Precipio, Inc 10-Q for FY2021 Q2

Precipio, Inc. (PRPO)

10-Q 2021-08-12 For: 2021-06-30

Added on April 06, 2026

About this 10-Q

Precipio, Inc filed this 10-Q on August 12, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.34M; up 79.2% from $1.31M a year earlier
Net loss: $3.01M; compared with a net loss of $2.23M a year earlier

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☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2021

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _____ to _____


Delaware	91-1789357
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

4 Science Park, New Haven, CT	06511
(Address of principal executive offices)	(Zip Code)

	a
Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRPO	The Nasdaq Stock Market LLC

Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

		Page No.

PART I.	Financial Information	3

Item 1.	Condensed Consolidated Financial Statements	3

	Condensed Consolidated Balance Sheets at June 30, 2021 (unaudited) and December 31, 2020	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	4

	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (unaudited)	7

	Notes to the Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

Item 4.	Controls and Procedures	39

PART II.	Other Information	41

Item 1.	Legal Proceedings	41

Item 1A.	Risk Factors	41

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	43

Signatures		44


	June 30, 2021
	(unaudited)		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash	$	15,701	$	2,656
Accounts receivable, net		443		874
Inventories		556		350
Other current assets		280		324
Total current assets		16,980		4,204

PROPERTY AND EQUIPMENT, NET		571		277

OTHER ASSETS:
Finance lease right-of-use assets, net		508		204
Operating lease right-of-use assets, net		199		306
Intangibles, net		15,192		15,667
Other assets		90		55
Total assets	$	33,540	$	20,713
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt, less debt issuance costs	$	25	$	648
Current maturities of finance lease liabilities		248		48
Current maturities of operating lease liabilities		143		225
Accounts payable		1,821		1,693
Accrued expenses		1,343		2,036
Deferred revenue		58		6
Total current liabilities		3,638		4,656
LONG TERM LIABILITIES:
Long-term debt, less current maturities and debt issuance costs		174		362
Finance lease liabilities, less current maturities		199		116
Operating lease liabilities, less current maturities		64		92
Common stock warrant liabilities		2,207		1,325
Total liabilities		6,282		6,551
COMMITMENTS AND CONTINGENCIES (Note 6)
STOCKHOLDERS’ EQUITY:
Preferred stock - $0.01 par value, 15,000,000 shares authorized at June 30, 2021 and December 31, 2020, 47 shares issued and outstanding at June 30, 2021 and December 31, 2020, liquidation preference of $427 at June 30, 2021		—		—
Common stock, $0.01 par value, 150,000,000 shares authorized at June 30, 2021 and December 31, 2020, 22,707,063 and 17,576,916 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		227		176
Additional paid-in capital		103,029		85,523
Accumulated deficit		(76,029)		(71,564)
Total Precipio, Inc. stockholders’ equity		27,227		14,135
Noncontrolling interest in joint venture		31		27
Total stockholders’ equity		27,258		14,162
Total liabilities and stockholders’ equity	$	33,540	$	20,713


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
SALES:
Service revenue, net	$	2,038	$	1,616	$	3,982	$	3,074
Other revenue		206		29		373		53
Revenue, net of contractual allowances and adjustments		2,244		1,645		4,355		3,127
Adjustment for allowance for doubtful accounts		100		(337)		(187)		(603)
Net sales		2,344		1,308		4,168		2,524
COST OF SALES:
Cost of service revenue		1,371		1,137		2,671		2,228
Cost of other revenue		222		–		278		—
Total cost of sales		1,593		1,137		2,949		2,228
Gross profit		751		171		1,219		296
OPERATING EXPENSES:
Operating expenses		2,883		2,430		5,488		4,758
OPERATING LOSS		(2,132)		(2,259)		(4,269)		(4,462)
OTHER INCOME (EXPENSE):
Interest (expense) income, net		(1)		246		(8)		(467)
Warrant revaluation		(894)		(372)		(1,012)		564
Gain on settlement of liability		17		–		34		—
Gain on forgiveness of Paycheck Protection Program loan		–		–		794		—
Loss on extinguishment of convertible notes		–		–		—		(1,225)
Other income		–		153		—		153
Total other income (expense)		(878)		27		(192)		(975)
LOSS BEFORE INCOME TAXES		(3,010)		(2,232)		(4,461)		(5,437)
INCOME TAX EXPENSE		–		–		—		—
NET LOSS		(3,010)		(2,232)		(4,461)		(5,437)

Less: Net income attributable to noncontrolling interest in joint venture		(3)		(17)		(4)		(17)
Deemed dividends related to beneficial conversion feature of preferred stock and fair value of warrant down round features		–		–		—		(3,344)
NET LOSS ATTRIBUTABLE TO PRECIPIO, INC. COMMON STOCKHOLDERS	$	(3,013)	$	(2,249)	$	(4,465)	$	(8,798)

BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.14)	$	(0.20)	$	(0.23)	$	(0.89)
BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING		21,041,162		11,353,093		19,461,528		9,862,525


	For the Three Months Ended June 30, 2021
	Preferred Stock			Common Stock			Additional						Noncontrolling
	Outstanding	Par		Outstanding	Par		Paid-in		Accumulated		Total		Interest in
	Shares	Value		Shares	Value		Capital		Deficit		Precipio, Inc.		Joint Venture		Total
Balance, April 1, 2021	47	$	—	18,132,063	$	181	$	87,365	$	(73,016)	$	14,530	$	28	$	14,558
Net (loss) income	—		—	—		—		—		(3,013)		(3,013)		3		(3,010)
Issuance of common stock in connection with at the market offering, net of issuance costs	—		—	4,501,000		45		14,902		—		14,947		—		14,947
Proceeds upon issuance of common stock from exercise of warrants	—		—	74,000		1		399		—		400		—		400
Stock-based compensation	—		—	—		—		363		—		363		—		363
Balance, June 30, 2021	47	$	—	22,707,063	$	227	$	103,029	$	(76,029)	$	27,227	$	31	$	27,258

	For the Six Months Ended June 30, 2021
	Preferred Stock			Common Stock			Additional						Noncontrolling
	Outstanding	Par		Outstanding	Par		Paid-in		Accumulated		Total		Interest in
	Shares	Value		Shares	Value		Capital		Deficit		Precipio, Inc.		Joint Venture		Total
Balance, January 1, 2021	47	$	—	17,576,916	$	176	$	85,523	$	(71,564)	$	14,135	$	27	$	14,162
Net (loss) income	—		—	—		—		—		(4,465)		(4,465)		4		(4,461)
Issuance of common stock in connection with purchase agreements	—		—	500,000		5		1,255		—		1,260		—		1,260
Issuance of common stock in connection with at the market offering, net of issuance costs	—		—	4,501,000		45		14,902		—		14,947		—		14,947
Proceeds upon issuance of common stock from exercise of warrants	—		—	74,000		1		399		—		400		—		400
Issuance of common stock for consulting services	—		—	55,147		—		150		—		150		—		150
Stock-based compensation	—		—	—		—		800		—		800		—		800
Balance, June 30, 2021	47	$	—	22,707,063	$	227	$	103,029	$	(76,029)	$	27,227	$	31	$	27,258


	June 30,
	2021	2020
Stock options	1,361,998	791,233
Warrants	831,901	906,769
Preferred stock	117,500	117,500
Total	2,311,399	1,815,502


(dollars in thousands)	June 30, 2021		December 31, 2020
Assets:
Accounts receivable, net	$	240	$	538
Total assets	$	240	$	538
Liabilities:
Accrued expenses	$	7	$	27
Total liabilities	$	7	$	27
Noncontrolling interest in Joint Venture	$	31	$	27
Total stockholders' equity	$	61	$	53


	Dollars in Thousands
	June 30, 2021		December 31, 2020
Department of Economic and Community Development (DECD)	$	219	$	233
DECD debt issuance costs		(20)		(22)
Financed insurance loan		—		12
Paycheck Protection Program		—		787
Total long-term debt		199		1,010
Current portion of long-term debt		(25)		(648)
Long-term debt, net of current maturities	$	174	$	362


(Dollars in thousands)	For the Three Months Ended June 30,
	2020
		Debt Discounts		Debt Premiums
Beginning balance at April 1	$	—	$	679
Deductions:
Amortization (accretion) (1)		—		(346)
Write-off related to note conversions (2)		—		(333)
Balance at June 30	$	—	$	—


	For the Six Months Ended June 30,
	2020
		Debt Discounts		Debt Premiums
Beginning balance at January 1	$	(1,796)	$	—
Additions:		—		793
Deductions:
Amortization (accretion) (1)		703		(385)
Write-off related to note conversions (2)		138		(408)
Write-off related to note extinguishment (3)		955		—
Balance at June 30	$	—	$	—


(dollars in thousands)
Classification on the Consolidated Balance Sheet	June 30, 2021		December 31, 2020 (1)
Assets:
Operating lease right-of-use assets, net	$	199	$	306
Finance lease right-of-use assets, net (2)		508		204
Total lease assets	$	707	$	510

Liabilities:
Current:
Current maturities of operating lease liabilities	$	143	$	225
Current maturities of finance lease liabilities		248		48
Noncurrent:
Operating lease liabilities, less current maturities		64		92
Finance lease liabilities, less current maturities		199		116
Total lease liabilities	$	654	$	481


(dollars in thousands)	Operating Leases				Finance Leases				Total
		June 30,		December 31,		June 30,		December 31,		June 30,		December 31,
		2021		2020		2021		2020		2021		2020
2021	$	121	$	241	$	111	$	61	$	232	$	302
2022		48		48		158		49		206		97
2023		35		35		91		38		126		73
2024		17		17		80		28		97		45
2025		—		—		65		13		65		13
Thereafter		—		—		26		—		26		—
Total lease obligations		221		341		531		189		752		530
Less: Amount representing interest		(14)		(24)		(84)		(25)		(98)		(49)
Present value of net minimum lease obligations		207		317		447		164		654		481
Less, current portion		(143)		(225)		(248)		(48)		(391)		(273)
Long term portion	$	64	$	92	$	199	$	116	$	263	$	208


	June 30,	December 31,
	2021	2020
Weighted-average remaining lease term (years):
Operating leases	1.7	1.9
Finance leases	3.4	3.6
Weighted-average discount rate:
Operating leases	8.00%	8.00%
Finance leases	18.87%	8.28%


			Underlying	Exercise
	Issue Year	Expiration	Shares	Price
Warrants
(1)	2017	June 2022	2,540	$	41.25
(1)	2017	June 2022	500	$	7.50
(2)	2017	June 2022	6,095	$	105.00
(3)	2017	August 2022	25,201	$	0.40
(4)	2017	August 2022	4,000	$	46.88
(5)	2017	August 2022	47,995	$	150.00
(5)	2017	August 2022	9,101	$	7.50
(6)	2017	August 2022	16,664	$	0.40
(6)	2017	August 2022	7,335	$	0.40
(7)	2017	October 2022	666	$	0.40
(8)	2018	October 2022	7,207	$	112.50
(9)	2018	April 2023	69,964	$	5.40
(9)	2018	April 2023	78,414	$	5.40
(10)	2018	October 2022	15,466	$	11.25
(11)	2018	July 2023	14,671	$	5.40
(11)	2018	July 2023	14,672	$	5.40
(11)	2018	August 2023	20,903	$	5.40
(11)	2018	August 2023	20,903	$	5.40
(11)	2018	September 2023	19,816	$	5.40
(11)	2018	September 2023	20,903	$	5.40
(12)	2018	November 2023	75,788	$	5.40
(12)	2018	December 2023	51,282	$	5.40
(13)	2019	April 2024	147,472	$	5.40
(14)	2019	May 2024	154,343	$	9.56
			831,901


	Amount Recorded
Deemed Dividends	(in thousands)

Dividends resulting from the March 2020 Amendment
Deemed Dividend A	$	3,333
Deemed Dividend B		6
Deemed Dividend C		5
Deemed Dividend D		*

For the six months ended June 30, 2020	$	3,344


Dollars in Thousands
	Three Months Ended June 30, 2021
	2016 Warrant		Bridge Note		Total Warrant
	Liability		Warrant Liabilities		Liabilities
Beginning balance at April 1	$	–	$	1,313	$	1,313
Total losses:
Revaluation recognized in earnings		–		894		894
Balance at June 30	$	–	$	2,207	$	2,207

	Three Months Ended June 30, 2020
	2016 Warrant		Bridge Note		Total Warrant
	Liability		Warrant Liabilities		Liabilities
Beginning balance at April 1	$	58	$	344	$	402
Total (gains) losses:
Revaluation recognized in earnings		(19)		391		372
Balance at June 30	$	39	$	735	$	774


Dollars in Thousands
	Six Months Ended June 30, 2021
	2016 Warrant		Bridge Note		Total Warrant
	Liability		Warrant Liabilities		Liabilities
Beginning balance at January 1	$	130	$	1,195	$	1,325
Total losses:
Revaluation recognized in earnings		–		1,012		1,012
Deductions – warrant exercises		(130)		–		(130)
Balance at June 30	$	–	$	2,207	$	2,207

	Six Months Ended June 30, 2020
	2016 Warrant		Bridge Note		Total Warrant
	Liability		Warrant Liabilities		Liabilities
Beginning balance at January 1	$	70	$	1,268	$	1,338
Total gains:
Revaluation recognized in earnings		(31)		(533)		(564)
Balance at June 30	$	39	$	735	$	774


	Number of	Weighted-Average
	Options	Exercise Price
Outstanding at January 1, 2021	822,992	$	4.46
Granted	597,347		2.17
Forfeited	(58,341)		3.02
Outstanding at June 30, 2021	1,361,998	$	3.52
Exercisable at June 30, 2021	541,544	$	5.19


	For the Three Months Ended June 30,
(dollars in thousands)	Diagnostic Testing				Biomarker Testing				Total
	2021		2020		2021		2020		2021		2020
Medicaid	$	18	$	16	$	—	$	—	$	18	$	16
Medicare		1,009		643		—		—		1,009		643
Self-pay		69		86		—		—		69		86
Third party payers		921		847		—		—		921		847
Contract diagnostics		—		—		21		24		21		24
Service revenue, net	$	2,017	$	1,592	$	21	$	24	$	2,038	$	1,616


	For the Three Months Ended June 30,
(dollars in thousands)					Contractual Allowances and				Revenues, net of Contractual
	Gross Revenues				adjustments				Allowances and adjustments
	2021		2020		2021		2020		2021		2020
Medicaid	$	18	$	16	$	—	$	—	$	18	$	16
Medicare		1,009		643		—		—		1,009		643
Self-pay		69		89		—		(3)		69		86
Third party payers		3,225		2,949		(2,304)		(2,102)		921		847
Contract diagnostics		21		24		—		—		21		24
		4,342		3,721		(2,304)		(2,105)		2,038		1,616
Other		206		29		—		—		206		29
	$	4,548	$	3,750	$	(2,304)	$	(2,105)	$	2,244	$	1,645


	For the Three Months Ended June 30,
	Revenues, net of
(dollars in thousands)	Contractual Allowances				Allowances for doubtful
	and adjustments				accounts				Total
	2021		2020		2021		2020		2021		2020
Medicaid	$	18	$	16	$	10	$	(16)	$	28	$	—
Medicare		1,009		643		110		(97)		1,119		546
Self-pay		69		86		—		—		69		86
Third party payers		921		847		(20)		(224)		901		623
Contract diagnostics		21		24		—		—		21		24
		2,038		1,616		100		(337)		2,138		1,279
Other		206		29		—		—		206		29
	$	2,244	$	1,645	$	100	$	(337)	$	2,344	$	1,308


			Allowance for
			Doubtful
(dollars in thousands)			Accounts
Balance, January 1, 2021			$	(4,013)
Collection Allowance:
Medicaid	$	1
Medicare		11
Third party payers		(199)
		(187)
Bad debt expense	$	(1)
Total charges				(188)
Write-offs				2,792
Balance, June 30, 2021			$	(1,409)


	Dollars in Thousands
	Three Months Ended
	June 30,				Change
	2021		2020		$		%
Service revenue, net, less allowance for doubtful accounts	$	2,138	$	1,279	$	859	67	%
Other		206		29		177	610	%
Net Sales	$	2,344	$	1,308	$	1,036	79	%


	Dollars in Thousands
	Six Months Ended
	June 30,				Change
	2021		2020		$		%
Service revenue, net, less allowance for doubtful accounts	$	3,795	$	2,471	$	1,324	54	%
Other		373		53		320	604	%
Net Sales	$	4,168	$	2,524	$	1,644	65	%



31.1		Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

31.2		Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended.

32.1*		Certification of Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

32.2*		Certification of Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended.

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	PRECIPIO, INC.

Date: August 12, 2021	By:	/S/ ILAN DANIELI
		Ilan Danieli
		Chief Executive Officer (Principal Executive Officer)


Date: August 12, 2021	By:	/S/ CARL IBERGER
		Carl Iberger
		Chief Financial Officer (Principal Financial Officer)