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What changed in Precipio, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Precipio, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+391 added−308 removedSource: 10-K (2025-03-27) vs 10-K (2024-03-29)

Top changes in Precipio, Inc.'s 2024 10-K

391 paragraphs added · 308 removed · 245 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

65 edited+49 added−16 removed52 unchanged
Biggest changeIn accordance with the transitional provisions in the IVDR, devices placed on the EU market prior to May 26, 2022 in accordance with the IVDD (except for Class A, non-sterile devices which must conform with the IVDR requirements since May 26, 2022) may continue to be supplied until a certain date (ranging from May 2025 to May 2027) which will depend on the risk class of the device, provided that manufacturers comply with the IVDR requirements relating to post-market surveillance, market surveillance, vigilance and registration of economic operators and devices.
Biggest changeUnder IVDR’s transitional provisions, devices placed on the EU market under IVDD before May 26, 2022, may continue to be supplied until deadlines ranging from December 2027 to December 2029, depending on risk classification, provided they comply with post-market surveillance, vigilance, and registration requirements. The transition deadlines are subject to manufacturers submitting applications to notified bodies within specified timeframes.
HemeScreen utilizes an inexpensive RT-PCR (reverse transcription polymerase chain reaction). HemeScreen is a set of disease-specific reagents that provide a simple workflow, is easy to use, and create attractive economics to the lab, resulting in their ability to reduce batches and provide faster test 5 Table of Contents turnaround time.
HemeScreen utilizes an inexpensive RT-PCR (reverse 5 Table of Contents transcription polymerase chain reaction). HemeScreen is a set of disease-specific reagents that provide a simple workflow, is easy to use, and create attractive economics to the lab, resulting in their ability to reduce batches and provide faster test turnaround time.
Operability – this is a complex technology that requires a high level of lab competency and an advanced level of staff sophistication and training. 2. Cost – running NGS testing is expensive; the machines can cost millions of dollars; reagents are expensive, and the staff to run these tests are highly paid. 3.
Operability – this is a complex technology that requires a high level of lab competency and an advanced level of staff sophistication and training; 2. Cost – running NGS testing is expensive; the machines can cost millions of dollars; reagents are expensive, and the staff to run these tests are highly paid; and 3.
Global healthcare distributors, such as ThermoFisher, McKesson, and Cardinal Health, have partnered with us to form the backbone of our go-to-market strategy and enable us to access laboratories around the country that can benefit from using our diagnostic products. ​ Our operating structure promotes the harnessing of our proprietary technology and genetic diagnostic expertise to bring to market our robust pipeline of innovative solutions designed to address the root causes of misdiagnoses. ​ ​ Industry We believe there is a significant problem of misdiagnosis across numerous disease states (particularly in blood-related cancers) due to an inefficient and commoditized industry.
Global healthcare distributors, such as ThermoFisher, McKesson, Medline and Cardinal Health, have partnered with us to form the backbone of our go-to-market strategy and enable us to access laboratories around the country that can benefit from using our diagnostic products. ​ Our operating structure promotes the harnessing of our proprietary technology and genetic diagnostic expertise to bring to market our robust pipeline of innovative solutions designed to address the root causes of misdiagnoses. ​ ​ Industry We believe there is a significant problem of misdiagnosis across numerous disease states (particularly in blood-related cancers) due to an inefficient and commoditized industry.
To deliver on our strategy of mitigating misdiagnoses we rely heavily on our CLIA laboratory to support R&D beta-testing of the products we develop, in a clinical environment. ​ The development of laboratory products involves a qualified facility; highly skilled laboratory staff; and access to viable patient specimens to conduct development and testing.
To deliver on our strategy of mitigating misdiagnoses, we rely heavily on our CLIA laboratories to support R&D beta-testing of the products we develop, in a clinical environment. ​ The development of laboratory products involves a qualified facility; highly skilled laboratory staff; and access to viable patient specimens to conduct development and testing.
In November 2013, the FDA issued a guidance document entitled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only” (RUO Guidance), which highlights the FDA’s interpretation that distribution of RUO products with any labeling, advertising or promotion that suggests that clinical laboratories can validate the test through their own procedures and subsequently offer it for clinical diagnostic use as a laboratory developed test is in conflict with RUO status.
In November 2013, the FDA issued a guidance document entitled “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only” (“RUO Guidance”), which highlights the FDA’s interpretation that distribution of RUO products with any labeling, advertising or promotion that suggests that clinical laboratories can validate the test through their own procedures and subsequently offer it for clinical diagnostic use as a laboratory developed test is in conflict with RUO status.
With over 20 years managing small and medium-size companies, some of his previous experiences include COO of Osiris, a publicly-traded company based in New York City with operations in the US, Canada, Europe and Asia; VP of Operations for Laurus Capital Management, a multi-billion dollar hedge fund; and in various other entrepreneurial ventures.
With over 20 years managing small and medium- size companies, some of his previous experiences include serving as COO of Osiris, a publicly-traded company based in New York City with operations in the US, Canada, Europe and Asia, VP of Operations for Laurus Capital Management, a multi- billion dollar hedge fund, and in various other entrepreneurial ventures.
Our model gives us a unique capability to ensure that the product is relevant, reliable, and workable within the laboratory workflow. Furthermore, given the hands-on experience we have as first-users of our own products, we have unparalleled experience and expertise required to support our customers and help them maximize the value of our technologies that they use.
Our model gives us a unique capability to ensure that the finished product is relevant, reliable, and workable within the laboratory workflow. Furthermore, given the hands-on experience we have as first-users of our own products, we have unparalleled experience, insight, and expertise required to support our customers and help them maximize the value of our technologies that they use.
We develop innovative technologies in our laboratory where we design, test, validate, and use these products clinically. We believe these technologies improve diagnostic outcomes across various diseases within the hematologic field. We then commercialize these technologies as proprietary products that serve the global laboratory community in furtherance of our mission to eliminate or greatly reduce the prevalence of misdiagnosis.
We develop innovative technologies in our laboratory where we design, test, validate, and use these products clinically. We believe these technologies improve diagnostic outcomes across various diseases within the hematologic field. We then commercialize these technologies as proprietary products that serve the global laboratory community in furtherance of our mission to eliminate or greatly reduce the prevalence of misdiagnoses.
We also enable our employees to take unlimited personal time off and have put in place enhanced parental leave abilities. Employee Engagement. We conduct confidential employee engagement surveys to obtain feedback on a variety of topics, including culture, values, diversity and inclusion, career development, employee satisfaction and tenure, and execution of our company strategy.
We also enable our employees to take unlimited personal time off and have put in place enhanced parental leave benefits. Employee Engagement. We conduct confidential employee engagement surveys to obtain feedback on a variety of topics, including culture, values, diversity and inclusion, career development, employee satisfaction and tenure, and execution of our company strategy.
We invest in our employees by providing development opportunities, and the necessary resources to support their success, including coaching, management and leadership training, presentation workshops and paid conference attendance. The diversity of our employees and their skillsets also offer a unique opportunity for us to learn from each other’s experiences.
We invest in our employees by providing development opportunities, and the necessary resources to support their success, including coaching, management and leadership training, presentation workshops and paid conference attendance. The diversity of our employees and their skillsets also offer a unique opportunity for us to learn from each other’s experiences. Compensation and Benefits.
Gage previously served as Director of Financial Reporting and Analysis of Precipio, Inc. since joining the Company in June 2017 following its acquisition of Transgenomic Inc., where he was Director of Financial Reporting and Analysis since 2014. Mr. Gage has over 30 years of experience in company finance, 25 years of which being with publicly traded companies. Mr.
Gage previously served as Director of Financial Reporting and Analysis of Precipio, Inc., upon joining the Company in June 2017 following its acquisition of Transgenomic Inc., where he was Director of Financial Reporting and Analysis since 2014. Mr. Gage has over 30 years of experience in corporate finance, 25 years of which being with publicly traded companies. Mr.
WHO (World Health Organization) and NCCN (The National Comprehensive Cancer Network®) guidelines have delineated the testing requirements of several specific genetic markers that are required during the diagnostic workup based on the patient's disease state. ​ The current products on the market offer two solutions for genetic testing.
World Health Organization (WHO) and The National Comprehensive Cancer Network® (NCCN) guidelines have delineated the testing requirements of several specific genetic markers that are required during the diagnostic workup based on the patient's disease state. ​ The current products on the market largely offer two types of solutions for genetic testing.
One of those solutions is single-gene testing products via various testing modalities; the other solution is broad, NGS (Next Generation Sequencing) panels that typically range from 50 to >500 genes in one panel. There are benefits and drawbacks to both current product options.
One of those solutions is single-gene testing products via various testing modalities; the other solution is broad, next generation sequencing (“NGS”) panels that typically range from 50 to >500 genes in one panel. There are benefits and drawbacks to both current product options.
Subsequently, IV-Cell has been used at our laboratory for the past few years on more than 1,000 clinical specimens, producing more precise diagnostic results. ​ The IV-Cell technology and media can be purchased via a direct supply contract, whereby we are contracted with a manufacturer (under license and non-disclosure) to produce the media. ​ Competition Our principal competition in clinical pathology services comes largely from two groups.
Subsequently, IV-Cell has been used at our laboratory for the past few years on more than 1,000 clinical specimens, producing more precise diagnostic results. ​ The IV-Cell technology and media can be purchased via a direct supply contract, whereby we are contracted with a manufacturer (under license and non-disclosure) to produce the media. ​ 6 Table of Contents Competition Our principal competition in clinical pathology services comes largely from two groups.
Despite much publicity of the industry transitioning from fee-per-service to value-based payments, this transition has not yet occurred in diagnostics. When a patient is misdiagnosed, physicians often end up administering incorrect treatments, creating adverse effects rather than improving outcomes.
Despite much publicity of the industry transitioning from fee-per-service to value-based payments, this transition has not yet occurred in diagnostics. When a 4 Table of Contents patient is misdiagnosed, physicians often end up administering incorrect treatments, creating adverse effects rather than improving outcomes.
Further, to the extent we engage in new business initiatives, we must continue to evaluate whether new laws and regulations are applicable to us. There can be no assurance that we will not be subject to scrutiny or challenge under one or more of these laws or that any enforcement actions would not be successful.
Further, to the extent we engage in new business initiatives, we must continue to evaluate whether new laws and regulations are applicable to us. There can be no assurance that we will not be subject to scrutiny or challenge under one or more of these laws or that any enforcement 8 Table of Contents actions would not be successful.
As we grow and mature, we look forward to establishing programs that infuse D&I within the business, identify barriers that impact recruitment, development and retention of underrepresented employees, identify educational content, communicate the value and impact of D&I on goals and objectives, all while continuing to focus on hiring diverse talent at all levels of the Company.
As we grow and mature, we look forward to establishing programs that infuse inclusivity within the business, identify barriers that impact recruitment, development and retention of underrepresented employees, identify educational content, communicate the value and impact of inclusivity on goals and objectives, all while continuing to focus on hiring diverse talent at all levels of the Company.
Faced with four different options of cell lineages for culturing – myeloid, B-cell, T-cell, and Plasma – current products limit the laboratory to select only one cell lineage to culture.
Faced with four different options of cell lineages for culturing – myeloid, B-cell, T-cell, and Plasma – current products on the market limit the laboratory to select only one cell lineage to culture.
For our laboratory services, as blood-related cancers are more likely to be developed later in life, the largest insurance provider is Medicare, which constituted approximately 32% of our patients’ cases during the year ended December 31, 2023. Non-Medicare patients are typically insured by private insurance companies who provide patient coverage and pay for patients’ health-related costs.
For our laboratory services, as blood-related cancers are more likely to be developed later in life, the largest insurance provider is Medicare, which constituted approximately 30% of our patients’ cases during the year ended December 31, 2024. Non-Medicare patients are typically insured by private insurance companies who provide patient coverage and pay for patients’ health-related costs.
As currently structured, the PPACA increases the number of persons covered under government programs and private insurance; furnishes economic incentives for measurable improvements in health care quality outcomes; promotes a more integrated health care delivery system and the creation of new health care delivery.
As currently structured, the PPACA increases the number of persons covered under government programs and private insurance; furnishes economic incentives for measurable improvements in health care quality outcomes; promotes a more integrated health care delivery system and 9 Table of Contents the creation of new health care delivery.
We focus our employee communications on continual engagement, providing updates on our business, technology, and workforce, including learning opportunities. We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Diversity & Inclusion (“D&I”). We strive to create a culture in which all employees feel heard, respected, and valued.
We focus our employee communications on continual engagement, providing updates on our business, technology, and workforce, including learning opportunities. We believe our management team has the experience necessary to effectively execute our strategy and advance our product and technology leadership. Inclusion Efforts. We strive to create a culture in which all employees feel heard, respected, and valued.
Companies such as Life Technologies, Illumina, Roche, Natera, PerkinElmer, BioRad, Qiagen and many others have developed machines and assays that can test hundreds of genes simultaneously. While this technology is extremely robust, there are a few challenges to NGS. 1.
Companies such as Life Technologies, Illumina, Roche, Natera, PerkinElmer, BioRad, Qiagen and many others have developed machines and assays that can test hundreds of genes simultaneously. While this technology is extremely robust, there are a few challenges to NGS, including, but not limited to: 1.
Gage was appointed Interim Chief Financial Officer of Precipio, Inc. effective March 21, 2022 and promoted to Chief Financial Officer effective July 1, 2023 without any change to his compensation or any additional stock award. Mr.
Gage was appointed Interim Chief Financial Officer of Precipio, Inc. effective March 21, 2022 and promoted to Chief Financial Officer effective July 1, 2023 without any change to his compensation or stock awards. Mr.
Approximately 33% of our revenue for the year ended December 31, 2023 was derived directly from Medicare, Medicaid or other government-sponsored healthcare programs. Also, we indirectly provide services to beneficiaries of Medicare, Medicaid and other government-sponsored healthcare programs through managed care entities.
Approximately 34% of our revenue for the year ended December 31, 2024 was derived directly from Medicare, Medicaid or other government-sponsored healthcare programs. Also, we indirectly provide services to beneficiaries of Medicare, Medicaid and other government-sponsored healthcare programs through managed care entities.
More information regarding our research and development activities can be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Item 7 of this Annual Report. Human Capital Employees. As of March 1, 2024, Precipio employed fifty-one (51) employees on a full-time basis and six (6) employees as part-time.
More information regarding our research and development activities can be found in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Item 7 of this Annual Report. Human Capital Employees. As of March 1, 2025, Precipio employed fifty-four (54) employees on a full-time basis and six (6) employees as part-time.
Furthermore, because we use our products as part of our day-to-day operations, we are able to deliver a high level of hands-on, experienced support to customers, improving their experience with our products. ​ Our Products Division commercial team generates direct sales and works with our key distributors.
Furthermore, because we use our products as part of our day-to-day operations, we can deliver a high level of hands-on, expert support to customers, improving their experience with our products. ​ Our Products Division commercial team generates direct sales and works with our key distributors.
Danieli assumed the role of Chief Executive Officer of Precipio, Inc. at the time of a 12 Table of Contents June 2017 merger transaction with Transgenomic, Inc. (the “Merger”).
Danieli assumed the role of Chief Executive Officer of Precipio, Inc. at the time of a June 2017 merger transaction with Transgenomic, Inc. (the “Merger”).
We make available free of charge through our website our Securities and Exchange Commission, (“SEC”), filings, including exhibits, furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We make available free of charge through our website our SEC filings, including exhibits and amendments to these reports, furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Ilan holds an MBA from the Darden School at the University of Virginia, and a BA in Economics from Bar-Ilan University in Israel. Matthew Gage, Chief Financial Officer, age 57 ​ Mr.
Ilan holds an MBA from the Darden School at the University of Virginia, and a BA in Economics from Bar-Ilan University in Israel. 13 Table of Contents Matthew Gage, Chief Financial Officer, age 58 ​ Mr.
Yield significant revenue to the laboratory . ​ ​ 2. IV-Cell TM The cytogenetics laboratory workflow of bone marrow and peripheral blood samples suffers from an inherent flaw.
IV-Cell TM The cytogenetics laboratory workflow of bone marrow and peripheral blood samples suffers from an inherent flaw.
Successful deployment within the United States will be closely followed by international marketing where the same product opportunities exist for our products. From our New Haven, Connecticut commercial lab, we currently provide diagnostic blood cancer testing services to oncology practices in over 20 states.
The annual growth rate of each market segment is estimated at 5%. Successful deployment within the United States will be closely followed by international marketing where the same product opportunities exist for our products. From our New Haven, Connecticut commercial lab, we currently provide diagnostic blood cancer testing services to oncology practices in over 20 states.
We are committed to creating and maintaining a diverse, inclusive and safe work environment.
We are committed to creating and maintaining an inclusive and safe work environment.
None of our employees are represented by a labor union or covered by a collective bargaining agreement, and we believe our relationship with our employees is good. Career Development and Growth. We emphasize employee development and training.
All of our employees are based in the U.S. and a majority are based in Connecticut. None of our employees are represented by a labor union or covered by a collective bargaining agreement, and we believe our relationship with our employees is good. Career Development and Growth. We emphasize employee development and training.
As a vendor, this places us as a reputable user of our own products, and we believe gains us significant credibility with existing and prospective customers.
As a vendor, this enables us to serve as a reputable user of our own products, and we believe this provides us with significant credibility with existing and prospective customers.
Compliance with Environmental Laws ​ We believe we are in compliance with current environmental protection requirements that apply to us or our business. Costs attributable to environmental compliance are not currently material. ​ Intellectual Property ​ The Company has filed an international patent applications for its proprietary HemeScreen technology.
Compliance with Environmental Laws ​ We believe we are in compliance with current environmental protection requirements that apply to us or our business. Costs attributable to environmental compliance are not currently material. ​ Intellectual Property ​ The Company has filed U.S. and European patent applications for its proprietary HemeScreen technology, reinforcing our commitment to innovation in diagnostic solutions.
To that end, we published our ESG Report in February 2023, which is available on our website, and expect to continue reporting on our progress to our various stakeholders. ​ Climate Change ​ We are committed to operating our business in an environmentally sustainable manner, meaning developing and producing products in a resource efficient way while limiting our environmental impact in the most material areas of greenhouse gas emissions, energy use, waste, and water. ​ For more information about how climate change impacts our business, see “Risk factors – Global climate change could negatively affect our business” in Item 1A of this Annual Report.
We will continue evaluating and reporting on ESG risks and improvements over time. ​ Climate Change ​ We are committed to operating our business in an environmentally sustainable manner, meaning developing and producing products in a resource efficient way while limiting our environmental impact in the most material areas of greenhouse gas emissions, energy use, waste, and water. ​ For more information about how climate change impacts our business, see “Risk factors – Global climate change could negatively affect our business” in Item 1A of this Annual Report.
You can review our electronically filed reports and other information that we file with the SEC on the SEC’s web site at http://www.sec.gov. 13 Table of Contents
You can review our electronically filed reports and other information that we file with the SEC on the SEC’s website at http://www.sec.gov.
Executive Officers of the Registrant Our executive officers, their ages as of March 15, 2024 and their respective positions are as follows: Ilan Danieli, Chief Executive Officer, age 52 ​ Mr. Danieli was the founder of Precipio Diagnostics LLC and was the Chief Executive Officer of Precipio Diagnostics LLC since 2011. Mr.
Information about our Executive Officers. ​ Our executive officers, their ages as of March 1, 2025 and their respective positions are as follows: Ilan Danieli, Chief Executive Officer, age 53 ​ Mr. Danieli was the founder of Precipio Diagnostics LLC and was the Chief Executive Officer of Precipio Diagnostics LLC since 2011. Mr.
If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, including the following: ● issuance of warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; ● requesting or requiring recalls, withdrawals, or administrative detention or seizure of products; ● imposing operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying requests for marketing authorization or new products or modified products; or criminal prosecution. 10 Table of Contents European Union Regulation Our products are regulated as in-vitro diagnostic devices in the European Union (EU) and will therefore be subject to the requirements of the In-Vitro Diagnostic Devices Regulation (EU) 2017/746, (“IVDR”).
If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, including the following: ● issuance of warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; ● requesting or requiring recalls, withdrawals, or administrative detention or seizure of products; ● imposing operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying requests for marketing authorization or new products or modified products; or ● criminal prosecution.
Gage holds a Bachelor of Science Degree in Business Administration from Bryant University. ​ Environmental, Social, and Governance ​ As our business continues to grow and develop, we recognize the importance of making responsible business decisions for the benefit of all of our stakeholders, including our stockholders, customers, employees, partners, the communities in which we work and live, as well as the planet.
Mohamed holds an MD and a Masters in Human Genetics from the University of Alexandria, Egypt. ​ ​ Environmental, Social, and Governance ​ As our business continues to grow and develop, we recognize the importance of making responsible business decisions for the benefit of all of our stakeholders, including our stockholders, customers, employees, partners, the communities in which we work and live, as well as the planet.
Many of the companies against which we may compete have significantly greater financial resources and expertise than we do in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products.
For the Products division, our competitors include various reagent manufacturers who produce various products that compete with our products. Many of the companies against which we may compete have significantly greater financial resources and expertise than we do in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products.
These SOPs are reviewed and approved annually and signed off by the laboratory manager and medical director. 8 Table of Contents Among the various federal and state laws and regulations that may govern or impact our current and planned operations are the following: Reimbursement This section is relevant to our clinical pathology services; our products are sold and invoiced directly (or via distributors) to customers who pay for the products, so there are no reimbursement issues.
Among the various federal and state laws and regulations that may govern or impact our current and planned operations are the following: Reimbursement This section is relevant to our clinical pathology services; our products are sold and invoiced directly (or via distributors) to customers who pay for the products, so there are no reimbursement issues.
However, the FDA has stated it intends to end its policy of enforcement discretion and to actively regulate LDTs.
However, at various points in recent years, the FDA has stated that it intends to end its policy of enforcement discretion and to actively regulate LDTs.
We also provide new technologies to the oncology diagnostic laboratory market in the form of HemeScreen and IV-Cell product offerings. The diagnostics product market is estimated to have annual revenues exceeding $14 billion by 2025. The annual growth rate of each market segment is estimated at 5%.
The oncology total available market, is currently estimated to exceed $20 billion, with an estimated compound annual growth rate exceeding 5%. We also provide new technologies to the oncology diagnostic laboratory market in the form of HemeScreen and IV-Cell product offerings. The diagnostics product market is estimated to have annual revenues exceeding $88 billion by 2025.
We believe that insurance providers, Medicare and Medicaid waste valuable dollars on the 4 Table of Contents application of incorrect treatments and can incur substantial downstream costs. According to a report by Pinnacle Health, the estimated cost of misdiagnosis within the healthcare system is $750 billion annually.
We believe that insurance providers, Medicare and Medicaid waste valuable dollars on the application of incorrect treatments and can incur substantial downstream costs. According to a report by Pinnacle Health, the estimated cost of misdiagnosis within the healthcare system is $100 billion annually. Most importantly, however, patients pay the ultimate price of misdiagnosis with increased morbidity and mortality.
The first group consists of companies that specialize in oncology and offer directly competing services to our diagnostic services. These companies provide a high level of service focused on oncology and offer their services to oncologists and pathology departments within hospitals.
The first group consists of companies that specialize in oncology and offer directly competing services to our diagnostic services. These companies provide a high level of service focused on oncology and offer their services to oncologists and pathology departments within hospitals. Competitors in this group include NeoGenomics Laboratories, Inc., also known as NeoGenomics or Neo, GenPath Diagnostics and Inform Diagnostics.
Avoid the cost of multiple platforms and test all the genes on one single platform; 2. Reduce the threshold of expertise required to perform these tests; 3. Reduce the batch requirements for the test and to subsequently significantly reduce the turnaround time for patient results; 4. Provide improved clinical service to physicians; and 5.
Reduce the threshold of expertise required to perform these tests; 3. Reduce the batch requirements for the test and to subsequently significantly reduce the turnaround time for patient results; 4. Provide improved clinical service to physicians; and 5. Yield significant revenue to the laboratory . ​ ​ 2.
It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the PPACA will impact our business. U.S. Food and Drug Administration Regulation We offer our products as research use only (“RUO”) products.
It is unclear how other healthcare reform measures of the Trump administration or other efforts, if any, to challenge, repeal or replace the PPACA will impact our business. U.S. Food and Drug Administration Regulation Medical devices are subject to extensive regulation by the Food and Drug Administration (“FDA”).
We are committed to providing comprehensive benefits and some examples of the benefits we offer are: medical insurance including prescription drug benefits, dental insurance, vision insurance, accident insurance, life insurance, disability insurance, health savings accounts, flexible spending accounts and access to mental health support.
The aim is to structure our compensation programs to balance incentive earnings for both short-term and long-term performance. 12 Table of Contents We are committed to providing comprehensive benefits and some examples of the benefits we offer are: medical insurance including prescription drug benefits, dental insurance, vision insurance, accident insurance, life insurance, disability insurance, health savings accounts, flexible spending accounts and access to mental health support.
Compensation and Benefits. 11 Table of Contents Our human capital strategies, initiatives, and outcomes are reviewed on a regular basis with our Board’s Governance Committee as well as Compensation Committee to help align with our overall business strategies.
Our human capital management strategies, initiatives, and outcomes are reviewed on a regular basis with our Board’s Governance Committee as well as Compensation Committee to help align with our overall business strategies. Our competitive compensation programs are designed to align the compensation of our employees with our performance and to provide the proper incentives to attract, retain and motivate employees.
Our technology enables testing to be completed in one rapid scanning process. The HemeScreen panels test for the presence of various mutations. In developing HemeScreen, we focused on improving the economics of providing blood cancer diagnostic tests and reducing laboratory technician time consumed in the testing process. By using our HemeScreen media, laboratories can: ​ 1.
In developing HemeScreen, we focused on improving the economics of providing blood cancer diagnostic tests and reducing laboratory technician time consumed in the testing process. By using our HemeScreen media, laboratories can: ​ 1. Avoid the cost of multiple platforms and test all the genes on one single platform; 2.
An RUO product is one that is not intended for clinical diagnostic use and must be labeled “For Research Use Only. Not for use in diagnostic procedures.” Products that are intended for research use only and are properly labeled as RUO are exempt from compliance with the requirements of 9 Table of Contents the U.S.
Not for use in diagnostic procedures.” Products that are intended for research use only and are properly labeled as RUO are exempt from compliance with the requirements of the FDA applicable to medical devices.
The FDA may consider the totality of the circumstances surrounding distribution and use of an RUO product, including how the product is marketed, when determining its intended use.
A product labeled RUO but intended to be used diagnostically may be viewed by the FDA as adulterated or misbranded and is subject to FDA enforcement activities. The FDA may consider the totality of the circumstances surrounding distribution and use of an RUO product, including how the product is marketed, when determining its intended use.
We operate CLIA laboratories in both New Haven, Connecticut and Omaha, Nebraska where we provide essential blood cancer diagnostics to office-based oncologists in many states nationwide.
We operate Clinical Laboratory Improvement Amendments (“CLIA”) compliant laboratories in both New Haven, Connecticut and Omaha, Nebraska, from which we provide essential blood cancer diagnostics to oncologists nationwide.
Our panels: ​ Typically range from 4-7 genes (matching the clinical requirements); Are all run on one, inexpensive machine (a RT-PCR, which costs between $30-75k); Require very basic laboratory training and can be run by any lab tech with limited training; and, Have attractive economics that provide attractive margins to laboratories who decide to use the RUO assays as an LDT. ​ IV-Cell competition 7 Table of Contents ​ As described in the section above, the cytogenetics workup requires the selection and evaluation of a cell lineage within 4 potential cell lineages.
Our panels: 1. Typically range from 4-7 genes (matching the clinical requirements); 2. Are all run on one, inexpensive machine (an RT-PCR, which costs between $30-75k); 7 Table of Contents 3. Require very basic laboratory training and can be run by any lab tech with limited training; and 4.
The FDA takes the position that it has authority to regulate LDTs as medical devices, and historically, it has exercised enforcement discretion with respect to most LDTs and has not required laboratories that offer LDTs to comply with the FDA’s requirements for medical devices.
Historically, the FDA has exercised enforcement discretion with respect to most LDTs and has not required laboratories that offer LDTs to comply with the FDA’s requirements for medical devices, such as the FDA’s requirements pertaining to marketing authorization, establishment registration, device listing, the Quality System Regulation, and other post-market controls.
The IVDR became fully applicable in all EU Member States on May 26, 2022 (therefore not including the UK). The IVDR introduced more stringent requirements than the previous EU In Vitro Diagnostics Directive 98/79/EC, (“IVDD”). For an in-vitro diagnostic device to be placed on the market in the EU, a CE mark demonstrating conformance with the applicable regulations is required.
The IVDR introduced more stringent requirements than the previous In Vitro Diagnostics Directive 98/79/EC (“IVDD”), including enhanced clinical evidence, post-market surveillance, and increased scrutiny by notified bodies for most device classes. For an in-vitro diagnostic device to be placed on the EU market, a CE mark demonstrating compliance with the IVDR is required.
Corporate History Precipio, Inc. was incorporated in Delaware on March 6, 1997. Our principal office is located at 4 Science Park, New Haven, Connecticut 06511. Our internet address is www.precipiodx.com. Information found on our website is not incorporated by reference into this report and should not be considered as part of this report.
Our internet address is www.precipiodx.com. Information found on our website is not incorporated by reference into this report and should not be considered as part of this report.
Competitors in this group include NeoGenomics Laboratories, Inc., also known as NeoGenomics or Neo, 6 Table of Contents GenPath Diagnostics and Inform Diagnostics. The second group consists of large commercial companies that offer a wide variety of laboratory tests ranging from simple chemistry tests to complex genetic testing.
The second group consists of large commercial companies that offer a wide variety of laboratory tests ranging from simple chemistry tests to complex genetic testing. Competitors in this group include LabCorp (NYSE: LH) and Quest Diagnostics (NYSE: DGX). Within the liquid biopsy market, our competitors include Foundation Medicine and Guardant Health.
Most importantly, however, patients pay the ultimate price of misdiagnosis with increased morbidity and mortality. Developing diagnostic products that increase accuracy, while also providing improved workflow and economic outcomes to laboratories is key to addressing this problem and delivering better diagnostic care.
Developing diagnostic products that increase accuracy, while also providing improved workflow and economic outcomes to laboratories is key to addressing this problem and delivering better diagnostic care. Market Our market is the United States domestic oncology market where we participate as a commercial diagnostic laboratory and market our products.
We have since added Acute Myeloid Leukemia, Chronic Lymphocytic Leukemia, Cytopenia, and BCR-ABL panels, evolving HemeScreen into a “suite” of robust genetic diagnostic panels, and we released a number of panels during 2023 and expect the release of additional diagnostic panels in the coming years. ​ We own an international patent application on our proprietary panels.
We have since added Acute Myeloid Leukemia, Chronic Lymphocytic Leukemia, Cytopenia, and BCR-ABL panels, evolving HemeScreen into a “suite” of robust genetic diagnostic panels, and we released a number of panels during 2024 such as BCR-ABL1 and Bloodhound MPN assays. These assays provide lower limits of detection compared to their HemeScreen predecessors and provide quantitative results.
Of the total, thirteen (13) were in Finance, General and Administration, twenty-four (24) were in laboratory and production, ten (10) were in Sales and Marketing, three (3) were in Customer Service and Support and seven (7) were in Research & Development. All of our employees are based in the U.S. and a majority are based in Connecticut.
Of the total full-time and part-time employees, nine (9) were in Finance, General and Administration, thirty-five (35) were in laboratory and production, eight (8) were in Sales and Marketing, three (3) were in Customer Service and Support and five (5) were in Research & Development.
The proposal will now be put forward to the European Parliament and European Council for adoption. Research and Development Expenses For the years ended December 31, 2023 and 2022, we recorded $1.7 million, respectively, of research and development expenses.
Further legislation will be put in place in 2025 and 2026 to introduce new pre-market requirements, including an international reliance procedure for approval of certain medical devices for the Great Britain market. Research and Development Expenses For the years ended December 31, 2024 and 2023, we recorded $1.3 million and $1.7 million, respectively, of research and development expenses.
For all other devices, a conformity assessment procedure must be undertaken by an independent notified body to assess the compliance of the device with the applicable requirements.
While Class A, non-sterile devices can be self-certified, all other devices require conformity assessment by an independent notified body.
Removed
Market Our market is the United States domestic oncology market where we participate as a commercial diagnostic laboratory and market our products. The oncology total available market, is currently estimated to exceed $20 billion, with an estimated compound annual growth rate exceeding 5%.
Added
These assays were also released with complementary analysis software (BHAS) for rapid data analysis to further streamline laboratory workflows. ​ We own pending U.S. and European patent applications on our proprietary panels. Our technology enables testing to be completed in one rapid scanning process. The HemeScreen panels test for the presence of various mutations.
Removed
Competitors in this group include LabCorp (NYSE: LH) and Quest Diagnostics (NYSE: DGX). Within the liquid biopsy market, our competitors include Foundation Medicine and Guardant Health. For the Products division, our competitors include various reagent manufacturers who produce various products that compete with our products.
Added
Have attractive economics that provide attractive margins to laboratories who decide to use the RUO assays as an LDT. ​ ​ IV-Cell competition ​ As described in the section above, the cytogenetics workup requires the selection and evaluation of a cell lineage within 4 potential cell lineages.
Removed
Food and Drug Administration (FDA) applicable to medical devices. A product labeled RUO but intended to be used diagnostically may be viewed by the FDA as adulterated or misbranded and is subject to FDA enforcement activities.
Added
These SOPs are reviewed and approved annually and signed off by the laboratory manager and medical director.
Removed
LDTs are defined by the FDA to be tests that are designed, developed, and used within a single laboratory.
Added
Currently, we offer our products as research use only (“RUO”) products. An RUO product is one that is not intended for clinical diagnostic use and must be labeled “For Research Use Only.
Removed
For example, on October 3, 2014, the FDA issued two draft guidance documents, entitled “Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)” and “FDA Notification and Medical Device Reporting for Regulatory Oversight of Laboratory Developed Tests (LDTs)”, that set forth a proposed risk-based regulatory framework that would apply varying levels of FDA oversight to LDTs.
Added
Most recently, on April 29, 2024, the FDA published a final rule on LDTs, in which FDA outlines its plans to end enforcement discretion for many LDTs in five stages over a four-year period: ● In Phase 1 (effective May 6, 2025), clinical laboratories would be required to comply with medical device reporting, correction/removal reporting, and certain quality systems complaint handling requirements. ● In Phase 2 (effective May 6, 2026), clinical laboratories would be required to comply with all other device requirements (e.g., establishment registration and device listing, labeling, investigational use requirements), except for remaining quality systems requirements and premarket review requirements. 10 Table of Contents ● In Phase 3 (effective May 6, 2027), clinical laboratories would be required to comply with all remaining applicable quality systems requirements. ● In Phase 4 (effective November 6, 2027), clinical laboratories would be required to comply with premarket submission requirements for high-risk tests (i.e., tests subject to FDA’s premarket approval (PMA) requirement). ● In Phase 5 (effective May 6, 2028), clinical laboratories would be required to comply with premarket submission requirements for moderate- and low- risk tests (i.e., tests subject to de novo classification or the 510(k) requirement).
Removed
The draft guidance documents have not been finalized. In January 2017, the FDA issued a “Discussion Paper on Laboratory Developed Tests (LDTs),” which includes a possible approach to LDT oversight that is intended to advance public discussion on the topic. Additionally, legislative proposals continue to be discussed.
Added
The final rule potentially extends enforcement discretion for certain tests, such as LDTs approved by the New York State Department of Health and LDTs first marketed prior to May 6, 2024 which are not modified or are modified in certain limited ways, from certain FDA regulatory requirements, provided certain important limitations have been met.
Removed
Such proposals would implement differing approaches to the regulation of LDTs, including in certain instances to require marketing authorization from the FDA.
Added
We are actively reviewing the final rule to evaluate its applicability to our operations, and the extent to which we may be required to modify our operations to comply with its requirements.
Removed
On October 3, 2023, the FDA published a proposed rule on LDTs, in which the FDA proposes to end enforcement discretion for virtually all LDTs in five stages over a four-year period from the date the FDA publishes a final rule.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA weak declining or inflationary economy could strain our collaborators and suppliers, possibly resulting in supply disruption, or cause delays in their payments to us. ​ In addition, the Company’s operations and access to capital may be impacted by disruptions to the banking system and financial market volatility resulting from bank failures, particularly in light of the recent events that have occurred with respect to Silicon Valley Bank (“SVB”) and other financial institutions. ​ Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. ​ Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect the Company’s current and projected business operations and its financial condition and results of operations. ​ Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past 21 Table of Contents and may in the future lead to market-wide liquidity problems.
Biggest changeA weak declining or inflationary economy, or increased U.S. trade tariffs, could also strain our collaborators and suppliers, possibly resulting in supply disruption, or cause delays in their payments to us. ​ Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect the Company’s current and projected business operations and its financial condition and results of operations. ​ Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. 24 Table of Contents ​ Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates.
The sanctions for failure to comply with the CLIA requirements include suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties.
The sanctions for failure to comply with CLIA requirements include suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties.
Depending on decisions by the Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v.
Depending on decisions by Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future. For example, in the case, Assoc. for Molecular Pathology v.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
Our current controls and any new controls that we develop may become inadequate, and weaknesses in our internal control over financial reporting may be discovered in the future.
Our current controls and any new controls that we develop may become inadequate, and weaknesses in our internal control over financial reporting may be discovered in the future.
If we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results, and the price of our common stock could decline.
If we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results, and the price of our common stock could decline .
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: ● multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payer regimes and other governmental; ● approvals, permits and licenses; ● failure by us, our collaborators or our distributors to obtain regulatory clearance, authorization or approval for the use of our products and services in various countries; ● additional potentially relevant third-party patent rights; ● complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property rights throughout the world; ● difficulties in staffing and managing foreign operations, including repatriating foreign earned profits; ● complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems; ● difficulties in negotiating favorable reimbursement negotiations with governmental authorities; ● logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; ● limits in our ability to penetrate international markets if we are not able to conduct our clinical diagnostic services locally; ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; ● international regulations and license requirements that may restrict foreign investment in and operation of the internet, IT infrastructure, data centers and other sectors, and international transfers of data; ● natural disasters, political and economic instability, including wars, terrorism and political unrest, and outbreak of disease; ● boycotts, curtailment of trade and other business restrictions; and ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977, or FCPA, its books and records provisions, or its anti-bribery provisions or laws similar to the FCPA in other jurisdictions in which we may in the future operate, such as the United Kingdom’s, (“UK”), Bribery Act of 2010 and anti-bribery requirements of member states in the European Union, (“EU”). ​ Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations. 20 Table of Contents ​ The sales of our products in the EU and the UK are regulated through a process that either requires self-certification or certification by a notified body in order to affix a CE mark.
Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors, including: ● multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, export and import restrictions, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payer regimes and other governmental; ● approvals, permits and licenses; ● failure by us, our collaborators or our distributors to obtain regulatory clearance, authorization or approval for the use of our products and services in various countries; ● additional potentially relevant third-party patent rights; ● complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property rights throughout the world; ● difficulties in staffing and managing foreign operations, including repatriating foreign earned profits; ● complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems; ● difficulties in negotiating favorable reimbursement negotiations with governmental authorities; ● logistics and regulations associated with shipping samples, including infrastructure conditions and transportation delays; ● limits in our ability to penetrate international markets if we are not able to conduct our clinical diagnostic services locally; ● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and services and exposure to foreign currency exchange rate fluctuations; ● international regulations and license requirements that may restrict foreign investment in and operation of the internet, IT infrastructure, data centers and other sectors, and international transfers of data; ● natural disasters, political and economic instability, including wars, terrorism and political unrest, and outbreak of disease; ● boycotts, curtailment of trade and other business restrictions; and ● regulatory and compliance risks that relate to maintaining accurate information and control over sales and distributors’ activities that may fall within the purview of the Foreign Corrupt Practices Act of 1977, or FCPA, its books and records provisions, or its anti-bribery provisions or laws similar to the FCPA in other jurisdictions in which we may in the future operate, such as the United Kingdom’s (“UK”) Bribery Act of 2010 and anti-bribery requirements of member states in the European Union (“EU”). ​ 23 Table of Contents Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations. ​ The sales of our products in the EU and the UK are regulated through a process that either requires self-certification or certification by a notified body in order to affix a CE mark.
Some of these provisions include: ● a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; ● a requirement that special meetings of stockholders be called only by the chairman of the board, board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office, or our chief executive officer; ● advance notice requirements for stockholder proposals and nominations for election to our board of directors; ● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than a majority he shares then entitled to vote generally for the election of directors; and ● the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.
Some of these provisions include: ● a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time; ● a requirement that special meetings of stockholders be called only by the chairman of the board, board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office, or our chief executive officer; ● advance notice requirements for stockholder proposals and nominations for election to our board of directors; ● a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than a majority of the shares then entitled to vote generally for the election of directors; and ● the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.
For example: ​ •others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of the patents that we hold rights to; ​ •we, or our licensors or collaborators, might not have been the first to invent or the first to file patent applications covering certain of our or their inventions; ​ •others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned intellectual property rights; ​ •it is possible that our current or future pending owned patent applications will not lead to issued patents; ​ •issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; ​ •our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in the US; ​ •we may not develop additional proprietary technologies that are patentable; ​ •the patents of others may harm our business; and ​ •we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property. ​ Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects Risks Related to Our Common Stock The price of our common stock may fluctuate significantly, which could negatively affect us and holders of our common stock.
For example: ​ •others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of the patents that we hold rights to; ​ •we, or our licensors or collaborators, might not have been the first to invent or the first to file patent applications covering certain of our or their inventions; ​ 42 Table of Contents •others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned intellectual property rights; ​ •it is possible that our current or future pending owned patent applications will not lead to issued patents; ​ •issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; ​ •our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in the US; ​ •we may not develop additional proprietary technologies that are patentable; ​ •the patents of others may harm our business; and ​ •we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property. ​ Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects Risks Related to Our Common Stock The price of our common stock may fluctuate significantly, which could negatively affect us and holders of our common stock.
Under U.S. federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code, as amended.
Under U.S. federal income tax law, a corporation’s ability to utilize its NOLs to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.
The technologies associated with the molecular diagnostics industry are evolving rapidly and there is intense competition within such industry. Certain molecular diagnostics companies have established technologies that may be competitive to our product candidates and any future tests that we develop.
The technologies associated with the molecular diagnostics industry are evolving rapidly and there is intense competition within such industry. Certain molecular diagnostics companies have established technologies that may be competitive to our diagnostic product candidates and any future tests that we develop.
Under current law, federal NOLs generated in taxable years ending after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.
Under current law, federal NOLs generated in taxable years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOLs may be limited to 80% of our taxable income annually for tax years beginning after December 31, 2020.
Our ability to achieve commercial market acceptance for our existing and future products will depend on several factors, including: ● our ability to convince the medical community of the clinical utility of our products and their potential advantages over existing diagnostics technology; ● the willingness of physicians and patients to utilize our products; and 18 Table of Contents ● the agreement by commercial third-party payers and government payers to reimburse our products, the scope and amount of which will affect patients’ willingness or ability to pay for our products and will likely heavily influence physicians’ decisions to recommend our products.
Our ability to achieve commercial market acceptance for our existing and future products will depend on several factors, including: ● our ability to convince the medical community of the clinical utility of our products and their potential advantages over existing diagnostics technology; ● the willingness of physicians and patients to utilize our products; and 21 Table of Contents ● the agreement by commercial third-party payers and government payers to reimburse our products, the scope and amount of which will affect patients’ willingness or ability to pay for our products and will likely heavily influence physicians’ decisions to recommend our products.
The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be 42 Table of Contents located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
The Court of Chancery of the State of Delaware and the federal district courts of the United States may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be 48 Table of Contents located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting, which we may be required to include in our periodic reports that we file with the SEC under Section 404 of the Sarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in a restatement of our prior period financial statements.
Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting, which we may be required to include in our periodic reports that we file with the SEC under Section 404 of the Sarbanes-Oxley Act, and could harm our operating results, cause us to fail to meet our reporting obligations, or result in a restatement of our 44 Table of Contents prior period financial statements.
Additionally, any new laboratory opened by us would be subject to certification under CLIA and licensure by various states, which would take a significant amount of time and result in delays in our ability to continue our operations. An impairment in the carrying value of our intangible assets could negatively affect our results of operations.
Additionally, any new laboratory opened by us would be subject to recertification under CLIA and licensure by various states, which would take a significant amount of time and result in delays in our ability to continue our operations. An impairment in the carrying value of our intangible assets could negatively affect our results of operations.
We have approximately $0.8 million of remaining availability pursuant to this prospectus supplement. ​ We have issued a substantial number of warrants and equity awards from our equity plans which are exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders.
We have approximately $1.0 million of remaining availability pursuant to this prospectus supplement. ​ We have issued a substantial number of warrants and equity awards from our equity plans which are exercisable into shares of our common stock which could result in substantial dilution to the ownership interests of our existing stockholders.
Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating our trade secrets. ​ If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. ​ Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks.
Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating our trade secrets. ​ 38 Table of Contents If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. ​ Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, 33 Table of Contents constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.
If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules used in or formed during the manufacturing process, or any final product itself, the holders of any such patents may be able to block our ability to commercialize the product candidate unless we obtained a license under the applicable patents, or until such patents expire or they are finally determined to be held invalid or unenforceable.
Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. ​ If we raise funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or current or future product candidates or to grant licenses on terms that may not be favorable to us.
Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends . ​ 46 Table of Contents If we raise funds through additional collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or current or future product candidates or to grant licenses on terms that may not be favorable to us.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common 43 Table of Contents stock and our common stock prices may be more volatile.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common 49 Table of Contents stock and our common stock prices may be more volatile.
We may increase the number of employees in the future depending on the progress of our development of diagnostic technology. Our future financial performance and our ability to 23 Table of Contents commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
We may increase the number of employees in the future depending on the progress of our development of diagnostic technology. Our future financial performance and our ability to 27 Table of Contents commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. ​ 36 Table of Contents Intellectual property rights do not necessarily address all potential threats to our competitive advantage. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. ​ Intellectual property rights do not necessarily address all potential threats to our competitive advantage. ​ The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition. The testing, manufacturing and marketing of diagnostics entails an inherent risk of product liability and personal injury claims.
For these reasons, we may not be able to utilize a material portion of the NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our operating results and financial condition. 31 Table of Contents The testing, manufacturing and marketing of diagnostics entails an inherent risk of product liability and personal injury claims.
If customers believe that such products will 19 Table of Contents offer enhanced features or be sold for a more attractive price, they may delay purchases until such products are available. We may also have excess or obsolete inventory of older products as we transition to new products and our experience in managing product transitions is very limited.
If customers believe that such products will offer enhanced features or be sold for a more attractive price, they may delay purchases until such products are available. We may also have excess or obsolete inventory of older products as we transition to new products and our experience in managing product transitions is very limited.
Efforts by certain market participants to manipulate the price of our common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.
Efforts by certain market participants to manipulate the price of our 43 Table of Contents common stock for their personal financial gain may cause our stockholders to lose a portion of their investment, may make it more difficult for us to raise equity capital when needed without significantly diluting existing stockholders, and may reduce demand from new investors to purchase shares of our stock.
Due to our recurring losses from operations and the expectation that we will continue to incur losses in the future, we may be required to raise additional capital to complete the development and commercialization of our current product candidates and to pay off our obligations.
Due to our recurring losses from operations and that we may continue to incur losses in the future, we may be required to raise additional capital to complete the development and commercialization of our current product candidates and to pay off our obligations.
We intend to continue to develop our in-house marketing organization and sales force, which will require significant capital expenditures, management resources and time. We will have to compete with other companies to recruit, hire, train and retain marketing and sales personnel.
We intend to continue to develop our in-house marketing capabilities and sales force, which will require significant capital expenditures, management resources and time. We will have to compete with other companies to recruit, hire, train and retain marketing and sales personnel.
It is critical to our success that we anticipate changes in technology and customer requirements and successfully introduce new, enhanced and competitive technologies to meet our customers’ and prospective customers’ needs on a timely and cost-effective basis. At the same time, however, we must carefully manage the introduction of new products.
It is critical to our success that we anticipate changes in technology and customer requirements and successfully introduce new, enhanced and competitive technologies to meet our customers’ and prospective customers’ needs on a timely and cost-effective basis. At the same 22 Table of Contents time, however, we must carefully manage the introduction of new products.
These changes in federal, state, local, and third-party payer regulations or policies may decrease our revenues and adversely affect our results of operations and our financial condition. Occasionally, legislative pauses and changes impact our products that are reimbursed under the Medicare Physician Fee Schedule (“MPFS”), or the Clinical Laboratory Fee Schedule (“CLFS”).
These changes in federal, state, local, and third-party payer regulations or policies may decrease our revenues and adversely affect our results of operations and our financial condition. Occasionally, legislative pauses 32 Table of Contents and changes impact our products that are reimbursed under the Medicare Physician Fee Schedule (“MPFS”), or the Clinical Laboratory Fee Schedule (“CLFS”).
In this case, we could ultimately be forced to cease use of such trademarks. ​ Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
In this case, we could ultimately be forced to cease use of such trademarks. ​ 40 Table of Contents Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
From April 14, 2023 through the date of issuance of this Report on From 10-K, we received $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 10,192 shares of Common Stock. The Company has an additional $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.
From April 14, 2023 through the date of issuance of this Report on From 10-K, we received $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 11,847 shares of Common Stock. The Company has an additional $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, we may be unable to commercialize our product candidates or such efforts may be impaired or delayed, which could in turn significantly harm our business. ​ Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our products or product candidates.
If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, we may be unable to commercialize our product candidates or such efforts may be impaired or delayed, which could in turn significantly harm our business. ​ 39 Table of Contents Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our products or product candidates.
False Claims Act The FCA prohibits providers from, among other things, (1) knowingly presenting or causing to be presented, claims for payments from the Medicare, Medicaid or other federal healthcare programs that are false or fraudulent; (2) knowingly making, using or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the federal government; or (3) knowingly making, using or causing to be made or used, a false record 30 Table of Contents or statement to avoid, decrease or conceal an obligation to pay money to the federal government.
False Claims Act The FCA prohibits providers from, among other things, (1) knowingly presenting or causing to be presented, claims for payments from the Medicare, Medicaid or other federal healthcare programs that are false or fraudulent; (2) knowingly making, using or causing to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the federal government; or (3) knowingly making, using or causing to be made or used, a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government.
In addition, a number of states have adopted their own false claims and whistleblower provisions whereby a private party may file a civil lawsuit in state court. We are required to provide information to our employees and certain contractors about state and federal false claims laws and whistleblower provisions and protections.
In addition, a number of states have adopted their own false claims and whistleblower provisions whereby a private 36 Table of Contents party may file a civil lawsuit in state court. We are required to provide information to our employees and certain contractors about state and federal false claims laws and whistleblower provisions and protections.
If the current equity and credit markets deteriorate, or do not improve, it 41 Table of Contents may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.
If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.
In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.
In addition, there is a risk that one or more of our current service providers, manufacturers and 47 Table of Contents other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.
We cannot be certain that we will achieve or sustain profitability. ● We are subject to concentrations of revenue risk and concentrations of credit risk in accounts receivable. ● We have been, and may continue to be, subject to costly litigation. ● The commercial success of our products, including those we are developing, will depend upon the degree of market acceptance of these products among physicians, patients, health care payers and the medical community and on our ability to successfully market our products. ● If we cannot compete successfully with our competitors, including new entrants in the market, we may be unable to increase or sustain our revenue or achieve and sustain profitability. ● We may not be able to develop new products or enhance the capabilities of our systems to keep pace with rapidly changing technology and customer requirements, which could have a material adverse effect on our business and operating results. ● International expansion of our business could expose us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. ● Unfavorable U.S. or global economic conditions and conflicts could adversely affect our business, financial condition or results of operations. ● Global climate change could negatively affect our business. ● We depend upon a limited number of key personnel, and if we are not able to retain them or recruit additional qualified personnel, the execution of our strategy, management of our business and commercialization of our product candidates could be delayed or negatively impacted. ● We will need to increase the size of our organization, and we may experience difficulties in managing growth. ● We currently have limited experience in marketing products.
We cannot be certain that we will achieve or sustain profitability ● We are subject to concentrations of revenue risk and concentrations of credit risk in accounts receivable. ● We have been, and may continue to be, subject to costly litigation. ● Failure to Comply with Insider Trading Regulations and Policies Could Result in Significant Legal and Reputational Consequences. ● The commercial success of our products, including those we are developing, will depend upon the degree of market acceptance of these products among physicians, patients, health care payers and the medical community and on our ability to successfully market our products. ● If we cannot compete successfully with our competitors, including new entrants in the market, we may be unable to increase or sustain our revenue or achieve and sustain profitability. ● We may not be able to develop new products or enhance the capabilities of our systems to keep pace with rapidly changing technology and customer requirements, which could have a material adverse effect on our business and operating results. ● International expansion of our business could expose us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States. ● Unfavorable U.S. or global economic conditions and conflicts could adversely affect our business, financial condition or results of operations. ● Global climate change could negatively affect our business. ● We depend upon a limited number of key personnel, and if we are not able to retain them or recruit additional qualified personnel, the execution of our strategy, management of our business and commercialization of our product candidates could be delayed or negatively impacted. ● We will need to increase the size of our organization, and we may experience difficulties in managing growth. ● We currently have limited experience in marketing products.
These efforts, including changes in law or regulations that may occur in the future, may each individually or collectively have a material adverse impact on our business, results of operations, financial condition, and prospects. 27 Table of Contents Changes in payer mix could have a material adverse impact on our net sales and profitability.
These efforts, including changes in law or regulations that may occur in the future, may each individually or collectively have a material adverse impact on our business, results of operations, financial condition, and prospects . Changes in payer mix could have a material adverse impact on our net sales and profitability.
The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes in the CLIA law or regulations (or interpretation of the law or regulations) could have a material adverse effect on us.
The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes to CLIA or regulations (or interpretation of the law or regulations) could have a material adverse effect on us.
In any patent infringement 34 Table of Contents proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
We will need to increase the size of our organization, and we may experience difficulties in managing growth. We are a small company with 51 full-time employees and 6 part-time employees as of March 1, 2024. Future growth will impose significant added responsibilities on members of management, including the need to identify, attract, retain, motivate and integrate highly skilled personnel.
We will need to increase the size of our organization, and we may experience difficulties in managing growth. We are a small company with 54 full-time employees and 6 part-time employees as of March 1, 2025. Future growth will impose significant added responsibilities on members of management, including the need to identify, attract, retain, motivate and integrate highly skilled personnel.
Any future regulations aimed at mitigating climate change 22 Table of Contents may negatively impact the prices of raw materials and energy as well as the demand for certain of our customer’s products which could in turn impact demand for our products and impact our results of operations.
Any future regulations aimed at mitigating climate change may negatively impact the prices of raw materials and energy as well as the demand for certain of our customer’s products which could in turn impact demand for our products and impact our results of operations.
Therefore, we cannot be certain that we were the first to make the inventions claimed in any of our owned or pending patent applications, or that we were the first to file for patent protection of such inventions. We depend on certain technologies that are licensed to us.
Therefore, we cannot be certain that we were the first to make the inventions claimed in any of our owned or pending patent applications, or that we were the first to file for patent protection of such inventions. 37 Table of Contents We depend on certain technologies that are licensed to us.
To date, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services. We expect to incur net losses through at least 2024 as we further develop and commercialize our diagnostic technology.
To date, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services. We expect to incur net losses through at least the first half of 2025 as we further develop and commercialize our diagnostic technology.
Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar incidents can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information.
Security incidents, including physical or electronic break-ins, computer viruses, attacks by hackers and similar cybersecurity incidents, and data breaches, can create system disruptions or shutdowns or the unauthorized disclosure of, access to, or misuse of confidential information.
Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses. As of December 31, 2023, we had approximately $76 million of federal net operating losses, (“NOLs”).
Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses. As of December 31, 2024, we had approximately $79 million of federal net operating losses, (“NOLs”).
Enforcing a claim 32 Table of Contents against a third party that illegally obtained and is using our trade secrets, like patent litigation, is expensive and time-consuming and the outcome is unpredictable. ​ Moreover, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties.
Enforcing a claim against a third party that illegally obtained and is using our trade secrets, like patent litigation, is expensive and time- consuming and the outcome is unpredictable. ​ Moreover, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties.
These rules and regulations will 38 Table of Contents cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly. ​ The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.
These rules and regulations will cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly. ​ The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.
The term “remuneration” has been broadly interpreted to include anything of value such as gifts, discounts, rebates, waiver of payments or providing anything at less than its fair market value.
The term “remuneration” has been broadly interpreted to include anything of value such as gifts, discounts, rebates, waiver of payments or providing 35 Table of Contents anything at less than its fair market value.
Approximately $28 million of the federal NOLs will expire at various dates beginning in 2036 through 2037 if not utilized, while the remaining amount will have an indefinite life. As of December 31, 2023, we had approximately $2.4 million of state NOLs. The state NOLs expire on various dates.
Approximately $28 million of the federal NOLs will expire at various dates beginning in 2036 through 2037 if not utilized, while the remaining amount will have an indefinite life. As of December 31, 2024, we had approximately $2.5 million of state NOLs. The state NOLs expire on various dates.
Generally, we do not require collateral or other securities to support our accounts receivable and while we are directly affected by the financial condition of our customers, management does not believe significant credit risks exist at December 31, 2023. We have been, and may continue to be, subject to costly litigation.
Generally, we do not require collateral or other securities 20 Table of Contents to support our accounts receivable and while we are directly affected by the financial condition of our customers, management does not believe significant credit risks exist at December 31, 2024. We have been, and may continue to be, subject to costly litigation.
If we are unable to establish marketing and sales capabilities and retain the proper talent to execute on our sales and marketing strategy, we may not be able to generate product revenue. ● Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer. ● Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses. ● The testing, manufacturing and marketing of diagnostics entails an inherent risk of product liability and personal injury claims. 14 Table of Contents ● All of our diagnostic technology development and our clinical services are performed at two laboratories, and in the event either or both of these facilities were to be affected by a termination of the lease or a man-made or natural disaster, our operations could be severely impaired. ● An impairment in the carrying value of our intangible assets could negatively affect our results of operations. ● Governmental payers and health care plans have taken steps to control costs. ● Changes in payer mix could have a material adverse impact on our net sales and profitability. ● Our laboratories require ongoing CLIA certification and we cannot guarantee that our laboratories will pass all future certification inspections. ● Our products that we sell as research use only products and/or that we offer as laboratory developed tests could become subject to government regulations requiring marketing authorization, and the marketing authorization and maintenance process for such products may be expensive, time-consuming and uncertain in both timing and outcome. ● Failure to comply with HIPAA could be costly. ● Our failure to comply with any applicable government laws and regulations or otherwise respond to claims relating to improper handling, storage or disposal of hazardous chemicals that we use may adversely affect our results of operations. ● We may become subject to the Anti-Kickback Statute, Stark Law, False Claims Act, Civil Monetary Penalties Law and may be subject to analogous provisions of applicable state laws and could face substantial penalties if we fail to comply with such laws. ● We cannot be certain that measures taken to protect our intellectual property will be effective. ● The price of our common stock may fluctuate significantly, which could negatively affect us and holders of our common stock. ● The price of our stock may be vulnerable to manipulation. ● If we cannot continue to satisfy Nasdaq listing maintenance requirements and other rules, our securities may be delisted, which could negatively impact the price of our securities. ● Increased costs associated with corporate governance compliance may significantly impact our results of operations. ● We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future.
The actual or perceived failure to comply with such obligations could lead to government enforcement actions (which could include civil or criminal penalties), fines and sanctions, private litigation and/or adverse publicity and could negatively affect our operating results and business. ● Cybersecurity risks could compromise our information and expose us to liability, which may harm our ability to operate effectively and may cause our business and reputation to suffer. ● Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal tax purposes is subject to limitation and risk that could further limit our ability to utilize our net operating losses. ● The testing, manufacturing and marketing of diagnostics entails an inherent risk of product liability and personal injury claims. ● All of our diagnostic technology development and our clinical services are performed at two laboratories, and in the event either or both of these facilities were to be affected by a termination of the lease or a man-made or natural disaster, our operations could be severely impaired. 17 Table of Contents ● An impairment in the carrying value of our intangible assets could negatively affect our results of operations. ● Governmental payers and health care plans have taken steps to control costs. ● Changes in payer mix could have a material adverse impact on our net sales and profitability. ● Our laboratories require ongoing CLIA certification and we cannot guarantee that our laboratories will pass all future certification inspections. ● Our products that we sell as research use only products and/or that we offer as laboratory developed tests could become subject to government regulations requiring marketing authorization, and the marketing authorization and maintenance process for such products may be expensive, time-consuming and uncertain in both timing and outcome. ● Failure to comply with HIPAA could be costly. ● Our failure to comply with any applicable government laws and regulations or otherwise respond to claims relating to improper handling, storage or disposal of hazardous chemicals that we use may adversely affect our results of operations. ● We may become subject to the Anti-Kickback Statute, Stark Law, False Claims Act, Civil Monetary Penalties Law and may be subject to analogous provisions of applicable state laws and could face substantial penalties if we fail to comply with such laws. ● We cannot be certain that measures taken to protect our intellectual property will be effective. ● The price of our common stock may fluctuate significantly, which could negatively affect us and holders of our common stock. ● The price of our stock may be vulnerable to manipulation. ● If we cannot continue to satisfy Nasdaq listing maintenance requirements and other rules, our securities may be delisted, which could negatively impact the price of our securities. ● Increased costs associated with corporate governance compliance may significantly impact our results of operations. ● We have not paid dividends on our common stock in the past and do not expect to pay dividends on our common stock for the foreseeable future.
The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents and patent applications at a reasonable cost or in 31 Table of Contents a timely manner.
The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents and patent applications at a reasonable cost or in a timely manner.
If we are unable to prevent or mitigate the impact of such security or data privacy breaches or other incidents, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business. ​ Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.
If we are unable to prevent or mitigate the impact of such cybersecurity incidents, data breaches or other adverse events, we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business. ​ Cyberattacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect.
Now that the UK has left the EU, the new UKCA mark will replace the EU CE mark in Great Britain, (“GB”). The EU legal framework remains applicable in Northern Ireland (indeed any products placed on the market in Northern Ireland must be compliant with EU law).
Now that the UK has left the EU, the new UK Conformity Assessed (“UKCA”) mark will replace the EU CE mark in Great Britain (“GB”). The EU legal framework remains applicable in Northern Ireland (indeed any products placed on the market in Northern Ireland must be compliant with EU law).
We may require significant additional financing to sustain our operations and without it we will not be able to continue operations. At December 31, 2023, we had working capital of $0.5 million. For the year ended December 31, 2023, we had an operating cash flow deficit of $3.6 million and a net loss of $5.8 million.
We may require significant additional financing to sustain our operations and without it we will not be able to continue operations. At December 31, 2024, we had a working capital deficit of $0.8 million. For the year ended December 31, 2024, we had an operating cash flow of $0.4 million and a net loss of $4.3 million.
Any return on investment may be limited to the value of our common stock. ● If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. ● The sale or issuance of our common stock to Alliance Global Partners may cause significant dilution and the sale of the shares of common stock acquired by Alliance Global Partners, or the perception that such sales may occur, could cause the price of our common stock to fall. ● The issuance of our common stock to creditors or litigants may cause significant dilution to our stockholders and cause the price of our common stock to fall. ​ Risks Related to Our Business and Strategy There is substantial doubt about our ability to continue as a going concern.
Any return on investment may be limited to the value of our common stock. ● If securities or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline. ● The sale or issuance of our common stock to Alliance Global Partners may cause significant dilution and the sale of the shares of common stock acquired by Alliance Global Partners, or the perception that such sales may occur, could cause the price of our common stock to fall. ● The issuance of our common stock to creditors or litigants may cause significant dilution to our stockholders and cause the price of our common stock to fall. ● Improper timing of equity awards could result in regulatory scrutiny and reputational harm. ​ Risks Related to Our Business and Strategy There is substantial doubt about our ability to continue as a going concern.
We expect to incur substantial net losses through at least 2024 as we further develop and commercialize our diagnostic technology. We also expect that our selling, general and administrative expenses will continue to increase due to the additional costs associated with market development activities and expanding our staff to sell and support our products.
We may incur substantial net losses through at least the first half of 2025 as we further develop and commercialize our diagnostic technology. We also expect that our selling, general and administrative expenses will continue to increase due to the additional costs associated with market development activities and expanding our staff to sell and support our products.
For the year ended December 31, 2023, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and 17 Table of Contents building a sales force to market our products and services.
For the year ended December 31, 2024, we have experienced negative cash flow from development of our diagnostic technology, as well as from the costs associated with establishing a laboratory and building a sales force to market our products and services.
The Clinical Laboratory Improvement Amendments of 1988, (“CLIA”), extended federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency. The CLIA requires that all clinical laboratories meet quality assurance, quality control and personnel standards. Laboratories must also undergo proficiency testing and are subject to inspections.
CLIA extended federal oversight to virtually all clinical laboratories by requiring that they be certified by the federal government or by a federally-approved accreditation agency. CLIA requires that all clinical laboratories meet quality assurance, quality control and personnel standards. Laboratories must also undergo proficiency testing and are subject to inspections.
Either outcome could have an adverse impact on our business. ​ Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
Either outcome could have an adverse impact on our business. 41 Table of Contents ​ Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
Failure to comply with HIPAA could be costly. HIPAA and associated regulations protect the privacy and security of certain patient health information and establish standards for electronic health care transactions in the United States. These privacy regulations establish federal standards regarding the uses and disclosures of protected health information. Our laboratories are subject to HIPAA and its associated regulations.
HIPAA and associated regulations protect the privacy and security of certain patient health information and establish standards for electronic health care transactions in the United States. These privacy regulations establish federal standards regarding the uses and disclosures of protected health information. Our laboratories are subject to HIPAA and its associated regulations.
We cannot be certain that future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC. 35 Table of Contents Third parties may assert ownership or commercial rights to inventions we develop.
We cannot be certain that our pending European patent application and future European patents and patent applications will avoid falling under the jurisdiction of the UPC, if we decide to opt out of the UPC. Third parties may assert ownership or commercial rights to inventions we develop.
We do not control these analysts. The price of our common stock could decline if one or more equity research analysts downgrade our common stock or if they issue other unfavorable commentary or cease publishing reports about us or our business.
The price of our common stock could decline if one or more equity research analysts downgrade our common stock or if they issue other unfavorable commentary or cease publishing reports about us or our business.
Our device will need to be re-certified under the IVDR by such date in order to remain on the EU market, which will include evaluation by an EU notified body to confirm whether our device meets the general safety and performance requirements under the IVDR.
Our device will need to be re-certified under the IVDR in order to remain on the EU market beyond the deadlines for transition, which will include evaluation by an EU notified body to confirm whether our device meets the general safety and performance requirements under the IVDR.
From April 14, 2023 through the date the consolidated financial statements were issued, we received approximately $0.1 16 Table of Contents million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 10,192 shares of common stock. We have approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.
From April 14, 2023 through the date the consolidated financial statements were issued, we received approximately $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 11,847 shares of common stock. We have approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement.
Our closest competitors fall largely into two groups, consisting of companies that specialize in oncology and offer directly competing services to our diagnostic services, offering their services to oncologists and pathology departments within hospitals, as well as large commercial companies that offer a wide variety of laboratory tests that range from simple chemistry tests to complex genetic testing.
Our closest competitors fall largely into three groups, the first consisting of companies that specialize in oncology and offer directly competing services to our diagnostic services, the second offering their services to oncologists and pathology departments within hospitals, and the third consisting of large commercial companies that offer a wide variety of laboratory tests that range from simple chemistry tests to complex genetic testing.
We have had several customers who, from time to time, have individually represented 10% or more of our total revenue, or whose accounts receivable balances individually represented 10% or more of our total accounts receivable. For the years ended December 31, 2023 and 2022, one and no customers individually represented 10% or more of our total revenue, respectively.
We have had several customers who, from time to time, have individually represented 10% or more of our total revenue, or whose accounts receivable balances individually represented 10% or more of our total accounts receivable. For both the years ended December 31, 2024 and 2023, one customer individually represented 10% or more of our total revenue.
If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a security breach, we may incur significant costs to notify and mitigate potential harm to the affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.
If personal information or protected health information is improperly accessed, tampered with, misused or disclosed as a result of a cyber security incident or data breach, we may incur significant costs to notify impacted stakeholders (including affected individuals, investors and regulators) and mitigate potential harm 30 Table of Contents to affected individuals, and we may be subject to sanctions and civil or criminal penalties if we are found to be in violation of the privacy or security rules under HIPAA or other similar federal or state laws protecting confidential personal information.
Further, if we have to use a substitute laboratory while our facilities were shut down, we could only use another facility with established state licensure and accreditation under CLIA.
Further, if we have to use a substitute laboratory in the event our facilities are shut down, we could only use another facility with established state licensure and accreditation under CLIA.
The market participant is then obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement. If the price at the time of replacement is lower than the price at which the security was originally sold by the market participant, then the market participant will realize a gain on the transaction.
If the price at the time of replacement is lower than the price at which the security was originally sold by the market participant, then the market participant will realize a gain on the transaction.
A severe or prolonged economic downturn or increase in inflation rates could result in a variety of risks to our business, including weakened demand for our products and services and our ability to raise additional capital when needed on favorable terms, if at all.
A severe or prolonged economic downturn or increase in inflation rates, or increased U.S. trade tariffs and trade disputes with other countries, could result in a variety of risks to our business, including weakened demand for our products and services and our ability to raise additional capital when needed on favorable terms, if at all.
At December 31, 2023, one customer accounted for approximately 13% of our total accounts receivable and at December 31, 2022, one customer accounted for approximately 12% of our total accounts receivable.
At December 31, 2024, one customer accounted for approximately 29% of our total accounts receivable and at December 31, 2023, one customer accounted for approximately 13% of our total accounts receivable.
Cyberattacks could include wrongful conduct by hostile foreign governments, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful malware, denial-of-service, social engineering fraud or other means to threaten data security, confidentiality, integrity and availability.
Cyberattacks could include wrongful conduct by hostile foreign governments, intentional or inadvertent wrongful conduct by insider employees or vendors, industrial espionage, wire fraud and other forms of cyber fraud, the deployment of harmful ransomware, malware, denial-of-service attacks, social engineering fraud (including phishing attacks) or other means to threaten data security, confidentiality, integrity and availability.
Although we do not currently own any European patents or applications, if we obtain such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.
If our pending European patent application issues, and if we obtain other such patents and applications in the future, any such revocation and loss of patent protection could have a material adverse impact on our business and our ability to commercialize or license our technology and products.
Our consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business.
Our consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business. We have incurred substantial operating losses and have used cash in our operating activities for the past few years.
There are several federal laws addressing fraud and abuse that apply to businesses that receive reimbursement from a federal health care program. There are also a number of similar state laws covering fraud and abuse with respect 29 Table of Contents to, for example, private payers, self-pay and insurance.
There are several federal laws addressing fraud and abuse that apply to businesses that receive reimbursement from a federal health care program. There are also a number of similar state laws covering fraud and abuse with respect to, for example, private payers, self-pay and insurance. Currently, we receive a substantial percentage of our revenue from private payers and from Medicare.
Any failure by such third parties to prevent or mitigate security breaches or improper access to, misuse of, or disclosure of such 24 Table of Contents information could have similarly adverse consequences for us.
Any failure by such third - parties to prevent or mitigate cybersecurity incidents, data breaches or improper access to, misuse of, or disclosure of such information could have similarly adverse consequences for us.
We may seek to settle outstanding obligations to vendors, debtholders or litigants in any litigation through the issuance of our common stock or other security to such persons. Such issuances may cause significant dilution to our stockholders and cause the price of our common stock to fall.
We may seek to settle outstanding obligations to vendors, debtholders or litigants in any litigation through the issuance of our common stock or other security to such persons. Such issuances may cause significant dilution to our stockholders and cause the price of our common stock to fall. Improper timing of equity awards could result in regulatory scrutiny and reputational harm.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changePersonnel at all levels and departments are made aware of our cybersecurity policies through trainings. We engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards.
Biggest changeAs part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management. Personnel at all levels and departments are made aware of our cybersecurity policies through trainings. We engage consultants, or other third parties in connection with our risk assessment processes.
Our board of directors administers its risk oversight function directly as a whole, as well as through the audit committee. 44 Table of Contents Our Chief Operating Officer is primarily responsible to assess and manage our material risks from cybersecurity threats with assistance from third-party service providers.
Our board of directors administers its risk oversight function directly as a whole, as well as through the audit committee. 50 Table of Contents Our Chief Operating Officer is primarily responsible to assess and manage our material risks from cybersecurity threats with assistance from third-party service providers.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with an IT consultant who reports to our IT Manager and Chief Operating Officer, to manage the risk assessment and mitigation process. As part of our overall risk management system, we monitor and test our safeguards and train our employees on these safeguards, in collaboration with IT and management.
Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with an IT consultant who reports to our IT Manager and Chief Operating Officer, to manage the risk assessment and mitigation process .
Added
These service providers assist us to design and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease approximately 5,300 square feet of laboratory space in Omaha, Nebraska, which we occupy under a lease expiring in May 2025 with annual rental payments of less than $0.1 million. We believe that these facilities are adequate to meet our current and planned needs.
Biggest changeWe also lease approximately 5,300 square feet of laboratory space in Omaha, Nebraska, which we occupy under a lease expiring in May 2025 with annual rental payments of less than $0.1 million and we are currently evaluating our options for renewal of this space. We believe that these facilities are adequate to meet our current and planned needs.
Item 2. Properties We currently lease approximately 8,267 square feet of laboratory and office space in New Haven, Connecticut, which we occupy under leases expiring in December 2026 with annual rental payments of $0.2 million.
Item 2. Properties We currently lease approximately 11,382 square feet of laboratory and office space in New Haven, Connecticut, which we occupy under leases expiring in February 2030 with annual rental payments between $0.3 million and $0.4 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeTherefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against us in the same reporting period for amounts in excess of management’s expectations, our financial statements for such reporting period could be materially adversely affected.
Biggest changeThe outcome of legal proceedings and claims brought against us are subject to significant uncertainty. If one or more of these legal matters were resolved against us in the same reporting period for amounts in excess of management’s expectations, our financial statements for such reporting period could be materially and adversely affected.
In general, the resolution of a legal matter could prevent us from offering our services or products to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results.
In general, the resolution of a legal matter resolved against us, could also prevent us from offering our services or products to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results.
Mine Safety Disclosures Not Applicable. ​ 45 Table of Contents PART II
This discussion is incorporated herein by reference. ​ Item 4. Mine Safety Disclosures Not Applicable. ​ 52 Table of Contents PART II
Removed
The outcome of legal proceedings and claims brought against us are subject to significant uncertainty.
Added
From time to time, the Company is involved in legal proceedings related to matters, which are incidental to our business.
Removed
The Company is involved in legal proceedings related to matters, which are incidental to its business and is delinquent on the payment of outstanding accounts payable for certain vendors and suppliers who have taken or have threatened to take legal action to collect such outstanding amounts. See below for a discussion on these matters. Item 4.
Added
Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business, but, regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Added
We are currently involved in a legal proceeding brought by a former employee before the court in San Antonio, Texas alleging unfair dismissal where the former employee seeks monetary damages. We dispute these allegations and intend to defend ourselves vigorously.
Added
While the outcome remains uncertain, management does not currently expect the case to have a material impact on its financial results. 51 Table of Contents For a fulsome discussion of legal proceedings, see Note 8 – “Commitment and Contingencies” in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item. Holders. At March 24, 2024, there were 1,430,292 shares of our common stock outstanding and approximately 34 holders of record. Dividends. No cash dividends have been paid on our common stock.
Biggest changeWe are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required under this item. Holders. At March 24, 2025, there were 1,504,312 shares of our common stock outstanding and approximately 34 holders of record. Dividends. No cash dividends have been paid on our common stock.
Investors in our common stock should not rely on an investment in our company if they require dividend income and should not purchase our common stock with the expectation of receiving cash dividends. Issuer Purchases of Equity Securities . We made no purchases of our common stock during the year ended December 31, 2023. Therefore, tabular disclosure is not presented.
Investors in our common stock should not rely on an investment in our company if they require dividend income and should not purchase our common stock with the expectation of receiving cash dividends. Issuer Purchases of Equity Securities . We made no purchases of our common stock during the year ended December 31, 2024. Therefore, tabular disclosure is not presented.
Recent Sales of Unregistered Securities. None. ​ Item 6. [Reserved] Not Applicable.
Recent Sales of Unregistered Securities. None. ​ Item 6. [Reserved] ​

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeFinancial Statements and Supplementary Data 53 ​ Report of Independent Registered Public Accounting Firm (PCAOB ID#688) 53 ​ Consolidated Balance Sheets as of December 31, 2023 and 2022 55 ​ Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 56 ​ Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023 and 2022 57 ​ Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 58 ​ Notes to the Consolidated Financial Statements for the Years Ended December 31, 2023 and 2022 60
Biggest changeFinancial Statements and Supplementary Data 61 ​ Report of Independent Registered Public Accounting Firm (PCAOB ID#688) 61 ​ Consolidated Balance Sheets as of December 31, 2024 and 2023 63 ​ Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 64 ​ Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 65 ​ Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 66 ​ Notes to the Consolidated Financial Statements for the Years Ended December 31, 2024 and 2023 68
Item 6. [Reserved] 46 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 46 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 52 Item 8.
Item 6. [Reserved] 53 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 53 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 60 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe Joint Venture was dissolved on November 1, 2023 with an effective date of December 31, 2022. ​ Going Concern The consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business.
Biggest changeGlobal healthcare distributors, such as ThermoFisher, McKesson, Medline and Cardinal Health, have partnered with us to form the backbone of our go-to-market strategy and enable us to access laboratories around the country that can benefit from using our diagnostic products. ​ Our operating structure promotes the harnessing of our proprietary technology and genetic diagnostic expertise to bring to market our robust pipeline of innovative solutions designed to address the root causes of misdiagnoses. ​ Going Concern The consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business.
To meet our current and future obligations we have taken the following steps to capitalize the business and successfully achieve our business plan: ● On April 14, 2023 , we entered into a sales agreement with AGP, pursuant to which we may offer and sell our common stock having aggregate sales proceeds of up to $5.8 million, to or through AGP, as sales agent (the “AGP 2023 Sales Agreement”).
To meet our current and future obligations we have taken the following steps to capitalize the business and successfully achieve our business plan: ● On April 14, 2023 , the Company entered into a sales agreement with AGP, pursuant to which the Company may offer and sell its common stock having aggregate sales proceeds of up to $5.8 million, to or through AGP, as sales agent (the “AGP 2023 Sales Agreement”).
At each of December 31, 2023 and December 31, 2022, other than certain purchase commitments, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
At each of December 31, 2024 and December 31, 2023, other than certain purchase commitments, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
The accompanying financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result should we be unable to continue as a going concern as a result of the outcome of this uncertainty. ​ Results of Operations for the Years Ended December 31, 2023 and 2022 Net Sales.
The accompanying financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments that might result should we be unable to continue as a going concern as a result of the outcome of this uncertainty. ​ Results of Operations for the Years Ended December 31, 2024 and 2023 Net Sales.
The gross profit increased during the year ended December 31, 2023, as compared to the prior year period, as a result of increases in case volume and revenue. We operate a fully staffed CLIA and CAP certified clinical pathology and molecular laboratory.
The gross profit increased during the year ended December 31, 2024, as compared to the prior year period, as a result of increases in case volume and revenue. We operate a fully staffed CLIA and CAP certified clinical pathology and molecular laboratory.
We recorded net other income of $1.8 million for the year ended December 31, 2023 which was related to $1.7 million of income from the write-off of certain liabilities and $0.1 million of income related to a gain on the dissolution of joint venture. These were partially offset by less than $0.1 million of interest expense.
F or the year ended December 31, 2023, we recorded net other income of $1.8 million which was related to $1.7 million of income from the write-off of certain liabilities and $0.1 million of income related to a gain on the dissolution of joint venture. These were partially offset by less than $0.1 million of interest expense.
Cash flows used in financing activities totaled $0.2 million for the year ended December 31, 2022, which included payments on our long-term debt and finance lease obligations of $0.3 million partially offset by $0.1 million of proceeds from the issuance of common stock .
Cash flows used in financing activities totaled $0.3 million for the year ended December 31, 2024, which included payments on our long-term debt and finance lease obligations of $0.6 million partially offset by $0.2 million of proceeds from debt and $0.1 million of proceeds from the issuance of common stock.
The cash flows used in operating activities of $3.6 million during the year ended December 31, 2023 included a net loss of $5.8 million, an increase in accounts receivables of $0.5 million, a decrease in accounts payable of $0.2 million and a decrease in operating lease liabilities of $0.2 million.
The cash flows used in operating activities of $3.6 million 56 Table of Contents during the year ended December 31, 2023 included a net loss of $5.8 million, an increase in accounts receivables of $0.5 million, a decrease in accounts payable of $0.2 million and a decrease in operating lease liabilities of $0.2 million.
(3) These amounts represent purchase commitments, including all open purchase orders See Note 8 – “Commitments and Contingencies” to our accompanying consolidated financial statements included with this Annual Report on Form 10-K. 50 Table of Contents ​ Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period.
(3) These amounts represent purchase commitments, including all open purchase orders See Note 8 – “Commitments and Contingencies” to our accompanying consolidated financial statements included with this Annual Report on Form 10-K. ​ Critical Accounting Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. 57 Table of Contents Making estimates requires management to exercise significant judgment.
The purchase commitments are mostly for laboratory reagents used in our normal operating business. See Note 8 – Commitments and Contingencies to our consolidated financial statements appearing elsewhere in this report for further discussion.
The purchase commitments are mostly for laboratory reagents used in our normal operating business. See Note 8 – “Commitments and Contingencies” to our consolidated financial statements appearing elsewhere in this report for further discussion.
Cash flows used in investing activities were $0.1 million and $0.3 million for the years ended December 31, 2023 and 2022, respectively, resulting from purchases of property and equipment. Cash Flows Provided by (used in) Financing Activities.
Cash flows used in investing activities were $0.2 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively, resulting from purchases of property and equipment. Cash Flows (Used in) Provided by Financing Activities.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.
It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.
During the year ended December 31, 2023, patient diagnostic service revenue increased $4.2 million as compared to the same period in 2022. This increase was due to a greater number of cases processed in the current year period.
During the year ended December 31, 2024, patient diagnostic service revenue increased $3.7 million as compared to the same period in 2023. This increase was due to a greater number of cases processed in the current year period.
The Company’s ability to continue as a going concern over the next twelve months from the date the consolidated financial statements were issued is dependent upon a combination of achieving its business plan, including generating additional revenue, and raising additional financing to meet its debt obligations and paying liabilities arising from normal business operations when they come due.
Our ability to continue as a going concern over the next twelve months from the date the consolidated financial statements were issued is dependent upon a combination of achieving its business plan, including generating additional revenue and avoiding potential business disruption due to the macroeconomic environment and geopolitical instability, and raising additional financing, if needed, to meet its debt obligations and paying liabilities arising from normal business operations when they come due.
Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory. Cost of sales increased by $2.3 million for the year ended December 31, 2023 as compared to the same period in 2022.
Product revenue decreased by $0.4 million for the year ended December 31, 2024 as compared to the same period in 2023. Cost of Sales. Cost of sales includes material and supply costs for the patient tests performed, costs related to products and other direct costs (primarily personnel costs, pathologist interpretation costs and rent) associated with the operations of our laboratory.
Gross profit and gross margins were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollars in Thousands ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Margin % ​ 2023 2022 2023 2022 Gross Profit ​ $ 6,018 ​ $ 2,510 40 % 27 % ​ Gross margin was 40% and 27% of total net sales, for the years ended December 31, 2023 and 2022, respectively, and the gross profit was approximately $6.0 million and $2.5 million during the years ended December 31, 2023 and 2022, respectively.
Gross profit and gross margins were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollars in Thousands ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Margin % ​ 2024 2023 2024 2023 Gross Profit ​ $ 7,559 ​ $ 6,018 41 % 40 % ​ Gross margin was 41% and 40% of total net sales, for the years ended December 31, 2024 and 2023, respectively, and the gross profit was approximately $7.6 million and $6.0 million during the years ended December 31, 2024 and 2023, respectively.
Liquidity and Capital Resources Our working capital positions at December 31, 2023 and 2022 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 Change Current assets (including cash of $1,502 and $3,445 respectively) ​ $ 3,682 ​ $ 5,710 ​ $ (2,028) Current liabilities ​ 3,141 ​ 4,361 ​ (1,220) Working capital ​ $ 541 ​ $ 1,349 ​ $ (808) To date, we have incurred significant net losses and have funded our operations primarily through cash generated from operations, the issuance of convertible debt and the issuance of shares of our common stock.
Liquidity and Capital Resources Our working capital positions at December 31, 2024 and 2023 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 December 31, 2023 Change Current assets (including cash of $1,389 and $1,502 respectively) ​ $ 3,451 ​ $ 3,682 ​ $ (231) Current liabilities ​ 4,271 ​ 3,141 ​ 1,130 Working capital ​ $ (820) ​ $ 541 ​ $ (1,361) To date, we have incurred significant net losses and have funded our operations primarily through cash generated from operations, the issuance of convertible debt and the issuance of shares of our common stock.
Operating Expenses. Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock based compensation costs and depreciation and amortization. Our operating expenses decreased by $1.7 million to $13.6 million for the year ended December 31, 2023 as compared to $15.3 million for the year ended December 31, 2022.
Operating expenses primarily consist of personnel costs, professional fees, travel costs, facility costs, stock based compensation costs and depreciation and amortization. Our operating expenses decreased by 55 Table of Contents $1.9 million to $11.8 million for the year ended December 31, 2024 as compared to $13.6 million for the year ended December 31, 2023.
The Company adopted this guidance on January 1, 2023. The adoption of this standard was not material to our consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”) which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures.
The Company adopted this standard for fiscal year 2024 and such adoption did not have a material impact on our consolidated financial statements. 58 Table of Contents Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”) which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures.
In August 2020, the FASB issued ASU 2020-06 “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .” This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related EPS guidance for both Subtopics.
The adoption of this standard was not material to our consolidated financial statements . ​ In August 2020, the FASB issued ASU 2020-06 “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .” This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share (“EPS”) guidance for both Subtopics.
The Company has incurred substantial operating losses and has used cash in its operating activities for the past several years. For the year ended December 31, 2023, the Company had a net loss of $5.8 million and net cash used in operating activities of $3.6 million.
We have incurred substantial operating losses and has used cash in its operating activities for the past several years. For the year ended December 31, 2024, we had a net loss of $4.3 million and net cash provided by operating activities of $0.4 million.
These were partially offset by a decrease in other assets of $0.5 million, an increase in accounts payable of $0.1 million, an increase in deferred revenue of $0.1 million and non-cash adjustments of $5.1 million . Cash Flows Used In Investing Activities.
These were partially offset by a decrease in inventories of $0.3 million, a decrease in other assets of $0.4 million, an increase in accrued expenses of $0.7 million and non-cash adjustments of $1.7 million. Cash Flows Used In Investing Activities.
Overview We are a healthcare solutions company focused on cancer diagnostics. Our business mission is to address the pervasive problem of cancer misdiagnoses by developing solutions in the form of diagnostic products and services.
Overview We are a healthcare biotechnology company focused on cancer diagnostics. Our business mission is to address the pervasive problem of cancer misdiagnoses by developing solutions in the form of diagnostic products and services. Our products and services aim to deliver higher accuracy, improved laboratory workflow, and ultimately better patient outcomes, which reduce healthcare expenses.
Cash decreased by $1.9 million and $8.2 million during the years ended December 31, 2023 and 2022, respectively. 49 Table of Contents Cash Flows Used in Operating Activities.
Cash decreased by $0.1 million and $1.9 million during the years ended December 31, 2024 and 2023, respectively. Cash Flows Provided by (Used in) Operating Activities.
For additional information on critical accounting estimates, see Note 2 to the consolidated Financial Statements, “Summary of Significant Accounting Policies and New Accounting Standards,” in Part II, Item 8, of this Annual Report on Form 10-K.
For additional information on critical accounting estimates, see Note 2 to the consolidated Financial Statements, “Summary of Significant Accounting Policies and New Accounting Standards,” in Part II, Item 8, of this Annual Report on Form 10-K. Recently Adopted Accounting Pronouncements In June 2022, the Financial Accounting Standards Board (the “FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820) (“ASU 2022-03”).
Adoption of ASU 2023-09 is expected to enhance the usefulness of income tax disclosures and is not expected to have a material impact on the Company’s financial position, results of operations or cash flows. 51 Table of Contents In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820) (“ASU 2022-03”).
Adoption of ASU 2023-09 is expected to enhance the usefulness of income tax disclosures and is not expected to have a material impact on the Company’s financial position, results of operations or cash flows. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures (ASU 2024-03”).
On January 19, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $865,889 of shares of our common stock.
On April 8, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sale of up to $1,061,478 of shares of our common stock (the “April 2024 Prospectus Supplement”).
We routinely provide a reserve for credit losses accounts as a result of having limited in-network payer contracts. The other non-cash adjustments to net loss of approximately $3.2 million include, among other things, depreciation and amortization, the value of stock issued in payment of services, gain on write-off of liabilities and stock-based compensation .
The other non-cash adjustments to net loss of approximately $3.3 million include, among other things, depreciation and amortization, the value of stock issued in payment of services, gain on write-off of liabilities and stock-based compensation.
As such, it is necessary to maintain appropriate staffing levels to provide industry standard 48 Table of Contents laboratory processing and reporting to ordering physicians. An increase in case volume enables our laboratory to yield economies of scale and to leverage fixed expenses, as we saw during 2023 with the increases in case volume and gross margin mentioned above.
As such, it is necessary to maintain appropriate staffing levels to provide industry standard laboratory processing and reporting to ordering physicians. An increase in case volume will enable our laboratory to yield economies of scale and to leverage fixed expenses. Operating Expenses.
Analysis of Cash Flows - Years Ended December 31, 2023 and 2022 The following table summarizes our net cash flow activity (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Change Net cash used in operating activities ​ $ (3,559) ​ $ (7,721) ​ $ 4,162 Net cash used in investing activities ​ ​ (126) ​ ​ (277) ​ ​ 151 Net cash provided by (used in) financing ​ 1,742 ​ (225) ​ 1,967 Net change in cash ​ $ (1,943) ​ $ (8,223) ​ $ 6,280 ​ Net Change in Cash.
Analysis of Cash Flows - Years Ended December 31, 2024 and 2023 The following table summarizes our net cash flow activity (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Change Net cash provided by (used in) operating activities ​ $ 439 ​ $ (3,559) ​ $ 3,998 Net cash used in investing activities ​ ​ (223) ​ ​ (126) ​ ​ (97) Net cash (used in) provided by financing activities ​ (329) ​ 1,742 ​ (2,071) Net change in cash ​ $ (113) ​ $ (1,943) ​ $ 1,830 ​ Net Change in Cash.
Better diagnostic results – Better Patient Outcome – Lower Healthcare Expenditures. To deliver our strategy, we have structured our organization to develop diagnostic products. Laboratory and R&D facilities located in New Haven, Connecticut and Omaha, Nebraska house development teams that collaborate on the development of new products and services.
To deliver our strategy, we have structured our organization to develop diagnostic products, including our laboratory and research and development (“R&D”) facilities located in New Haven, Connecticut and Omaha, Nebraska, 53 Table of Contents respectively, which house teams that collaborate on the development of new products and services.
Net sales were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollars in Thousands ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ 2023 2022 $ % Service revenue, net, less allowance for credit loss ​ $ 12,178 ​ $ 8,010 ​ $ 4,168 ​ 52 % Other ​ 3,019 ​ 1,402 ​ ​ 1,617 ​ 115 % Net Sales ​ $ 15,197 ​ $ 9,412 ​ $ 5,785 ​ 61 % ​ Net sales for the year ended December 31, 2023 were $15.2 million, an increase of $5.8 million, as compared to the same period in 2022.
Net sales were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollars in Thousands ​ ​ Year Ended ​ ​ ​ ​ ​ December 31, ​ Change ​ 2024 2023 $ % Service revenue, net, less allowance for credit loss ​ $ 15,921 ​ $ 12,178 ​ $ 3,743 ​ 31 % Product revenue ​ 2,611 ​ 3,019 ​ ​ (408) ​ (14) % Net Sales ​ $ 18,532 ​ $ 15,197 ​ $ 3,335 ​ 22 % ​ Net sales for the year ended December 31, 2024 were $18.5 million, an increase of $3.3 million, as compared to the same period in 2023.
We processed 6,765 cases during the year ended December 31, 2023 as compared to 4,109 cases during the same period in 2022, or a 65% increase in cases. Other revenue increased by $1.6 million for the year ended December 31, 2023 as compared to the same period in 2022.
We processed 11,894 cases during the year ended December 31, 2024 as compared to 6,765 cases during the same period in 2023, or a 76% increase in cases.
The cash flows used in operating activities in the year ended December 31, 2022 included the net loss of $12.2 million, an increase in accounts receivables of $0.7 million, a decrease accrued expenses of $0.3 million, an increase in inventories of $0.1 million and a decrease in operating lease liabilities of $0.2 million.
The cash flows provided by operating activities of $0.4 million during the year ended December 31, 2024 included a decrease in accounts receivables of $0.4 million, a decrease in other assets of $0.3 million, an increase in accrued expenses of $1.0 million, an increase in deferred revenue of $0.1 million and non-cash adjustments of $3.4 million.
There can be no assurance that we will be able to successfully achieve our initiatives summarized above in order to continue as a going concern.
Notwithstanding the aforementioned circumstances, there remains substantial doubt about our ability to continue as a going concern for the next twelve months from the date the consolidated financial statements were available to be issued. There can be no assurance that we will be able to successfully achieve our initiatives summarized above in order to continue as a going concern.
As of December 31, 2023, the Company had an accumulated deficit of $98.2 million and working capital of $0.5 million.
As of December 31, 2024, we had an accumulated deficit of $102.4 million and a working capital deficit of $0.8 million.
Contractual Obligations and Commitments At December 31, 2023, our contractual obligations and other commitments were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due By Period (in thousands) ​ Total Less Than 1 Year 1-3 Years 3-5 Years Long term debt (1) ​ $ 370 ​ $ 248 ​ $ 70 ​ $ 52 Finance lease obligations (2) ​ 171 ​ 79 ​ 92 ​ — Operating lease obligations (2) ​ 696 ​ 258 ​ 438 ​ — Purchase obligations (3) ​ 1,884 ​ 1,834 ​ 50 ​ — ​ ​ $ 3,121 ​ $ 2,419 ​ $ 650 ​ $ 52 (1) Total payments include $353,000 in principal and $17,000 in interest.
Contractual Obligations and Commitments At December 31, 2024, our contractual obligations and other commitments were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments Due By Period (in thousands) ​ Total Less Than 1 Year 1-3 Years 3-5 Years More than 5 Years Long term debt (1) ​ $ 413 ​ $ 326 ​ $ 70 ​ $ 17 ​ $ — Finance lease obligations (2) ​ 589 ​ 172 ​ 240 ​ 104 ​ 73 Operating lease obligations (2) ​ 438 ​ 224 ​ 214 ​ — ​ — Purchase obligations (3) ​ 3,116 ​ 2,168 ​ 316 ​ 316 ​ 316 ​ ​ $ 4,556 ​ $ 2,890 ​ $ 840 ​ $ 437 ​ $ 389 (1) Total payments include $383,000 in principal and $30,000 in interest.
During the year ended December 31, 2023 we received net proceeds of $2.2 million from sale of 237,102 shares of our common stock through purchase agreements and at the market offerings. We have approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement .
During the year ended December 31, 2024 we received $0.3 million in proceeds from debt issuance and net proceeds of $0.1 million from sale of 11,822 shares of our common stock through at the market offerings.
As of the date the consolidated financial statements were issued, we have received $0.1 million in gross proceeds through the AGP 2023 Sales Agreement from the sale of 10,192 shares of common stock. The Company has approximately $3.7 47 Table of Contents million available for future sales pursuant to the AGP 2023 Sales Agreement.
As of the date the consolidated financial statements were issued, the Company has approximately $3.7 million 54 Table of Contents available for future sales pursuant to the 2023 Registration Statement, which includes approximately $1.0 million of remaining availability pursuant to the April 2024 Prospectus Supplement.
We operate CLIA laboratories in both the New Haven, Connecticut and Omaha, Nebraska locations providing essential blood cancer diagnostics to office-based oncologists in many states nationwide. To deliver on our strategy of mitigating misdiagnoses we rely heavily on our CLIA laboratory to support R&D beta-testing of the products we develop, in a clinical environment.
To deliver on our strategy of mitigating misdiagnoses, we rely heavily on our CLIA laboratories to support R&D beta-testing of the products we develop, in a clinical environment. ​ The development of laboratory products involves a qualified facility; highly skilled laboratory staff; and access to viable patient specimens to conduct development and testing.
These were partially offset by a decrease in inventories of $0.3 million, a decrease in other assets of $0.4 million, an increase in accrued expenses of $0.7 million and non-cash adjustments of $1.7 million. The non-cash adjustments included $0.2 million for the change in provision for credit losses.
These were partially offset by a net loss of $4.3 million, an increase in inventories of $0.3 million, and a decrease in operating lease liabilities of $0.2 million.
The amendments in this Update also require additional disclosures for equity securities subject to contractual sale restrictions. The provisions in this Update are effective for fiscal years beginning after December 15, 2023. Early adoption is permitted. The Company does not expect to early adopt this ASU.
The amendments in this Update also require additional disclosures for equity securities subject to contractual sale restrictions. The Company adopted this guidance on January 1, 2024.
Impact of Inflation Inflation generally affects us with increased cost of labor and operating supplies. We do not believe that price inflation had a material adverse effect on our financial condition or results of operations during the periods presented .
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2024 and 2023.
During the year ended December 31, 2022, we recorded net other income of $0.6 million which was primarily attributable to non-cash income recorded on warrant revaluations .
General and administrative expenses for the year ended December 31, 2024 increased by $0.1 million as compared to the year ended December 31, 2023. Other (Expense) Income. We recorded net other expense of $0.1 million for the year ended December 31, 2024 which was related to net interest expense.
Removed
Misdiagnoses originate from outdated commercial diagnostic cancer testing technologies, lack of subspecialized expertise, and sub-optimal laboratory processes that are needed in today’s diagnostic cancer testing in order to provide accurate, rapid, and resource-effective results to treat patients. Industry studies estimate one in five blood-cancer patients are misdiagnosed.
Added
We develop innovative technologies in our laboratory where we design, test, validate, and use these products clinically. We believe these technologies improve diagnostic outcomes across various diseases within the hematologic field. We then commercialize these technologies as proprietary products that serve the global laboratory community in furtherance of our mission to eliminate or greatly reduce the prevalence of misdiagnoses.
Removed
As cancer diagnostic testing has evolved from cellular to molecular (genes and exons), laboratory testing has become extremely complex, requiring even greater diagnostic precision, attention to process and a more appropriate evaluation of the abundance of genetic data to effectively gather, consider, analyze and present information for the 46 Table of Contents physician for patient treatment.
Added
We operate Clinical Laboratory Improvement Amendments (“CLIA”) compliant laboratories in both New Haven, Connecticut and Omaha, Nebraska, from which we provide essential blood cancer diagnostics to oncologists nationwide.
Removed
We believe cancer diagnostics requires a holistic approach to improve the quality of diagnostic data and achieve more accurate interpretations of the patient situation, with the intent to reduce misdiagnoses.
Added
Our CLIA laboratory in New Haven, which is operated by our pathology services division, encapsulates these components, and also generates revenue for us which covers costs associated with operating this laboratory.
Removed
By delivering diagnostic products, reagents and services that improve the accuracy and efficiency of diagnostics, leading to fewer misdiagnoses, we believe patient outcomes can be improved through the selection of appropriate therapeutic options. Furthermore, we believe that better patient outcomes will have a positive impact on healthcare expenses as misdiagnoses are reduced.
Added
This structure of utilizing our clinical lab to obtain samples and utilize the equipment and staffing to develop, test and validate our products, significantly reduces the development costs and timeline for our products.
Removed
Our Products Division commercial team generates direct sales as well as works with our key distributors. Global healthcare distributors, such as ThermoFisher, McKesson and Cardinal Health, have partnered with us to form the backbone of our go-to-market strategy and enable us to access laboratories around the country that can benefit from using our diagnostic products.
Added
This also enables us to accelerate the time to market of new product development and launch. ​ Furthermore, as a clinical laboratory, we are always the first user of every product we develop, which allows us to optimize important laboratory functions such as workflow, inventory management, regulatory and billing issues.
Removed
In April 2020, we formed a Joint Venture with Poplar. Poplar provides specialized laboratory testing services to a nationwide client base of gastroenterologists, dermatologists, oncologists, urologists, gynecologists and their patients.
Added
As a vendor, this enables us to serve as a reputable user of our own products, and we believe this provides us with significant credibility with existing and prospective customers.
Removed
The business purpose of the Joint Venture is to facilitate and capitalize on the combined capabilities, resources and healthcare industry relationships of its members by partnering, promoting and providing oncology services to office based physicians, hospitals and medical centers.
Added
Furthermore, because we use our products as part of our day-to-day operations, we can deliver a high level of hands-on, expert support to customers, improving their experience with our products. ​ Our Products Division commercial team generates direct sales and works with our key distributors.
Removed
Under the terms of the Joint Venture, Precipio SPV has a 49% ownership interest in the Joint Venture, with Poplar having a 51 % ownership. We have determined that we hold a variable interest in the Joint Venture and that we are the primary beneficiary of the Joint Venture. Due to this determination, we consolidate the Joint Venture.
Added
The benefit of the increase in cases billed during the full year ended December 31, 2024 as compared to the full year ended December 31, 2023 was partially offset by a lower average price per case during the current year as a result of a different product mix.
Removed
See Note 2 - Summary of Significant Accounting Policies to our consolidated financial statements appearing elsewhere in this report for further discussion .
Added
Cost of sales increased by $1.8 million for the year ended December 31, 2024 as compared to the same period in 2023. The majority of the increase related to increases in reagents, operating supplies, personnel costs and pathologist interpretation costs all due to the increase in the number of cases processed, as discussed above. Gross Profit.
Removed
We have approximately $0.8 million of remaining availability pursuant to this prospectus supplement. ● On June 8, 2023, we entered into a securities purchase agreement pursuant to which we received $2.0 million in gross proceeds through the sale of 206,250 shares of common stock and warrants to purchase shares of our common stock.
Added
The decrease included decreases from: (1) a decrease of $1.5 million in sales and marketing expenses due mainly to a decrease in personnel costs of $1.2 million as a result of a lower headcount and a decrease of $0.3 million in other costs, (2) a decrease of $0.4 million in research and development expenses mainly related to a decrease of $0.1 million in operating supplies, a decrease of $0.1 million in personnel costs and a decrease of $0.2 million in other costs, and (3) a decrease of $0.1 million in stock-based compensation expenses.
Removed
Issuance costs were approximately $0.2 million and we intend to use the net proceeds for working capital and general corporate purposes. Notwithstanding the aforementioned circumstances, there remains substantial doubt about our ability to continue as a going concern for the next twelve months from the date the consolidated financial statements were available to be issued.
Added
The Company has approximately $3.7 million available for future sales pursuant to the AGP 2023 Sales Agreement which includes approximately $1.0 million of remaining availability pursuant to the April 2024 Prospectus Supplement.
Removed
The other revenues were primarily related to increased sales of our HemeScreen product as a result of a greater number of customers purchasing reagents during the current year period . Cost of Sales.
Added
The non-cash adjustments included $0.1 million for the change in provision for credit losses. We routinely provide a reserve for credit losses accounts as a result of having limited in-network payer contracts.
Removed
The increase is in line with the changes in related revenues discussed above. Gross Profit.
Added
The Company adopted this guidance on January 1, 2024.
Removed
The decrease included decreases from: (1) a decrease of less than $0.1 million in general and administrative expenses, which was due to a decrease of $0.2 million in legal and professional fee expenses partially offset by a $0.1 million increase in state franchise taxes; and (2), a decrease of $2.2 million in stock-based compensation expenses for the year ended December 31, 2023.
Added
The adoption of this standard was not material to our consolidated financial statements. ​ In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses.
Removed
These decreases were partially offset by a $0.6 million increase in sales and marketing expenses due mainly to increased personnel costs as we expanded our product sales force starting in the second half of 2022 . Other Income (Expense).
Added
Under the new guidance an entity is required to disclose the title and position of the chief operating decision maker ("CODM") and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.
Removed
On January 19, 2024, we filed a prospectus supplement to our prospectus dated April 25, 2023 registering the offer and sales of up to $865,889 of shares of our common stock. We have approximately $0.8 million of remaining availability pursuant to this prospectus supplement.
Added
The ASU also requires that an entity that has a single reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280. The ASU does not change how operating segments are identified or, when applicable, aggregated.
Removed
Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13 “ Measurement of Credit Losses on Financial Instruments ”, which replaces current methods for evaluating impairment of financial instruments not measured at fair value, including trade accounts receivable and certain debt securities, with a current expected credit loss model.
Added
This update requires entities to disaggregate operating expenses into specific categories, such as purchases of inventory, compensation, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively.
Removed
The Company is currently assessing the potential impact that the adoption of this ASU will have on its consolidated financial statements.
Added
The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures. Other Developments ​ Change Healthcare ​ Change Healthcare (“CHC”), a subsidiary of UnitedHealth Group, suffered a cybersecurity breach in February 2024 which resulted in the temporary shut-down of some of its systems. Precipio uses CHC to process its billings for pathology services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosure about Market Risk We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item. ​ 52 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item. ​ 60 Table of Contents

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