UNITED STATES


SECURITIES AND EXCHANGE
COMMISSION


Washington, D.C.
20549





FORM 10-Q





(Mark One)




x
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the quarterly period endedJune 30, 2009.





or





 ̈
            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.


(Exact name of registrant as specified
in its charter)





Nevada
                (State or other jurisdiction
      of
                incorporation or
      organization)
              74-2897368
                (I.R.S. Employer Identification
      No.)





12701 Commonwealth Drive, Suite 9,
      Fort Myers, Florida
              (Address of principal executive
      offices)
            33913
              (Zip
  Code)




(239)768-0600


(Registrant’s telephone number, includingarea code)





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 preceding 12 months (or for
such shorterperiod that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YesxNo ̈




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 and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit andpost such files).  Yes ̈No ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting 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 x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈No x





AsofAugust4, 2009, theregistrant had36,611,721shares of Common Stock, par value $0.001
per share outstanding.











TABLE
OF CONTENTS




FINANCIAL
INFORMATION




PART
      IItem
      1.
                  Financial
      Statements (unaudited)
                  
                  
                  4Item
      2.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  
                  
                  14Item
      3.
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  
                  
                  19Item
      4.
                  Controls
      and Procedures
                  
                  
                  19Item
      4T.
                  Controls
      and Procedures
                  
                  
                  19OTHER
      INFORMATIONPART
      IIItem
      1.
                  Legal
      Proceedings
                  
                  
                  20Item
      1A.
                  Risk
      Factors
                  
                  
                  20Item
      2.
                  Unregistered
      Sales of Equity Securities and Use of Proceeds
                  
                  
                  20Item
      3.
                  Defaults
      Upon Senior Securities
                  
                  
                  20Item
      4.
                  Submission
      of Matters to a Vote of Security Holders
                  
                  
                  20Item
      5.
                  Other
      Information
                  
                  
                  20Item
      6.
                  Exhibits
                  
                  
                  21SIGNATURES





2





FORWARD-LOOKING
STATEMENTS





The
information in this Quarterly Report on Form 10-Q contains “forward-looking
statements” relating to NeoGenomics, Inc., a Nevada corporation (referred to
individually as the “Parent Company” or collectively with all of its
subsidiaries as “NeoGenomics” or the “Company”) within the meaning of Section
27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), which are subject to the “safe harbor” created by those
sections.  These “forward looking statements” represent the Company’s
current expectations or beliefs including, but not limited to, statements
concerning the Company’s operations, performance, financial condition and
growth. For this purpose, any statements contained in this Form 10-Q that are
not statements of historical fact are forward-looking statements. Without
limiting the generality of the foregoing, words such as “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,”
“will,” “would” or the negative or other comparable terminology are intended to
identify forward-looking statements, although not all forward-looking statements
contain these identifying words. These statements by their nature involve
substantial risks and uncertainties, such as credit losses, dependence on
management and key personnel, variability of quarterly results, competition and
the ability of the Company to continue its growth strategy, certain of which are
beyond the Company’s control. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual
outcomes and results could differ materially from those indicated in the
forward-looking statements.





Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.





3





PART
I – FINANCIAL INFORMATION


Item
1.  Financial Statements


NEOGENOMICS,
INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(unaudited)








June 30,
                                  2009
                                
                                
                                December 31,
                                  2008ASSETSCURRENT
      ASSETSCash
      and cash equivalents
                                
                                $
                                697,722
                                
                                
                                $
                                468,171Accounts
      receivable (net of allowance for doubtful accounts of $541,387 and
      $358,642, respectively)
                                
                                
                                4,171,363
                                
                                
                                
                                2,913,531Inventories
                                
                                
                                598,612
                                
                                
                                
                                491,459Other
      current assets
                                
                                
                                635,272
                                
                                
                                
                                482,408Total
      current assets
                                
                                
                                6,102,969
                                
                                
                                
                                4,355,569PROPERTY AND EQUIPMENT
      (net of accumulated depreciation of $2,105,596 and
      $1,602,594,respectively)
                                
                                
                                3,190,587
                                
                                
                                
                                2,875,297OTHER
      ASSETS
                                
                                
                                88,283
                                
                                
                                
                                64,509TOTAL
      ASSETS
                                
                                $
                                9,381,839
                                
                                
                                $
                                7,295,375LIABILITIES AND STOCKHOLDERS’
      EQUITYCURRENT
      LIABILITIESAccounts
      payable
                                
                                $
                                1,554,015
                                
                                
                                $
                                1,512,427Accrued
      expenses and other liabilities
                                
                                
                                1,220,807
                                
                                
                                
                                1,094,817Revolving
      credit line
                                
                                
                                1,858,187
                                
                                
                                
                                1,146,850Short-term
      portion of equipment capital leases
                                
                                
                                870,052
                                
                                
                                
                                636,900Total
      current liabilities
                                
                                
                                5,503,061
                                
                                
                                
                                4,390,994LONG
      TERM LIABILITIESLong-term
      portion of equipment capital leases
                                
                                
                                1,530,946
                                
                                
                                
                                1,403,271TOTAL
      LIABILITIES
                                
                                
                                7,034,007
                                
                                
                                
                                5,794,265STOCKHOLDERS’
      EQUITYCommon
      stock, $.001 par value, (100,000,000 shares authorized;
      33,077,424
                                  and
      32,117,237 shares issued and outstanding, respectively)
                                
                                
                                33,077
                                
                                
                                
                                32,117Additional
      paid-in capital
                                
                                
                                18,186,334
                                
                                
                                
                                17,381,810Accumulated
      deficit
                                
                                
                                (15,871,579
                                )
                                
                                
                                (15,912,817
                                )Total stockholders’ equity
                                
                                
                                2,347,832
                                
                                
                                
                                1,501,110TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                                
                                $
                                9,381,839
                                
                                
                                $
                                7,295,375





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.





4





NEOGENOMICS,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited)




FortheThree-Months
                                                                    EndedJune30,
                                                                  
                                                                  
                                                                  FortheSix-Months
                                                                    EndedJune30,2009
                                                                  
                                                                  
                                                                  
                                                                  2008
                                                                  
                                                                  
                                                                  
                                                                  2009
                                                                  
                                                                  
                                                                  
                                                                  2008NET
      REVENUE
                                                                  
                                                                  $
                                                                  7,459,326
                                                                  
                                                                  
                                                                  $
                                                                  4,881,402
                                                                  
                                                                  
                                                                  $
                                                                  14,372,846
                                                                  
                                                                  
                                                                  $
                                                                  9,044,164COST
      OF REVENUE
                                                                  
                                                                  
                                                                  3,384,035
                                                                  
                                                                  
                                                                  
                                                                  2,183,758
                                                                  
                                                                  
                                                                  
                                                                  6,474,477
                                                                  
                                                                  
                                                                  
                                                                  4,042,231GROSS
      PROFIT
                                                                  
                                                                  
                                                                  4,075,291
                                                                  
                                                                  
                                                                  
                                                                  2,697,644
                                                                  
                                                                  
                                                                  
                                                                  7,898,369
                                                                  
                                                                  
                                                                  
                                                                  5,001,933OPERATING
      EXPENSESSelling,
      General
      and administrative
                                                                  
                                                                  
                                                                  3,936,779
                                                                  
                                                                  
                                                                  
                                                                  2,556,121
                                                                  
                                                                  
                                                                  
                                                                  7,611,863
                                                                  
                                                                  
                                                                  
                                                                  5,070,676Interest
      expense, net
                                                                  
                                                                  
                                                                  130,452
                                                                  
                                                                  
                                                                  
                                                                  69,246
                                                                  
                                                                  
                                                                  
                                                                  245,268
                                                                  
                                                                  
                                                                  
                                                                  124,342Total
      operating expenses
                                                                  
                                                                  
                                                                  4,067,231
                                                                  
                                                                  
                                                                  
                                                                  2,625,367
                                                                  
                                                                  
                                                                  
                                                                  7,857,131
                                                                  
                                                                  
                                                                  
                                                                  5,195,018NET
      INCOME (LOSS)
                                                                  
                                                                  $
                                                                  8,060
                                                                  
                                                                  
                                                                  $
                                                                  72,277
                                                                  
                                                                  
                                                                  $
                                                                  41,238
                                                                  
                                                                  
                                                                  $
                                                                  (193,085
                                                                  )NET
      INCOME (LOSS) PER SHARE-
      Basic
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  (0.01
                                                                  )-
      Diluted
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  0.00
                                                                  
                                                                  
                                                                  $
                                                                  (0.01
                                                                  )WEIGHTED
      AVERAGE NUMBER
                                                                    OF
      SHARES OUTSTANDING-Basic
                                                                  
                                                                  
                                                                  33,066,941
                                                                  
                                                                  
                                                                  
                                                                  31,367,144
                                                                  
                                                                  
                                                                  
                                                                  32,655,972
                                                                  
                                                                  
                                                                  
                                                                  31,383,824-
      Diluted
                                                                  
                                                                  
                                                                  38,485,914
                                                                  
                                                                  
                                                                  
                                                                  35,727,192
                                                                  
                                                                  
                                                                  
                                                                  36,864,793
                                                                  
                                                                  
                                                                  
                                                                  31,383,824





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.





5





NEOGENOMICS,
INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited)







For the Six MonthsEnded June 30,2009
                          
                          
                          2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      income (loss)
                          
                          $
                          41,238
                          
                          
                          $
                          (193,085
                          )Adjustments
      to reconcile net income (loss) to net cash used in provided by operating
      activities:Provision
      for bad debts
                          
                          
                          934,478
                          
                          
                          
                          815,011Depreciation
                          
                          
                          503,002
                          
                          
                          
                          323,720Amortization
      of debt issue costs
                          
                          
                          29,900
                          
                          
                          
                          22,076Stock-based
      compensation
                          
                          
                          170,694
                          
                          
                          
                          124,539Non-cash
      consulting expenses
                          
                          
                          30,346
                          
                          
                          
                          67,042Changes
      in assets and liabilities, net:(Increase)
      decrease in accounts receivable, net of write-offs
                          
                          
                          (2,192,310
                          )
                          
                          
                          (1,220,083
                          )(Increase)
      decrease in inventories
                          
                          
                          (107,153
                          )
                          
                          
                          (59,508
                          )(Increase)
      decrease in pre-paid expenses
                          
                          
                          (182,764
                          )
                          
                          
                          (368,117
                          )(Increase)
      decrease in deposits
                          
                          
                          (23,774
                          )
                          
                          
                          5,009Increase
      (decrease) in accounts payable and other liabilities
                          
                          
                          263,765
                          
                          
                          
                          (38,205
                          )NET
      CASH USED IN OPERATING ACTIVITIES
                          
                          
                          (532,578
                          )
                          
                          
                          (521,601
                          )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchases
      of property and equipment
                          
                          
                          (139,446
                          )
                          
                          
                          (170,764
                          )NET
      CASH USED IN INVESTING ACTIVITIES
                          
                          
                          (139,446
                          )
                          
                          
                          (170,764
                          )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from capital lease obligations
                          
                          
                          96,890
                          
                          
                          
                          -Advances
      on credit facility
                          
                          
                          711,336
                          
                          
                          
                          1,053,471Repayment
      of capital leases
                          
                          
                          (325,095
                          )
                          
                          
                          (139,905
                          )Issuance
      of common stock and warrants for cash, net of transaction
      expenses
                          
                          
                          418,444
                          
                          
                          
                          10,413NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                          
                          
                          901,575
                          
                          
                          
                          923,979NET
      INCREASE IN CASH AND CASH EQUIVALENTS
                          
                          
                          229,551
                          
                          
                          
                          231,614CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                          
                          
                          468,171
                          
                          
                          
                          210,573CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                          
                          $
                          697,722
                          
                          
                          $
                          442,187SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONInterest
      paid
                          
                          $
                          214,258
                          
                          
                          $
                          107,820Income
      taxes paid
                          
                          $
                          -
                          
                          
                          $
                          -NON-CASH
      INVESTING AND FINANCING ACTIVITIESEquipment
      leased under capital leases
                          
                          $
                          685,923
                          
                          
                          $
                          234,833Equipment
      purchased and included in accounts payable at June 30
                          
                          $
                          5,107
                          
                          
                          $
                          165,653Equipment
      purchased and payables settled with issuance of restricted common
      stock
                          
                          $
                          186,000
                          
                          
                          $
                          -





The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.





6





NEOGENOMICS,
INC.


NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


AS
OF JUNE 30, 2009





NOTE
A – NATURE OF BUSINESS AND BASIS OF FINANCIAL STATEMENT
PRESENTATION





Nature of
Business





NeoGenomics,
Inc., a Nevada corporation (the “Parent”), and its subsidiary, NeoGenomics
Laboratories, Inc. (formerly known as NeoGenomics, Inc.), a Florida corporation
(“NEO”, “NeoGenomics Laboratories” or the “Subsidiary”) (collectively referred
to as “we”, “us”, “our”, “NeoGenomics”, or the “Company”), operates as a
certified “high complexity” clinical laboratory in accordance with the federal
government’s Clinical Laboratory Improvement Amendments of 1988 (“CLIA”), and is
dedicated to the delivery of clinical diagnostic services to pathologists,
oncologists, urologists, hospitals, and other laboratories throughout the United
States.





Basis of
Presentation





The
accompanying condensed consolidated financial statements include the accounts of
the Parent and the Subsidiary.  All significant intercompany accounts
and balances have been eliminated in consolidation.





The
accompanying condensed consolidated financial statements of the Company are
unaudited and include all adjustments, in the opinion of management, which are
necessary to make the financial statements not misleading.  Except as
otherwise disclosed, all such adjustments are of a normal recurring nature.
Interim results are not necessarily indicative of results for a full
year.





The
interim condensed consolidated financial statements and notes are presented in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not contain certain information included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008. Therefore, the
interim condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company’s annual report.





Net Income (Loss) Per Common
Share





We
compute net income (loss) per share in accordance with Financial Accounting
Standards Statement No. 128 “Earnings per Share” (“SFAS 128”) and Securities and
Exchange Commission (“SEC”) Staff Accounting Bulletin No. 98 (“SAB
98”).  Under the provisions of SFAS 128 and SAB 98, basic net income
(loss) per share is computed by dividing the net income (loss) available to
common stockholders by the weighted average number of common shares outstanding
during the period.  Diluted net income (loss) per share is computed by
dividing the net income (loss) for the period by the weighted average number of
common and common equivalent shares outstanding, using the treasury stock
method, during the period.  Equivalent shares consist of employee
stock options and certain warrants issued to consultants and other providers of
financing to the Company that are in-the-money based on the weighted average
closing share price for the period.  Under the treasury stock method,
the number of in-the-money shares that are considered outstanding for this
calculation is reduced by the number of common shares that theoretically could
have been re-purchased by the Company with the aggregate exercise proceeds of
such warrant and options exercises if such shares were re-purchased at the
average market price for the period.




7




The
following table presents the components of basic and diluted earnings per
share:
 
 For theThree-Months
                      Ended June
    30,
                    
                    For the Six-Months
                      Ended June
    30,2009
                    
                    2008
                    
                    2009
                    
                    
                    2008Numerator:Net Income
                    
                    $
                    8,060
                    
                    
                    $
                    72,277
                    
                    
                    $
                    41,238
                    
                    
                    $
                    (193,085
                    )Denominator:Weighted average shares of common
      stock outstanding, net - basic
                    
                    
                    33,066,941
                    
                    
                    
                    31,367,144
                    
                    
                    
                    32,655,972
                    
                    
                    
                    31,383,824Dilutive effect of common
      equivalent shares- Options
                    
                    
                    2,019,288
                    
                    
                    
                    1,281,967
                    
                    
                    
                    1,161,980
                    
                    
                    
                    -- Warrants
                    
                    
                    3,399,685
                    
                    
                    
                    3,076,081
                    
                    
                    
                    3,046,841
                    
                    
                    
                    -Weighted average shares of common
      stock outstanding, net - diluted
                    
                    
                    38,485,914
                    
                    
                    
                    35,727,192
                    
                    
                    
                    36,864,793
                    
                    
                    
                    31,383,824Net income per
      share:Basic
                    
                    $
                    0.00
                    
                    
                    $
                    0.00
                    
                    
                    $
                    0.00
                    
                    
                    $
                    (0.01
                    )Diluted
                    
                    $
                    0.00
                    
                    
                    $
                    0.00
                    
                    
                    $
                    0.00
                    
                    
                    $
                    (0.01
                    )
 
 There
were no common equivalent shares included in the calculation of diluted earnings
per share for the six month period ended June 30, 2008 because the company had a
net loss for such period and therefore such common equivalent shares were
anti-dilutive.
 
 The
following table presents the total outstanding stock options and warrants to
purchase common shares as of the periods indicated, without respect to whether
such options or warrants are in-the-money or whether or not they have
vested:
  June 30,
                          2009
                        
                        June 30,
                          2008Stock optionsoutstanding
                        
                        
                        4,900,000
                        
                        
                        
                        3,805,044Warrantsto purchase common stock
      outstanding
                        
                        
                        6,512,755
                        
                        
                        
                        5,805,363Total stock options and
      warrantsoutstanding
                        
                        
                        11,412,755
                        
                        
                        
                        9,610,407




8




NOTE
B – LIQUIDITY





Our consolidated financial statements
are prepared using accounting principles generally accepted in the United States
of America applicable to a going concern, which contemplates the realization of
assets and liquidation of liabilities in the normal course of business.   AtJune30, 2009 we had stockholders’equity of approximately $2.3
million.





On
November 5, 2008, we entered into a common stock purchase agreement (the
“Purchase Agreement”) with Fusion Capital Fund II, LLC, an Illinois limited
liability company (“Fusion”).  The Purchase Agreement, which has a term of
30 months, provides for the future funding of up to $8.0 million from sales of
our common stock to Fusion on a when and if needed basis as determined by us in
our sole discretion, depending on, among other things, the market price of our
common stock (see Note E).





On February 1, 2008, we entered into a
revolving credit facility with CapitalSource Finance, LLC(“CapitalSource”),which allows us to borrow up to
$3.0millionbased on a formula which is tied to our eligible
accounts receivable that are aged less than 150 days(see NoteC).





On July 24, 2009 (see Note G
“Subsequent
Events”),we enteredinto a Common Stock Purchase Agreement
with Abbott Laboratories, an Illinois corporation(“Abbott”), and consummated the issuance and sale
to Abbott, for an aggregate purchase price of $4.8 million, of 3,500,000 shares of common
stock, $0.001 par value per
share.





We believe we have adequate resources to
meet our operating commitments for the nexttwelve monthsand accordingly,our consolidated financial statements
do not include any adjustments relating to the recoverability and classification
of recorded asset amounts or the amounts and classification of liabilities that
might be necessaryshould
we be unable to continue as a goingconcern.




NOTE
C – REVOLVING CREDIT AND SECURITY AGREEMENT





On
February 1, 2008, our subsidiary, NeoGenomics Laboratories, Inc., a Florida
corporation (“Borrower”), entered into a Revolving Credit and Security Agreement
(the “Credit Facility” or “Credit Agreement”) with CapitalSource, the terms of
which provide for borrowings based on eligible accounts receivable up to a
maximum borrowing of $3.0 million, as defined in the Credit
Agreement.  Subject to the provisions of the Credit Agreement,
CapitalSource shall make advances to us from time to time during the three year
term, and the Credit Facility may be drawn, repaid and redrawn from time to time
as permitted under the Credit Agreement.





Interest
on outstanding advances under the Credit Facility are payable monthly in arrears
on the first day of each calendar month at an annual rate based on the one-month
LIBOR plus 3.25%, subject to a LIBOR floor of 3.14%.  At June 30,
2009, the effective rate of interest was 6.39%.




To secure
the payment and performance in full of the Obligations (as defined in the Credit
Agreement), we granted CapitalSource a continuing security interest in and lien
upon, all of our rights, title and interest in and to our Accounts (as defined
in the Credit Agreement), which primarily consist of accounts receivable and
cash balances held in lock box accounts.  Furthermore, pursuant to the
Credit Agreement, the Parent guaranteed the punctual payment when due, whether
at stated maturity, by acceleration or otherwise, of all of the Obligations. The
Parent guaranty is a continuing guarantee and shall remain in force and effect
until the indefeasible cash payment in full of the Guaranteed Obligations (as
defined in the Credit Agreement) and all other amounts payable under the Credit
Agreement.





On
November 3, 2008, the Company and CapitalSource signed a first amendment to the
Credit Agreement.  This amendment increased the amount allowable under the
Credit Agreement to pay towards the settlement of the US Labs lawsuit to
$250,000 from $100,000 and documented other administrative agreements between
NeoGenomics and CapitalSource.





On April 14, 2009, the Parent Company,
NeoGenomics Laboratories, Inc. (the wholly owned subsidiary of the Parent
Company)(“Borrower”) and CapitalSource(as agent for CapitalSource Bank)entered into a Second
Amendment to Revolving Credit and Security Agreement (the “Second Amendment”).  The Second Amendment,
among other things, amends that certain Revolving Credit and Security Agreement dated February 1, 2008 as
amended by that certain First Amendment to Revolving Credit and Security
Agreement dated November 3, 2008 (as amended, the “Loan Agreement”) to (i) provide that through December
31, 2009, the Borrower must maintain Minimum Liquidity (as defined in the Loan
Agreement) of not less than $500,000, (ii) amend the definitions of
“Fixed Charge Coverage
Ratio”and “Fixed Charges”, (iii) amend the definition of
“Permitted
Indebtedness”to increase
the amount of permitted capitalized lease obligations and indebtedness
incurred to purchase goods secured by certain purchase money liens and (iv)
amend and update certain representations, warranties and
schedules.  In addition, pursuant to the Second Amendment,
CapitalSource waived the following events of default under the
Loan Agreement:  (i) the failure of the Borrower to comply with the
fixed charge coverage ratio covenant for the test period ending December 31,
2008, (ii) the failure of the Borrower to notify CapitalSource of thechange of Borrower’s name to NeoGenomics Laboratories,
Inc.and to obtain
CapitalSource’s prior consent to the related amendment
to Borrower’s Articles of Incorporation,(iii) the failure of the
Parent Company and the Borrower to obtain CapitalSource’s prior written consent to the amendment of
the Parent Company’s bylaws to allow for the size of the
Parent Company’s Board of Directors to be increased to
eight members and (iv)the
failure of the Borrower to notify CapitalSource of the filing of an
immaterialcomplaint by the
Borrower against a former employee of the Borrower.   The Company paid
CapitalSource Bank a $25,000 amendment fee in connection with the Second
Amendment.





9


On June
30, 2009, the available credit under the Credit Facility was approximately $1.1
million and the outstanding borrowing was approximately $1.9 million after
netting of $35,355 in compensating cash on hand.





NOTE
D – EQUIPMENT LEASE LINE





On
November 5, 2008, the Subsidiary entered into a Master Lease Agreement (the
“Lease Agreement”) with Leasing Technologies International, Inc
(“LTI”).  The Lease Agreement establishes the general terms and
conditions pursuant to which the Subsidiary may lease equipment pursuant to a
$1.0 million lease line.  Advances under the lease line may be made
for one year by executing equipment schedules for each advance.  The
lease term of any equipment schedules issued under the lease line will be for 36
months.  The lease rate factor applicable for each equipment schedule
is 0.0327/month.  If the Subsidiary makes use of the entire lease
line, the monthly rent would be $32,700.  Monthly rent for the leased
equipment is payable in advance on the first day of each month. The obligations
of the Subsidiary are guaranteed by the Parent Company.  At the end of
the term of each equipment schedule the Subsidiary may:  (a) renew the
lease with respect to such equipment for an additional 12 months at fair market
value; (b) purchase the equipment at fair market value, which price will not be
less than 10% of cost nor more than 14% of cost; (c) extend the term for an
additional six months at 35% of the monthly rent paid by the lessee during the
initial term, after which the equipment may be purchased for the lesser of fair
market value or 8% of cost; or (d) return the equipment subject to a remarketing
charge equal to 6% of cost.




On
December 31, 2008, the Company entered into Lease Schedule No. 1 of the Lease
Agreement with LTI for $437,300 which was funded to two vendors for lab
equipment, which is included in the amount of equipment capital lease
obligations in the accompanying consolidated balance sheet.





On May
22, 2009, the Company entered into Lease Schedule No. 2 of the Lease Agreement
with LTI for $442,300 which was funded to two vendors for lab and computer
equipment.  As of June 30, 2009, we had the ability to receive
additional advances of $120,400 under the Lease Agreement.





NOTE
E – COMMON STOCK PURCHASE AGREEMENT





On
November 5, 2008, we entered into a common stock purchase agreement (the “Stock
Agreement”) with Fusion Capital Fund II, LLC an Illinois limited liability
company (“Fusion”).  The Stock Agreement, which has a term of 30 months,
provides for the future funding of up to $8.0 million from sales of our common
stock to Fusion on a when and if needed basis as determined by us in our sole
discretion.  In consideration for entering into this Stock Agreement, on
October 10, 2008, we issued to Fusion 17,500 shares of our common stock (valued
at $14,700 on the date of issuance) and $17,500 as a due diligence expense
reimbursement.  In addition, on November 5, 2008, we issued to Fusion
400,000 shares of our common stock (valued at $288,000 on the date of issuance)
as a commitment fee.  Concurrently with entering into the Stock Agreement,
we entered into a registration rights agreement with Fusion.  Under the
registration rights agreement, we agreed to file a registration statement with
the SEC covering the 417,500 shares that have already been issued to Fusion and
at least 3.0 million shares that may be issued to Fusion under the Stock
Agreement.  Presently, we expect to sell no more than the initial 3.0
million shares to Fusion during the term of this Stock Agreement.  The
Company filed a registration statement on Form S-1 on November 28, 2008, on
February 5, 2009 the registration statement became effective and on April 28,
2009 we filed Post Effective Amendment No 1 to the registration statement which
became effective on May 8, 2009.




10


Under the
Stock Agreement we have the right to sell to Fusion shares of our common stock
from time to time in amounts between $50,000 and $1.0 million, depending on the
market price of our common stock.  The purchase price of the shares related
to any future funding under the Stock Agreement will be based on the prevailing
market prices of our stock at the time of such sales without any fixed discount,
and the Company will control the timing and amount of any sales of shares to
Fusion.  Fusion shall not have the right or the obligation to purchase any
shares of our common stock on any business day that the price of our common
stock is below $0.45 per share.  The Stock Agreement may be terminated by
us at any time at our discretion without any cost to us.  There are no
negative covenants, restrictions on future funding from other sources,
penalties, further fees or liquidated damages in the
agreement.




Given our
current liquidity position from cash on hand and our availability under our
Credit Facility with CapitalSource, we have no immediate plans to issue common
stock under the Stock Agreement. If and when we do elect to sell shares to
Fusion under this agreement, we expect to do so opportunistically and only under
conditions deemed favorable by the Company.  Any proceeds received by the
Company from sales under the Stock Agreement will be used for general corporate
purposes, working capital, and/or for expansion activities.





NOTE
F – RELATED PARTY TRANSACTIONS





During
the six months ended June 30, 2009 and 2008, Steven C. Jones, a director of the
Company, earned approximately $107,000 and $107,000, respectively, for various
consulting work performed in connection with his duties as Acting Principal
Financial Officer.





During
the six months ended June 30, 2009 and 2008, George O’Leary, a director of the
Company, earned $37,100 and $9,500, respectively, for various consulting work
performed for the Company.





On March
11, 2005, we entered into an agreement with HCSS, LLC (“HCSS”) and eTelenext,
Inc. (“eTelenext”) to enable NeoGenomics to use eTelenext’s Accessioning
Application, AP Anywhere Application and CMQ Application.  HCSS is a
holding company created to build a small laboratory network for the 50 small
commercial genetics laboratories in the United States.  HCSS is owned
66.7% by Dr. Michael T. Dent, a member of our Board of Directors.




On June
18, 2009 HCSS and the Company entered into a new Software Development, License
and Support Agreement to use recently upgraded applications.  The
estimated costs for the development and migration phase are anticipated to be
between $66,000 and $75,000 and are expected to be completed in six
months.  This agreement has an initial term of 5 years from the date
of acceptance and calls for monthly fees of $8,000-$12,000 during the
term.  During the six months ended June 30, 2009 and 2008, HCSS earned
approximately $59,000 and approximately $47,000, respectively, for transaction
fees related to completed tests.





On
September 30, 2008, the Company entered into a master lease agreement (the
“Master Lease”) with Gulf Pointe Capital, LLC (“Gulf Pointe”) which allows us to
obtain lease capital from time to time up to an aggregate of $130,000 of lease
financing.  The Company entered into the Master Lease after it was
determined that the lease facility with LTI described in Note D would not allow
for the leasing of certain used and other types of
equipment.    The terms under this lease are consistent with
the terms of our other lease arrangements. Three members of our Board of
Directors Steven Jones, Peter Petersen and Marvin Jaffe, are affiliated with
Gulf Pointe and recused themselves from both sides of all negotiations
concerning this transaction.  In consideration for entering into the
Master Lease with Gulf Pointe, the Company issued a warrant to purchase 32,475
shares of common stock to Gulf Pointe with an exercise price of $1.08 and a five
year term.  Such warrant vests 25% on issuance and then on a pro rata
basis as amounts are drawn under the Master Lease.  The warrant was
valued at approximately $11,000 using the Black-Scholes option pricing model, andthe warrant
cost is being expensed as it vests. At the end of the term of any lease schedule
under the Master Lease, the Company’s options are as follows:  (a)
purchase not less than all of the equipment for its then fair market value not
to exceed 15% of the original equipment cost, (b) extend the lease term for a
minimum of six months, or (c) return not less than all the equipment at the
conclusion of the lease term.  On September 30, 2008, we also entered
into the first lease schedule under the Master Lease which provided for the
sale/leaseback of approximately $130,000 of used laboratory equipment (“Lease
Schedule No. 1”).   Lease Schedule No. 1 has a 30 month term and
a lease rate factor of 0.0397/month, which equates to monthly payments of $5,155
during the term.





11


On
February 9, 2009, we amended our Master Lease with Gulf Pointe to increase the
maximum size of the facility to $250,000.   As part of this
amendment, we terminated the original warrant agreement, dated September 30,
2008, and replaced it with a new warrant to purchase 83,333 shares of our common
stock.  Such new warrant has a five year term, an exercise price of
$0.75/share and the same vesting schedule as the original
warrant.  The replacement warrant was valued using the Black-Scholes
option pricing model and the value did not materially differ from the valuation
of the original warrant it replaced.   On February 9, 2009, we
also entered into a second schedule under the Master Lease for the
sale/leaseback of approximately $118,000 of used laboratory equipment (“Lease
Schedule No. 2”).  Lease Schedule No. 2 was entered into after it was
determined that LTI was unable to consummate this transaction under the lease
facility described in Note D.  Lease Schedule No. 2 has a 30 month
term at the same lease rate factor per month as Lease Schedule No. 1, which
equates to monthly payments of $4,690 during the term.





NOTE
G – SUBSEQUENT EVENTS





Strategic Supply
Agreement





On July
24, 2009, NeoGenomics Laboratories and Abbott Molecular Inc., a Delaware
corporation (“Abbott Molecular”), entered into a Strategic Supply Agreement (the
“Supply Agreement”).  The Supply Agreement, among other things,
provides for Abbott Molecular to supply materials with which NeoGenomics intends
to develop its own FISH (fluorescence in situ hybridization)-based
test for the diagnosis of malignant melanoma in skin biopsy specimens (excluding
subtyping) (the “Melanoma LDT”).





Pursuant
to the terms of the Supply Agreement, Abbott Molecular has agreed to supply
NeoGenomics with such of Abbott Molecular’s analyte specific reagents (“ASRs”)
that NeoGenomics may request for the purpose of NeoGenomics’ evaluation and
determination as to which ASRs to include in its Melanoma LDT.  Once
the ASRs have been identified by NeoGenomics, Abbott Molecular has agreed to
supply such ASRs (subject to certain limitations) to NeoGenomics.  If
NeoGenomics identifies for inclusion in the Melanoma LDT one or more ASRs that
are not currently marketed or sold commercially by Abbott Molecular as
individual stand-alone products, then the Supply Agreement provides that Abbott
Molecular will supply such ASRs to NeoGenomics on an exclusive basis in the
United States and Puerto Rico (the “Exclusive ASRs”), provided that Abbott
Molecular may also supply such exclusive ASRs to certain of its academic
collaborators for research and limited clinical purposes.  Abbott
Molecular’s obligation to supply the Exclusive ASRs on an exclusive basis is
subject to NeoGenomics meeting certain revenue thresholds with respect to the
Melanoma LDT.  Except for the ASRs supplied for evaluation purposes
(which are to be supplied at no cost), the Supply Agreement provides that the
price of the ASRs supplied by Abbott Molecular will include both a base and a
premium component.




In the
event that Abbott Molecular obtains FDA approval for its own in vitro diagnostic
test for aid in diagnosis of malignant melanoma in skin biopsy specimens
(excluding subtyping), the Supply Agreement contemplates a means by which
NeoGenomics may offer such FDA-approved test to its customers instead of the
Melanoma LDT.





Pursuant
to the Supply Agreement, Abbott Molecular also granted to NeoGenomics a first
right to develop two additional laboratory developed tests relating to certain
specified disease states using Abbott Molecular ASRs or other
products.





12


The
initial term of the Supply Agreement expires on December 31, 2019. The Supply
Agreement also contemplates two year renewal terms under certain
circumstances.  The parties may terminate the Supply Agreement prior
to the expiration of the term under certain circumstances.





The
Supply Agreement provides (subject to certain limitations) that Abbott Molecular
may convert the Supply Agreement into a non-exclusive agreement or terminate the
Supply Agreement if NeoGenomics does not develop and launch the Melanoma LDT
within six (6) months after the date on which Abbott Molecular supplies ASRs
(other than ASRs supplied for evaluation purposes) to NeoGenomics.





Abbott
Molecular may terminate the Supply Agreement following a change of control
involving NeoGenomics and certain designated companies.  In such event
Abbott Molecular would pay to NeoGenomics (or its successor) a termination
payment based upon a pre-defined formula.





Common Stock Purchase
Agreement and Registration Rights Agreement





On July
24, 2009, NeoGenomics, Inc. entered into a Common Stock Purchase Agreement (the
“Common Stock Purchase Agreement”) with Abbott Laboratories, an Illinois
corporation (“Abbott”), and consummated the issuance and sale to Abbott, for an
aggregate purchase price of $4,767,000, of 3,500,000 shares of common stock,
$0.001 par value per share (the “Shares”).  Pursuant to the terms of
the Common Stock Purchase Agreement, Abbott is prohibited from selling or
otherwise transferring the Shares until January 20, 2010.





On July
24, 2009, NeoGenomics, Inc. and Abbott also entered into a Registration Rights
Agreement (the “Registration Rights Agreement”) that, among other things, grants
certain demand and piggyback registration rights to Abbott with respect to the
Shares.





Employment
Agreement





On July
21, 2009, the Board of Directors of the Company appointed Grant Carlson, age 50,
to the position of Vice President of Sales and Marketing, as previously disclosed, pursuant
to a Current Report on Form
8-K filed with the Securities and Exchange Commission on July 30,
2009.





END OF
FINANCIAL STATEMENTS.





13





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





The
following discussion and analysis should be read in conjunction with the
unaudited consolidated condensed financial statements, and the notes thereto
included herein. The information contained below includes statements of the
Company’s or management’s beliefs, expectations, hopes, goals and plans that, if
not historical, are forward-looking statements subject to certain risks and
uncertainties that could cause actual results to differ materially from those
anticipated in the forward-looking statements. For a discussion on
forward-looking statements, see the information set forth in the introductory
note to this Quarterly Report on Form 10-Q under the caption “Forward Looking
Statements”, which information is incorporated herein by reference.





Critical Accounting
Policies





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires us to make estimates and
assumptions and select accounting policies that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.





While
many operational aspects of our business are subject to complex federal, state
and local regulations, the accounting for our business is generally
straightforward with net revenues primarily recognized upon completion of the
testing process. Our revenues are primarily comprised of laboratory tests, and
approximately one-half of total operating costs and expenses consist of employee
compensation and benefits. Due to the nature of our business, several of our
accounting policies involve significant estimates and judgments. These
accounting policies have been described in our Annual Report on Form 10-K for
the year ended December 31, 2008, and there have been no material changes in the
six months ended June 30, 2009.





Overview





NeoGenomics
operates a network of cancer-focused testing laboratories whose mission is to
improve patient care through exceptional cancer genetic diagnostic
services.  Our vision is to become America’s premier cancer testing
laboratory by delivering uncompromising quality, exceptional service and
innovative products and solutions. The Company’s laboratory network currently
offers the following types of testing services:





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, and




e)  molecular
      testing which involves analysis of DNA and RNA to diagnose and predict the
      clinical significance of various genetic sequence
    disorders.




All of
these testing services are widely utilized in the diagnosis, prognosis, and
prediction for response to therapy of various types of cancers.





14





Results of Operations for
the Three and Six Months Ended June 30, 2009 as Compared to the Three and Six
Months Ended June 30, 2008





Revenue





Revenues
increased approximately 53%, or $2.5 million, to $7.4 million for the three
months ended June 30, 2009 as compared to $4.9 million for the three months
ended June 30, 2008.  For the six months ended June 30, 2009, revenues
increased approximately 59%, or $5.3 million, to $14.3 million as compared to
$9.0 million for the six months ended June 30, 2008. The revenue increase is the
result of increased acceptance of our product offerings and our competitive
turnaround times resulting in new clients.





Test
volume increased approximately 43%, or 3,410, to 11,316 for the three months
ended June 30, 2009 as compared to 7,906 for the three months ended June 30,
2008.  For the six months ended June 30, 2009, test volume increased
approximately 49%, or 7,108, to 21,773 as compared to 14,665 for the six months
ended June 30, 2008.  Average revenue per test increased approximately
7%, or $42 to $659 for the three months ended June 30, 2009 as compared to $617
for the three months ended June 30, 2008.  For the six months ended
June 30, 2009, average revenue per test increased approximately 7% or $43 to
$660 as compared to $617 for the six months ended June 30, 2008. The increase in
average revenue per test is primarily the result of certain Medicare fee
schedule increases in 2009 for a number of our tests and to a lesser extent
price increases to client bill customers based on the increase in the Medicare
fee schedule and changes in our product and payer mixes.  Revenues per
test are a function of both the nature of the test and the payer (Medicare,
Medicaid, third party insurer, institutional client etc.).





Our
policy is to record as revenue the amounts that we expect to collect based on
published or contracted amounts and/or prior experience with the
payer.   We have established a reserve for uncollectible amounts
based on estimates of what we will collect from: a) third-party payers with whom
we do not have a contractual arrangement or sufficient experience to accurately
estimate the amount of reimbursement we will receive, b) co-payments directly
from patients, and c) those procedures that are not covered by insurance or
other third party payers.   The Company’s allowance for doubtful
accounts increased 51%, or approximately $183,000 to $541,000, as compared to
$358,000 at December 31, 2008.  The allowance for doubtful accounts
was approximately 11.5% and 11.0% of accounts receivables on June 30, 2009 and
December 31, 2008, respectively.





Cost of
Revenue





Cost of
revenue includes payroll and payroll related costs for performing tests,
depreciation of laboratory equipment, rent for laboratory facilities, laboratory
reagents, probes and supplies, and delivery and courier costs relating to the
transportation of specimens to be tested.





Cost of
revenue increased approximately 55%, or $1.2 million, to $3.4 million for the
three months ended June 30, 2009 as compared to $2.2 million for the three
months ended June 30, 2008.  For the six months ended June 30, 2009,
cost of revenue increased approximately 60%, or $2.4 million, to $6.4 million as
compared to $4.0 million for the six months ended June 30, 2008.  The
increase was primarily attributable to increases in all areas of costs of
revenue as the Company scaled its operations in order to meet increasing
demand.  Cost of revenue as a percentage of revenue was approximately
45% for the three and six months ended June 30, 2009 as compared to
approximately 45% for the three and six months ended June 30, 2008.





Accordingly,
gross margin was approximately 55% for the three and six months ended June 30,
2009, as compared to gross margin of approximately 55% for the three and six
months ended June 30, 2008.  We anticipate that gross margins will
continue at or near these levels as we add new capacity while more effectively
utilizing our existing capacity.





Selling, General and
Administrative Expenses





Selling,
general and administrative expenses increased approximately 54%, or $1.3 million
to $3.9 million for the three months ended June 30, 2009 as compared to $2.6
million for the three months ended June 30, 2008.  For the six months
ended June 30, 2009 selling, general and administrative expenses increased
approximately 50%, or $2.5 million, to $7.6 million as compared to $5.1 million
for the six months ended June 30, 2008.  The increase in selling,
general and administrative expenses is primarily a result of adding sales and
marketing personnel to generate and support revenue growth.  We
anticipate selling, general and administrative expenses will continue to grow as
a result of our expected revenue growth.  However, we expect these
expenses to decline as a percentage of revenue as our infrastructure costs
stabilize.





15





Selling,
general and administrative expenses as a percentage of revenue increased to
approximately 53% for the three months ended June 30, 2009 as compared to
approximately 52% for the three months ended June 30, 2008.  This
increase is primarily a result of adding sales and marketing
personnel.  For the six months ended June 30, 2009 selling, general
and administrative expenses as a percentage of revenue decreased to
approximately 53% as compared to approximately 56% for the six months ended June
30, 2008.  This decrease as compared to the same period last year was
primarily a result of greater economies of scale in our business from spreading
our administrative wages over a greater revenue base.





Bad debt
expense increased approximately 10%, or $37,000, to $427,000 for the three
months ended June 30, 2009 as compared to $390,000 for the three months ended
June 30, 2008.  For the six months ended June 30, 2009 bad debt
expense increased approximately 15%, or $119,000 to $934,000 as compared to
$815,000 for the six months ended June 30, 2008. This increase was a result of
the significant increases in revenue.  Bad debt expense as a
percentage of revenue was 5.7% and 6.5% for the three and six months ended June
30, 2009, respectively, as compared to 8.0% and 9.0% for the three and six
months ended June 30, 2008, respectively.





The
decrease in bad debt expense as a percentage of revenue for the three and six
months ended June 30, 2009 as compared to the three and six months ended June
30, 2008 is the result of changes we have made in our billing practices as well
as the implementation of a more effective billing system.  These
changes were made at the end of March 2008 and corrected the billing issues we
experienced towards the end of 2007.  Moving forward, we expect that
bad debt expense as a percentage of revenue will be between 5%-7% of
revenue.





Interest Expense,
net





Interest
expense net, which primarily represents interest on borrowing arrangements,
increased approximately 88%, or $61,000 to $130,000 for the three months ended
June 30, 2009 as compared to $69,000 for the three months ended June 30,
2008.  For the six months ended June 30, 2009 interest expense, net
increased approximately 97%, or $121,000 to $245,000 as compared to $124,000 for
the six months ended June 30, 2008. Interest expense is primarily related to our
credit facility with CapitalSource Finance, LLC (“CapitalSource”) and our
capital leases outstanding, and increased over the same period in the prior year
primarily as a result of the higher balances at June 30, 2009 as compared to
June 30, 2008.





Net Income
(Loss)





As a
result of the foregoing, we reported net income of $8,000 for the three months
ended June 30, 2009 as compared to net income of $72,000 for the three months
ended June 30, 2008. For the six months ended June 30, 2009, we reported net
income of $41,000 as compared to a net loss of ($193,000) for the six months
ended June 30, 3008.





Liquidity and Capital
Resources





During
the six months ended June 30, 2009, our operating activities used approximately
$533,000 of cash compared with approximately $522,000 used in the six months
ended June 30, 2008.  This use of cash consisted primarily of
increases in our accounts receivable balance as a result of increased
revenue.  We invested approximately $139,000 for new equipment during
the six months ended June 30, 2009, compared with approximately $171,000 for the
six months ended June 30, 2008.





Net cash
flow provided by financing activities was approximately $902,000 for the six
months ended June 30, 2009 which was primarily derived from the sale for
$500,000 of our common stock to the Douglas M. VanOort Living Trust, in
connection with Mr. VanOort’shiringas our Executive Chairman and interim
Chief Executive Officer,and amounts borrowed from our
revolving credit facility, offset by payments made on capital lease
obligations.  For the six months ended June 30, 2008, our net cash
flow provided by financing activities was approximately $924,000 which was
primarily from amounts borrowed from our revolving credit facility, offset by
payments made on capital lease obligations.  At June 30, 2009 and
December 31, 2008, we had cash and cash equivalents of approximately $698,000
and $468,000, respectively.





16





Our consolidated financial statements
are prepared using accounting principles generally accepted in theUnited States of America applicable to a
going concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business.At June 30, 2009, we had
stockholders’equity of
$2,347,832.





On
November 5, 2008, we entered into a common stock purchase agreement (the
“Purchase Agreement”) with Fusion Capital Fund II, LLC an Illinois limited
liability company (“Fusion”).  The Purchase Agreement, which has a term of
30 months, provides for the future funding of up to $8.0 million from sales of
our common stock to Fusion on a when and if needed basis as determined by us in
our sole discretion, depending on, among other things, the market price of our
common stock.  As of June 30, 2009, we had not drawn on any amounts
under the Fusion Purchase Agreement.





On February 1, 2008, we entered into a
revolving credit facility with CapitalSource, which allows us to borrow up to
$3,000,000 based on a formula which is tied to our eligible accounts receivable
that are aged less than 150
days.





Subsequent
to the current quarter ended June 30, 2009, on July 24, 2009, NeoGenomics
entered into a Common Stock Purchase Agreement with Abbott Laboratories, an
Illinois corporation (“Abbott”), and consummated the issuance and sale to
Abbott, for an aggregate purchase price of $4,767,000, of 3,500,000 shares of
common stock, $0.001 par value per share. See Subsequent Events below and Note G
to the financial statements.





As of June 30, 2009, we had
approximately $698,000 in cash on hand and $1,106,000 of availability under our
credit facility.  As
such, we believe we have adequate resources to meet our operating commitments
for the nexttwelve
months,and accordingly our consolidated
financial statements do not include any adjustments relating tothe recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might be necessary should we be unable to continue as a goingconcern.





Capital
Expenditures





We
currently forecast capital expenditures in order to execute on our business
plan. The amount and timing of such capital expenditures will be determined by
the volume of business, but we currently anticipate that we will need to
purchase approximately $1.5 million to $2.0 million of additional capital
equipment during the next twelve months.  We plan to fund these
expenditures with cash, through bank loan facilities, and through capital lease
financing arrangements.  If we are unable to obtain such funding, we
will need to pay cash for these items or we will be required to curtail our
equipment purchases, which may have an impact on our ability to continue to grow
our revenues.





Subsequent
Events





Strategic Supply
Agreement





On July
24, 2009, NeoGenomics Laboratories and Abbott Molecular Inc., a Delaware
corporation (“Abbott Molecular”), entered into a Strategic Supply Agreement (the
“Supply Agreement”).  The Supply Agreement, among other things,
provides for Abbott Molecular to supply materials with which NeoGenomics intends
to develop its own FISH (fluorescence in situ hybridization)-based
test for the diagnosis of malignant melanoma in skin biopsy specimens (excluding
subtyping) (the “Melanoma LDT”).





Pursuant
to the terms of the Supply Agreement, Abbott Molecular has agreed to supply
NeoGenomics with such of Abbott Molecular’s analyte specific reagents (“ASRs”)
that NeoGenomics may request for the purpose of NeoGenomics’ evaluation and
determination as to which ASRs to include in its Melanoma LDT.  Once
the ASRs have been identified by NeoGenomics, Abbott Molecular has agreed to
supply such ASRs (subject to certain limitations) to NeoGenomics.  If
NeoGenomics identifies for inclusion in the Melanoma LDT one or more ASRs that
are not currently marketed or sold commercially by Abbott Molecular as
individual stand-alone products, then the Supply Agreement provides that Abbott
Molecular will supply such ASRs to NeoGenomics on an exclusive basis in the
United States and Puerto Rico (the “Exclusive ASRs”), provided that Abbott
Molecular may also supply such exclusive ASRs to certain of its academic
collaborators for research and limited clinical purposes.  Abbott
Molecular’s obligation to supply the Exclusive ASRs on an exclusive basis is
subject to NeoGenomics meeting certain revenue thresholds with respect to the
Melanoma LDT.  Except for the ASRs supplied for evaluation purposes
(which are to be supplied at no cost), the Supply Agreement provides that the
price of the ASRs supplied by Abbott Molecular will include both a base and a
premium component.





17





In the
event that Abbott Molecular obtains FDA approval for its own in vitro diagnostic
test for aid in diagnosis of malignant melanoma in skin biopsy specimens
(excluding subtyping), the Supply Agreement contemplates a means by which
NeoGenomics may offer such FDA-approved test to its customers instead of the
Melanoma LDT.





Pursuant
to the Supply Agreement, Abbott Molecular also granted to NeoGenomics a first
right to develop two additional laboratory developed tests relating to certain
specified disease states using Abbott Molecular ASRs or other
products.





The
initial term of the Supply Agreement expires on December 31, 2019. The Supply
Agreement also contemplates two year renewal terms under certain
circumstances.  The parties may terminate the Supply Agreement prior
to the expiration of the term under certain circumstances.





The
Supply Agreement provides (subject to certain limitations) that Abbott Molecular
may convert the Supply Agreement into a non-exclusive agreement or terminate the
Supply Agreement if NeoGenomics does not develop and launch the Melanoma LDT
within six (6) months after the date on which Abbott Molecular supplies ASRs
(other than ASRs supplied for evaluation purposes) to NeoGenomics.





Abbott
Molecular may terminate the Supply Agreement following a change of control
involving NeoGenomics and certain designated companies.  In such event
Abbott Molecular would pay to NeoGenomics (or its successor) a termination
payment based upon a pre-defined formula.





Common Stock Purchase
Agreement and Registration Rights Agreement





On July
24, 2009, NeoGenomics, Inc. entered into a Common Stock Purchase Agreement (the
“Common Stock Purchase Agreement”) with Abbott Laboratories, an Illinois
corporation (“Abbott”), and
consummated the issuance and sale to Abbott, for an aggregate purchase price of
$4,767,000, of 3,500,000 shares of common stock, $0.001 par value per share (the
“Shares”).  Pursuant to the terms of the Common Stock Purchase
Agreement, Abbott is prohibited from selling or otherwise transferring the
Shares until January 20, 2010.





On July
24, 2009, NeoGenomics, Inc. and Abbott also entered into a Registration Rights
Agreement (the “Registration Rights Agreement”) that, among other things, grants
certain demand and piggyback registration rights to Abbott with respect to the
Shares.





Employment
Agreement





On July
21, 2009, the Board of Directors of the Company appointed Grant Carlson, age 50,
to the position of Vice President of Sales and Marketing, as previously disclosed, pursuant to a
Current Report on Form 8-K
filed with the Securities and Exchange Commission on July 30, 2009.





18





ITEM
3 – Quantitative and Qualitative Disclosures About Market Risk





We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide information under this
item.





ITEM
4 – Controls and Procedures





Not
applicable.





ITEM
4T – Controls and Procedures





Disclosure
Controls and Procedures





We maintain disclosure controls and
procedures designed to ensure that information required to be disclosed in
reports filed under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our principal executive officer,
principal financial officer, and principal accounting officer, as appropriate,
to allow timely decisions regarding required disclosure.  In designing
and evaluating our disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control
objectives.





As
required by SEC Rule 15d-15(e), our management carried out an evaluation, under
the supervision and with the participation of our principal executive officer,
principal financial officer, and principal accounting officer, of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report.  Based on that evaluation, our
principal executive officer, principal financial officer, and principal
accounting officer concluded that our disclosure controls and procedures were
not effective at a reasonable assurance level as of the end of the period
covered by this report due to the material weakness that was originally
described more fully in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 relating to our failure to maintain proper spreadsheet
controls.





Changes in
Internal Control Over Financial Reporting





There were no changes in our internal
control over financial reporting that occurred during thethreemonths ended June 30, 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.





19





PART
II – OTHER INFORMATION





ITEM
1 – LEGAL PROCEEDINGS





A civil
lawsuit is currently pending between the Company and its liability insurer, FCCI
Commercial Insurance Company ("FCCI") in the 20th Judicial Circuit Court in and
for Lee County, Florida (Case No. 07-CA-017150).  FCCI filed the suit
on December 12, 2007 in response to the Company's demands for insurance benefits
with respect to an underlying action involving US Labs (a settlement agreement
has since been reached in the underlying action, and thus that case has now
concluded).  Specifically, the Company maintains that the underlying
plaintiff's allegations triggered the subject insurance policy's personal and
advertising injury coverage.  In the lawsuit, FCCI seeks a court
judgment that it owes no obligation to the Company regarding the underlying
action (FCCI does not seek monetary damages).  The Company has
counterclaimed against FCCI for breach of the subject insurance policy, and
seeks recovery of defense costs incurred in the underlying matter, amounts paid
in settlement thereof, and fees and expenses incurred in litigating with
FCCI.  The court previously denied a motion by FCCI for judgment on
the pleadings, rejecting FCCI's contention that the underlying complaint did not
trigger the insurer's duty to defend as a matter of law.  A motion for
summary judgment is currently pending.We intend to aggressively pursue all remedies in this matter and believe
that the courts will ultimately find that FCCI had a duty to provide coverage in
the US Labs litigation.





ITEM
1A – RISK FACTORS





We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item.





ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





Not
Applicable





ITEM
3 – DEFAULTS UPON SENIOR SECURITIES





Not
Applicable





ITEM
4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None





ITEM
5 – OTHER INFORMATION





Lease
Schedule





The
Company’s disclosure in this Quarterly Report on Form 10-Q under Note D to its
unaudited consolidated financial statements with respect to Lease Schedule No. 2
to the Company’s $1,000,000 master lease agreement with Leasing Technology
International, Inc. is hereby incorporated by reference into this
item.





20





ITEM
6 – EXHIBITS





EXHIBIT
                    NO.
                  DESCRIPTION10.1
                  Strategic
      Supply Agreement dated July 24, 2009, between NeoGenomics Laboratories,
      Inc., a Florida corporation, and Abbott Molecular Inc., a Delaware
      corporation31.1
                  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





21




SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





Date:August 6,
    2009
                
                NEOGENOMICS,
  INC.By:
                /s/ Douglas M.
      VanOortName:
                Douglas
    VanOortTitle:
                Executive Chairman and Interim
      ChiefExecutive
      OfficerBy:
                /s/ Steven C.
      JonesName:
                Steven C.
    JonesTitle:
                Acting Principal Financial
      OfficerBy:
                /s/ Jerome J.
      DvonchName:
                Jerome J.
      DvonchTitle:
                Director of Finance and
      PrincipalAccounting
      Officer