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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2009.
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ____________ to ____________
 Commission File Number: 333-72097
 NEOGENOMICS, INC.
 
 Nevada
    
    74-2897368(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)12701 Commonwealth Drive, Suite 9, Fort Myers, Florida
    
    33913(Address of principal executive offices)
    
    (Zip Code)
 (239) 768-0600
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company þ o þ




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TABLE OF CONTENTS
 PART I FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited)
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4.
    
    Controls and Procedures
    
    
    20Item 4T.
    
    Controls and Procedures
    
    
    20PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    21Item 1A.
    
    Risk Factors
    
    
    21Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3.
    
    Defaults Upon Senior Securities
    
    
    21Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    21Item 5.
    
    Other Information
    
    
    21Item 6.
    
    Exhibits
    
    
    22SIGNATURESEX-31.1EX-31.2EX-31.3EX-32.1
  2




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FORWARD-LOOKING STATEMENTS
   3




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 NEOGENOMICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
 September 30, 2009
    
    
    December 31, 2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    3,128,047
    
    
    $
    468,171Accounts receivable (net of allowance for doubtful accounts of $551,914
and $358,642, respectively)
    
    
    4,174,624
    
    
    
    2,913,531Inventories
    
    
    613,631
    
    
    
    491,459Other current assets
    
    
    714,278
    
    
    
    482,408Total current assets
    
    
    8,630,580
    
    
    
    4,355,569PROPERTY AND EQUIPMENT(net of accumulated depreciation of $2,416,445
and $1,602,594,respectively)
    
    
    4,180,162
    
    
    
    2,875,297OTHER ASSETS
    
    
    106,737
    
    
    
    64,509TOTAL ASSETS
    
    $
    12,917,479
    
    
    $
    7,295,375LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    2,106,696
    
    
    $
    1,512,427Accrued expenses and other liabilities
    
    
    1,200,988
    
    
    
    1,094,817Revolving credit line
    
    
    
    
    
    
    1,146,850Short-term portion of equipment capital leases
    
    
    995,932
    
    
    
    636,900Total current liabilities
    
    
    4,303,616
    
    
    
    4,390,994LONG TERM LIABILITIESLong-term portion of equipment capital leases
    
    
    1,566,344
    
    
    
    1,403,271TOTAL LIABILITIES
    
    
    5,869,960
    
    
    
    5,794,265STOCKHOLDERS EQUITYCommon stock, $.001 par value, (100,000,000 shares authorized; 37,160,639
and 32,117,008 shares issued and outstanding, respectively)
    
    
    37,160
    
    
    
    32,117Additional paid-in capital
    
    
    23,637,244
    
    
    
    17,381,810Accumulated deficit
    
    
    (16,626,885
    )
    
    
    (15,912,817
    )Total stockholders equity
    
    
    7,047,519
    
    
    
    1,501,110TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    12,917,479
    
    
    $
    7,295,375
  4




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NEOGENOMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 For the three months
    
    
    For the nine monthsended September 30,
    
    
    ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008NET REVENUE
    
    $
    7,296,800
    
    
    $
    5,050,796
    
    
    $
    21,669,645
    
    
    $
    14,094,959COST OF REVENUE
    
    
    3,672,289
    
    
    
    2,535,318
    
    
    
    10,146,766
    
    
    
    6,577,549GROSS PROFIT
    
    
    3,624,511
    
    
    
    2,515,478
    
    
    
    11,522,879
    
    
    
    7,517,410OPERATING EXPENSESGeneral and administrative
    
    
    2,457,978
    
    
    
    1,831,829
    
    
    
    7,013,326
    
    
    
    5,357,936Sales and marketing
    
    
    1,792,955
    
    
    
    803,779
    
    
    
    4,849,470
    
    
    
    2,348,348Interest (income) expense, net
    
    
    128,883
    
    
    
    74,995
    
    
    
    374,151
    
    
    
    199,336Total operating expenses
    
    
    4,379,816
    
    
    
    2,710,603
    
    
    
    12,236,947
    
    
    
    7,905,620NET INCOME (LOSS)
    
    $
    (755,305
    )
    
    $
    (195,125
    )
    
    $
    (714,068
    )
    
    $
    (388,210
    )NET INCOME (LOSS) PER SHARE Basic
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    ) Diluted
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    )WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING Basic
    
    
    36,000,083
    
    
    
    31,440,327
    
    
    
    33,782,925
    
    
    
    31,414,065 Diluted
    
    
    36,000,083
    
    
    
    31,440,327
    
    
    
    33,782,925
    
    
    
    31,414,065
  5




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NEOGENOMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited
 For the Nine Months Ended September 30,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (714,068
    )
    
    $
    (388,210
    )Adjustments to reconcile net income (loss) to net cash used in provided by
operating activities:Provision for bad debts
    
    
    1,358,744
    
    
    
    1,095,387Depreciation
    
    
    813,851
    
    
    
    512,913Amortization of debt issue costs
    
    
    46,554
    
    
    
    35,321Stock-based compensation
    
    
    295,429
    
    
    
    229,539Non-cash consulting expenses
    
    
    49,042
    
    
    
    99,813Changes in assets and liabilities, net:(Increase) decrease in accounts receivable, net of write-offs
    
    
    (2,619,838
    )
    
    
    (1,239,702
    )(Increase) decrease in inventories
    
    
    (122,171
    )
    
    
    (39,857
    )(Increase) decrease in pre-paid expenses
    
    
    (232,928
    )
    
    
    (392,900
    )(Increase) decrease in deposits
    
    
    (42,228
    )
    
    
    (14,512
    )Increase (decrease) in accounts payable and other liabilities
    
    
    121,713
    
    
    
    (79,446
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,045,900
    )
    
    
    (181,654
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchases of property and equipment
    
    
    (432,182
    )
    
    
    (370,218
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (432,182
    )
    
    
    (370,218
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from capital lease obligations
    
    
    96,890
    
    
    
    Advances on credit facility
    
    
    (1,146,850
    )
    
    
    1,176,221Repayment of capital leases
    
    
    (542,088
    )
    
    
    (244,612
    )Issuance of common stock and warrants for cash, net of transaction expenses
    
    
    5,730,006
    
    
    
    41,055NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    4,137,958
    
    
    
    972,664NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    2,659,876
    
    
    
    420,792CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    468,171
    
    
    
    210,573CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    3,128,047
    
    
    $
    631,365SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONInterest paid
    
    $
    335,242
    
    
    $
    171,606Income taxes paid
    
    $
    
    
    
    $
    NON-CASH INVESTING AND FINANCING ACTIVITIESEquipment leased under capital leases
    
    $
    1,064,194
    
    
    $
    538,761Equipment purchased and included in accounts payable at September 30
    
    $
    680,021
    
    
    $
    126,227Equipment purchased and payables settled with issuance of restricted common stock
    
    $
    186,000
    
    
    $
    
  6




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NEOGENOMICS, INC.
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 AS OF SEPTEMBER 30, 2009
 NOTE A  NATURE OF BUSINESS AND BASIS OF FINANCIAL STATEMENT PRESENTATION
 Nature of Business
  Basis of Presentation
     Net Income (Loss) Per Common Share
  7




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NOTE B  REVOLVING CREDIT AND SECURITY AGREEMENT
       8




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NOTE C  EQUIPMENT LEASE LINE
       NOTE D  COMMON STOCK PURCHASE AGREEMENT
   9




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NOTE E  RELATED PARTY TRANSACTIONS
      10




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NOTE F  STRATEGIC SUPPLY AGREEMENT
 in situ
       11




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NOTE G  COMMON STOCK PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT
   NOTE H  SUBSEQUENT EVENTS
 Wells Fargo Lease Agreement
   Suntrust Lease Agreement
   Employment Agreement
   12




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 NeoGenomics, Inc., a Nevada corporation (referred to individually as the Parent Company or
collectively with all of its subsidiaries as NeoGenomics or the Company in this Form 10-Q) is
the registrant for SEC reporting purposes. Our common stock is listed on the OTC Bulletin Board
under the symbol NGNM.
 Introduction
  Overview
  a)
    
    cytogenetics testing, which analyzes human chromosomes;b)
    
    Fluorescence In-Situ Hybridization (FISH) testing, which analyzes
abnormalities at the chromosomal and gene levels;c)
    
    flow cytometry testing, which analyzes gene expression of specific markers
inside cells and on cell surfaces;d)
    
    immunohistochemistry testing, which analyzes the distribution of tumor
antigens in specific cell and tissue types, ande)
    
    molecular testing which involves analysis of DNA and RNA to diagnose and
predict the clinical significance of various genetic sequence disorders.
  Our Focus
   13




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TM
 Seasonality
  Critical Accounting Policies
   Results of Operations for the Three and Nine Months Ended September 30, 2009 as Compared to the
Three and Nine Months Ended September 30, 2008
  For the three months ended
    
    For the nine months endedSeptember 30.
    
    September 30,2009
    
    2008
    
    2009
    
    2008NET REVENUE
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %COST OF REVENUE
    
    
    50
    %
    
    
    50
    %
    
    
    47
    %
    
    
    47
    %GROSS PROFIT
    
    
    50
    %
    
    
    50
    %
    
    
    53
    %
    
    
    53
    %OPERATING EXPENSES:General and administrative
    
    
    33
    %
    
    
    36
    %
    
    
    32
    %
    
    
    38
    %Sales and marketing
    
    
    25
    %
    
    
    16
    %
    
    
    22
    %
    
    
    17
    %Interest (income) expense, net
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %
    
    
    1
    %TOTAL OPERATING EXPENSES
    
    
    60
    %
    
    
    54
    %
    
    
    56
    %
    
    
    56
    %NET INCOME (LOSS)
    
    
    (10
    )%
    
    
    (4
    )%
    
    
    (3
    )%
    
    
    (3
    )%
 14




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Revenue
      Cost of Revenue
   15




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Sales and Marketing
  For the three months ended
    
    
    
    
    
    For the nine months endedSeptember 30.
    
    
    
    
    
    September 30,%
    
    
    
    
    
    
    
    
    
    %2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    ChangeSales and marketing
    
    $
    1,792,955
    
    
    $
    803,779
    
    
    
    123
    %
    
    $
    4,849,470
    
    
    $
    2,348,348
    
    
    
    107
    %As a % of revenue
    
    
    25
    %
    
    
    16
    %
    
    
    
    
    
    
    22
    %
    
    
    17
    %
    General and Administrative Expenses
  For the three months ended
    
    
    
    
    
    For the nine months endedSeptember 30.
    
    
    
    
    
    September 30,%
    
    
    
    
    
    
    
    
    
    %2009
    
    2008
    
    Change
    
    2009
    
    2008
    
    ChangeGeneral and administrative
    
    $
    2,457,978
    
    
    $
    1,831,829
    
    
    
    34
    %
    
    $
    7,013,326
    
    
    $
    5,357,936
    
    
    
    31
    %As a % of revenue
    
    
    33
    %
    
    
    36
    %
    
    
    
    
    
    
    32
    %
    
    
    38
    %
  16




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Interest Expense, net
  Net Income (Loss)
  Liquidity and Capital Resources
  17




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For the nine months endedSeptember 30.2009
    
    
    2008Net cash provided by (used in):Operating activities
    
    $
    (1,045,900
    )
    
    $
    (181,654
    )Investing activities
    
    
    (432,182
    )
    
    
    (370,219
    )Financing activities
    
    
    4,137,958
    
    
    
    972,664Net increase in cash and cash equivalents
    
    
    2,659,876
    
    
    
    420,792Cash and cash equivalents, beginning of period
    
    
    468,171
    
    
    
    210,573Cash and cash equivalents, end of period
    
    $
    3,128,047
    
    
    $
    631,365Working Capital (1), end of period
    
    $
    4,326,964
    
    
    $
    771,089
 
 (1)
    
    Defined as current assets - current liabilities.        18




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Capital Expenditures
  Subsequent Events
 Wells Fargo Lease Agreement
   Suntrust Lease Agreement
   Employment Agreement
  19




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ITEM 3  Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4  Controls and Procedures
  
 ITEM 4T  Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  20




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PART II  OTHER INFORMATION
 
 ITEM 1  LEGAL PROCEEDINGS
   
 ITEM 1A  RISK FACTORS
  
 ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3  DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5  OTHER INFORMATION
 None
 21




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ITEM 6  EXHIBITS
 EXHIBITNO.
    
    DESCRIPTION31.1
    
    
    
    Certification by Principal Executive Officer pursuant to Rule
13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 200231.2
    
    
    
    Certification by Principal Financial Officer pursuant to Rule
13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 200231.3
    
    
    
    Certification by Principal Accounting Officer pursuant to Rule
13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 200232.1
    
    
    
    Certification by Principal Executive Officer, Principal
Financial Officer and Principal Accounting Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
 22




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SIGNATURES
  Date: November 23, 2009
    NEOGENOMICS, INC.By:
    /s/ Douglas M. VanOortName:
    Douglas M. VanOortTitle:
    Executive Chairman and Chief Executive
OfficerBy:
    /s/ Steven C. JonesName:
    Steven C. JonesTitle:
    Acting Principal Financial OfficerBy:
    /s/ Jerome J. DvonchName:
    Jerome J. DvonchTitle:
    Director of Finance and  Principal
Accounting Officer