Financial Data and Key Metrics Changes - The company reported significant progress in Q2 2020 despite the challenges posed by the COVID-19 pandemic, indicating a focus on growth and adaptation [5][31]. - The diagnostic services side of the business is expected to improve margins as volume increases, driving cash flow towards profitability [11][18]. Business Line Data and Key Metrics Changes - The pathology services segment has seen growth due to the successful integration of Oncometrix customers and the addition of new clients [10]. - The product side of the business, including technologies like IV-Cell and HemeScreen, is being commercialized, with expectations of substantial revenue shifts between diagnostic services and product sales in the next 12 months [18]. Market Data and Key Metrics Changes - The company is actively engaging in the COVID-19 testing market, having partnered with ADS Biotec to distribute FDA authorized serology tests, indicating a strategic pivot to meet market demands [24][30]. - The company is currently capable of producing 1 million tests per day, positioning itself to meet potential future demand as the FDA expands EUA for point-of-care and self-use tests [30]. Company Strategy and Development Direction - The company aims to leverage its COVID-19 testing initiatives as a means to generate shareholder value while maintaining focus on its core business [31]. - Strategic partnerships are being explored to enhance the market introduction of products like IV-Cell and HemeScreen, aiming for rapid adoption and distribution [15][18]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the challenges posed by the pandemic while capitalizing on new opportunities in the testing market [32][33]. - The company believes that the next steps in reopening the economy will involve expanded testing capabilities, which aligns with its strategic goals [26][29]. Other Important Information - The company has developed a strong pipeline for HemeScreen, targeting physician office laboratories, which have been seeking to improve service quality and efficiency during the pandemic [17]. - The management emphasized the importance of adhering to FDA guidelines and processes in the development and marketing of their COVID-19 tests [28]. Q&A Session Summary Question: What is the company's strategy regarding COVID-19 testing? - The company has partnered with ADS Biotec to distribute FDA authorized COVID-19 serology tests and is focusing on leveraging its existing customer base for initial rollout [24]. Question: How does the company plan to handle the production and distribution of tests? - The company is currently capable of producing 1 million tests per day and is preparing distribution channels for potential expanded use of the tests [30].

PART I. Financial Information [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents Precipio, Inc.'s unaudited condensed consolidated financial statements for H1 2020, highlighting a **$5.4 million net loss**, **$2.7 million negative working capital**, and substantial doubt about going concern [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets were **$19.0 million**, total liabilities **$6.4 million**, and stockholders' equity **$12.6 million**, with a **$2.7 million negative working capital** Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $2,015 | $1,878 | | **Total Assets** | $19,034 | $19,511 | | **Total Current Liabilities** | $4,680 | $4,334 | | **Total Liabilities** | $6,407 | $6,306 | | **Total Stockholders' Equity** | $12,627 | $13,205 | | **Working Capital** | ($2,665) | ($2,456) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2020 net sales grew **39% to $1.3 million** with a **$2.2 million net loss**, while H1 2020 net sales grew **53% to $2.5 million** but net loss widened to **$8.8 million** due to a deemed dividend Q2 Performance (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | | :--- | :--- | :--- | | Net Sales | $1,308 | $942 | | Gross Profit | $171 | $172 | | Operating Loss | ($2,259) | ($2,295) | | Net Loss Attributable to Common Stockholders | ($2,249) | ($5,913) | | Basic and Diluted Loss Per Share | ($0.20) | ($1.05) | Six-Month Performance (in thousands, except per share data) | Metric | H1 2020 | H1 2019 | | :--- | :--- | :--- | | Net Sales | $2,524 | $1,655 | | Gross Profit | $296 | $210 | | Operating Loss | ($4,462) | ($4,354) | | Net Loss Attributable to Common Stockholders | ($8,798) | ($7,565) | | Basic and Diluted Loss Per Share | ($0.89) | ($1.66) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased by **$0.6 million** in H1 2020 due to a **$5.5 million net loss**, partially offset by **$4.8 million** from common stock issuances and note conversions, nearly doubling outstanding shares - For the six months ended June 30, 2020, total stockholders' equity decreased by approximately **$0.6 million**. This was mainly due to a net loss of **$5.45 million**, which was largely offset by **$4.8 million** in capital raised from common stock issuances via note conversions and purchase agreements[12](index=12&type=chunk) - The number of outstanding common shares increased significantly from **7,898,117** at the beginning of the year to **14,616,916** at June 30, 2020, primarily due to conversions of debt and stock purchase agreements[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2020 saw **$3.6 million cash used in operations**, offset by **$3.1 million from financing**, resulting in a **$0.5 million net cash decrease** and a **$0.4 million ending cash balance** Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,562) | ($4,887) | | Net cash used in investing activities | ($10) | ($30) | | Net cash provided by financing activities | $3,077 | $5,705 | | **Net Change in Cash** | **($495)** | **$788** | | **Cash at End of Period** | **$353** | **$1,169** | [Notes to the Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, a joint venture with Poplar Healthcare, **going concern doubt** due to losses and **negative working capital**, long-term debt including a **$0.8 million PPP loan**, convertible note activities, and **equity financing** - The company's financial statements are prepared on a going concern basis, but management has identified substantial doubt about its ability to continue as a going concern due to a history of operating losses, negative working capital of **$2.7 million**, and net cash used in operations of **$3.6 million** as of June 30, 2020[27](index=27&type=chunk) - In April 2020, the company formed a joint venture, Precipio Oncometrix LLC, with Poplar Healthcare, holding a **49% interest**, and consolidates the joint venture as a Variable Interest Entity (VIE)[23](index=23&type=chunk)[32](index=32&type=chunk)[42](index=42&type=chunk) - On April 23, 2020, the company received a **$787,200** loan under the Paycheck Protection Program (PPP), which it believes has been used for qualifying expenses and will apply for forgiveness[52](index=52&type=chunk)[53](index=53&type=chunk) - A March 2020 amendment to convertible notes triggered a down-round feature in the Series B Preferred Stock, adjusting its conversion price to **$0.40** from **$2.25**, resulting in a non-cash deemed dividend of approximately **$3.3 million**[118](index=118&type=chunk)[154](index=154&type=chunk) - The company relies heavily on equity financing, having raised **$2.6 million** in the first six months of 2020 through purchase agreements with Lincoln Park Capital[107](index=107&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, liquidity, and capital resources, covering business overview, recent developments like **Nasdaq compliance** and **COVID-19 test market entry**, and the significant **going concern risk** - The company regained compliance with Nasdaq's **$1.00** minimum bid price requirement on June 29, 2020[213](index=213&type=chunk) - On July 30, 2020, the company announced an agreement with ADS Biotec to distribute its FDA-authorized COVID-19 serology antibody tests[214](index=214&type=chunk) - Management reiterates that there is substantial doubt about the company's ability to continue as a going concern, dependent on achieving its business plan and raising additional financing[218](index=218&type=chunk)[219](index=219&type=chunk) [Results of Operations](index=70&type=section&id=Results%20of%20Operations) Q2 2020 net sales grew **39% to $1.3 million** with gross profit flat at **$0.2 million**, while H1 2020 net sales grew **53% to $2.5 million** due to increased cases and sales force expansion Q2 2020 vs. Q2 2019 Results (in thousands) | Metric | Q2 2020 | Q2 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,308 | $942 | $366 | 39% | | Cost of Sales | $1,137 | $770 | $367 | 48% | | Gross Profit | $171 | $172 | ($1) | -1% | | Gross Margin | 13% | 18% | - | - | H1 2020 vs. H1 2019 Results (in thousands) | Metric | H1 2020 | H1 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $2,524 | $1,655 | $869 | 53% | | Cost of Sales | $2,228 | $1,445 | $783 | 54% | | Gross Profit | $296 | $210 | $86 | 41% | | Gross Margin | 12% | 13% | - | - | - The increase in net sales was primarily driven by a significant increase in patient diagnostic cases processed (**76%** in Q2 and **79%** in H1), resulting from an increased sales force[222](index=222&type=chunk)[227](index=227&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2020, the company had a **$2.7 million working capital deficit** and **$0.4 million cash**, relying on **$2.6 million stock sales** and a **$0.8 million PPP loan** to fund **$3.6 million operating cash outflow**, with substantial doubt about going concern Working Capital Position (in thousands) | Metric | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Current Assets | $2,015 | $1,878 | | Current Liabilities | $4,680 | $4,334 | | **Working Capital** | **($2,665)** | **($2,456)** | - Cash decreased by **$0.5 million** in H1 2020. Financing activities, including a **$2.6 million** stock issuance and a **$0.8 million** PPP loan, were crucial for funding the **$3.6 million** operating cash outflow[235](index=235&type=chunk)[236](index=236&type=chunk)[239](index=239&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=76&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Precipio is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Precipio is exempt from providing quantitative and qualitative disclosures about market risk[245](index=245&type=chunk) [Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2020[248](index=248&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2020[249](index=249&type=chunk) PART II. Other Information [Legal Proceedings](index=79&type=section&id=Item%201.%20Legal%20Proceedings) The company reports the dismissal of the Jesse Campbell lawsuit and an unresolved **$0.2 million claim** from CPA Global for patent services, with a **less than $0.1 million liability** recorded - The Jesse Campbell lawsuit was settled and officially dismissed by the court on June 3, 2020, and this matter is now closed[252](index=252&type=chunk) - A claim from CPA Global for approximately **$0.2 million** in patent maintenance services remains unresolved. The company has recorded a liability of less than **$0.1 million** for this matter[251](index=251&type=chunk) [Risk Factors](index=79&type=section&id=Item%201A.%20Risk%20Factors) Key risks include a history of losses, **negative working capital**, the critical need for **additional capital**, **NASDAQ listing compliance**, **COVID-19 pandemic impact**, and **PPP loan forgiveness uncertainty** - The company has a history of losses, had negative working capital of **$2.7 million** as of June 30, 2020, and requires substantial additional capital to continue operations and commercialize its technology[256](index=256&type=chunk)[260](index=260&type=chunk) - The COVID-19 pandemic poses a significant risk, with the company having experienced business interruptions in certain urban markets ranging from **30% to 85%**, and the full and ongoing impact remains uncertain[267](index=267&type=chunk)[269](index=269&type=chunk) - The company regained compliance with Nasdaq's minimum bid price rule on June 29, 2020, but faces the risk of future delisting if it cannot continue to satisfy listing requirements[261](index=261&type=chunk)[263](index=263&type=chunk) - The company received a **$787,200** PPP loan, but there is no assurance that the loan will be forgiven in whole or in part, and repayment could adversely affect future cash flows[271](index=271&type=chunk)[274](index=274&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=85&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[275](index=275&type=chunk) [Defaults Upon Senior Securities](index=85&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Not applicable - Not applicable[276](index=276&type=chunk) [Mine Safety Disclosures](index=85&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[277](index=277&type=chunk) [Other Information](index=85&type=section&id=Item%205.%20Other%20Information) The company reported no other information - None[278](index=278&type=chunk) [Exhibits](index=85&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including Sarbanes-Oxley certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files[280](index=280&type=chunk)

Precipio, Inc. (NASDAQ:PRPO) Q1 2020 Earnings Conference Call May 19, 2020 5:00 PM ET Company Participants Miri Radomski - In-House Counsel Ilan Danieli - CEO Carl Iberger - CFO Conference Call Participants Operator Good day and welcome to the Precipio Quarterly Shareholder Update Call. All participants will be in a listen-only mode. [Operator Instructions] Please note that the conference is being recorded. [Operator instructions] Please note that the conference is being recorded. Statements made during thi ...

Table of Contents 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 March 31, 2020 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: 001‑36439 PRECIPIO, INC. (Exact name of registrant as specified in its charter) Delaware 91‑1789357 ( ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 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: 001‑36439 PRECIPIO, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorp ...

Financial Data and Key Metrics Changes - The company's Q3 revenue was lower than the prior quarter, with reported revenues year-to-date at $2.4 million, reflecting a 12% increase compared to the same period in 2018 [17][18] - The net loss for Q3 was $2.4 million, an improvement from a net loss of $4.1 million in the equivalent period in 2018, primarily due to a $1.6 million write-off associated with Goodwill [23] Business Line Data and Key Metrics Changes - Pathology services revenue continued to grow, but pharma revenues were virtually nonexistent in Q3 due to project phases that did not generate business [11] - October case volume increased by almost 20% above the Q3 average, indicating a rebound in pathology volume [11] Market Data and Key Metrics Changes - The company experienced a summer slowdown, particularly in August, leading to a sharp decline in pathology volume due to customer vacations [11] - Ordering patterns have rebounded in Q4, suggesting a recovery in demand [18] Company Strategy and Development Direction - The company aims to diversify its revenue by adding a third revenue line from products and services, which are less susceptible to reimbursement issues [12] - The introduction of IV-cell and HemeScreen products is expected to generate revenue for the first time in Q4, with significant growth potential anticipated [14] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with Q3 results but emphasized that the decline is temporary and not indicative of a long-term trend [15] - The company is committed to growth and fiscal responsibility, aiming for cash flow breakeven during 2020 [30][26] Other Important Information - Cash on hand as of September 30 was $1.7 million, an increase of $1.3 million from year-end December 2018 [25] - The company has successfully reduced spending in certain areas, enabling a focus on growth initiatives [24] Q&A Session Summary Question: What are the expectations for future revenue growth? - Management projected a 15% increase in revenue but fell short in September due to decreased patient referrals [18] Question: How is the company managing its operating expenses? - The company is focusing on cost reductions and efficiencies through outsourcing and external systems, which have yielded both recurring and non-recurring savings [21] Question: What is the outlook for the new product lines? - Management is optimistic about the IV-cell and HemeScreen products, with expectations for significant revenue contributions in 2020 [22]

Table of Contents 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: 001‑36439 PRECIPIO, INC. (Exact name of registrant as specified in its charter) Delaware 91‑17893 ...

Financial Data and Key Metrics Changes - Total reported revenues grew by 32% quarter over quarter and 8% year over year for the six-month period ending June 30, 2019 [18] - Cash reserves increased to $1.2 million as of June 30, 2019, compared to $0.4 million at year-end December 31, 2018 [26] - The company executed a reverse stock split of 15 for 1 on April 26, 2019, resulting in 5.9 million shares outstanding as of June 30, 2019 [17] Business Line Data and Key Metrics Changes - Diagnostic testing accounts for almost all reported revenue, with pathology services representing approximately 75% and pharma services providing the remaining 25% [19] - The sales force has expanded to cover 18 states, contributing to revenue growth from pathology diagnostic testing primarily from office-based oncologists and multi-oncologist physician groups [20] - New laboratory processes, HemeScreen and IV-cell, are expected to expand revenues and improve clinical outcomes [21][22] Market Data and Key Metrics Changes - The company is making significant inroads into international markets, including Brazil, Asia, South America, Europe, and the Middle East, which will diversify revenue sources away from reliance solely on the U.S. market [13] - The New Haven, Connecticut pathology lab received CAP approval in August, which is anticipated to translate into additional diagnostic sales from key oncology practices [19] Company Strategy and Development Direction - The company is focused on expanding its sales force and improving customer relationships to drive revenue growth [20] - Management is confident in the technology and its application, with ongoing validation processes expected to enhance the company's market position [30] - The company aims to achieve cash flow breakeven and profitability through effective marketing of IV-cell and HemeScreen [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the volatility in stock price but emphasizes stable revenue growth and positive prospects for product validation [29] - The company is committed to reducing public reporting expenses and reinvesting savings into sales force expansion [25] - Management expresses confidence that completed validation processes will have a significant positive impact on finances and market position [30] Other Important Information - The company settled significant legal claims from the 2017 merger, alleviating financial burdens [15][16] - Operating expenses have remained level year over year, with reductions in certain G&A expenses allowing for reinvestment in sales [24] Q&A Session Summary Question: What is the outlook for the company's growth? - Management believes that the annualized growth rate will continue to increase, exceeding the current rate of 15% [18] Question: How is the company addressing stock price volatility? - Management notes that the stock's volatility reflects market perception rather than company performance, with stable revenue growth demonstrated [29]

[PART I. Financial Information](index=3&type=section&id=PART%20I.%20Financial%20Information) This section presents the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, highlighting a net loss and going concern doubt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | **Total Assets** | **$22,205** | **$21,605** | | Cash | $1,169 | $381 | | Total Current Assets | $2,331 | $1,793 | | **Total Liabilities** | **$7,978** | **$15,482** | | Total Current Liabilities | $4,750 | $13,765 | | **Total Stockholders' Equity** | **$14,227** | **$6,123** | Condensed Consolidated Statement of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $942 | $817 | $1,655 | $1,529 | | Gross Profit | $172 | $175 | $210 | $199 | | Operating Loss | $(2,295) | $(2,183) | $(4,354) | $(4,631) | | Net Loss | $(5,913) | $(2,831) | $(7,565) | $(5,270) | | Net Loss per Share (Basic & Diluted) | $(1.05) | $(2.29) | $(1.66) | $(8.20) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,887) | $(3,611) | | Net cash used in investing activities | $(30) | $(44) | | Net cash provided by financing activities | $5,705 | $3,305 | | **Net Change in Cash** | **$788** | **$(350)** | | **Cash at End of Period** | **$1,169** | **$71** | [Business Description and Going Concern](index=10&type=section&id=1.%20BUSINESS%20DESCRIPTION) Precipio is a cancer diagnostics company that operates a laboratory in New Haven, CT, and a research facility in Omaha, NE, focusing on its licensed ICE-COLD-PCR (ICP) technology - The company is a cancer diagnostics firm leveraging academic partnerships and its proprietary ICP technology[22](index=22&type=chunk) - There is **substantial doubt** about the company's ability to continue as a going concern due to a **net loss of $7.6 million**, **negative working capital of $2.4 million**, and **net cash used in operations of $4.9 million** for the six months ended June 30, 2019[23](index=23&type=chunk)[26](index=26&type=chunk) - The company is relying on a **$10.0 million equity purchase agreement** with Lincoln Park to fund operations, with **$5.9 million remaining available** for drawdown[24](index=24&type=chunk)[25](index=25&type=chunk) - The company regained compliance with Nasdaq's minimum bid price requirement after a **1-for-15 reverse stock split** effective April 26, 2019[27](index=27&type=chunk) [Convertible Notes](index=16&type=section&id=4.%20CONVERTIBLE%20NOTES) As of June 30, 2019, the company had a minimal balance of $39,000 in convertible notes, down from $4.4 million at year-end 2018 Convertible Notes Balance (in thousands) | Note Type | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Convertible bridge notes, net | $39 | $3,830 | | Convertible promissory notes - Exchange Notes, net | $0 | $547 | | **Total convertible notes, net** | **$39** | **$4,377** | - In April and May 2019, the company issued new Bridge Notes for **gross proceeds totaling approximately $1.9 million**. These issuances included significant debt discounts, warrant liabilities, and beneficial conversion features, leading to **immediate recognized losses of $1.9 million**[56](index=56&type=chunk)[62](index=62&type=chunk)[66](index=66&type=chunk) - During the six months ended June 30, 2019, a **total of $7.3 million in convertible notes** (including Bridge, Crede, and Leviston notes) plus interest were converted into **2,386,425 shares of common stock**[67](index=67&type=chunk)[78](index=78&type=chunk)[84](index=84&type=chunk)[112](index=112&type=chunk) - **All outstanding Exchange Notes ($2.8 million)**, **the Crede Note ($1.45 million)**, and **the Leviston Note ($0.7 million)** were fully converted or settled during the first half of 2019[74](index=74&type=chunk)[78](index=78&type=chunk)[84](index=84&type=chunk) [Commitments and Contingencies](index=27&type=section&id=6.%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in several legal matters - **Settled a lawsuit with XIFIN, Inc. for $40,000** in April 2019[90](index=90&type=chunk) - Reached a **settlement in principle in the Jesse Campbell lawsuit for $1.95 million**, which will be primarily funded by insurance. The company recorded a liability for its **remaining deductible of approximately $0.3 million**[92](index=92&type=chunk) - A **claim from CPA Global for approximately $0.2 million** for patent services remains, with a **liability of less than $0.1 million recorded**[91](index=91&type=chunk) - Settled an **outstanding debt of approximately $1.5 million** with a service provider for **payments totaling $0.6 million**, resulting in a **gain on settlement of $0.9 million** for the six months ended June 30, 2019[94](index=94&type=chunk)[96](index=96&type=chunk) [Stockholders' Equity](index=31&type=section&id=8.%20STOCKHOLDERS%27%20EQUITY) Stockholders' equity increased significantly from $6.1 million at year-end 2018 to $14.2 million at June 30, 2019 - A **1-for-15 reverse stock split** was effected on April 26, 2019[27](index=27&type=chunk) - The company utilized its equity purchase agreement with Lincoln Park, **receiving $2.4 million from the sale of 998,076 shares** during the six months ended June 30, 2019[126](index=126&type=chunk) - During the six months ended June 30, 2019, the company **issued 310,200 shares from warrant exercises for $1.6 million in cash proceeds** and **2,386,425 shares from the conversion of $7.3 million in convertible notes**[111](index=111&type=chunk)[112](index=112&type=chunk) - Financing agreements in 2018 and 2019 triggered down-round provisions in preferred stock and warrants, leading to conversion and exercise price adjustments and the recognition of **significant deemed dividends of $3.8 million in 2018**[129](index=129&type=chunk)[131](index=131&type=chunk)[142](index=142&type=chunk)[172](index=172&type=chunk) [Revenue and Accounts Receivable](index=51&type=section&id=11.%20SALES%20SERVICE%20REVENUE%2C%20NET%20AND%20ACCOUNTS%20RECEIVABLE) For the six months ended June 30, 2019, net service revenue was $2.1 million, up from $1.7 million year-over-year, primarily driven by diagnostic testing Disaggregation of Service Revenue, Net (in thousands) | Revenue Source | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Diagnostic Testing | $1,678 | $834 | | Biomarker Testing | $427 | $856 | | **Total Service Revenue, Net** | **$2,105** | **$1,690** | - **Customer A accounted for 29% of net sales in Q2 2019** and **26% for the six months ended June 30, 2019**[216](index=216&type=chunk) - **Customer A represented 28% of total net accounts receivable as of June 30, 2019**, up from 23% at December 31, 2018[217](index=217&type=chunk) Accounts Receivable, Net (in thousands) | Category | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Gross Accounts Receivable | $3,054 | $2,398 | | Less: Allowance for doubtful accounts | $(2,171) | $(1,708) | | **Accounts Receivable, Net** | **$883** | **$690** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=57&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 15% increase in net sales for Q2 2019 compared to Q2 2018, driven by a 16% rise in diagnostic case volume - The company's ability to continue as a going concern is in **substantial doubt**, dependent on generating more revenue and raising additional financing. The Lincoln Park equity line is a key source of capital[226](index=226&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - **Net sales for Q2 2019 increased 15% YoY to $0.9 million**, driven by a **16% increase in patient diagnostic cases processed** (445 vs 383)[230](index=230&type=chunk) - For the six months ended June 30, 2019, **cash increased by $0.8 million**. This was due to **$5.7 million raised from financing activities** (stock issuance, warrant exercises, convertible notes) offsetting **$4.9 million used in operating activities**[243](index=243&type=chunk)[244](index=244&type=chunk)[246](index=246&type=chunk) Working Capital (in thousands) | | June 30, 2019 | December 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Current Assets | $2,331 | $1,793 | $538 | | Current Liabilities | $4,750 | $13,765 | $(9,015) | | **Working Capital** | **$(2,419)** | **$(11,972)** | **$9,553** | [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is a smaller reporting company as defined by the Securities Exchange Act of 1934 and is therefore not required to provide the information requested under this item - As a smaller reporting company, Precipio is exempt from providing quantitative and qualitative disclosures about market risk[253](index=253&type=chunk) [Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2019 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2019[255](index=255&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the three months ended June 30, 2019[256](index=256&type=chunk) [PART II. Other Information](index=69&type=section&id=PART%20II.%20Other%20Information) This section details legal proceedings, key risk factors, unregistered equity sales, and a list of exhibits filed with the report [Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the company's recent legal activities - The lawsuit with XIFIN, Inc. was **settled and paid in full for $40,000** on April 19, 2019[258](index=258&type=chunk) - The Jesse Campbell lawsuit has a **settlement in principle for $1.95 million**. The company's insurance will cover most of the cost, leaving a recorded liability of **approximately $0.3 million** for the company to pay[260](index=260&type=chunk) - The obligation to Bio-Rad Laboratories for **$39,000 was paid in full** during the second quarter of 2019[261](index=261&type=chunk) [Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) This section updates key risk factors, emphasizing the company's history of losses and the expectation of future losses, which could prevent it from achieving profitability - The company has a **history of significant losses ($7.6 million net loss as of June 30, 2019)** and expects to incur future losses, with no certainty of achieving profitability[267](index=267&type=chunk) - A **critical risk is the need to raise substantial additional capital**. Failure to secure funding could force delays, reduction, or elimination of product development and operations[269](index=269&type=chunk) - The company is subject to **significant customer concentration risk**. For Q2 2019, **two customers represented approximately 40% of total revenue**. One customer accounted for **28% of total accounts receivable at June 30, 2019**[273](index=273&type=chunk)[274](index=274&type=chunk) - Although the company regained compliance with Nasdaq's minimum bid price rule via a reverse stock split, it **may be unable to continue to satisfy listing requirements**, which could lead to **delisting**[275](index=275&type=chunk)[276](index=276&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities during the period covered by this report - None [Other Information](index=73&type=section&id=Item%205.%20Other%20Information) There is no other information to report for the period - None [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report - Exhibits filed include **Certifications of the Principal Executive Officer and Principal Financial Officer under Sarbanes-Oxley Sections 302 and 906**[280](index=280&type=chunk)[281](index=281&type=chunk) - **XBRL Instance Document and related taxonomy files** were also submitted as exhibits[281](index=281&type=chunk)

Table of Contents 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 March 31, 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: 001‑36439 PRECIPIO, INC. (Exact name of registrant as specified in its charter) Delaware 91‑1789357 ( ...