Precipio(PRPO) - 2025 Q1 - Quarterly Report

Financial Information This section presents the company's condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls assessment Condensed Consolidated Financial Statements Unaudited Q1 2025 financials show reduced net loss, but liquidity issues persist, raising going concern doubts Condensed Consolidated Balance Sheets (in thousands) | | (unaudited) March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | ASSETS | | | | Cash | $1,017 | $1,389 | | Total current assets | $3,278 | $3,451 | | Total assets | $17,785 | $16,996 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $4,331 | $4,271 | | Total liabilities | $6,087 | $4,902 | | Total stockholders' equity | $11,698 | $12,094 | | Total liabilities and stockholders' equity | $17,785 | $16,996 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net sales | $4,929 | $3,432 | | Gross profit | $2,140 | $920 | | Operating loss | $(859) | $(2,074) | | Net loss | $(884) | $(2,079) | | Basic and diluted loss per common share | $(0.59) | $(1.46) | Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(44) | $(667) | | Net cash used in investing activities | $(138) | — | | Net cash used in financing activities | $(190) | $(59) | | Net change in cash | $(372) | $(726) | | Cash at end of period | $1,017 | $776 | - The company is a healthcare biotechnology firm focused on developing diagnostic products and services to address cancer misdiagnoses[19] - The company has incurred substantial operating losses, has a working capital deficit of $1.1 million, and an accumulated deficit of $103.3 million as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern[26][27] - In April 2025, the company received an initial payment of approximately $0.4 million related to an Employee Retention Credit (ERC) claim, which will be recorded as other income in Q2 2025[117] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2025 sales growth to increased diagnostic cases, improving gross margin, while addressing working capital and going concern risks Net Sales Comparison (in thousands) | | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change $ (in thousands) | Change % | | :--- | :--- | :--- | :--- | :--- | | Service revenue, net | $4,275 | $2,775 | $1,500 | 54% | | Product revenue | $654 | $657 | $(3) | -% | | Net Sales | $4,929 | $3,432 | $1,497 | 44% | - The increase in service revenue was driven by processing 3,021 cases in Q1 2025, a 47% increase from the 2,062 cases processed in Q1 2024[142] Gross Profit and Margin Comparison | (Dollars in Thousands) | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Gross Profit | $2,140 | $920 | | Gross Margin % | 43% | 27% | - Operating expenses remained flat at $3.0 million for Q1 2025 compared to Q1 2024[145] Working Capital Position (in thousands) | | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Current assets | $3,278 | $3,451 | $(173) | | Current liabilities | $4,331 | $4,271 | $60 | | Working capital | $(1,053) | $(820) | $(233) | - Net cash used in operating activities significantly decreased to $44 thousand in Q1 2025 from $667 thousand in Q1 2024, primarily due to a smaller net loss and changes in working capital[149] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, Precipio is not required to provide the information under this item[158] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls were effective with no material changes to internal controls during Q1 2025 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2025[161] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[162] Other Information This section covers legal proceedings, risk factors, equity sales, defaults, mine safety disclosures, and a list of exhibits Legal Proceedings The company is involved in a legal proceeding with a former employee, which management disputes and does not expect to have a material financial impact - The company is involved in a legal proceeding brought by a former employee alleging unfair dismissal, which it is defending vigorously and does not expect to have a material financial impact[168] Risk Factors No material changes to risk factors have occurred since the company's most recent Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the company's most recent Annual Report on Form 10-K[171] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered equity securities during the three months ended March 31, 2025 - During the three months ended March 31, 2025, the company did not have any sales of unregistered securities[173] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[174] Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable[175] Other Information No directors or officers adopted or terminated Rule 10b5-1 or other trading plans during Q1 2025 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement during the fiscal quarter[177] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, SOX certifications, and Inline XBRL files - The report includes a list of filed exhibits, such as the Certificate of Incorporation, Bylaws, Sarbanes-Oxley certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents[180]