10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019 

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 001-36200

________________________

OXFORD IMMUNOTEC GLOBAL PLC

(Exact name of registrant as specified in its charter)

England and Wales	98-1133710
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
94C Innovation Drive, Milton Park, Abingdon OX14 4RZ, United Kingdom	Not Applicable
(Address of Principal Executive Offices)	(Zip Code)

+44 (0)1235 442780

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares, £0.006705 nominal value per share	OXFD	The Nasdaq Global Market

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 shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to 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 such files).

Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐   Non-accelerated filer   ☐ Accelerated filer ☒ Smaller reporting company ☒   Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐   No ☒

As of October 24, 2019, there were 26,446,585 Ordinary Shares, nominal value £0.006705, of Oxford Immunotec Global PLC outstanding.

Oxford Immunotec Global PLC

Form 10-Q

Quarterly Period Ended September 30, 2019

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Condensed consolidated balance sheets as of September 30, 2019 (unaudited) and December 31, 2018	4
	Condensed consolidated statements of operations (unaudited) for the three and nine months ended September 30, 2019 and 2018	5
	Condensed consolidated statements of other comprehensive income (loss) (unaudited) for the three and nine months ended September 30, 2019 and 2018	6
	Condensed consolidated statements of shareholders’ equity (unaudited) for the nine months ended September 30, 2019 and 2018	7
	Condensed consolidated statements of cash flows (unaudited) for the nine months ended September 30, 2019 and 2018	8
	Notes to the unaudited condensed consolidated financial statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	32
Signatures		33

1

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or the Quarterly Report, and the exhibits hereto, contains or incorporates by reference estimates, predictions, opinions, projections and other statements that may be interpreted as “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The forward-looking statements are contained principally in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Part II, Item 1A, “Risk Factors,” but are also contained elsewhere in this Quarterly Report. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “would,” “could,” “should,” “intend,” “plan,” “contemplate,” “expect,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “target,” “potential,” “continue,” and “ongoing” and other comparable expressions intended to identify statements about the future, although not all forward-looking statements contain these identifying words. These statements involve substantial known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to differ materially from those currently anticipated. Forward-looking statements are neither historical facts nor assurances of future performance. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain and that involve substantial risks and uncertainties. Such risks and uncertainties include, but are not limited to:

● our failure to meet our obligations arising from the sale of our U.S. laboratory services business, or the U.S. Laboratory Services Business, to Quest Diagnostics Incorporated, or Quest, a Delaware corporation, or the Transaction;

● the potential disruption of management time from ongoing business operations due to the Transaction;

● our exposure to potential litigation and contingent liabilities pursuant to the Transaction that could have a material adverse effect on our financial condition;

● given our prior history of losses, our ability to achieve and sustain profitability and our ability to manage our growth;

● our ability to continue to sell our T-SPOT.TB at current prices if, for example, our customers or prospective customers are unwilling to pay for our tests at current pricing levels or as a result of increased competition generally;

● our ability to effectively use our current financial resources and our ability to obtain additional capital resources;

● our ability to further develop, commercialize and achieve market acceptance of our current and future products;

● our ability to obtain and maintain regulatory body clearance and approval to market any of our products;

● continued demand for diagnostic products for tuberculosis and other immune-regulated conditions and the development of new market opportunities;

● our ability to compete successfully in our target markets and to maintain and expand our sales network;

● coverage and reimbursement decisions of insurers and other third-party payors, as well as guidelines, recommendations, and studies published by various organizations related to the use of our products;

● our dependence on certain of our customers, suppliers and service providers;

● disruptions to our business, including disruptions at our laboratory and manufacturing facilities;

● the integrity and uninterrupted operation of our information technology and storage systems;

● the impact of currency fluctuations on our business;

● the impact of global economic and political developments, including the referendum to leave the European Union, passed by the United Kingdom, or U.K., on June 23, 2016, and further implementing legislation on our business;

● potential changes in the United States, or U.S., social, political, regulatory and economic conditions or laws and policies governing the health care system, U.S. tax laws, and laws and regulations impacting foreign trade, immigration, manufacturing, and development and investment in the U.S. and in other territories and countries where we or our customers and suppliers operate;

● our ability to make successful acquisitions or investments and to manage the integration of such acquisitions or investments;

● our ability to retain key members of our management;

● the impact of taxes on our business, including our ability to use net operating losses;

● the impact of legislative and regulatory developments, including healthcare and tax reform, on our business;

● the impact of any product liability, intellectual property and commercial litigation on our business;

● our ability to comply with Securities and Exchange Commission, or SEC, reporting, antifraud, anti-corruption, environmental, health and safety laws and regulations;

● our ability to maintain effective internal control over financial reporting;

● our ability to maintain our licenses to sell our products around the world, including in countries such as China, Japan and the U.S.;

● our ability to protect and enforce our intellectual property rights;

● our status as an English company with our ordinary shares listed in the U.S.;

● the volatility of the price of our ordinary shares, potential substantial future sales of our ordinary shares and the fact that we do not pay dividends; and

● the impact of anti-takeover provisions under U.K. law and our articles of association.

2

You should refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report represent our views only as of the date of this Quarterly Report. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report. As used in this Quarterly Report, the words “Company,” “we,” “us” and “our” refer to Oxford Immunotec Global PLC, a public limited company incorporated under the laws of England and Wales.

Where You Can Find More Information

We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public on the SEC’s website at www.sec.gov. In addition, we make available free of charge on our corporate website at www.oxfordimmunotec.com (in the “Investors” section) copies of materials we file with, or furnish to, the SEC. By referring to our corporate website, www.oxfordimmunotec.com, we do not incorporate such website or its contents into this Quarterly Report.

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Oxford Immunotec Global PLC

Condensed consolidated balance sheets

	September 30,			December 31,
(in thousands, except share and per share data)	2019			2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	184,282		$	192,844
Accounts receivable, net		15,496			9,158
Other receivable		8,696			4,500
Inventory, net		9,800			7,767
Prepaid expenses and other assets		3,157			2,511
Total current assets		221,431			216,780
Restricted cash, non-current		100			100
Other receivable, non-current		1,079			4,500
Property and equipment, net		6,378			7,144
Operating lease right-of-use assets		6,662			-
Goodwill		2,483			2,483
Other intangible assets, net		43			61
Deferred tax asset		790			1,052
Total assets	$	238,966		$	232,120
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	3,085		$	2,801
Accrued liabilities		8,718			10,891
Current portion of operating lease liability		533			-
Settlement liability		4,218			4,106
Deferred income		174			125
Current portion of loans payable		-			85
Total current liabilities		16,728			18,008
Long-term portion of operating lease liability		7,239			-
Long-term portion of loans payable		30			106
Total liabilities		23,997			18,114
Commitments and contingencies (Note 13)
Shareholders' equity:
Ordinary shares, £0.006705 nominal value; 40,060,729 and 38,978,604 shares authorized at September 30, 2019 and December 31, 2018, respectively, and 26,642,510 and 26,439,334 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		278			276
Additional paid-in capital		306,601			303,015
Accumulated deficit		(81,485	)		(80,762	)
Accumulated other comprehensive loss		(10,425	)		(8,523	)
Total shareholders' equity		214,969			214,006
Total liabilities and shareholders' equity	$	238,966		$	232,120

See accompanying notes to these unaudited condensed consolidated financial statements.

4

Oxford Immunotec Global PLC

Condensed consolidated statements of operations

(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands, except share and per share data)	2019			2018			2019			2018
Revenue:
Product	$	20,115		$	15,095		$	52,622		$	40,236
Service		1,104			955			2,974			4,150
Total revenue		21,219			16,050			55,596			44,386
Cost of revenue:
Product		5,313			3,864			14,306			9,993
Service		418			709			1,053			2,877
Total cost of revenue		5,731			4,573			15,359			12,870
Gross profit		15,488			11,477			40,237			31,516
Operating expenses:
Research and development		1,631			1,754			6,044			5,969
Sales and marketing		7,405			6,432			21,169			20,655
General and administrative		5,531			8,132			16,230			19,349
Settlement expense		799			212			1,002			1,979
Total operating expenses		15,366			16,530			44,445			47,952
Operating income (loss) from continuing operations		122			(5,053	)		(4,208	)		(16,436	)
Other income (expense):
Interest income (expense), net		1,064			(673	)		3,426			(2,011	)
Foreign exchange gains (losses)		360			(52	)		(233	)		(306	)
Other income (expense)		23			5			65			(242	)
Income (loss) from continuing operations before income taxes		1,569			(5,773	)		(950	)		(18,995	)
Income tax benefit (expense) from continuing operations		(383	)		(485	)		1,230			(1,182	)
Income (loss) from continuing operations		1,186			(6,258	)		280			(20,177	)
Discontinued operations:
Income (loss) from discontinued operations before income taxes		(469	)		2,774			(469	)		(104	)
Income tax expense		-			-			-			-
Income (loss) from discontinued operations		(469	)		2,774			(469	)		(104	)
Net income (loss)	$	717		$	(3,484	)	$	(189	)	$	(20,281	)
Net income (loss) per ordinary share - basic
Income (loss) from continuing operations	$	0.04		$	(0.24	)	$	0.01		$	(0.78	)
Income (loss) from discontinued operations		(0.02	)		0.11			(0.02	)		-
Net income (loss)	$	0.03		$	(0.13	)	$	(0.01	)	$	(0.78	)
Net income (loss) per ordinary share - diluted:
Income (loss) from continuing operations	$	0.04		$	(0.24	)	$	0.01		$	(0.78	)
Income (loss) from discontinued operations		(0.02	)		0.11			(0.02	)		-
Net income (loss)	$	0.03		$	(0.13	)	$	(0.01	)	$	(0.78	)
Weighted-average shares used to compute net income (loss) per ordinary share - basic		26,751,083			26,033,550			26,631,704			25,867,014
Weighted-average shares used to compute net income (loss) per ordinary share - diluted		26,936,541			26,033,550			26,904,481			25,867,014

See accompanying notes to these unaudited condensed consolidated financial statements.

5

Oxford Immunotec Global PLC

Condensed consolidated statements of other comprehensive loss

(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
(in thousands)	2019			2018			2019			2018
Net income (loss)	$	717		$	(3,484	)	$	(189	)	$	(20,281	)
Other comprehensive loss:
Foreign currency translation adjustment, including tax charges of $426, $124, $486, and $396, respectively		(1,714	)		(614	)		(1,902	)		(1,578	)
Other comprehensive loss, net of tax		(1,714	)		(614	)		(1,902	)		(1,578	)
Total comprehensive loss	$	(997	)	$	(4,098	)	$	(2,091	)	$	(21,859	)

See accompanying notes to these unaudited condensed consolidated financial statements.

6

Oxford Immunotec Global PLC

Condensed consolidated statements of shareholders’ equity

(unaudited)

										Accumulated
				Additional						other			Total
	Ordinary			paid-in			Accumulated			comprehensive			shareholders'
(in thousands)	shares			capital			deficit			gain (loss)			equity
Balance at December 31, 2018	$	276		$	303,015		$	(80,762	)	$	(8,523	)	$	214,006
Exercise of share options		2			1,800			-			-			1,802
Share-based compensation expense		-			845			-			-			845
Tax on vesting of restricted share units		-			(145	)		-			-			(145	)
Other comprehensive income		-			-			-			1,167			1,167
Net loss		-			-			(1,496	)		-			(1,496	)
Balance at March 31, 2019		278			305,515			(82,258	)		(7,356	)		216,179
Exercise of share options		2			1,531			-			-			1,533
Share-based compensation expense		-			846			-			-			846
Tax on vesting of restricted share units		-			(10	)		-			-			(10	)
Other comprehensive loss		-			-			-			(1,355	)		(1,355	)
Net income		-			-			590			-			590
Balance at June 30, 2019		280			307,882			(81,668	)		(8,711	)		217,783
Exercise of share options		-			593			-			-			593
Share-based compensation expense		-			983			-			-			983
Tax on vesting of restricted share units		-			(68	)		-			-			(68	)
Other comprehensive loss		-			-			-			(1,714	)		(1,714	)
Ordinary shares repurchased		(2	)		(2,789	)		(534	)		-			(3,325	)
Net income		-			-			717			-			717
Balance at September 30, 2019	$	278		$	306,601		$	(81,485	)	$	(10,425	)	$	214,969

									Accumulated
			Additional						other			Total
	Ordinary		paid-in			Accumulated			comprehensive			shareholders'
(in thousands)	shares		capital			deficit			gain (loss)			equity
Balance at December 31, 2017	$	269	$	294,613		$	(201,541	)	$	(5,712	)	$	87,629
Exercise of share options		2		82			-			-			84
Share-based compensation expense		-		1,824			-			-			1,824
Tax on vesting of restricted share units		-		(156	)		-			-			(156	)
Other comprehensive income		-		-			-			557			557
Net loss		-		-			(10,326	)		-			(10,326	)
Balance at March 31, 2018		271		296,363			(211,867	)		(5,155	)		79,612
Exercise of share options		1		729			-			-			730
Share-based compensation expense		-		922			-			-			922
Tax on vesting of restricted share units		-		(108	)		-			-			(108	)
Other comprehensive loss		-		-			-			(1,521	)		(1,521	)
Net loss		-		-			(6,471	)		-			(6,471	)
Balance at June 30, 2018		272		297,906			(218,338	)		(6,676	)		73,164
Exercise of share options		4		1,881			-			-			1,885
Share-based compensation expense		-		1,015			-			-			1,015
Other comprehensive loss		-		-			-			(614	)		(614	)
Net loss		-		-			(3,484	)		-			(3,484	)
Balance at September 30, 2018	$	276	$	300,802		$	(221,822	)	$	(7,290	)	$	71,966

See accompanying notes to these consolidated financial statements.

7

Oxford Immunotec Global PLC

Condensed consolidated statements of cash flows

(unaudited)

	Nine months ended
	September 30,
(in thousands)	2019			2018
Cash flows from operating activities
Net income (loss)	$	(189	)	$	(20,281	)
Less: Net loss from discontinued operations, net of tax		(469	)		(104	)
Net income (loss) from continuing operations		280			(20,177	)
Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities:
Depreciation and amortization expense		1,351			953
Non-cash rent expense		178			-
Accretion and amortization of loan fees and non-cash interest income		(147	)		421
Share-based compensation expense		2,674			3,550
Loss on disposal of property and equipment		20			84
Deferred income taxes		(250	)		1,117
Changes in operating assets and liabilities:
Accounts receivable, net		(6,686	)		(1,291	)
Inventory, net		(2,346	)		773
Prepaid expenses and other assets		(1,974	)		(270	)
Accounts payable		325			(8,982	)
Accrued liabilities		(820	)		2,978
Deferred income		49			-
Other liabilities, net		-			(70	)
Net cash used in operating activities from continuing operations		(7,346	)		(20,914	)
Cash flows from investing activities
Purchases of property and equipment		(729	)		(4,884	)
Net cash used in investing activities from continuing operations		(729	)		(4,884	)
Cash flows from financing activities
Proceeds from exercise of share options		3,926			2,697
Payments of tax withheld on exercises of options and vesting of restricted share units		(224	)		(265	)
Repurchases of ordinary shares		(3,325	)		-
Payments on capital lease		-			(57	)
Net cash provided by financing activities from continuing operations		377			2,375
Net cash flows of continuing operations		(7,698	)		(23,423	)
Cash flows from discontinued operations
Net operating cash flows provided by discontinued operations		-			6,778
Net investing cash flows used in discontinued operations		-			(2,527	)
Net financing cash flows used in discontinued operations		-			(10	)
Net cash flows of discontinued operations		-			4,241
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(864	)		(994	)
Net decrease in cash, cash equivalents, and restricted cash		(8,562	)		(20,176	)
Cash, cash equivalents, and restricted cash at beginning of period		192,944			90,532
Cash, cash equivalents, and restricted cash at end of period	$	184,382		$	70,356

See accompanying notes to these unaudited condensed consolidated financial statements.

8

Oxford Immunotec Global PLC

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2019

1. Business and basis of presentation

Description of business

Oxford Immunotec Global PLC, or the Company, is a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for immunology and infectious disease by leveraging the technological, product development, manufacturing, quality, regulatory, and sales and marketing capabilities it has developed over its seventeen year history. The Company’s proprietary T-SPOT.TB test utilizes its T-SPOT technology platform to test for tuberculosis, which is the leading cause of infectious disease death worldwide.

Discontinued operations

The Company reports the results of operations of a business that either has been disposed of or is classified as held for sale, in accordance with Accounting Standards Codification, or ASC, 360, Property, Plant, and Equipment, in discontinued operations, as required by ASC 205, Presentation of Financial Statements. The Company presents such events as discontinued operations so long as the financial results can be clearly identified and the future operations and cash flows are completely eliminated from ongoing operations. The Company’s historical results for all periods presented are restated to account for businesses reported as discontinued operations in our Consolidated Financial Statements and these Notes. Unless otherwise specified, disclosures in our Consolidated Financial Statements and these Notes relate solely to our continuing operations.

As discussed in Note 14. Discontinued operations, on September 25, 2018, the Company entered into an agreement to sell the Company’s U.S. Laboratory Services Business to Quest Diagnostics Incorporated, or the Transaction. The Transaction represented a strategic business shift having a major effect on the Company’s operations and financial results. Accordingly, operations have been reported in discontinued operations in the consolidated financial statements for all periods presented. The Transaction was consummated on November 6, 2018 for gross proceeds of $170 million in cash. Immediately following the Transaction, the Company had approximately 210 employees, including sales and marketing teams on three continents, and a laboratory in the United Kingdom.

Unaudited interim financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, of a normal recurring nature, necessary for a fair statement of the financial position at September 30, 2019, the results of operations for the three and nine-month periods ended September 30, 2019 and 2018, and the cash flows for the nine-month periods ended September 30, 2019 and 2018. Interim results are not necessarily indicative of results for a full year.

The consolidated balance sheet presented as of December 31, 2018, has been derived from the Company's audited consolidated financial statements as of that date. The consolidated financial statements and notes included in this Quarterly Report should be read in conjunction with the 2018 consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on March 28, 2019, or the 2018 Form 10-K.

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments purchased with maturities at acquisition of three months or less to be cash equivalents. The Company maintains its available cash balances in cash, money market funds and repurchase agreements primarily invested in U.S. government and agency securities, and bank savings accounts in the United States, United Kingdom, Germany, Japan, China and South Korea. The Company maintains deposits in government insured financial institutions in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Restricted cash relates to collateral for procurement cards issued by a U.S. commercial bank.

Cash, cash equivalents, and restricted cash consists of the following:

(in thousands)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	184,282	$	192,844
Restricted cash, non-current		100		100
Total cash, cash equivalents, and restricted cash	$	184,382	$	192,944

9

Revenues

The Company’s revenues include product and service revenues. In general, revenue from diagnostic test kit sales and related accessories is recognized at a point in time based upon contractual rates. However, for contracts with tiered pricing provisions, if the tiered pricing constitutes a material right and spans across multiple reporting periods, the Company estimates the total transaction price at the beginning of each reset period (i.e., the period in which revenue at different tiers is earned and settled) based on expected volumes. The Company revises its estimates of variable consideration at each reporting date throughout each reset period. Service revenue is recorded based upon contractually established billing rates and recognized upon delivery of test results to the customer. See Note 2. Revenue for disaggregation of revenue by type and geography.

For the three and nine months ended September 30, 2019, the Company had no material bad-debt expense and there were no material contract assets, contract liabilities or deferred contract costs recorded on the condensed consolidated balance sheet as of September 30, 2019. The Company generally expenses sales commissions when incurred because the amortization period would be less than one year.

Revenue expected to be recognized in any future year related to remaining performance obligations is not material.

Taxes assessed by governmental authorities on revenue, including sales and value added taxes, are recorded on a net basis (excluded from revenue) in the consolidated statements of operations.

Other than the following discussion regarding leases, the remainder of the significant accounting estimates and policies used in preparation of the condensed consolidated financial statements disclosed in Note 1. Description of business and significant accounting policies to the consolidated financial statements in the 2018 Form 10-K remain unchanged.

Leases

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-02, Leases, or ASU 2016-02, to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted ASU 2016-02 on January 1, 2019, or the effective date, and used the effective date as its date of initial application.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The operating lease right-of-use assets also include any lease payments made prior to the commencement date and exclude lease incentives and initial direct costs incurred. The operating lease right-of-use assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate was determined at lease commencement, or as of January 1, 2019 for operating leases existing upon adoption of ASU 2016-02. The incremental borrowing rate is subsequently reassessed upon modification to the lease arrangement.

In accordance with the guidance in ASU 2016-02, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available. Entities may elect the practical expedient to not separate lease and non-lease components and would instead account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating lease right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

Income taxes

The Company calculates its interim income tax provision in accordance with ASC 270, Interim Reporting, and ASC 740, Accounting for Income Taxes. At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

The Company recognized an income tax provision of $383,000 and $485,000 for the three months ended September 30, 2019 and September 30, 2018, respectively. In the first quarter of 2019, the Company revised its transfer pricing model to reflect changes in the Company’s business model following the Transaction. Upon completion of the full transfer pricing study in the third quarter of 2019, the Company reassessed the realizability of its deferred tax assets based on all available evidence. As a result, the Company recorded a reversal of $2.2 million of the previously recognized valuation allowances against its deferred tax assets in the U.S. and a $1.4 million valuation allowance against its deferred tax assets in the U. K. The Company recognized an income tax benefit of $1.2 million and income tax expense of $1.2 million for the nine months ended September 30, 2019 and 2018, respectively.

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Recently adopted accounting pronouncements

In February 2016, the FASB issued ASU 2016-02, which requires lessees to reflect all leases with terms longer than 12 months on their balance sheets. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The FASB has subsequently issued amendments to the guidance, including the addition of an optional transition method. The Company’s process of evaluating the impact of ASU 2016-02 has included reviewing all forms of leases and performing a completeness assessment over the lease population. The Company adopted ASU 2016-02 on January 1, 2019 and applied the modified retrospective approach, which recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company took advantage of the transition package of practical expedients permitted within ASU 2016-02, which among other things, allowed it to carryforward historical lease classifications. The Company made an accounting policy election that will keep leases with an initial term of 12 months or less and that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise off of the balance sheet and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As a result of adopting ASU 2016-02, the Company recognized right-of-use assets of about $7.2 million and corresponding liabilities of about $8.2 million for its existing lease portfolio on its consolidated balance sheets as of January 1, 2019. The adoption of ASU 2016-02 has not had a material impact on the Company’s consolidated statements of operations or consolidated statements of cash flows. The Company has included additional disclosures in Note 13. Commitments to its condensed consolidated financial statements regarding its leasing portfolio, including key judgments and assumptions and the discount rates used in calculating the Company’s right-of-use assets and corresponding liabilities.

In June 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, or ASU 2018-07. ASU 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted ASU 2018-07 prospectively as of January 1, 2019. The adoption of ASU 2018-07 has not had a material impact on the Company’s financial position, results of operations or related disclosures.

Recently issued but not yet adopted accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses, or ASU 2016-13. ASU 2016-13 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Under current U.S. GAAP, a company only considered past events and current conditions in measuring an incurred loss. Under ASU 2016-13, the information that a company must consider is broadened in developing an expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. The new guidance is currently expected to be effective for the Company for annual and interim periods beginning after December 15, 2019. The FASB is considering a delay of the implementation until annual and interim periods beginning after December 15, 2022 for smaller reporting companies. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. The guidance is applied using a modified retrospective, or prospective approach, depending on a specific amendment. The Company has been reviewing ASU 2016-13 and does not believe its adoption will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other, or ASU 2017-04. ASU 2017-04 simplifies subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The new guidance will be applied on a prospective basis. ASU 2017-04 will be effective for the Company for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests. The Company does not expect that the application of ASU 2017-04 will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13, which modifies certain disclosure requirements on fair value measurements. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty are required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are required to be applied retrospectively to all periods presented upon their effective date. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019 and interim periods within those years. The Company does not anticipate a material impact to disclosures as a result of the adoption of ASU 2018-13.

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2. Revenue

On November 6, 2018, the Company completed the sale of its U.S. Laboratory Services Business to Quest Diagnostics Incorporated. Accordingly, the Company’s prior year revenues have been recast to present the U.S. laboratory services business as a discontinued operation. For further information on these changes, refer to Note 14. Discontinued operations.

The following tables present the Company’s revenues disaggregated by type:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
Product	$	20,115	$	15,095	$	52,622	$	40,236
Service		1,104		955		2,974		4,150
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

Service revenue for the three and nine months ended September 30, 2018 included $93,000 and $1.7 million, respectively, from the blood donor screening market from which the Company withdrew in late 2018.

The following tables reflect revenue by geography (United States, Europe and rest of world, or Europe and ROW, and Asia):

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
United States	$	5,735	$	2,876	$	19,034	$	11,615
Europe and ROW		2,709		2,277		7,670		6,750
Asia		12,775		10,897		28,892		26,021
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

United States revenue for the three and nine months ended September 30, 2018 included $93,000 and $1.7 million, respectively, from the blood donor screening market from which the Company withdrew in late 2018.

3. Fair value measurement

As a basis for determining the fair value of certain of the Company’s financial instruments, the Company utilizes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The carrying amount of certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable, and accrued liabilities approximate fair value due to their short term nature.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability.

The tables below present information about the Company’s financial assets measured at fair value on a recurring basis as of the respective dates and indicate the level of the fair value hierarchy utilized to determine such fair values. The Company had no financial liabilities measured at fair value on a recurring basis as of the dates indicated.

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	10,848	$	10,848	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		161,098		161,098		-		-
Total	$	171,946	$	171,946	$	-	$	-

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	19,812	$	19,812	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		165,157		165,157		-		-
Total	$	184,969	$	184,969	$	-	$	-

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Money market funds and repurchase agreements were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 1 measurement within the fair value hierarchy.

4. Accounts receivable, net

Accounts receivable, net, consisted of the following as of:

(in thousands)	September 30, 2019			December 31, 2018
Accounts receivable	$	15,620		$	9,246
Less allowance for uncollectible accounts receivable		(124	)		(88	)
Accounts receivable, net	$	15,496		$	9,158

5. Inventory, net

Inventory, net consisted of the following as of:

(in thousands)	September 30, 2019		December 31, 2018
Raw materials	$	8,347	$	6,169
Work in progress		71		190
Finished goods		1,382		1,408
Inventory, net	$	9,800	$	7,767

6. Goodwill and acquired intangible assets

The Company has one reporting unit, and goodwill represents the synergies realized in its acquisitions of Imugen, Inc. and Immunetics, Inc. The carrying amount of goodwill reflected in the Company’s consolidated balance sheets was $2.5 million at September 30, 2019 and December 31, 2018. 

Acquired intangible assets consisted of the following as of September 30, 2019 and December 31, 2018:

	As of September 30, 2019
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	609	$	43
Total		$	652	$	609	$	43

	As of December 31, 2018
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	591	$	61
Total		$	652	$	591	$	61

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7. Accrued liabilities

Accrued liabilities consisted of the following as of:

(in thousands)	September 30, 2019		December 31, 2018
Employee related expenses	$	4,516	$	5,536
Accrued discount		1,173		-
Royalties		1,122		1,354
Professional services		893		863
Corporate tax		118		1,616
Other accrued liabilities		896		1,522
Total accrued liabilities	$	8,718	$	10,891

8. Loans payable

On October 4, 2016, the Company entered into the MidCap Agreement, which provided it with $40 million in debt financing, comprised of both a term loan and a revolving line of credit. The term loan was in the amount of $30 million and matured five years from the closing of the financing transaction. The term loan accrued interest at a rate of LIBOR plus 7.60% with interest only payments for the first 24 months, with the ability to extend to 48 months subject to certain conditions, before the loan began to amortize. The MidCap Agreement also provided the Company with a revolving line of credit of up to $10 million, which matured five years from the closing of the financing transaction. The revolving line of credit accrued interest at a rate of LIBOR plus 4.45%. The Company was also required to pay MidCap an unused line fee equal to 0.50% per annum of the average unused portion of the revolving line of credit. Based on certain conditions, both the term loan and revolving line of credit could have been increased by an additional $10 million for a total of $60 million.

On November 6, 2018, approximately $32.3 million of the gross proceeds received pursuant to the Transaction was paid directly to MidCap to repay the outstanding indebtedness under the MidCap Agreement, which included prepayment and exit fees of approximately $2.3 million. In connection with the Company’s repayment of the outstanding indebtedness under the MidCap Agreement, the term loan, the revolving loan, and all related agreements were terminated and all borrowings outstanding thereunder were repaid in full. The repayment resulted in a fourth quarter 2018 loss on extinguishment of debt of $2.1 million, which represents the cash paid to settle the debt in excess of debt related balances at the time of settlement. 

9. Share capital

During the nine-month period ended September 30, 2019, the Company issued 380,601 ordinary shares upon the exercise of options and 65,405 ordinary shares upon the vesting of restricted share units, or RSUs. During the twelve months ended December 31, 2018, the Company issued 694,322 ordinary shares upon the exercise of options and 83,378 ordinary shares upon the vesting of RSUs.

In 2019, the Company’s Board of Directors authorized the repurchase of up to $100 million of its ordinary shares in the aggregate, subject to the approval of its shareholders by an ordinary resolution at its 2019 Annual General Meeting, or the share repurchase program. The share repurchase program was approved by the Company’s shareholders at its Annual General Meeting held on June 18, 2019 and was initiated during the third quarter of 2019. During the three-month period ended September 30, 2019, the Company repurchased 242,830 ordinary shares at a total cost of $3.3 million. As the share repurchase program allows for a maximum repurchase of $100 million of the Company’s ordinary shares including commissions, up to $96.7 million of ordinary shares remain eligible for repurchase as of September 30, 2019. The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its ordinary shares under the program. Unless discontinued by the Company's Board of Directors, the share repurchase program will be valid for up to five years.

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10. Share option and equity incentive plan

The impact on the Company’s results of operations from share-based compensation was as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Cost of revenue	$	21	$	38	$	56	$	161
Research and development		132		201		244		581
Sales and marketing		332		137		910		774
General and administrative		498		572		1,464		2,034
Total continuing operations		983		948		2,674		3,550
Discontinued operations		-		67		-		211
Total share-based compensation	$	983	$	1,015	$	2,674	$	3,761

In November 2013, in connection with the Company’s initial public offering, the Company adopted the 2013 Share Incentive Plan, or the 2013 Plan, which provides for the grant of share options, restricted shares, RSUs, and other share-based awards to employees, officers, directors and consultants of the Company. The 2013 Plan was amended at the Company's 2017 annual general meeting of shareholders.

During the three-month period ended September 30, 2019, the Company granted 39,520 share options with an exercise price of $13.33 per share under the 2013 Plan. The weighted-average grant date fair value related to share options granted under the 2013 Plan during the three-month period ended September 30, 2019 was $5.80 per share.

During the nine-month period ended September 30, 2019, the Company granted to certain employees 469,848 share options with exercise prices ranging from $13.33 to $16.42 per share under the 2013 Plan. The weighted-average grant date fair value related to share options granted under the 2013 Plan during the nine-month period ended September 30, 2019 was $7.22 per share. Share options generally vest based on the grantee’s continued service with the Company during a specified period following the vesting start date and expire after ten years.

During the three and nine-month periods ended September 30, 2019, the Company awarded 11,928 and 154,472 RSUs, respectively. RSUs vest based on the grantee’s continued service with the Company during a specified period following grant as follows: 40% on the second anniversary of the vesting start date; 30% on the third anniversary of the vesting start date; and 30% on the fourth anniversary of the vesting start date. Share-based compensation expense for these RSUs is calculated based on the grant date market price of the shares and is being recognized over the vesting period.

For the three-month period ended September 30, 2019, the Company incurred shared-based compensation expense related to share options and RSUs of $658,000 and $325,000, respectively. For the three-month period ended September 30, 2018, the Company incurred shared-based compensation expense related to share options and RSUs of $748,000 and $267,000, respectively.

For the nine-month period ended September 30, 2019, the Company incurred shared-based compensation expense related to share options and RSUs of $1.9 million and $741,000, respectively. For the nine-month period ended September 30, 2018, the Company incurred shared-based compensation expense related to share options and restricted shares/RSUs of $2.4 million and $1.3 million, respectively.

As of September 30, 2019, there was $5.1 million and $3.5 million of total unrecognized compensation cost related to unvested share options and RSUs, respectively. These costs are expected to be recognized over weighted-average periods of 2.6 years for share options and 2.8 years for RSUs.

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11. Net income (loss) per share

	Three months ended September 30,						Nine months ended September 30,
($ in thousands)	2019			2018			2019			2018
Numerator
Income (loss) from continuing operations	$	1,186		$	(6,258	)	$	280		$	(20,177	)
Income (loss) from discontinued operations		(469	)		2,774			(469	)		(104	)
Net income (loss)	$	717		$	(3,484	)	$	(189	)	$	(20,281	)
Denominator
Weighted-average ordinary shares - basic		26,751,083			26,033,550			26,631,704			25,867,014
Dilutive effect of ordinary share equivalents resulting from ordinary share options and RSUs		185,458			-			272,777			-
Weighted-average ordinary shares - diluted		26,936,541			26,033,550			26,904,481			25,867,014

The following numbers of outstanding ordinary share options and unvested RSUs were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Options to purchase ordinary shares		-		383,855		-		290,226
Unvested RSUs		-		332,455		-		332,455

12. Settlement expense

On September 30, 2019, the Company entered into a Settlement Agreement and Release with Oxford University Innovation Limited, or OUI, or the OUI Settlement Agreement, to resolve outstanding disputes arising from a license agreement with OUI. The terms of the OUI Settlement Agreement are confidential.

On June 18, 2018, the Company entered into a Settlement Agreement with the former shareholders of Immunetics, Inc., or the Immunetics Settlement Agreement, to resolve disputes arising from the Agreement and Plan of Merger dated October 12, 2016. The terms of the Immunetics Settlement Agreement are confidential.

13. Commitments

Operating leases

The Company has operating leases for real estate and non-real estate in the United States, United Kingdom, China, Japan, and South Korea. One such operating lease is a sublease for real estate. The Company does not have any material finance leases.

The Company leases office, storage/warehouse, laboratory and manufacturing space in Abingdon, U.K., which leases are due to expire at various dates from December 31, 2020 to June 18, 2033. On March 1, 2013, the Company signed a five year lease for its U.S. corporate headquarters in Marlborough, Massachusetts. In August 2015, the Company entered into a lease amendment for this location to extend the term of the lease by two years through October 31, 2020. In addition, the lease amendment expanded the Company’s office space at this location by 7,600 square feet to a new total of 22,100 square feet. The base rent for the combined space over the lease term ranges from an initial low of $36,000 per month, which includes $12,000 per month for the expansion space, which commenced in early 2016, to a high of $39,000 per month. The Company has an option to extend the lease for one additional term of five years.

In June 2018, the Company entered into a lease for new space in Abingdon, U.K., which extends through June 2033 that will allow it to combine its manufacturing, laboratory, storage and office operations into a single facility. The base rent on the facility over the lease term will range from $39,000 per month to $79,000 per month. With the exception of manufacturing and associated groups, our U.K. operations are now located in this facility.

In connection with the sale of our U.S. Laboratory Services Business to Quest, the Company entered into a sublease with Quest for approximately 9,000 square feet of warehousing and office space in Norwood, Massachusetts. The sublease expires in November 2020. The base rent for the space subject to sublease is approximately $17,000 per month.

Many of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheet are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to not exercise.

The Company has existing leases that include variable lease and non-lease components that are not included in the right-of-use asset and lease liability and are reflected as an expense in the periods incurred. Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index, such as the Consumer Price Index.

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In calculating the present value of future lease payments, the Company has elected to utilize its incremental borrowing rate based on the remaining lease term at the date of adoption. The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was not applied. The Company has existing net leases in which the non-lease components (e.g., common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are not included in the right-of-use asset and lease liability, but instead are reflected as an expense in the period incurred. As of September 30, 2019, an operating lease right-of-use asset of $6.7 million and an operating lease liability of $7.8 million are reflected on the consolidated balance sheet.

The elements of lease expense were as follows:

($ amounts in thousands)	Three months ended September 30, 2019			Nine months ended September 30, 2019
Lease Cost
Operating lease cost	$	322		$	963
Short-term lease cost		186			553
Variable lease cost		239			705
Total lease cost	$	747		$	2,221
Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	250		$	765
Operating lease liabilities arising from obtaining right-of-use assets		136			136
Operating Leases
Weighted average remaining lease term (in years)		12.5			12.5
Operating Leases
Weighted average discount rate		7.8	%		7.8	%

Future lease payments required under non-cancelable operating leases in effect as of September 30, 2019 were as follows:

(in thousands)	September 30, 2019
2019 (three months)	$	257
2020		1,059
2021		998
2022		971
2023		941
Thereafter		8,184
Total lease payments		12,410
Less: imputed interest		(4,638	)
Total operating lease liabilities	$	7,772

The Company adopted ASC 842, Leases on January 1, 2019, as noted above and, as required, the following disclosure is provided for periods prior to adoption. Future minimum lease payments required under non-cancelable operating leases in effect as of December 31, 2018 were as follows:

(in thousands)	December 31, 2018
2019	$	2,024
2020		1,848
2021		972
2022		855
2023		855
Thereafter		7,558
Total minimum lease payments	$	14,112

Purchase commitments

Future minimum payments required under purchase obligations in effect as of September 30, 2019 are as follows:

(in thousands)	Purchase Obligations
2019 (three months)	$	4,432
2020		3,055
2021		1,200
2022		370
2023		370
Thereafter		-
Total minimum payments	$	9,427

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14. Discontinued operations

As previously disclosed, on September 25, 2018, the Company entered into a Limited Liability Company Interest Purchase Agreement, or the Purchase Agreement, with Quest, Oxford Immunotec Limited, a limited company incorporated in England and Wales and a wholly owned subsidiary of the Company, or Oxford Limited, and Oxford Immunotec, LLC, a Delaware limited liability company (formerly known as Oxford Immunotec, Inc., a Delaware corporation) and a wholly owned subsidiary of the Company, or Oxford LLC, pursuant to which Oxford Limited agreed to sell, and Quest agreed to acquire, the U.S. Laboratory Services Business, for gross proceeds of $170 million in cash. This transaction is referred to herein as the Transaction. Of this amount, approximately $32.3 million was paid directly to MidCap in settlement of all amounts due under a financing agreement, which included prepayment and exit fees of approximately $2.3 million as described in Note 8. Loans payable.

As contemplated in the Purchase Agreement, Oxford Immunotec USA, Inc., a Delaware corporation and a newly formed wholly owned subsidiary of Oxford Limited, or Oxford USA, joined the Purchase Agreement by way of a Joinder Agreement dated October 1, 2018.

The Transaction was consummated in accordance with the terms and conditions of the Purchase Agreement on November 6, 2018, or the Closing Date. Prior to and in connection with consummation of the Transaction, Oxford USA and Oxford LLC (at the time, known as Oxford Immunotec, Inc.) carried out a corporate restructuring pursuant to which (i) the assets and businesses of Oxford LLC other than the U.S. Laboratory Services Business were transferred to Oxford USA and (ii) Oxford LLC was converted into a limited liability company.

At the time of sale, the U.S. Laboratory Services Business had a carrying value of $27.9 million. The Company recorded a gain of $146.0 million in connection with the Transaction, which amount was included in income from discontinued operations before income taxes in the Company’s consolidated statement of operations during the three months ended December 31, 2018.

Additionally, pursuant to the terms of the Purchase Agreement, the parties entered into certain ancillary agreements as of the Closing Date, including: (i) a transitional services agreement, or TSA, that will continue, unless otherwise terminated, until each service included in the TSA has been completed, (ii) a technology license agreement that will remain in effect until the date of expiration or lapse of the last “Blood Stability Patent” to expire or lapse, and (iii) a long-term supply agreement, or the Supply Agreement, pursuant to which Oxford USA agreed to sell, and Quest agreed to purchase, T-SPOT.TB test kits and related accessories from Oxford USA. The Supply Agreement will last for a period of seven years after the effective date unless terminated earlier by a party to the Supply Agreement, as provided for in the Supply Agreement. In addition, the parties entered into a strategic collaboration agreement to drive continued growth of T-SPOT.TB testing in the U.S. that will remain in effect until the expiration or termination of the Supply Agreement.

In conjunction with the Purchase Agreement, Quest agreed to purchase kits and accessories from the Company for an initial period of seven years after the effective date of the Purchase Agreement unless a party earlier terminates, as provided for in the Purchase Agreement. On June 12, 2019, the Company entered into an Amendment of Agreement between Quest and Oxford Immunotec, USA, Inc., or the Amendment. The Amendment revised growth targets, pricing and various other terms, which are confidential.

During the three and nine months ended September 30, 2018, Oxford Limited sold kits to its discontinued operations, Oxford LLC, for use in the lab services business of $1.8 million and $7.3 million, respectively, that were eliminated in the Company’s consolidated financial results.

The following table presents the results of discontinued operations, which solely relate to 2018:

(in thousands)	Three months ended September 30, 2018		Nine months ended September 30, 2018
Major classes of line items constituting income (loss) from discontinued operations before income taxes:
Service revenue	$	18,446	$	46,265
Cost of service revenue		9,889		30,359
Gross profit		8,557		15,906
Research and development		2,077		4,989
Sales and marketing		2,093		6,582
General and administrative		1,613		4,439
Income (loss) from discontinued operations before income taxes		2,774		(104	)
Income tax expense		—		—
Income (loss) from discontinued operations	$	2,774	$	(104	)

During the third quarter of 2019, the Company recorded a charge in discontinued operations of $469,000 that resulted from adjustments on the remaining proceeds due from the Transaction.

18

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Please see “Special Note Regarding Forward-Looking Statements” in this Quarterly Report for a discussion of the uncertainties, risks and assumptions associated with these statements. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and in the 2018 Form 10-K, particularly in Part I, Item 1A, “Risk Factors.” You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Quarterly Report.

As previously disclosed, on September 25, 2018, Oxford Immunotec Global PLC, or the Company, entered into a Limited Liability Company Interest Purchase Agreement, or the Purchase Agreement, with Quest Diagnostics Incorporated, or Quest, Oxford Immunotec Limited, a limited company incorporated in England and Wales and a wholly owned subsidiary of the Company, or Oxford Limited, and Oxford Immunotec, LLC, a Delaware limited liability company (formerly known as Oxford Immunotec, Inc., a Delaware corporation) and a wholly owned subsidiary of the Company, or Oxford LLC, pursuant to which Oxford Limited agreed to sell, and Quest agreed to acquire, the Company’s U.S. laboratory services business, or the U.S. Laboratory Services Business, for gross proceeds of $170 million in cash, or the Transaction. Of this amount, approximately $32.3 million was paid directly to MidCap Financial Trust, or MidCap, in settlement of all amounts due under a financing agreement between the Company and MidCap.

In conjunction with the Transaction, all prior year amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been recast to present our results, as if the Transaction had occurred prior to the earliest period presented. For more information on the Transaction, please see the below section entitled “Discontinued operations” and Note 14. Discontinued operations, of the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report.

Overview

We are a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for immunology and infectious disease by leveraging the technological, product development, manufacturing, quality, regulatory, and sales and marketing capabilities we have developed over our seventeen year history. Our proprietary T-SPOT.TB test utilizes our T-SPOT technology platform to test for tuberculosis, which is the leading cause of infectious disease death worldwide.

On November 6, 2018, we completed the sale of our U.S. Laboratory Services Business to Quest for gross proceeds of $170 million in cash. This Transaction represented a strategic business shift and had a major effect on our operations and financial results. 

We have incurred significant losses from inception and as of September 30, 2019 had an accumulated deficit of $81.5million. However, our operating losses declined following the sale of the U.S. Laboratory Services Business to Quest, as we have concentrated on reducing overhead costs and refocusing the business on the sale of kits. And, we reported operating income from continuing operations for the three months ended September 30, 2019. Our revenue for the nine months ended September 30, 2019 and 2018 was $55.6 million and $44.4 million, respectively. Our income from continuing operations for the nine months ended September 30, 2019 was $280,000 compared to a loss from continuing operations of $20.2 million for the nine months ended September 30, 2018.

Discontinued operations

On September 25, 2018, the Company entered into the Purchase Agreement with Quest, Oxford Limited and Oxford LLC pursuant to which Oxford Limited agreed to sell, and Quest agreed to acquire, the Company’s U.S. Laboratory Services Business for gross proceeds of $170 million in cash, or the Transaction. Of this amount, approximately $32.3 million was paid directly to MidCap in settlement of all amounts due under the financing agreement between the Company and MidCap, as described in Note 8. Loans payable of the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report.

As contemplated in the Purchase Agreement, Oxford Immunotec USA, Inc., a Delaware corporation and a newly formed wholly owned subsidiary of Oxford Limited, or Oxford USA, joined the Purchase Agreement by way of a Joinder Agreement dated October 1, 2018.

The Transaction was consummated in accordance with the terms and conditions of the Purchase Agreement on November 6, 2018, or the Closing Date. Prior to and in connection with consummation of the Transaction, Oxford USA and Oxford LLC (at the time, known as Oxford Immunotec, Inc.) carried out a corporate restructuring pursuant to which (i) the assets and businesses of Oxford LLC other than the U.S. Laboratory Services Business were transferred to Oxford USA and (ii) Oxford LLC was converted into a limited liability company.

Additionally, pursuant to the terms of the Purchase Agreement, the parties entered into certain ancillary agreements as of the Closing Date, including: (i) a transitional services agreement, or TSA, (ii) a technology license agreement and (iii) a long-term supply agreement, or the Supply Agreement, pursuant to which Oxford USA agreed to sell, and Quest agreed to purchase, T-SPOT.TB test kits and related accessories from Oxford USA. In addition, the parties entered into a strategic collaboration agreement to drive continued growth of T.SPOT.TB testing in the U.S.

For more information related to the Transaction, please refer to our discussion in the notes to our financial statements in Note 14. Discontinued operations of the notes to our consolidated financial statements appearing elsewhere in this Quarterly Report.

19

Financial operations overview

Revenue

We generate revenue mainly from sales associated with our T-SPOT technology platform via our direct sales force and also through distributors. Our T-SPOT.TB test is our first commercialized product based on this technology.

Revenue by type

We currently offer our T-SPOT.TB test as both an in vitro diagnostic kit and a service. In the former, we sell test kits and associated accessories to distributors for resale and directly to institutions and laboratories that perform tuberculosis, or TB, testing. In the latter, we have an established clinical testing laboratory in the U.K., where we perform our T-SPOT.TB test on samples sent to us by customers. For the majority of our customers, we primarily negotiate pricing directly with our customers; our prices are influenced to some degree by the mechanism and level of funding our customers receive for performing tests for TB infection.

By type, total revenues were as summarized in the table below.

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
Product	$	20,115	$	15,095	$	52,622	$	40,236
Service		1,104		955		2,974		4,150
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation. We also released unaudited pro forma condensed combined statements of operations in Forms 8-K that were filed with the Securities and Exchange Commission on January 7, 2019 and March 11, 2019 that included the effect of the Transaction on revenues had the pricing and other terms of the Supply Agreement been in force in those prior periods. The unaudited pro forma condensed combined statements of operations were estimated based on the best information available at the time and assumptions that management believed to be factually supportable and reasonable. The unaudited pro forma condensed combined financial information was prepared for illustrative and informational purposes only, was not intended to reflect what our consolidated results of operations would have been had the Transaction occurred prior to the dates indicated, and is not necessarily indicative of our future consolidated results of operations.

Revenue by geography

We have a direct sales force in the U.S., certain European countries and Japan as well as market development personnel in China and South Korea. In parts of the world where we do not maintain a direct sales force, we market and sell our products through distributors. As a result, our revenue is denominated in multiple currencies.

The following table reflects revenue by geography (United States, Europe and rest of world, or Europe and ROW, and Asia) and as a percentage of total revenue, based on the billing address of our customers.

	Three months ended September 30,
(in thousands, except percentages)	2019				2018
Revenue
United States	$	5,735	27	%	$	2,876	18	%
Europe and ROW		2,709	13	%		2,277	14	%
Asia		12,775	60	%		10,897	68	%
Total revenue	$	21,219	100	%	$	16,050	100	%

	Nine months ended September 30,
(in thousands, except percentages)	2019				2018
Revenue
United States	$	19,034	34	%	$	11,615	26	%
Europe and ROW		7,670	14	%		6,750	15	%
Asia		28,892	52	%		26,021	59	%
Total revenue	$	55,596	100	%	$	44,386	100	%

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation.

20

Cost of revenue and operating expenses

Cost of revenue and gross margin

Cost of revenue consists of direct labor expenses, including employee benefits and share-based compensation expenses, overhead expenses, material costs, cost of laboratory supplies, freight costs, royalties paid under license agreements, depreciation of laboratory equipment and leasehold improvements.

We expect our overall cost of revenue to increase as we continue to increase our volume of T-SPOT.TB kits manufactured and tests performed. However, we also believe that through these increased volumes, we can achieve certain efficiencies in our manufacturing and laboratory operations that could help maintain or improve our overall margins.

During the three months ended September 30, 2019 and 2018, our cost of revenue represented 27% and 28%, respectively, of our total revenue. For the nine months ended September 30, 2019 and 2018, our cost of revenue represented 28% and 29%, respectively, of our total revenue.

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Cost of revenue
Product	$	5,313	$	3,864	$	14,306	$	9,993
Service		418		709		1,053		2,877
Total cost of revenue	$	5,731	$	4,573	$	15,359	$	12,870

Our gross profit represents total revenue less total cost of revenue, and gross margin is gross profit expressed as a percentage of total revenue. Our gross margins were 73% and 72% for the three months ended September 30, 2019 and 2018, respectively. Gross margins were 72% and 71% for the nine months ended September 30, 2019 and 2018, respectively.

Research and development expense

Our research and development efforts are focused on development programs to enhance our TB product offering. We are developing multiple product enhancements that aim to improve the clinical utility of our test and improve test workflow and automation.

Our research and development activities include performing research, development, clinical and regulatory activities and validating improvements to our technology and processes for the purposes of enhancing product performance. Research and development expense includes personnel-related expenses, including share-based compensation, fees for contractual and consulting services, clinical trial costs, travel costs, laboratory supplies, amortization, depreciation, rent, insurance and repairs and maintenance. We expense all research and development costs as incurred.

During the three months ended September 30, 2019 and 2018, our research and development expense represented 8% and 11%, respectively, of our total revenue. For the nine months ended September 30, 2019 and 2018, our research and development expense represented 11% and 13%, respectively, of our total revenue.

Sales and marketing expense

Our sales and marketing expense includes costs associated with our sales organization, including our direct sales force and sales management, and our marketing, customer service and business development personnel. These expenses consist principally of salaries, commissions, bonuses and employee benefits for these personnel, including share-based compensation, as well as travel costs related to sales, marketing costs, including the cost of obtaining marketing data, customer service activities, medical education activities and overhead expenses. We expense all sales and marketing costs as incurred.

During the three months ended September 30, 2019 and 2018, our sales and marketing expense represented 35% and 40%, respectively, of our total revenue. For the nine months ended September 30, 2019 and 2018, our sales and marketing expense represented 38% and 47%, respectively, of our total revenue.

General and administrative expense

Our general and administrative expense includes costs for our executive, accounting, treasury, finance, legal, information technology, or IT, and human resources functions. These expenses consist principally of salaries, bonuses and employee benefits for the personnel included in these functions, including share-based compensation and travel costs, professional services fees, such as consulting, audit, tax and legal fees, costs related to our Board of Directors, general corporate costs, overhead expenses, and bad debt expense. Additionally, general and administrative expense for the three and nine months ended September 30, 2019 included a credit for income from the TSA with Quest that was entered into in conjunction with the Transaction. We expense all general and administrative expenses as incurred.

During the three months ended September 30, 2019 and 2018, our general and administrative expense represented 26% and 51%, respectively, of our total revenue. For the nine months ended September 30, 2019 and 2018, our general and administrative expense represented 29% and 44%, respectively, of our total revenue.

21

Settlement expense

On September 30, 2019, we entered into a Settlement Agreement and Release with Oxford University Innovation Limited, or OUI, or the OUI Settlement Agreement, to resolve outstanding disputes arising from a license agreement with OUI. The terms of the OUI Settlement Agreement are confidential.

On June 18, 2018, the Company entered into a Settlement Agreement with the former shareholders of Immunetics, Inc., or the Immunetics Settlement Agreement, to resolve disputes arising from the Agreement and Plan of Merger dated October 12, 2016. The terms of the Immunetics Settlement Agreement are confidential.

On June 30, 2017, we entered into a Release and Settlement Agreement with Statens Serum Institut, or SSI, or the SSI Settlement Agreement, to resolve outstanding disputes arising from a license agreement with SSI. The terms of the SSI Settlement Agreement are confidential.

Interest income (expense), net

Interest income (expense), net includes interest income on our available cash balances, which are primarily invested in money market funds and repurchase agreements, primarily in U.S. government and agency securities, and bank savings accounts in the U.S., U.K., Germany, Japan, China and South Korea. Essentially all our cash is in the U.S. and the U.K. Interest expense for 2018 mainly related to our previous agreement with MidCap, or the MidCap Agreement, that provided us with $40 million in debt financing, comprised of both a term loan and a revolving line of credit. Upon closing of the Transaction, approximately $32.3 million was paid directly to MidCap in settlement of all amounts due. The payment to MidCap included prepayment and exit fees of approximately $2.3 million.

Foreign exchange gains (losses)

Foreign exchange gains (losses) largely resulted from U.S. dollar denominated bank accounts, accounts receivable, and accounts payable reflected on the books of Oxford Limited, which has a functional currency of the U.K. Pound Sterling. We are exposed to foreign exchange rate risk because we currently operate in three major regions of the world: the United States, Europe and ROW, and Asia, and our revenue is denominated in multiple currencies. Sales in the U.S. and South Korea are denominated in U.S. dollars while sales in Europe are denominated primarily in the U.K. Pound Sterling and Euro. As we grow Europe and ROW sales outside the U.K. and the Euro Zone, we may be subject to risk from additional currencies. Sales in China have historically been denominated in U.S. dollars, however, effective with the third quarter of 2019, some sales are denominated in Chinese Yuan. Sales in Japan are denominated in Yen.

Monetary assets and liabilities that are denominated in foreign currencies are remeasured at the period-end closing rate with resulting unrealized exchange fluctuations. Realized exchange fluctuations result from the settlement of transactions in currencies other than the functional currencies of our businesses. The functional currencies of our businesses are U.S. dollars, Pounds Sterling, Euros, Japanese Yen and Chinese Yuan, depending on the entity.

Other income (expense)

Other income (expense) includes other income and expense items.

Income (loss) from discontinued operations

On November 6, 2018, we completed the agreement to sell our U.S. Laboratory Services Business to Quest. This agreement represented a strategic business shift and had a major effect on our operations and financial results. Accordingly, the operations of this business have been reported in discontinued operations in the consolidated financial statements for 2018.

22

Results of operations  

Comparison of three months ended September 30, 2019 and 2018

The following table sets forth, for the periods indicated, the amounts of certain components of our statements of operations and the percentage of total revenue represented by these items, showing period-to-period changes.

	Three months ended September 30,
	2019						2018						Change
				% of						% of
(in thousands, except percentages)	Amount			Revenue			Amount			Revenue			Amount			%
Revenue:
Product	$	20,115			95	%	$	15,095			94	%	$	5,020			33	%
Service		1,104			5	%		955			6	%		149			16	%
Total revenue		21,219			100	%		16,050			100	%		5,169			32	%
Cost of revenue:
Product		5,313			25	%		3,864			24	%		1,449			38	%
Service		418			2	%		709			4	%		(291	)		(41	)%
Total cost of revenue		5,731			27	%		4,573			28	%		1,158			25	%
Gross profit		15,488			73	%		11,477			72	%		4,011			35	%
Operating expenses:
Research and development		1,631			8	%		1,754			11	%		(123	)		(7	)%
Sales and marketing		7,405			35	%		6,432			40	%		973			15	%
General and administrative		5,531			26	%		8,132			51	%		(2,601	)		(32	)%
Settlement expense		799			4	%		212			1	%		587			277	%
Total operating expenses		15,366			72	%		16,530			103	%		(1,164	)		(7	)%
Operating income (loss) from continuing operations		122			1	%		(5,053	)		(31	)%		5,175			(102	)%
Interest income (expense), net		1,064			5	%		(673	)		(4	)%		1,737			(258	)%
Foreign exchange gains (losses)		360			2	%		(52	)		(0	)%		412			(792	)%
Other income (expense)		23			0	%		5			0	%		18			360	%
Income (loss) from continuing operations before income taxes		1,569			7	%		(5,773	)		(36	)%		7,342			(127	)%
Income tax expense from continuing operations		(383	)		(2	)%		(485	)		(3	)%		102			(21	)%
Income (loss) from continuing operations		1,186			6	%		(6,258	)		(39	)%		7,444			(119	)%
Discontinued operations:
Income (loss) from discontinued operations before income taxes		(469	)		(2	)%		2,774			17	%		(3,243	)		(117	)%
Income tax expense		-			0	%		-			0	%		-			NM
Income (loss) from discontinued operations		(469	)		(2	)%		2,774			17	%		(3,243	)		(117	)%
Net income (loss)	$	717			3	%	$	(3,484	)		(22	)%	$	4,201			(121	)%

23

Revenue 

Revenue increased by 32% to $21.2 million for the three months ended September 30, 2019, from $16.1 million for the same period in 2018.

U.S. revenue, excluding revenue from discontinued operations, increased by 99% to $5.7 million for the three months ended September 30, 2019, from $2.9 million for the same period in 2018, due to growth in testing volumes and higher average selling prices in 2019, as compared to 2018 average selling prices which were the intercompany transfer price formerly eliminated in consolidation, partially offset by a $93,000 decrease in revenue resulting from our withdrawal from the blood donor screening market in 2018.

Asia revenue increased by 17% to $12.8 million for the three months ended September 30, 2019 compared to the same period in 2018, due to strong growth in shipments to Japan. On a non-generally accepted accounting principles, or non-GAAP, constant currency basis, revenue for Asia would have increased by 15%. Europe and ROW revenue increased 19% to $2.7 million for the three months ended September 30, 2019, compared to the same period in 2018. On a non-GAAP constant currency basis, Europe and ROW revenue would have increased by 24% in 2019 compared to 2018.

Changes in revenue include the impact of changes in foreign currency exchange rates. We use the non-GAAP financial measure “constant currency basis” in our filings to show changes in our revenue without giving effect to period-to-period currency fluctuations. Under U.S. GAAP, revenues received in local (non-U.S. dollar) currencies are translated into U.S. dollars at the average exchange rate for the period presented. When we use the term “constant currency basis”, it means that we have translated local currency revenues for the prior reporting period into U.S. dollars using the same average foreign currency exchange rates for the conversion of revenues into U.S. dollars that we used to translate local currency revenues for the comparable reporting period of the current year. We then calculate the change, as a percentage, from the prior period revenues using the current period exchange rates versus the current period revenues. This resulting percentage is a non-GAAP measure referring to a change as a percentage on a “constant currency basis”.

This non-GAAP financial measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of revenue on a constant currency basis is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on our operating results. We consider the use of a period over period revenue comparison on a constant currency basis to be helpful to investors, as it provides a revenue growth measure free of positive or negative volatility due to currency fluctuations.

By revenue type, total revenues were:

	Three months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Revenue
Product	$	20,115	$	15,095	$	5,020		33	%
Service		1,104		955		149		16	%
Total revenue	$	21,219	$	16,050	$	5,169		32	%

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation.

By geography, total revenues were:

	Three months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Revenue
United States	$	5,735	$	2,876	$	2,859		99	%
Europe and ROW		2,709		2,277		432		19	%
Asia		12,775		10,897		1,878		17	%
Total revenue	$	21,219	$	16,050	$	5,169		32	%

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation.

24

Cost of revenue and gross margin

Cost of revenue increased by 25% to $5.7 million for the three months ended September 30, 2019 compared to the same period in 2018, due largely to increased revenue in 2019. Gross margin for the three months ended September 30, 2019 was 73% compared to 72% for the same period in 2018.

	Three months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount			%
Cost of revenue
Product	$	5,313	$	3,864	$	1,449			38	%
Service		418		709		(291	)		(41	)%
Total cost of revenue	$	5,731	$	4,573	$	1,158			25	%

Research and development expense

Research and development expense decreased to $1.6 million for the three months ended September 30, 2019 from $1.8 million for the same period in 2018. As a percentage of total revenue, research and development expense was 8% for the three months ended September 30, 2019 compared to 11% for the same period in 2018.

Sales and marketing expense 

Sales and marketing expense increased to $7.4 million for the three months ended September 30, 2019 from $6.4 million for the same period in 2018. The increase largely resulted from higher salary and employee-related expenses. As a percentage of total revenue, sales and marketing expense decreased to 35% for the three months ended September 30, 2019, compared to 40% for the same period in 2018.

General and administrative expense

General and administrative expense decreased to $5.5 million for the three months ended September 30, 2019 from $8.1 million for the same period in 2018. The higher expenses in 2018 in large part reflected costs incurred in completing the Transaction. As a percentage of total revenue, general and administrative expense decreased to 26% for the three months ended September 30, 2019 from 51% for the same period in 2018.

Settlement expense

Settlement expense increased to $799,000 for the three months ended September 30, 2019 from $212,000 for the same period in 2018. Settlement expense relates to the OUI Settlement Agreement and the SSI Settlement Agreement. The terms of each of the agreements are confidential.

Interest income (expense), net

Interest income (expense), net was income of $1.1 million for the three months ended September 30, 2019 reflecting interest income on proceeds received in connection with the Transaction, compared to expense of $673,000 in the same period in 2018 resulting from the Company's indebtedness under the MidCap Agreement.

Foreign exchange gains (losses)

We recorded foreign exchange gains of $360,000 for the three months ended September 30, 2019, substantially all as a net result of U.S. dollar denominated bank accounts, accounts receivable, and accounts payable reflected on the books of Oxford Limited, which has a functional currency of the U.K. Pound Sterling. For the three months ended September 30, 2018, we recorded foreign exchange losses of $52,000. Approximately 27% of our sales for the three months ended September 30, 2019 were in the U.S., which are denominated in U.S. dollars. Sales in South Korea are also denominated in U.S. dollars. Sales in Europe are denominated primarily in the U.K. Pound Sterling and the Euro. As we grow Europe and ROW sales outside the United Kingdom and the Euro Zone, we may be subject to risk from additional currencies. Sales in China have historically been denominated in U.S dollars, however, effective with the third quarter of 2019, some sales are denominated in Chinese Yuan. Sales in Japan are denominated in Yen.

Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in the U.S., the U.K., Japan, Europe, China and South Korea.

As we continue to grow our business outside the U.S., our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. To date, we have not entered into any foreign currency hedging contracts, although we may do so in the future.

25

Other income (expense)

Other income for the three months ended September 30, 2019 was $23,000, compared to $5,000 for the three months ended September 30, 2018.

Income (loss) from discontinued operations

Discontinued operations represent the U.S. Laboratory Services Business that we sold to Quest. For financial statement purposes, the results of operations for the discontinued operations have been segregated from those of our continuing operations and are presented in our condensed consolidated financial statements as discontinued operations.

The loss from discontinued operations for the three months ended September 30, 2019 was $469,000 and resulted from adjustments on the remaining proceeds due from the Transaction. The income from discontinued operations for the three months ended September 30, 2018 was $2.8 million.

Comparison of nine months ended September 30, 2019 and 2018

The following table sets forth, for the periods indicated, the amounts of certain components of our statements of operations and the percentage of total revenue represented by these items, showing period-to-period changes.

	Nine months ended September 30,
	2019					2018					Change
				% of					% of
(in thousands, except percentages)	Amount			Revenue		Amount			Revenue		Amount			%
Revenue:
Product	$	52,622		95	%	$	40,236		91	%	$	12,386		31	%
Service		2,974		5	%		4,150		9	%		(1,176	)	(28	)%
Total revenue		55,596		100	%		44,386		100	%		11,210		25	%
Cost of revenue:
Product		14,306		26	%		9,993		23	%		4,313		43	%
Service		1,053		2	%		2,877		6	%		(1,824	)	(63	)%
Total cost of revenue		15,359		28	%		12,870		29	%		2,489		19	%
Gross profit		40,237		72	%		31,516		71	%		8,721		28	%
Operating expenses:
Research and development		6,044		11	%		5,969		13	%		75		1	%
Sales and marketing		21,169		38	%		20,655		47	%		514		2	%
General and administrative		16,230		29	%		19,349		44	%		(3,119	)	(16	)%
Settlement expense		1,002		2	%		1,979		4	%		(977	)	(49	)%
Total operating expenses		44,445		80	%		47,952		108	%		(3,507	)	(7	)%
Operating loss from continuing operations		(4,208	)	(8	)%		(16,436	)	(37	)%		12,228		(74	)%
Interest income (expense), net		3,426		6	%		(2,011	)	(5	)%		5,437		(270	)%
Foreign exchange losses		(233	)	(0	)%		(306	)	(1	)%		73		(24	)%
Other income (expense)		65		0	%		(242	)	(1	)%		307		(127	)%
Loss from continuing operations before income taxes		(950	)	(2	)%		(18,995	)	(43	)%		18,045		(95	)%
Income tax benefit (expense) from continuing operations		1,230		2	%		(1,182	)	(3	)%		2,412		(204	)%
Income (loss) from continuing operations		280		1	%		(20,177	)	(45	)%		20,457		(101	)%
Discontinued operations:
Loss from discontinued operations before income taxes		(469	)	(1	)%		(104	)	(0	)%		(365	)	351	%
Income tax expense		-		0	%		-		0	%		-		NM
Loss from discontinued operations		(469	)	(1	)%		(104	)	(0	)%		(365	)	351	%
Net loss	$	(189	)	(0	)%	$	(20,281	)	(46	)%	$	20,092		(99	)%

26

Revenue 

Revenue increased by 25% to $55.6 million for the nine months ended September 30, 2019, from $44.4 million for the same period in 2018.

U.S. revenue, excluding revenue from discontinued operations, increased by 64% to $19.0 million for the nine months ended September 30, 2019, from $11.6 million for the same period in 2018. The increase in U.S. revenue was due to growth in testing volumes and higher average selling prices in 2019, as compared to 2018 average selling prices, which were the intercompany transfer price formerly eliminated in consolidation, partially offset by a $1.7 million decrease in revenue resulting from our withdrawal from the blood donor screening market in 2018.

Asia revenue increased by 11% to $28.9 million for the nine months ended September 30, 2019 compared to the same period in 2018, due primarily to growth in testing volumes in both China and Japan. On a non-GAAP constant currency basis, revenue for Asia would have increased by 11%. Europe and ROW revenue increased 14% to $7.7 million for the nine months ended September 30, 2019, compared to the same period in 2018, due mainly to strong growth in TB sales. On a non-GAAP constant currency basis, Europe and ROW revenue would have increased by 20% in 2019 compared to 2018.

By revenue type, total revenues were:

	Nine months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount			%
Revenue
Product	$	52,622	$	40,236	$	12,386			31	%
Service		2,974		4,150		(1,176	)		(28	)%
Total revenue	$	55,596	$	44,386	$	11,210			25	%

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation.

By geography, total revenues were:

	Nine months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount		%
Revenue
United States	$	19,034	$	11,615	$	7,419		64	%
Europe and ROW		7,670		6,750		920		14	%
Asia		28,892		26,021		2,871		11	%
Total revenue	$	55,596	$	44,386	$	11,210		25	%

Revenue in the above table includes 2018 sales to the U.S. Laboratory Services Business at our intercompany transfer price that were formerly eliminated in consolidation.

27

Cost of revenue and gross margin

Cost of revenue increased by 19% to $15.4 million for the nine months ended September 30, 2019 when compared to the same period in 2018, due largely as a reflection of increased revenue in 2019. Gross margin for the nine months ended September 30, 2019 was 72% compared to 71% for the same period in 2018.

	Nine months ended September 30,				Change
(in thousands, except percentages)	2019		2018		Amount			%
Cost of revenue
Product	$	14,306	$	9,993	$	4,313			43	%
Service		1,053		2,877		(1,824	)		(63	)%
Total cost of revenue	$	15,359	$	12,870	$	2,489			19	%

Research and development expense

Research and development expense of $6.0 million for the nine months ended September 30, 2019 was essentially flat compared to the same period in 2018. As a percentage of total revenue, research and development expense decreased to 11% for the nine months ended September 30, 2019 from 13% for the same period in 2018.

Sales and marketing expense 

Sales and marketing expense increased to $21.2 million for the nine months ended September 30, 2019 from $20.7 million for the same period in 2018. The increase largely resulted from higher marketing and travel and entertainment expenses, partially offset by lower administrative and legal and professional fees. As a percentage of total revenue, sales and marketing expense decreased to 38% for the nine months ended September 30, 2019 from 47% for the same period in 2018.

General and administrative expense

General and administrative expense decreased to $16.2 million for the nine months ended September 30, 2019 from $19.3 million for the same period in 2018. The decrease included lower legal and professional fees and payments received under the TSA with Quest that have been credited against general and administrative expense during 2019. General and administrative expense for 2019 was also net of a credit for share-based compensation of $298,000, related to the departure of certain executive officers during the second quarter of 2019. As a percentage of total revenue, general and administrative expense decreased to 29% for the nine months ended September 30, 2019 from 44% for the same period in 2018.

Settlement expense

Settlement expense decreased to $1.0 million for the nine months ended September 30, 2019 from $2.0 million for the same period in 2018. Settlement expense relates to the OUI Settlement Agreement, the Immunetics Settlement Agreement, and the SSI Settlement Agreement. The terms of each of the agreements are confidential.

Interest income (expense), net

Interest income (expense), net was income of $3.4 million for the nine months ended September 30, 2019, reflecting interest income on proceeds received in connection with the Transaction, compared to expense of $2.0 million in the same period in 2018 resulting from the Company's indebtedness under the MidCap Agreement.

Foreign exchange losses

We recorded foreign exchange losses of $233,000 for the nine months ended September 30, 2019, substantially all as a net result of U.S. dollar denominated bank accounts, accounts receivable, and accounts payable reflected on the books of Oxford Limited, which has a functional currency of the U.K. Pound Sterling. For the nine months ended September 30, 2018, we recorded foreign exchange losses of $306,000. Approximately 34% of our sales for the nine months ended September 30, 2019 were in the U.S., which are denominated in U.S. dollars. Sales in South Korea are also denominated in U.S. dollars. Sales in Europe are denominated primarily in the U.K. Pound Sterling and the Euro. As we grow Europe and ROW sales outside the United Kingdom and the Euro Zone, we may be subject to risk from additional currencies. Sales in China have historically been denominated in U.S. dollars, however, effective with the third quarter of 2019, some sales in China are denominated in Chinese Yuan. Sales in Japan are denominated in Yen.

Our expenses are generally denominated in the currencies in which our operations are located, which are primarily in the U.S., the U.K., Japan, Europe, China and South Korea. 

28

As we continue to grow our business outside the U.S., our results of operations and cash flows will be subject to fluctuations due to changes in foreign currency exchange rates, which could harm our business in the future. To date, we have not entered into any foreign currency hedging contracts, although we may do so in the future.

Other income (expense)

Other income for the nine months ended September 30, 2019 was $65,000. Other expense was $242,000 for the nine months ended September 30, 2018.

Income (loss) from discontinued operations

Discontinued operations represent the U.S. Laboratory Services Business that we sold to Quest. For financial statement purposes, the results of operations for the discontinued operations have been segregated from those of our continuing operations and are presented in our condensed consolidated financial statements as discontinued operations.

The loss from discontinued operations for the nine months ended September 30, 2019 of $469,000 resulted from adjustments on the remaining proceeds due from the Transaction. The loss from discontinued operations for the nine months ended September 30, 2018 was $104,000.

Liquidity and capital resources

Sources and uses of funds

Since our inception, we have incurred significant losses and negative cash flows from operations. However, for the nine months ended September 30, 2019, we had income from continuing operations of $280,000, while using $7.3 million of cash in operating activities from continuing operations. As of September 30, 2019, we had an accumulated deficit of $81.5 million. We incurred a loss from continuing operations of $20.2 million and used $20.9 million of cash in operating activities from continuing operations for the nine months ended September 30, 2018.

On November 6, 2018, we completed the sale of our U.S. Laboratory Services Business to Quest, for gross proceeds of $170 million in cash. We received net proceeds of approximately $130.2 million in cash. In conjunction with the closing of the Transaction, approximately $32.3 million was paid directly to MidCap in settlement of all amounts due under our debt financing, which was comprised of both a term loan and a revolving line of credit. The payment to MidCap included prepayment and exit fees of approximately $2.3 million.

In 2019, our Board of Directors authorized the repurchase of up to $100 million of our ordinary shares in the aggregate, subject to the approval of our shareholders by an ordinary resolution at our 2019 Annual General Meeting, or the share repurchase program. The share repurchase program was approved by our shareholders at our Annual General Meeting held on June 18, 2019 and was initiated during the third quarter of 2019. During the three months ended September 30, 2019, we repurchased 242,830 shares at a total cost of $3.3 million. As the share repurchase program allows for a maximum repurchase of $100 million of our ordinary shares including commissions, up to $96.7 million of ordinary shares remain eligible for repurchase as of September 30, 2019. The share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our ordinary shares under the program. Unless discontinued by our Board of Directors, the share repurchase program will be valid for up to five years. See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” of this Quarterly Report for more information relating to the share repurchase program.

As of September 30, 2019, we had cash, cash equivalents, and restricted cash of $184.4 million. We maintain our available cash balances in cash, money market funds and repurchase agreements primarily invested in U.S. government and agency securities, and bank savings accounts in the U.S., U.K., Germany, Japan, China and South Korea. Essentially all our cash is in the U.S. and the U.K.

29

Summary of cash flows

The following table summarizes our cash, cash equivalents, and restricted cash, accounts receivable and cash flows for the periods indicated:

	As of and for the nine months ended September 30,
(in thousands)	2019			2018
Cash, cash equivalents, and restricted cash	$	184,382		$	70,356
Accounts receivable, net		15,496			7,080
Net cash used in operating activities from continuing operations	$	(7,346	)	$	(20,914	)
Net cash used in investing activities from continuing operations		(729	)		(4,884	)
Net cash provided by financing activities from continuing operations		377			2,375
Net operating cash flows provided by discontinued operations		-			6,778
Net investing cash flows used in discontinued operations		-			(2,527	)
Net financing cash flows used in discontinued operations		-			(10	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(864	)		(994	)
Net decrease in cash, cash equivalents, and restricted cash	$	(8,562	)	$	(20,176	)

Cash flows for the nine months ended September 30, 2019 and 2018

Operating activities from continuing operations

Net cash used in operating activities from continuing operations was $7.3 million during the nine months ended September 30, 2019, which included income from continuing operations of $280,000, non-cash expenses of $3.8 million, and cash used for changes in operating assets and liabilities of $11.5 million. The non-cash items included share-based compensation expense of $2.7 million, depreciation and amortization expense of $1.4 million, and non-cash rent expense of $178,000, partially offset by credits of $250,000 for the change in deferred income taxes and $147,000 for non-cash interest. The cash used for changes in operating assets and liabilities included an increase in accounts receivable of $6.7 million, an increase in inventory of $2.3 million, an increase in prepaid expenses and other assets of $2.0 million, and a decrease in accounts payable and accrued liabilities of $495,000. The increase in accounts receivable reflects increased revenue and timing. The increase in inventory reflects timing. The increase in prepaid expenses and other assets reflects an increase in taxes receivable and the timing of certain payments. The decrease in accounts payable and accrued liabilities was largely due to payments in the first nine months of 2019 for royalties on intellectual property and bonuses that were accrued for at December 31, 2018, as well as the timing of payments. 

Net cash used in operating activities from continuing operations was $20.9 million during the nine months ended September 30, 2018, which included a net loss from continuing operations of $20.2 million, non-cash expenses of $6.1 million, and cash used for changes in operating assets and liabilities of $6.9 million. The non-cash items included share-based compensation expense of $3.6 million, deferred tax expense of $1.1 million, depreciation and amortization of intangible assets of $953,000, accretion and amortization of loan fees of $421,000, and a loss on disposal of property and equipment of $84,000. The cash used for changes in operating assets and liabilities included a decrease in accounts payable and accrued liabilities of $6.0 million, an increase in accounts receivable of $1.3 million, an increase in prepaid expenses and other assets of $270,000, and a decrease in other liabilities of $70,000, partially offset by a decrease in inventory of $773,000.

Investing activities from continuing operations

Net cash used in investing activities from continuing operations was $729,000 and $4.9 million during the nine months ended September 30, 2019 and 2018, respectively, and consisted of purchases of property and equipment.

Financing activities from continuing operations

Net cash provided by financing activities from continuing operations during the nine months ended September 30, 2019 of $377,000 included $3.9 million received upon the exercises of share options during the nine months ended September 30, 2019, partially offset by $3.3 million used for the repurchase of our ordinary shares as permitted under the share repurchase program and $224,000 used to pay taxes withheld on exercises of options and vesting of restricted share units.

During the nine months ended September 30, 2018, net cash provided by financing activities from continuing operations was $2.4 million.

Discontinued operations 

Net cash provided by discontinued operations for the nine months ended September 30, 2018 of $4.2 million related to $6.8 million provided by operating activities of discontinued operations, partially offset by cash used in investing activities of discontinued operations of $2.5 million for the purchase of property and equipment. There were no cash flows from discontinued operations for the nine months ended September 30, 2019.

Employees

As of September 30, 2019, we had 236 employees. None of our employees is represented by a labor union. We have not experienced any work stoppages and we believe our employee relations are good.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company’s exposure to market risk from interest rate fluctuations, capital market fluctuations, and foreign currency exchange rate fluctuations has not materially changed from its exposure as of December 31, 2018, as described in Part II, Item 7A of our 2018 Form 10-K.

Item 4. Controls and Procedures 

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report. Based on their evaluation, they have concluded our disclosure controls and procedures were not effective as of September 30, 2019 due to a material weakness in internal control over financial reporting related to the accounting for income taxes that was disclosed in our 2018 Form 10-K.

Management’s Plan to Remediate the Material Weakness

As previously described in Part II, Item 9A. “Controls and procedures” of our 2018 Form 10-K, we are working to implement a remediation plan to address the material weakness mentioned above. The material weakness will not be considered remediated until applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed by the time we file our Annual Report on Form 10-K for the year ended December 31, 2019.

(b) Changes in Internal Control Over Financial Reporting

There have been no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to review and document our disclosure controls and procedures, including our internal control over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

31

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in legal proceedings in the ordinary course of our business. We do not, however, expect such legal proceedings to have a material adverse effect on our business, financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes in the risk factors described in Part I, Item 1A. “Risk Factors” of the 2018 Form 10-K aside from the risk factor included below:

Continued uncertainty arising from global political events, such as the United Kingdom’s proposed withdrawal from the European Union, could adversely affect our ability to conduct business and our results of operations.

On June 23, 2016, the U.K. held a non-binding referendum, in which voters approved an exit from the European Union, or E.U., commonly referred to as “Brexit”. Thereafter, on March 29, 2017, the U.K. formally notified the E.U. of its intention to withdraw pursuant to Article 50 of the Treaty of the European Union, which formally initiated the withdrawal procedure. The timing of the proposed withdrawal was initially scheduled for March 29, 2019. That deadline has been extended to up until January 31, 2020 to allow the U.K. to adopt a withdrawal agreement bill and ratify it as an international treaty. Discussions within the U.K. and between the U.K. and the E.U. will continue to focus on withdrawal issues, timing, and transition agreements. However, limited progress of the existing withdrawal agreement bill through the U.K. legislature and ongoing uncertainty related to the possibility of the U.K. leaving the E.U. without a formal withdrawal agreement and associated transition period in place, as well as a proposed General Election in December 2019, could cause significant market and economic disruption. Weakening of economic conditions or economic uncertainties tend to harm our business, and if such conditions emerge in the U.K. or in the rest of the E.U., it may have a material adverse effect on our operations and sales.

Although it is unknown what the terms of the U.K.’s future relationship with the E.U. will be, it is possible that there will be greater restrictions on trade between the U.K. and E.U. countries as well as increased regulatory complexities. These changes may adversely affect our operations and financial results. The announcement of Brexit also caused significant volatility in global currency markets. The fluctuation of currency exchange rates may expose us to gains and losses on non-U.S. currency transactions and impact the purchasing power of our non-U.S. currency customers, causing them to decrease or cancel orders or default on payment. Any global political uncertainty similar to the Brexit referendum could similarly harm our ability to conduct our business and our results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Calendar month	Total number of shares purchased (1)		Weighted-average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the share repurchase program
July		-	$	-		-	$	100,000,000
August		-		-		-		100,000,000
September		242,830		13.6922		242,830		96,675,123
		242,830				242,830

⁽¹⁾ All shares were repurchased under an authorization covering up to $100 million of the Company's ordinary shares in the aggregate including commissions, as approved by the Company's Board of Directors and approved by shareholders at the Company's Annual General Meeting held on June 18, 2019. Unless discontinued by the Company's Board of Directors, the share repurchase program will be valid for up to five years.

Item 6. Exhibits

Exhibit No.	Description
3.1	Articles of Association of the Registrant (Filed as Exhibit 3.1 to our Current Report on Form 8-K on June 18, 2014 and incorporated herein by reference.)
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following materials from the Company’s Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed consolidated balance sheets at September 30, 2019 and December 31, 2018; (ii) Condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018; (iii) Condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018; (iv) Condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018; and (v) Notes to unaudited condensed consolidated financial statements.

* Filed herewith.

32

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.

		OXFORD IMMUNOTEC GLOBAL PLC
Date: November 5, 2019	/s/	Peter Wrighton-Smith, Ph.D.
		Peter Wrighton-Smith, Ph.D.
		Chief Executive Officer and Director
		(Principal Executive Officer)
Date: November 5, 2019	/s/	Matthew T E McLaughlin
		Matthew T E McLaughlin
		Chief Financial Officer
		(Principal Financial Officer)

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Peter Wrighton-Smith, Ph.D., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Oxford Immunotec Global PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period for which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2019	/s/ Peter Wrighton-Smith, Ph.D.
	Peter Wrighton-Smith, Ph.D. Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Matthew T E McLaughlin, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Oxford Immunotec Global PLC;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period for which this report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2019	/s/ Matthew T E McLaughlin
	Matthew T E McLaughlin Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Oxford Immunotec Global PLC, a company incorporated in England and Wales (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Quarterly Report for the quarter ended September 30, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 5, 2019	/s/ Peter Wrighton-Smith, Ph.D.
	Peter Wrighton-Smith, Ph.D. Chief Executive Officer and Director

Date: November 5, 2019	/s/ Matthew T E McLaughlin
	Matthew T E McLaughlin Chief Financial Officer

This certification is being furnished and not filed, and shall not be incorporated into any document for any purpose, under the Securities Exchange Act of 1934 or the Securities Act of 1933.

XML

Note 1 - Business and Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Table Text Block]

(in thousands)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	184,282	$	192,844
Restricted cash, non-current		100		100
Total cash, cash equivalents, and restricted cash	$	184,382	$	192,944

XML

Note 12 - Settlement Expense

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Settlement Expense [Text Block]

12.

Settlement expense

On

September 30, 2019

, the Company entered into a Settlement Agreement and Release with Oxford University Innovation Limited, or OUI, or the OUI Settlement Agreement, to resolve outstanding disputes arising from a license agreement with OUI. The terms of the OUI Settlement Agreement are confidential.

On

June 18, 2018,

the Company entered into a Settlement Agreement with the former shareholders of Immunetics, Inc., or the Immunetics Settlement Agreement, to resolve disputes arising from the Agreement and Plan of Merger dated

October 12, 2016. 

The terms of the Immunetics Settlement Agreement are confidential.

XML

Note 5 - Inventory, Net (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Inventory, Current [Table Text Block]

(in thousands)	September 30, 2019		December 31, 2018
Raw materials	$	8,347	$	6,169
Work in progress		71		190
Finished goods		1,382		1,408
Inventory, net	$	9,800	$	7,767

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Note 10 - Share Option and Equity Incentive Plan - Expense Recognized During the Year Related to Share-based Compensation Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Continuing Operations [Member]
Share-based compensation	$ 983	$ 948	$ 2,674	$ 3,550
Discontinued Operations [Member]
Share-based compensation		67		211
Continued and Discontinued Operations [Member]
Share-based compensation	983	1,015	2,674	3,761
Cost of Revenue [Member]
Share-based compensation	21	38	56	161
Research and Development Expense [Member]
Share-based compensation	132	201	244	581
Selling and Marketing Expense [Member]
Share-based compensation	332	137	910	774
General and Administrative Expense [Member]
Share-based compensation	$ 498	$ 572	$ 1,464	$ 2,034

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Note 4 - Accounts Receivable, Net - Summary of Accounts Receivable, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts receivable	$ 15,620	$ 9,246
Less allowance for uncollectible accounts receivable	(124)	(88)
Accounts receivable, net	$ 15,496	$ 9,158

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Note 7 - Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Employee related expenses	$ 4,516	$ 5,536
Accrued discount	1,173
Royalties	1,122	1,354
Professional services	893	863
Corporate tax	118	1,616
Other accrued liabilities	896	1,522
Total accrued liabilities	$ 8,718	$ 10,891

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities
Net income (loss)	$ (189,000)	$ (20,281,000)
Less: Net loss from discontinued operations, net of tax	(469,000)	(104,000)
Net income (loss) from continuing operations	280,000	(20,177,000)
Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities:
Depreciation and amortization expense	1,351,000	953,000
Non-cash rent expense	178,000
Accretion and amortization of loan fees and non-cash interest income	(147,000)	421,000
Share-based compensation expense	2,674,000	3,550,000
Loss on disposal of property and equipment	20,000	84,000
Deferred income taxes	(250,000)	1,117,000
Changes in operating assets and liabilities:
Accounts receivable, net	(6,686,000)	(1,291,000)
Inventory, net	(2,346,000)	773,000
Prepaid expenses and other assets	(1,974,000)	(270,000)
Accounts payable	325,000	(8,982,000)
Accrued liabilities	(820,000)	2,978,000
Deferred income	49,000
Other liabilities, net		(70,000)
Net cash used in operating activities from continuing operations	(7,346,000)	(20,914,000)
Cash flows from investing activities
Purchases of property and equipment	(729,000)	(4,884,000)
Net cash used in investing activities from continuing operations	(729,000)	(4,884,000)
Cash flows from financing activities
Proceeds from exercise of share options	3,926,000	2,697,000
Payments of tax withheld on exercises of options and vesting of restricted share units	(224,000)	(265,000)
Repurchases of ordinary shares	(3,325,000)
Payments on capital lease		(57,000)
Net cash provided by financing activities from continuing operations	377,000	2,375,000
Net cash flows of continuing operations	(7,698,000)	(23,423,000)
Cash flows from discontinued operations
Net operating cash flows provided by discontinued operations		6,778,000
Net investing cash flows used in discontinued operations		(2,527,000)
Net financing cash flows used in discontinued operations		(10,000)
Net cash flows of discontinued operations		4,241,000
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(864,000)	(994,000)
Net decrease in cash, cash equivalents, and restricted cash	(8,562,000)	(20,176,000)
Cash, cash equivalents, and restricted cash at beginning of period	192,944,000	90,532,000
Cash, cash equivalents, and restricted cash at end of period	$ 184,382,000	$ 70,356,000

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue:
Revenue	$ 21,219,000	$ 16,050,000	$ 55,596,000	$ 44,386,000
Cost of revenue:
Cost of goods and services sold	5,731,000	4,573,000	15,359,000	12,870,000
Gross profit	15,488,000	11,477,000	40,237,000	31,516,000
Operating expenses:
Research and development	1,631,000	1,754,000	6,044,000	5,969,000
Sales and marketing	7,405,000	6,432,000	21,169,000	20,655,000
General and administrative	5,531,000	8,132,000	16,230,000	19,349,000
Settlement expense	799,000	212,000	1,002,000	1,979,000
Total operating expenses	15,366,000	16,530,000	44,445,000	47,952,000
Operating income (loss) from continuing operations	122,000	(5,053,000)	(4,208,000)	(16,436,000)
Other income (expense):
Interest income (expense), net	1,064,000	(673,000)	3,426,000	(2,011,000)
Foreign exchange gains (losses)	360,000	(52,000)	(233,000)	(306,000)
Other income (expense)	23,000	5,000	65,000	(242,000)
Income (loss) from continuing operations before income taxes	1,569,000	(5,773,000)	(950,000)	(18,995,000)
Income tax benefit (expense) from continuing operations	(383,000)	(485,000)	1,230,000	(1,182,000)
Income (loss) from continuing operations	1,186,000	(6,258,000)	280,000	(20,177,000)
Discontinued operations:
Income (loss) from discontinued operations before income taxes	(469,000)	2,774,000	(469,000)	(104,000)
Income tax expense
Income (loss) from discontinued operations	(469,000)	2,774,000	(469,000)	(104,000)
Net income (loss)	$ 717,000	$ (3,484,000)	$ (189,000)	$ (20,281,000)
Net income (loss) per ordinary share - basic
Income (loss) from continuing operations (in dollars per share)	$ 0.04	$ (0.24)	$ 0.01	$ (0.78)
Income (loss) from discontinued operations (in dollars per share)	(0.02)	0.11	(0.02)
Net income (loss) (in dollars per share)	0.03	(0.13)	(0.01)	(0.78)
Net income (loss) per ordinary share - diluted:
Income (loss) from continuing operations (in dollars per share)	0.04	(0.24)	0.01	(0.78)
Income (loss) from discontinued operations (in dollars per share)	(0.02)	0.11	(0.02)
Net income (loss) (in dollars per share)	$ 0.03	$ (0.13)	$ (0.01)	$ (0.78)
Weighted-average shares used to compute net income (loss) per ordinary share - basic (in shares)	26,751,083	26,033,550	26,631,704	25,867,014
Weighted-average shares used to compute net income (loss) per ordinary share - diluted (in shares)	26,936,541	26,033,550	26,904,481	25,867,014
Product [Member]
Revenue:
Revenue	$ 20,115,000	$ 15,095,000	$ 52,622,000	$ 40,236,000
Cost of revenue:
Cost of goods and services sold	5,313,000	3,864,000	14,306,000	9,993,000
Service [Member]
Revenue:
Revenue	1,104,000	955,000	2,974,000	4,150,000
Cost of revenue:
Cost of goods and services sold	$ 418,000	$ 709,000	$ 1,053,000	$ 2,877,000

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Note 13 - Commitments - Future Lease Payments (Details) $ in Thousands	Sep. 30, 2019 USD ($)
2019 (three months)	$ 257
2020	1,059
2021	998
2022	971
2023	941
Thereafter	8,184
Total lease payments	12,410
Less: imputed interest	(4,638)
Total operating lease liabilities	$ 7,772

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Note 11 - Net Income (Loss) Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income (loss) from continuing operations	$ 1,186,000			$ (6,258,000)			$ 280,000	$ (20,177,000)
Less: Net loss from discontinued operations, net of tax	(469,000)			2,774,000			(469,000)	(104,000)
Net income (loss)	$ 717,000	$ 590,000	$ (1,496,000)	$ (3,484,000)	$ (6,471,000)	$ (10,326,000)	$ (189,000)	$ (20,281,000)
Weighted-average ordinary shares - basic (in shares)	26,751,083			26,033,550			26,631,704	25,867,014
Dilutive effect of ordinary share equivalents resulting from ordinary share options and RSUs (in shares)	185,458						272,777
Weighted-average ordinary shares - diluted (in shares)	26,936,541			26,033,550			26,904,481	25,867,014

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Note 14 - Discontinued Operations - Results of Discontinued Operations (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Service revenue		$ 18,446,000		$ 46,265,000
Cost of service revenue		9,889,000		30,359,000
Gross profit		8,557,000		15,906,000
Research and development		2,077,000		4,989,000
Sales and marketing		2,093,000		6,582,000
General and administrative		1,613,000		4,439,000
Income (loss) from discontinued operations before income taxes	$ (469,000)	2,774,000	$ (469,000)	(104,000)
Income tax expense
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total	$ (469,000)	$ 2,774,000	$ (469,000)	$ (104,000)

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Note 8 - Loans Payable

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

8.

Loans payable

On

October 4, 2016,

the Company entered into the MidCap Agreement, which provided it with

$40

million in debt financing, comprised of both a term loan and a revolving line of credit. The term loan was in the amount of

$30

million and matured

five

years from the closing of the financing transaction. The term loan accrued interest at a rate of LIBOR plus

7.60%

with interest only payments for the

first

24

months, with the ability to extend to

48

months subject to certain conditions, before the loan began to amortize. The MidCap Agreement also provided the Company with a revolving line of credit of up to

$10

million, which matured

five

years from the closing of the financing transaction. The revolving line of credit accrued interest at a rate of LIBOR plus

4.45%.

The Company was also required to pay MidCap an unused line fee equal to

0.50%

per annum of the average unused portion of the revolving line of credit. Based on certain conditions, both the term loan and revolving line of credit could have been increased by an additional

$10

million for a total of

$60

million.

On

November 6, 2018,

approximately 

$32.3

million of the gross proceeds received pursuant to the Transaction was paid directly to MidCap to repay the outstanding indebtedness under the MidCap Agreement, which included prepayment and exit fees of approximately

$2.3

million. In connection with the Company’s repayment of the outstanding indebtedness under the MidCap Agreement, the term loan, the revolving loan, and all related agreements were terminated and all borrowings outstanding thereunder were repaid in full. The repayment resulted in a

fourth

quarter

2018

loss on extinguishment of debt of

$2.1

million, which represents the cash paid to settle the debt in excess of debt related balances at the time of settlement. 

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Note 4 - Accounts Receivable, Net

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Financing Receivables [Text Block]

4.

Accounts receivable, net

Accounts receivable, net, consisted of the following as of:

(in thousands)	September 30, 2019			December 31, 2018
Accounts receivable	$	15,620		$	9,246
Less allowance for uncollectible accounts receivable		(124	)		(88	)
Accounts receivable, net	$	15,496		$	9,158

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Note 3 - Fair value Measurement - Assets Measured on Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets, Fair Value	$ 171,946	$ 184,969
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value	171,946	184,969
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value
Money Market Funds [Member]
Assets, Fair Value	10,848	19,812
Money Market Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value	10,848	19,812
Money Market Funds [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value
Money Market Funds [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value
Tri-party Repurchase Agreements [Member]
Assets, Fair Value	161,098	165,157
Tri-party Repurchase Agreements [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value	161,098	165,157
Tri-party Repurchase Agreements [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value
Tri-party Repurchase Agreements [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value

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Note 10 - Share Option and Equity Incentive Plan (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Cost of revenue	$	21	$	38	$	56	$	161
Research and development		132		201		244		581
Sales and marketing		332		137		910		774
General and administrative		498		572		1,464		2,034
Total continuing operations		983		948		2,674		3,550
Discontinued operations		-		67		-		211
Total share-based compensation	$	983	$	1,015	$	2,674	$	3,761

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Note 1 - Business and Basis of Presentation (Details Textual)		3 Months Ended		9 Months Ended
	Nov. 06, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)
Entity Number of Employees	210
Income Tax Expense (Benefit), Total		$ 383,000	$ 485,000	$ (1,230,000)	$ 1,182,000
Operating Lease, Right-of-Use Asset		6,662,000		6,662,000
Operating Lease, Liability, Total		7,772,000		7,772,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset						$ 7,200,000
Operating Lease, Liability, Total						$ 8,200,000
Domestic Tax Authority [Member] | Internal Revenue Service (IRS) [Member]
Deferred Tax Assets, Valuation Allowance, Total		2,200,000		2,200,000
Foreign Tax Authority [Member] | Her Majesty's Revenue and Customs (HMRC) [Member]
Deferred Tax Assets, Valuation Allowance, Total		$ 1,400,000		$ 1,400,000
Quest [Member]
Proceeds from Divestiture of Businesses	$ 170,000,000

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Note 13 - Commitments - Future Minimum Lease Payments under the Non-cancelable Operating Leases (Details) $ in Thousands	Dec. 31, 2018 USD ($)
2019	$ 2,024
2020	1,848
2021	972
2022	855
2023	855
Thereafter	7,558
Total minimum lease payments	$ 14,112

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Note 11 - Net Income (Loss) Per Share - Antidilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Payment Arrangement, Option [Member]
Antidilutive securities (in shares)		383,855		290,226
Restricted Stock and Restricted Stock Units (RSU's) [Member]
Antidilutive securities (in shares)		332,455		332,455

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Note 9 - Share Capital

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

9.

Share capital

During the

nine

-month period ended

September 30, 2019

,

the Company issued

380,601

ordinary shares upon the exercise of options and

65,405

ordinary shares upon the vesting of restricted share units, or RSUs. During the

twelve

months ended

December 31, 2018

, the Company issued

694,322

ordinary shares upon the exercise of options and

83,378

ordinary shares upon the vesting of RSUs.

In

2019,

the Company’s Board of Directors authorized the repurchase of up to

$100

million of its ordinary shares in the aggregate, subject to the approval of its shareholders by an ordinary resolution at its

2019

Annual General Meeting, or the share repurchase program. The share repurchase program was approved by the Company’s shareholders at its Annual General Meeting held on

June 18, 2019

and was initiated during the

third

quarter of

2019.

During the

three

-month period ended

September 30, 2019,

the Company repurchas

ed

242,830

ordinary s

hares at a total cost o

f

$3.3

 mill

ion. As the share repurchase program allows for a maximum repurchase of

$100

million of the Company’s ordinary shares including commissions, up to

$96.7

 m

illion of ordinary shares remain eligible for repurchase as of

September 30, 2019.

The share repurchase program

may

be suspended, modified or discontinued at any time, and the Company has

no

obligation to repurchase any amount of its ordinary shares under the program. Unless discontinued by the Company's Board of Directors, the share repurchase program will be valid for up to

five

years.

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Note 5 - Inventory, Net

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

5.

Inventory, net

Inventory, net consisted of the following as of:

(in thousands)	September 30, 2019		December 31, 2018
Raw materials	$	8,347	$	6,169
Work in progress		71		190
Finished goods		1,382		1,408
Inventory, net	$	9,800	$	7,767

XML

Note 7 - Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

(in thousands)	September 30, 2019		December 31, 2018
Employee related expenses	$	4,516	$	5,536
Accrued discount		1,173		-
Royalties		1,122		1,354
Professional services		893		863
Corporate tax		118		1,616
Other accrued liabilities		896		1,522
Total accrued liabilities	$	8,718	$	10,891

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Note 14 - Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Disposal Groups, Including Discontinued Operations [Table Text Block]

(in thousands)	Three months ended September 30, 2018		Nine months ended September 30, 2018
Major classes of line items constituting income (loss) from discontinued operations before income taxes:
Service revenue	$	18,446	$	46,265
Cost of service revenue		9,889		30,359
Gross profit		8,557		15,906
Research and development		2,077		4,989
Sales and marketing		2,093		6,582
General and administrative		1,613		4,439
Income (loss) from discontinued operations before income taxes		2,774		(104	)
Income tax expense		—		—
Income (loss) from discontinued operations	$	2,774	$	(104	)

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Note 2 - Revenue - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue	$ 21,219	$ 16,050	$ 55,596	$ 44,386
UNITED STATES
Revenue	5,735	2,876	19,034	11,615
Europe and ROW [Member]
Revenue	2,709	2,277	7,670	6,750
Asia [Member]
Revenue	12,775	10,897	28,892	26,021
Product [Member]
Revenue	20,115	15,095	52,622	40,236
Service [Member]
Revenue	$ 1,104	$ 955	$ 2,974	$ 4,150

XML

Note 6 - Goodwill and Acquired Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]

	As of September 30, 2019
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	609	$	43
Total		$	652	$	609	$	43

	As of December 31, 2018
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	591	$	61
Total		$	652	$	591	$	61

XML

Note 2 - Revenue (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
Product	$	20,115	$	15,095	$	52,622	$	40,236
Service		1,104		955		2,974		4,150
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
United States	$	5,735	$	2,876	$	19,034	$	11,615
Europe and ROW		2,709		2,277		7,670		6,750
Asia		12,775		10,897		28,892		26,021
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

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Note 13 - Commitments

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

13.

Commitments

Operating leases

The Company has operating leases for real estate and non-real estate in the United States, United Kingdom, China, Japan, and South Korea. One such operating lease is a sublease for real estate. The Company does

not

have any material finance leases.

The Company leases office, storage/warehouse, laboratory and manufacturing space in Abingdon, U.K., which leases are due to expire at various dates from

December 31, 2020

to

June 18, 2033.

On

March 

1,

2013,

the Company signed a

five

year lease for its U.S. corporate headquarters in Marlborough, Massachusetts. In

August 2015,

the Company entered into a lease amendment for this location to extend the term of the lease by

two

years through

October 31, 2020.

In addition, the lease amendment expanded the Company’s office space at this location by

7,600

square feet to a new total of

22,100

square feet. The base rent for the combined space over the lease term ranges from an initial low of

$36,000

per month, which includes

$12,000

per month for the expansion space, which commenced in early

2016,

to a high of

$39,000

per month. The Company has an option to extend the lease for

one

additional term of

five

years.

In

June 2018,

the Company entered into a lease for new space in Abingdon, U.K., which extends through

June 2033

that will allow it to combine its manufacturing, laboratory, storage and office operations into a single facility. The base rent on the facility over the lease term will range from

$39,000

per month to

$79,000

per month. With the exception of manufacturing and associated groups, our U.K. operations are now located in this facility.

In connection with the sale of our U.S. Laboratory Services Business to Quest, the Company entered into a sublease with Quest for approximately

9,000

square feet of warehousing and office space in Norwood, Massachusetts. The sublease expires in

November 2020.

The base rent for the space subject to sublease is approximately

$17,000

per month.

Many of the Company’s leases contain options to renew and extend lease terms and options to terminate leases early. Reflected in the right-of-use asset and lease liability on the Company’s balance sheet are the periods provided by renewal and extension options that the Company is reasonably certain to exercise, as well as the periods provided by termination options that the Company is reasonably certain to

not

exercise.

The Company has existing leases that include variable lease and non-lease components that are

not

included in the right-of-use asset and lease liability and are reflected as an expense in the periods incurred. Such payments primarily include common area maintenance charges and increases in rent payments that are driven by factors such as future changes in an index, such as the Consumer Price Index.

In calculating the present value of future lease payments, the Company has elected to utilize its incremental borrowing rate based on the remaining lease term at the date of adoption. The Company has elected to account for each lease component and its associated non-lease components as a single lease component and has allocated all of the contract consideration across lease components only. This will potentially result in the initial and subsequent measurement of the balances of the right-of-use asset and lease liability for leases being greater than if the policy election was

not

applied. The Company has existing net leases in which the non-lease components (

e.g.

, common area maintenance, maintenance, consumables, etc.) are paid separately from rent based on actual costs incurred and therefore are

not

included in the right-of-use asset and lease liability, but instead are reflected as an expense in the period incurred. As of

September 30, 2019

, an operating lease right-of-use asset of $

6.7

 million and an operating lease liability o

f $

7.8

 m

illion are reflected on the consolidated balance sheet.

The elements of lease expense were as follows:

($ amounts in thousands)	Three months ended September 30, 2019			Nine months ended September 30, 2019
Lease Cost
Operating lease cost	$	322		$	963
Short-term lease cost		186			553
Variable lease cost		239			705
Total lease cost	$	747		$	2,221
Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	250		$	765
Operating lease liabilities arising from obtaining right-of-use assets		136			136
Operating Leases
Weighted average remaining lease term (in years)		12.5			12.5
Operating Leases
Weighted average discount rate		7.8	%		7.8	%

Future lease payments required under non-cancelable operating leases in effect as of

September 30, 2019

were as follows:

(in thousands)	September 30, 2019
2019 (three months)	$	257
2020		1,059
2021		998
2022		971
2023		941
Thereafter		8,184
Total lease payments		12,410
Less: imputed interest		(4,638	)
Total operating lease liabilities	$	7,772

The Company adopted ASC

842,

Leases

on

January 1, 2019,

as noted above and, as required, the following disclosure is provided for periods prior to adoption. Future minimum lease payments required under non-cancelable operating leases in effect as of

December 31, 2018

were as follows:

(in thousands)	December 31, 2018
2019	$	2,024
2020		1,848
2021		972
2022		855
2023		855
Thereafter		7,558
Total minimum lease payments	$	14,112

Purchase commitments

Future minimum payments required under purchase obligations in effect as of

September 30, 2019

are as follows:

(in thousands)	Purchase Obligations
2019 (three months)	$	4,432
2020		3,055
2021		1,200
2022		370
2023		370
Thereafter		-
Total minimum payments	$	9,427

XML

Note 3 - Fair value Measurement - Assets Measured on Recurring Basis (Details) (Parentheticals)	Sep. 30, 2019	Dec. 31, 2018
US Treasury Securities [Member] | Minimum [Member]
Collateralized Percentage	102.00%	102.00%

XML

Note 6 - Goodwill and Acquired Intangible Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Gross Carrying Amount, Finite-Lived Intangible Assets	$ 652	$ 652
Accumulated Amortization, Finite-Lived Intangible Assets	609	591
Net Carrying Amount, Finite-Lived Intangible Assets	43	61
Other Intangible Assets [Member]
Gross Carrying Amount, Finite-Lived Intangible Assets	652	652
Accumulated Amortization, Finite-Lived Intangible Assets	609	591
Net Carrying Amount, Finite-Lived Intangible Assets	$ 43	$ 61
Other Intangible Assets [Member] | Minimum [Member]
Amortization Period, Finite-Lived Intangible Assets (Year)	5 years	5 years
Other Intangible Assets [Member] | Maximum [Member]
Amortization Period, Finite-Lived Intangible Assets (Year)	10 years	10 years

XML

Note 10 - Share Option and Equity Incentive Plan (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 5,100,000		$ 5,100,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 219 days
Share-based Payment Arrangement, Option [Member]
Share-based Payment Arrangement, Expense	658,000	$ 748,000	$ 1,900,000	$ 2,400,000
Restricted Stock and Restricted Stock Units (RSU's) [Member]
Share-based Payment Arrangement, Expense	325,000	$ 267,000	741,000	$ 1,300,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total	$ 3,500,000		$ 3,500,000
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 292 days
2013 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	39,520		469,848
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 13.33
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 5.80		$ 7.22
2013 Plan [Member] | Share-based Payment Arrangement, Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
2013 Plan [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	11,928		154,472
2013 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Second Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			40.00%
2013 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Third Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			30.00%
2013 Plan [Member] | Restricted Stock Units (RSUs) [Member] | Fourth Anniversary of Grant Date [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			30.00%
2013 Plan [Member] | Minimum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 13.33
2013 Plan [Member] | Maximum [Member]
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price			$ 16.42

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 24, 2019
Document Information [Line Items]
Entity Registrant Name	Oxford Immunotec Global PLC
Entity Central Index Key	0001586049
Trading Symbol	oxfd
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		26,446,585
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Title of 12(b) Security	Ordinary Shares, £0.006705 nominal value per share

XML

Condensed Consolidated Statements of Other Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net income (loss)	$ 717	$ (3,484)	$ (189)	$ (20,281)
Other comprehensive loss:
Foreign currency translation adjustment, including tax charges of $426, $124, $486, and $396, respectively	(1,714)	(614)	(1,902)	(1,578)
Other comprehensive loss, net of tax	(1,714)	(614)	(1,902)	(1,578)
Total comprehensive loss	$ (997)	$ (4,098)	$ (2,091)	$ (21,859)

XML

Note 1 - Business and Basis of Presentation

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1.

Business and basis of presentation

Description of business

Oxford Immunotec Global PLC, or the Company, is a global, high-growth diagnostics company focused on developing and commercializing proprietary tests for immunology and infectious disease by leveraging the technological, product development, manufacturing, quality, regulatory, and sales and marketing capabilities it has developed over its

seventeen

year history. The Company’s proprietary T-SPOT.

TB

test utilizes its T-SPOT technology platform to test for tuberculosis, which is the leading cause of infectious disease death worldwide.

Discontinued operations

The Company reports the results of operations of a business that either has been disposed of or is classified as held for sale, in accordance with Accounting Standards Codification, or ASC,

360,

Property, Plant, and Equipment

, in discontinued operations, as required by ASC

205,

Presentation of Financial Statements

. The Company presents such events as discontinued operations so long as the financial results can be clearly identified and the future operations and cash flows are completely eliminated from ongoing operations. The Company’s historical results for all periods presented are restated to account for businesses reported as discontinued operations in our Consolidated Financial Statements and these Notes. Unless otherwise specified, disclosures in our Consolidated Financial Statements and these Notes relate solely to our continuing operations.

As discussed in Note

14.

 

Discontinued operations

, on

September 25, 2018,

the Company entered into an agreement to sell the Company’s U.S. Laboratory Services Business to Quest Diagnostics Incorporated, or the Transaction. The Transaction represented a strategic business shift having a major effect on the Company’s operations and financial results. Accordingly, operations have been reported in discontinued operations in the consolidated financial statements for all periods presented. The Transaction was consummated on

November 6, 2018

for gross proceeds of

$170

million in cash. Immediately following the Transaction, the Company had approximately

210

employees, including sales and marketing teams on

three

continents, and a laboratory in the United Kingdom.

Unaudited interim financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, of a normal recurring nature, necessary for a fair statement of the financial position at

September 30, 2019

, the results of operations for the 

three

and

nine

-month periods ended

September 30, 2019

and

2018

, and the cash flows for the

nine

-month periods ended

September 30, 2019

and

2018

. Interim results are

not

necessarily indicative of results for a full year.

The consolidated balance sheet presented as of

December 31, 2018

, has been derived from the Company's audited consolidated financial statements as of that date. The consolidated financial statements and notes included in this Quarterly Report should be read in conjunction with the

2018

consolidated financial statements and notes included in the Company’s Annual Report on Form 

10

-K for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission on

March 28, 2019,

or the 

2018

Form

10

-K.

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments purchased with maturities at acquisition of

three

months or less to be cash equivalents. The Company maintains its available cash balances in cash, money market funds and repurchase agreements primarily invested in U.S. government and agency securities, and bank savings accounts in the United States, United Kingdom, Germany, Japan, China and South Korea. The Company maintains deposits in government insured financial institutions in excess of government insured limits. Management believes that the Company is

not

exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Restricted cash relates to collateral for procurement cards issued by a U.S. commercial bank.

Cash, cash equivalents, and restricted cash consists of the following:

(in thousands)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	184,282	$	192,844
Restricted cash, non-current		100		100
Total cash, cash equivalents, and restricted cash	$	184,382	$	192,944

Revenues

The Company’s revenues include product and service revenues. In general, revenue from diagnostic test kit sales and related accessories is recognized at a point in time based upon contractual rates. However, for contracts with tiered pricing provisions, if the tiered pricing constitutes a material right and spans across multiple reporting periods, the Company estimates the total transaction price at the beginning of each reset period (

i.e.

, the period in which revenue at different tiers is earned and settled) based on expected volumes. The Company revises its estimates of variable consideration at each reporting date throughout each reset period. Service revenue is recorded based upon contractually established billing rates and recognized upon delivery of test results to the customer. See Note

2.

Revenue

for disaggregation of revenue by type and geography.

For the

three

and

nine

months ended

September 30, 2019

, the Company had

no

material bad-debt expense and there were

no

material contract assets, contract liabilities or deferred contract costs recorded on the condensed consolidated balance sheet as of

September 30, 2019

. The Company generally expenses sales commissions when incurred because the amortization period would be less than

one

year.

Revenue expected to be recognized in any future year related to remaining performance obligations is

not

material.

Taxes assessed by governmental authorities on revenue, including sales and value added taxes, are recorded on a net basis (excluded from revenue) in the consolidated statements of operations.

Other than the following discussion regarding leases, the remainder of the significant accounting estimates and policies used in preparation of the condensed consolidated financial statements disclosed in Note

1.

Description of business and significant accounting policies

to the consolidated financial statements in the 

2018

Form

10

-K remain unchanged.

Leases

In

February 2016,

the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU,

2016

-

02,

Leases

,or ASU

2016

-

02,

to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted ASU

2016

-

02

on

January 1, 2019,

or the effective date, and used the effective date as its date of initial application.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than

one

year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected

not

to recognize on the balance sheet leases with terms of

one

year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The operating lease right-of-use assets also include any lease payments made prior to the commencement date and exclude lease incentives and initial direct costs incurred. The operating lease right-of-use assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets. The interest rate implicit in lease contracts is typically

not

readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate was determined at lease commencement, or as of

January 1, 2019

for operating leases existing upon adoption of ASU

2016

-

02.

The incremental borrowing rate is subsequently reassessed upon modification to the lease arrangement.

In accordance with the guidance in ASU

2016

-

02,

components of a lease should be split into

three

categories: lease components (

e.g.

, land, building, etc.), non-lease components (

e.g.

, common area maintenance, maintenance, consumables, etc.), and non-components (

e.g.

, property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available. Entities

may

elect the practical expedient to

not

separate lease and non-lease components and would instead account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating lease right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

Income taxes

The Company calculates its interim income tax provision in accordance with ASC

270,

Interim Reporting

, and ASC

740,

Accounting for Income Taxes

. At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

The Company recognized an income tax provision of

$383,000

and

$485,000

for the

three

months ended

September 

30,

2019

and

September 

30,

2018,

respectively. In the

first

quarter of

2019,

the Company revised its transfer pricing model to reflect changes in the Company’s business model following the Transaction. Upon completion of the full transfer pricing study in the

third

quarter of

2019,

the Company reassessed the realizability of its deferred tax assets based on all available evidence. As a result, the Company recorded a reversal of

$2.2

million of the previously recognized valuation allowances against its deferred tax assets in the U.S. and a

$1.4

million valuation allowance against its deferred tax assets in the U. K. The Company recognized an income tax benefit of

$1.2

million and income tax expense of

$1.2

million for the

nine

months ended

September 

30,

2019

and

2018,

respectively.

Recently

a

dopted

a

ccounting

p

ronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

which requires lessees to reflect all leases with terms longer than

12

months on their balance sheets. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The FASB has subsequently issued amendments to the guidance, including the addition of an optional transition method. The Company’s process of evaluating the impact of ASU

2016

-

02

has included reviewing all forms of leases and performing a completeness assessment over the lease population. The Company adopted ASU

2016

-

02

on

January 1, 2019

and applied the modified retrospective approach, which recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company took advantage of the transition package of practical expedients permitted within ASU

2016

-

02,

which among other things, allowed it to carryforward historical lease classifications. The Company made an accounting policy election that will keep leases with an initial term of

12

months or less and that do

not

include an option to purchase the underlying asset that the Company is reasonably certain to exercise off of the balance sheet and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As a result of adopting ASU

2016

-

02,

the Company recognized right-of-use assets of about

$7.2

million and corresponding liabilities of about

$8.2

million for its existing lease portfolio on its consolidated balance sheets as of

January 1, 2019.

The adoption of ASU

2016

-

02

has

not

had a material impact on the Company’s consolidated statements of operations or consolidated statements of cash flows. The Company has included additional disclosures in Note

13.

Commitments

to its condensed consolidated financial statements regarding its leasing portfolio, including key judgments and assumptions and the discount rates used in calculating the Company’s right-of-use assets and corresponding liabilities.

In

June 2018,

the FASB issued ASU

2018

-

07,

 

Improvements to Nonemployee Share-Based Payment Accounting

, or ASU

2018

-

07.

ASU

2018

-

07

simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted ASU

2018

-

07

prospectively as of

January 1, 2019.

The adoption of ASU

2018

-

07

has

not

had a material impact on the Company’s financial position, results of operations or related disclosures.

Recently

i

ssued but

not

yet adopted 

a

ccounting

p

ronouncements

In

June 2016,

the FASB issued ASU

2016

-

13,

 

Financial Instruments-Credit Losses

, or ASU

2016

-

13.

ASU

2016

-

13

requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Under current U.S. GAAP, a company only considered past events and current conditions in measuring an incurred loss. Under ASU

2016

-

13,

the information that a company must consider is broadened in developing an expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. The new guidance is currently expected to be effective for the Company for annual and interim periods beginning after

December 15, 2019.

The FASB is considering a delay of the implementation until annual and interim periods beginning after

December 15, 2022

for smaller reporting companies. Early adoption is permitted for annual and interim periods beginning after

December 15, 2018.

The guidance is applied using a modified retrospective, or prospective approach, depending on a specific amendment. The Company has been reviewing ASU

2016

-

13

and does

not

believe its adoption will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In

January 2017,

the FASB issued ASU

2017

-

04,

 

Intangibles – Goodwill and Other

, or ASU

2017

-

04.

ASU

2017

-

04

simplifies subsequent measurement of goodwill by eliminating Step

2

from the goodwill impairment test. The new guidance will be applied on a prospective basis. ASU

2017

-

04

will be effective for the Company for annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests. The Company does

not

expect that the application of ASU

2017

-

04

will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, 

or ASU

2018

-

13,

which modifies certain disclosure requirements on fair value measurements. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements, and the narrative description of measurement uncertainty are required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are required to be applied retrospectively to all periods presented upon their effective date. ASU

2018

-

13

is effective for fiscal years beginning after

December 15, 2019

and interim periods within those years. The Company does

not

anticipate a material impact to disclosures as a result of the adoption of ASU

2018

-

13.

XML

Note 14 - Discontinued Operations (Details Textual) - USD ($)			3 Months Ended			9 Months Ended
	Nov. 06, 2018	Sep. 25, 2018	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income (Loss) from Discontinued Operations, Net of Tax, Including Portion Attributable to Noncontrolling Interest, Total			$ (469,000)		$ 2,774,000	$ (469,000)	$ (104,000)
MidCap Agreement [Member] | MidCap Financial [Member]
Extinguishment of Debt, Amount		$ 32,300,000
Debt Instrument, Prepayment and Exit Fees	$ 2,300,000	2,300,000
Laboratory Services Business [Member]
Proceeds from Divestiture of Businesses		170,000,000
Disposal Group, Including Discontinued Operation, Consideration		$ 27,900,000
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax, Total				$ 146,000,000
Discontinued Operation, Intra-Entity Amounts, Discontinued Operation after Disposal, Revenue					$ 1,800,000		$ 7,300,000

XML

Note 13 - Commitments - Lease Expense (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)
Operating lease cost	$ 322	$ 963
Short-term lease cost	186	553
Variable lease cost	239	705
Total lease cost	747	2,221
Cash paid for amounts included in the measurement of lease liabilities	250	765
Operating lease liabilities arising from obtaining right-of-use assets	$ 136	$ 136
Weighted average remaining lease term (Year)	12 years 182 days	12 years 182 days
Weighted average discount rate	7.80%	7.80%

XML

Note 11 - Net Income (Loss) Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three months ended September 30,						Nine months ended September 30,
($ in thousands)	2019			2018			2019			2018
Numerator
Income (loss) from continuing operations	$	1,186		$	(6,258	)	$	280		$	(20,177	)
Income (loss) from discontinued operations		(469	)		2,774			(469	)		(104	)
Net income (loss)	$	717		$	(3,484	)	$	(189	)	$	(20,281	)
Denominator
Weighted-average ordinary shares - basic		26,751,083			26,033,550			26,631,704			25,867,014
Dilutive effect of ordinary share equivalents resulting from ordinary share options and RSUs		185,458			-			272,777			-
Weighted-average ordinary shares - diluted		26,936,541			26,033,550			26,904,481			25,867,014

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Options to purchase ordinary shares		-		383,855		-		290,226
Unvested RSUs		-		332,455		-		332,455

XML

Note 1 - Business and Basis of Presentation - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash and cash equivalents	$ 184,282	$ 192,844
Restricted cash, non-current	100	100
Total cash, cash equivalents, and restricted cash	$ 184,382	$ 192,944	$ 70,356	$ 90,532

XML

Note 7 - Accrued Liabilities

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

7.

Accrued liabilities

Accrued liabilities consisted of the following as of:

(in thousands)	September 30, 2019		December 31, 2018
Employee related expenses	$	4,516	$	5,536
Accrued discount		1,173		-
Royalties		1,122		1,354
Professional services		893		863
Corporate tax		118		1,616
Other accrued liabilities		896		1,522
Total accrued liabilities	$	8,718	$	10,891

XML

Note 3 - Fair Value Measurement

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

3.

Fair value measurement

As a basis for determining the fair value of certain of the Company’s financial instruments, the Company utilizes a

three

-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level

1—Observable

inputs such as quoted prices in active markets for identical assets or liabilities.

Level

2—Observable

inputs, other than Level

1

prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are

not

active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level

3—Unobservable

inputs that are supported by little or

no

market activity and that are significant to the fair value of the assets or liabilities.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The carrying amount of certain of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other assets, accounts payable, and accrued liabilities approximate fair value due to their short term nature.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the entire fair value measurement requires management to make judgments and consider factors specific to the asset or liability.

The tables below present information about the Company’s financial assets measured at fair value on a recurring basis as of the respective dates and indicate the level of the fair value hierarchy utilized to determine such fair values. The Company had

no

financial liabilities measured at fair value on a recurring basis as of the dates indicated.

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	10,848	$	10,848	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		161,098		161,098		-		-
Total	$	171,946	$	171,946	$	-	$	-

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	19,812	$	19,812	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		165,157		165,157		-		-
Total	$	184,969	$	184,969	$	-	$	-

Money market funds and repurchase agreements were valued by the Company using quoted prices in active markets for similar securities, which represent a Level

1

measurement within the fair value hierarchy.

XML

Note 11 - Net Income (Loss) Per Share

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

11.

Net income (loss) per share

	Three months ended September 30,						Nine months ended September 30,
($ in thousands)	2019			2018			2019			2018
Numerator
Income (loss) from continuing operations	$	1,186		$	(6,258	)	$	280		$	(20,177	)
Income (loss) from discontinued operations		(469	)		2,774			(469	)		(104	)
Net income (loss)	$	717		$	(3,484	)	$	(189	)	$	(20,281	)
Denominator
Weighted-average ordinary shares - basic		26,751,083			26,033,550			26,631,704			25,867,014
Dilutive effect of ordinary share equivalents resulting from ordinary share options and RSUs		185,458			-			272,777			-
Weighted-average ordinary shares - diluted		26,936,541			26,033,550			26,904,481			25,867,014

The following numbers of outstanding ordinary share options and unvested RSUs were excluded from the computation of diluted net loss per share for the periods presented because their effect would have been anti-dilutive:

	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Options to purchase ordinary shares		-		383,855		-		290,226
Unvested RSUs		-		332,455		-		332,455

XML

Note 4 - Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

(in thousands)	September 30, 2019			December 31, 2018
Accounts receivable	$	15,620		$	9,246
Less allowance for uncollectible accounts receivable		(124	)		(88	)
Accounts receivable, net	$	15,496		$	9,158

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

Accounting Policies [Abstract]

Discontinued Operations, Policy [Policy Text Block]

Discontinued operations

The Company reports the results of operations of a business that either has been disposed of or is classified as held for sale, in accordance with Accounting Standards Codification, or ASC,

360,

Property, Plant, and Equipment

, in discontinued operations, as required by ASC

205,

Presentation of Financial Statements

. The Company presents such events as discontinued operations so long as the financial results can be clearly identified and the future operations and cash flows are completely eliminated from ongoing operations. The Company’s historical results for all periods presented are restated to account for businesses reported as discontinued operations in our Consolidated Financial Statements and these Notes. Unless otherwise specified, disclosures in our Consolidated Financial Statements and these Notes relate solely to our continuing operations.

As discussed in Note

14.

 

Discontinued operations

, on

September 25, 2018,

the Company entered into an agreement to sell the Company’s U.S. Laboratory Services Business to Quest Diagnostics Incorporated, or the Transaction. The Transaction represented a strategic business shift having a major effect on the Company’s operations and financial results. Accordingly, operations have been reported in discontinued operations in the consolidated financial statements for all periods presented. The Transaction was consummated on

November 6, 2018

for gross proceeds of

$170

million in cash. Immediately following the Transaction, the Company had approximately

210

employees, including sales and marketing teams on

three

continents, and a laboratory in the United Kingdom.

Basis of Accounting, Policy [Policy Text Block]

Unaudited interim financial statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information and with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, they do

not

include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, of a normal recurring nature, necessary for a fair statement of the financial position at

September 30, 2019

, the results of operations for the 

three

and

nine

-month periods ended

September 30, 2019

and

2018

, and the cash flows for the

nine

-month periods ended

September 30, 2019

and

2018

. Interim results are

not

necessarily indicative of results for a full year.

The consolidated balance sheet presented as of

December 31, 2018

, has been derived from the Company's audited consolidated financial statements as of that date. The consolidated financial statements and notes included in this Quarterly Report should be read in conjunction with the

2018

consolidated financial statements and notes included in the Company’s Annual Report on Form 

10

-K for the year ended

December 31, 2018,

as filed with the Securities and Exchange Commission on

March 28, 2019,

or the 

2018

Form

10

-K.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments purchased with maturities at acquisition of

three

months or less to be cash equivalents. The Company maintains its available cash balances in cash, money market funds and repurchase agreements primarily invested in U.S. government and agency securities, and bank savings accounts in the United States, United Kingdom, Germany, Japan, China and South Korea. The Company maintains deposits in government insured financial institutions in excess of government insured limits. Management believes that the Company is

not

exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

Restricted cash relates to collateral for procurement cards issued by a U.S. commercial bank.

Cash, cash equivalents, and restricted cash consists of the following:

(in thousands)	September 30, 2019		December 31, 2018
Cash and cash equivalents	$	184,282	$	192,844
Restricted cash, non-current		100		100
Total cash, cash equivalents, and restricted cash	$	184,382	$	192,944

Revenue from Contract with Customer [Policy Text Block]

Revenues

The Company’s revenues include product and service revenues. In general, revenue from diagnostic test kit sales and related accessories is recognized at a point in time based upon contractual rates. However, for contracts with tiered pricing provisions, if the tiered pricing constitutes a material right and spans across multiple reporting periods, the Company estimates the total transaction price at the beginning of each reset period (

i.e.

, the period in which revenue at different tiers is earned and settled) based on expected volumes. The Company revises its estimates of variable consideration at each reporting date throughout each reset period. Service revenue is recorded based upon contractually established billing rates and recognized upon delivery of test results to the customer. See Note

2.

Revenue

for disaggregation of revenue by type and geography.

For the

three

and

nine

months ended

September 30, 2019

, the Company had

no

material bad-debt expense and there were

no

material contract assets, contract liabilities or deferred contract costs recorded on the condensed consolidated balance sheet as of

September 30, 2019

. The Company generally expenses sales commissions when incurred because the amortization period would be less than

one

year.

Revenue expected to be recognized in any future year related to remaining performance obligations is

not

material.

Taxes assessed by governmental authorities on revenue, including sales and value added taxes, are recorded on a net basis (excluded from revenue) in the consolidated statements of operations.

Other than the following discussion regarding leases, the remainder of the significant accounting estimates and policies used in preparation of the condensed consolidated financial statements disclosed in Note

1.

Description of business and significant accounting policies

to the consolidated financial statements in the 

2018

Form

10

-K remain unchanged.

Lessee, Leases [Policy Text Block]

Leases

In

February 2016,

the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU,

2016

-

02,

Leases

,or ASU

2016

-

02,

to enhance the transparency and comparability of financial reporting related to leasing arrangements. The Company adopted ASU

2016

-

02

on

January 1, 2019,

or the effective date, and used the effective date as its date of initial application.

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present. Most leases with a term greater than

one

year are recognized on the balance sheet as right-of-use assets, lease liabilities and, if applicable, long-term lease liabilities. The Company has elected

not

to recognize on the balance sheet leases with terms of

one

year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. The operating lease right-of-use assets also include any lease payments made prior to the commencement date and exclude lease incentives and initial direct costs incurred. The operating lease right-of-use assets are subsequently assessed for impairment in accordance with the Company’s accounting policy for long-lived assets. The interest rate implicit in lease contracts is typically

not

readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The incremental borrowing rate was determined at lease commencement, or as of

January 1, 2019

for operating leases existing upon adoption of ASU

2016

-

02.

The incremental borrowing rate is subsequently reassessed upon modification to the lease arrangement.

In accordance with the guidance in ASU

2016

-

02,

components of a lease should be split into

three

categories: lease components (

e.g.

, land, building, etc.), non-lease components (

e.g.

, common area maintenance, maintenance, consumables, etc.), and non-components (

e.g.

, property taxes, insurance, etc.). Then the fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on fair values to the lease components and non-lease components.

Although separation of lease and non-lease components is required, certain practical expedients are available. Entities

may

elect the practical expedient to

not

separate lease and non-lease components and would instead account for each lease component and the related non-lease component together as a single component. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the contract consideration to the lease component only. The lease component results in an operating lease right-of-use asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense.

Income Tax, Policy [Policy Text Block]

Income taxes

The Company calculates its interim income tax provision in accordance with ASC

270,

Interim Reporting

, and ASC

740,

Accounting for Income Taxes

. At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.

The Company recognized an income tax provision of

$383,000

and

$485,000

for the

three

months ended

September 

30,

2019

and

September 

30,

2018,

respectively. In the

first

quarter of

2019,

the Company revised its transfer pricing model to reflect changes in the Company’s business model following the Transaction. Upon completion of the full transfer pricing study in the

third

quarter of

2019,

the Company reassessed the realizability of its deferred tax assets based on all available evidence. As a result, the Company recorded a reversal of

$2.2

million of the previously recognized valuation allowances against its deferred tax assets in the U.S. and a

$1.4

million valuation allowance against its deferred tax assets in the U. K. The Company recognized an income tax benefit of

$1.2

million and income tax expense of

$1.2

million for the

nine

months ended

September 

30,

2019

and

2018,

respectively.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently

a

dopted

a

ccounting

p

ronouncements

In

February 2016,

the FASB issued ASU

2016

-

02,

which requires lessees to reflect all leases with terms longer than

12

months on their balance sheets. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The FASB has subsequently issued amendments to the guidance, including the addition of an optional transition method. The Company’s process of evaluating the impact of ASU

2016

-

02

has included reviewing all forms of leases and performing a completeness assessment over the lease population. The Company adopted ASU

2016

-

02

on

January 1, 2019

and applied the modified retrospective approach, which recognize a cumulative-effect adjustment, if any, to the opening balance of retained earnings. The Company took advantage of the transition package of practical expedients permitted within ASU

2016

-

02,

which among other things, allowed it to carryforward historical lease classifications. The Company made an accounting policy election that will keep leases with an initial term of

12

months or less and that do

not

include an option to purchase the underlying asset that the Company is reasonably certain to exercise off of the balance sheet and will result in recognizing those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As a result of adopting ASU

2016

-

02,

the Company recognized right-of-use assets of about

$7.2

million and corresponding liabilities of about

$8.2

million for its existing lease portfolio on its consolidated balance sheets as of

January 1, 2019.

The adoption of ASU

2016

-

02

has

not

had a material impact on the Company’s consolidated statements of operations or consolidated statements of cash flows. The Company has included additional disclosures in Note

13.

Commitments

to its condensed consolidated financial statements regarding its leasing portfolio, including key judgments and assumptions and the discount rates used in calculating the Company’s right-of-use assets and corresponding liabilities.

In

June 2018,

the FASB issued ASU

2018

-

07,

 

Improvements to Nonemployee Share-Based Payment Accounting

, or ASU

2018

-

07.

ASU

2018

-

07

simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted ASU

2018

-

07

prospectively as of

January 1, 2019.

The adoption of ASU

2018

-

07

has

not

had a material impact on the Company’s financial position, results of operations or related disclosures.

Recently

i

ssued but

not

yet adopted 

a

ccounting

p

ronouncements

In

June 2016,

the FASB issued ASU

2016

-

13,

 

Financial Instruments-Credit Losses

, or ASU

2016

-

13.

ASU

2016

-

13

requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. Under current U.S. GAAP, a company only considered past events and current conditions in measuring an incurred loss. Under ASU

2016

-

13,

the information that a company must consider is broadened in developing an expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates more timely information in the estimate of expected credit loss. The new guidance is currently expected to be effective for the Company for annual and interim periods beginning after

December 15, 2019.

The FASB is considering a delay of the implementation until annual and interim periods beginning after

December 15, 2022

for smaller reporting companies. Early adoption is permitted for annual and interim periods beginning after

December 15, 2018.

The guidance is applied using a modified retrospective, or prospective approach, depending on a specific amendment. The Company has been reviewing ASU

2016

-

13

and does

not

believe its adoption will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In

January 2017,

the FASB issued ASU

2017

-

04,

 

Intangibles – Goodwill and Other

, or ASU

2017

-

04.

ASU

2017

-

04

simplifies subsequent measurement of goodwill by eliminating Step

2

from the goodwill impairment test. The new guidance will be applied on a prospective basis. ASU

2017

-

04

will be effective for the Company for annual or any interim goodwill impairment tests in fiscal years beginning after

December 15, 2019.

Early adoption is permitted for interim or annual goodwill impairment tests. The Company does

not

expect that the application of ASU

2017

-

04

will have a material impact on the presentation of its results of operations, financial position, or related disclosures.

In

August 2018,

the FASB issued ASU

No.

2018

-

13,

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, 

or ASU

2018

-

13,

which modifies certain disclosure requirements on fair value measurements. The amendments regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level

3

fair value measurements, and the narrative description of measurement uncertainty are required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments are required to be applied retrospectively to all periods presented upon their effective date. ASU

2018

-

13

is effective for fiscal years beginning after

December 15, 2019

and interim periods within those years. The Company does

not

anticipate a material impact to disclosures as a result of the adoption of ASU

2018

-

13.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - £ / shares	Sep. 30, 2019	Dec. 31, 2018
Common stock, nominal value (in GBP per share)	£ 0.006705	£ 0.006705
Common stock, shares authorized (in shares)	40,060,729	38,978,604
Common stock, shares issued (in shares)	26,642,510	26,439,334
Common stock, shares outstanding (in shares)	26,642,510	26,439,334

XML

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance at Dec. 31, 2017	$ 269	$ 294,613	$ (201,541)	$ (5,712)	$ 87,629
Exercise of share options	2	82			84
Share-based compensation expense		1,824			1,824
Tax on vesting of restricted share units		(156)			(156)
Other comprehensive income (loss),				557	557
Net income (loss)			(10,326)		(10,326)
Balance at Mar. 31, 2018	271	296,363	(211,867)	(5,155)	79,612
Balance at Dec. 31, 2017	269	294,613	(201,541)	(5,712)	87,629
Other comprehensive income (loss),					(1,578)
Net income (loss)					(20,281)
Balance at Sep. 30, 2018	276	300,802	(221,822)	(7,290)	71,966
Balance at Mar. 31, 2018	271	296,363	(211,867)	(5,155)	79,612
Exercise of share options	1	729			730
Share-based compensation expense		922			922
Tax on vesting of restricted share units		(108)			(108)
Other comprehensive income (loss),				(1,521)	(1,521)
Net income (loss)			(6,471)		(6,471)
Balance at Jun. 30, 2018	272	297,906	(218,338)	(6,676)	73,164
Exercise of share options	4	1,881			1,885
Share-based compensation expense		1,015			1,015
Other comprehensive income (loss),				(614)	(614)
Net income (loss)			(3,484)		(3,484)
Balance at Sep. 30, 2018	276	300,802	(221,822)	(7,290)	71,966
Balance at Dec. 31, 2018	276	303,015	(80,762)	(8,523)	214,006
Exercise of share options	2	1,800			1,802
Share-based compensation expense		845			845
Tax on vesting of restricted share units		(145)			(145)
Other comprehensive income (loss),				1,167	1,167
Net income (loss)			(1,496)		(1,496)
Balance at Mar. 31, 2019	278	305,515	(82,258)	(7,356)	216,179
Balance at Dec. 31, 2018	276	303,015	(80,762)	(8,523)	214,006
Other comprehensive income (loss),					(1,902)
Net income (loss)					(189)
Balance at Sep. 30, 2019	278	306,601	(81,485)	(10,425)	214,969
Balance at Mar. 31, 2019	278	305,515	(82,258)	(7,356)	216,179
Exercise of share options	2	1,531			1,533
Share-based compensation expense		846			846
Tax on vesting of restricted share units		(10)			(10)
Other comprehensive income (loss),				(1,355)	(1,355)
Net income (loss)			590		590
Balance at Jun. 30, 2019	280	307,882	(81,668)	(8,711)	217,783
Exercise of share options		593			593
Share-based compensation expense		983			983
Tax on vesting of restricted share units		(68)			(68)
Other comprehensive income (loss),				(1,714)	(1,714)
Net income (loss)			717		717
Ordinary shares repurchased	(2)	(2,789)	(534)		(3,325)
Balance at Sep. 30, 2019	$ 278	$ 306,601	$ (81,485)	$ (10,425)	$ 214,969

XML

Note 5 - Inventory, Net - Summary of Inventory, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Raw materials	$ 8,347	$ 6,169
Work in progress	71	190
Finished goods	1,382	1,408
Inventory, net	$ 9,800	$ 7,767

XML

Note 8 - Loans Payable (Details Textual) - MidCap Agreement [Member] - MidCap Financial [Member] - USD ($)				3 Months Ended
	Nov. 06, 2018	Sep. 25, 2018	Oct. 04, 2016	Dec. 31, 2018
Debt Agreement, Maximum Borrowing Capacity			$ 40,000,000
Debt Agreement, Maximum Borrowing Capacity, Including Additional Increase			60,000,000
Payments for Loans	$ 32,300,000
Debt Instrument, Prepayment and Exit Fees	$ 2,300,000	$ 2,300,000
Gain (Loss) on Extinguishment of Debt, Total				$ (2,100,000)
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity			$ 10,000,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage			0.50%
London Interbank Offered Rate (LIBOR) [Member] | Revolving Credit Facility [Member]
Debt Instrument, Basis Spread on Variable Rate			4.45%
Term Loan [Member]
Long-term Debt, Total			$ 30,000,000
Debt Instrument, Term			5 years
Debt Instrument, Periodic Payment, Term			2 years
Debt Instrument, Periodic Payment, Term, Potential Extension			4 years
Debt Agreement, Additional Increase			$ 10,000,000
Term Loan [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			7.60%

XML

Note 3 - Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	September 30, 2019
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	10,848	$	10,848	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		161,098		161,098		-		-
Total	$	171,946	$	171,946	$	-	$	-

	December 31, 2018
(in thousands)	Total		Level 1		Level 2		Level 3
Assets:
U.S. Government money market funds	$	19,812	$	19,812	$	-	$	-
Tri-party repurchase agreements (collateralized by at least 102% U.S. Treasury and Agency Securities)		165,157		165,157		-		-
Total	$	184,969	$	184,969	$	-	$	-

XML

Note 14 - Discontinued Operations

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

14.

Discontinued operations

As previously disclosed, on

September 25, 2018,

the Company entered into a Limited Liability Company Interest Purchase Agreement, or the Purchase Agreement, with Quest, Oxford Immunotec Limited, a limited company incorporated in England and Wales and a wholly owned subsidiary of the Company, or Oxford Limited, and Oxford Immunotec, LLC, a Delaware limited liability company (formerly known as Oxford Immunotec, Inc., a Delaware corporation) and a wholly owned subsidiary of the Company, or Oxford LLC, pursuant to which Oxford Limited agreed to sell, and Quest agreed to acquire, the U.S. Laboratory Services Business, for gross proceeds of

$170

million in cash. This transaction is referred to herein as the Transaction. Of this amount, approximately

$32.3

million was paid directly to MidCap in settlement of all amounts due under a financing agreement, which included prepayment and exit fees of approximately

$2.3

million as described in Note

8.

Loans payable

.

As contemplated in the Purchase Agreement, Oxford Immunotec USA, Inc., a Delaware corporation and a newly formed wholly owned subsidiary of Oxford Limited, or Oxford USA, joined the Purchase Agreement by way of a Joinder Agreement dated

October 1, 2018.

The Transaction was consummated in accordance with the terms and conditions of the Purchase Agreement on

November 6, 2018,

or the Closing Date. Prior to and in connection with consummation of the Transaction, Oxford USA and Oxford LLC (at the time, known as Oxford Immunotec, Inc.) carried out a corporate restructuring pursuant to which (i) the assets and businesses of Oxford LLC other than the U.S. Laboratory Services Business were transferred to Oxford USA and (ii) Oxford LLC was converted into a limited liability company.

At the time of sale, the U.S. Laboratory Services Business had a carrying value of

$27.9

million. The Company recorded a gain of

$146.0

million in connection with the Transaction, which amount was included in income from discontinued operations before income taxes in the Company’s consolidated statement of operations during the

three

months ended

December 31, 2018

.

Additionally, pursuant to the terms of the Purchase Agreement, the parties entered into certain ancillary agreements as of the Closing Date, including: (i) a transitional services agreement, or TSA, that will continue, unless otherwise terminated, until each service included in the TSA has been completed, (ii) a technology license agreement that will remain in effect until the date of expiration or lapse of the last “Blood Stability Patent” to expire or lapse, and (iii) a long-term supply agreement, or the Supply Agreement, pursuant to which Oxford USA agreed to sell, and Quest agreed to purchase, T-SPOT.

TB

 test kits and related accessories from Oxford USA. The Supply Agreement will last for a period of

seven

years after the effective date unless terminated earlier by a party to the Supply Agreement, as provided for in the Supply Agreement. In addition, the parties entered into a strategic collaboration agreement to drive continued growth of T-SPOT.

TB

testing in the U.S. that will remain in effect until the expiration or termination of the Supply Agreement.

In conjunction with the Purchase Agreement, Quest agreed to purchase kits and accessories from the Company for an initial period of

seven

years after the effective date of the Purchase Agreement unless a party earlier terminates, as provided for in the Purchase Agreement. On

June 12, 2019,

the Company entered into an Amendment of Agreement between Quest and Oxford Immunotec, USA, Inc., or the Amendment. The Amendment revised growth targets, pricing and various other terms, which are confidential.

During the

three

and

nine

months ended

September 30, 2018

, Oxford Limited sold kits to its discontinued operations, Oxford LLC, for use in the lab services business of

$1.8

million and

$7.3

million, respectively, that were eliminated in the Company’s consolidated financial results.

The following table presents the results of discontinued operations, which solely relate to

2018

:

(in thousands)	Three months ended September 30, 2018		Nine months ended September 30, 2018
Major classes of line items constituting income (loss) from discontinued operations before income taxes:
Service revenue	$	18,446	$	46,265
Cost of service revenue		9,889		30,359
Gross profit		8,557		15,906
Research and development		2,077		4,989
Sales and marketing		2,093		6,582
General and administrative		1,613		4,439
Income (loss) from discontinued operations before income taxes		2,774		(104	)
Income tax expense		—		—
Income (loss) from discontinued operations	$	2,774	$	(104	)

During the

third

quarter of

2019,

the Company recorded a charge in discontinued operations of

$469,000

that resulted from adjustments on the remaining proceeds due from the Transaction.

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 184,282	$ 192,844
Accounts receivable, net	15,496	9,158
Other receivable	8,696	4,500
Inventory, net	9,800	7,767
Prepaid expenses and other assets	3,157	2,511
Total current assets	221,431	216,780
Restricted cash, non-current	100	100
Other receivable, non-current	1,079	4,500
Property and equipment, net	6,378	7,144
Operating lease right-of-use assets	6,662
Goodwill	2,483	2,483
Other intangible assets, net	43	61
Deferred tax asset	790	1,052
Total assets	238,966	232,120
Liabilities and shareholders' equity
Accounts payable	3,085	2,801
Accrued liabilities	8,718	10,891
Current portion of operating lease liability	533
Settlement liability	4,218	4,106
Deferred income	174	125
Current portion of loans payable		85
Total current liabilities	16,728	18,008
Long-term portion of operating lease liability	7,239
Long-term portion of loans payable	30	106
Total liabilities	23,997	18,114
Commitments and contingencies (Note 13)
Shareholders' equity:
Ordinary shares, £0.006705 nominal value; 40,060,729 and 38,978,604 shares authorized at September 30, 2019 and December 31, 2018, respectively, and 26,642,510 and 26,439,334 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively	278	276
Additional paid-in capital	306,601	303,015
Accumulated deficit	(81,485)	(80,762)
Accumulated other comprehensive loss	(10,425)	(8,523)
Total shareholders' equity	214,969	214,006
Total liabilities and shareholders' equity	$ 238,966	$ 232,120

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Condensed Consolidated Statements of Other Comprehensive Loss (Unaudited) (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Foreign currency translation adjustment, tax charges / (benefits)	$ 426	$ 124	$ 486	$ 396

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Note 6 - Goodwill and Acquired Intangible Assets (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of Reporting Units	1
Goodwill, Ending Balance	$ 2,483	$ 2,483

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Note 9 - Share Capital (Details Textual) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period		380,601		694,322
Stock Issued During Period, Shares, Restricted Stock Award, Gross		65,405		83,378
Stock Repurchase Program, Authorized Amount	$ 100,000		$ 100,000
Stock Repurchased During Period, Shares	242,830
Stock Repurchased During Period, Value	$ 3,325
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 96,700		$ 96,700
Stock Repurchase Program, Period in Force			5 years

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Note 13 - Commitments - Purchase Commitments (Details) $ in Thousands	Sep. 30, 2019 USD ($)
2019 (three months)	$ 4,432
2020	3,055
2021	1,200
2022	370
2023	370
Thereafter
Total minimum payments	$ 9,427

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Note 13 - Commitments (Details Textual)		1 Months Ended
	Sep. 25, 2018 USD ($) ft²	Jun. 30, 2018 USD ($)	Aug. 31, 2015 USD ($) ft²	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jul. 31, 2015 ft²	Mar. 01, 2013
Lessee, Operating Lease, Term of Contract							5 years
Lessee, Operating Lease, Renewal Term			2 years
Area of Real Estate Property | ft²	9,000		22,100			7,600
Operating Leases, Monthly Rent Expense	$ 17,000
Lessee Leasing Arrangements, Operating Leases, Optional Extension of Contract			5 years
Operating Lease, Right-of-Use Asset				$ 6,662,000
Operating Lease, Liability, Total				$ 7,772,000
Office Expansion [Member]
Operating Leases, Monthly Rent Expense			$ 12,000
Minimum [Member]
Operating Leases, Monthly Rent Expense		$ 39,000	36,000
Maximum [Member]
Operating Leases, Monthly Rent Expense		$ 79,000	$ 39,000

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Note 13 - Commitments (Tables)

9 Months Ended

Sep. 30, 2019

Notes Tables

Lease, Cost [Table Text Block]

($ amounts in thousands)	Three months ended September 30, 2019			Nine months ended September 30, 2019
Lease Cost
Operating lease cost	$	322		$	963
Short-term lease cost		186			553
Variable lease cost		239			705
Total lease cost	$	747		$	2,221
Other Information
Cash paid for amounts included in the measurement of lease liabilities	$	250		$	765
Operating lease liabilities arising from obtaining right-of-use assets		136			136
Operating Leases
Weighted average remaining lease term (in years)		12.5			12.5
Operating Leases
Weighted average discount rate		7.8	%		7.8	%

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

(in thousands)	September 30, 2019
2019 (three months)	$	257
2020		1,059
2021		998
2022		971
2023		941
Thereafter		8,184
Total lease payments		12,410
Less: imputed interest		(4,638	)
Total operating lease liabilities	$	7,772

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

(in thousands)	December 31, 2018
2019	$	2,024
2020		1,848
2021		972
2022		855
2023		855
Thereafter		7,558
Total minimum lease payments	$	14,112

Purchase Obligation, Fiscal Year Maturity [Table Text Block]

(in thousands)	Purchase Obligations
2019 (three months)	$	4,432
2020		3,055
2021		1,200
2022		370
2023		370
Thereafter		-
Total minimum payments	$	9,427

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Note 2 - Revenue (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Revenue from Contract with Customer, Including Assessed Tax	$ 21,219,000	$ 16,050,000	$ 55,596,000	$ 44,386,000
UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax	$ 5,735,000	2,876,000	$ 19,034,000	11,615,000
Blood Donor Screening Services [Member]
Revenue from Contract with Customer, Including Assessed Tax		93,000		1,700,000
Blood Donor Screening Services [Member] | UNITED STATES
Revenue from Contract with Customer, Including Assessed Tax		$ 93,000		$ 1,700,000

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Note 10 - Share Option and Equity Incentive Plan

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

10.

Share option and equity incentive plan

The impact on the Company’s results of operations from share-based compensation was as follows:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Cost of revenue	$	21	$	38	$	56	$	161
Research and development		132		201		244		581
Sales and marketing		332		137		910		774
General and administrative		498		572		1,464		2,034
Total continuing operations		983		948		2,674		3,550
Discontinued operations		-		67		-		211
Total share-based compensation	$	983	$	1,015	$	2,674	$	3,761

In

November 2013,

in connection with the Company’s initial public offering, the Company adopted the

2013

Share Incentive Plan, or the

2013

Plan, which provides for the grant of share options, restricted shares, RSUs, and other share-based awards to employees, officers, directors and consultants of the Company. The

2013

Plan was amended at the Company's

2017

annual general meeting of shareholders.

During the

three

-month period ended

September 30, 2019

, the Company granted

39,520

share options with an exercise price of

$13.33

 per share under the

2013

Plan. The weighted-average grant date fair value related to share options granted under the

2013

Plan during the

three

-month period ended

September 30, 2019

was

$5.80

per share.

During the

nine

-month period ended

September 30, 2019

, the Company granted to certain employees

469,848

 share options with exercise prices ranging from

$13.33

 to

$16.42

 per share under the

2013

Plan. The weighted-average grant date fair value related to share options granted under the

2013

Plan during the

nine

-month period ended

September 30, 2019

was

$7.22

 per share. Share options generally vest based on the grantee’s continued service with the Company during a specified period following the vesting start date and expire after

ten

years.

During the

three

and

nine

-month periods ended

September 30, 2019

, the Company awarded

11,928

and 

154,472

 RSUs, respectively. RSUs vest based on the grantee’s continued service with the Company during a specified period following grant as follows:

40%

on the

second

anniversary of the vesting start date;

30%

on the

third

anniversary of the vesting start date; and

30%

on the

fourth

anniversary of the vesting start date. Share-based compensation expense for these RSUs is calculated based on the grant date market price of the shares and is being recognized over the vesting period.

For the

three

-month period ended

September 30, 2019

, the Company incurred shared-based compensation expense related to share options and RSUs of

$658,000

and

$325,000,

respectively. For the

three

-month period ended

September 30, 2018

, the Company incurred shared-based compensation expense related to share options and RSUs of

$748,000

and

$267,000,

respectively.

For the

nine

-month period ended

September 30, 2019

, the Company incurred shared-based compensation expense related to share options and RSUs of

$1.9

 million and

$741,000,

respectively. For the

nine

-month period ended

September 30, 2018

, the Company incurred shared-based compensation expense related to share options and restricted shares/RSUs of

$2.4

million and

$1.3

million, respectively.

As of

September 30, 2019

, there was

$5.1

million and

$3.5

 million of total unrecognized compensation cost related to unvested share options and RSUs, respectively. These costs are expected to be recognized over weighted-average periods of

2.6

 years for share options and

2.8

 years for RSUs.

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Note 6 - Goodwill and Acquired Intangible Assets

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

6.

Goodwill and acquired intangible assets

The Company has

one

reporting unit, and goodwill represents the synergies realized in its acquisitions of Imugen, Inc. and Immunetics, Inc. The carrying amount of goodwill reflected in the Company’s consolidated balance sheets was

$2.5

million at

September 30, 2019

and

December 31, 2018

. 

Acquired intangible assets consisted of the following as of

September 30, 2019

and

December 31, 2018

:

	As of September 30, 2019
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	609	$	43
Total		$	652	$	609	$	43

	As of December 31, 2018
(in thousands)	Amortization period (years)	Gross carrying amount		Accumulated Amortization		Net carrying amount
Licenses	5-10	$	652	$	591	$	61
Total		$	652	$	591	$	61

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Note 2 - Revenue

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

2.

Revenue

On

November 6, 2018,

the Company completed the sale of its U.S. Laboratory Services Business to Quest Diagnostics Incorporated. Accordingly, the Company’s prior year revenues have been recast to present the U.S. laboratory services business as a discontinued operation. For further information on these changes, refer to Note

14.

 

Discontinued operations.

The following tables present the Company’s revenues disaggregated by type:

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
Product	$	20,115	$	15,095	$	52,622	$	40,236
Service		1,104		955		2,974		4,150
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

Service revenue for the

three

and

nine

months ended

September 

30,

2018

 included

$93,000

and

$1.7

million, respectively, from the blood donor screening market from which the Company withdrew in late

2018.

The following tables reflect revenue by geography (United States, Europe and rest of world, or Europe and ROW, and Asia):

	Three months ended September 30,				Nine months ended September 30,
(in thousands)	2019		2018		2019		2018
Revenue
United States	$	5,735	$	2,876	$	19,034	$	11,615
Europe and ROW		2,709		2,277		7,670		6,750
Asia		12,775		10,897		28,892		26,021
Total revenue	$	21,219	$	16,050	$	55,596	$	44,386

United States revenue for the

three

and

nine

months ended

September 

30,

2018

 included

$93,000

and

$1.7

million, respectively, from the blood donor screening market from which the Company withdrew in late

2018.