersey with registered number 109886 and having itsregistered office at PO Box 1075, Elizabeth House, 9 Castle Street, St Helier, Jersey, JE2 3RT"Term" means the term of the Lease together with any continuation whether by Act of Parliament, tacit relocation or otherwise;"VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any tax similar or equivalent to value added tax orperforming a similar fiscal function.1.2In this Agreement, unless otherwise specified or the context otherwise requires:- 1.2.1words importing any gender include all other genders; 1.2.2words importing the singular only include the plural and vice versa; 1.2.3words importing the whole are to be treated as including reference to any part of the whole; 1.2.4where at any one time there are two or more persons included in the expression "Tenant", obligations contained in thisAgreement which are expressed to be made by the Tenant are binding jointly and severally on them and their respectiveexecutors and representatives whomsoever without the necessity of discussing them in their order; 1.2.5words importing individuals include corporations and vice versa; 1.2.6references to this Agreement or to any other document are to be construed as references to this Agreement or to thatother document as modified, amended, varied, supplemented, assigned, novated or replaced from time to time; 1.2.7any reference to a clause, schedule or part of the schedule is to the relevant clause, schedule or part of the schedule ofor to this Agreement; 1.2.8any phrase introduced by the words "including", "include", "in particular" or any similar expression is to be construed asillustrative only and is not to be construed as limiting the generality of any preceding words; 1.2.9any obligation on, or right granted or reserved to, the Landlord may be fulfilled or exercised by managing agents in placeof or in addition to the Landlord.93 1.3The headings in this Agreement are included for convenience only and are to be ignored in construing this Agreement.94 2.Deposit Account and Deposit Fund2.1The Tenant will pay to the Landlord the Deposit and, within five Business Days after receipt, the Landlord will place the Deposit in theDeposit Account to be held, subject to the remaining provisions of this Agreement, throughout the Term.2.2In so far as not applied by the Landlord in accordance with the provisions of this Agreement, the Deposit Fund will be held by theLandlord in trust for both the Landlord and the Tenant so that the Landlord have the right to apply the Deposit Fund in accordance withthe provisions of this Agreement and the Tenant retains its right to the Interest (in accordance with the provisions of Clause 3.2) and itsreversionary interest in the Deposit Fund.2.3The Tenant will be required at all times to maintain the Deposit Fund in an amount not less than the Deposit and if:-, 2.3.1the Landlord withdraws any part of the Deposit Fund in accordance with provisions of this Agreement, or 2.3.2for any other reason whatsoever, the Deposit Fund becomes less than the Depositthen the Tenant will lodge with the Landlord within five Business Days after written demand such further sum (certified by the Landlordas aftermentioned) as represents the difference between the Deposit Fund and the Deposit at the time in question, failing which interestwill run on such sum at the Prescribed Rate from the date of demand until the date of payment.3.Interest Earned on Deposit Account3.1Interest will beneficially accrue to and be the property of the Tenant and the Tenant will be responsible for accounting for it to HMRevenue & Customs. Without prejudice to the Tenant's obligation to account to HM Revenue & Customs for the Interest, the Landlordwill be entitled to advise HM Revenue & Customs of the name and address of the Tenant and the amount of the Interest.3.2The Interest will be left in the Deposit Account and will form part of the Deposit Fund.3.3The Tenant will be entitled (but not more frequently than once in any year) by written demand to require the Landlord to uplift from theDeposit Account an amount equal to any Interest and, subject to any deductions required to be made by the Landlord at law, to pay it tothe Tenant provided that no such payment will be made if:- 3.3.1at the date of such demand, the Tenant has not complied with its monetary obligations under the Lease; or 3.3.2such payment would cause the Deposit Fund to be less than the Deposit.4.Provision of Account Details4.1On reasonable written request from the Tenant (but not more frequently than once in every year), the Landlord will provide the Tenantwith:- 4.1.1details of the Deposit Account; and 4.1.2a written statement of the Interest.4.2The Landlord will, on payment to the Tenant of the Deposit Fund in accordance with Clause 6, provide the Tenant with a writtenstatement showing all deposits and withdrawals made by the Landlord and all Interest received or remitted by it to the Tenant inaccordance with the provisions of this Agreement.95 5.Withdrawals by the LandlordThe Landlord may, at any time, withdraw and pay to themselves from the Deposit Fund:-5.1on each occasion that the Tenant fails to pay the rent or other sums (whether or not any formal demand has been made) for which theTenant is responsible in terms of the Lease or under this Agreement, an amount equal to such rent or other sums due plus any VATchargeable and interest due on them as provided for in the Lease;5.2on each occasion that the Tenant is in breach of any of its obligations under the Lease and such breach has not been remedied withinsuch reasonable time as may be determined by the Landlord (having regard to the nature and extent of the breach) and notified inwriting to the Tenant, a sum or sums plus any VAT chargeable on them as will meet or go towards meeting the cost to the Landlord ofmaking good such breach and all loss suffered by the Landlord as a consequence of such breach (including, without prejudice to theforegoing generality, the professional costs properly incurred by the Landlord);5.3on the appointment of a liquidator or a receiver or an administrator to the Tenant or the making of a winding-up order or administrationorder in respect of the Tenant or the making of a voluntary arrangement in respect of the Tenant, the whole of the Deposit Fund; and5.4If the Lease is irritated for any reason the whole of the Deposit Fund.5.56.Return of Deposit FundThe Landlord will pay to the Tenant:6.1The sum of TWO MILLION FOUR HUNDRED THOUSAND POUNDS (£2,400,000) of the initial Deposit Fund on the date on whichthe Tenant has provided to the Landlord audited annual accounts disclosing an EBITDA of TWENTY FIVE MILLION U.SDOLLARS ($25,000,000) (or such sum in a different currency which shall be equivalent thereto) or more for each of the twoconsecutive financial years of the said Quotient Limited (or of any such party as shall guarantee the obligations of the Tenantpursuant to the Guarantee or any subsequent or replacement guarantee in the event that Quotient Limited ceases to be a guarantorunder the Guarantee) immediately preceding the date on which such audited accounts are produced.6.2the Deposit Fund within one month after:- 6.2.2the intimation of any permitted assignation by the Tenant of its interest under the Lease; 6.2.3the expiry of the Term, provided that the Tenant has then complied with its obligations under the Lease; 6.2.4the renunciation by the Tenant of its interest under the Lease; 6.2.5the date on which the Tenant has provided to the Landlord audited annual accounts disclosing an EBITDA of TWENTYFIVE MILLION U.S DOLLARS ($25,000,000) (or such sum in a different currency which shall be equivalent thereto) ormore for each of the three consecutive financial years of the said Quotient Limited (or of any such party as shallguarantee the obligations of the Tenant pursuant to the Guarantee or any subsequent or replacement guarantee in theevent that Quotient Limited ceases to be a guarantor under the Guarantee) immediately preceding the date on whichsuch audited accounts are produced (declaring that the 2 year period referred to in clause 6.1 of this Agreement and the3 year period referred to in Clause 6.2.5 of this Agreement may run concurrently). 6.2.6such earlier date as the Landlord may, in its sole discretion, determine.6.3Any dispute or difference between the Landlord and the Tenant in relation to Clauses 6.1 or 6.2.5 may be referred by either party to thedecision of an independent expert accountant ("the Accountant") to96 be agreed between the parties or in default of agreement to be appointed by the President or other senior office holder for the time beingof the Institute of Chartered Accountants in Scotland at the request of either party, and the decision of the Accountant shall be final andbinding on the Landlord and the Tenant and the Accountant shall allow the Landlord and the Tenant a reasonable period of time withinwhich to make representations to him. The costs of the Accountant shall be borne as he shall direct, failing which equally between theLandlord and the Tenant.7.Landlord's Remedies7.1Any breach by the Tenant of the provisions of this Agreement will constitute a breach of the Tenant's obligations under the Lease andthe Landlord will be entitled to exercise its rights of irritancy and others under the Lease in relation to any such breach of thisAgreement and the Landlord's rights contained in this Agreement will be in addition to, and without prejudice to, its rights and remediesunder the Lease.7.2The Tenant acknowledges that, subject only to Clause 7, this Agreement and the holding by the Landlord of the Deposit Fund will be amatter entirely separate from the Lease and will not be a defence (whether by way of set-off or otherwise) to any action for payment bythe Landlord under the Lease or to any irritancy of the Lease.8.Alienation8.1If the Landlord disposes of its interest as the Landlord under the Lease, it will:- 8.1.1assign to the party acquiring such interest the Landlord's rights and obligations under this Agreement; and 8.1.2transfer to such party the Deposit Fund.8.2The Tenant is not entitled to assign its interest in this Agreement.9.Costs9.1The Tenant will pay to the Landlord within five Business Days after written demand all bank costs in connection with the operation ofthe Deposit Account, failing which the Landlord will, without prejudice to its other rights and remedies, be entitled to pay them out of theDeposit Fund.9.2Each of the Parties will bear its own costs and expenses in connection with the preparation and completion of this Agreement.9.3The Tenant will pay within five Business Days after written demand the costs of registering this Agreement in the Books of Council andSession and obtaining three Extracts (two for the Landlord and one for the Tenant).10.CertificateA certificate or statement signed by any authorised signatory on behalf of the Landlord will be conclusive and binding on the Parties,except in the case of manifest or demonstrable error.11.Applicable Law and JurisdictionThis Agreement is governed by and is to be construed in accordance with the law of Scotland and in so far as not already subject to it,the Parties irrevocably submit to the non-exclusive jurisdiction of the Scottish Courts.12.Consent to RegistrationThe Parties consent to registration of this Agreement and of any certificate or statement under it for preservation and execution: INWITNESS WHEREOF 97 Part 17Landlord Waivers 98 Part 18 CAPITAL ALLOWANCES 1.In this Part of the Schedule:- 1.1.1"Available Fixtures" means the Fixed Plant in respect of which the Seller has not claimed allowances under CAA; 1.1.2"CAA" means Capital Allowances Act 2001; 1.1.3"CA Report" means the draft report dated December 2017 by CBRE; 1.1.4"Earliest Claim Period" means the earliest chargeable period of the Seller in which relevant qualifying expenditure canbe allocated to a capital allowances pool and in respect of which the Seller is entitled to amend its income or corporationtax return as applicable pursuant to Paragraph 1.5; 1.1.5"Election Notice" means a notice of election under Section 198 of the CAA in the form contained in Part 10 of theSchedule; 1.1.6"Fixed Plant" means such plant and machinery (within the meaning of the CAA) as constitutes a fixture or fixtures andwhich is included in the sale of the Property; 1.1.7"General Pool Available Fixtures" means those Available Fixtures which are not Special Rate Available Fixtures; and 1.1.8"Special Rate Available Fixtures" means those Available Fixtures on which the Seller has incurred special rateexpenditure (as defined in Section 104A of the CAA).1.2The Seller confirms that: 1.2.1it is the past owner (as defined in Section 187A(2) of the CAA) of each Available Fixture; 1.2.2there is no Fixed Plant other than Available Fixtures; 1.2.3it did not enter into an election under Section 198 of the CAA in respect of the Available Fixtures when it acquired theProperty; and 1.2.4it has not allocated any qualifying expenditure incurred on any Available Fixture to a pool pursuant to Section 53 of theCAA.1.3The Parties have provisionally agreed the amount of qualifying expenditure incurred by the Seller on General Pool Available Fixturesas£5,486,982.44and the Special Rate Available Fixtures as£8,744.268.00and have agreed to instruct at the Seller's cost thefinalisation of the CA Report to determine the exact amount of qualifying expenditure incurred by the Seller on the General PoolAvailable Fixtures and the Special Rate Available Fixtures which are to be pooled pursuant to paragraph 1.5 by ,no later than threemonths after Completion, and which determination shall be subject to the Purchaser's approval acting reasonably. The FinalisedReport shall not contain any materially adverse (from the Purchaser's perspective) deviations from the figures specified in this Clause1.3. The use of Table C contained in Part 10 of the Schedule (and the allocations within it) shall be completed as specified by thePurchaser and by the CA Report.1.4The Seller will take all reasonable steps to facilitate the completion of the CA Report determination of the amounts to be allocated tothe pools pursuant to paragraph 1.5, including permitting access to the Property.99 1.5For the purposes of meeting the pooling requirement (within the meaning of Section 187A(4) of the CAA) the Seller undertakes toallocate to a main pool the amount of qualifying expenditure on General Pool Available Fixtures specified in the CA Report pursuant toparagraph 1.3 and to allocate to a special rate pool the amount of qualifying expenditure on Special Rate Available Fixtures specifiedin the CA Report in each case by amending its relevant tax return for the Earliest Claim Period (and any subsequent tax return inwhich the pooling is required to be taken into account) no later than 20 business days after determination of the qualifying expenditurein accordance with paragraph 1.3.1.6The Seller will not claim any writing-down allowances in respect of the qualifying expenditure allocated to a pool pursuant to paragraph1.5.1.7Within 20 business days after the CA Report is finalised which shall specify the amounts of the Seller’s qualifying expenditure whichare to be allocated to the pools pursuant to paragraph 1.5 and the Seller and (as the Purchaser shall procure) the Beneficial Owner willsign in duplicate the Election Notice with such determined amounts included as the Seller’s disposal values of the General PoolAvailable Fixtures and the Special Rate Available Fixtures and deliver the duplicate to the other Party. The Price Retention shall bepayable by the Purchaser to the Seller within 3 business days of the Purchaser's receipt of the Election Notices duly signed by theSeller ("the Payment Date").1.8Promptly following the allocation of the Seller’s qualifying expenditure on the Available Fixtures to the pools pursuant to paragraph 1.5the Seller will notify the Purchaser in writing of such pooling and each party will submit its copy of the completed Election Notice toHMRC in accordance with Section 201 of the CAA by the end of the Earliest Claim Period.1.9If HMRC challenges the expenditure allocated to either pool pursuant to paragraph 1.5 the Seller will as soon as reasonablypracticable and in any event within ten days, give written notice of it to the Purchaser and the Seller will, at the reasonable cost of thePurchaser, take such action as the Purchaser may reasonably request by notice in writing given to the Seller to avoid, dispute,defend, resist or appeal against such challenge from HMRC.1.10The Parties undertake to use reasonable endeavours to ensure that the conditions of Section 187A of the CAA are satisfied to theextent such provisions are applicable and such satisfaction is possible to enable the Beneficial Owner to claim writing downallowances in respect of the Available Fixtures to the extent permitted by the CAA.1.11If and to the extent that the Purchaser shall reasonably require, Alba shall be a party to the documentation required in terms of thisPart 18 of the Schedule in addition to (or in substitution for) the Seller including potentially entering into the Election Notice or suchseparate notice all as shall be reasonably required by the Purchaser to enable the Beneficial Owner to obtain valid Election Notice(s)in respect of the qualifying expenditure approximately to the specific monetary values provisionally set out in Paragraph 1.3. Part 19 VAT NOTIFICATION [TO BE PRINTED ON THE HEADED NOTEPAPER OF ROSLIN ESTATE COMPANY] VAT NOTIFICATION100 [ ][ ] 2018Dear SirsSite 3, Bio Campus, Roslin, Midlothian (the "Property")Value Added Tax (Special Provisions) Order 1995 (the "VAT Order")We hereby notify you in accordance with Article 5(2A)(b) of the VAT Order that Article 5(2B) of the VAT Order does not apply to us in relation tothe purchase of the Property from you.Yours faithfully For and on behalf of Roslin Estate Company 101 Part 20 Notice to Adopt Statement of PracticeNotice PROPERTY: ALL and WHOLE the subjects known as Site 3, Bio Campus, Roslin, Midlothian registered or undergoing registration in the LandRegister of Scotland under Title Number MID[ ]TRANSFEROR/SELLER: QUOTIENT BIOCAMPUS LIMITED, a company incorporated under the Companies Acts (Registered NumberSC514165) and having their Registered Office at Douglas Building, Pentlands Science Park, Bush Loan, Penicuik, Midlothian, EH26 0PL (the“Seller”)NOMINEE/PURCHASER: [ ] Assets Limited, incorporated under the Companies Acts (Registered Number [ ]) and having itsRegistered Office at 5th Floor, Maybrook House, 40 Blackfriars Street M3 2EG (the “Purchaser”)FUTURE BENEFICIAL OWNER: [ ] Estate Company (A Partnership) of 5th Floor Maybrook House, 40 Blackfriars Street, ManchesterM3 2EG (the “Beneficial Owner”)The Seller, the Purchaser and the Beneficial Owner confirm that they have agreed to adopt the optional practice set out in HMRC’s Business Brief10/96 in relation to the purchase of the Property pursuant to an Agreement dated and between the Seller and thePurchaserFollowing the transfer of the Property, the Purchaser will hold the legal title as nominee for the Beneficial Owner. SIGNED for and on behalf of the Seller SIGNED for and on behalf of the Purchaser SIGNED for and on behalf of the Beneficial Owner 102Exhibit 12.1Quotient LimitedStatement of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock DividendsThe following table sets forth the calculation of our fixed charges and preferred stock dividends for the years ended March 31, 2018, 2017, 2016, 2015 and2014. Year ended March 31, 2014 2015 2016 2017 2018 (Expressed in thousands of U.S. Dollars) Fixed charges Interest expense: Interest on debt and finance leases $612 $1,364 $2,246 $6,117 $10,116 Amortization of deferred funding costs 464 776 855 2,736 4,362 Accrued preference share dividends — 175 1,050 1,050 1,050 Interest expense $1,076 $2,315 $4,151 $9,903 $15,528 Interest element of operating leases 685 1,229 1,908 1,951 2,094 Total fixed charges $1,761 $3,544 $6,059 $11,854 $17,622 Preferred Stock Dividends — — — — — Combined fixed charges and preferred stock dividends $1,761 $3,544 $6,059 $11,854 $17,622 We have incurred losses in each of the five years concerned and thus our earnings were insufficient to cover the combined fixed charges by $1.8 million inthe year ended March 31, 2014, $3.5 million in the year ended March 31, 2015, $6.1 million in the year ended March 31, 2016, $11.9 million in the yearended March 31, 2017, $17.6 million in the year ended March 31, 2018 and $40.8 million in aggregate over the five year period.Exhibit 21.1List of Subsidiaries of Quotient Limited Name Place of Incorporation QBD (QS IP) Limited Jersey, Channel Islands Quotient Biodiagnostics, Inc. Delaware, USA Alba Bioscience Limited Scotland Quotient Suisse SA Switzerland Quotient Biocampus Limited Scotland  Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to (i) the incorporation by reference in the following Registration Statements of our report dated May 30, 2018, with respect to the consolidatedfinancial statements of Quotient Limited included in this Annual Report on Form 10-K for the year ended March 31, 2018 and (ii) the reference to our firmunder the heading "Experts" in the related Prospectuses and Prospectus Supplements: 1.the Registration Statement on Form S-3 (File No. 333-221470) pertaining to the registration of up to 16,829,366 Ordinary Shares and up to8,414,683 new warrants; 2.the Registration Statement on Form S-8 (File No. 333-218462) pertaining to the registration of 200,000 shares authorized for issuance underthe Amended and Restated 2014 Stock Incentive Plan of Quotient Limited; 3.the Registration Statement on Form S-3 (File No. 333-206026) pertaining to the registration of up to $200,000,000 Ordinary Shares,Preference Shares, Debt Securities, Rights to Purchase Ordinary Shares, Rights to Purchase Preference Shares, Warrants to Purchase OrdinaryShares, Warrants to Purchase Preference Shares and Warrants to Purchase Debt Securities; 4.the Registration Statement on Form S-3 (File No. 333-203818) pertaining to the registration for resale of 1,939,614 Ordinary Shares issuedand outstanding and 850,000 Ordinary Shares issuable upon exercise of a Pre-funded Warrant; 5.the Registration Statement on Form S-8 (File No. 333-195507) pertaining to the registration of 779,462 shares issuable upon exercise ofoutstanding options granted under the 2013 Enterprise Management Plan (now referred to as the 2012 Option Plan) and 1,500,000 sharesreserved for issuance under the 2014 Stock Incentive Plan (now referred to as the Amended and Restated 2014 Stock Incentive Plan) ofQuotient Limited; and 6.the Registration Statement on Form S-8 (File No. 333-214483) pertaining to the registration of 1,120,205 shares reserved for issuance underthe 2014 Stock Incentive Plan (now referred to as the Amended and Restated 2014 Stock Incentive Plan) of Quotient Limited. /s/ Ernst & Young LLPBelfast, United KingdomMay 30, 2018 Exhibit 31.1CERTIFICATIONI, Franz Walt, certify that:1.I have reviewed this Annual Report on Form 10-K of Quotient Limited;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant 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 maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of 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 that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’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 over financial reporting which are reasonablylikely 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 a significant role in the registrant’s internal controlover financial reporting. Date: May 30, 2018 /s/ Franz Walt Franz Walt Chief Executive Officer Exhibit 31.2CERTIFICATIONI, Christopher Lindop, certify that:1.I have reviewed this Annual Report on Form 10-K of Quotient Limited;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant 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 maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, 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 financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of 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 that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially 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 of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’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 over financial reporting which are reasonablylikely 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 a significant role in the registrant’s internal controlover financial reporting. Date: May 30, 2018 /s/ Christopher Lindop Christopher Lindop Chief Financial Officer Exhibit 32.1CERTIFICATIONPursuant 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), theundersigned officer of Quotient Limited, a company incorporated under the laws of Jersey, Channel Islands (the “Company”), does hereby certify, to suchofficer’s knowledge, that:The Annual Report on Form 10-K of the Company for the year ended March 31, 2018 (the “Form 10-K”) filed with the Securities and Exchange Commissionon the date hereof fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the informationcontained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 30, 2018 /s/ Franz Walt Franz Walt Chief Executive OfficerThis certification is being furnished and not filed, and shall not be incorporated into any document for any purpose, under the Securities Exchange Act of1934 or the Securities Act of 1933.Exhibit 32.2CERTIFICATIONPursuant 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), theundersigned officer of Quotient Limited, a company incorporated under the laws of Jersey, Channel Islands (the “Company”), does hereby certify, to suchofficer’s knowledge, that:The Annual Report on Form 10-K of the Company for the year ended March 31, 2018 (the “Form 10-K”) filed with the Securities and Exchange Commissionon the date hereof fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the informationcontained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: May 30, 2018 /s/ Christopher Lindop Christopher Lindop Chief Financial OfficerThis certification is being furnished and not filed, and shall not be incorporated into any document for any purpose, under the Securities Exchange Act of1934 or the Securities Act of 1933.

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