2.	Restatement Relating to Quarter Ended March, 31, 2016

On February 17, 2017, the Audit Committee of the Board of Directors determined that the unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2016, filed on September 27, 2016, should no longer be relied upon and that the Company will restate its previously-filed interim financial statements for the fiscal quarter ended March 31, 2016. The Audit Committee concluded that the unaudited interim financial statements for the three-month and nine-month periods ending March 31, 2016 contain material errors related to Company’s revenue estimates. In recognizing revenue for its financial reports, the Company records revenue at the time test results are delivered net of an estimate of the provision for contractual adjustments and discounts. The revenue estimate employed for the quarter ended March 31, 2016 was based on historical experience. Beginning in calendar 2016, commercial and government payors, the major source of collections for the Company, focused on reducing payments to clinical laboratories by imposing more stringent payment guidelines in their adjudication processes. Additionally, effective January 2016, the Centers for Medicare and Medicaid Services (CMS) reduced the unit reimbursement rate for many of the tests typically performed by the Company, along with the number of tests that CMS would reimburse. Because Medicare and Medicaid accounts for close to 50% of our annual revenue, this reduction in reimbursement rates had a substantial negative impact on our revenue. We have determined that for the quarter ended March 31, 2016, the Company did not accurately adjust their historical experience for these prospective changes, resulting in the Company overstating its revenues and accounts receivable balance. The Company then determined that its revenue for the quarter ended March 31, 2016 should have been approximately $2,113,000 less than previously reported.

In addition, the Company has corrected the deferred tax liability recorded in connection with the reverse merger, AEON elected to change from a cash basis tax payer to an accrual basis tax payer. This is a change of accounting methodology which creates a built-in-gain that resulted in a deferred tax liability of approximately $1,498,000 as of the date of the merger. An adjustment was needed for approximately $730,000 to increase the deferred tax liability and deferred tax expense previously recorded. This increase was partially offset by an adjustment for approximately $149,000 to decrease the deferred tax asset and increase deferred tax expense relating to the revenue adjustment, resulting in a net increase of $581,000 to the provision for income taxes.

The following summarizes the effects of restatement:

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	(Unaudited)						(Unaudited)
	As						As
	Previously Reported					Restated	Previously Reported				Restated
	2016		Adjustment			2016	2016		Adjustment		2016

Consolidated Statement of Operations

Fees for services	$	7,357,034		(2,112,975)	$	5,244,059	$	29,954,475		(2,112,975)	$	27,841,500

Total net revenues	$	7,616,243		(2,112,975)	$	5,503,268	$	30,213,684		(2,112,975)	$	28,100,709

Operating income (loss)	$	850,846		(2,112,975)	$	(1,262,129)	$	9,912,239		(2,112,975)	$	7,799,264

Income before provision for income taxes	$	391,402		(2,112,975)	$	(1,721,573)	$	9,461,887		(2,112,975)	$	7,348,912

Provision for income taxes	$	436,600		581,000	$	1,017,600	$	428,940		581,000		1,009,940

Net (loss) income	$	(45,198)		(2,693,975)	$	(2,739,173)	$	9,032,947		(2,693,975)	$	6,338,972

Earnings per share:
Basic (loss) earnings per share	$	(0.03)			$	(0.65)	$	4.34			$	3.04
Diluted (loss) earnings per share	$	(0.03)			$	(0.65)	$	3.44			$	2.44

	As of
	March 31, 2016
	(Unaudited)				As of
	As Previously				March 31,
Consolidated Balance Sheets	Reported				Restated
	2016		Adjustment		2016
Accounts receivable, net	$	4,549,699		(2,112,975)	$	2,436,724

Long-Term deferred tax asset	$	32,436,000		(581,000)	$	31,855,000

Retained Earnings	$	5,416,757		(2,693,975)	$	2,722,782