1. Organization, Description of the Business and Liquidity OncoCyte Corporation (OncoCyte) is a molecular diagnostics company whose mission is to provide actionable answers at critical decision points during the course of lung cancer care, with the goal of improving patient outcomes by accelerating and optimizing diagnosis and treatment. OncoCytes first product for commercial release is a proprietary treatment stratification or prognostic test that identifies which patients with early stage non-small cell lung cancer may benefit from chemotherapy, resulting in a significantly higher, five-year survival rate. OncoCyte is also developing DetermaVu, as a proprietary non-invasive blood test using molecular markers to determine whether lung nodules detected through imaging are unlikely to be malignant, with the goal of reducing the number of unnecessary invasive and expensive diagnostic biopsy procedures. OncoCyte holds a 25% equity interest in Razor Genomics, Inc. (Razor), a privately held company, developing a prognostic test to assist physicians in the management of non-small cell lung cancer (see Note 5). Razors key product is a commercially ready test called the Molecular Prognostic Assay, a proprietary treatment stratification test (the Razor assay) for early stage lung cancer. OncoCyte has licensed all rights to commercialize the Razor assay and plans to conduct certain clinical trials for purposes of promoting commercialization. OncoCyte is currently devoting substantially all of its efforts on developing and commercializing its lung cancer diagnostic test DetermaVu and the Razor assay. OncoCyte was incorporated in 2009 in the state of California and was formerly a majority-owned subsidiary of Lineage Cell Therapeutics, Inc. (Lineage) (formerly known as BioTime, Inc.), a publicly traded, clinical-stage, biotechnology company developing new cellular therapies for degenerative retinal diseases, neurological conditions associated with demyelination, and aiding the body in detecting and combating cancer. Beginning on February 17, 2017, OncoCyte ceased to be a subsidiary of Lineage for financial reporting purposes when Lineages percentage ownership of outstanding OncoCyte common stock declined below 50% as a result of the issuance of additional OncoCyte common stock to certain investors who exercised OncoCyte stock purchase warrants (see Note 7). Liquidity For all periods presented, OncoCyte generated no revenues. Since inception, OncoCyte has financed its operations through the sale of common stock, warrants, warrant exercises, bank loans, and sales of Lineage common shares that it holds as marketable equity securities. Lineage also provides OncoCyte with the use of Lineage office and laboratory facilities, and through September 30, 2019 provided administrative services, to OncoCyte under a Shared Facilities and Services Agreement (the Shared Facilities Agreement) as described in Note 4. OncoCyte has incurred operating losses and negative cash flows since inception and had an accumulated deficit of $85.8 million as of September 30, 2019. OncoCyte expects to continue to incur operating losses and negative cash flows for the foreseeable future. At September 30, 2019, OncoCyte had $19.4 million of cash and cash equivalents and held Lineage and AgeX Therapeutics, Inc. (AgeX) common stock as marketable equity securities valued at $0.4 million. On October 17, 2019, OncoCyte refinanced a loan from Silicon Valley Bank for net proceeds of $2.5 million (see Notes 6 and 11). On November 13, 2019, OncoCyte entered into a series of stock purchase agreements on like terms pursuant to which OncoCyte agreed to sell a total of 5,058,824 shares of common stock for approximately $8.6 million in cash in an offering registered under the Securities Act of 1933, as amended (the Securities Act). OncoCyte expects the transaction to close on November 15, 2019 subject to the satisfaction of customary closing conditions. See Note 11. OncoCyte believes that its cash, cash equivalents and marketable equity securities is sufficient to carry out current operations through at least twelve months from the issuance date of the condensed interim financial statements included in this Report. OncoCyte will need to raise additional capital to finance its operations, including the development and commercialization of its cancer diagnostic and prognostic tests, until such time as it is able to complete development and commercialize one or more tests and generate sufficient revenues to cover its operating expenses. Presently, OncoCyte is devoting substantially all of its efforts on developing and commercializing its lung cancer diagnostic test DetermaVu and the Razor assay. OncoCyte may also explore a range of other commercialization options in order to reduce capital needs and the risks associated with the timelines and uncertainty for attaining the Medicare and commercial reimbursement approvals that will be essential for the successful commercialization of OncoCytes cancer tests. Those alternative arrangements could include acquisition of companies in the diagnostic or related markets, marketing arrangements with other diagnostic companies through which OncoCyte might receive a royalty on sales, or through which it might form a joint venture to market its cancer tests and share in net revenues. Delays in the development of DetermaVu could prevent OncoCyte from raising sufficient additional capital to finance the completion of development and commercial launch of DetermaVu the Razor assay, or other cancer diagnostic tests. Investors may also be reluctant to provide OncoCyte with capital until its tests are approved for reimbursement by Medicare or private insurers or healthcare providers. The unavailability or inadequacy of financing or revenues to meet future capital needs could force OncoCyte to modify, curtail, delay, or suspend some or all aspects of planned operations. Sales of additional equity securities could result in the dilution of the interests of its shareholders. OncoCyte cannot assure that adequate financing will be available on favorable terms, if at all. Basis of presentation The unaudited condensed interim financial statements presented herein, and discussed below, have been prepared on a stand-alone basis in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities Exchange Commission (the SEC). In accordance with those rules and regulations certain information and footnote disclosures normally included in comprehensive financial statements have been condensed or omitted. The condensed balance sheet as of December 31, 2018 was derived from the audited financial statements at that date, but does not include all the information and footnotes required by GAAP. These condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in OncoCytes Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying condensed interim financial statements, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of OncoCytes financial condition and results of operations. The condensed results of operations are not necessarily indicative of the results to be expected for any other interim period or for the entire year. Prior to February 17, 2017, Lineage consolidated the results of OncoCyte into Lineages consolidated results based on Lineages ability to control OncoCytes operating and financial decisions and policies through its majority ownership of OncoCyte common stock. Beginning on February 17, 2017, Lineages percentage ownership of the outstanding OncoCyte common stock declined below 50%, resulting in a loss of control of OncoCyte under GAAP and, as a result, Lineage deconsolidated OncoCytes financial statements from Lineages consolidated financial statements. As a result of this deconsolidation, OncoCyte is no longer considered a subsidiary of Lineage under GAAP with effect from February 17, 2017. Beginning on September 11, 2019, because Lineages ownership interest in OncoCyte decreased to below 20%, Lineage no longer exercises significant influence over the operations and management of OncoCyte. OncoCyte remains an affiliate of Lineage. To the extent OncoCyte did not have its own employees or human resources for its operations, Lineage or Lineage subsidiaries provided certain employees for administrative or operational services, as necessary, for the benefit of OncoCyte (see Note 4). Accordingly, Lineage allocated expenses such as salaries and payroll related expenses incurred and paid on behalf of OncoCyte based on the amount of time that particular employees devoted to OncoCyte affairs. Other expenses such as legal, accounting, human resources, marketing, travel, and entertainment expenses were allocated to OncoCyte to the extent that those expenses were incurred by or on behalf of OncoCyte. Lineage also allocated certain overhead expenses such as facilities rent and utilities, property taxes, insurance, internet and telephone expenses based on a percentage determined by management. These allocations have been made based upon activity-based allocation drivers such as time spent, percentage of square feet of office or laboratory space used, and percentage of personnel devoted to OncoCytes operations or management. Management has evaluated the appropriateness of the percentage allocations on a periodic basis and believes that this basis for allocation is reasonable.