Precipio(PRPO) - 2020 Q1 - Quarterly Report

PART I. Financial Information This section presents Precipio, Inc.'s unaudited condensed consolidated financial statements and management's analysis for Q1 2020 Item 1. Condensed Consolidated Financial Statements This section presents Precipio, Inc.'s unaudited condensed consolidated financial statements for Q1 2020 and 2019, with detailed notes on financial position, performance, and cash flows Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets and stockholders' equity from December 31, 2019, to March 31, 2020, while total liabilities significantly increased, primarily driven by current maturities of convertible notes Condensed Consolidated Balance Sheet Highlights (Dollars in thousands) | Item | March 31, 2020 (unaudited) | December 31, 2019 | | :-------------------------------- | :------------------------- | :------------------ | | Total assets | $18,995 | $19,511 | | Total liabilities | $7,710 | $6,306 | | Total stockholders' equity | $11,285 | $13,205 | | Cash | $417 | $848 | | Accounts receivable, net | $883 | $574 | | Current maturities of convertible notes | $2,292 | $142 | | Total current liabilities | $6,739 | $4,334 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2020, the company reported increased net sales but a significantly higher net loss compared to the prior year, primarily due to a substantial loss on extinguishment of convertible notes and increased interest expense Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31, Dollars in thousands, except per share data) | Item | 2020 | 2019 | | :------------------------------------ | :----- | :----- | | Net sales | $1,216 | $713 | | Gross profit | $125 | $38 | | Operating loss | $(2,203) | $(2,059) | | Total other expenses (income) | $(1,002) | $407 | | Loss before income taxes | $(3,205) | $(1,652) | | Net loss | $(3,205) | $(1,652) | | Deemed dividends | $(3,344) | $— | | Net loss available to common stockholders | $(6,549) | $(1,652) | | Basic and diluted loss per common share | $(0.78) | $(0.48) | | Weighted-average shares outstanding | 8,371,956 | 3,441,893 | - Net sales increased by 71% from $713 thousand in Q1 2019 to $1,216 thousand in Q1 2020, driven by service revenue[11] - Net loss significantly widened from $(1,652) thousand in Q1 2019 to $(3,205) thousand in Q1 2020, further exacerbated by $3,344 thousand in deemed dividends in 2020[11] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $13.2 million at January 1, 2020, to $11.3 million at March 31, 2020, primarily due to the net loss, partially offset by common stock issuances related to purchase agreements and convertible note conversions Condensed Consolidated Statements of Stockholders' Equity Highlights (Dollars in thousands) | Item | January 1, 2020 | March 31, 2020 | | :------------------------------------ | :-------------- | :------------- | | Total Stockholders' Equity | $13,205 | $11,285 | | Net loss | — | $(3,205) | | Conversion of convertible notes into common stock | — | $353 | | Issuance of common stock in connection with purchase agreements | — | $1,350 | | Stock-based compensation | — | $168 | Condensed Consolidated Statements of Cash Flows The company continued to use cash in operating activities, with a net cash outflow of $1.6 million for the three months ended March 31, 2020. Financing activities provided $1.2 million, primarily from common stock issuance, partially offsetting the operational cash burn Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, Dollars in thousands) | Item | 2020 | 2019 | | :------------------------------------ | :----- | :----- | | Net cash used in operating activities | $(1,589) | $(1,879) | | Net cash used in investing activities | $(24) | $(3) | | Net cash flows provided by financing activities | $1,182 | $1,803 | | Net change in cash | $(431) | $(79) | | Cash at end of period | $417 | $302 | - Net cash used in operating activities decreased from $(1,879) thousand in Q1 2019 to $(1,589) thousand in Q1 2020[14] - Net cash provided by financing activities decreased from $1,803 thousand in Q1 2019 to $1,182 thousand in Q1 2020[14] Notes to the Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering the company's business, significant accounting policies, debt, equity, fair value measurements, revenue recognition, and material subsequent events 1. BUSINESS DESCRIPTION Precipio, Inc. is a cancer diagnostics company focused on eliminating misdiagnosis through academic partnerships and proprietary technologies like IV-Cell, HemeScreen, and ICE-COLD-PCR. The company faces a going concern risk due to historical operating losses and negative working capital, but has taken steps to secure financing through a $10.0 million purchase agreement with Lincoln Park and a $50 million S-3 registration statement - Precipio, Inc. is a cancer diagnostics company providing diagnostic products and services to the oncology market, aiming to eradicate misdiagnosis[18] - The company operates a cancer diagnostic laboratory in New Haven, CT, and an R&D facility in Omaha, NE, focusing on technologies like IV-Cell, HemeScreen, and ICE-COLD-PCR (ICP)[18] - As of March 31, 2020, the company had a net loss of $3.2 million, negative working capital of $5.0 million, and net cash used in operating activities of $1.6 million, raising substantial doubt about its ability to continue as a going concern[19] - To address going concern, Precipio entered a $10.0 million common stock purchase agreement with Lincoln Park Capital Fund LLC (received $0.3 million post-Q1) and filed an S-3 registration statement for up to $50 million in securities[20][21] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This section outlines the basis of presentation for the unaudited condensed consolidated financial statements, discusses the adoption of ASU 2018-13 and ASU 2018-15 (which had no material impact), and notes upcoming pronouncements like ASU 2019-12 and ASU 2016-13. It also details the calculation of basic and diluted loss per share, identifying anti-dilutive securities - The condensed consolidated financial statements are presented in conformity with GAAP and are unaudited, reflecting normal recurring adjustments[23] - The company adopted ASU 2018-13 (Fair Value Measurement) and ASU 2018-15 (Intangibles—Goodwill and Other—Internal Use Software) on January 1, 2020, with no material impact[24][25] - ASU 2019-12 (Income Taxes) and ASU 2016-13 (Credit Losses) are not yet adopted, with no material impact expected from ASU 2019-12[26][27] Outstanding Securities Excluded from Diluted Loss Per Share (March 31, in shares) | Security Type | 2020 | 2019 | | :------------ | :------- | :------- | | Stock options | 802,113 | 498,262 | | Warrants | 907,601 | 917,563 | | Preferred stock | 117,500 | 20,888 | | Convertible notes | 4,032,281 | 1,663,330 | | Total | 5,859,495 | 3,100,043 | 3. LONG-TERM DEBT Precipio's total long-term debt decreased from $519 thousand at December 31, 2019, to $374 thousand at March 31, 2020. This includes a DECD loan, financed insurance loans, and a settlement agreement, with the majority of the debt classified as current maturities Long-Term Debt (Dollars in Thousands) | Item | March 31, 2020 | December 31, 2019 | | :------------------------------------------ | :------------- | :---------------- | | Department of Economic and Community Development (DECD) | $242 | $249 | | Financed insurance loan | $131 | $260 | | September 2018 Settlement | $25 | $34 | | Total long-term debt | $374 | $519 | | Current portion of long-term debt | $(180) | $(321) | | Long-term debt, net of current maturities | $194 | $198 | - The DECD 2018 Loan is a ten-year loan due December 31, 2027, with monthly interest at 3.25%[31] - Financed Insurance Loans outstanding balance decreased from $0.3 million at December 31, 2019, to $0.1 million at March 31, 2020[33] 4. CONVERTIBLE NOTES The company's convertible notes, primarily Bridge Notes, saw significant activity, including an amendment in March 2020 that extended maturity and adjusted conversion prices, leading to an extinguishment of the notes and a $1.2 million loss. Various notes were converted into common stock during the periods presented Convertible Notes (Dollars in Thousands) | Item | March 31, 2020 | December 31, 2019 | | :------------------------------------------ | :------------- | :---------------- | | Convertible bridge notes | $1,613 | $1,938 | | Convertible bridge notes discount and debt issuance costs | $— | $(1,796) | | Convertible bridge notes premiums | $679 | $— | | Total convertible notes | $2,292 | $142 | | Current portion of convertible notes | $(2,292) | $(142) | | Convertible notes, net of current maturities | $— | $— | - The March 2020 Amendment to the April 2019 and May 2019 Bridge Notes extended maturity, amended the floor price from $2.25 to $0.40, and extended guaranteed interest, resulting in a $1.2 million loss on extinguishment[44][45] - During Q1 2020, $0.3 million of bridge notes (plus interest) were converted into 427,997 shares of common stock, compared to $2.1 million converted into 1,019,430 shares in Q1 2019[47] 5. ACCRUED EXPENSES OTHER CURRENT LIABILITIES Accrued expenses increased from $1,639 thousand at December 31, 2019, to $1,833 thousand at March 31, 2020, with increases in accrued compensation and interest Accrued Expenses (Dollars in thousands) | Item | March 31, 2020 | December 31, 2019 | | :------------------ | :------------- | :---------------- | | Accrued expenses | $1,289 | $1,268 | | Accrued compensation | $407 | $247 | | Accrued interest | $137 | $124 | | Total | $1,833 | $1,639 | - The company recorded no gain on settlement of liability in Q1 2020, compared to $0.2 million in Q1 2019[58] 6. COMMITMENTS AND CONTINGENCIES The company is involved in legal proceedings, including a patent management service claim and a class-action lawsuit with a $1.95 million settlement awaiting final court approval. It also operates within a highly regulated healthcare industry, subject to various federal and state laws - A liability of less than $0.1 million is recorded for a patent management service claim by CPA Global[60] - A class-action lawsuit settlement of $1.95 million is awaiting final court approval, with funds held in escrow[61] - The healthcare industry is subject to numerous federal, state, and local laws and regulations, including those related to licensure, accreditation, and fraud and abuse[62] 7. LEASES Precipio adopted Topic 842 for leases, recognizing ROU assets and lease liabilities for operating and finance leases. As of March 31, 2020, total lease assets were $630 thousand and total lease liabilities were $623 thousand, with future minimum lease payments detailed for both lease types - The company adopted Topic 842 on January 1, 2019, recording initial ROU assets and operating lease liabilities of approximately $750,000[65] Lease Assets and Liabilities (Dollars in thousands) | Item | March 31, 2020 | December 31, 2019 | | :------------------------------------ | :------------- | :---------------- | | Operating lease right-of-use assets, net | $463 | $519 | | Finance lease assets (Property and equipment, net) | $167 | $184 | | Total lease assets | $630 | $703 | | Current maturities of operating lease liabilities | $212 | $209 | | Current maturities of finance lease liabilities | $36 | $52 | | Operating lease liabilities, less current maturities | $263 | $317 | | Finance lease liabilities, less current maturities | $112 | $119 | | Total lease liabilities | $623 | $697 | Weighted-Average Lease Terms and Discount Rates (March 31, 2020) | Item | Operating Leases | Finance Leases | | :-------------------------------- | :--------------- | :------------- | | Weighted-average remaining lease term (years) | 2.4 | 4.5 | | Weighted-average discount rate | 8.00% | 7.25% | 8. STOCKHOLDERS' EQUITY Stockholders' equity details include common stock authorization, issuances from convertible note conversions and purchase agreements (LP Purchase Agreement and LP 2020 Purchase Agreement), and preferred stock. The March 2020 Amendment triggered down round features on Series B Preferred Stock and certain warrants, resulting in $3.344 million in deemed dividends - The company issued 427,997 shares of common stock in Q1 2020 (vs. 1,248,115 in Q1 2019) from convertible note conversions[74] - Under the LP Purchase Agreement, the company received $9.4 million from common stock sales to Lincoln Park through April 6, 2020, including $1.3 million in Q1 2020[80] - A new LP 2020 Purchase Agreement was entered into on March 26, 2020, allowing Lincoln Park to purchase up to $10.0 million of common stock over 24 months, with $0.3 million received post-Q1[81][85] - The March 2020 Amendment triggered a down round feature on Series B Preferred Stock, adjusting the conversion price from $2.25 to $0.40 per share, and resulting in a $3.333 million deemed dividend[89][115] - Down round features on August 2017 Offering Warrants, Note Conversion Warrants, and Convertible Promissory Note Warrants also triggered deemed dividends totaling $11 thousand[99][101][103][115] 9. FAIR VALUE The company measures certain financial instruments, such as common stock warrant liabilities and derivative liabilities, at fair value using a three-level hierarchy. Significant revaluation gains were recognized on warrant liabilities, while derivative liabilities saw no change in fair value in Q1 2020 - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[117] - Common stock warrant liabilities are recorded at fair value, with changes recognized in earnings. The 2016 Warrant Liability and Bridge Note Warrant Liabilities are Level 3 instruments[118][119][123] Change in Fair Value of Warrant Liabilities (Three Months Ended March 31, Dollars in Thousands) | Item | 2020 | 2019 | | :------------------------------------ | :----- | :----- | | Beginning balance at January 1 | $1,338 | $1,132 | | Revaluation recognized in earnings (gain) | $(936) | $(240) | | Balance at March 31 | $402 | $892 | - Derivative liabilities related to convertible notes (Bridge Notes Redemption Feature, Conversion Option) are bifurcated and remeasured at each reporting date. There was no change in fair value in Q1 2020, compared to a $(23) thousand gain in Q1 2019[126][127][128][129] 10. EQUITY INCENTIVE PLAN The 2017 Stock Option and Incentive Plan was amended to increase authorized shares and include an "evergreen" provision. During Q1 2020, 325,050 stock options were granted, and the company recognized $0.2 million in stock-based compensation expense - The 2017 Stock Option and Incentive Plan was amended to increase authorized shares by 359,300 and add an "evergreen" provision, automatically increasing shares by 5% of outstanding common stock annually[131] Stock Option Activity (Three Months Ended March 31, 2020) | Item | Number of Options | Weighted Average Exercise Price | | :-------------------------- | :---------------- | :------------------------------ | | Outstanding at January 1, 2020 | 490,330 | $8.30 | | Granted | 325,050 | $2.09 | | Forfeited | (13,267) | $5.43 | | Outstanding at March 31, 2020 | 802,113 | $5.85 | | Exercisable at March 31, 2020 | 244,357 | $11.06 | - Stock-based compensation expense was $0.2 million for both Q1 2020 and Q1 2019[134] 11. SALES SERVICE REVENUE, NET AND ACCOUNTS RECEIVABLE Precipio recognizes revenue under ASC 606 for diagnostic testing (point in time), clinical research grants, and biomarker testing (over time). Total service revenue, net, increased to $1,458 thousand in Q1 2020 from $910 thousand in Q1 2019. Accounts receivable, net, increased to $883 thousand at March 31, 2020, with a corresponding increase in the allowance for doubtful accounts - Revenue from diagnostic testing is recognized at a point in time upon delivery of the patient's laboratory report[140] - Revenue from clinical research grants and biomarker testing is recognized over time using an "effort based" method[141][142] Disaggregation of Service Revenue, Net (Three Months Ended March 31, Dollars in thousands) | Payer Class | 2020 | 2019 | | :------------------ | :----- | :----- | | Medicaid | $9 | $3 | | Medicare | $524 | $394 | | Self-pay | $50 | $4 | | Third party payers | $517 | $356 | | Contract diagnostics | $358 | $153 | | Total Service Revenue, Net | $1,458 | $910 | Accounts Receivable, Net (Dollars in thousands) | Item | March 31, 2020 | December 31, 2019 | | :-------------------------- | :------------- | :---------------- | | Medicaid | $31 | $107 | | Medicare | $1,692 | $814 | | Self-pay | $65 | $88 | | Third party payers | $1,710 | $2,203 | | Contract diagnostic services | $327 | $36 | | Less allowance for doubtful accounts | $(2,942) | $(2,674) | | Accounts receivable, net | $883 | $574 | 12. SUBSEQUENT EVENTS Subsequent to March 31, 2020, Precipio secured a $787,200 Paycheck Protection Program (PPP) loan, received a Nasdaq delisting notice for failing to meet the $1.00 minimum bid price requirement (with compliance period tolled until July 1, 2020), and formed a joint venture, Precipio Oncometrix LLC, with Poplar Healthcare PLLC - On April 23, 2020, the company received an unsecured $787,200 loan under the Paycheck Protection Program (PPP) with a 1.00% interest rate and deferred payments for six months, with potential for forgiveness[161][162][163] - On April 29, 2020, Nasdaq issued a delisting notice due to the common stock's closing bid price falling below $1.00 for 30 consecutive business days. The compliance period is tolled until July 1, 2020, with a deadline of December 28, 2020, to regain compliance[165][166][167] - In April 2020, Precipio formed a joint venture, Precipio Oncometrix LLC (POC), with Poplar Healthcare PLLC, with Precipio SPV holding a 49% ownership interest, to provide oncology services[171][172] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, Q1 2020 operations, going concern, COVID-19 impact, liquidity, and capital resources Forward-Looking Information This section contains forward-looking statements based on management's current views, assumptions, or beliefs of future events and financial performance - The report contains forward-looking statements based on management's current views, assumptions, or beliefs of future events and financial performance[174] - Actual financial results may vary materially due to factors such as the impact of COVID-19, revenue, operating expenses, funding, economic circumstances, and regulatory factors[174] - The company expressly disclaims any obligation to update or revise forward-looking statements, except as required by law[176] Overview Precipio, Inc. is a cancer diagnostics company dedicated to eradicating misdiagnosis through its platform, academic partnerships, and proprietary technologies (IV-Cell, HemeScreen, ICE-COLD-PCR). It operates diagnostic and R&D facilities in New Haven and Omaha - Precipio is a cancer diagnostics company focused on eradicating misdiagnosis using academic expertise and technologies like IV-Cell, HemeScreen, and ICE-COLD-PCR (ICP)[179] - The company operates a cancer diagnostic laboratory in New Haven, Connecticut, and a research and development facility in Omaha, Nebraska, which is also CLIA and CAP certified[179] Going Concern The company's ability to continue as a going concern is in substantial doubt due to recurring operating losses, negative working capital, and cash usage. Despite securing a $10.0 million purchase agreement with Lincoln Park and filing an S-3 registration for up to $50 million, there's no assurance these initiatives will fully resolve the uncertainty - The company has incurred substantial operating losses and used cash in operating activities for several years, with a net loss of $3.2 million, negative working capital of $5.0 million, and $1.6 million net cash used in operations as of March 31, 2020[180] - Substantial doubt exists about the company's ability to continue as a going concern for the next twelve months[183] - Financing efforts include a $10.0 million common stock purchase agreement with Lincoln Park (with $0.3 million already received post-Q1) and an effective S-3 registration statement for up to $50 million in securities[181] Outlook - COVID-19 related The COVID-19 pandemic has caused significant business disruption, leading to business interruptions ranging from 30% to 85% in certain urban markets. The full impact on the company's operational and financial performance remains uncertain, with management actively monitoring and adapting operations - The COVID-19 outbreak has caused significant business disruption, with its impact on operational and financial performance being uncertain and unpredictable[184] - The company has experienced business interruptions ranging from 30% to 85% in certain urban markets[222] - Management is actively monitoring the situation, protecting employees, engaging customers, and employing remote work where possible[223] Results of Operations for the Three Months Ended March 31, 2020 and 2019 For Q1 2020, net sales increased by 71% to $1.2 million, driven by a 90% increase in patient diagnostic cases and higher contract diagnostics revenue. Gross profit improved, but operating expenses rose due to sales and marketing. A significant net expense of $1.0 million was recorded, primarily from a $1.2 million loss on extinguishment of convertible notes and increased interest expense, partially offset by warrant revaluation gains Key Financial Results (Three Months Ended March 31, Dollars in Thousands) | Item | 2020 | 2019 | Change ($) | Change (%) | | :------------------------------------ | :----- | :----- | :--------- | :--------- | | Net Sales | $1,216 | $713 | $503 | 71% | | Gross Profit | $125 | $38 | $87 | 229% | | Gross Margin | 10% | 5% | 5% | 100% | | Operating Expenses | $2,328 | $2,097 | $231 | 11% | | Other Income (Expense), net | $(1,002) | $407 | $(1,409) | -346% | - Service revenue increased due to a 90% increase in patient diagnostic cases (683 cases in Q1 2020 vs. 360 in Q1 2019) and a $0.2 million increase in contract diagnostics revenue[185] - Other expense, net, of $1.0 million in Q1 2020 included a $1.2 million loss on extinguishment of convertible notes and $0.7 million in interest expense, partially offset by $0.9 million income from warrant revaluations[190] Liquidity and Capital Resources The company's working capital remained negative, decreasing to $(5.0) million at March 31, 2020. Cash decreased by $0.4 million, with operating activities using $1.6 million, partially offset by $1.2 million provided by financing activities, primarily from common stock issuance Working Capital Position (Dollars in Thousands) | Item | March 31, 2020 | December 31, 2019 | Change ($) | | :------------------------------------ | :------------- | :---------------- | :--------- | | Current assets | $1,692 | $1,878 | $(186) | | Current liabilities | $6,739 | $4,334 | $2,405 | | Working capital | $(5,047) | $(2,456) | $(2,591) | - Cash decreased by $0.4 million in Q1 2020, compared to a $0.1 million decrease in Q1 2019[192] - Net cash used in operating activities was $1.6 million in Q1 2020, driven by net loss and increased accounts receivable, partially offset by non-cash adjustments[193] - Net cash provided by financing activities was $1.2 million in Q1 2020, primarily from $1.4 million in common stock issuance, offset by debt payments[195] Off-Balance Sheet Arrangements The company reported no material off-balance sheet arrangements as of March 31, 2020, or December 31, 2019 - The company did not have any off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition or results of operations[196] Contractual Obligations and Commitments No significant changes to contractual obligations and commitments occurred during the three months ended March 31, 2020, compared to those disclosed in the Annual Report on Form 10-K for 2019 - No significant changes to contractual obligations and commitments occurred during the three months ended March 31, 2020, as compared to the Annual Report on Form 10-K for 2019[197] Critical Accounting Policies and Estimates The company's critical accounting policies and estimates, which involve significant management judgments, are discussed in detail in its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 - Critical accounting policies and estimates, involving significant management judgments, are discussed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019[198] Recently Issued Accounting Pronouncements Additional information regarding recently issued accounting pronouncements can be found in Note 2 to the unaudited condensed consolidated financial statements - Information on recently issued accounting pronouncements is provided in Note 2 to the unaudited condensed consolidated financial statements[199] Impact of Inflation The company does not believe that price inflation or deflation had a material adverse effect on its financial condition or results of operations during the periods presented - Price inflation or deflation did not have a material adverse effect on the company's financial condition or results of operations during the periods presented[200] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Precipio, Inc. is exempt from providing quantitative and qualitative disclosures about market risk - Precipio, Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[201] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of March 31, 2020, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the quarter - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[203] - There have been no material changes in internal control over financial reporting during the three months ended March 31, 2020[204] PART II. Other Information This section provides other required information, including legal proceedings, updated risk factors, and report exhibits Item 1. Legal Proceedings The company is involved in legal proceedings, including a patent management service claim and a class-action lawsuit with a $1.95 million settlement awaiting final court approval. The healthcare industry's legal and regulatory environment also poses ongoing compliance considerations - A claim by CPA Global for approximately $0.2 million for patent management services is outstanding, with less than $0.1 million recorded as a liability[206] - A class-action lawsuit settlement of $1.95 million is awaiting final court approval, with funds held in escrow[207] - The healthcare industry is subject to extensive federal, state, and local laws and regulations, including those related to fraud and abuse, which could result in significant fines or program expulsion for violations[208][209] Item 1A. Risk Factors This section updates the company's risk factors, emphasizing its history of losses and future profitability uncertainty, the need for substantial additional capital, the risk of NASDAQ delisting due to minimum bid price non-compliance, and the significant adverse impacts of the COVID-19 pandemic and the associated Paycheck Protection Program loan - The company has incurred losses since inception and expects to continue incurring losses, with no certainty of achieving or sustaining profitability[211][212] - Substantial additional capital is needed to commercialize diagnostic technology, and failure to obtain funding could delay or cease operations[214] - The company received a Nasdaq delisting notice for failing to meet the $1.00 minimum bid price requirement, with a compliance deadline of December 28, 2020[216][217] - The COVID-19 pandemic has caused significant business disruption and uncertainty, with experienced business interruptions ranging from 30% to 85% in urban markets[220][222] - Risks related to the Paycheck Protection Program (PPP) loan include uncertainty of forgiveness and the potential adverse effect on future cash flows if repayment is required[224][226] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[227] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - This item is not applicable[228] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - This item is not applicable[229] Item 5. Other Information There is no other information to report under this item - No other information to report[230] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and various XBRL taxonomy documents - Exhibits include certifications (31.1, 31.2, 32.1, 32.2) and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents (101.INS to 101.PRE)[232] Signatures The report is duly signed on behalf of Precipio, Inc. by its Chief Executive Officer, Ilan Danieli, and Chief Financial Officer, Carl Iberger, on May 14, 2020 - The report is signed by Ilan Danieli, Chief Executive Officer, and Carl Iberger, Chief Financial Officer, on May 14, 2020[237]